3D Printing Financials: Stratasys Delivers Q3 Earnings, Focuses on Long-Term Growth – 3DPrint.com

Stratasys (Nasdaq: SSYS) posted earnings for the third quarter of 2024, showing a promising path ahead for the company. The company increased its profits and gross margins by cutting costs and focusing more on fast-growing industries like aerospace, automotive, defense, medical device, and dental. CEO Yoav Zeif shared that the new F3300 3D printer is doing well in the market, with major companies like Toyota and Nissan adopting the technology. While global economic challenges continue, trends like onshoring and focusing on U.S. manufacturing open up opportunities for Stratasys.

Stratasys F3300. Image courtesy of Stratasys.

Diving into the numbers, Stratasys reported that revenue declined to $140 million from $162.1 million in the same quarter last year, primarily due to reduced customer spending on capital equipment. Despite this drop, the company experienced its eighth consecutive quarter of year-over-year growth in consumables revenue, pointing to strong printer use even as hardware sales softened. This resilience was mainly driven by the increased use of fused deposition modeling (FDM) technology, claims Zeif.

Additionally, gross margin improved by 430 basis points to 44.8%. These improvements were due to a higher mix of consumables and better margins in Stratasys Direct, partly because the company streamlined its services by divesting some less profitable operations.

The company reported a net loss of $26.6 million, or 37 cents per share, an improvement from the net loss of $47.3 million, or 68 cents per share, in the same period last year. Notably, Stratasys returned to non-GAAP profitability with a net income of $400,000, or one cent per share, compared to $2.4 million, or four cents per share, in the third quarter of 2023.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) stood at $5.1 million, down from $9.8 million in the previous year, reflecting challenges in operational profitability due to decreased revenues. However, the company’s cash used in operating activities decreased to $4.5 million from $12.7 million in 2023, pointing to improved cash management and operational efficiency amid a difficult economic environment.

Despite some financial challenges, Stratasys remains focused on its long-term growth strategy. Zeif stated: “Our strategy for driving long-term shareholder value centers on targeted innovation across materials, knowledge, and workflow solutions in high-growth target industries that benefit from emerging megatrends. Those include addressing supply chain risks, onshoring, new mobility, customization, sustainability, and a nonstop drive for greater efficiency and lower cost across the manufacturing spectrum. Through disciplined ongoing investment in technology and material development, coupled with a focused approach to key end users, we are laying the foundation for Stratasys’ next leg of growth once the current downcycle inevitably subsides.”

AMS 2024 CEO Panel’s Yoav Zeif. Image courtesy of 3DPrint.com.

Building on this strategic vision, Stratasys appears well-positioned to capitalize on global shifts toward localized manufacturing and onshoring. During an earnings call with investors, Zeif said he was optimistic about the opportunities of these trends given the recent election results. He noted that the move toward localized production aligns perfectly with the company’s focus and is a “tailwind” for Stratasys.

“No doubt that the latest results support the megatrends,” Zeif said, referring to the push for onshoring and supply chain resilience. “Additive manufacturing has much to offer in this decoupling from China,” he added, pointing to the fact that current geopolitical developments are strengthening the need for localized manufacturing solutions.

While he didn’t share specific customer details, Zeif said he was confident that these shifts are creating new avenues for growth in industries like automotive, aerospace, and defense, where supply chain agility and customization are super important.

Last quarter, Stratasys rolled out a restructuring plan to make the business more profitable and resilient. With a focus on cutting costs and boosting customer adoption, the company has already reduced its workforce by 15% and is on track to save $40 million annually, starting in the first quarter of next year.

Zeif says this restructuring is progressing ahead of schedule, leading to better operating margins. By focusing on high-growth products, materials, and software, Stratasys aims to be ready for a surge in customer spending once economic conditions improve. The company expects this approach to drive greater profitability and cash flow by 2025.

Stratasys CEO Yoav Zeif at AMS 2024. Image courtesy of 3DPrint.com.

Looking ahead, Stratasys raised its outlook for full-year 2024 margins and profitability metrics while maintaining its revenue outlook. The company expects revenue between $570 million and $580 million. Non-GAAP gross margins are anticipated to be between 49% and 49.2%, with operating expenses ranging from $276 million to $278 million. The non-GAAP operating margins are expected to range between 0.6% and 1.3%.

What’s more, the net loss for the full year is projected to be between $105 million and $90 million, or $1.48 to $1.27 per share. This includes one-time extraordinary costs, such as expenses incurred to defend against hostile takeover bids, proxy contests, and fees for exploring potential mergers and acquisitions.

Meanwhile, on a non-GAAP basis, the net income is expected to be between $2.1 million and $5 million, or three to seven cents per share. Adjusted EBITDA is forecasted to be in the range of $25 million to $28 million, with capital expenditures between $15 million and $20 million.

Zeif told investors that the current macro environment dominates, and customers don’t have the urgency to invest in new technologies in this high-cost capital climate. That said, the executive also pointed out that 3D printing’s value continues to grow for customers, proven by steady utilization across industries. He concluded that long-term megatrends like supply chain resilience, onshoring, and manufacturing digitalization remain strong, regardless of macroeconomic variables fluctuating. Going into 2025, Zeif is confident in these trends and that Stratasys is using this time to strengthen its portfolio and position itself for a significant upside once market conditions improve.