Stratasys, Ltd. · NASDAQ:SSYS
Stratasys — Merger or Acquisition (September 2023)
37 slides from Stratasys's merger presentation, Sep 14, 2023
Slide 1: Rule 425 filing legend
Filed by 3D Systems Corporation pursuant to Rule 425 under the U.S. Securities Act of 1933, as amended, and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934, as amended Subject Company: Stratasys Ltd. Commission File No.: 001-35751 The following presentaon was delivered
Slide 2: Building a Global Leader in Additive Manufacturing
+ •Cover style Building a Global Leader in Additive Manufacturing SEPTEMBER 13, 2023
Slide 3: Forward-Looking Statements
Forward-Looking Statements Certain statements made in this document that are not statements of integration will be successful or synergies will be realized if such historical or current facts are forward-looking statements within the transaction were to be consummated. Business combination proposals
Slide 4: Additional Information
Additional Information This communication does not constitute an offer to buy or sell or the This document shall not constitute an offer to buy or sell or the solicitation solicitation of an offer to sell or buy any securities. This communication of an offer to sell or buy any securities, nor shall
Slide 5: Executive Summary
Executive Summary 4
Slide 6: Proposed Transaction Summary
Proposed Transaction Summary • Consideration of $7.00 in cash and 1.6387 shares of 3D Systems common stock per Stratasys ordinary share 1 • 3D Systems believes this offer is worth more than $27 per share, inclusive of synergies Consideration • Election mechanism offers Stratasys shareholders the rig
Slide 7: Attractive and Credible, Combined Financial Profile
Attractive and Credible, Combined Financial Profile, Jointly Agreed with Stratasys Combined Company Near-Term Financial Profile Organic Revenue Growth Double-Digit Gross Profit Margin ~50% R&D Spend ~12% SG&A Spend ~25% EBITDA Margin 15%+ Source: Combined Management Estimates from September 2022 Mee
Slide 8: The Market Continues to Speak
The Market Continues to Speak Stratasys Three-Day Share Price “We do not believe that the Board can reject the obvious any longer: a 3D Reaction Post-Announcement Systems transaction is significantly more compelling than the current alternatives and warrants immediate engagement.” - The Donerail Gro
Slide 9: Stratasys' Process Seemed Designed For One Outcome
Stratasys' Process Seemed Designed For One Outcome Since 2021 began, 3D Systems has continually reached out to Stratasys about a potential combination Almost every time, Stratasys refused to hold discussions with 3D Systems Stratasys only engaged with 3D Systems when facing a proxy contest from Nano
Slide 10: Enhanced Our Offer Per Stratasys' Feedback
Enhanced Our Offer Per Stratasys’ Feedback Stratasys listed more stock consideration, closing certainty, and management as their key concerns. 3D Systems addressed those concerns in our latest proposal. Cumulative 6% increase in combined ownership since May offer, resulting in incremental ✓ 1 exposu
Slide 11: Well-Positioned to Obtain Regulatory Clearances
Well-Positioned to Obtain Regulatory Clearances 3D Systems is confident that all applicable regulatory clearances for the proposed combination will be obtained Combined R&D Additive Industry is Capability Will Bring Manufacturing is a Experiencing Better Solutions to Dynamic Space with Accelerated 1
Slide 12: Closing of Stratasys + DM Highly Uncertain
Closing of Stratasys + DM Highly Uncertain Ñ There is NO assurance the Stratasys + DM deal will close The Stratasys + DM merger contains unusual rights to terminate including if an undisclosed list of Desktop Metal’s highly problematic commercial contracts are not Ñ terminated or modified, along wit
Slide 13: Our Proposed Transaction is Unparalleled + Delivers Significant Value Creation
Our Proposed Transaction is Unparalleled + Delivers Significant Value Creation Concerning Impact on Stratasys’ Combined with Exceptional Cost ✓ ? Financial Profile and Cash Generation Synergies Creates Unmatched Global Player in a Questionable Synergies and Highly ✓ ? Rapidly Scaling Industry Specul
Slide 14: Overview of Additive Manufacturing Industry and 3D Systems
Overview of Additive Manufacturing Industry and 3D Systems 13
Slide 15: Shareholders to Benefit from Supportive Industry Trends
Shareholders to Benefit from Supportive Industry Trends Compelling Growth Drivers Additive Manufacturing experiencing an inflection point as it transitions from the lab to the factory floor driven by improved economics and supply chain risk reduction $80B+ Continuous expansion of Additive Manufactur
Slide 16: Industry & Business Update
Industry & Business Update 2 3 1 Standalone 3D Fully committed to our Scale is essential for System’s long-term high-potential the next era in Additive growth strategy is clear Regenerative Medicine Manufacturing business Our standalone plan expects high single-digit to low double-digit growth for n
Slide 17: An Attractive Core Business Poised for Further Growth
An Attractive Core Business Poised for Further Growth Industrial Solutions Healthcare Solutions Dental Solutions (excl. Dental) • 2% year-over-year growth in 1H’23 • Industry working through high- • Driven by growth and adoption in levels of inventory • 7% year-over-year growth in 1H’23 Aerospace &
Slide 18: An Incredibly Differentiated Position in Regenerative Medicine
An Incredibly Differentiated Position in Regenerative Medicine 3D Systems Human Organs (Lung, Kidney, and Liver) Bioprinting Leadership Most Complex Object Ever 3D Printed: • 2 Lobes • 5,000 kilometers of vasculature • 213 Million Alveoli • 44 Trillion Voxels 35+ Years of developing Targeting First
Slide 19: The Opportunity in Regenerative Medicine is Vast
The Opportunity in Regenerative Medicine is Vast Organs: • 2,569 lung transplants completed worldwide in 2021 • 3,111 patients were added to the waiting list in the United States alone • The number of patients formally added to the lung transplant waiting list has grown almost 28% compared to the la
Slide 20: 3D Systems' Offer is Far Better for Stratasys Shareholders
3D Systems’ Offer is Far Better for Stratasys Shareholders 19
Slide 21: Scale Drives Greater Profitability
Scale Drives Greater Profitability “The problem of this industry (…) no one has scale. So we want to scale. We want an inflection point. We want to be in manufacturing, but at the same time, we don't have the scale to do it. It's all about scale. And we can, as an industry, wait for this scale, but
Slide 22: Best-in-Class Combined Financial Profile
Best-in-Class Combined Financial Profile ~$1.2bn ~$885mm 1 1 Combined 2023E Revenue Combined 2023E Revenue (More than $1bn in Revenue TODAY, NOT by 2026) ~$150mm ~$55mm 2 3 Combined 2023E EBITDA Combined 2023E EBITDA Assuming run rate cost synergies Assuming run rate cost synergies ~13% ~6% 2 3 Comb
Slide 23: 3D Systems is the Best Entry into Metals for Stratasys
3D Systems is the Best Entry into Metals for Stratasys Binder Jet Metals not ready for mass production DMP Metals – Laser Bed û Binder Jet Metals Fusion Metals None of the players in Binder Jet Dental ✓û Metals have achieved consistent û profitability Healthcare – Guides ✓û and Instrumentation Healt
Slide 24: Highly Complementary Portfolio
Highly Complementary Portfolio Digital Light Printing (DLP) DP Metals Jetting: Inkjet (Poly) Selective Absorption Selective Laser Sintering (Laser-Based Fusion) Fusion Proven Technologies With Little 1 Overlap Jetting: Inkjet (Wax) Extrusion SSYS Large Format Fused Filament Small-Med Format Fused Fa
Slide 25: Significant Near-Term Cost Synergies Jointly Identified and Agreed
Significant Near-Term Cost Synergies Jointly Identified and Agreed Upon by 3D Systems and Stratasys Teams Breakdown of Expected Synergies SG&A Savings • Supply chain efficiencies COGS • Eliminate overlapping functions • Effective global services support 1 SG&A $110mm+ R&D Integration of cost synergi
Slide 26: Higher, More Certain Near-Term Synergies
Higher, More Certain Near-Term Synergies + 1 ~$110M+ ~$50M vs Cost Synergies Cost Synergies Achieved in 2+ years? ✓ Synergies Expected to be Fully Realized in 18 ? $50 million is incremental to the $100 million of Months Post Close, standalone cost reductions previously announced by with 60% Realize
Slide 27: Clearly Superior Offer
Clearly Superior Offer + $1.7bn $(0.6) $3.1bn $2.4 $1.0bn $0.7 $2.0bn $1.0 $ 0.5 8 Illustrative 15x 41% (Cash $0.6 Capitalization Consideration) $1.1bn Illustrative 15x Multiple on ~46% Capitalization $110mm Stratasys Multiple on Synergies Ownership $1.4 $1.4 $ 1.4 $50mm (Stock in $1.1 (Stock Synerg
Slide 28: Desktop Metal is a Failing Asset
Desktop Metal is a Failing Asset 27
Slide 29: Skepticism Around the Merits of a Stratasys + Desktop Metal Combination
Skepticism Around the Merits of a Stratasys + Desktop Metal Combination “Stratasys to Acquire “It feels like I want to be more excited “We believe this combination (SSYS and about the acquisition, but those DM) would never have transpired without Desktop Metal; Our Initial numbers aren't -- they're
Slide 30: Unrealistic EBITDA Growth Expectations Given No Basis in Historical Performance
Unrealistic EBITDA Growth Expectations Given No Basis in Historical Performance STRATASYS MANAGEMENT DESKTOP ACTUAL DESKTOP METAL EBITDA RESULTS 1 METAL EBITDA PROJECTIONS $180 $99 $37 ($73) ($89) ($93) ($96) ($118) 2019A 2020A 2021A 2022A Jun-2023 LTM 2024E 2025E 2026E Source: Factset, Company Fili
Slide 31: Desktop Metal Has a History of Questionable Capital Deployment
Desktop Metal Has a History of Questionable Capital Deployment Leading to Meaningful Impairments ~$230M impairment ~$270M impairment Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 $680M+ cumulative cash burn February 2021 May 2021 ~$500M Beacon Bio cumulative goodwill impair
Slide 32: Desktop Metal's Gross Margin is Well Below Peers'
Desktop Metal's Gross Margin is Well Below Peers' 1 DM’s gross margins are the lowest among peers Suggests DM is a low-quality business, with weak pricing power 56.3% 47.4% 47.3% 43.1% 39.7% 28.2% 27.6% 7.5% 6.3% Materialise Markforged Proto Labs voxeljet Kornit Digital Velo3D 1 Based on peers ident
Slide 33: Stratasys' "Next Big Thing" in Metals is a 28-Year-Old Technology
Stratasys’ “Next Big Thing” in Metals is a 28-Year-Old Technology In 8 years as a public company, In 28 years, ExOne Binder Jet û û ExOne never made a profit never approached mass production ExOne Revenue ($mm) ExOne EBITDA ($mm) $ 65 $ 59 $ 53 $(7) $(9) $(10) 2018 2019 2020 2018 2019 2020 1995 2002
Slide 34: Conclusion
Conclusion 33
Slide 35: 3D Systems Welcomes Constructive Engagement
3D Systems Welcomes Constructive Engagement History of Proposals Received by Stratasys Board of Directors Proposal Implied Value Implied Premium to Stratasys Stock Stratasys Board Date Buyer Per Stratasys Share at Market Price Decision Jan-16-2021 $43.48 37% No engagement Feb-9-2021 $ 60.00 13 % Eng
Slide 36: An Unparalleled Transaction for Stratasys Shareholders
An Unparalleled Transaction for Stratasys Shareholders 1 2 3 Creates Player with Delivers Exceptional Secures Higher Value Differentiated Scale Cost Synergies that Through Stronger and Broadest Drive Significant Value Financial Profile Capabilities in Rapidly Creation Growing Industry Higher Value.
Slide 37: A Vote Against Desktop Metal is a Vote for 3D Systems
S A Vote Against Desktop Metal is a Vote for 3D Systems + 36