Stratasys Inc.
(
SSYS
) reported third quarter 2012 earnings per share of 40 cents,
outpacing the Zacks Consensus Estimate of 19 cents.
Revenue
Stratasys recorded total revenue of $49.7 million in the third
quarter, up 24.5% from $40.0 million in the year-ago quarter.
During the quarter, the company shipped a total of 911 units,
which is a 52.0% increase from 600 units shipped during year-ago
period.
Third quarter sales were driven by the 21% sales increase of
Fortus 3D production system. Although the primary reply for
customers purchasing the company's Fortus systems was decent, but
a larger share of the demand growth was influenced by new Direct
Digital Manufacturing applications.
As far as the segments are concerned,
Products
revenue
came in at $41.3 million, up 27.0% from $32.5 million reported in
the year-ago quarter.
Services
revenue jumped 12.9% to $8.40 million from $7.44 million in the
year-ago quarter.
Operating Results
Gross profit stood at $28.0 million (56.2% of the total
revenue) in the quarter, up 29.8% from $21.5 million (53.9% of
the total revenue) in the year-ago quarter. The gross margin
improvement was due to efficient cost reduction measures.
Operating income in the quarter was $9.10 million versus $7.85
million in the third quarter of 2011. However, operating expense
increased 37.6% year over year, primarily due to higher R&D
and SG&A expenses. Operating margin of 18.3% dropped from
34.3% in the year-ago quarter. The company is offering
lower-margin products, which has resulted in the reduction of
margin.
The company reported net income of $5.18 million or 24 cents
per share in the third quarter compared with $5.86 million or 27
cents per share in the prior-year quarter. Non-GAAP net income
was $8.7 million or 40 cents per share in the reported
quarter.
Balance Sheet
The company exited the quarter with cash and cash equivalents
of $51.8 million, slightly up from $51.2 million in the previous
quarter. The company does not have any long-term debt.
Guidance
For fiscal 2012, the company expects revenue to be in the
range of $194 million to $199 million, versus previous guidance
of $193 million to $198 million, whereas the non-GAAP earnings
guidance is expected to be in the range of $1.37 to $1.40 per
share, versus previous guidance of $1.31 to $1.38 per share.
Whereas, the GAAP earnings guidance is expected to be in the
range of $0.77 to $0.88 per share, versus previous GAAP guidance
of $0.83 to $0.98 per share.
Conclusion
The third quarter results were encouraging with EPS
substantially exceeding the Zacks Consensus Estimate and revenues
improving on a year-over-year basis. This apart, the revenue
growth in the Fortus 3D production systems contributed to the
overall revenue.
Moreover the company is expected to benefit from the
discontinuity of 3D printers by
Hewlett-Packard Company
(
HPQ
), effective at the end of 2012. Stratasys does not expect the
contract termination to have a material impact on the business
fundamentals of the company. Again, the company is also
witnessing an upward trend in the direct digital marketing
demand.
On the other hand, the company is a bit apprehensive about the
company's high-cost business model and stiff competition from big
and small players like
3D Systems Corp.
(
DDD
). Nonetheless, the acquisition of Objet is expected to improve
the growth of 3D systems business.
The company has a Zacks #1 Rank, which implies a short-term
Strong Buy rating on the stock.
3D SYSTEMS CORP (DDD): Free Stock Analysis
Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
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STRATASYS INC (SSYS): Free Stock Analysis
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