Stratasys (SSYS) reported fourth-quarter 2024 non-GAAP earnings of 12 cents per share, which beat the Zacks Consensus Estimate by 9.09%. The company had posted non-GAAP earnings of 2 cents per share in the year-ago quarter.The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and matched once, delivering an average surprise of 52.27%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Quarterly revenues fell 3.8% year over year to $150.4 million. ...

Financial Support and Taxation - The company has received approximately $9 million in grants from the Israeli Innovation Authority for R&D activities since 2007, with an additional $1.9 million from European authorities[152]. - The average effective tax rate for profits from Israeli operations under government benefit programs is estimated to be between 7.5% and 15%, with the standard corporate tax rate set at 23% from 2018 onwards[150]. - The company is subject to royalty payments of 3% to 5% on revenues generated from products developed with IIA funding, which are linked to the U.S. dollar[155]. - Payment of dividends may be restricted under the Companies Law, requiring profits and surplus funds criteria to be met[171]. Capital and Investment Activities - The company is currently engaged in a PIPE transaction with Fortissimo Capital, which involves an investment of $120 million for 11,650,485 newly-issued ordinary shares at a price of $10.30 per share, reflecting a 10.6% premium over the market price[165]. - The company may need to raise additional capital, which could dilute existing shareholders if conducted at a lower price than their acquisition cost[165]. - Future capital requirements will depend on various factors, including the success of capturing additive manufacturing demand and costs associated with establishing sales and marketing capabilities[166]. - The company has approved a new share repurchase program in September 2024, allowing for the repurchase of up to $50 million of outstanding ordinary shares[168]. - The share repurchase program may reduce the public float of shares and cause volatility in the share price, with no assurance of a positive impact on share price or profitability[169]. Market Performance and Volatility - The market price of the company's ordinary shares has fluctuated between $6.16 and $54.37 from early 2020 to early 2025, indicating significant volatility[161]. - The market price of the company's ordinary shares has significantly declined, reaching all-time lows in 2024 before a slow recovery towards the end of the year[167]. Compliance and Regulatory Risks - The company may face increased liabilities if it fails to comply with the requirements of the Innovation Law, which could include penalties and mandatory repayment of grants[157]. - The company must comply with specific conditions to manufacture products and transfer technologies outside of Israel, which may increase its liabilities[152]. - The company is classified as a foreign private issuer, which allows for reduced disclosure requirements compared to domestic U.S. companies[173]. - If the company loses its foreign private issuer status, it will face increased compliance and reporting costs starting December 31, 2025[176]. - The company may be classified as a passive foreign investment company (PFIC), which could lead to adverse tax consequences for U.S. shareholders[177]. - The company does not believe it was a PFIC in 2024, but cannot assure that it will not become one in the future[178]. Dividend Policy - The company does not anticipate paying any cash dividends in the foreseeable future, meaning capital appreciation will be the sole source of return for shareholders[170].

Financial Data and Key Metrics Changes - In Q4 2024, consolidated revenue was $150.4 million, down 3.8% year-over-year. For the full year, consolidated revenue declined 8.8% to $572.5 million compared to $627.6 million in 2023 [31][33]. - Adjusted gross margin for Q4 was 49.6%, up from 48.8% in the same period last year. For the full year, non-GAAP gross margin improved by 100 basis points to 49.2% [35][36]. - GAAP net loss for Q4 was $41.9 million, or $0.59 per diluted share, compared to a net loss of $15 million, or $0.22 per diluted share, in the same period last year [39]. Business Line Data and Key Metrics Changes - Product revenue in Q4 fell by 4.8% to $105.1 million, with systems revenue down 1.5% to $46.7 million. Consumable revenue decreased by 7.3% to $58.4 million [31][32]. - For the full year, product revenue was $392 million, down from $433.7 million in 2023. Consumables revenue increased by 2.3% to $251.7 million [33][34]. Market Data and Key Metrics Changes - The company generated 36% of its revenues from manufacturing in 2024, up from 34% in 2023, indicating a shift towards end-part manufacturing [10]. - The dental market opportunity is projected to reach nearly $2.5 billion by 2028, with significant interest in the TrueDent resin [23][79]. Company Strategy and Development Direction - The company is focused on enhancing its leadership in additive manufacturing and is committed to right-sizing the business while maintaining R&D resources [9][51]. - The strategy includes a focus on high-value applications, particularly in manufacturing and the dental sector, with plans to expand its product offerings and customer base [10][80]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite current macroeconomic challenges, emphasizing the long-term value proposition of additive manufacturing [56][108]. - The outlook for 2025 anticipates revenue in the range of $570 million to $585 million, with expectations for sequential growth throughout the year [45]. Other Important Information - The company ended Q4 with $150.7 million in cash and equivalents, with no debt, providing a stable financial position to support growth initiatives [12][44]. - A $120 million investment from Fortissimo Capital is expected to close in Q2 2025, which will further strengthen the company's financial position [13][44]. Q&A Session Summary Question: Market conditions and revenue cadence for 2025 - Management acknowledged current downturns but highlighted strong customer engagement and a focus on reliability and effectiveness of equipment as key areas of customer interest [56][58]. Question: Gross margin guidance for 2025 - Management indicated that gross margins are expected to remain stable, with improvements anticipated as cost-saving measures take effect [62][64]. Question: Organic revenue growth and FX impacts - Management noted minimal impact from divestitures and hedging strategies in place to mitigate FX risks [75][76]. Question: Consumables revenue decline - Management described Q4 as an outlier and expressed confidence in a rebound in consumables revenue for 2025 [88]. Question: Acquisition targets and strategy - Management emphasized a clear strategy focused on shareholder value and indicated interest in opportunities that align with their long-term goals [97][102]. Question: Market verticals with confidence - Management identified dental, aerospace, and tooling as key verticals with growth potential, while remaining cautious about overall market conditions [112][113].

Company Performance - Stratasys reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and significantly up from $0.02 per share a year ago, representing an earnings surprise of 9.09% [1] - The company posted revenues of $150.36 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.70%, although this is a decline from year-ago revenues of $156.34 million [2] - Over the last four quarters, Stratasys has surpassed consensus EPS estimates three times and topped consensus revenue estimates only once [2] Stock Movement and Outlook - Stratasys shares have increased approximately 19.4% since the beginning of the year, contrasting with a decline of -1.8% in the S&P 500 [3] - The future performance of Stratasys stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $135.54 million, and for the current fiscal year, it is $0.35 on revenues of $573.11 million [7] Industry Context - The Commercial Printing industry, to which Stratasys belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Stratasys may also be influenced by the outlook for the industry as a whole, with empirical research showing that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

March 5, 2025 Make additive work for you Conference Call and Webcast Link Q4 and FY 2024 Results Speakers Dr. Yoav Zeif, CEO Eitan Zamir, CFO Yonah Lloyd, CCO & VP IR US Toll-Free Dial-In 1-877-407-0619 International Dial-In +1-412-902-1012 Live Webcast and Replay Make additive work for you Forward -Looking Statements Cautionary Statement Regarding Forward - Looking Statements The statements in this slide presentation regarding Stratasys' strategy, and the statements regarding its projected future financial ...

Industry Overview - 3D Printing, also known as additive manufacturing, has transformed from a sci-fi concept to a practical technology since its inception in the 1980s, allowing for the creation of three-dimensional objects from digital designs [1] - The technology offers advantages over traditional manufacturing, including cost-effectiveness, customization, precision, and sustainability [1] Market Adoption - Businesses are increasingly adopting 3D Printing for rapid prototyping and on-demand production, significantly reducing lead times and costs [2] - Major companies in the 3D Printing space include Xometry, Proto Labs Inc., and Stratasys, with tech giants like Microsoft and HP also entering the market [2] Advantages of 3D Printing - The use of lighter and more durable components, reduced material waste, and faster production cycles make 3D Printing a game-changer [3] - It enables localized production, cutting down supply chains and lowering transportation costs, which is particularly beneficial for industries with fluctuating demand [3] Industry Applications - 3D Printing is being adopted across various industries, including healthcare, aerospace, automotive, and consumer goods [4] - In aerospace, it is used for lightweight components, while in automotive, it aids in producing prototypes and customized parts [4] - The medical field is leveraging 3D Printing for personalized medical tools and prosthetics, with advancements in tissue and organ printing expected to revolutionize healthcare [4] Market Size and Growth - The global 3D Printing market was valued at $19.33 billion in 2024 and is projected to grow at a CAGR of 23.4% by 2032, with North America holding a 41.39% market share [5] Investment Opportunities - 3D Printing presents significant growth opportunities for investors, with companies like GE Aerospace, Carpenter Technology, and Proto Labs identified as high-potential stocks [6] Company Profiles - **GE Aerospace**: A leader in additive manufacturing, GE has made significant investments in 3D Printing, including a $54 million investment for additional machines and tooling in Alabama and $107 million for facilities in Cincinnati [10][11] - **Carpenter Technology**: Built its additive capabilities through acquisitions and opened an Emerging Technology Center in Alabama, focusing on producing specialty alloys for 3D Printing [12][13] - **Proto Labs**: Known for rapid prototyping, Proto Labs has over 250,000 parts printed monthly and generated approximately $84 million in revenues from its 3D Printing service in 2024 [17]

Group 1 - Stratasys' stock has rebounded significantly in recent months following the announcement of preliminary earnings for Q4 2024, despite the results being described as mediocre [1] - Revenue for Stratasys is stabilizing, and the company is now experiencing positive cash flows [1] Group 2 - Narweena, an asset manager led by Richard Durant, focuses on identifying market dislocations due to a poor understanding of long-term business prospects [2] - The firm aims to achieve excess risk-adjusted returns by targeting businesses with secular growth opportunities in markets with barriers to entry [2] - Narweena's investment strategy is driven by the belief that an aging population and low population growth will create new investment opportunities, contrasting with past trends [2] - The firm emphasizes that many industries may face stagnation or secular decline, which could paradoxically enhance business performance due to reduced competition [2] - There is a noted trend of economies being increasingly dominated by asset-light businesses, leading to a declining need for infrastructure investments [2] - A large pool of capital is pursuing a limited set of investment opportunities, resulting in rising asset prices and compressed risk premia over time [2]

Industry Overview - The 3D printing industry has been a disaster for shareholders, destroying billions in value [1] - Competition in the 3D printing industry is intense, with some businesses likely to go bankrupt [1] - Stratasys (NASDAQ: SSYS) remains a key player in the 3D printing market [1] Investment Focus - The investment focus is on growth companies with a bias towards the mid-cap segment [1] - Key sectors under study include biotechnologies, computer chips, cloud technology, energy, and commodities [1] - Special attention is given to risks surrounding business cases, with a top-down approach complementing bottom-up analysis [1] Analytical Approach - A systematic balance sheet analysis is performed to assess the financial health of growing businesses [1] - Stress tests are employed to challenge investment theses and evaluate the degree of safety in each model [1] - Long-term capital appreciation is preferred over short-term speculation [1] Analyst Background - The analyst holds a master's in communication and an MBA, with experience in journalism [1] - The analyst has been a contributor to Seeking Alpha since 2023, focusing on technology and geopolitically relevant companies [1]

Industry Overview - The Zacks Computer-Peripheral Equipment industry is facing challenges due to weakening IT spending caused by macroeconomic uncertainties, high inflation, and geopolitical risks [1] - Demand for remote working and online learning-related computer peripherals has declined in the post-pandemic era [1] - The industry comprises companies offering computer input, output, and storage devices, including keyboards, mice, LCD panels, smart glass, 3D printers, and transaction-based printer products [3] - The industry is highly competitive, with companies focusing on innovation to meet current demand trends and strengthen product portfolios [4] Key Trends Shaping the Industry - Shift in consumer preference from mobile gaming to professional gaming experiences, driven by advanced gaming devices and the popularity of e-sports leagues [5] - Growing demand for 3D printing solutions across industries like medical, aerospace, and automotive, driven by engineers, designers, and entrepreneurs [6] - Expansion into price-sensitive regions like Asia Pacific and the Middle East & Africa through low-cost quality products [7] - Delayed PC refresh cycle due to the pandemic-led work-from-home trend, negatively impacting demand for computer peripherals [9] - Elevated operating expenses from R&D and sales force expansion, likely to dent margins in the near term [10] Industry Performance and Valuation - The Zacks Computer-Peripheral Equipment industry has underperformed the S&P 500 and the broader Zacks Computer and Technology sector, plunging 30.4% in the trailing 12 months [14] - The industry is currently trading at a forward 12-month P/S of 0.68X, compared to the S&P 500's 5.46X and the Zacks Computer and Technology sector's 7.02X [15] - The industry carries a Zacks Industry Rank 157, placing it in the bottom 37% of over 250 Zacks industries, indicating dim near-term prospects [11][12] Companies to Watch Stratasys (SSYS) - Manufacturer of 3D printers and rapid prototyping systems for industries like automotive, aerospace, defense, and medical [16] - Benefiting from increased demand for 3D printed equipment, with cost-control initiatives and innovative product introductions driving growth [17][18] - Consensus earnings estimate for 2025 remains unchanged at 33 cents per share, with the stock depreciating 35.6% in the past year [19] Mercury Systems (MRCY) - Provider of sensor and safety-critical mission processing subsystems for aerospace, defense, and intelligence programs [20] - Benefiting from modernization in radar, electronic warfare, and C4I, with a revised upward earnings estimate of 31 cents per share for fiscal 2025 [21][22] - Stock has soared 36.2% in the past 12 months [22] Logitech (LOGI) - Global leader in PC peripherals and digital platforms, with products in PC navigation, gaming, and video security [22] - Experiencing recovery from the post-pandemic downturn, with three consecutive quarters of year-over-year sales growth [23] - Increasing hybrid work trends and partnerships with cloud providers like Zoom and Microsoft are key growth drivers [24] - Consensus earnings estimate for fiscal 2025 remains unchanged at $4.63 per share, with the stock declining 9.1% over the past year [25] TransAct Technologies (TACT) - Manufacturer of transaction-based printers and related products for vertical markets like gaming, financial services, and kiosks [26] - Benefiting from accelerated digital transformation and business automation, with trusted printers for transaction records [27] - Consensus earnings estimate for 2025 remains unchanged at a loss of 17 cents per share, with the stock plunging 41.7% over the past year [28]

Core Viewpoint - Stratasys (SSYS) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in determining near-term stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to buying pressure and a potential rise in stock price, reflecting positive sentiment about the company's earnings outlook [3][5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of 'buy' and 'sell' ratings, ensuring that only the top 5% of stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [9][10]. Earnings Estimate Revisions for Stratasys - For the fiscal year ending December 2024, Stratasys is expected to earn $0.04 per share, reflecting a -63.6% change from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Stratasys has increased by 29.6%, indicating a positive trend in earnings estimates [8].