Stratasys Inc. reported fourth-quarter 2012 earnings per share of 40 cents, beating the Zacks Consensus Estimate of 27 cents.
Stratasys recorded total revenue of $96.4 million in the fourth quarter, up 23.0% from $78.3 million in the year-ago quarter. The company witnessed improvements in both product and services revenue.
In the reported quarter, Product revenue grew significantly by 64.2% with the year-ago quarter. The upside was driven by substantial growth in the company’s system and consumable earnings. This apart, Services revenue increased by 58.6% in the fourth quarter of 2012, attributable to the improvement in demand for the company’s higher price for Fortus 3D Production Systems and broad portfolio of PolyJet.
Gross profit stood at $32.8 million (46.1% of the total revenue) in the quarter, up 32.6% from $22.9 million (52.5% of the total revenue) in the year-ago quarter. The gross margin declined as revenue increased at a lower rate than the cost of sales.
Operating loss in the quarter was $4.2 million versus $5.8 million in the fourth quarter of 2011. However, operating expense increased 170.9% year over year, primarily due to higher R&D and SG&A expenses. Operating margin plummeted to a loss of 7.0% from operating profit margin of 20.4% in the year-ago quarter. The company’s product mix affected its operating margin.
The company reported net loss of $3.5 million or 9 cents per share in the fourth quarter compared with a loss of $6.30 million or 17 cents per share in the prior-year quarter. Non-GAAP net income was $16.3 million or 40 cents per share in the reported quarter compared to a profit of $11.6 billion or 30 cents.
The company exited the quarter with cash and cash equivalents of $153.9 million, up from $51.2 million in the previous quarter. The company does not have any long-term debt.
The company provided its guidance for fiscal 2013, wherein, revenue is expected in the range of $430.0 million to $445.0 million, while the Non-GAAP earnings are anticipated to be $1.80 to $1.95 per share. Moreover, GAAP loss is expected in the range of 41 cents to 16 cents per share.
The fourth-quarter results were encouraging with EPS exceeding the Zacks Consensus Estimate and revenues improving on a year-over-year basis. Moreover, growth in product and services revenue helped the company expand its business substantially.
Previously, the company had stated that Hewlett-Packard agreed to discontinue its manufacturing and distribution agreement for 3D printers. The discontinuation has been effective since the end of 2012.
Despite a globally increasing demand for 3D printers, Stratasys does not expect the termination to have a material impact on the business fundamentals. However, we are a bit apprehensive about the company’s high-cost business model and stiff competition from big and small players like 3D Systems Corp. .
The company has a Zacks Rank #3, (Hold) on the stock. Symantec Corp. , with a Zacks Rank #1 (Strong Buy), might be worth considering at this point.