Stratasys future still unclear as merger negotiations drag on

3-D printing industry watchers and Stratasys shareholders and customers hoped for answers about the future of the company Wednesday when officials reported second-quarter results.

They are still waiting.

In a company news release, CEO Yoav Zeif said: "Despite the various M&A scenarios emerging in the industry, customers across all of our technologies remain highly engaged and confident in Stratasys as we continue to look for ways to expand our innovation and suite of offerings."

Zeif also called an acquisition of rival Desktop Metal "expected."

Left unsaid, though, was where a $2 billion offer from 3D Systems, another rival, to buy Stratasys stands.

The company's board last month said company officials could examine the 3D Systems offer after the Rock Hill, S.C., company sweetened its bid several times.

Zeif said macroeconomic conditions made the second quarter a hard one for 3-D printer manufacturers. Stratasys lost $38.6 million, or 56 cents a share. The same period a year ago, the company lost $24.4 million, or 37 cents a share.

Sales declined 4% to $159.8 million.

Zeif noted that consumables and customer service revenue increased during the quarter, demonstrating the shift to using 3-D printers in production-ready environments.

Last week, the company's path became a bit clearer when its largest shareholder, Nano Dimension, withdrew a partial tender offer to acquire a controlling interest in Stratasys, which is based in Eden Prairie and Rehovot, Israel.

Nano Dimension had offered a slate of director candidates to compete with Stratasys'. But at the Stratasys annual meeting on Tuesday, the company's own slate was elected with no drama.

But there could be waves ahead with 3D Systems. 3D also reported earnings Wednesday, and its CEO, Jeff Graves, expressed frustration at the pace of the Stratasys negotiations.

In his company update, Graves said 3D has two modes to increase scale: organic growth or a merger with Stratasys.

"Either path can be successful," Graves said in the earnings release. "But the combination with Stratasys clearly accelerates the benefits to our customers and shareholders, which is why we have been working on this concept for the last two years, and so passionately over the last two months."

3D Systems also had a tough second quarter, losing $28.9 million. Revenue declined 8.5% to $128.2 million. The company has a strong presence in the dental market, especially in the making of plastic molds that help straighten teeth. Consumer discretionary spending in that space has declined significantly, it said.

The companies in this space are attracting so much attention because the size of the 3-D printing or additive manufacturing market of $15 billion is expected to grow 25% a year for the next five years or so.

"The consensus in the industry seems to be that Stratasys and 3D Systems will likely merge," said Michael Molitch-Hou, editor of the trade publication 3DPrint.com.

Molitch-Hou added that there is additional industry speculation that a combined 3D Systems/Stratasys would go ahead and complete the merger with Desktop Metal.

Stratasys faces a $32.5 million termination fee for backing out of the proposed deal to acquire Desktop Metal.

Combining Stratasys, Desktop Metal and 3D Printing would give the combined entity a breadth in most types of materials, expanding markets.

The industry is rapidly moving from using 3-D printing to largely building prototypes to being an effective tool for creating production-ready parts that can be produced at scale.

"Additive manufacturing is on the edge of tremendous growth as customers accelerate the use of our technologies at production scale," said Zeif, the Stratasys CEO.

Shares of Stratasys closed at $15.55, down 7.2% Wednesday; year-to-date the stock is up 31%.