Record Quarterly Revenue of $115.4 million,
an increase of 31% over Q3 2017
Record Quarterly Net Income of $20.9
million, an increase of 58% over Q3 2017
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, 2018.
Third Quarter 2018 Highlights include:
- Revenue for the third quarter of 2018
was a record $115.4 million, representing a 31.0 percent increase
over revenue of $88.1 million in the third quarter of 2017.
- The number of unique product developers
and engineers served through our web-based customer interface
totaled 20,792 in the third quarter of 2018, an increase of 23.0
percent over the third quarter of 2017.
- Net income for the third quarter of
2018 was a record $20.9 million, or $0.77 per diluted share.
- Non-GAAP net income was $23.4 million,
or $0.86 per diluted share. See “Non-GAAP Financial Measures”
below.
“We are pleased to deliver another quarter with over 30 percent
growth,” said Vicki Holt, President and Chief Executive Officer.
“Protolabs again demonstrated strong performance across all of our
geographies and in each of our services.”
Additional Third Quarter 2018 Highlights include:
- Gross margin was 54.1 percent of
revenue for the third quarter of 2018, compared with 56.0 percent
for the third quarter of 2017.
- GAAP operating margin was 21.7 percent
of revenue during the third quarter of 2018, compared to 22.0
percent for the third quarter of 2017.
- Non-GAAP operating margin was 24.9
percent of revenue during the third quarter of 2018, compared to
24.6 percent for the third quarter of 2017. See “Non-GAAP Financial
Measures” below.
- The company generated $25.6 million in
cash from operations during the third quarter of 2018.
- Cash and investments balance was $153.4
million at September 30, 2018.
“As a result of continued strong operations and growth in each
of our individual service offerings, we are becoming more of a
total solution for some of our customers. The majority of our top
customers have utilized every one of our core services in 2018.
With our unique ability to deliver parts at unprecedented speed, we
are helping more customers deliver their products to market faster
and in new ways,” concluded Holt.
Non-GAAP Financial Measures
The company has included non-GAAP revenue growth that excludes
the impact of changes in foreign currency exchange rates.
Management believes these metrics are useful in evaluating the
underlying business trends and ongoing operating performance of the
company.
The company has included non-GAAP operating margin, adjusted for
stock-based compensation expense and amortization expense
(collectively, “non-GAAP operating margin”), in this press release
to provide investors with additional information regarding the
company’s financial results.
The company has included non-GAAP net income, adjusted for
stock-based compensation expense, amortization expense, unrealized
foreign currency activity, disposal of businesses 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, operating margin and revenues, the most
directly comparable measures calculated and presented in accordance
with GAAP. These non-GAAP measures are 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 these non-GAAP measures
provide 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 2018 financial results today, October 25, 2018 at 8:30 a.m.
ET. To access the call in the U.S. please dial 877-709-8150 or
outside the U.S. dial 201-689-8354 at least five minutes prior to
the 8:30 a.m. start time. No participant code is required. A
simultaneous webcast of the call will be available via the investor
relations section of the Protolabs website and the following link:
https://edge.media-server.com/m6/p/ep72okh4. A replay will
be available for 14 days following the call on the investor
relations section of the Protolabs website.
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)
September 30, December 31, 2018 2017
(Unaudited) Assets Current assets Cash
and cash equivalents $ 62,593 $ 36,707 Short-term marketable
securities 57,561 57,424 Accounts receivable, net 62,131 51,503
Inventory 9,608 11,271 Income taxes receivable - 1,832 Other
current assets 8,639 6,267 Total current assets
200,532 165,004 Property and equipment, net 210,053 166,440
Long-term marketable securities 33,224 37,034 Goodwill 128,752
128,504 Other intangible assets, net 19,713 19,084 Other long-term
assets 3,590 2,672 Total assets $ 595,864 $ 518,738
Liabilities and shareholders' equity Current
liabilities Accounts payable $ 17,300 $ 15,876 Accrued compensation
14,462 12,100 Accrued liabilities and other 14,843 8,408 Short-term
debt obligations - 5,000 Income taxes payable 2,763
2,371 Total current liabilities 49,368 43,755 Long-term
income taxes payable 2,181 2,181 Long-term deferred tax liabilities
8,732 6,966 Other long-term liabilities 4,377 4,621
Shareholders' equity 531,206 461,215 Total
liabilities and shareholders' equity $ 595,864 $ 518,738
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,
2018
2017
2018
2017
Revenue Injection Molding $ 53,681 $ 49,480 $ 156,610 $ 144,187 CNC
Machining 40,845 27,166 115,364 73,318 3D Printing 13,845 11,102
39,418 32,061 Sheet Metal 6,452 - 19,002 - Other
607 357 2,433
746 Total revenue 115,430 88,105 332,827
250,312 Cost of revenue
53,027
38,793 153,303
109,358 Gross profit 62,403 49,312 179,524 140,954
Operating expenses Marketing and sales 16,818 13,846 50,947
41,463 Research and development 7,458 5,877 21,155 17,784 General
and administrative
13,096
10,222 38,679
28,256 Total operating expenses
37,372 29,945
110,781 87,503 Income from
operations 25,031 19,367 68,743 53,451 Other income, net
390 291 1,376
1,779 Income before income taxes 25,421 19,658
70,119 55,230 Provision for income taxes
4,484
6,438 12,817
17,724 Net income
$ 20,937
$ 13,220 $
57,302 $ 37,506 Net
income per share: Basic
$ 0.77
$ 0.50 $ 2.13
$ 1.41 Diluted
$
0.77 $ 0.49 $
2.10 $ 1.40 Shares
used to compute net income per share: Basic 27,038,585 26,617,349
26,963,205 26,600,174 Diluted 27,337,886 26,802,034 27,268,311
26,716,553
Proto Labs, Inc. Condensed Consolidated
Statements of Cash Flows (In thousands)
(Unaudited) Nine Months
Ended September 30, 2018 2017 Operating
activities Net income $ 57,302 $ 37,506 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 19,520 13,539 Stock-based
compensation expense 7,986 6,159 Deferred taxes 1,770 715 Gain on
sale of businesses (671 ) - Amortization of held-to-maturity
securities 336 851 Other 160 21 Changes in operating assets and
liabilities
(1,441 )
209 Net cash provided by operating activities
84,962 59,000
Investing activities Purchases of property, equipment
and other capital assets (61,898 ) (24,164 ) Cash used for
acquisitions, net of cash acquired (90 ) - Proceeds from sale of
businesses 284 - Purchases of marketable securities (41,384 )
(20,037 ) Proceeds from maturities of marketable securities 44,721
34,090 Purchases of other assets and investments
(126 ) (514
) Net cash used in investing activities
(58,493 ) (10,625
) Financing activities Payments on debt
(5,000 ) - Proceeds from exercises of stock options and other 5,248
5,749 Repurchases of common stock
-
(4,410 ) Net cash provided by
financing activities
248
1,339 Effect of exchange rate changes on cash
and cash equivalents
(831 )
774 Net increase in cash and cash
equivalents 25,886 50,488
Cash and cash equivalents,
beginning of period 36,707
68,795 Cash and cash equivalents, end of
period $ 62,593 $
119,283
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 Nine Months
Ended September 30, September
30,
2018
2017
2018
2017
Non-GAAP net income, adjusted for
stock-based compensation expense, amortization expense, unrealized
loss (gain) on foreign currency, disposal of businesses and legal
settlement
GAAP net income $ 20,937 $ 13,220 $ 57,302 $ 37,506 Add back:
Stock-based compensation expense 2,952 2,201 7,986 6,159
Amortization expense 808 106 2,371 394 Unrealized loss (gain) on
foreign currency (101 ) 266 147 (83 ) Disposal of businesses - -
(671 ) - Legal settlement
-
- -
(417 ) Total adjustments 1 3,659 2,573
9,833 6,053 Income tax benefits on adjustments 2
(1,213 ) (747
) (4,574 )
(1,824 ) Non-GAAP net income
$ 23,383 $
15,046 $ 62,561
$ 41,735
Non-GAAP net income per share: Basic
$
0.86 $ 0.57
$ 2.32 $
1.57 Diluted
$ 0.86
$ 0.56 $
2.29 $ 1.56
Shares used to compute non-GAAP net income per share: Basic
27,038,585 26,617,349 26,963,205 26,600,174 Diluted 27,337,886
26,802,034 27,268,311 26,716,553 1 Stock-based
compensation expense, amortization expense, unrealized loss (gain)
on foreign currency, disposal of businesses and legal settlement
were included in the following GAAP consolidated statement of
operations categories:
Three Months Ended Nine
Months Ended September 30,
September 30,
2018
2017
2018
2017
Cost of revenue $ 446 $ 263 $ 1,096 $ 698 Marketing
and sales 560 417 1,380 1,024 Research and development 419 295
1,109 796 General and administrative
2,335
1,332 6,772
4,035 Total operating expenses
3,314 2,044 9,261 5,855 Other income, net
(101 ) 266
(524 ) (500
) Total adjustments
$ 3,659
$ 2,573 $
9,833 $ 6,053
2 For the three- and nine-months ended September 30, 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 Nine Months
Ended September 30, September
30,
2018
2017
2018
2017
Revenue $ 115,430 $ 88,105 $ 332,827 $ 250,312 Income from
operations
25,031 19,367
68,743 53,451 GAAP
operating margin 21.7% 22.0% 20.7% 21.4% Add back: Stock-based
compensation expense 2,952 2,201 7,986 6,159 Amortization expense
808 106
2,371 394 Total adjustments
3,760 2,307
10,357 6,553
Non-GAAP income from operations adjusted
for stock-based compensation expense and amortization expense
$ 28,791 $
21,674 $ 79,100
$ 60,004 Non-GAAP operating margin 24.9%
24.6% 23.8% 24.0%
Proto Labs, Inc.
Comparison of GAAP to Non-GAAP Revenue Growth (In
thousands) (Unaudited)
Three Months
EndedSeptember 30, 2018
Three
MonthsEndedSeptember
30,2017
%
% ChangeConstant
GAAP
Adjustments1
Non-GAAP GAAP
Change2
Currencies3 Revenues United
States $ 90,732 $ - $ 90,732
$
67,490 34.4 % 34.4 % Europe 21,273 162 21,435 18,094 17.6 % 18.5 %
Japan
3,425 16
3,441 2,521
35.9 % 36.5 %
Total Revenue
$ 115,430 $
178 $ 115,608
$ 88,105 31.0 % 31.2 %
Nine Months
EndedSeptember 30, 2018
Nine
MonthsEnded September
30,2017
%
% ChangeConstant
GAAP
Adjustments1
Non-GAAP GAAP
Change2
Currencies3 Revenues United
States $ 261,253 $ - $ 261,253 $ 191,019 36.8 % 36.8 % Europe
61,431 (3,825 ) 57,606 51,224 19.9 % 12.5 % Japan
10,143 (211 )
9,932 8,069 25.7
% 23.1 % Total Revenue
$ 332,827 $
(4,036 ) $
328,791 $ 250,312 33.0 %
31.4 % 1 Revenue growth for the three- and nine-month
periods ended September 30, 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- and nine-month periods ended
September 30, 2017 to GAAP revenue growth for the three- and
nine-month periods ended September 30, 2018. 3 This column
presents the percentage change from GAAP revenue growth for the
three- and nine-month periods ended September 30, 2017 (calculated
using the foreign currency exchange rates in effect during that
period) to non-GAAP revenue growth for the three- and nine-month
periods ended September 30, 2018 (as recalculated using the foreign
currency exchange rates in effect during the three- and nine-month
periods ended September 30, 2017) in order to provide a constant
currency comparison.
Proto Labs, Inc.
Product Developer Information (Unaudited)
Three Months
Ended Nine Months Ended September 30,
September 30, 2018 2017 2018
2017 Unique product developers and engineers served
20,792 16,909 38,823
31,307
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181025005159/en/
Investor Relations Contact:Proto Labs, Inc.Dan Schumacher,
763-479-7240Director of Investor
Relationsdaniel.schumacher@protolabs.comorMedia Contact:Padilla for
ProtolabsTim Nelson, 612-455-1789Tim.Nelson@PadillaCo.com
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