3D printing solutions provider, Stratasys Ltd. SSYS posted second quarter 2015 adjusted income per share (excluding amortization, impairment and other one-time items but including stock-based compensation) of 9 cents as against the Zacks Consensus Estimate of a loss of 8 cents. However, adjusted earnings decreased from 46 cents per share reported in the year-ago quarter.
Quarter Details
Stratasys’ revenues not only jumped 2.2% from the year-ago quarter to $182.3 million but also came ahead of the Zacks Consensus Estimate of $180 million. Product revenues were down 14.6% from the year-ago quarter to $134.5 million. However, revenues from Services increased 96.2% year over year to $47.8 million.
Stratasys revealed that revenues from its MakerBot business have plunged 57% on a year-over-year basis in the second quarter. The decline was primarily due to overall market weakness coupled with continuous weakness related with the restructuring of its business.
Stratasys’ adjusted gross margin (excluding amortization and other one-time expenses but including share-based compensation) contracted 550 basis points (bps) to 53.7%, primarily due to the addition of Solid Concepts and Harvest Technologies.
The company’s adjusted operating expenses increased 23.6% year over year to $103.8 million. Moreover, as a percentage of revenues, operating expenses increased 980 bps year over year to 56.9%. The increase was primarily due to acquisitions as well as investments in sales, marketing and research related to product innovation.
The company posted adjusted operating loss of $5.9 million in the reported quarter as against adjusted operating income of $21.7 million in the year-ago quarter mainly due to higher cost of sales and increased operating expenses.
The company exited the quarter with cash and cash equivalents of $352.3 million compared with $423 million in the previous quarter. Inventories came in at approximately $137.4 million as against $131 million in the last quarter. The company does not have any long-term debt.
Guidance
For the third-quarter of 2015, the company expects revenues in the range of $175 million to $190 million, way below the Zacks Consensus Estimate of $216 million. Non-GAAP earnings per share are projected between 3 cents and 13 cents.
Conclusion
Stratasys reported better-than-expected second-quarter results. However, performance at its MakerBot business remained weak. Moreover, the company provided a tepid third quarter revenue guidance.
Stratasys’ soft guidance reflects unfavorable currency exchange rate and weak performance at its MakerBot business.
The company revealed that revenues from its MakerBot business have plunged 57% on a year-over-year basis in the second quarter mainly due to overall market weakness coupled with continuous weakness related with the restructuring of its business.
Additionally, some customers are delaying their purchases owing to the current economic conditions. In the 3D printer business, the majority of customers have gravitated toward the lower-priced uPrint, which may affect the company’s margins in the upcoming quarters.
Currently, Stratasys carries a Zacks Rank #4 (Sell).
However, some better-ranked stocks in the technology sector are Amazon.com Inc. AMZN, VASCO Data Security International Inc. VDSI and Cirrus Logic Inc. CRUS. Amazon sports a Zacks Rank #1 (Strong Buy), while Cirrus Logic and VASCO Data Security hold a Zacks Rank #2 (Buy).
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