Proto Labs Reports Record Revenue and Net Income for the Third Quarter 2012

Quarterly Revenue Increases 21% Year over Year to $32.5 Million

Quarterly Net Income Increases 22% Year over Year to $6.7 Million

MAPLE PLAIN, Minn.--()--Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled quick-turn manufacturer, today announced its financial results for the third quarter and the first nine months ended September 30, 2012.

Highlights include:

  • Revenue for the third quarter of 2012 increased to a record $32.5 million, 21 percent above revenue of $26.9 million in the third quarter of 2011.
  • European revenue grew 14 percent and Japan revenue grew 15 percent sequentially in the third quarter of 2012 compared to the second quarter.
  • For the first nine months of 2012, revenue increased to $92.4 million, or 26 percent above revenue of $73.3 million during the first nine months of 2011.
  • During the first nine months of 2012, revenue from 2,251 new customer companies totaled $13.6 million and revenue from 4,394 existing customer companies totaled $78.8 million.
  • Net income during the third quarter of 2012 totaled $6.7 million, or $0.26 per diluted share. After adding back the after-tax expense of stock compensation, non-GAAP net income was $7.3 million, or $0.29 per diluted share. See “Non-GAAP Financial Measure” below.

“We are pleased to report record quarterly revenue for Proto Labs,” said Brad Cleveland, President and CEO. “It is particularly encouraging that all of our global operations contributed to this result, with sequential growth occurring in the United States, Europe and Japan.”

Additional highlights include:

  • Gross margin was 60.7 percent of revenue in the third quarter of 2012 compared with 59.1 percent in the second quarter of 2012.
  • During the third quarter of 2012, spending on research and development, including the Protoworks initiatives, totaled $2.6 million, or 7.9 percent of revenue. This compares to $2.4 million, or 8.0 percent of revenue during the second quarter of 2012.
  • Operating margin was 29.5 percent of revenue during the third quarter of 2012 compared to 24.9 percent in the second quarter of 2012.
  • Cash generated from operations totaled $19.3 million in the first nine months of 2012. Expenditures on capital equipment were $14.4 million in the first nine months of 2012.

“Our record quarterly net income reflects the impact of our ongoing margin expansion initiatives around the world, and I would like to congratulate my global colleagues for their achievements despite macro-economic challenges,” concluded Mr. Cleveland.

Non-GAAP Financial Measure

The company has included non-GAAP net income, adjusted for stock-based compensation 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, 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, 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, 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 25, at 8:30 a.m. ET. To access the call in the U.S. please dial 800-798-2864. Outside the U.S. please dial. 617-614-6206. Use participant code 66508620#. 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 and injection molding 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 of the final prospectus relating to the Proto Labs’ initial public offering, as filed with the SEC, as well as in Proto Labs’ subsequent 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,
2012 2011
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 36,290 $ 8,135
Short-term marketable securities 21,704 250
Accounts receivable, net 15,304 11,533
Inventory 4,343 3,797
Other current assets   5,172   4,362  
Total current assets 82,813 28,077
 
Property and equipment, net 44,457 34,249
Long-term marketable securities   29,651   -  
Total assets $ 156,921 $ 62,326  
 
Liabilities, redeemable convertible stock and
shareholder's equity (deficit)
Current liabilities
Accounts payable $ 4,159 $ 4,431
Accrued compensation 5,516 4,767
Accrued liabilities and other 725 351
Current portion of long-term debt obligations   335   390  
Total current liabilities 10,735 9,939
 
Deferred tax liability 4,252 4,252
Long-term debt obligations 401 613
Other 800 871
 
Redeemable convertible preferred and common stock - 66,894
 
Shareholders' equity (deficit)   140,733   (20,243 )
Total liabilities, redeemable convertible stock and
shareholders' equity (deficit) $ 156,921 $ 62,326  
               
 
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,

2012

2011

2012

2011

Revenues
Protomold $ 23,458

$

19,951 $ 66,697 $ 55,087
Firstcut   8,996   6,964     25,678     18,215  
Total revenues 32,454 26,915 92,375 73,302
 
Cost of revenues
Protomold $ 9,186 $ 7,471 $ 26,821 $ 20,642
Firstcut   3,574   2,834     10,421     7,609  
Total cost of revenues   12,760   10,305     37,242     28,251  
Gross profit 19,694 16,610 55,133 45,051
 
Operating expenses
Marketing and sales 4,442 4,000 13,440 11,139
Research and development 2,561 1,304 6,622 3,639
General and administrative   3,118   3,038     10,394     8,297  
Total operating expenses   10,121   8,342     30,456     23,075  
Income from operations 9,573 8,268 24,677 21,976
Other income (expense), net   314   21     (90 )   18  
Income before income taxes 9,887 8,289 24,587 21,994
Provision for income taxes   3,185   2,801     7,957     7,252  
Net income 6,702 5,488 16,630 14,742
Less: dividends on redeemable preferred stock - (1,053 ) - (3,126 )
Less: undistributed earnings allocated to preferred shareholders   -   (1,415 )   -     (3,834 )
Net income attributable to common shareholders $ 6,702 $ 3,020   $ 16,630   $ 7,782  
 
Net income per share:
Basic $ 0.28 $ 0.23   $ 0.72   $ 0.64  
Diluted $ 0.26 $ 0.22   $ 0.68   $ 0.58  
 
Shares used to compute net income per share:
Basic 24,052,409 12,895,918 22,975,950 12,162,808
Diluted 25,312,643 13,560,400 24,356,785 13,496,238
                               
 
Proto Labs, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
       
Nine Months Ended
September 30,
2012 2011
 
Operating activities
Net income $ 16,630 $ 14,742
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 4,380 3,009
Stock-based compensation expense 2,362 742
Deferred taxes - 1,463
Excess tax benefit from stock-based compensation (2,635 ) -
Loss on disposal of property and equipment - (11 )
Changes in operating assets and liabilities:   (1,476 )   (610 )
Net cash provided by operating activities   19,261     19,335  
 
Investing activities
Purchases of property and equipment (14,435 ) (10,083 )
Purchases of marketable securities (61,395 ) -
Proceeds from sale of marketable securities   10,290     500  
Net cash used in investing activities   (65,540 )   (9,583 )
 
Financing activities
Proceeds from initial public offering, net of offering costs 71,530 -
Payments on debt (289 ) (3,955 )
Proceeds from exercises of warrants and stock options 728 547
Excess tax benefit from stock-based compensation   2,635     -  
Net cash provided by (used in) financing activities   74,604     (3,408 )
Effect of exchange rate changes on cash and cash equivalents   (170 )   (92 )
Net increase in cash and cash equivalents 28,155 6,252
Cash and cash equivalents, beginning of period   8,135     6,101  
Cash and cash equivalents, end of period $ 36,290   $ 12,353  
                 
 
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, 2012 September 30, 2012
Non-GAAP net income, adjusted for stock-based compensation expense:
GAAP net income $ 6,702 $ 16,630
Add back: Stock-based compensation expense
Cost of revenue 103 248
Marketing and sales 117 300
Research and development 142 346
General and administrative   380     1,468  
Total stock-based compensation expense 742 2,362
Less: Tax benefit on stock-based compensation   (194 )   (663 )
Non-GAAP net income $ 7,250   $ 18,329  
 
Non-GAAP net income per share:
Basic $ 0.30   $ 0.80  
Diluted $ 0.29   $ 0.75  
 
Shares used to compute non-GAAP net income per share:
Basic 24,052,409 22,975,950
Diluted 25,312,643 24,356,785
         

Contacts

Proto Labs, Inc.
Investor Relations:
Jack Judd, 763-479-7408
jack.judd@protolabs.com
or
Media Relations:
Bill Dietrick, 763-479-7664
bill.dietrick@protolabs.com

Sharing

Contacts

Proto Labs, Inc.
Investor Relations:
Jack Judd, 763-479-7408
jack.judd@protolabs.com
or
Media Relations:
Bill Dietrick, 763-479-7664
bill.dietrick@protolabs.com