Stratasys Ltd. SSYS reported second-quarter 2019 earnings of 16 cents per share, which missed the Zacks Consensus Estimate of 17 cents. However, the bottom line was higher than the year-ago figure of 15 cents.
Stratasys’ revenues of $163.2 million also missed the consensus estimate of $170 million and decreased 4% year over year. However, after adjusting for the sale of divested entities during 2019, total revenues decreased 2% for the quarter and fell 1% after adjusting for constant currency.
Revenue growth across systems, consumables, and services in the Americas was more than offset by significant economic weakness in Europe, which affected capital investments and spending in the automotive and industrial machinery markets in that region. Moreover, the adverse impact of foreign exchange rates in Europe and Asia Pacific was a major headwind.
Stratasys, Ltd. Price, Consensus and EPS Surprise
Stratasys, Ltd. price-consensus-eps-surprise-chart | Stratasys, Ltd. Quote
Quarter Details
Segment wise, Products revenues fell 6.8% from the year-ago quarter to $110.3 million. The figure was down 3% in constant currency, excluding divested entities.
Within Products revenues, System revenues decreased 10%. Taking divestitures into account, the figure declined 6%. Consumables revenues fell 4% year over year, and were down 1% excluding divestitures.
Revenues from Services increased 2% year over year to $52.8 million. The rise was primarily attributed to 2% growth in customer support.
Strong sales of production-focused 3D printers and materials were witnessed in North America aerospace segment. Early adoption of the recently launched Aircraft Interior Solution was also encouraging.
The company secured several large deals with top aerospace OEMs in the second quarter. This apart, increased demand for jigs, fixtures and tooling applications by Tier-1 and Tier-2 suppliers was a positive.
Margin
Stratasys’ non-GAAP gross profit decreased 4.3% from the year-ago quarter to $85.6 million. Non-GAAP gross margin was flat at 52.5% due to a mix in revenue sources.
Non-GAAP operating expenses decreased 3% year over year to $76.6 million, driven by a continued focus on administrative cost control and the impact of divestments.
Non-GAAP operating income totaled $9.1 million, down 14.2%. Operating margin contracted 60 basis points to 5.6%.
Balance Sheet and Cash Flow
The company exited the quarter with cash and cash equivalents of $366.3 million compared with $367.8 million at the end of the previous quarter.
As of Jun 30, 2019, there was no long-term debt.
Net cash used in operating activities in the quarter was $3.8 million.
Guidance
For full-year 2019, the company reiterated its guidance. Revenues are expected in the range of $670-$700 million.
Non-GAAP earnings per share for the full year are expected between 55 cents and 70 cents.
Non-GAAP operating margin is projected to be in the 5.5-6.5% band.
However, capital expenditures are now estimated to lie within $30-$45 million, down from the previous expectation of $45-$60 million.
Management is optimistic about its product lineup, which is expected to expand its addressable markets, resulting in accelerated growth from 2020.
Moreover, the company is expanding in manufacturing, rapid prototyping, and photo-realism design as well as in target verticals of aerospace, automotive, healthcare and dental.
Management expects continued demand for high-end PolyJet solutions from industries, including consumer-packaged goods and medical segments.
Additionally, management is optimistic about upcoming innovations in FDM and PolyJet portfolios.
Zacks Rank and Key Picks
Stratasys currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the broader technology sector are Rosetta Stone RST, Anixter International AXE and Alteryx AYX, each flaunting a Zacks Rank #1.
Long-term earnings growth rate for Rosetta Stone, Anixter and Alteryx is currently projected to be 12.5%, 8% and 13.7%, respectively.
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