Quarterly Revenue Increases 12.7% to a
Record $88.1 millionQuarterly Net Income Increases 10.3% to
a Record $13.2 million
Proto Labs, Inc. (NYSE: PRLB), a leading online and
technology-enabled, quick-turn, on-demand manufacturer, today
announced financial results for the third quarter ended September
30, 2017.
Third Quarter 2017 Highlights include:
- Revenue for the third quarter of 2017
was $88.1 million, 12.7 percent above revenue of $78.2 million in
the third quarter of 2016.
- The number of unique product developers
and engineers served totaled 16,909 in the third quarter of 2017,
an increase of 18.5 percent over the third quarter of 2016.
- Net income for the third quarter of
2017 was $13.2 million, or $0.49 per diluted share. Non-GAAP net
income, excluding the after-tax expense of stock compensation,
amortization of intangibles, and unrealized foreign currency gains,
was $15.0 million, or $0.56 per diluted share. See "Non-GAAP
Financial Measures" below.
"We continued to drive strong performance in the third quarter,
delivering record revenue for the third straight quarter," said
Vicki Holt, President and Chief Executive Officer. "Our investments
in the business to support the needs of our customers are
delivering returns with increasing operating margins and record
earnings this quarter." Additional Third Quarter 2017 Highlights
include:
- Gross margin was 56.0 percent of
revenue for the third quarter of 2017 compared with 57.2 percent
for the third quarter of 2016.
- Operating margin was 22.0 percent of
revenue during the third quarter of 2017 compared to 21.7 percent
for the third quarter of 2016.
- The Company generated $19.6 million in
cash from operations during the third quarter of 2017.
- Cash and investments balance increased
to $227.8 million at September 30, 2017.
"Our concerted effort over the past couple of years to expand
relationships with our customers continues to drive our
performance. The U.S. and Europe, our two largest geographies,
delivered record revenue levels as our focus on the customer
continues to show positive signs. We continue to expand our
capabilities and provide more of a total solution to help our
customers get their products to market as efficiently and cost
effectively as possible," 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 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, unrealized
foreign currency activity, impairment on assets, facilities-related
charges and legal settlement (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 below reconciliations of GAAP to
non-GAAP net income and revenues, the most directly comparable
measures 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 third
quarter and full year 2017 financial results today, October 26,
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:
https://edge.media-server.com/m6/p/epn5s29w. 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)
September 30,2017
December
31,2016
(Unaudited) Assets Current assets Cash
and cash equivalents $ 119,283 $ 68,795 Short-term marketable
securities 53,201 39,477 Accounts receivable, net 46,276 34,060
Inventory 9,789 9,310 Income taxes receivable - 445 Other current
assets 6,280 5,697 Total current assets 234,829
157,784 Property and equipment, net 153,512 139,474
Long-term marketable securities 55,351 84,479 Goodwill 28,916
28,916 Other intangible assets, net 2,261 2,655 Other long-term
assets 2,701 933 Total assets $ 477,570 $ 414,241
Liabilities and shareholders' equity Current
liabilities Accounts payable $ 13,130 $ 11,322 Accrued compensation
11,366 7,670 Accrued liabilities and other 7,463 4,435 Income taxes
payable 3,804 - Total current liabilities 35,763
23,427 Long-term deferred tax liabilities 7,721 7,003 Other
long-term liabilities 4,247 3,978 Shareholders' equity
429,839 379,833 Total liabilities and shareholders'
equity $ 477,570 $ 414,241
Proto Labs,
Inc. Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months
EndedSeptember 30,
Nine Months EndedSeptember
30,
2017
2016
2017
2016
Revenue Injection Molding $ 49,480 $ 46,445 $ 144,187 $ 134,376 CNC
Machining 27,166 21,781 73,318 60,510 3D Printing 11,102 9,850
32,061 28,059 Other
357 97
746 2,757 Total revenue
88,105 78,173 250,312 225,702 Cost of revenue
38,793 33,448
109,358 99,077 Gross profit 49,312
44,725 140,954 126,625 Operating expenses Marketing and
sales 13,846 11,787 41,463 34,182 Research and development 5,877
5,976 17,784 17,110 General and administrative
10,222 10,020
28,256 28,397 Total operating
expenses
29,945 27,783
87,503 79,689 Income from
operations 19,367 16,942 53,451 46,936 Other income, net
291 625 1,779
2,342 Income before income taxes 19,658 17,567
55,230 49,278 Provision for income taxes
6,438
5,585 17,724
15,943 Net income
$ 13,220
$ 11,982 $
37,506 $ 33,335 Net
income per share: Basic
$ 0.50
$ 0.45 $ 1.41
$ 1.27 Diluted
$
0.49 $ 0.45 $
1.40 $ 1.26 Shares
used to compute net income per share: Basic 26,617,349 26,416,041
26,600,174 26,334,738 Diluted 26,802,034 26,609,878 26,716,553
26,539,078
Proto Labs, Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
(Unaudited)
Nine Months EndedSeptember
30,
2017
2016
Operating activities Net income $ 37,506 $ 33,335
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 13,539 12,831
Stock-based compensation expense 6,159 5,260 Deferred taxes 715 495
Amortization of held-to-maturity securities 851 881 Loss on
impairment of assets - 455 Other 21 (1,381 ) Changes in operating
assets and liabilities
209
6,266 Net cash provided by operating activities
59,000 58,142
Investing activities Purchases of property and
equipment (24,164 ) (30,981 ) Purchases of marketable securities
(20,037 ) (56,213 ) Proceeds from maturities of marketable
securities 34,090 45,907 Purchases of other investments
(514 ) - Net
cash used in investing activities
(10,625
) (41,287 )
Financing activities Acquisition-related contingent
consideration - (400 ) Proceeds from exercises of stock options and
other 5,749 4,168 Repurchases of common stock
(4,410 ) - Net
cash provided by (used in) financing activities
1,339 3,768 Effect
of exchange rate changes on cash and cash equivalents
774 (58 )
Net increase in cash and cash equivalents 50,488 20,565
Cash and cash equivalents, beginning of period
68,795 47,653
Cash and cash equivalents, end of period $
119,283 $ 68,218
Proto Labs, Inc.
Reconciliation of GAAP to Non-GAAP Net Income per Share
(In thousands, except share and per share amounts)
(Unaudited)
Three Months
EndedSeptember 30,
Nine Months EndedSeptember
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 $ 13,220 $ 11,982 $ 37,506 $ 33,335 Add back:
Stock-based compensation expense 2,201 1,719 6,159 5,260
Amortization expense 106 163 394 520 Impairment on assets - - - 455
Facilities-related charges - 731 - 1,150 Unrealized loss (gain) on
foreign currency 266 (330 ) (83 ) (1,460 ) Legal settlement
- -
(417 ) - Total
adjustments 1
2,573
2,283 6,053
5,925 Income tax benefits on adjustments 2
(747 ) (743
) (1,824 )
(2,054 ) Non-GAAP net income
$ 15,046 $
13,522 $ 41,735
$ 37,206
Non-GAAP net income per share: Basic
$
0.57 $ 0.51
$ 1.57 $
1.41 Diluted
$ 0.56
$ 0.50 $
1.56 $ 1.40
Shares used to compute non-GAAP net income per share: Basic
26,617,349 26,416,041 26,600,174 26,334,738 Diluted 26,802,034
26,609,878 26,716,553 26,539,078
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
EndedSeptember 30,
Nine Months EndedSeptember
30,
2017
2016
2017
2016
Cost of revenue $ 263 $ 558 $ 698 $ 999 Marketing and sales 417 250
1,024 741 Research and development 295 310 796 1,084 General and
administrative 1,332 1,495 4,035 4,561 Other income, net
266 (330 )
(500 ) (1,460
) Total adjustments
$ 2,573
$ 2,283 $
6,053 $ 5,925
2 For the three months ended September 30, 2017 and 2016,
income tax effects were calculated reflecting an effective GAAP tax
rate of 32.8% and 31.8%, respectively, and an effective non-GAAP
tax rate of 32.3% and 31.9%, respectively. For the nine months
ended September 30, 2017 and 2016, income tax effects were
calculated reflecting an effective GAAP tax rate of 32.1% and
32.4%, respectively, and an effective non-GAAP tax rate of 31.9%
and 32.6%, respectively. Our non-GAAP tax rates for the three and
nine months ended September 30, 2017 and 2016 differ from our 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
EndedSeptember 30,
Nine Months EndedSeptember
30,
2017
2016
2017
2016
Revenue $ 88,105 $ 78,173 $ 250,312 $ 225,702 Income from
operations
19,367 16,942
53,451 46,936 GAAP
operating margin 22.0 % 21.7 % 21.4 % 20.8 % Add back: Stock-based
compensation expense 2,201 1,719 6,159 5,260 Amortization expense
106 163 394 520 Impairment on assets - - - 455 Facilities-related
charges
- 731
- 1,150 Total adjustments
2,307 2,613
6,553 7,385
Non-GAAP income from operations adjusted
for stock-based compensation expense, amortization expense,
impairment on assets and facilities-related charges
$ 21,674 $
19,555 $ 60,004
$ 54,321 Non-GAAP operating margin 24.6 %
25.0 % 24.0 % 24.1 %
Proto Labs, Inc. Comparison of GAAP to Non-GAAP Revenue
Growth (In thousands) (Unaudited)
Three Months EndedSeptember 30,
2017
ThreeMonthsEndedSeptember30,
2016
%
% Change
Constant
GAAP
Adjustments1
Non-GAAP GAAP
Change2
Currencies3 Revenues United
States $ 67,490 $ - $ 67,490 $ 59,574 13.3% 13.3% Europe 18,094
(657 ) 17,437 15,610 15.9% 11.7% Japan
2,521
211 2,732
2,989 -15.7% -8.6% Total
Revenue
$ 88,105 $
(446 ) $ 87,659
$ 78,173 12.7% 12.1%
Nine Months
EndedSeptember 30, 2017
NineMonthsEndedSeptember30,
2016
%
% Change
Constant
GAAP
Adjustments1
Non-GAAP GAAP
Change2
Currencies3 Revenues United
States $ 191,019 $ - $ 191,019 $ 169,364 12.8% 12.8% Europe 51,224
1,144 52,368 48,518 5.6% 7.9% Japan
8,069
256 8,325
7,820 3.2% 6.5% Total
Revenue
$ 250,312 $
1,400 $ 251,712
$ 225,702 10.9% 11.5%
1 Revenue growth for the three- and nine-month periods ended
September 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. 2 This column presents the percentage change from GAAP
revenue growth for the three- and nine-month periods ended
September 30, 2016 to GAAP revenue growth for the three- and
nine-month periods ended September 30, 2017. 3 This column presents
the percentage change from GAAP revenue growth for the three- and
nine-month periods ended September 30, 2016 (calculated using the
foreign currency exchange rates in effect during those periods) to
non-GAAP revenue growth for the three- and nine-month periods ended
September 30, 2017 (as recalculated using 2016 foreign currency
exchange rates in order to provide a constant currency comparison).
Three Months
EndedSeptember 30, 2017
Three Months
EndedSeptember 30, 2016
%
% ChangeAdjusted
GAAP
Adjustments4
Non-GAAP GAAP
Adjustments4
Non-GAAP Change
Revenue Revenues
Injection Molding
$ 49,480 $ - $ 49,480 $ 46,445 $ (1,100 ) $ 45,345 6.5% 9.1% CNC
Machining $ 27,166 - 27,166 $ 21,781 - 21,781 24.7% 24.7% 3D
Printing 11,102 - 11,102 9,850 (68 ) 9,782 12.7% 13.5% Other
357 -
357 97 -
97 268.0%
268.0% Total Revenue
$
88,105 $ -
$ 88,105 $
78,173 $ (1,168
) $ 77,005 12.7% 14.4%
Nine Months EndedSeptember
30, 2017
Nine Months EndedSeptember
30, 2016
%
% ChangeAdjusted
GAAP
Adjustments4
Non-GAAP GAAP
Adjustments4
Non-GAAP Change
Revenue Revenues Injection Molding $ 144,187 $
(550 ) $ 143,637 $ 134,376 $ (2,419 ) $ 131,957 7.3% 8.9% CNC
Machining $ 73,318 - 73,318 60,510 - 60,510 21.2% 21.2% 3D Printing
32,061 - 32,061 28,059 (242 ) 27,817 14.3% 15.3% Other
959 -
959 2,757
(1,784 ) 973
-72.9% -23.3% Total Revenue
$ 250,525 $
(550 ) $
249,975 $ 225,702
$ (4,445 ) $
221,257 10.9% 12.9%
4 Revenue growth for the three- and nine-month
periods ended September 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
EndedSeptember 30,
Nine Months EndedSeptember
30,
2017
2016
2017
2016
Revenue: United States $ 67,490 $ 59,574 $ 191,019 $ 169,364
Europe 18,094 15,610 51,224 48,518 Japan
2,521
2,989 8,069
7,820 Total Revenue
$ 88,105
$ 78,173 $
250,312 $ 225,702
Proto Labs, Inc. Product
Developer Information (Unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2017
2016
2017
2016
Unique product developers and engineers served
16,909
14,271 31,307 26,528
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/20171026005641/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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