Steep merger costs contribute to $47.3M quarterly loss for Stratasys

Stratasys recorded a big loss in the third quarter, including $17.3 million because of costs associated with defending itself against a takeover offer and its own failed attempt to acquire Desktop Metal.

The 3-D printer manufacturer that is based in Eden Prairie and Rehovot, Israel, lost $47.3 million, or 68 cents a share, compared with a profit of $18.7 million, or 28 cents a share in the third quarter of 2022.

Stratasys revenue for the quarter ended Sept. 30 was $162.1 million, even with last year and matching analyst expectations.

"During the third quarter, Stratasys delivered solid operating and financial results, highlighted by record recurring revenues from consumables, reflecting solid printer utilization," said Yoav Zeif, Stratasys' chief executive in a news release.

The company's adjusted net income — which accounted for the mergers and acquisition costs as well restructuring and other costs — was $2.4 million, or 4 cents per diluted share. That was a decrease from the $3.3 million, or 5 cents a share in the year ago quarter.

Adjusted EPS for the current quarter beat analyst expectations by 1 cent.

In the quarter, Stratasys shareholders rejected the company's plan to acquire Desktop Metal. The canceled deal meant it has to pay a hefty termination fee. It also continued to rebuff repeated takeover offers from its largest competitor, 3D Systems.

Last week, Rock Hill, S.C.-based 3D Systems reported lower than expected third quarter results and cited increasing macroeconomic and geopolitical headwinds as the causes. 3D Systems last month announced a restructuring plan with the goal to save $45 million to $55 million.

"In light of recent industrywide weakness, including at [3D Systems], we view any future transaction between the two companies as unlikely," wrote James Ricchiuti an analyst with Needham & Co. in a note to shareholders after 3D Systems announced its third quarter results.

Zeif, the Stratasys CEO, also acknowledged that the company's employees have had to work in difficult circumstances since Hamas attacked Israel. Stratasys has more than 2,000 employees, including 530 who work at two facilities in Israel.

"We want to acknowledge the tremendous support we have received from partners, customers, investors and our industry since the tragic events in Israel," Zeif said in the release. "We especially want to thank our employees who have performed in an exemplary fashion during these challenging times. Our operations have been fully functional, allowing us to continue delivering industry-leading results."

Based on recent divestitures and the challenging economy, Stratasys lowered its guidance for the remainder of the year and now expects revenue in the range of $620 million to $630 million and adjusted earnings of 10 to 14 cents a share.