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Stratasys (SSYS) Q1 Loss and Revenues in Line with Estimates

Zacks

Stratasys Ltd. SSYS reported modest results for first-quarter 2017, wherein the top and bottom lines, both met our expectations. Furthermore, although the top line witnessed a fall, the bottom line improved on a year-over-year basis.

For the first quarter, the company reported adjusted loss per share (excluding amortization, impairment and other one-time items but including stock-based compensation) of 2 cents, which came in line with the Zacks Consensus Estimate. Moreover, it marked a significant improvement from a loss of 6 cents posted in the year-ago quarter.

On a GAAP basis, the company reported loss of 26 cents per share compared with a loss of 44 cents per share reported in the year-ago quarter. The year-over-year improvement in bottom-line results came mainly due to the company’s consistent focus on reducing operating expenses which were partially offset by lower revenues.

Shares of Stratasys gained nearly 2.5% yesterday. Notably, the stock has outperformed the Zacks categorized Computer-Peripheral Equipment industry in the year-to-date period. The stock yielded a return of 85.5% over the period, outperforming the industry’s return of 17.4%.


Quarter Details

Stratasys reported revenues of $163.2 million, which came almost in line with the Zacks Consensus Estimate. However, on a year-over-year basis, the figure declined 2.8% mainly due to fall in Product and Services revenues.

Segment wise, Product revenues were down 3% from the year-ago quarter to $115.1 million mainly due to an 11% decline in System sales, which was affected by a shift in product mix toward lower-end system. Revenues from Services fell 2% year over year to $48.1 million.

Stratasys’ adjusted gross margin (excluding amortization and other one-time expenses but including share-based compensation) contracted 380 basis points (bps) to 50.8%, primarily due to shift in sales mix.

The company’s adjusted operating expenses decreased 11.4% year over year to $82.7 million, primarily due to the company’s continuous focus on improving efficiencies. Also, as a percentage of revenues, operating expenses went down year over year from 55.6% to 50.7%. The decrease was primarily due to lower research and development expenses, and selling, general and administrative expenses.

The company posted adjusted operating loss of $0.8 million in the reported quarter compared with adjusted operating loss of $2.8 million reported in the year-ago quarter.

The company exited the quarter with cash and cash equivalents and short-term bank deposits of $297.2 million compared with $280.3 million in the previous quarter. Inventories came in at approximately $116 million compared with $117.5 million in the previous quarter. Long-term debt as of Mar 31, 2017 came in at $21.4 million. The company generated $25.4 million of cash flow from operations during the quarter.

Guidance

Stratasys reiterated its full-year 2017 outlook. The company still expects revenues in the range of $645–$680 million (mid-point $662.5 million). The Zacks Consensus Estimate is pegged at $668.9 million. Non-GAAP income per share is projected between 19 cents and 37 cents.

Furthermore, the company still anticipates non-GAAP operating margin to be in the range of 3–5%. Capital expenditure is estimated in the range of $40–$50 million, which is in line with the previous guidance range.

Bottom Line

Stratasys reported modest first-quarter results, wherein the top and bottom lines came in line with the respective Zacks Consensus Estimate. The bottom-line results, which displayed year-over-year improvement, were also encouraging.

Stratasys, Ltd. Price, Consensus and EPS Surprise

Stratasys, Ltd. Price, Consensus and EPS Surprise | Stratasys, Ltd. Quote

It seems that Stratasys’ turnaround strategies, which include launching innovative products, strategic partnerships and acquisitions, and improving cost efficiencies, are paying off. These initiatives will help Stratasys to gain more market share as the prospect of 3D printing industry appears bright.

Currently, Stratasys carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Applied Optoelectronics AAOI, Paylocity Holding Corporation PCTY and FormFactor Inc. FORM. While Applied Optoelectronics sports a Zacks Rank #1 (Strong Buy), Paylocity and FormFactor carry Zacks Rank #2 (Buy).

Long-term expected EPS growth rate for Applied Optoelectronics, Paylocity and FormFactor are 20%, 36.2% and 16%, respectively.

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