SSYS - Earnings call transcript Q1 2024

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Operator

Greetings, and welcome to the Stratasys First Quarter 2024 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations. Thank you.

begin. may You

Yonah Lloyd

and our everyone, for us joining Good Xst thank quarter discuss XXXX financial to afternoon, you results.

like Eitan On release. the Yoav . I access CFO, Dr. online call, is press including the our are you the would to Zamir. slide today's call with our Zeif; web us and address today in to that remind available presentation, CEO, at our provided

including be access be In through to slide today's addition, a section also can replay presentation, Relations available Investor call, and website. accessed of the will our the of

that and Please our those to hear of future our and other regarding today our of forward-looking note our consist taxes as expectations future some financial outlook. will performance revenue, the information will for limitation, our expectations during gross you statements, margin, business without including, expenses, discussion operating

All results speak could or performance, are or events, materially forward-looking from statements expectations trends to results forecast. our differ Actual that future statements.

those materially could that factors cause risks the from annual the referenced to please discussed For in report to or risk XX-F in actual be forward-looking XXXX Form for refer Stratasys' statements, different set on results year. forth

operating refer for and XXXX, and to furnishing report for XX-F are to the and Exhibit review Please to -- in XXXX of of as on and respectively. XX.X we which the report first prospects quarter Item the included that Form on also for are Form X our annual financial SEC our tomorrow, XXXX X-K and

a on X-K release SEC furnishing is as the quarter today. are which first see report to attached the for Form press to XX.X of Please announces that we the earnings our also that Exhibit XXXX, separate

and and provide furnished Form quarterly material X-K developments SEC company. the our results regarding that updated year, Our throughout the our a to operating information reports concerning on we on current basis

information speak Stratasys no obligation their or as update statements dates. forward-looking of to which assumes any respective

to measures financial our non-GAAP evaluate GAAP quarters, metrics non-GAAP measures. combination slide with our in GAAP in are call GAAP release. financial will tables today's The should provided previous today's performance. be press include reconciliations in to Non-GAAP and and read As presentation our in

turn to the Zeif. Executive Chief Yoav? Yoav call now will I our Officer, over Dr.

Yoav Zeif

Good joining and you for Thank thank you, us. everyone, afternoon, Yonah.

first flat Our results across reflect backing even year-over-year business XXXX after the we for constrained spending industry, of quarter are the revenue of resulting solid model resilience seeing relatively in the out as capital divestitures. our

margins the demonstrating improved recurring of systems reflecting of consumables stream. and strong revenue Gross our reached the and a revenue existing high, record impact utilization this

displaying using costs. a managing promising as their indication level, are applications manufacturing increasing on reliance of at usage systems a high they also the customers while printing Our expand in XD

that the effectiveness our results the Our to results. approach of spending and consumables capital this continues prolonged quarter our market unique high-margin drives strong and produce demonstrate that strategy throughout downturn,

normalizes. quarter, we and the million and believe in discipline from cash and $X financial sector free help growth Specifically, generated our challenges over strongly current flow. spending We profit subside of that CapEx us in the cash differentiates increased macro positive as operations drive will and our

and differentiated healthy software meaningfully accretive to current and when capital And support a us printer driving long-term acquisitions. investments both solutions balance returns. maintain sheet to returns growth, provides to sustainable to levels, manage and the materials of continue positions organic optionality We environment that normal shareholder spending stability through technologies, accelerate industry-leading our growth our to offering us

of last give exciting at year. the me let you technology we our the recent on Now which end an FXXXX, offering, launched update

systems. throughput establishes FXXXX to of standard the shared, in printing XD FDM have standard speed a we new FDM the twice for up manufacturing industrial and As with

purchased new BAE sales across And sector technology the FXXXX Systems, market to on need. our buyer, first Toyota, defense production our building air continues resonate funnel The to growing. momentum. we and market contractor, product. to reduce that are securing costs time FDM in and deliver value drive perfectly with that is to their proposition our Europe's improvement After largest suited

world to the in forefront leader help end-use vertical faster purchased Company, Sikorsky, stay a way. production manufacturing cost-effective at FXXXX parts the to the aircraft flight them Lockheed of the more through for and in Martin a a of additive

And cases. where XD multiple Nissan, is FXXXX also of became customer for technology that a the automotive use competitor an OEM, has printing our replacing

surpassed the pipeline we look half FXXXX accelerating year. engagement first the this interest our details to is Our on have in of customer forward achieving and year, levels. strong. throughout and wins sharing more with Orders expectations and

printing of manufacturing which X.X of end a We new speed compromising HighDef SAF also quality. recently without the launch version and additional for applications use set users growing provides or capabilities with introduced our HXXX cases

Now I'd to of couple quarter a like to milestones end. highlight subsequent

and the we manage Kleiner, over Stratasys global years, for team. quality lead continuing while the has of First, promotion now announced new XX COO, he MIS customer our the company's Amir to with team, been Amir will success operations, and

will strengthen success between the the supply divisions. operations organization appointment This and the connection chain customer and

proudly printing leaders our our industry. second customers, people and employees, we quarter Sustainability benefits sustainability is the planet. with our DNA strategies in post as report. are the ESG clear core also of to Also our and we heart It's published end, ESG at to XD

health ethical and include inclusion, governance good safety, conduct. diversity and improved environmental employee achievements Our impact, and

the critical processes role and companies in certifications to are world. partner of we some our the we have as practices implemented cement largest component help manufacturing with leadership The

customers' an operations our are journey important chains their of optimize We to decarbonize and supply part production. and increasingly

mindful what to on a more additive pulp manufacturing in the our technology join to we invite sustainable leverage manner. We investors produce and to we customers call manufacturing, where us shift

partner results service CapEx and ahead customers' most trusted will meaningfully to believe current manufacturing reversed. Overall, additive are our cycle we down the driving improved we see when

the industry and term. end, that building partnerships, drive are for long on channels we to meaningful growth sales leadership innovation, technological in for best-in-class will continuing foundation To that our invest key our

results, an update to provide Before details the over regarding I turn our financial strategic ongoing me our to CFO it of review. let cover the

We to run our evaluate Board of continue considers a all and process maximize to value. comprehensive as Directors avenues

the we necessary. previously, disclose further we will communicated disclosure have that we such process appropriate determine development on As or is where

Over to Eitan. you,

Eitan Zamir

Thank Yoav, good you, everyone. and afternoon,

by We are in results year, quarter of the we to CapEx first spending. relative first improvements customer of in the last multiple experience quarter while the weakness continue of to encouraged effect macroeconomic the

Despite the And over cash in our flow. improved, margins in cash million $X to thanks sales. our and relatively million $X consumables record in level flat operating generated revenues, in over gross another we free part

to down For the first quarter, compared X.X% QX consolidated $XXX.X million was XXXX. of revenue

quarter revenue $XXX million to noncore the million first in our or Excluding compared were same was revenues divestitures, $XX.X X.X%, flat. the relatively last by year in divestitures. period excluding Product the down

quarter the in revenue, product was Within million system compared last to $XX.X year. $XX.X revenue million same

Excluding XX.X%. to thought Yoav, to yet And for of another record X.X% Consumable signals represents we declined level utilization compared revenue divestitures, million to the as, pointed $XX.X This be revenue strong. year. same Stratasys. last rates have that continue grew out, system period the

year, and including revenue, Direct up of same Service strong revenue compared indication to service $XX.X strong our levels our last and up same X.X% Stratasys Absent was revenue, service was compared Within X.X%. Bureau the million $XX.X customer was another to the use Service period support divestitures, revenue remains year. at period of system. million last in

gross the last to the Now gross quarter also XX.X% same to same turning XX.X% quarter the to year. for Non-GAAP grew last gross to in for XX.X% period XX.X% compared expanded period margin for margins. compared margin GAAP the to year.

Direct at mix improvement Stratasys efficiency. a consumables, by versus the prior greater driven period of higher was The and divestitures year due margins better operational in part to

with during the was strategic GAAP process. operating expenses million associated were to primarily same acquisitions in $XX.X extraordinary to review The and period $XX.X change our expenses year. last million compared recent related our expenses

were compared the costs. period were XX.X% for to compared last expenses million during due to operating same higher year last million the operating same and inclusion of $XX.X revenue for Non-GAAP period year. XX.X% merit of $XX.X quarter the Non-GAAP to Covestro the expenses

of quarter $XX.X earnings. our $XX.X was the the operating income non-GAAP a the $X.X of was OpEx, cost in period offset revenues somewhat -- increase a The the change and of in to for last period reflects loss overall compared for sold. same million, loss $X.X Non-GAAP $X.X Regarding million last improvement year. to by for the year. for goods million GAAP million same operating and million operating change compared consolidated in quarter loss

was period or per million. for compared $XX net diluted loss $X.XX net for $X.XX GAAP a the the million $XX.X per diluted quarter or last year. to share loss of share same

compared million $X.XX diluted or the net share $X.X diluted of non-GAAP the per $X.XX year. loss per million Non-GAAP net last to same period or share income was in quarter $X.X for

operations our last the $XX.X year. $X.X was the during the generated compared for cash compared quarter in million $X.X in first Adjusted same of period the cash million million use to from of last in quarter EBITDA $X year. We operations the of million to same quarter

expenditures, capital at million cash of million. to the of free million compared short-term $X $X.X we in quarter equivalents deposits the the end cash, million with We $XXX.X quarter After cash $XXX.X XXXX. ended of flow generated and for

and we Our capitalized well market and sheet and positioned identify to are capture enhancing balance remains strong opportunities. well value

challenging XXXX. Now expect purchases we the and cause continuing year, I most outlook likely our -- longer turn backdrop let to to this sales ongoing persist cycles. for me delayed to

guidance reiterating first our we and follows. quarter results, are current visibility our on our to Based end year markets, full as

sequential with half. between revenue expectation of quarterly notably second our the higher reiterating $XXX million growth, to $XXX are We in revenues million

the Given show first relative the year to sequentially we softness ongoing quarter the quarter and from revenue second in slight to quarter this expenditures, improvement capital of expect the declined XXXX. customer second

continue and gross of growth second of we the a from with to in in year-over-year improved XX% -- XXXX margin The the XX.X% to expect year be XXXX. perspective, range half full -- to

to margins next be We year. expect XX% our over

In XXXX, million $XXX $XXX we between expect to expenses to million. range our operating

expect GAAP and $X.XX loss non-GAAP We to per X.X% $X for between million year. share operating diluted $XX or anticipate to full million X.X% $X.XX $X.XX $XX or of -- per to non-GAAP a share $XX continue net diluted $X.XX We million year full for of the to to and to of margins million income the net XXXX.

be is to year. of the to for expected $XX to the expected expenditures $XX in for to million million million EBITDA are the range Capital adjusted range $XX -- million year. $XX We between

And positive year, expect flow continue to finally, operating the we activities. full cash for from

we over but to certain costs, operating back let for flow year. call second cash back that, The to turn operating reversal will positive quarter to closing With half a Yoav? the generate positive of see second Yoav in expect the due me to flow the quarter-specific cash not remarks.

Yoav Zeif

in you, of purchased our as consumables In results customers our Eitan. persistently environment. system a solid today previously utilize through quarter in form to flows challenging continue past sales summary, of delivered Thank our periods another The the we strength in systems. heavily

more turns. performance, offerings to coming years. making higher We expect innovation drive to be in that means needs with advanced those will greater that we systems when manufacturing those are the capabilities be cycle replaced and we The ready investments the additive in meet will

We is focus on for across focused the relative our laser use differentiated to are a us value. our cases. enhance and with That, relentless to outperformance on customers solutions coupled of wide array to commitment shareholder drive products delivering stage and execution, setting

open With it up Operator? that, questions. let's for

Operator

[Operator Instructions].

with Our Fitzgerald. first Cantor question comes from Troy Jensen

Troy Jensen

results I of cash in X are mean good us the Maybe could quarter kind the you seasonality? questions. flows. I of on couple off Congrats Eitan. months first guys talk positive now. for the to through guess, you A X here about

from going seasonality expect to we then normal FXXXX you in And here the on QX? this would revenues quarter? are of top see incremental So that,

Eitan Zamir

for Troy, question. you, Thank the

a So increase expect QX. compared to we slight

that the QX. regard, of normal better being QX than in seasonality is, there So

the respect the the with And short macroeconomic question? still headwinds what However, the some again situation to was FXXXX creating in term. is

Troy Jensen

revenues to think FXXXX . I'm QX? initial it's are that? going to kind incremental seasonality? be to of is then in business, I it base Is seasonal be trying And going to that guess

Eitan Zamir

-- we but revenue Yes, of significant expect the QX, in half more second year. be have there in is to going much to the

Troy Jensen

Okay. Perfect.

wrong couple for just service of I to deferred to get that's been Eitan, multiyear So X row Yoav. they've question. third on long-term contracts, a just do routes deferred Eitan, for touch but the quarters here I'm guessing follow-up why in down I'd you want now. a long-term a revenues, But, more turning love direction? can a I've got

Eitan Zamir

There trend. sometimes specific mix contract. of is number of of a It's no years the

trends. specific no or is there So reason

Troy Jensen

fine. All Okay. All That's right. right.

review chatter X out for reported you, was normal, of right? and expecting weeks there I this kind guys Yoav, a of executives We're Now you to believe than and just strategic lot had guys later in quarter more is the You Barcelona. update. consolidation interesting, hear lot a about about of personally

briefly about it the guys your any of do about So more when touched of kind talk plan strategic to but something is remarks in know here you -- kind on I really you you remarks, there color prepared review? can on

Yoav Zeif

of the Well, on some resources that and part important it's later world, really are scheduling nothing quarter, operations. nothing the our but logistics impacts that issue, the really touched to

details. of As it strategic making for when culminate. the sharing course, from we precluded can engaging, we review we is What strategic that the review, I progress. And any say will we are on are update will are

Troy Jensen

Understood. right. guys. All luck Good

Operator

Greg Our next question Palm comes Craig-Hallum. from with

Danny Eggerichs

This there give you're is elongate of of seeing continue or in time the months Danny be Any we kind great. you just John macro change but Maybe us about remains same? can -- think the overall to kind how stay kind for any today. cycles maybe ago, sales of would visibility, the we color Eggerichs obviously, any as last few challenging, talked kind Greg a of

Yoav Zeif

question. asking. you Great for Thank

the So was I quarter, stabilizing. last lower, real stabilizing. derivative improvement a sales said like an less sales there last is saw There situation cycles quarter, are we we in are cycle, more of so improvement, getting in the -- the same second kind not but or as

are the market. yet new breakthrough, our an FXXXX, with -- It's the if now engagement there. it I the led base led new see don't clear. by the NPI, of the where customers, it's is our the on the most by We there appetite in product but engagements

But holding the models, go But a hand, it there. and large the new they we customers, so constraint. at all there high their can have on end, drones end, new is CapEx, far is are you on have the the CapEx the because other are and you focusing demand

way, We last market decline. Year-over-year, the did in are And time the we years. we our we are where market. using increased also challenging by this we not in a are flat stable, X share very

to to fulfill and ready we there that make stable is we someone we it. more waiting just then are that more demand using that we sure and time are gain So this to are share and market address, will out addressed

engine for the have this. growth we in And place

So no micro on this ready are working will be leading X there. keep pressure that factors macro to make doubt but we that there industry. a our out sure still the we is to on

Danny Eggerichs

quarter? did pretty or And touching Obviously, . I Okay. quarter did Makes sounds guess, strong. good again, really kind contribution consumables. utilization what in sense. maybe just the on printer how remains like -- of business should the continues make Covestro to we expect that? as sequentially move about grow And guess, think that that the business I year? to we that, in throughout How should we

Eitan Zamir

Thank question. for you the

in million discussed that something organic we past, Covestro our Covestro the both for of as better utilization Covestro creates are future. growth million and Covestro, printers levels -- so of was the growth So confidence $X the to a $X quarter. and is which lot a

Yoav Zeif

new to we here, opens add Maybe because accelerate us consumables I can is believe focused Consumable the for applications. it of I up allow manufacturing will additive if may. because us adoption that

Covestro. growth performance consumable our in proud utilization. year-over-year We very with higher are we observed So and without

sure the And together utilization We our in high increased step, -- in by that we time. practically will is selling keeping increasing of for of consumable this be revenue and the our a of consumables there trend the this long Stratasys. total and more of of even this record And by board. step all base across manufacturing have the strength installed make even out tough a step time. SBM, And will share

Operator

Blair. question Our Drab from next with comes Brian William

Brian Drab

attention, a to what's step-up. because catching just just -- little sequentially can and you quarter the about more it's about bit is first more the a wanted I is And significant really talk to driving And talk that? little quarter I'm fourth bit step-up from the consumables a my

consumables saw that is tougher that that you significant quarter. to environment FXXXX is momentum continue going surprised you a fourth in of up that here to very this also saw kind in potentially the consumables? step you that which million quarter the from Are first And usage, with the in

Eitan Zamir

Brian. you, Thank

question. your first with maybe first So

onwards, up you X million think when million trend in X $XX.X the I'm million after quarters, and So to the and the this as look of $XX.X to for QX, to QX you acquisition mentioned, from you your trend Covestro. XXXX $XX.X $XX about million on quarter. we're to point, about talking the When or then last

That's confidence. that Yoav's and to from utilization the higher creates demonstrate earlier point

So to every our where between we sometimes, to levels But have million. $XX quarter $XX ability in on confidence achieve in million, this also deals. range $XX it million above land specific depends maybe

can move somewhere We the it trend. helps. achieve we than question, the is to trend do can range. So specifics million see higher $XX believe Hopefully, But within XXXX positive your during we quarter. this the sometimes, a

Brian Drab

my on is usage then as attach Okay. rate other to relative helpful. And Yes, FXXXX, the consumables guess or what the usage that's I follow-up, machines?

Yoav Zeif

help was and large Maybe FXXXX targeting I here. manufacturing designed can pulp. with

talking and consuming those about we high-performance utilization. are because So we talking what of high are are in very machines materials parts those and material those unique is is that machines for high large running are about type high-performance

XX% machines like are much XX%, this be than we same can XX% that that and utilization, XX% have our machines which higher the FXXX.We have prototyping running around range. It's that is any

So our is optimistic I'm materials. coming it's with very because manufacturing, for designed and high-end this

Operator

Capital Jacob our Markets. And Lake Stephan comes question with from next Street

Jacob Stephan

that could year. would the to the FXXXX? is the business? clarity orders of mean clarity just you maybe a surpassed there half on color that comment, provide earlier base Any is the just results. some so on first you the Or have the Yoav, you helpful. I made little I the in that Congrats be expectations kind get prepared far on wanted remarks, of just mentioned in

Yoav Zeif

Jacob, the opportunity I to an It's clarify. thank to FXXXX. you. related

plan launching with have the on are we we a like are a plan product, FXXXX. and course, it time new that Of and exceeding every we

is ramp HX. but starting is will HX, at a ramp-up, culminate course, Of and at there up the

. And meant. this terms other and in effect Toyota, have we will use have of orders are if for. I because and for quality that they BAE, also also have Because it is of we the creates parts, Sikorsky, end Nissan, use it use have terms flying can surpassing something wheel this definitely for we we what that's are that looking end parts. of we in customers the use So purchase we

Jacob Stephan

seeing maybe blue-chip these And that -- mid-market sheet balance seeing do kind you with are don't these traction of do. guess, Understood. so companies some could the nice that the but of about that FXXXX, large of maybe -- customers have the you I those then Yes. you're what mean, customers, have talk some I you kind of opportunity there? What

Yoav Zeif

are pure traction throughput application, in in doubled the seeing the mid-market machine the can half We cost. that the and also manufacturing this run and the mindset FDM application, almost because almost run double can and has speed

So large part in a market. . high the end, it's FDM disruption

Operator

Instructions] [Operator .

Our next Alek Valero question comes Loop Markets. with Capital from

Alek Valero

first My on seen you Alex kinds so, Congrats in It's results. focusing they customers? notable on the tone conversational are Ananda. is have on? changes question things what for with guys the if any of And

Yoav Zeif

great I'm question. high-level, a I have level that proud very talking of is that well we XX,XXX much the And engagement team feet. more we are specific. not would That's anymore that as say with my

to work about our talking What is together are the their requirements? application? what requirements? customers How are We we meet those with

way happening those within this also blue only mindset to change And the in get Stratasys. think That's chip customers. the only is way. I This

we engagement than about ago X X and joined real requirements. Stratasys level years are different So I ago it's because talking of years a when

We about right meet? We institutions? working to with the standards? what of What are do are we type talking need

additive And the very that to do you is manufacturing. when customers benefit clear. understand the And of benefit start

each different it's application. course, Of from

it's there. For completely each application it's but different,

to trying not molding are compete the we on injection And part.

compete so are this to specific have where lightweight, we personalization, so on and journey. customers geometries the on We on are on with us forth. on And absolute advantage and trying

Alek Valero

Very helpful.

of some we focusing a what be the quick more industry are things notable As -- second follow-up, all company XXXX? what wise on that the half are in and should

Yoav Zeif

you. that's great question. Thank a No,

how real should on value. I additive think focus we can manufacturing industry the deliver

a the talk customer software, matter of materials It's related promise, the And digital to TCO, applications. we about applications with successful the about ownership value specific specific park. can other good we along of our of talking this a what how deliver the cost the material reliability help and how is the we of and combination it's machine; to software that's the of be the are exactly total the can and and doing. So thread

because a in industry the are way chasm, will we is of to of And we And It's to have the that's we matter them. condition, macro and the that are but time. to there. deliver kind the industry crossing be each moment that advantages analyze going judge or I a depressed the The today, know absolute of player. only one because transition the of

Do the the has you strategy deliver have fundamental. the the think And fundamentals to value? I

lot are stability, stability. the We to very leading It's a customers, the important with by way. of financial

someone with partner discipline with additive with in that a the the come the go-to-market, material many a see that about about not with portfolio, with there, focus, for understand and journey You years is the be with to the software, promising a to there delivering. can them the with should right portfolio, service, take the fundamentals that

Alek Valero

helpful. Very

Operator

Our next Needham from & Company. question with Ricchiuti Jim comes

Chris Grenga

for Or that existing there systems shipped XD quarter, you is there? the existing fleets? were replacing attention customers Or would to systems expanding With breakout to Grenga printing? This are are in are Chris call respect any new to the on Jim. that is they

Yoav Zeif

another say, thank such kind machines that by -- large XX,XXX installed of, is Chris, the thing out almost combination us, a way, help a combination. we It's the I I would for but a there. wouldn't And this tailwind, have a you, of say base question. It's

sell even another tough prove they have the customers that machine don't We need time times, in read So ourselves. Stratasys to us. trust to can because always tough -- in those even customers, loyal we we

are are combination. But new crossing chasm maintain it's manufacturing, question, base. happiness logos. it's to Back installed a lot combination. giving we to of time, we of we your And our and a attention hunting a the But are But into at for the same the

Chris Grenga

then change change with assume is And Or that the it just to respect the respect incremental observed to embedded far? outlook, it. you've with is in no customer CapEx that outlook? does patterns so Got there any

Eitan Zamir

the half Chris, second the is year. of see we the and based see the what quarter that the and for outlook currently now on we outlook second

Operator

Thank I'll the ladies to at time. floor hand Yoav questions this further you. you. And back Zeif closing are no and there remarks. for Thank gentlemen,

Yoav Zeif

Thank you for joining us.

forward again updating next to quarter. Looking you

Operator

concludes day. This parties disconnect. conference. you. good Thank today's All may a Have

Stratasys (SSYS) 29 May 242024 Q1 Earnings call transcript