Protolabs Reports Record Revenue and Net Income for First Quarter 2018

About Protolabs

Protolabs is the world's fastest digital manufacturing source for rapid prototyping and on-demand production. The technology-enabled company produces custom parts and assemblies in as fast as one day with automated 3D printing, CNC machining, sheet metal fabrication, and injection molding processes. Its digital approach to manufacturing enables accelerated time to market, reduces development and production costs, and minimizes risk throughout the product life cycle. Visit protolabs.com for more information.

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 Protolabs 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 Protolabs’ future results. The forward-looking statements included in this press release are made only as of the date hereof. Protolabs cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Protolabs 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)
 
       
March 31, December 31,
2018 2017
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 45,095 $ 36,707
Short-term marketable securities 53,467 57,424
Accounts receivable, net 58,464 51,503
Inventory 9,506 11,271
Income taxes receivable - 1,832
Other current assets   8,106   6,267
Total current assets 174,638 165,004
 
Property and equipment, net 187,863 166,440
Long-term marketable securities 30,667 37,034
Goodwill 128,752 128,504
Other intangible assets, net 19,319 19,084
Other long-term assets   2,670   2,672
Total assets $ 543,909 $ 518,738
 
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 18,358 $ 15,876
Accrued compensation 9,736 12,100
Accrued liabilities and other 10,809 8,408
Short-term debt obligations - 5,000
Income taxes payable   2,962   2,371
Total current liabilities 41,865 43,755
 
Long-term income taxes payable 2,181 2,181
Long-term deferred tax liabilities 7,582 6,966
Other long-term liabilities 4,605 4,621
 
Shareholders' equity   487,676   461,215
Total liabilities and shareholders' equity $ 543,909 $ 518,738
                 
 
 
Proto Labs, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
       
Three Months Ended
March 31,

2018

2017

Revenue
Injection Molding $ 51,343 $ 47,916
CNC Machining 36,731 21,972
3D Printing 12,325 10,085
Sheet Metal 6,241 -
Other   1,105   194
Total revenue 107,745 80,167
 
Cost of revenue   49,837   34,894
Gross profit 57,908 45,273
 
Operating expenses
Marketing and sales 16,572 12,987
Research and development 6,665 5,823
General and administrative   12,943   8,781
Total operating expenses   36,180   27,591
Income from operations 21,728 17,682
Other income, net   178   315
Income before income taxes 21,906 17,997
Provision for income taxes   3,855   5,797
Net income $ 18,051 $ 12,200
 
Net income per share:
Basic $ 0.67 $ 0.46
Diluted $ 0.66 $ 0.46
 
Shares used to compute net income per share:
Basic 26,879,388 26,466,731
Diluted 27,197,099 26,599,200
                 
 
 
Proto Labs, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
       
Three Months Ended
March 31,
2018 2017
Operating activities
Net income $ 18,051 $ 12,200
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 6,259 4,250
Stock-based compensation expense 2,307 1,716
Deferred taxes 612 394
Amortization of held-to-maturity securities 163 301
Other 106 (56 )
Changes in operating assets and liabilities   (1,353 )   (13 )
Net cash provided by operating activities   26,145     18,792  
 
Investing activities
Purchases of property and equipment (25,513 ) (7,812 )
Cash used for acquisitions, net of cash acquired (90 ) -
Purchases of marketable securities (3,389 ) (16,520 )
Proceeds from maturities of marketable securities   13,551     10,755  
Net cash used in investing activities   (15,441 )   (13,577 )
 
Financing activities
Payments on debt (5,000 ) -
Proceeds from exercises of stock options and other 2,252 194
Repurchases of common stock   -     (2,662 )
Net cash used in financing activities   (2,748 )   (2,468 )
Effect of exchange rate changes on cash and cash equivalents   432     346  
Net increase in cash and cash equivalents 8,388 3,093
Cash and cash equivalents, beginning of period   36,707     68,795  
Cash and cash equivalents, end of period $ 45,095   $ 71,888  
                     
 
 
Proto Labs, Inc.
Reconciliation of GAAP to Non-GAAP Net Income per Share
(In thousands, except share and per share amounts)
(Unaudited)
       
Three Months Ended
March 31,

2018

2017

Non-GAAP net income, adjusted for stock-based compensation expense, amortization expense, and unrealized loss on foreign currency

GAAP net income $ 18,051 $ 12,200
Add back:
Stock-based compensation expense 2,307 1,716
Amortization expense 764 163
Unrealized loss on foreign currency   156     63  
Total adjustments 1 3,227 1,942
Income tax benefits on adjustments 2   (2,043 )   (574 )
Non-GAAP net income $ 19,235   $ 13,568  
 
 
Non-GAAP net income per share:
Basic $ 0.72   $ 0.51  
Diluted $ 0.71   $ 0.51  
 
Shares used to compute non-GAAP net income per share:
Basic 26,879,388 26,466,731
Diluted 27,197,099 26,599,200
             
 
1 Stock-based compensation expense, amortization expense, and unrealized loss on foreign currency were included in the following GAAP consolidated statement of operations categories:
 
Three Months Ended
March 31,

2018

2017

 
Cost of revenue $ 287 $ 197
 
Marketing and sales 377 269
Research and development 314 222
General and administrative   2,093     1,191  
Total operating expenses 2,784 1,682
 
Other income, net   156     63  
Total adjustments $ 3,227   $ 1,942  
 
2 For the three months ended March 31, 2018 and 2017, income tax effects were calculated using the effective tax rate for the relevant jurisdictions. Our non-GAAP tax rates differ from our GAAP tax rates due primarily to the mix of activity incurred in domestic and foreign tax jurisdictions and removing effective tax rate benefits from stock-based compensation activity in the quarter.
 
 
 
Proto Labs, Inc.
Reconciliation of GAAP to Non-GAAP Operating Margin
(In thousands)
(Unaudited)
       
Three Months Ended
March 31,

2018

2017

Revenue $ 107,745 $ 80,167
Income from operations   21,728     17,682  
GAAP operating margin 20.2 % 22.1 %
Add back:
Stock-based compensation expense 2,307 1,716
Amortization expense   764     163  
Total adjustments   3,071     1,879  

Non-GAAP income from operations adjusted for stock-based compensation expense and amortization expense

$ 24,799   $ 19,561  
Non-GAAP operating margin 23.0 % 24.4 %
                     
 
 
Proto Labs, Inc.
Comparison of GAAP to Non-GAAP Revenue Growth
(In thousands)
(Unaudited)
                       

Three Months Ended
March 31, 2018

Three Months Ended

March 31, 2017

%

% Change

Constant

GAAP Adjustments 1 Non-GAAP GAAP

Change 2

Currencies 3
Revenues
United States $ 84,167 $ - $ 84,167 $ 60,176 39.9 % 39.9 %
Europe 19,945 (2,534 ) 17,411 16,999 17.3 % 2.4 %
Japan   3,633   (176 )   3,457   2,992 21.4 % 15.5 %
Total Revenue $ 107,745 $ (2,710 ) $ 105,035 $ 80,167 34.4 % 31.0 %
 
1 Revenue growth for the three month period ended March 31, 2018 has been recalculated using 2017 foreign currency exchange rates in effect during comparable periods to provide information useful in evaluating the underlying business trends excluding the impact of changes in foreign currency exchange rates.
2 This column presents the percentage change from GAAP revenue growth for the three month period ended March 31, 2017 to GAAP revenue growth for the three month period ended March 31, 2018.
3 This column presents the percentage change from GAAP revenue growth for the three month period ended March 31, 2017 (calculated using the foreign currency exchange rates in effect during that period) to non-GAAP revenue growth for the three month period ended March 31, 2018 (as recalculated using 2017 foreign currency exchange rates in order to provide a constant currency comparison).
 
 
Proto Labs, Inc.
Product Developer Information
(Unaudited)
       
Three Months Ended
March 31,
2018 2017
Unique product developers and engineers served 18,057 14,801
       
Note: the information above includes unique product developers and engineers who purchased our 3D Printed products in the United States and Europe through our web-based customer interface. The information does not include 3D Printing, Injection Molding and Sheet Metal customers who do not utilize our web-based customer interface; these customers are principally related to our recent acquisitions.
 




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