Stratasys Ltd. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter filing; the supplied text does not provide clear Q4-only financial results. Financial statements are prepared under U.S. GAAP. Stratasys sells polymer 3D-printing systems, consumables, software and services, and additive-manufacturing parts.
Key financial results
| Metric | FY2022 | FY2021 | Change / context |
|---|---|---|---|
| Revenue | $651.5 million | $607.2 million | Up 7.3%; above 2019 pre-pandemic levels by 2.4% |
| Products revenue | $452.1 million | $417.6 million | Up 8.3%; systems revenue rose 12.6%, consumables 4.3% |
| Services revenue | $199.4 million | $189.7 million | Up 5.1% |
| Gross profit / margin | $276.5 million / 42.4% | $260.1 million / 42.8% | Gross profit up 6.3%; margin down 0.4 percentage points |
| Operating loss | $57.2 million | $79.2 million | Loss narrowed; operating margin improved from (13.0%) to (8.8%) |
| Net loss / diluted loss per share | $29.0 million / $0.44 | $62.0 million / $0.98 | Loss narrowed substantially |
| Non-GAAP net income / diluted EPS | $10.3 million / $0.15 | Non-GAAP net loss $4.3 million / $(0.07) | Company-defined non-GAAP measures; adjustments exclude specified items |
| Operating cash flow | $(75.4) million | $35.8 million | Turned negative, primarily due to working-capital use |
| Cash, equivalents and short-term deposits | $327.8 million | $502.2 million | Down $174.3 million; figures include restricted cash in the comparative cash-flow discussion |
| Total assets / total liabilities | $1,259.8 million / $300.4 million | $1,277.2 million / $321.2 million | Current assets $700.2 million; current liabilities $210.7 million |
| Debt | Management says it had no debt | — | Leases and contingent consideration remain liabilities; filing also refers to a Bank of America credit agreement |
Changes and notable items
- Revenue growth reflected higher systems sales, consumables usage and services, partly offset by MakerBot’s September 2022 divestiture and adverse currency effects.
- Operating expenses fell 1.7% to $333.6 million. Lower acquisition-related contingent-consideration expense was partly offset by higher employee costs and acquisition-related headcount.
- The MakerBot–Ultimaker transaction generated a $39.1 million gain on deconsolidation. Stratasys retained a 46.5% equity interest, recorded at $105.6 million initially; the investment stood at $100.2 million at year-end after equity-method losses.
- Working capital absorbed $105.3 million of cash, principally as inventory increased $87.3 million and receivables increased. Year-end inventory was $194.1 million, up from $129.1 million.
- Year-end cash and short-term deposits declined despite no debt, while long-term investments rose to $141.6 million, including the Ultimaker investment.
- Goodwill was $65.0 million; no impairment was recorded in 2022. The Stratasys-Core reporting unit’s estimated fair value exceeded carrying value by approximately 45%, based on management’s discounted cash-flow assumptions.
Outlook, commentary and risks
- Management expected 2023 revenue to grow sequentially, driven in part by anticipated later-year product introductions. The supplied filing text does not provide clear numerical 2023 revenue or earnings guidance.
- Management expects margins to improve as supply-chain and inflationary pressures ease, new technologies ramp and product mix improves; timing and realization are uncertain. Price increases were used to offset higher costs.
- Management said liquidity and the absence of debt position the company to manage macroeconomic uncertainty, while emphasizing cost controls, cash generation and continued investment in product development.
- Principal risks include inflation, higher interest rates and possible recession; customer financing and demand; supply-chain disruptions and sole-source PolyJet printhead supply from Ricoh; foreign-exchange exposure, particularly the shekel and euro; competition, product mix and consumables substitution; acquisition integration and contingent payments; cybersecurity, litigation and intellectual-property claims; and political, security, tax and regulatory risks in Israel.
- Contingent consideration liabilities for Origin and Xaar were $38.3 million at year-end; potential future payments could reach $61 million in aggregate. The company also had approximately $144.8 million of supplier purchase-order obligations due during 2023.
- The planned Covestro additive-manufacturing materials acquisition was expected to close in Q2 2023 for approximately $42.3 million, plus inventory adjustments and subject to a potential earnout of up to $36.4 million.
- On November 13, 2022, Stratasys released approximately $44.8 million of Israeli tax-exempt profits and paid approximately $2.9 million in reduced tax. About $160.6 million of such profits remained at year-end, with estimated tax of approximately $16.1 million if distributed.
Important facts for investors to verify
- Review the audited statements and cash-flow detail, especially the sharp shift to negative operating cash flow and the inventory build.
- Reconcile reported GAAP losses with management’s non-GAAP adjustments, including the MakerBot gain, stock-based compensation, amortization and contingent-consideration revaluations.
- Assess whether 2023 sequential growth and margin improvement depend on product launches, easing costs and customer demand assumptions that may not materialize.
- Track the Covestro acquisition’s completion, funding, earnout terms and expected contribution, and monitor Origin/Xaar contingent payments.
- Confirm the nature of the Bank of America credit agreement and any restrictions or obligations, given management’s statement that the company had no debt.
- Monitor foreign-exchange sensitivity, goodwill assumptions and the recoverability of deferred tax assets; the valuation allowance was $699.7 million at year-end.