Stratasys Inc. (SSYS) reported first-quarter 2013 earnings per share of 38 cents, beating the Zacks Consensus Estimate of a loss of 16 cents.
Revenues
Stratasys recorded total revenue of $97.2 million in the first quarter, up 116.5% from $44.9 million in the year-ago quarter. The company witnessed improvements in the revenues of both Products and Services.
In the reported quarter, Product revenues grew significantly by 117.9% from the year-ago quarter. The upside was driven by the improvement in sales across segments. Apart from this, Services revenues increased by 107.6% in the first quarter of 2013, attributable to an increase in the revenues from maintenance contracts and service, reflecting the company’s growing base of installed systems.
Operating Results
Gross profit stood at $37.4 million (38.5% of the total revenue) in the quarter, up 62.8% from $22.9 million (51.0% of the total revenue) in the year-ago quarter. Although the total gross profit increased, the gross margin declined as revenues increased at a lower rate than the cost of sales.
Operating loss in the quarter was $16.7 million versus a profit of $7.3 million in the first quarter of 2012. However, operating expenses increased 244.1% year over year, primarily due to higher research and development (R&D) and selling, general and administrative (SG&A) expenses.
Operating loss margin was 17.2% from operating profit margin of 16.1% in the year-ago quarter. The substantial increase in operating expenses resulted in an operating loss.
The company reported net loss of $15.5 million or 40 cents per share in the first quarter compared to a profit of $4.52 million or 21 cents per share in the prior-year quarter. Non-GAAP net income was $15.6 million or 38 cents per share in the reported quarter compared to a profit of $10.7 billion or 27 cents per share in the year-ago quarter.
Balance Sheet
The company exited the quarter with cash and cash equivalents of $65.5 million, down from $133.8 million in the previous quarter. Inventories for the quarter stood at $66.4 million, down from $67.9 million reported in the previous quarter. The company does not have any long-term debt.
Guidance
The company provided its guidance for fiscal 2013, wherein, revenues are expected in the range of $430.0 million to $445.0 million, while the Non-GAAP earnings are anticipated to be $1.80 to $1.95 per share.
Conclusion
The first-quarter results were encouraging with EPS exceeding the Zacks Consensus Estimate and revenues improving on a year-over-year basis. Moreover, the company reported substantial growth in Product and Services revenues helped the company expand its business volume.
Previously, the company had stated that Hewlett-Packard (HPQ) agreed to discontinue its manufacturing and distribution agreement for 3D printers. The discontinuation has benefited the company, as it helped Stratasys to become a dominant player in this market.
Despite a globally increasing demand for 3D printers, Stratasys does not expect the termination to have a material impact on the business fundamentals. However, we are a little apprehensive as the company is unable to control its operating expenses and cost of sales. Moreover, it is facing stiff competition from big and small players like 3D Systems Corp. (DDD).
The company carries a Zacks Rank #3 (Hold). Electronic For Imaging Inc. (EFII), carrying a Zacks Rank #1 (Strong Buy), might be worth considering at this point.
3D SYSTEMS CORP (DDD): Free Stock Analysis Report
ELECTRN IMAGING (EFII): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
STRATASYS LTD (SSYS): Free Stock Analysis Report
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