Stratasys, Ltd. · NASDAQ:SSYS
Stratasys — Merger or Acquisition (June 2023)
39 slides from Stratasys's merger presentation, Jun 27, 2023
Slide 1: Building a Global Leader in Additive Manufacturing
Building a Global Leader in Additive Manufacturing JUNE 27, 2023 +
Slide 2: Forward-Looking Statements
Forward - Looking Statements Certain statements made in this document that are not statements of historical or current facts are forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward - looking statements involve known and unknown risks, unce
Slide 3: Additional Information
Additional Information This communication does not constitute an offer to buy or sell or the solicitation of an offer to sell or buy any securities. This communication relates to a proposal which 3D Systems has made for a business combination with Stratasys. In furtherance of this proposal and subje
Slide 4: Proposed Transaction Summary
Consideration of $7.50 in cash and 1.3223 shares of 3D Systems common stock per Stratasys ordinary share Implies a nominal value per Stratasys share of approximately ~$20 based on 3D Systems’ 10 - Day VWAP as of June 26, 2023 Open to offering Stratasys shareholders the opportunity to choose consider
Slide 5: An Unparalleled Transaction for Stratasys Shareholders
An Unparalleled Transaction for Stratasys Shareholders Delivers Exceptional Cost Synergies that Drive Significant Value Creation 2 Secures Higher Value Through Stronger Financial Profile 3 Creates Player with Differentiated Scale and Broadest Capabilities in Rapidly Growing Industry 1 Higher Value.
Slide 6: Uniquely Attractive Combination
Uniquely Attractive Combination 6
Slide 7: Fragmented Industry In Need of Scale
Fragmented Industry In Need of Scale 7 Metal Additive Manufacturing Technology Landscape Polymer Additive Manufacturing Technology Landscape Scale drives costs down and improves ability to compete with emerging Chinese players Source: Ampower Insights
Slide 8: Shareholders to Benefit from Supportive Industry Trends
Shareholders to Benefit from Supportive Industry Trends ~$15B 2021 1 $80B+ 2029 1 ~21% CAGR Over Next 5 - 7 Years 2 1 Based on Fortune Business Insights. 2 Average based on Fortune Business Insights, Grand View Research, Markets and Markets, Modor Research, and Wohlers Report. 8 Compelling Growth Dr
Slide 9: Building a Scaled Champion
Building a Scaled Champion Source: Public Filings, Management Estimates. 1 Based on 3D Systems management estimates. 2 Reflects 3D Systems standalone. Creates the Most Compelling Additive Manufacturing Pure - Play Stock 9 ~40K Customers 1 600+ Channel Partners 1 1M+ Parts Printed Per Day 2 2023E Rev
Slide 10: Scale Drives Greater Profitability
10 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, b
Slide 11: An Attractive Core Business Poised for Further Growth
Healthcare Solutions (ex. Dental) • 22 % year - over - year growth 1 • Driven by emergence of Virtual Surgical Planning and Orthopedic applications Industrial Solutions • 9% year - over - year growth 1 • Driven by market leadership in Aerospace & Defense An Attractive Core Business Poised for Furthe
Slide 12: 3D Systems' Differentiated Position in Regenerative Medicine
Non - Organ Tissues Supercharged By a True Growth Engine: 3D Systems’ Incredibly Differentiated Position in Regenerative Medicine 3D Systems Bioprinting Leadership 35+ Years of developing advanced 3D printing applications Organ development partnership since 2017 Acquired in 2021 to expand bioprintin
Slide 13: On Track on Our Roadmap for 3D-Printed Organs, Tissues and Bioprinting
13 On Track on Our Roadmap for 3D - Printed Organs, Tissues and Bioprinting Sep 2022 Formed Systemic Bio, a wholly - owned company focused on application of advanced bioprinting technologies Jan 2021 Announced expansion of regenerative medicine / bioprinting solution 2026E Target First in Human Tria
Slide 14: Highly Complementary Portfolio
Highly Complementary Portfolio Selective Laser Sintering (Laser - Based Fusion) Large Format Fused Filament Fabrication (Pellets) Jetting: Inkjet (Wax) Jetting: Inkjet (Poly) Selective Absorption Fusion Small - Med Format Fused Deposition Modeling Extrusion Proven Technologies With Little Overlap 1
Slide 15: Comprehensive Offering of Additive Technologies Across Applications
Comprehensive Offering of Additive Technologies Across Applications Desktop Bio Printing Durable Goods Aerospace Automotive Medical Devices VSP & Anatomical Models Dental x x x Inkjet (Poly) x x x Inkjet (Wax) x x CJP x x x x x Small - Med Format FDM (Filament) x x x Large Format FFF (Pellets) x x x
Slide 16: Significant Near-Term Cost Synergies Jointly Identified and Agreed
Significant Near - Term Cost Synergies Jointly Identified and Agreed Upon by 3D and Stratasys Teams SG&A Savings • Supply chain efficiencies • Eliminate overlapping functions • Effective global services support R&D Integration • Optimizing development opportunities without loss of technological expe
Slide 17: Best-in-Class Combined Financial Profile
Best - in - Class Combined Financial Profile Sources: Company Filings. Note: 1 Assumes approximately $240mm of cash and cash equivalents on Stratasys’s balance sheet and approximately $530mm of cash and cash equivalents on 3D Systems’ balance sheet. 2 Based on midpoint of CY2023E guidance. 3 Based o
Slide 18: Attractive and Credible Combined Financial Profile
Attractive and Credible , Combined Financial Profile, Jointly Agreed with Stratasys 18 Source: Combined Management Estimates from September 2022 Meeting. Combined Company Near - Term Financial Profile Double - Digit Organic Revenue Growth ~50% Gross Profit Margin ~12% R&D Spend ~25% SG&A Spend 15%+
Slide 19: Value Creation to Stratasys Shareholders
$ 1.1B $ 1.2B $ 1.5B $(0.6)B $ 3.2B $ 1.8B .50 $ 2.0 Illustrative Value of Cost Synergies (Capitalized) Combined Equity Value Value Creation to Stratasys Shareholders Significant and Unique Value Creation: + ~71% Value Uplift to Stratasys Shareholders ~$26 Implied Stratasys Value per Share Illustrat
Slide 20: Clearly Superior Proposal
Clearly Superior Proposal 20
Slide 21: Shareholder and analyst comments on Stratasys-Desktop Metal deal
“We believe this combination (SSYS and DM) would never have transpired without the outside pressure from Nano and now the clean, profitable growth story behind SSYS gets diluted down with the unprofitable business of DM.” “The proposed stock - for - stock transaction structure contradicts Stratasys’
Slide 22: Unrealistic EBITDA Growth Expectations for Desktop Metal
$(93) $(73) $(96) $(118) $(101) $ 99 $ 37 $ 180 0) $ 200 2025E 2026E Unrealistic EBITDA Growth Expectations Given No Basis in Historical Performance ACTUAL DESKTOP METAL EBITDA RESULTS 2019A 2020A 2021A 2022A Mar - 2023 LTM 2024E Source: Factset, Company Filings, Press Releases 1 Contribution from D
Slide 23: Desktop Metal Has a History of Questionable Capital Deployment
February 2021 September 2021 May 2021 June 2021 July 2021 September 2021 November 2021 May Dental October 2021 23 Desktop Metal Has a History of Questionable Capital Deployment Leading to Meaningful Impairments ~$270M impairment ~$230M impairment Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 20
Slide 24: Stratasys' Next Big Thing in Metals is a 28-Year-Old Technology
1998 Extrude Hone launched direct metal 3D printing machine using binder jetting technology Stratasys’ “Next Big Thing” in Metals is a 28 - Year - Old Technology 2021 Desktop Metal Acquires ExOne and their Binder Jet Technology 2002 - 2005 Extrude Hone entered sand 3D printings market with the S10 a
Slide 25: Metal Binder Jet Is A Niche Application
83% 63% 81% 80% 83% 99% 53% 5% 16% 4% 7% 6% 14% Aerospace 89% 2% Automotive R&D Energy, Oil & Gas Education Medical Tooling Other End Markets Metal Binder Jet Is A Niche Application, Producing Small, Porous And Fragile Parts That Are Not Suited For Mass Production 25 Source: Context World. 1 Reflect
Slide 26: 3D Systems is the Best Entry into Metals for Stratasys
3D Systems is the Best Entry into Metals for Stratasys Binder Jet Metals DMP Metals – Laser Bed Fusion Metals x Dental x Healthcare – Guides and Instrumentation x Healthcare – Medical Devices x Aerospace x x Automotive x x Durable Goods x Desktop Binder Jet Metals not ready for mass produc
Slide 27: Higher, More Certain Near-Term Synergies
Higher, More Certain Near - Term Synergies + ~$50M Cost Synergies Achieved in 2+ years? ~$100M+ ? $50 million is incremental to the $100 million of standalone cost reductions previously announced by Desktop Metal, which equates to ~60% of Desktop Metal’s 2022 Operating Expenses Cost Synergies Synerg
Slide 28: Stratasys and Desktop Metal's Aspirational Value Uplift
$ 1.1 $ 0.6 $ 0.7 $ 1.4 $ 1.0 $ 0.4 $1.6B $1.1B $ 0.9 $ 2.1 $ 1.5 $ 2.3 $ 2.8 $ 3.6 Stratasys Equity¹ Desktop Metal Equity² Net Cost Synergies³ PF Equity Stratasys and Desktop Metal’s Aspirational Value Uplift Based On Unlikely Synergies and Multiple Expansion Source: Stratasys proxy and investor pr
Slide 29: Setting the Record Straight
$ 1.1 $ 0.6 $ 0.7 $ 1.4 $ 1.0 $ 2.3 Stratasys Equity¹ Desktop Metal Equity² Net Cost Synergies³ Combined Equity Value Value Creation to Stratasys Shareholders Setting the Record Straight 29 Source: Stratasys proxy and investor presentation as of 20 - Jun - 2023, equity research. See page 19 for deta
Slide 30: Conclusion
TE 0) Q Mm r~/ NO ( Conclusion
Slide 31: The Market Has Spoken
2.5 % 14.1 % SSYS + DM Merger Announcement (25 - May - 23) Nano Tender Offer Announcement (09 - Mar - 23) 3D Systems Offer Announcement (02 - Jun - 23) The Market Has Spoken Source: Factset Stratasys Three - Day Share Price Reaction Post - Announcement 31 (1.5)% Merger Announcement (May 25, 2023) Te
Slide 32: An Unparalleled Transaction Creates Unmatched Global Player
An Unparalleled Transaction 32 + Creates Unmatched Global Player in a Rapidly Scaling Industry x Highly Complementary Portfolio with a Comprehensive Offering Including Proven Metals Applications x Delivers Significant Value Creation Combined with Exceptional Cost Synergies x ? Puzzling Thesis Around
Slide 33: Appendix
Appendix 33
Slide 34: Experienced 3D Systems Management Team
Experienced 3D Systems Management Team Jeff Graves CEO • Joined in May 2020 • Experience: Previous President & CEO of MTS Systems; Former President & CEO of C&D Technologies; Former Operating Officer & CEO of Kemet Corporations Michael Turner CFO • Joined in August 2022 • Experience: Former CFO of I
Slide 35: True Innovation Powerhouse
True Innovation Powerhouse + ~$700mm Last 4 - Year Cumulative R&D Spend 3,400+ Patents and Pending Patent Applications x Ongoing development of best - of - breed digital manufacturing ecosystem x Developed capacity to print using more than 130 materials x Combined entity to drive R&D optimization x
Slide 36: Combined Go-to-Market Footprint
Combined Go - to - Market Footprint 130+ Countries 3 600+ Channel Partners 1 190+ Direct Sales Team Members 2 340+ Global Customer Support Team Members 2 750+ R&D Team Members 2 100+ Application Experts 2 + 36 Source: Public Filings, Management Estimates. 1 Based on 3D Systems management estimates.
Slide 37: Side-by-Side: Laser Bed Fusion vs Binder Jet
Side - by - Side: Laser Bed Fusion vs Binder Jet 37 Binder Jet Metals DMP Metals – Powder Bed Fusion Metals A liquid binding agent is deposited onto thin metal powder layers; secondary sintering process is required A laser selectively fuses metal powder particles together Process Material selection
Slide 38: History of Proposals Received by Stratasys Board of Directors
3D Systems Welcomes Constructive Engagement Stratasys Board Decision Implied Premium to Stratasys Stock Price Proposal Implied Value Per Stratasys Share at Market Buyer Date No engagement 37% $43.48 Jan - 16 - 2021 Engagement ?! 13 % $ 60.00 Feb - 9 - 2021 No engagement 65% $ 40.24 Mar - 10 - 2021 N
Slide 39: Well-Positioned to Obtain Regulatory Clearances
Well - Positioned to Obtain Regulatory Clearances • Commoditization of desktop segment • Intensification of competition across printing process and materials by both smaller players and larger firms such as EOS, HP, Carbon, and GE • Multitude of competitors and new entrants, including emerging Chine