Quarterly Revenue Increases 9.4% to a Record
$82.0 million
Quarterly Net Income Increases 13.0% to
$12.1 million
Proto Labs, Inc. (NYSE: PRLB), a leading online and
technology-enabled, quick-turn, on-demand manufacturer, today
announced financial results for the second quarter ended June 30,
2017.
Second Quarter 2017 Highlights include:
- Revenue for the second quarter of 2017
was $82.0 million, 9.4 percent above revenue of $75.0 million in
the second quarter of 2016.
- The number of unique product developers
and engineers served totaled 16,174 in the second quarter of 2017,
an increase of 18.8 percent over the second quarter of 2016.
- Net income for the second quarter of
2017 was $12.1 million, or $0.45 per diluted share. Non-GAAP net
income, excluding the after-tax expense of stock compensation,
amortization of intangibles, legal settlements and unrealized
foreign currency gains, was $13.1 million, or $0.49 per diluted
share. See “Non-GAAP Financial Measures” below.
“We delivered record revenue this quarter with the Americas
leading the way with 14.5 percent year-over-year growth,” said
Vicki Holt, President and Chief Executive Officer. “Our revenue
growth was driven by an 18.8 percent growth in the number of unique
product developers we served this quarter, reflecting continued
penetration of our market opportunity.”
Additional Second Quarter 2017 Highlights include:
- Gross margin was 56.5 percent of
revenue for the second quarter of 2017 compared with 56.4 percent
for the second quarter of 2016.
- Operating margin was 20.0 percent of
revenue during the second quarter of 2017 compared to 19.8 percent
of revenue for the second quarter of 2016.
- The company generated $20.6 million in
cash from operations during the second quarter of 2017.
- Cash and investments balance increased
to $217.9 million at June 30, 2017.
“We continue to execute on our initiative to expand our product
envelope. Our recently launched on-demand manufacturing offering
tailors our injection molding service to address the specific needs
of the customer. This offering includes a suite of inspection
reports, including a digital inspection report option, a lifetime
mold guarantee and more competitive piece part pricing to the
on-demand manufacturing customer,” concluded Holt.
Non-GAAP Financial Measures
The company has included non-GAAP adjusted revenue growth that
excludes the impact of changes in foreign currency exchange rates
and non-GAAP adjusted revenue growth that excludes the impact of
discontinued businesses, discontinued manufacturing processes, and
unprofitable Alphaform 3D printing contracts in this press release
to provide investors with additional information regarding the
company’s financial results. Management believes these metrics are
useful in evaluating the underlying business trends and ongoing
operating performance of the company.
The company has also included non-GAAP operating margin,
adjusted for stock-based compensation expense, amortization
expense, impairment on assets and facilities-related charges
(collectively, “non-GAAP operating margin”), in this press release
to provide investors with additional information regarding the
company’s financial results.
The company has also included non-GAAP net income, adjusted for
stock-based compensation expense, amortization expense, impairment
on assets, facilities-related charges, legal settlement and
unrealized foreign currency activity (collectively, “non-GAAP net
income”), in this press release to provide investors with
additional information regarding the company’s financial
results.
The company has provided a reconciliation of GAAP to non-GAAP
net income, the most directly comparable measure calculated and
presented in accordance with GAAP. Non-GAAP net income is used by
the company’s management and board of directors to understand and
evaluate operating performance and trends and provide useful
measures for period-to-period comparisons of the company’s
business. Accordingly, the company believes that non-GAAP net
income 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
second quarter 2017 financial results today, July 27, 2017 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 be available via
the investor relations section of the Proto Labs website and the
following link:
http://edge.media-server.com/m/p/pcgxg5mm. A replay
will be available for 14 days following the call on the investor
relations section of Proto Labs’ website.
About Proto Labs, Inc.
Proto Labs is the world’s fastest digital manufacturing source
for custom prototypes and low-volume production parts. The
technology-enabled company uses advanced 3D printing, CNC machining
and injection molding technologies to produce parts within days.
The result is an unprecedented speed-to-market value for product
designers and engineers worldwide. 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 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)
June 30, December 31, 2017
2016 (Unaudited)
Assets Current assets Cash and cash equivalents $ 99,196 $
68,795 Short-term marketable securities 48,272 39,477 Accounts
receivable, net 42,211 34,060 Inventory 9,327 9,310 Income taxes
receivable - 445 Other current assets 5,915 5,697
Total current assets 204,921 157,784 Property and equipment,
net 146,364 139,474 Long-term marketable securities 69,435 84,479
Goodwill 28,916 28,916 Other intangible assets, net 2,367 2,655
Other long-term assets 2,650 933 Total assets $
454,653 $ 414,241
Liabilities and shareholders'
equity Current liabilities Accounts payable $ 14,147 $ 11,322
Accrued compensation 10,990 7,670 Accrued liabilities and other
4,530 4,435 Income taxes payable 1,383 - Total
current liabilities 31,050 23,427 Long-term deferred tax
liabilities 8,613 7,003 Other long-term liabilities 4,186 3,978
Shareholders' equity 410,804 379,833 Total
liabilities and shareholders' equity $ 454,653 $ 414,241
Proto Labs, Inc. Condensed Consolidated Statements
of Operations (In thousands, except share and per share
amounts) (Unaudited)
Three Months Ended Six Months
Ended June 30, June 30,
2017
2016
2017
2016
Revenue Injection Molding $ 46,792 $ 44,762 $ 94,708 $ 87,931 CNC
Machining 24,180 19,854 46,152 38,729 3D Printing 10,873 9,099
20,958 18,209 Other
195
1,246 389
2,660 Total revenue 82,040 74,961 162,207 147,529
Cost of revenue
35,671
32,715 70,565
65,629 Gross profit 46,369 42,246 91,642 81,900
Operating expenses Marketing and sales 14,630 11,453 27,617 22,395
Research and development 6,084 5,816 11,907 11,134 General and
administrative
9,253 10,126
18,034 18,377 Total
operating expenses
29,967
27,395 57,558
51,906 Income from operations 16,402 14,851 34,084
29,994 Other income, net
1,173
1,092 1,488
1,717 Income before income taxes 17,575 15,943 35,572
31,711 Provision for income taxes
5,489
5,252 11,286
10,358 Net income
$ 12,086
$ 10,691 $
24,286 $ 21,353 Net
income per share: Basic
$ 0.46
$ 0.41 $ 0.91
$ 0.81 Diluted
$
0.45 $ 0.40 $
0.91 $ 0.80 Shares
used to compute net income per share: Basic 26,541,978 26,368,001
26,554,262 26,295,074 Diluted 26,649,152 26,561,148 26,710,217
26,526,629
Proto Labs, Inc. Condensed Consolidated
Statements of Cash Flows (In thousands)
(Unaudited) Six Months
Ended June 30, 2017 2016 Operating
activities Net income $ 24,286 $ 21,353 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8,700 8,147 Stock-based compensation
expense 3,958 3,541 Deferred taxes 1,608 403 Amortization of
held-to-maturity securities 592 590 Loss on impairment of assets -
455 Other 77 (1,095 ) Changes in operating assets and liabilities
206 5,084 Net
cash provided by operating activities
39,427
38,478 Investing
activities Purchases of property and equipment (13,301 )
(22,416 ) Purchases of marketable securities (20,037 ) (38,304 )
Proceeds from maturities of marketable securities 25,194 28,759
Purchases of other investments
(514
) - Net cash used in
investing activities
(8,658 )
(31,961 ) Financing
activities Acquisition-related contingent consideration - (400
) Proceeds from exercises of stock options and other 3,791 3,729
Repurchases of common stock
(4,410
) - Net cash provided by
(used in) financing activities
(619
) 3,329 Effect of exchange
rate changes on cash and cash equivalents
251
(168 ) Net increase in
cash and cash equivalents 30,401 9,678
Cash and cash
equivalents, beginning of period 68,795
47,653 Cash and cash
equivalents, end of period $ 99,196
$ 57,331
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 Six
Months Ended June 30, June
30,
2017
2016
2017
2016
Non-GAAP net income, adjusted for
stock-based compensation expense, amortization expense, unrealized
gain on foreign currency, legal settlement, impairment on assets
and charges related to the exit of facilities
GAAP net income $ 12,086 $ 10,691 $ 24,286 $ 21,353 Add back:
Stock-based compensation expense 2,242 1,809 3,958 3,541
Amortization expense 125 171 288 357 Impairment on assets - 455 -
455 Facilities-related charges - 418 - 418 Unrealized gain on
foreign currency (412 ) (806 ) (349 ) (1,130 ) Legal settlement
(417 ) -
(417 )
- Total adjustments 1
1,538
2,047 3,480
3,641 Income tax benefits on
adjustments 2
(501 )
(773 ) (1,079
) (1,310 ) Non-GAAP
net income
$ 13,123 $
11,965 $ 26,687
$ 23,684
Non-GAAP net income per share: Basic
$
0.49 $ 0.45
$ 1.01 $
0.90 Diluted
$ 0.49
$ 0.45 $
1.00 $ 0.89
Shares used to compute non-GAAP net income per share: Basic
26,541,978 26,368,001 26,554,262 26,295,074 Diluted 26,649,152
26,561,148 26,710,217 26,526,629
1
Stock-based compensation expense, amortization expense, impairment
on assets, facilities-related charges, unrealized gain on foreign
currency and legal settlement were included in the following GAAP
consolidated statement of operations categories:
Three
Months Ended Six Months Ended June
30, June 30,
2017
2016
2017
2016
Cost of revenue $ 237 $ 268 $ 434 $ 398 Marketing and sales 339 213
607 491 Research and development 279 480 501 774 General and
administrative 1,512 1,892 2,704 3,108 Other income, net
(829 ) (806
) (766 )
(1,130 ) Total adjustments
$
1,538 $ 2,047
$ 3,480 $
3,641 2 For the three months ended June
30, 2017 and 2016, income tax effects were calculated reflecting an
effective GAAP tax rate of 31.2% and 32.9%, respectively, and an
effective non-GAAP tax rate of 31.3% and 33.5%, respectively. For
the six months ended June 30, 2017 and 2016, income tax effects
were calculated reflecting an effective GAAP tax rate of 31.7% and
32.7%, respectively, and an effective non-GAAP tax rate of 31.7%
and 33.0%, respectively. Our GAAP tax rates for the three and six
months ended June 30, 2017 and 2016 differ from our non-GAAP tax
rates for the same periods due primarily to the mix of activity
incurred in domestic and foreign tax jurisdictions.
Proto Labs, Inc. Reconciliation of GAAP to
Non-GAAP Operating Margin (In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2017
2016
2017
2016
Revenue $ 82,040 $ 74,961 $ 162,207 $ 147,529 Income from
operations
16,402
14,851 34,084
29,994 GAAP operating margin 20.0 % 19.8 % 21.0
% 20.3 % Add back: Stock-based compensation expense 2,242 1,809
3,958 3,541 Amortization expense 125 171 288 357 Impairment on
assets - 455 - 455 Facilities-related charges
-
418 -
418 Total adjustments
2,367 2,853
4,246 4,771
Non-GAAP income from operations adjusted
for stock-based compensation expense, amortization expense,
impairment on assets and facilities-related charges
$ 18,769 $
17,704 $ 38,330
$ 34,765 Non-GAAP operating
margin 22.9 % 23.6 % 23.6 % 23.6 %
Proto
Labs, Inc. Comparison of GAAP to Non-GAAP Revenue Growth
(In thousands) (Unaudited)
Three Months Ended
% Change
Six Months Ended % Change June
30, % Constant June
30, % Constant
2017
2016
Change
Currencies1
2017
2016
Change
Currencies1
Revenues United States $ 63,353 $ 55,323 14.5 % 14.5 % $ 123,529 $
109,791 12.5 % 12.5 % Europe 16,131 17,276 -6.6 % -1.9 % 33,130
32,907 0.7 % 6.1 % Japan
2,556
2,362 8.2 %
11.5 % 5,548
4,831 14.8 %
15.8 % Total Revenue
$
82,040 $ 74,961
9.4 % 10.6 %
$ 162,207 $
147,529 9.9 %
11.2 % 1 Revenue growth for the
three- and six-month periods ended June 30, 2017 has been
recalculated using 2016 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.
Three
Months Ended Six Months Ended June
30,
%
June 30,
%
2017
2016
Change(2)
2017
2016
Change(2)
Revenues Injection Molding $ 46,792 $ 44,219 5.8 % $ 94,158 $
86,612 8.7 % CNC Machining 24,180 19,854 21.8 % 46,152 38,729 19.2
% 3D Printing 10,873 9,019 20.6 % 20,958 18,036 16.2 % Other
195 401 -51.4
% 389 876
-55.6 % Total Revenue
$
82,040 $ 73,493
11.6 % $
161,657 $ 144,253
12.1 % 2 Revenue growth for the
three- and six-month periods ended June 30, 2017 and 2016 has been
recalculated to exclude revenue earned from two discontinued
manufacturing processes, Metal Injection Molding (MIM) and
Magnesium Thixomolding (Thixo), discontinued non-core resin resale
business and unprofitable Alphaform 3D Printing contracts.
Proto Labs, Inc. Revenue by Geography (In
thousands) (Unaudited)
Three Months Ended Six Months
Ended June 30, June 30,
2017
2016
2017
2016
Revenue: United States $ 63,353 $ 55,323 $ 123,529 $ 109,791
Europe 16,131 17,276 33,130 32,907 Japan
2,556
2,362 5,548
4,831 Total Revenue
$ 82,040
$ 74,961 $
162,207 $ 147,529
Proto Labs, Inc. Product Developer
Information (Unaudited)
Three Months Ended Six Months
Ended June 30, June 30, 2017 2016
2017 2016 Unique product developers and engineers
served
16,174 13,612 24,255
20,333 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 and Injection Molding customers resulting from the
Alphaform acquisition who do not utilize our web-based customer
interface.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005251/en/
Proto Labs, Inc.Investor Relations:Daniel Schumacher,
763-479-7240daniel.schumacher@protolabs.comorJohn Way,
763-479-7726john.way@protolabs.comorMedia Relations:Bill Dietrick,
763-479-7664bill.dietrick@protolabs.com
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