Quarterly Revenue Increases 30% Year over Year to $54.6 Million
Year-to-Date Revenue Increases 29% Year over Year to $153.5 Million
MAPLE PLAIN, Minn. — (BUSINESS WIRE) — October 23, 2014 — Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled quick-turn manufacturer, today announced financial results for the third quarter ended September 30, 2014.
Highlights include:
- Revenue for the third quarter of 2014 increased to a record $54.6 million, 30 percent above revenue of $42.0 million in the third quarter of 2013.
- Revenue for the third quarter of 2014 from additive services (3D printing) through the Fineline acquisition completed last April increased to $3.4 million, a 38% increase when compared to Fineline’s third quarter of 2013.
- The record quarterly revenue was achieved through a 19 percent increase in the number of product developers served combined with an increase of 3 percent in spending per product developer.
- Net income for the third quarter of 2014 increased to $10.4 million, or $0.40 per diluted share. Non-GAAP net income, excluding the after tax expense of stock compensation and amortization of intangibles, was $11.4 million, or $0.44 per diluted share. See “Non-GAAP Financial Measure” below.
“We achieved strong revenue growth in the third quarter, especially in light of the weakness we experienced in our European markets. While our European business was flat compared to the previous year, our North American business excluding our Fineline operation grew 26 percent,” said Vicki Holt, President and Chief Executive Officer of Proto Labs. “We continue to add to our sales and marketing teams worldwide as we believe this will drive further revenue growth. In addition, best practices developed by our US marketing team are being incorporated throughout all our international operations to ensure consistent lead generation and customer awareness. We remain extremely optimistic about the outlook for Proto Labs and continue to make investments in the business to drive sustainable growth long term.”
Additional highlights include:
- Gross margin was 60.6 percent of revenue during the third quarter of 2014 compared with 61.8 percent during the same quarter in 2013.
- During the third quarter of 2014, spending on research and development, including the Protoworks initiatives and integration activities related to Fineline, totaled $4.6 million, or 8.3 percent of revenue. This compares to $3.0 million, or 7.2 percent of revenue, during the third quarter of 2013.
- Operating margin was 28.3 percent of revenue during the third quarter of 2014 compared to 31.9 percent during the third quarter of 2013.
- As measured on a year-to-date basis, cash generated from operations totaled $40 million. Cash, cash equivalents and investments totaled $119 million as of September 30, 2014.
“We remain on track with our integration of Fineline and continue to see the value of our additive offering combined with our legacy services of injection molding and CNC machining,” commented Ms. Holt. “The new services we have rolled out this year through our Protoworks initiatives, LSR molding and metal injection molding, have been well-received and remain on track to provide more meaningful revenue in 2015. In summary, I continue to be impressed with the high-level of accomplishments of all our teams and am confident our activities will continue to support our long-term target model.”
Non-GAAP Financial Measure
The company has included non-GAAP net income, adjusted for stock-based compensation expense and amortization expense, in this press release to provide investors with additional information regarding the company’s financial results. The company has provided below a reconciliation of non-GAAP net income, adjusted for stock-based compensation expense and amortization expense, to net income, the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP net income, adjusted for stock-based compensation expense and amortization expense, is used by the company’s management and board of directors to understand and evaluate operating performance and trends and provides a useful measure for period-to-period comparisons of the company’s business. Accordingly, the company believes that non-GAAP net income, adjusted for stock-based compensation expense and amortization expense, provides useful information to investors and others in understanding and evaluating operating results in the same manner as our management and board of directors.
Conference Call
The company has scheduled a conference call to discuss its third quarter financial results today, October 23, 2014 at 8:30 a.m. ET. To access the call in the U.S. please dial 877-709-8150. Outside the U.S. please dial 201-689-8354. No participant code is required. A simultaneous webcast of the call will also be available on the investor relations section of the company’s website at www.protolabs.com/investors. An audio replay will be available for 14 days following the call on the investor relations website of Proto Lab’s website.
About Proto Labs, Inc.
Proto Labs is a leading online and technology-enabled quick-turn manufacturer of custom parts for prototyping and short-run production. Proto Labs provides “Real Parts, Really Fast” to product developers worldwide. Proto Labs utilizes computer numerical control (CNC) machining, injection molding, and additive manufacturing (3D printing), to manufacture custom parts for our customers. For more information, visit protolabs.com.
Forward-Looking Statements
Statements contained in this press release regarding matters that are not historical or current facts are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause the results of Proto Labs to be materially different than those expressed or implied in such statements. Certain of these risk factors and others are described in the “Risk Factors” section within reports filed with the SEC. Other unknown or unpredictable factors also could have material adverse effects on Proto Labs’ future results. The forward-looking statements included in this press release are made only as of the date hereof. Proto Labs cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Proto Labs expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.
| Proto Labs, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| September 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 34,268 | $ | 43,039 | ||||
| Short-term marketable securities | 24,212 | 36,339 | ||||||
| Accounts receivable, net | 25,460 | 18,320 | ||||||
| Inventory | 5,705 | 5,166 | ||||||
| Other current assets | 7,953 | 6,931 | ||||||
| Total current assets | 97,598 | 109,795 | ||||||
| Property and equipment, net | 87,962 | 56,101 | ||||||
| Long-term marketable securities | 60,449 | 64,023 | ||||||
| Goodwill | 28,916 | - | ||||||
| Other intangible assets, net | 4,269 | - | ||||||
| Other long-term assets | 232 | 256 | ||||||
| Total assets | $ | 279,426 | $ | 230,175 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 7,973 | $ | 6,455 | ||||
| Accrued compensation | 8,154 | 6,196 | ||||||
| Accrued liabilities and other | 3,804 | 808 | ||||||
| Current portion of long-term debt obligations | 164 | 204 | ||||||
|
Total current liabilities |
20,095 | 13,663 | ||||||
| Long-term deferred tax liabilities | 4,112 | 3,682 | ||||||
| Long-term debt obligations | 42 | 159 | ||||||
| Other long-term liabilities | 854 | 1,028 | ||||||
| Shareholders' equity | 254,323 | 211,643 | ||||||
| Total liabilities and shareholders' equity | $ | 279,426 | $ | 230,175 | ||||
| Proto Labs, Inc. | ||||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||||
| (In thousands, except share and per share amounts) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| Revenue | ||||||||||||||||||
| Protomold | $ | 35,655 | $ | 29,534 | $ | 104,604 | $ | 84,338 | ||||||||||
| Firstcut | 15,549 | 12,474 | 43,407 | 34,732 | ||||||||||||||
| Fineline | 3,370 | - | 5,503 | - | ||||||||||||||
| Total revenue | 54,574 | 42,008 | 153,514 | 119,070 | ||||||||||||||
| Cost of revenue | 21,492 | 16,053 | 58,725 | 44,983 | ||||||||||||||
| Gross profit | 33,082 | 25,955 | 94,789 | 74,087 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| Marketing and sales | 7,351 | 5,409 | 21,029 | 16,222 | ||||||||||||||
| Research and development | 4,555 | 3,026 | 11,925 | 8,405 | ||||||||||||||
| General and administrative | 5,733 | 4,118 | 15,970 | 12,035 | ||||||||||||||
| Total operating expenses | 17,639 | 12,553 | 48,924 | 36,662 | ||||||||||||||
| Income from operations | 15,443 | 13,402 | 45,865 | 37,425 | ||||||||||||||
| Other income (expense), net | (56 | ) | 31 | (19 | ) | 149 | ||||||||||||
| Income before income taxes | 15,387 | 13,433 | 45,846 | 37,574 | ||||||||||||||
| Provision for income taxes | 5,003 | 4,561 | 14,404 | 11,804 | ||||||||||||||
| Net income | $ | 10,384 | $ | 8,872 | $ | 31,442 | $ | 25,770 | ||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | $ | 0.40 | $ | 0.35 | $ | 1.23 | $ | 1.03 | ||||||||||
| Diluted | $ | 0.40 | $ | 0.34 | $ | 1.20 | $ | 1.00 | ||||||||||
| Shares used to compute net income per share: | ||||||||||||||||||
| Basic | 25,757,593 | 25,384,940 | 25,651,156 | 25,121,941 | ||||||||||||||
| Diluted | 26,200,741 | 26,002,240 | 26,109,539 | 25,794,950 | ||||||||||||||
| Proto Labs, Inc. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| Nine Months Ended | ||||||||||
| September 30, | ||||||||||
| 2014 | 2013 | |||||||||
| Operating activities | ||||||||||
| Net income | $ | 31,442 | $ | 25,770 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 7,696 | 5,528 | ||||||||
| Stock-based compensation expense | 3,561 | 2,595 | ||||||||
| Deferred taxes | 487 | (61 | ) | |||||||
| Excess tax benefit from stock-based compensation | (4,383 | ) | (8,198 | ) | ||||||
| Amortization of held-to-maturity securities | 1,194 | 1,007 | ||||||||
| Loss on disposal of property and equipment | - | 111 | ||||||||
| Changes in operating assets and liabilities | 7 | 8,148 | ||||||||
| Net cash provided by operating activities | 40,004 | 34,900 | ||||||||
| Investing activities | ||||||||||
| Purchases of property and equipment | (35,928 | ) | (12,976 | ) | ||||||
| Acquisitions, net of cash acquired | (33,864 | ) | - | |||||||
| Purchases of marketable securities | (47,338 | ) | (82,657 | ) | ||||||
| Proceeds from sales and maturities of marketable securities | 61,896 | 50,663 | ||||||||
| Net cash used in investing activities | (55,234 | ) | (44,970 | ) | ||||||
| Financing activities | ||||||||||
| Payments on debt | (1,005 | ) | (211 | ) | ||||||
| Acquisition-related contingent consideration | (800 | ) | - | |||||||
| Proceeds from exercises of stock options and other | 3,962 | 4,635 | ||||||||
| Excess tax benefit from stock-based compensation | 4,383 | 8,198 | ||||||||
| Net cash provided by financing activities | 6,540 | 12,622 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | (81 | ) | 71 | |||||||
| Net increase (decrease) in cash and cash equivalents | (8,771 | ) | 2,623 | |||||||
| Cash and cash equivalents, beginning of period | 43,039 | 36,759 | ||||||||
| Cash and cash equivalents, end of period | $ | 34,268 | $ | 39,382 | ||||||
| Proto Labs, Inc. | ||||||||||
| Reconciliation of GAAP to Non-GAAP Financial Measure | ||||||||||
| (In thousands, except share and per share amounts) | ||||||||||
| (Unaudited) | ||||||||||
| Three Months Ended | Nine Months Ended | |||||||||
| September 30, 2014 | September 30, 2014 | |||||||||
|
Non-GAAP net income, adjusted for stock-based compensation and amortization expenses: |
||||||||||
| GAAP net income | $ | 10,384 | $ | 31,442 | ||||||
| Add back: Stock-based compensation expense | ||||||||||
| Cost of revenue | 103 | 282 | ||||||||
| Marketing and sales | 250 | 685 | ||||||||
| Research and development | 287 | 770 | ||||||||
| General and administrative | 673 | 1,824 | ||||||||
| Total stock-based compensation expense | 1,313 | 3,561 | ||||||||
| Income tax benefits on stock-based compensation expense | (417 | ) | (1,128 | ) | ||||||
| Non-GAAP net income adjusted for stock-based compensation expense | 11,280 | 33,875 | ||||||||
| Add back: Amortization expense | ||||||||||
| General and administrative | 186 | 311 | ||||||||
| Income tax benefits on amortization expense | (65 | ) | (109 | ) | ||||||
|
Non-GAAP net income adjusted for stock-based compensation and amortization expenses |
$ | 11,401 | $ | 34,077 | ||||||
| Non-GAAP net income per share: | ||||||||||
| Basic | $ | 0.44 | $ | 1.33 | ||||||
| Diluted | $ | 0.44 | $ | 1.31 | ||||||
| Shares used to compute non-GAAP net income per share: | ||||||||||
| Basic | 25,757,593 | 25,651,156 | ||||||||
| Diluted | 26,200,741 | 26,109,539 | ||||||||
| Proto Labs, Inc. | ||||||||
| Revenue by Geography - Based on Shipping Location | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | Nine Months Ended | |||||||
| September 30, 2014 | September 30, 2014 | |||||||
| Revenues | ||||||||
| Domestic | ||||||||
| United States | $ | 40,822 | $ | 113,810 | ||||
| International | ||||||||
| Europe | 9,333 | 27,523 | ||||||
| Japan | 1,878 | 5,210 | ||||||
| United States | 2,541 | 6,971 | ||||||
| Total international | 13,752 | 39,704 | ||||||
| Total revenue | $ | 54,574 | $ | 153,514 | ||||
| Proto Labs, Inc. | ||||||||||||||
| Customer Information | ||||||||||||||
| (In thousands, except customer amounts) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||
| 2014 | 2013 | |||||||||||||
| Number of | Number of | |||||||||||||
| Customers | Revenue ($) | Customers | Revenue ($) | |||||||||||
| New customers - Protomold and Firscut | 2,564 | $ | 16,054 | 2,261 | $ | 14,636 | ||||||||
| Existing customers - Protomold and Firscut | 6,154 | 131,957 | 5,315 | 104,434 | ||||||||||
| Total | 8,718 | $ | 148,011 | 7,576 | $ | 119,070 | ||||||||
| Note: the data above does not include customers who purchased Fineline products during the periods presented | ||||||||||||||
| Proto Labs, Inc. | ||||||||||||
| Product Developer Information | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Unique product developers served - Protomold and Firscut | 8,680 | 7,308 | 15,942 | 13,421 | ||||||||
| Note: the data above does not include product developers who purchased Fineline products during the periods presented | ||||||||||||
Contact:
For Proto Labs, Inc.
Investor Relations:
Jack Judd,
763-479-7408
Email Contact
or
Jenifer
Kirtland, 408-656-9496
Email Contact
or
Media
Relations:
Bill Dietrick, 763-479-7664
Email Contact