Stratasys, Ltd.

Greetings and welcome to the Stratasys Limited first quarter 2023 earnings call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations. Thank you. Please go ahead.

Good morning, everyone, and thank you for joining us to discuss our 2023 first quarter financial results. On the call with us today are our CEO, Dr. Yoav Zaif, and our CFO, Eitan Zamir. I would like to remind you that access to today's call, including the 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 or referenced in Stratasys' annual report on Form 20F for the 2022 year. Please also refer to our operating and financial review and prospects for 2022 and for the first quarter of 2023, which are included as item 5 of our annual report on Form 20F for 2022 and in Exhibit 99.2 to the report on Form 6K that we are furnishing to the SEC today, respectively. Please also see the press release that announces our earnings for the first quarter of 2023, which is attached as Exhibit 99.1 to a separate report on Form 6K that we are furnishing to the SEC today. Our reports on Form 6K that we furnish to the SEC on a quarterly basis and throughout the year provide updated current information regarding our operating results and material developments concerning our company. 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. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release. I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zayt. Yoav?

Thank you, Yonah. Good morning, everyone, and thank you for joining us. Before I discuss the business highlights, I would like to comment briefly on the three unsolicited proposals we received in recent months from Nano Dimension to acquire strategies, initially for $18, then $19.55, and subsequently for $20.05 per share in cash. As previously announced, consistent with its fiduciary duties and in consultation with its independent financial and legal advisors, the Stratasys Board carefully reviewed and evaluated each proposal. Following each review, the Stratasys Board unanimously rejected all three proposals, because they eat substantially undervalued strategies in light of the company's standalone prospects. As we have articulated previously, Nano is in the midst of multiple lawsuits with its shareholders involving the control and governance of the company. And as a result, serious questions remain about the legal legitimacy of the Nano offer. The strategies board and management team are committed to enhancing shareholders' value and continue to successfully execute on the company's growth strategy. We are making strong progress towards becoming a highly profitable $1 billion revenue company. As part of its fiduciary duties, the board will review any bona fide proposal for the company and weigh it against our standalone plan. We are not going to comment further on this matter today. We appreciate you keeping your questions focused on our results, as the focus of this call is our performance for the quarter. Our excellent results for Q1 2023 represent another consecutive quarter of solid performance, despite an increasingly challenging macro backdrop. we continue to execute on our winning strategy, driven by our broad, global, and diverse set of systems, materials, and software solutions. With our leadership position, our five key technologies, resilient business model, and strong financial profile, we believe we are positioned to accelerate growth and drive shareholder returns, not only for today, but also for years to come. Our confidence is reflected in the medium-term focus we are announcing today. Eitan will provide further details during his remarks, but we expect to surpass $1 billion in revenue in 2026 with substantial profitability. In terms of our first quarter results, we are seeing stronger utilization by our customers than ever before, which drove all-time record revenues in both consumables and customer service. As we have noted in the past few earnings calls, macro-related pressure on CapEx budgets are causing longer sales cycles and occasional deferrals of orders. Our OEM revenue was relatively flat to the first quarter of last year, adjusted for FX and divestment, primarily due to the impact of those factors on hardware purchases. The manufacturing trends of on-shoring, deglobalization, and just-in-time production are driving opportunities for growth. Stratasys is positioned to take advantage of these opportunities given our combination of proven market leading system in FDM and PolyJet, new technology offerings in P3, SAP, and stereolithography, the broadest set of polymer materials in the industry, a unified software platform across the portfolio, and unmatched go-to-market capabilities. Along with our robust balance sheet, This sets us apart and will enable us to sustain our organic growth and expand our reach via the pursuit of external opportunities. Engagement with both our installed base and new customers remains strong. We continue to expand our customer reach across our entire suite of technologies, particularly targeting manufacturing applications. We have demonstrated a resilient and recurring business model that delivered gross margin this quarter that were flat compared to the year-ago period, and also kept OPEC spending as a percentage of revenue nearly flat to the corresponding period last year, even with a reduction in revenues. As a result of our effort, and despite the headwind faced, I'm proud that we delivered positive adjusted earnings per share for the seventh consecutive quarter. Our vision for the future of additive manufacturing, and in turn, our ability to deliver greater returns for our shareholders is more robust than ever. We ended the quarter with a strong balance sheet that includes no debt and $288 million in cash and equivalents. This continues to support our growth through organic investment and accretive acquisition opportunities, including early stage but highly compelling technology-driven businesses, which we believe will improve results as we leverage our infrastructure and experience to strengthen operations. Now, let me turn to the exciting achievements and milestones reached since the end of 2022. In February, we introduced the first monolithic, multicolored 3D-printed dental solution through our prudent resin. our first ever FDA-cleared medical device. As a reminder, dental overall is a 50 billion tom and is fast-growing industry for additive manufacturing. The TrueDent solution enables labs to create permanent, natural-looking dentures with accurate tooth structures, gum, shade, and translucency in one continuous print. The resin is designed for exclusive use in our J5 Dentajet printers using GrabCut print software and provides Dental Labs the ability to scale manufacturing with simplified workflow and reduce processing time. To deliver the best quality dentures available in the market today, we already have several new customers and many of the largest dental labs are actively evaluating the solution. In February, we launched the new J3 DentaJet printer, opening up more opportunities to strategists, such as implant models and surgical guides for dental labs. It recently received an excellent reception at the dental industry's largest ratio. Our superior accuracy provides an entry point for customers ready to step up from lower quality solutions. One of the world's largest dental labs said it tripled its daily production volume with the J3 relative to the previous system. Moving to our medical highlight, in February, we signed an agreement with Ricoh USA to provide on-demand 3D printed anatomic models for clinical settings. Our patient-specific 3D printed solutions combined our 3D printing technology the cloud-based segmentation as a service solution from Axial 3D and precision additive manufacturing service from Ricoh into one convenient solution. This represents an expansion of the relationship between Ricoh 3D for healthcare and Stratasys. After quarter end, we forge a joint development and commercialization agreement with ColdPlant Biotechnologies. to transform healthcare with industrial scale bioprinting of tissues and organs. The initial focus of the relationship will be around development of bioprinting solutions for cold plants, regenerative breast implants. A 2.6 billion opportunity. Further, the combination of our P3 technology-based bioprinter with their RH collagen-based bio-ink is also ideal for future innovation and production of additional human tissues and organs. Both companies agree to cross-promote our respective bioprinting products. On the industrial side, in March, we secured a multi-system opportunity with Goethe's Maschinenbau for our mass-production H350 printers. The sales involve four additional systems to help the German Service Bureau meet growing demand for high-quality end-use parts. Getz is already a valued partner that also deploys FDM and Polygest-based Stratasys printers. In addition, in early April, we closed the acquisition of Covestro's additive manufacturing materials business. which expands our differentiated 3D printed material offering in stereolithography, DLP, and powders to address more manufacturing industry applications. Covestro is expected to be immediately accretive and includes R&D facilities, global development, and sales teams, and a portfolio of 60 materials for additive manufacturing. Together, we will be able to address more applications faster pushing the boundaries of what is possible in additive manufacturing. We are also growing our focus on adding value for customers while increasing recurring revenue through significant software enhancements. Last month, we introduced GrabCat Sprint Pro, which provides a major productivity boost for our customer. The initial rollout is for our SAF and FDM systems. applicable for end-use parts and production scale volumes, tooling and prototypes. We plan to make this software update available across our other three technologies as well. The annual subscription package includes quality management capabilities from our Riven acquisition, as well as added functionality from third-party partners. three value-add plug-in partners available in the initial release. As we continue growing our ecosystem, our Castor, AlphaStar, and Cognitive Design System. These advances in software are helping Stratasys integrate into scaled-up Industry 4.0 infrastructure. In fact, the Advanced Manufacturing Research Center at the University of Sheffield has been able to successfully incorporate Stratasys data into its factory-plus architecture right alongside CNC machines, robot arms, and other mainstream factory equipment. In addition, Stratasys expansion into software is helping drive opportunities with systems and materials. Our previously announced OpenAM software is now widely available to customers. and we are seeing it help unlock Fortus 450 printer opportunities with manufacturing customers that are interested in FDM for end-use part applications due to the greater flexibility it provides in materials selection. That is also a key driver of customers' interest in Origin 1 printers as well. Our technological innovations best-in-class sales channels, and key partnerships are contributing to our effort to build on our meaningful foundations for growth that will drive our industry leadership for the long term. I will now turn the call over to our CFO, Eitan Zamir, to share the financial results, update our outlook for the rest of 2023, and outline our medium-term forecast. Eitan?