3-D Printing On The Rise, A Look At Stratasys

| About: Stratasys, Inc. (SSYS)

It's hard to imagine how much 3D will impact manufacturing in the future. Companies in this space have very exciting prospects, and one of the largest of those is Stratasys Ltd. (NASDAQ:SSYS), the product of the merger between Stratasys Inc. and Objet Ltd.

Yesterday, March 4th, Stratasys released its Fourth Quarter and Fiscal 2012 proforma financial results. The highlights are as follows:

  • Revenue up 23% in the fourth quarter to $96.4 million.
  • Non-GAAP Net Income of $16.3 million in fourth quarter or $0.40 per share, a 40% increase over last year's fourth quarter.
  • Revenue for fiscal 2012 increased to $359 million from $277 million, resulting in a $0.58 per share net loss, an improvement from last year's $0.84 per share loss.
  • 29,816 systems shipped worldwide as of 12/31/12.
  • Backlog of $28.6 million at year-end.
  • Revenue guidance of $430-$445 million in 2013.

Looking at this data, there is no denying that there was a substantial increase in demand in 2012. And a 23% growth in fourth quarter revenue coupled with the $28.6 million backlog indicates this is a trend that has only just begun.

Non-GAAP numbers exclude $60.5 million in intangible asset amortization, $20.5 million in share-based compensation expense, and $8.8 million in merger-related costs. Of these, the $60.5 million is a non-cash item. Excluding this alone would have resulted in a loss of approximately $13 million.

Also important to note, Stratasys' total equity as of December 31, 2012 was $1.572 billion, of which $1.332 billion could be attributed to intangible items. While this is pretty common for tech companies in the beginning of their development, investors may want to wait for more tangible assets and profits to materialize.

Projects Started in 2012:

  • Launch of the Objet1000 - the world's most effective large-format 3D printer for industrial scale prototypes.
  • Launch of the Scholar - an accessible and highly affordable PolyJet 3D printer package for academia.
  • Introduction of black color ULTEM 9085 - a high-performance thermoplastic, for use in its FDM 3D printing process.
  • Introduction of new rigid black PolyJet material and 16 new rigid/rubber-like composites - bringing availability of PolyJet materials to more than 120.

Going Forward:

While demand is picking up, Stratasys will be facing stiff competition from other companies like Hewlett-Packard (NYSE:HPQ), Xerox (NYSE:XRX), Organovo Holdings (NYSEMKT:ONVO), Autodesk (NASDAQ:ADSK) and Exa Corporation (NASDAQ:EXA). These are all very large companies that could pressure Stratasys' revenue growth and possibly make it a takeover candidate for companies like HPQ, should they decide to increase their investment in this developing field through acquisition rather than building it from scratch internally. As of its current 10-K, HPQ had over $11 billion in cash compared to Stratasys' market cap of only $2.6 billion. With a report from the World Economic Forum recently declaring 3D printing one of the top 10 emerging technologies of 2013, it will be interesting to see how this company develops in the next few quarters. And who wins the most market share in this exciting new market.

As of now:

- Stock Price: $68.43, down from January highs of $90.00.

- Market Cap: $2.626 billion

- P/E: 79.58

- Dividend: $0.00

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.