Stratasys Cash Flow And Cash On Hand 2021

Stratasys road show. Flickr Image.

This article covers several cash flow metrics of Stratasys Ltd. (NASDAQ:SSYS).

The cash flow metrics that we are going to discuss here include the cash on hand, operating cash flow, cash flow margins, free cash flow and cash flow from investing activities.

Stratasys is a solutions provider in the additive manufacturing sector.

The company is considered one of the major disruptors in the 3D printing space and its solutions include not only the 3D printers but also the software as well as the consumables that come with the hardware.

The following topics are related to Stratasys’ cash flow.

Let’s take a look!

Total Cash On Hand

Stratasys’ cash on hand

Let’s first check on Stratasys’ total cash on hand as depicted in the chart above.

For your information, Stratasys’ total cash on hand is made up of cash and cash equivalents, and short-term deposits.

Between fiscal 2018 and 2021, Stratasys’ cash on hand has grown from around $400 million to slightly above $500 million as of fiscal 2021.

Prior to fiscal 2021, Stratasys’ cash on hand has slipped to only $300 million by the end of fiscal 2020 from $400 million reported in fiscal 2018.

Due to the decreasing cash position, Stratasys raised cash in fiscal 1Q 2021 by as much as $220 million USD through common stock offerings.

As a result of the capital raise, Stratasys’ cash on hand surged beyond $500 million in 1Q 2021 and the respective cash position has remained relatively unchanged until fiscal 3Q 2021.

While Stratasys’ cash reserves have ballooned to more than $500 million, the company does not have any outstanding debt as of fiscal Q3 2021.

Therefore, as of fiscal 3Q 2021, Stratasys’ net debt came in at around -$500 million.

Breakdown Of Cash On Hand

Stratasys’ cash on hand breakdown

As mentioned, Stratasys’ total cash on hand is made up of 2 major components which are cash and cash equivalents and short-term deposits.

The chart above breaks down the company’s total cash on hand into cash and cash equivalents and short-term deposits.

According to the chart, Stratasys’ cash and cash equivalents have been on a decline prior to the capital raise which occurred during 1Q 2021.

In fiscal Q4 2020, Stratasys’ cash and cash equivalents reached only $270 million USD, one of the lowest figures ever reported.

As a result of the continuous cash burn, Stratasys resorted to a capital raise in 1Q 2021 by issuing common stocks that valued as much as $220 million USD.

In fiscal 1Q 2021, you can see that Stratasys’ cash and cash equivalents surged to more than $400 million while short-term deposits increased slightly to $100 million.

As of fiscal 3Q 2021, Stratasys’ cash and cash equivalents reached $330 million while short-term deposits clocked at $187 million USD, bringing the total cash balance to $520 million.

Cash On Hand To Current Assets Ratio

Stratasys’ cash on hand to current assets ratio

The chart above shows Stratasys’ cash balance or cash position to current assets ratio expressed in percentage.

As shown, Stratasys’ cash on hand made up more than 50% of the firm’s total current assets.

The ratio was at a record high of 65% as of fiscal Q3 2021, illustrating that Stratasys’ total current assets were mostly liquid assets such as cash and cash equivalents.

Net Cash From Operating Activities

Stratasys’ net cash from operations

The net cash from operations is one of the most important metrics related to cash flow as the cash generated from operations is usually the lifeline of a business.

Without operating cash flow, a business will have to rely on external cash flow such as those raised from debt and equity.

That said, Stratasys has a very poor operating cash flow result as seen in the chart above.

Prior to fiscal 2020, Stratasys’ operating cash flow totaled as much as $60 million on a TTM basis.

However, this figure dived drastically to negative values in fiscal 2020, driven primarily by the COVID-19 disruptions.

Stratasys’ negative net cash from operations illustrates that the company burned more cash than the business itself could produce, thereby driving the company to raise more cash through external sources.

While operating cash flow tumbled in fiscal 2020, it recovered significantly in fiscal 2021, reaching as much as $55 million on a TTM basis as of fiscal 3Q 2021.

Operating Cash Flow Margin

Stratasys’ operating cash flow margin

The operating cash flow margin measures how much cash is squeezed out of revenue in a given period.

Therefore, the higher the ratio, the better the cash flow is.

That said, the pattern of Stratasys’ operating cash flow margin follows that of the previous chart in which the margin declined significantly in fiscal 2020 and then recovered in the following year.

Stratasys’ operating cash flow margin surged to around 10% and was nearly back to pre-COVID levels.

From a comparison perspective, Stratasys’ operating cash flow margin is only slightly below that of 3D Systems which reported a 12% operating cash flow margin in the same quarter.

Free Cash Flow Net Of Capital Expenditures

Stratasys’ free cash flow net of capital expenditures

The above free cash flow is calculated by substrating capital expenditures from Stratasys’ operating cash flow.

Capital expenditures are cash spent on the purchase of property and equipment.

Similar to the net cash from operating activities, Stratasys’ free cash flow result also has been very poor as shown in the chart.

That said, Stratasys’ free cash flow dived significantly to negative values in fiscal 2020, driven primarily by the poor operating net cash reported in the same period.

In the following quarters, Stratasys’ free cash flow has been on a rise and reached $26 million USD on a TTM basis as of fiscal Q3 2021.

Despite the recovery in fiscal 2021, Stratasys’ free cash flow was still below pre-COVID levels.

From a comparison perspective, Stratasys generated much less free cash flow than its rivals 3D Systems which happened to have a free cash flow totaling $60 million USD in Q3 2021.

Free Cash Flow Margin

Stratasys’ free cash flow margin

Similar to the operating cash flow margin, the free cash flow margin measures the amount of free cash flow being squeezed out of revenue.

Therefore, the higher the ratio, the better the free cash flow is.

According to the chart, Stratasys’ free cash flow margin totaled only 4.4% in fiscal 3Q 2021, which is considered quite poor.

Stratasys’ low free cash flow margin is caused primarily by the poor free cash flow recorded by the company.

Despite the poor results, Stratasys’ free cash flow margin has recovered tremendously in fiscal 2021 from the prior year when the company was battered by the COVID-19 pandemic.

From a comparison perspective, Stratasys’ 3Q 2021 free cash flow margin was less than half of the figure reported by 3D Systems in the same quarter.

While Stratasys’ free cash flow margin has been lagging behind that of its peers, it has been rising and reached record highs since fiscal 2020, indicating that recovery has been in place.

Free Cash Flow Net Of Cash Flow From Investing Activities

Stratasys’ free cash flow net of cash flow from investing activities

When we take into account Stratasys’ net cash from investing activities, the firm’s free cash flow looks totally different from the one that we saw earlier.

As seen in the chart, Stratasys’ free cash flow has been mainly in the red, due largely to a large amount of cash being spent on investing activities.

In this aspect, Stratasys’ net cash from investing activities has exceeded the operating cash flow, thereby considerably driving down the free cash flow.

As of fiscal Q3 2021, Stratasys’ free cash flow came in at a massive loss of $80 million USD, a record low for the company.

Summary

To recap, Stratasys is a poor cash flow producer.

While the company may have a large pool of cash reserves totaling as much as $500 million in fiscal Q3 2021, it has been poor in terms of generating operating cash flow.

When the COVID-19 pandemic hit in early 2020, Stratasys’ cash flow has been badly affected and operating cash flow literally dried up throughout 2020.

For this reason, Stratasys has resorted to external sources to raise capital, such as issuing more common stocks in fiscal Q1 2021.

Despite the negative operating cash reported in fiscal 2020, Stratasys’ managed to recover in fiscal 2021, driving operating and free cash flow to record highs as of Q3 2021.

When net cash from investing activities is taken into account in free cash flow measurement, Stratasys’ free cash flow dived considerably and the figures are even in the red, indicating that more cash is spent than the business can produce.

Credits and References

1. All financial figures in this article were obtained and referenced from SSYS’s quarterly and annual filings which can be obtained in the following location: SSYS Press Releases.

2. Featured images in this article are used under creative commons licenses and sourced from the following websites: Stratasys Road Show and A handful of cash.

Other Statistics For Your Reference

Disclosure

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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