SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of November 2019
Commission File Number 001-35751
(Translation of registrant’s name into English)
|c/o Stratasys, Inc.||1 Holtzman Street, Science Park|
|7665 Commerce Way||P.O. Box 2496|
|Eden Prairie, Minnesota 55344||Rehovot, Israel 76124|
|(Addresses of principal executive offices)|
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
On November 13, 2019, Stratasys Ltd. (“we” or “us”) announced our financial results for the third quarter of 2019, ended September 30, 2019. A copy of our press release announcing our results is furnished as Exhibit 99.1 to this Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) and is incorporated herein by reference.
In conjunction with the conference call being held on November 13, 2019 to discuss our results, we are also furnishing a copy of the script used for the conference call to provide additional information regarding our business and our financial results (attached to this Form 6-K as Exhibit 99.2 and incorporated herein by reference) and a PowerPoint presentation with additional information (attached to this Form 6-K as Exhibit 99.3 and incorporated herein by reference).
The information in this Form 6-K, including Exhibits 99.1, 99.2 and 99.3, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|Dated: November 13, 2019||By:||/s/ Lilach Payorski|
|Title:||Chief Financial Officer|
The following exhibits are furnished as part of this Form 6-K:
|99.1||Press release dated November 13, 2019, announcing the financial results of Stratasys Ltd. for the quarter ended September 30, 2019|
|99.2||Script for conference call of Stratasys Ltd. discussing quarterly financial results, held on November 13, 2019|
|99.3||PowerPoint presentation with additional information for the foregoing conference call|
STRATASYS RELEASES THIRD QUARTER 2019 FINANCIAL RESULTS
Third Quarter Revenue of $157.5 million
Third Quarter GAAP net loss of $6.9 million, or ($0.13) per diluted share, and non-GAAP net income of $6.3 million, or $0.12 per diluted share
Minneapolis & Rehovot, Israel, November 13, 2019 — Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the third quarter of 2019.
Q3 2019 Financial Results Summary:
Revenue for the third quarter of 2019 was $157.5 million, compared to $162.0 million for the same period last year.
|●||GAAP gross margin was 49.2% for the quarter, compared to 48.7% for the same period last year.|
|●||Non-GAAP gross margin was 52.4% for the quarter, compared to 52.1% for the same period last year.|
|●||GAAP operating loss for the quarter was $6.0 million, compared to an operating income of $3.4 million for the same period last year.|
|●||Non-GAAP operating income for the quarter was $8.1 million, compared to non-GAAP operating income of $8.2 million for the same period last year.|
|●||GAAP net loss for the quarter was $6.9 million, or ($0.13) per diluted share, compared to a net loss of $0.7 million, or ($0.01) per diluted share, for the same period last year.|
|●||Non-GAAP net income for the quarter was $6.3 million, or $0.12 per diluted share, compared to net income of $5.7 million, or $0.11 per diluted share, for the same period last year.|
|●||The Company used $8.6 million of cash from operations during the third quarter and ended the period with $347.1 million of cash and cash equivalents.|
“Our results in the third quarter reflect a continuation of our track record of delivering earnings and profitability, despite challenging global economic conditions that have impacted customer investments in our target verticals in Europe and Asia. In the third quarter we continued to observe strong performance in our core professional and production-focused business in the Americas, our largest market, with specific strength in high-end FDM and PolyJet systems, our F123 Series, and our target verticals of automotive and aerospace,” said Elchanan (Elan) Jaglom, Interim Chief Executive Officer of Stratasys. “We continue to believe that when macro conditions improve we will see a return to growth in Europe and Asia, and believe we are well positioned with an impressive portfolio of new products as we finish 2019.”
Stratasys today updated the following information regarding the Company’s guidance for the fiscal year ending December 31, 2019:
|●||Revenue guidance of $640 million to $655 million, compared to previous guidance of $670 million to $700 million.|
|●||GAAP net loss of $17 million to $3 million, or ($0.31) to ($0.05) per diluted share.|
|●||Non-GAAP net income of $30 million to $38 million, or $0.55 to $0.70 per diluted share.|
|●||Non-GAAP operating margins of 5.5% to 6.5%.|
|●||Capital expenditures are projected at $30 million to $45 million.|
Given the expected ongoing negative impact of not recording a tax benefit on U.S. tax losses on the Company’s non-GAAP net income, the Company believes that the rate of growth in its non-GAAP operating income is the best measure of its performance.
Non-GAAP earnings guidance excludes $23 million to $24 million of projected amortization of intangible assets; $22 million to $24 million of share-based compensation expense; reorganization and other expenses of ($1 million) to $1 million. Non-GAAP guidance includes negative tax adjustments of $2 million to $3 million on the above non-GAAP items.
Stratasys Ltd. Q3 2019 Conference Call Details
The Company plans to hold the conference call to discuss its third quarter financial results on Wednesday, November 13, 2019 at 8:30 a.m. (ET).
The investor conference call will be available via live webcast on the Stratasys Web site at investors.stratasys.com; or directly at the following web address: https://edge.media-server.com/mmc/p/gt9wb79u.
To participate by telephone, the domestic dial-in number is (866) 394-5776 and the international dial-in is (409) 350-3596. The access code is 9983069.
Investors are advised to dial into the call at least ten minutes prior to the call to register. The webcast will be available for 90 days at investors.stratasys.com, or by accessing the provided web address.
Stratasys is a global leader in additive manufacturing or 3D printing technology, and is the manufacturer of FDM® and PolyJet™ 3D Printers. The Company’s technologies are used to create prototypes, manufacturing tools, and production parts for industries, including aerospace, automotive, healthcare, consumer products and education. For 30 years, Stratasys products have helped manufacturers reduce product-development time, cost, and time-to-market, as well as reduce or eliminate tooling costs and improve product quality. The Stratasys 3D printing ecosystem of solutions and expertise includes: 3D printers, materials, software, expert services, and on-demand parts production. Online at: www.stratasys.com, http://blog.stratasys.com and LinkedIn.
Stratasys is a registered trademark and the Stratasys signet is a trademark of Stratasys Ltd. and/or its subsidiaries or affiliates. All other trademarks are the property of their respective owners.
Cautionary Statement Regarding Forward-Looking Statements
The statements in this press release regarding Stratasys' strategy, and the statements regarding its projected future financial performance, including the financial guidance concerning its expected results for 2019, are forward-looking statements reflecting management's current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with Stratasys' business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: the degree of market acceptance of our 3D printers, high-performance systems and consumables, and the software and technology included in those systems; potential declines in the demand for, or the prices of, our products and services, or volume of our sales, due to decreased demand either for them specifically or in the 3D printing market generally; potential shifts in our overall strategy, including as related to any reorganization activities and our capital expenditures; potential shifts in our product mix to lower-margin products or in our revenues mix towards our AM services business; the impact of competition and new technologies; potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets; potential failure to successfully consummate acquisitions or investments in new businesses, technologies, products or services; risks related to our relationships with our suppliers, resellers and independent sales agents, and our operations at our manufacturing sites; risks related to the international scope of our operations and regulatory compliance (including reporting, environmental, anti-corruption and other regulatory compliance) related to that scope of operations; risks related to the security of our information systems (including risks related to potential cyber-attacks); changes in the overall global economic environment or in political and economic conditions in the countries in which we operate; changes in our strategy; costs and potential liability relating to litigation and regulatory proceedings; and those additional factors referred to in Item 3.D “Key Information - Risk Factors”, Item 4, “Information on the Company”, Item 5, “Operating and Financial Review and Prospects,” and all other parts of our Annual Report on Form 20-F for the year ended December 31, 2018 (the “2018 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 7th, 2019. Readers are urged to carefully review and consider the various disclosures made throughout our 2018 Annual Report and the Report of Foreign Private Issuer on Form 6-K that attaches Stratasys’ unaudited, condensed consolidated financial statements as of, and for the quarter and nine months ended, September 30, 2019, and its review of its results of operations and financial condition for that period, which has been furnished to the SEC on or about the date hereof, and our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. Any guidance provided, and other forward-looking statements made, in this press release are made as of the date hereof, and Stratasys undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Use of non-GAAP financial measures
The non-GAAP data included herein, which excludes certain items as described below, are non-GAAP financial measures. Our management believes that these non-GAAP financial measures are useful information for investors and shareholders of our Company in gauging our results of operations (x) on an ongoing basis after excluding mergers, acquisitions and divestments related expense or gains and reorganization-related charges or gains, and (y) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, including intangible assets amortization related to equity method investments, impairment of long-lived assets, and the corresponding tax effect of those items. These non-GAAP adjustments either do not reflect actual cash outlays that impact our liquidity and our financial condition or have a non-recurring impact on the statement of operations, as assessed by management. These non-GAAP financial measures are presented to permit investors to more fully understand how management assesses our performance for internal planning and forecasting purposes. The limitations of using these non-GAAP financial measures as performance measures are that they provide a view of our results of operations without including all items indicated above during a period, which may not provide a comparable view of our performance to other companies in our industry. Investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with GAAP. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table below.
Stratasys Investor Relations
Vice President - Investor Relations
Consolidated Balance Sheets
|(in thousands, except share data)|
|September 30,||December 31,|
|Cash and cash equivalents||$||347,082||$||393,167|
|Accounts receivable, net||133,743||138,146|
|Other current assets||29,765||22,936|
|Total current assets||682,978||684,171|
|Property, plant and equipment, net||187,712||188,150|
|Other intangible assets, net||90,297||107,274|
|Operating lease right-of-use assets||21,757||-|
|Other non-current assets||22,977||22,810|
|Total non-current assets||708,075||704,083|
|LIABILITIES AND EQUITY|
|Current portion of long term-debt||-||5,143|
|Accrued expenses and other current liabilities||33,176||39,115|
|Accrued compensation and related benefits||35,413||31,703|
|Operating lease liabilities - short term||9,016||-|
|Total current liabilities||173,958||175,781|
|Deferred revenues - long-term||15,742||18,422|
|Operating lease liabilities - long term||13,303||-|
|Other non-current liabilities||32,580||29,084|
|Total non-current liabilities||61,625||69,506|
|Redeemable non-controlling interests||700||852|
|Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 54,428 thousands shares and 53,881 thousands shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively||148||146|
|Additional paid-in capital||2,701,974||2,681,048|
|Accumulated other comprehensive loss||(7,967||)||(7,753||)|
|Total liabilities and equity||$||1,391,053||$||1,388,254|
Consolidated Statements of Operations
|(in thousands, except per share data)|
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Cost of sales|
|Research and development, net||23,620||25,786||70,234||74,585|
|Selling, general and administrative||59,741||49,792||173,217||168,684|
|Operating profit (loss)||(5,952||)||3,350||(8,418||)||(5,044||)|
|Financial income (expense), net||289||(39||)||2,796||(114||)|
|Income (loss) before income taxes||(5,663||)||3,311||(5,622||)||(5,158||)|
|Income tax expenses||586||304||3,084||1,110|
|Share in profits (losses) of associated companies||(733||)||(3,752||)||495||(11,185||)|
|Net income (loss)||(6,982||)||(745||)||(8,211||)||(17,453||)|
|Net loss attributable to non-controlling interests||(41||)||(66||)||(152||)||(182||)|
|Net income (loss) attributable to Stratasys Ltd.||$||(6,941||)||$||(679||)||$||(8,059||)||$||(17,271||)|
|Net income (loss) per ordinary share attributable to Stratasys Ltd.|
|Three Months Ended September 30,|
|U.S. dollars and shares in thousands (except per share amounts)|
|Gross profit (1)||$||77,409||$||5,087||$||82,496||$||78,928||$||5,545||$||84,473|
|Operating income (loss) (1,2)||$||(5,952||)||$||14,055||$||8,103||$||3,350||$||4,815||$||8,165|
|Net income (loss) attributable to Stratasys Ltd. (1,2,3)||$||(6,941||)||$||13,275||$||6,334||$||(679||)||$||6,383||$||5,704|
|Net income (loss) per diluted share attributable to Stratasys Ltd. (4)||$||(0.13||)||$||0.25||$||0.12||$||(0.01||)||$||0.12||$||0.11|
|(1)||Acquired intangible assets amortization expense||3,916||5,221|
|Non-cash stock-based compensation expense||475||351|
|Reorganization and other related costs||696||(27||)|
|(2)||Acquired intangible assets amortization expense||2,016||2,532|
|Non-cash stock-based compensation expense||4,960||3,662|
|Reorganization and other related costs||1,992||-|
|Merger and acquisition and other expense||-||(6,924||)|
|(3)||Corresponding tax effect||(780||)||(750||)|
|Gain from equity method divestment and related amortization and impairments||-||2,318|
|(4)||Weighted average number of ordinary shares outstanding- Diluted||54,394||54,940||53,769||53,992|
|Nine Months Ended September 30,|
|U.S. dollars and shares in thousands (except per share amounts)|
|Gross profit (1)||$||235,033||$||13,780||$||248,813||$||238,225||$||16,852||$||255,077|
|Operating income (loss) (1,2)||$||(8,418||)||$||32,376||$||23,958||$||(5,044||)||$||28,750||$||23,706|
|Net income (loss) attributable to Stratasys Ltd. (1,2,3)||$||(8,059||)||$||28,574||$||20,515||$||(17,271||)||$||33,789||$||16,518|
|Net income (loss) per diluted share attributable to Stratasys Ltd. (4)||$||(0.15||)||$||0.53||$||0.38||$||(0.34||)||$||0.65||$||0.31|
|(1)||Acquired intangible assets amortization expense||11,714||15,645|
|Non-cash stock-based compensation expense||1,370||1,180|
|Reorganization and other related costs||696||27|
|(2)||Acquired intangible assets amortization expense||5,688||7,629|
|Non-cash stock-based compensation expense||14,387||10,526|
|Reorganization and other related costs||(1,479||)||2,230|
|Merger and acquisition and other expense||-||(6,926||)|
|Gain from sale of plant and property||-||(1,563||)|
|(3)||Corresponding tax effect||(2,198||)||(2,661||)|
|Gain from equity method divestment, related write-offs and amortization||(1,604||)||7,700|
|(4)||Weighted average number of ordinary shares outstanding- Diluted||54,201||54,705||53,716||53,820|
Reconciliation of GAAP to Non-GAAP Forward Looking Guidance
Fiscal Year 2019
|(in millions, except per share data)|
|GAAP net loss||($17) to ($3)|
|Stock-based compensation expense||$22 to $24|
|Intangible assets amortization expense||$23 to $24|
|Reorganization and other related costs||($1) to $1|
|Tax expense related to Non-GAAP adjustments||($2) to ($3)|
|Non-GAAP net income||$30 to $38|
|GAAP loss per share||($0.31) to ($0.05)|
|Non-GAAP diluted earnings per share||$0.55 to $0.70|
|SSYS Q3 2019 Earnings Script|
SLIDE 1 & 2: TITLE SLIDES
Good day, ladies and gentlemen. Welcome to today’s conference call to discuss Stratasys’ third quarter 2019 financial results.
My name is [INSERT], and I’m your operator for today’s call. [INSERT RELEVANT INSTRUCTIONS].
And now, I’d like to hand the call over to Yonah Lloyd, Vice President of Investor Relations for Stratasys. Mr. Lloyd, please go ahead.
SLIDE 3 & 4: FLS & NON-GAAP DISCLOSURE
SPEAKER: Yonah Lloyd
Good morning, everyone, and thank you for joining us to discuss our 2019 third quarter financial results. On the call with us today are Elan Jaglom, Interim CEO, and Lilach Payorski, CFO.
I remind you that access to today's call, including the prepared slide presentation, is available online at the web address provided in our press release.
In addition, a replay of today's call, including access to the slide presentation, will also be available, and can be accessed through the investor relations section of our website.
Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes and other future financial performance, and our expectations for our business outlook. All statements that speak to future performance, events, expectations or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed in Stratasys' annual report on Form 20-F for the 2018 year, as well as our report on Form 6-K and the related press release concerning our earnings for the third quarter of 2019, the latter two of which we are furnishing to the SEC today. Stratasys assumes no obligation to update any forward-looking statements or information which speak as of their respective dates.
As in previous quarters, today's call will include GAAP and non-GAAP financial measures. The non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Certain non-GAAP to GAAP reconciliations are provided in the table contained in our slide presentation and in today’s press release.
Now I would like to turn the call over to our Interim CEO, Elan Jaglom. Elan?
SLIDE 5: OPENING SUMMARY
SPEAKER: Elan Jaglom
Good morning everyone and thank you for joining today’s call.
Our results in the third quarter reflect a continuation of our track record of delivering earnings and profitability despite challenging global economic conditions that have impacted capital investments and general spending in the automotive and industrial machinery segments in Europe and Asia.
In the third quarter we continued to observe strong performance in the core professional and production areas of our Americas business, our largest market, with specific strength in high-end FDM and PolyJet systems, our F123 Series, and our target verticals of automotive and aerospace.
Despite the pause in customer investments we are experiencing in Europe and Asia, we continue to see high levels of customer engagement and are encouraged by the interest in deploying our solutions there.
As we have seen in the Americas region, major OEMs in our target verticals of Aerospace and Automotive are adopting our solutions at an increasing rate, and we expect customers in Europe and Asia to do the same once economic conditions improve.
We are encouraged by the initial interest in the multiple new product announcements we recently made, including two new advanced PolyJet systems, new manufacturing-focused FDM materials, and an addition to the MakerBot Method line of performance 3D printers.
Additionally, we recently announced plans to increase our ownership stake in Xaar 3D, our JV with Xaar plc, to develop additive manufacturing solutions based on High Speed Sintering technology that will target low-to-medium volume end-use part production for industrial manufacturing, with an option to fully acquire Xaar 3D.
We expect to make additional significant product announcements in 2020, and continue to believe that our new, expanding portfolio will broaden our addressable markets.
I will return later in the call to provide an update on our search for a new CEO, but first I will turn the call over to our CFO, Lilach Payorski, who will review the details of our financial results.
SLIDE 6 & 7: FINANCIAL RESULTS SUMMARY
SPEAKER: Lilach Payorski
Thank you, Elan, and good morning, everyone.
Total revenue in the third quarter was $157.5 million compared to $162.0 million for the same period last year. On a constant currency basis, total revenue declined 2%.
As Elan mentioned, we saw continued positive performance in the Americas, where we had specific strength in our high-end Fortus platform, including a large, multi-unit deployment to a leading automotive OEM, and we also saw strong sales of our workgroup-focused F123 Series and J750 full color, multi-material 3D printers.
GAAP operating loss for the third quarter was $6.0 million, compared to income of $3.4 million for the same period last year.
Non-GAAP operating income for the quarter was $8.1 million, compared to non-GAAP operating income of $8.2 million for the same period last year.
GAAP net loss for the quarter was $6.9 million, or ($0.13) per diluted share, compared to a net loss of $0.7 million, or ($0.01) per diluted share, for the same period last year.
Non-GAAP net income for the quarter was $6.3 million, or $0.12 per diluted share, compared to non-GAAP net income of $5.7 million, or $0.11 per diluted share, for the same period last year.
SLIDE 8: REVENUE
Product revenue in the third quarter was $106.3 million, a decrease of 3% compared to the same period last year, or 2% on a constant currency basis.
The decline in product revenue was driven primarily by economic weakness in EMEA and APJ that impacted mainly systems sales in those regions.
Within product revenue, consumables revenue for the quarter increased by 3% compared to the same period last year, and increased 5% on a constant currency basis, while system revenue for the quarter decreased 9%, compared to the same period last year, with no change on a constant currency basis.
Services revenue in the third quarter was $51.1 million, a decrease of 2% compared to the same period last year, with no change on a constant currency basis.
Within services revenue, customer support revenue increased by 3% compared to the same period last year, and 4% on a constant currency basis.
SLIDE 9: GROSS MARGIN TRENDS
GAAP gross margin was 49.2% for the quarter, compared to 48.7% for the same period last year.
Non-GAAP gross margin was 52.4% for the quarter, compared to 52.1% for the same period last year.
SLIDE 10: OPERATING EXPENSES & OPERATING INCOME
GAAP operating expenses increased by 10% to $83.4 million for the third quarter, as compared to the same period last year.
Non-GAAP operating expenses decreased by 3% to $74.4 million for the third quarter as compared to the same period last year, driven by the timing of R&D investments related to new product introductions. We remain committed to our long-term strategy and we continue to invest in developing new products that we believe will expand our addressable markets.
SLIDE 11: BALANCE SHEET SUMMARY & CASH FLOW FROM OPERATIONS
The Company used $8.6 million of cash from operations during the third quarter, as compared to $5.0 million of cash generated in the third quarter last year, primarily due to proactive steps to increase inventory levels in order to improve fulfillment time and support product demand as well as to prepare for new product launches in 2020.
We ended the third quarter with $347.1 million in cash and cash equivalents, compared to $366.3 million at the end of the second quarter of 2019.
SLIDE 12: FINANCIAL SUMMARY
|1.||We are pleased with our profitability and earnings in the third quarter, which reflect the positive impact of our continued commitment to expense management and operational efficiencies, despite the lower than expected revenues in some of our regions.|
|2.||We had positive year-over-year growth in our core Americas systems, consumables, and services revenues, which were offset primarily by the impact of economic conditions in Europe and Asia.|
|3.||Our balance sheet remains healthy and we are well positioned for future opportunities.|
I will now turn the call back over to Elan.
SLIDE 13: UPDATE ON CEO SEARCH
Thank you, Lilach.
Our search for a new CEO is progressing, and I look forward to completing the process. We remain focused on being deliberate with our decision-making process and moving forward with a highly qualified leader that has the necessary public company experience and exceptional track record of delivering shareholder value.
In the interim, we are happy to have a strong, experienced oversight committee that continues to work closely with me and with our management team.
I would now like to turn the call over to our VP of Investor Relations, Yonah Lloyd, who will provide greater details on our 2019 financial guidance. Yonah?
SLIDE 14: REVENUE & EARNINGS GUIDANCE
SPEAKER: Yonah Lloyd
Thank you, Elan.
We are updating full year guidance for 2019 as follows:
|1.||Revenue guidance of $640 to $655 million, compared to previous guidance of $670 to $700 million.|
|2.||Despite lowering our revenue guidance, we are maintaining our guidance for GAAP net loss of $17 to $3 million, or ($0.31) to ($0.05) per diluted share, with current expectations to be at the low end of the range.|
|3.||We are also maintaining our Non-GAAP net income of $30 to $38 million, or $0.55 to $0.70 per diluted share, with current expectations to be at the low end of the range.|
|4.||Non-GAAP operating margin of 5.5% to 6.5%.|
|5.||Capital expenditures projected at $30 to $45 million.|
Non-GAAP earnings guidance excludes $23 to $24 million of projected amortization of intangible assets; $22 to $24 million of share-based compensation expense; reorganization and other expenses of $1 to negative 1 million; and includes negative tax adjustments of $2 to $3 million on the above non-GAAP items.
The estimated non-GAAP tax rate for 2019 is impacted by the ongoing non-cash valuation allowance on deferred tax assets that we expect to record throughout the year on U.S. losses.
Given the expected ongoing negative impact of not recording a tax benefit on U.S. tax losses on our net income, as well as significant quarter to quarter variability in our non-GAAP tax rate, the Company believes non-GAAP operating income is the best measure of our performance.
Appropriate reconciliations between GAAP and non-GAAP financial measures are provided in a table at the end of our press release and slide presentation, with itemized detail concerning the non-GAAP financial measures.
Operator, please open the call for questions.
SLIDE 15: Q&A
SPEAKER: Elan Jaglom
Thank you for joining today’s call. We look forward to speaking with all of you again next quarter.
SLIDE 16: FINANCIAL RECONCILIATION TABLES