Stratasys, Inc. 3Q08 (Qtr End 9/30/08) Earnings Call Transcript

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2008-11-03 11:09:15.0

Tags: 3D, U.S. Bancorp Piper Jaffray Inc., Call Transcript, Earnings, High-end System, Stratasys Inc., Printers, Sales Strategy, Hardware, Peripherals, Sales, Seeking Alpha, 3D, U.S. Bancorp Piper Jaffray Inc., Call Transcript, Earnings, High-end System, Stratasys Inc., Printers, Sales Strategy, Hardware, Peripherals, Sales, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Andrew Nowinski - Piper Jaffray.

Andrew Nowinski - Piper Jaffray

Can I get some color on the gross margin side? It looks like gross margin was fairly in line with your historical kind of Q3 seasonality, but given that high-end sales, consumables and paid parts were all off and 3D printers were flat, I guess I would have expected to see it a little bit higher than it was. Can you just maybe give a little more color on that?

Bob Gallagher

We have, I think - probably a misnomer out there is we have a wide variation in our product gross margins, not only on our 3D printers because essentially the products that we sell - 3D printers from $18,900 to $34,900 - but on our high-end systems we have a price range from probably about $50,000 up to $400,000. There's just as much variation in our gross margins on the high end systems as there are in 3D printers. So it's not necessarily a correlation that you can make from high-end to 3D printers.

So obviously the quarter data's influenced because it's a high quarter for education for us, as typically is the case in the third quarter, but we're happy to show margin improvement year-over-year.

Andrew Nowinski - Piper Jaffray

On the high-end side, high-end were up 68% year-over-year. How much of that was driven by your shipments to that Fortune 100 customer?

Scott Crump

Well, the high end is a global market - it's a global opportunity - so I think the answer is it basically went globally.

Bob Gallagher

We [don't] break out the percentage as it relates to a specific customer in any quarter.

Operator

Your next question comes from Eric Martinuzzi - Craig-Hallum Capital.

Eric Martinuzzi - Craig-Hallum Capital

The high-end systems, I assume most of this is coming from the 900. What's the runway there? We've just seen our first quarter of real commercial shipments of these. Is this a four-quarter phenomenon, a two-quarter phenomenon, 18 months? What's your sense?

Scott Crump

We have a strong sales activity that definitely carried over into the fourth quarter. Our commercial launch, as I mentioned, was very successful. The customers really love it. And the product's on track to exceed our original 2008 sales estimates.

Since it is a new product, both from a launch as well as from a commercial standpoint it's been out, well, since the beginning of the third quarter - it's fairly difficult to estimate or forecast for 2009. But from what I can see so far, it's definitely a homerun.

 

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