Stratasys Ltd 6-K, filed May 16, 2023
Stratasys Ltd. (SSYS)
About this 6-K
Stratasys Ltd filed this 6-K on May 16, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2023
Commission File Number 001-35751
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(Translation of registrant’s name into English) |
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c/o Stratasys, Inc. 9600 West 76th Street Eden Prairie, Minnesota 55344 |
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(Address of principal executive office) |
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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
CONTENTS
On May 16, 2023, Stratasys Ltd., or Stratasys, released its financial results for the three months ended March 31, 2023.
Attached hereto as Exhibit 99.1 are the unaudited, condensed consolidated financial statements of Stratasys for the three months ended March 31, 2023 (including the notes thereto) (the “Q1 2023 Financial Statements”).
Attached hereto as Exhibit 99.2 is Stratasys’ review of its results of operations and financial condition for the three months ended March 31, 2023, including the following:
(i)
Operating and Financial Review and Prospects
(ii)
Quantitative and Qualitative Disclosures About Market Risk
(iii)
Legal Proceedings
(iv)
Risk Factors
Attached hereto as Exhibit 101 are the Q1 2023 Financial Statements, formatted in IXBRL (eXtensible Business Reporting Language), consisting of the following sub-exhibits:
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Exhibit Number |
Document Description |
| 99.1 | Unaudited, Condensed Consolidated Financial Statements of Stratasys Ltd. as of, and for the quarterended, March 31, 2023 |
| 99.2 | Review of StratasysLtd. Results of Operations and Financial Condition for the three monthsended March 31, 2023 |
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EX-101.INS |
IXBRL Taxonomy Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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EX-101.SCH |
IXBRL Taxonomy Extension Schema Document |
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EX-101.CAL |
IXBRL Taxonomy Calculation Linkbase Document |
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EX-101.DEF |
IXBRL Taxonomy Extension Definition Linkbase Document |
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EX-101.LAB |
IXBRL Taxonomy Label Linkbase Document |
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EX-101.PRE |
IXBRL Taxonomy Presentation Linkbase Document |
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EX-104 |
Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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STRATASYS LTD. | ||
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Dated: May 16, 2023 |
By: |
/s/ Eitan Zamir |
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Name: |
Eitan Zamir | |
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Title: |
Chief Financial Officer | |
Exhibit 99.1
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2023
(UNAUDITED)
INDEX TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(UNAUDITED)
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Item |
Page | |
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Consolidated Balance Sheets |
2 | |
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Consolidated Statements of Operations and Comprehensive Loss |
3 | |
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Consolidated Statements of Changes in Equity |
4-5 | |
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Consolidated Statements of Cash Flows |
6 | |
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Notes to Condensed Consolidated Interim Financial Statements |
7-18 |
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Balance Sheets | ||||||||
| (in thousands, except per share data) | ||||||||
| March 31, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term deposits | ||||||||
| Accounts receivable, net of allowance for credit losses of $ | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Goodwill | ||||||||
| Other intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Long-term investments | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Accrued compensation and related benefits | ||||||||
| Deferred revenues - short term | ||||||||
| Operating lease liabilities - short term | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Deferred revenues - long term | ||||||||
| Deferred income taxes - long term | ||||||||
| Operating lease liabilities - long term | ||||||||
| Contingent consideration - long term | ||||||||
| Other non-current liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Contingencies (see note 12) | ||||||||
| Equity | ||||||||
| Ordinary shares, NIS | $ | $ | ||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Operations and Comprehensive Loss | |||||||
| (in thousands, except per share data) | |||||||
| Three Months Ended March 31, | |||||||
| 2023 | 2022 | ||||||
| Revenues | |||||||
| Products | $ | $ | |||||
| Services | |||||||
| Cost of revenues | |||||||
| Products | |||||||
| Services | |||||||
| Gross profit | |||||||
| Operating expenses | |||||||
| Research and development, net | |||||||
| Selling, general and administrative | |||||||
| Operating loss | ( | ) | ( | ) | |||
| Financial income (expenses), net | ( | ) | |||||
| Loss before income taxes | ( | ) | ( | ) | |||
| Income tax benefit (expenses) | ( | ) | |||||
| Share in losses of associated companies | ( | ) | ( | ) | |||
| Net loss | $ | ( | ) | $ | ( | ) | |
| Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | |
| Weighted average ordinary shares outstanding - basic and diluted | |||||||
| Comprehensive loss | |||||||
| Net loss | ( | ) | ( | ) | |||
| Other comprehensive income (loss), net of tax: | |||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | |||
| Unrealized gains (losses) on derivatives designated as cash flow hedges | ( | ) | |||||
| Other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||
| (in thousands ) | ||||||||||||||||||||||||
| Three Months Ended March 31, 2023 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Ordinary Shares | Paid-In | Accumulated | Comprehensive | Total | ||||||||||||||||||||
| Number of shares | Par Value | Capital | deficit | Loss | Equity | |||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Comprehensive loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||
| (in thousands ) | ||||||||||||||||||||||||
| Three Months Ended March 31, 2022 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Ordinary Shares | Paid-In | Accumulated | Comprehensive | Total | ||||||||||||||||||||
| Number of shares | Par Value | Capital | deficit | Loss | Equity | |||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of shares in connection with stock-based compensation plans | ||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||
| Comprehensive income (loss) | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
| Consolidated Statements of Cash Flows | |||||||||
| (in thousands) | Three Months Ended March 31, | ||||||||
| 2023 | 2022 | ||||||||
| Cash flows from operating activities | |||||||||
| Net loss | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | |||||||||
| Stock-based compensation | |||||||||
| Foreign currency transaction loss | |||||||||
| Share in losses of associated companies | |||||||||
| Revaluation of investments | |||||||||
| Other non-cash items, net | ( | ) | |||||||
| Change in cash attributable to changes in operating assets and liabilities: | |||||||||
| Accounts receivable, net | ( | ) | |||||||
| Inventories | ( | ) | ( | ) | |||||
| Other current assets and prepaid expenses | |||||||||
| Other non-current assets | ( | ) | |||||||
| Accounts payable | ( | ) | |||||||
| Other current liabilities | ( | ) | |||||||
| Deferred revenues | |||||||||
| Deferred income taxes, net and uncertain tax positions | ( | ) | |||||||
| Other non-current liabilities | ( | ) | ( | ) | |||||
| Net cash used in operating activities | ( | ) | ( | ) | |||||
| Cash flows from investing activities | |||||||||
| Cash paid for acquisitions, net of cash acquired | ( | ) | - | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | |||||
| Investments in short-term bank deposits | ( | ) | ( | ) | |||||
| Proceeds from short-term bank deposits | |||||||||
| Purchase of intangible assets | ( | ) | ( | ) | |||||
| Other investing activities | ( | ) | ( | ) | |||||
| Investments in unconsolidated entities | ( | ) | ( | ) | |||||
| Net cash provided by investing activities | |||||||||
| Cash flows from financing activities | |||||||||
| Proceeds from exercise of stock options | |||||||||
| Other financing activities | |||||||||
| Net cash provided by financing activities | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||||
| Net change in cash, cash equivalents and restricted cash | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||
| Supplemental disclosures of cash flow information: | |||||||||
| Transfer of inventory to fixed assets | |||||||||
| Transfer of fixed assets to inventory | |||||||||
| Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: | |||||||||
| Cash and cash equivalents | |||||||||
| Restricted cash included in other current assets | |||||||||
| Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows | $ | $ | |||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Business Description and Basis of Presentation
The condensed consolidated interim financial information herein is unaudited; however, such information reflects all adjustments (consisting of normal, recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim period. The condensed consolidated interim financial statements include the accounts of Stratasys Ltd. and its subsidiaries. All intercompany accounts and transactions, including profits from intercompany sales not yet realized outside the Company, have been eliminated in consolidation.
Note 2. New Accounting Pronouncements
| U.S. $ in thousands | ||||
| Fair value, net | $ | |||
| Net assets deconsolidated | ( | ) | ||
| Transaction expenses | ( | ) | ||
| Gain on deconsolidation of subsidiary | $ |
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 4. Revenues
Disaggregation of Revenues
| Three months ended March 31, | |||||||
| 2023 | 2022 | ||||||
| (U.S. $ in thousands) | |||||||
| Americas | |||||||
| Systems | $ | $ | |||||
| Consumables | |||||||
| Service | |||||||
| Total Americas | |||||||
| EMEA | |||||||
| Systems | |||||||
| Consumables | |||||||
| Service | |||||||
| Total EMEA | |||||||
| Asia Pacific | |||||||
| Systems | |||||||
| Consumables | |||||||
| Service | |||||||
| Total Asia Pacific | |||||||
| Total Revenues | $ | $ | |||||
The following table presents the Company’s revenues disaggregated based on the timing of revenue recognition (at a specific point in time or over the course of time) for the three months ended March 31, 2023 and 2022:
| Three months ended March 31, | |||||||
| 2023 | 2022 | ||||||
| (U.S. $ in thousands) | |||||||
| Revenues recognized in point in time from: | |||||||
| Products | $ | $ | |||||
| Services | |||||||
| Total revenues recognized in point in time | |||||||
| Revenues recognized over time from: | |||||||
| Services | |||||||
| Total revenues recognized over time | |||||||
| Total Revenues | $ | $ | |||||
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Contract Assets and Contract Liabilities
| March 31, | December 31, | |||||||||
| 2023 | 2022 | |||||||||
| U.S. $ in thousands | ||||||||||
| Deferred revenue* | $ | $ | ||||||||
*
Revenue recognized in 2023 that was included in deferred revenue balance as of December 31, 2022 was $
Remaining Performance Obligations
Remaining Performance Obligations (“RPO“) represent contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of March 31, 2023, the total RPO amounted to $
Incremental Costs of Obtaining a Contract
Sales commissions earned mainly by the Company’s sales agents are considered incremental costs of obtaining a contract with a customer, as the Company expects the benefit of those commissions to be longer than one year. The majority of the sales commissions are not subject to capitalization, as the commission expense is recognized as the related revenue is recognized. Sales commissions for initial contracts related to the service type warranty are deferred and then amortized on a straight-line basis over the expected customer relationship period if the Company expects to recover those costs. Amortization expense is included in selling, general and administrative expenses in the consolidated statements of operations. As of March 31, 2023 and December 31, 2022, the deferred commissions amounted to $
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 5. Inventories
Inventories consisted of the following:
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| U.S. $ in thousands | ||||||||
| Finished goods | $ | $ | ||||||
| Work-in-process | ||||||||
| Raw materials | ||||||||
| $ | $ | |||||||
Note 6. Goodwill and Other Intangible Assets
Goodwill
Changes in the carrying amount of the Company’s goodwill during the three months ended March 31, 2023 were as follows:
| U.S. $ in thousands | ||||
| Goodwill as of January 1, 2023 | $ | |||
| Goodwill acquired | ||||
| Foreign currency translation adjustments | ||||
| Goodwill as of March 31, 2023 | $ |
Other Intangible Assets
Other intangible assets consisted of the following:
| March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
| Carrying Amount, | Net | Carrying Amount, | Net | |||||||||||||||||||||
| Net of | Accumulated | Book | Net of | Accumulated | Book | |||||||||||||||||||
| Impairment | Amortization | Value | Impairment | Amortization | Value | |||||||||||||||||||
| U.S. $ in thousands | ||||||||||||||||||||||||
| Developed technology | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Patents | ( | ) | ( | ) | ||||||||||||||||||||
| Trademarks and trade names | ( | ) | ( | ) | ||||||||||||||||||||
| Customer relationships | ( | ) | ( | ) | ||||||||||||||||||||
| Capitalized software development costs | ( | ) | ( | ) | ||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||
Amortization expenses relating to intangible assets for the three-month period ended March 31, 2023 and 2022 were approximately $
As of March 31, 2023, the estimated amortization expenses relating to intangible assets for each of the following future periods were as follows:
| Estimated | ||||
| amortization expenses | ||||
| (U.S. $ in thousands) | ||||
| Remaining 9 months of 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 and thereafter | ||||
| Total | $ |
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 7. Net Loss Per Share
The following table presents the numerator and denominator of the basic and diluted net loss per share computations for the three months ended March 31, 2023 and 2022:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| (In thousands, except per share amounts) | ||||||||
| Numerator: | ||||||||
| Net loss for basic and diluted loss per share | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Net loss per share | ||||||||
| $ | ( | ) | $ | ( | ) | |||
The computation of diluted net loss per share excluded share awards of
Note 8. Income Taxes
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 9. Fair Value Measurements
The following table summarizes the Company’s financial assets and liabilities that are carried at fair value on a recurring basis, in its consolidated balance sheets:
| March 31, 2023 | December 31, 2022 | ||||||||||||||
| Level 2 | Level 3 | Level 2 | Level 3 | ||||||||||||
| (U.S. $ in thousands) | |||||||||||||||
| Assets: | |||||||||||||||
| Foreign exchange forward contracts not designated as hedging instruments | $ | $ | |||||||||||||
| Foreign exchange forward contracts designated as hedging instruments | |||||||||||||||
| Liabilities: | |||||||||||||||
| Foreign exchange forward contracts not designated as hedging instruments | ( | ) | ( | ) | |||||||||||
| Foreign exchange forward contracts designated as hedging instruments | ( | ) | ( | ) | |||||||||||
| Convertible notes | - | ||||||||||||||
| Contingent consideration* | |||||||||||||||
| ( | ) | ( | ) | ||||||||||||
*
The Company’s foreign exchange forward contracts are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs, including interest rate curves and both forward and spot prices for currencies (Level 2 inputs).
Contingent consideration represents liabilities recorded at fair value in connection with acquisitions, and thus represents a Level 3 measurement within the fair value hierarchy (refer to Note 3).
Other financial instruments consist mainly of cash and cash equivalents, short-term deposits, current and non-current receivables, accounts payable and other current liabilities. The fair value of these financial instruments approximates their carrying values.
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 10. Derivative instruments and hedging activities
Since the Company conducts its operations globally, it is exposed to global market risks and to the risk that its earnings, cash flows and equity could be adversely impacted by fluctuations in foreign currency exchange rates. The Company enters into transactions involving foreign currency exchange derivative financial instruments. The Company manages its foreign currency exposures on a consolidated basis, which allows the Company to net exposures and take advantage of any natural hedging. The transactions are designed to manage the Company’s net exposure to foreign currency exchange rates and to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The Company does not enter into derivative transactions for trading purposes.
The Company is primarily exposed to foreign exchange risk with respect to recognized assets and liabilities and forecasted transactions denominated in New Israeli Shekels (“NIS”), Euro, British Pound, Korean Won, Chinese Yuan and the Japanese Yen. The gains and losses on the hedging instruments partially offset losses and gains on the hedged items. Financial markets and currency volatility may limit the Company’s ability to hedge these exposures. These contracts mature through December 2023.
The following table summarizes the consolidated balance sheets classification and fair values of the Company’s derivative instruments:
| Fair Value | Notional Amount | |||||||||||||||||
| March 31, | December 31, | March 31, | December 31, | |||||||||||||||
| Balance sheet location | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| U.S. $ in thousands | ||||||||||||||||||
| Assets derivatives -Foreign exchange contracts, not designated as hedging instruments | Other current assets | $ | $ | $ | $ | |||||||||||||
| Assets derivatives -Foreign exchange contracts, designated as cash flow hedge | Other current assets | |||||||||||||||||
| Liability derivatives -Foreign exchange contracts, not designated as hedging instruments | Accrued expenses and other current liabilities | ( | ) | ( | ) | |||||||||||||
| Liability derivatives -Foreign exchange contracts, designated as hedging instruments | Accrued expenses and other current liabilities | ( | ) | ( | ) | |||||||||||||
| $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||
Foreign exchange contracts not designated as hedging instruments
As of March 31, 2023, the notional amounts of the Company’s outstanding exchange forward contracts, not designated as hedging instruments, were $
Cash Flow Hedging - Hedges of forecasted foreign currency payroll and other operating expenses
As of March 31, 2023, the Company had in effect foreign exchange forward contracts, designated as cash flow hedges for accounting purposes, for the conversion of $
Cash Flow Hedging - Hedges of forecasted foreign currency revenue
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Note 11. Equity
a. Stock-based compensation plans
Stock-based compensation expenses for equity-classified stock options, restricted share units (“RSUs”) and performance-based restricted share units (”PSUs”) were allocated as follows:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| U.S $ in thousands | ||||||||
| Cost of revenues | $ | $ | ||||||
| Research and development, net | ||||||||
| Selling, general and administrative | ||||||||
| Total stock-based compensation expenses | $ | $ | ||||||
A summary of the Company’s stock option activity for the three months ended March 31, 2023 is as follows:
| Number of Options | Weighted Average Exercise Price | |||||||
| Options outstanding as of January 1, 2023 | $ | $ | ||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Options outstanding as of March 31, 2023 | ||||||||
| Options exercisable as of March 31, 2023 | $ | $ |
As of March 31, 2023, the unrecognized compensation cost of $
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
A summary of the Company’s RSUs and PSUs activity for the three months ended March 31, 2023 is as follows:
| Number of RSUs and PSUs | Weighted Average Grant Date Fair Value | |||||||
| Unvested as of January 1, 2023 | $ | $ | ||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Unvested as of March 31, 2023 | $ | $ |
The fair value of RSUs and PSUs is determined based on the quoted price of the Company’s ordinary shares on the date of the grant.
As of March 31, 2023, the unrecognized compensation cost of $
b. Accumulated other comprehensive loss
The following tables present the changes in the components of accumulated other comprehensive income (loss), net of taxes, for the three months ended March 31, 2023 and 2022, respectively:
| Three Months Ended March 31, 2023 | ||||||||||||||
| Net Unrealized Gain (Loss) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Total | ||||||||||||
| U.S. $ in thousands | ||||||||||||||
| Balance as of January 1, 2023 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ( | ) | ( | ) | ||||||||||
| Other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||
| Balance as of March 31, 2023 | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
STRATASYS LTD.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
| Three Months Ended March 31, 2022 | ||||||||||||||
| Net Unrealized Gain (Loss) on Cash Flow Hedges | Foreign Currency Translation Adjustments | Total | ||||||||||||
| U.S. $ in thousands | ||||||||||||||
| Balance as of January 1, 2022 | $ | $ | ( | ) | $ | ( | ) | |||||||
| Other comprehensive income (loss) before reclassifications | ( | ) | ( | ) | ||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ( | ) | ( | ) | ||||||||||
| Other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance as of March 31, 2022 | $ | $ | ( | ) | $ | ( | ) | |||||||
Note 12. Contingencies
OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes included as Exhibit 99.1 to the Report of Foreign Private Issuer on Form 6-K to which this Operating and Financial Review and Prospects is attached, or the Form 6-K. The discussion below contains forward-looking statements (within the meaning of the United States federal securities laws) that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties, including those identified in “Forward-Looking Statements and Factors that May Affect Future Results of Operations”, below, as well in the “Risk Factors” in Item 3.D of our Annual Report on Form 20-F for the year ended December 31, 2022, filed with the Securities and Exchange Commission, or SEC, on March 3, 2023, or our 2022 Annual Report, as updated by the “Risk Factors” section below.
Overview of Business and Trend Information
- further actions taken by central banks in Europe and the U.S. to increase interest rates as a means to slow down inflation, which may worsen credit/financing conditions for our customers who purchase our products; and
- potential contraction of economic activities and recessionary conditions that could arise as a result of interest rate increases and a decrease in consumer demand;
Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. In the opinion of our management, all adjustments considered necessary for a fair statement of the unaudited condensed consolidated financial statements have been included herein and are of a normal recurring nature. The following discussion compares the actual results, on a GAAP basis, for the three months ended March 31, 2023 with the corresponding period in 2022.
The following table sets forth certain statement of operations data for the periods indicated:
| Three Months Ended March 31, | |||||||||||||||
| 2023 | 2022 | ||||||||||||||
| U.S. $ in thousands | % of Revenues | U.S. $ in thousands | % of Revenues | ||||||||||||
| Revenues | $ | 149,377 | 100.0 | % | $ | 163,429 | 100.0 | % | |||||||
| Cost of revenues | 83,982 | 56.2 | % | 93,752 | 57.4 | % | |||||||||
| Gross profit | 65,395 | 43.8 | % | 69,677 | 42.6 | % | |||||||||
| Research and development, net | 21,475 | 14.4 | % | 23,998 | 14.7 | % | |||||||||
| Selling, general and administrative | 60,717 | 40.6 | % | 65,263 | 39.9 | % | |||||||||
| Operating loss | 16,797 | 11.2 | % | 19,584 | 12.0 | % | |||||||||
| Financial expenses (income), net | (773 | ) | (0.5 | )% | 1,362 | 0.8 | % | ||||||||
| Loss before income taxes | 16,024 | 10.7 | % | 20,946 | 12.8 | % | |||||||||
| Income tax benefit (expenses) | (3,775 | ) | 2.5 | % | 73 | 0.0 | % | ||||||||
| Share in losses of associated companies | 2,425 | 1.6 | % | 75 | 0.0 | % | |||||||||
| Net loss | 22,224 | 14.9 | % | 20,948 | 12.8 | % | |||||||||
Discussion of Results of Operations
Revenues
Our products and services revenues in the three months ended March 31, 2023 and 2022, as well as the percentage change reflected thereby, were as follows:
| Three Months Ended March 31, | |||||||||||||||
| 2023 | 2022 | % Change | |||||||||||||
| U.S. $ in thousands | |||||||||||||||
| Products | $ | 100,971 | $ | 113,073 | (10.7 | )% | |||||||||
| Services | 48,406 | 50,356 | (3.9 | )% | |||||||||||
| $ | 149,377 | $ | 163,429 | (8.6 | )% | ||||||||||
Products Revenues
Services Revenues
Services revenues (including SDM, maintenance contracts, time and materials and other services) decreased by $2.0 million for the three months ended March 31, 2023, or 3.9%, as compared to the three months ended March 31, 2022. Within services revenues, customer support revenue, which includes revenue generated mainly by maintenance contracts on our systems, increased by 4.9%.
Revenues by Region
Revenues and the percentage of revenues by region for the three months ended March 31, 2023 and 2022, as well as the percentage change in revenues in each such region reflected thereby, were as follows:
| Three Months Ended March 31, | ||||||||||||||||||||
| 2023 | 2022 | % Change | ||||||||||||||||||
| U.S.$ in thousands | % of Revenues | U.S.$ in thousands | % of Revenues | |||||||||||||||||
| Americas* | $ | 90,080 | 60.3 | % | $ | 98,567 | 60.3 | % | (8.6 | )% | ||||||||||
| EMEA | 37,880 | 25.4 | % | 40,055 | 24.5 | % | (5.4 | )% | ||||||||||||
| Asia Pacific | 21,417 | 14.3 | % | 24,807 | 15.2 | % | (13.7 | )% | ||||||||||||
| $ | 149,377 | 100.0 | % | $ | 163,429 | 100.0 | % | (8.6 | )% | |||||||||||
* Represent the United States, Canada and Latin America
Gross Profit
Gross profit from our products and services, as well as the percentage change reflected thereby, was as follows:
| Three Months Ended March 31, | ||||||||||||
| 2023 | 2022 | |||||||||||
| U.S. $ in thousands | Change in % | |||||||||||
| Gross profit attributable to: | ||||||||||||
| Products | $ | 49,858 | $ | 53,700 | (7.2 | )% | ||||||
| Services | 15,537 | 15,977 | (2.8 | )% | ||||||||
| $ | 65,395 | $ | 69,677 | (6.1 | )% | |||||||
Gross profit as a percentage of revenues from our products and services was as follows:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Gross profit as a percentage of revenues from: | ||||||||
| Products | 49.4 | % | 47.5 | % | ||||
| Services | 32.1 | % | 31.7 | % | ||||
| Total gross profit | 43.8 | % | 42.6 | % | ||||
Operating Expenses
The amount of each type of operating expense for the three months ended March 31, 2023 and 2022, as well as the percentage change reflected thereby, and total operating expenses as a percentage of our total revenues in each such quarter, were as follows:
| Three Months Ended March 31, | ||||||||||||
| 2023 | 2022 | % Change | ||||||||||
| U.S. $ in thousands | ||||||||||||
| Research and development, net | $ | 21,475 | $ | 23,998 | (10.5 | )% | ||||||
| Selling, general and administrative | 60,717 | 65,263 | (7.0 | )% | ||||||||
| $ | 82,192 | $ | 89,261 | (7.9 | )% | |||||||
| Percentage of revenues | 55.0 | % | 54.6 | % | ||||||||
Research and development expenses, net decreased by $2.5 million, or 10.5%, to $21.5 million for the three months ended March 31, 2023, compared to $24.0 million for the three months ended March 31, 2022. The amount of research and development expenses constituted 14.4% of our revenues for the three months ended March 31, 2023, as compared to 14.7% for the three months ended March 31, 2022. The absolute decrease in research and development expenses, was primarily attributable to the impact of MakerBot divestiture in amount of $1.8 million.
Operating Loss
Operating loss and operating loss as a percentage of our total revenues were as follows:
| Three Months Ended March 31, | |||||||||
| 2023 | 2022 | ||||||||
| U.S. $ in thousands | |||||||||
| Operating loss | $ | (16,797 | ) | $ | (19,584 | ) | |||
| Percentage of revenues | (11.2 | )% | (12.0 | )% | |||||
Financial Expenses (Income), net
Income Taxes
Income tax benefit (expenses) and income tax benefit (expenses) as a percentage of net loss before taxes, as well as the percentage change in each, year over year, reflected thereby, were as follows:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| U.S. $ in thousands | ||||||||
| Income tax benefit (expenses) | $ | (3,775 | ) | $ | 73 | |||
| As a percent of loss before income taxes | (23.6 | )% | 0.3 | % | ||||
Share in Losses of Associated Companies
Share in losses of associated companies reflects our proportionate share of the losses of unconsolidated entities accounted for by using the equity method of accounting. During the three months ended March 31, 2023, the loss from our proportionate share of the losses of our equity method investments was $2.4 million, compared to a loss of $0.1 million in the three months ended March 31, 2022.
Net Loss and Net Loss Per Share
Net loss and net loss per share were as follows:
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| U.S. $ in thousands | ||||||||
| Net loss | $ | (22,224 | ) | $ | (20,948 | ) | ||
| Percentage of revenues | (14.9 | )% | (12.8 | )% | ||||
| Basic and diluted net loss per share | $ | (0.33 | ) | $ | (0.32 | ) | ||
The following non-GAAP data, which excludes certain items as described below, are non-GAAP financial measures. Our management believes that these non-GAAP financial measures are useful information for investors and shareholders of our company in gauging our results of operations (i) on an ongoing basis after excluding mergers, acquisitions and restructuring-related charges or gains, legal provisions and (ii) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, including intangible assets amortization related to equity method investments, impairment of long-lived assets and goodwill, revaluation of our investments and the corresponding tax effect of those items.
Reconciliation of GAAP to Non-GAAP Results of Operations
The following tables present the GAAP measures, the corresponding non-GAAP amounts and the related non-GAAP adjustments for the applicable periods:
| Three Months Ended March 31, | ||||||||||||||||||||||||
| 2023 | Non-GAAP | 2023 | 2022 | Non-GAAP | 2022 | |||||||||||||||||||
| GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | |||||||||||||||||||
| U.S. dollars and shares in thousands (except per share amounts) | ||||||||||||||||||||||||
| Gross profit (1) | $ | 65,395 | $ | 5,299 | $ | 70,694 | $ | 69,677 | $ | 7,689 | $ | 77,366 | ||||||||||||
| Operating income (loss) (1,2) | (16,797 | ) | 18,315 | 1,518 | (19,584 | ) | 21,607 | 2,023 | ||||||||||||||||
| Net income (loss) (1,2,3) | (22,224 | ) | 23,306 | 1,082 | (20,948 | ) | 22,158 | 1,210 | ||||||||||||||||
| Net income (loss) per diluted share (4) | $ | (0.33 | ) | $ | 0.35 | $ | 0.02 | $ | (0.32 | ) | $ | 0.34 | $ | 0.02 | ||||||||||
| (1) | Acquired intangible assets amortization expense | 4,001 | 6,966 | |||||||||||||||||||||
| Non-cash stock-based compensation expense | 932 | 900 | ||||||||||||||||||||||
| Restructuring and other related costs | 366 | (177 | ) | |||||||||||||||||||||
| 5,299 | 7,689 | |||||||||||||||||||||||
| (2) | Acquired intangible assets amortization expense | 2,194 | 2,225 | |||||||||||||||||||||
| Non-cash stock-based compensation expense | 7,308 | 7,633 | ||||||||||||||||||||||
| Restructuring and other related costs | 1,798 | 555 | ||||||||||||||||||||||
| Revaluation of investments | 580 | 1,061 | ||||||||||||||||||||||
| Contingent consideration | 265 | 207 | ||||||||||||||||||||||
| Other expenses | 871 | 2,237 | ||||||||||||||||||||||
| 13,016 | 13,918 | |||||||||||||||||||||||
| 18,315 | 21,607 | |||||||||||||||||||||||
| (3) | Corresponding tax effect | 3,038 | 145 | |||||||||||||||||||||
| Equity method related amortization | 1,490 | - | ||||||||||||||||||||||
| Finance expenses | 463 | 406 | ||||||||||||||||||||||
| 4,991 | 551 | |||||||||||||||||||||||
| $ | 23,306 | $ | 22,158 | |||||||||||||||||||||
| (4) | Weighted average number of ordinary shares outstanding - Diluted | 67,583 | 68,080 | 65,721 | 67,060 | |||||||||||||||||||
Liquidity and Capital Resources
A summary of our statements of cash flows is as follows:
| Three Months Ended March 31, | |||||||
| 2023 | 2022 | ||||||
| U.S $ in thousands | |||||||
| Net loss | $ | (22,224 | ) | $ | (20,948 | ) | |
| Depreciation and amortization | 11,680 | 15,290 | |||||
| Stock-based compensation | 8,241 | 8,533 | |||||
| Foreign currency transactions loss | 531 | 2,792 | |||||
| Other non-cash items, net | 3,372 | 1,219 | |||||
| Change in working capital and other items | (19,526 | ) | (22,949 | ) | |||
| Net cash used in operating activities | (17,926 | ) | (16,063 | ) | |||
| Net cash provided by investing activities | 75,922 | 67,738 | |||||
| Net cash provided by financing activities | 855 | 1,021 | |||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (168 | ) | (2,228 | ) | |||
| Net change in cash, cash equivalents and restricted cash | 58,683 | 50,468 | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 150,686 | 243,293 | |||||
| Cash, cash equivalents and restricted cash, end of period | 209,369 | 293,761 | |||||
Our cash, cash equivalents and restricted cash balance increased to $ 209.4million as of March 31, 2023 from $150.7 million as of December 31, 2022. The increase in cash, cash equivalents and restricted cash in the three months ended March 31, 2023 was primarily due to $75.9 million of cash provided by investing activities, partially offset by $17.9 million of cash used in operating activities.
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
We generated $0.9 million of cash from financing activities during the three months ended March 31, 2023.
Capital resources and capital expenditures
Our total current assets amounted to $665.0 million as of March 31, 2023, of which $287.6 million consisted of cash, cash equivalents, short-term deposits and restricted cash. Total current liabilities amounted to $202.1 million. Most of our cash and cash equivalents and short-term deposits are held in banks in Israel, US and in the U.K.
The credit risk related to our accounts receivable is limited, due to the relatively large number of customers and their wide geographic distribution. In addition, we seek to reduce the credit exposure related to our accounts receivable by imposing credit limits, conducting ongoing credit evaluation, and by implementing account monitoring procedures, as well as credit insurance for many of our customers.
We believe that we will have adequate cash and cash equivalents to fund our ongoing operations and that these sources of liquidity will be sufficient to satisfy our capital expenditure and working capital needs for the next twelve months.
Critical Accounting Estimates
Forward-Looking Statements and Factors That May Affect Future Results of Operations
Certain information included in or incorporated by reference into the Report of Foreign Private Issuer on Form 6-K to which this Operating and Financial Review is appended, or the Form 6-K, may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. You can generally identify forward-looking statements as statements containing the words “may,” “will,” “could,” “should,” “expect,” “anticipate,” “intend,” “estimate,” “believe,” “project,” “plan,” “assume” or other similar expressions, or negatives of those expressions, although not all forward-looking statements contain these identifying words.
These forward-looking statements may include, but are not limited to, statements regarding our future strategy, future operations, projected financial position, proposed products, estimated future revenues, projected costs, future prospects, the future of our industry and results that might be obtained by pursuing management’s current plans and objectives.
You should not place undue reliance on our forward-looking statements because the matters they describe are subject to certain risks, uncertainties and assumptions that are difficult to predict. Our forward-looking statements are based on the information currently available to us and speak only as of the date of the Form 6-K. Over time, our actual results, performance or achievements may differ from those expressed or implied by our forward-looking statements, and such difference might be significant and materially adverse to our shareholders. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:
•
the extent of our success at introducing new or improved products and solutions that gain market share;
•
the extent of growth of the 3D printing market generally;
•
changes in our overall strategy, including as related to any restructuring activities and our capital expenditures;
•
the impact of shifts in prices or margins of the products that we sell or services we provide;
•
the impact of competition and new technologies;
•
impairments of goodwill or other intangible assets in respect of companies that we acquire;
•
the extent of our success at efficiently and successfully integrating the operations of various companies that we have acquired or may acquire;
- the degree of our success at locating and acquiring additional value-enhancing, inorganic technology that furthers our business plan to lead in the realm of polymers;
- the potential adverse impact that recent global interruptions and delays involving freight carriers and other third parties have been and may continue to have on our supply chain and distribution network, and, consequently, our ability to successfully sell both our existing and newly-launched 3D printing products;
- the potential adverse effects that inflation, and actions taken to reduce inflation, such as increased interest rates, are having or may have on the macro-economic environment, and the degree of our resilience (and that of our customers and suppliers) to those effects, which may have significant consequences for our operations, financial position and cash flows;
•
global market, political and economic conditions, and in the countries in which we operate in particular;
•
government regulations and approvals;
•
litigation and regulatory proceedings;
•
infringement of our intellectual property rights by others (including for replication and sale of consumables for use in our systems), or infringement of others’ intellectual property rights by us;
- potential cyber attacks against, or other breaches to, our information technologies systems;
• the extent of our success at maintaining our liquidity and financing our operations and capital needs;
•
impact of tax regulations on our results of operations and financial conditions;
•
those factors referred to in Item 3.D, “Key Information - Risk Factors”, Item 4, “Information on the Company”, and Item 5, “Operating and Financial Review and Prospects” in our 2022 Annual Report, as supplemented herein, as well as in other portions of the 2022 Annual Report Readers are urged to carefully review and consider the various disclosures made throughout the Form 6-K, our 2022 Annual Report, and in our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Reference is made to Item 11, “Quantitative and Qualitative Disclosures About Market Risk” in our 2022 Annual Report.
LEGAL PROCEEDINGS
We are subject to various litigation and other legal proceedings from time to time. For a discussion of our litigation status, see Note 12-“Contingencies” in the notes to our unaudited condensed consolidated interim financial statements attached as Exhibit 99.1 to the Form 6-K.
RISK FACTORS
Adverse macro-economic trends such as inflation and higher interest rates have been adversely affecting, and may continue to adversely affect, potentially in a more material manner (including due to measures taken to reduce their impact), our business, results of operations and financial condition.