Stratasys announced their fourth quarter and 2012 fiscal year end results this morning. While the company has been spending time and energy (too much says CEO David Reis) on the merger with Objet, they still managed to report outstanding numbers. Their revenue of $359 million for fiscal 2012 increased 30% over the $277 million reported for same period last year, and guided revenue for fiscal 2013 to $430 million to $445 million. You can see all the numbers below my comments, in their press release.

I just finished listening to the all-important conference call that follows the release. I missed the presentation part of the call and got on right when the questions from analysts began; this the most important part of the call as the presentation is where mostly just repeat what is in the earnings report (and show nice slides). The new CEO, David Reiss, speaking from the “Objet” offices in Rehovot, Israel, handled all of the questions. The call went well, which is to say that there were no negative surprises, no gotchas on its forecast.

Here are a few points I picked up as I was listening, and I apologize if I didn’t get something exactly right. I have not been able to replay it and just wrote as I heard it.

• The merger has taken a lot of energy from everyone at both Stratasys and Objet, and took longer than expected, by approximately a quarter.
• The delayed merger created a shift back by a quarter in reseller channel training to get them up to speed on the new, combined product lines. They are busy this year training the resellers, and will train them in order of their sales production potential.
• They see their growth in three areas: 1) There will be much focus placed on the higher end production models, delivering machines that the manufacturers require. 2) They will also introduce less-expensive, easy-to-use, office-friendly printers–he didn’t say home models, but office-friendly. 3) And, an area that they mentioned at least twice in the call is expansion in verticals where they are “only in the early stages” — this is where applications require special solutions in either hardware or materials (i.e. dental). They seem to see a lot of growth here in verticals.
• Operating expenses will increase as they invest heavily in R&D. (Low R&D spending is something that some have criticized for the 3D printing industry as a whole recently, so this is a good thing, long term).
• Revenue growth was stronger in the second half of 2012 than in the first half.
• As for acquisition strategies, they will need to consider and balance making it on their own against buying technologies that help achieve their goals. (As opposed to 3D Systems (DDD), which grows very heavily through acquisitions — which as I’ve written recently, caused me to overweight my SSYS stock versus DDD because it’s hard to really read growth when it’s not mostly organic).

It’s about 7:15 a.m. PST as I wrap up this post, and the stock is up about 7%, as high as 11% earlier. This is opposed to a bigger percentage drop by DDD after their recent earning announcement. Big difference in investor reaction to the two company’s announcements.

The investor conference call will be available on the Stratasys website under the “Investors” tab; or directly at the following web address: http://www.media-server.com/m/p/aix9b7e6.

Here is the official press release, less financial reports like the balance sheet and profit and loss statement, which you can easily find at the link:

Stratasys Reports Strong Fourth Quarter and Fiscal 2012 Financial Results

MINNEAPOLIS & REHOVOT, Israel–(BUSINESS WIRE)– Stratasys Ltd. (NASDAQ: SSYS) today announced financial results for the fourth quarter and fiscal year 2012, the first quarter of combined results for Stratasys, Inc. and Objet Ltd. following the December 1, 2012 completion of their merger. Quarterly revenue increased 40% year over year and 30% quarter over quarter. Both GAAP and non-GAAP gross margins improved.

Financial Results Summary (Pro Forma Combined Basis):

• Revenue of $96.4 million for the fourth quarter of 2012 represents a 23% increase over the $78.3 million recorded for the same period last year.
• Non-GAAP Net Income of $16.3 million for the fourth quarter, or $0.40 per share, represents a 40% increase over the $11.7 million, or $0.30 per share, reported for the same period last year.
• GAAP Net Income for the fourth quarter was a loss of $3.5 million, or ($0.09) per share, versus a loss of $6.3 million, or ($0.17) per share, for the same period last year.
• Revenue of $359.0 million for fiscal 2012 represents a 30% increase over the $277.0 million reported for same period last year.
• Non-GAAP Net Income of $59.6 million for fiscal 2012, or $1.49 per share, represents a 60% increase over the $37.2 million, or $0.94 per share, recorded for the same period last year.
• GAAP Net Income for fiscal 2012 was a loss of $21.6 million, or ($0.58) per share, versus a loss of $30.9 million, or ($0.84) per share, for the same period last year.
• Non-GAAP Gross Margins improved to 58.0% from 56.5% in fiscal 2012, and improved to 57.8% from 56.9% in the fourth quarter over prior year periods.
• GAAP Gross Margins improved to 45.7% from 40.8% in fiscal 2012, and improved to 46.1% from 42.9% in the fourth quarter over prior year periods.
• The Company has shipped 29,816 systems worldwide as of December 31, 2012.
• Fiscal 2012 year-end system backlog totaled $28.6 million.

“Our financial results reflect the strong demand for our products driven by the rapidly growing interest in additive manufacturing worldwide, as more companies are recognizing how our technology can reshape the way their products are designed and manufactured,” said David Reis, chief executive officer of Stratasys. “Our results and strong year-end backlog are made more impressive when you consider the significant amount of resources committed during the period to complete our game-changing merger, which included the initiation of an integration plan for our worldwide sales, marketing and service organization and their related support infrastructure. We are very pleased with our first financial results as a combined company.”

Following completion of the merger between Stratasys, Inc. and Objet Ltd., the Company benefits from a global network of more than 260 resellers and independent sales agents that sell Stratasys products and services worldwide. In this connection, the Company has initiated a comprehensive integration plan, which includes a cross-training program to enable its reseller and sales agent network to market and sell the combined product and service portfolio. The Company expects to conclude the cross-training process within 18 months, yielding a more capable reseller network.

The Company spent a net amount of $33.3 million, or 9.3% of its 2012 revenue, on research and development on a pro forma non-GAAP basis and $36.9 million, or 10.3% on a pro forma GAAP basis. The Company’s ongoing combined R&D investments yielded a number of product introductions in the fourth quarter, including:

• 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.
In 2013, the Company will continue significant investment in its R&D efforts, focusing on further developing its proprietary technologies, enhancing its AM systems, and developing new systems and materials in order to broaden its product offerings.

“Stratasys has significantly expanded its sales reach, and now maintains a combined sales and marketing infrastructure that is unmatched within the industry,” said Scott Crump, chairman and chief innovation officer of Stratasys. “We have initiated the process of cross-selling our portfolio of complementary additive manufacturing solutions through our channel worldwide. In addition, we are focused on improving our existing platforms and developing new products that meet the needs of our customers. We expect these channel and product initiatives will provide more opportunities to sell our products going forward.”

Financial Guidance

Stratasys provided the following financial guidance for the fiscal year ending December 31, 2013:

• Revenue guidance of $430 million to $445 million.
• Non-GAAP earnings guidance of $1.80 to $1.95 per share.
• GAAP earnings guidance of a ($0.41) to ($0.16) per share loss.

Non-GAAP earnings guidance excludes $60.5 million of projected amortization of intangible assets; $20.5 million to $23.0 million of share-based compensation expense; and $7.2 million to $8.8 million in merger-related expenses. The Company expects to record significant one-time integration expenses as a result of infrastructure alignment and brand unification.

Revenue growth is expected to be relatively stronger in the second half of the year as the Company progresses through its integration plan and revenue synergies from selling the combined product portfolio ramp as more resellers are cross-trained to sell the complementary product line. Guidance assumes that the merger integration plan will be a major focus in 2013, and that the Company will make significant investments to fund growth, including incremental sales, marketing and R&D expenses.

Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of this press release. The table provides itemized detail of the non-GAAP financial measures.

“The fourth quarter represents the beginning of a new chapter for our combined companies as the merger of Stratasys, Inc. and Objet Ltd. has created an industry leader within the additive manufacturing industry. We are focused on expanding applications and driving adoption, and we believe that the new Stratasys is uniquely positioned to capitalize on the rapidly growing demand for our products worldwide. We believe that we have only begun to recognize the potential within our industry, and we are excited about 2013 in view of the merger and the many new opportunities we see developing this year and beyond,” Reis concluded.