Record Quarterly Revenue of $115.9 million,
an increase of 6% over Q2 2018
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,
2019.
Second Quarter 2019 Highlights include:
- Revenue for the second quarter of 2019 was $115.9 million,
representing a 5.7 percent increase over revenue of $109.7 million
for the second quarter of 2018.
- The number of unique product developers and engineers served
through our web-based customer interface totaled 20,840 in the
second quarter of 2019, an increase of 4.7 percent over the second
quarter of 2018.
- Net income for the second quarter of 2019 was $16.2 million, or
$0.60 per diluted share.
- Non-GAAP net income was $19.1 million, or $0.71 per diluted
share. See “Non-GAAP Financial Measures” below.
“Protolabs continues to be a leader in digital manufacturing and
achieved record revenue of $115.9 million in the second quarter,”
said Vicki Holt, President and Chief Executive Officer. “We
continue to focus on serving our customers by expanding our
differentiated offering as we launched a metal 3D printing
production offer and custom color matching for injection
molding.”
Additional Second Quarter 2019 highlights include:
- Gross margin was 52.0 percent of revenue for the second quarter
of 2019, compared with 54.0 percent for the second quarter of
2018.
- GAAP operating margin was 16.9 percent of revenue for the
second quarter of 2019, compared to 20.0 percent for the second
quarter of 2018.
- Non-GAAP operating margin was 20.6 percent of revenue for the
second quarter of 2019, compared to 23.3 percent for the second
quarter of 2018. See “Non-GAAP Financial Measures” below.
- EBITDA was $27.8 million, or 24.0% of revenue, for the second
quarter of 2019.
- Adjusted EBITDA was $31.0 million, or 26.7% of revenue, for the
second quarter of 2019. See “Non-GAAP Financial Measures”
below.
- Cash flow from operations was $36.9 million in the second
quarter of 2019.
- Cash and investments balance was $150.7 million at June 30,
2019.
- The Company repurchased $4.1 million, or 40,669 shares, of
common stock during the quarter.
- Protolabs continued to expand its service offering through two
new launches in Q2:
- Custom color matching for injection molding
- Production offer for metal 3D printing
“Protolabs grew 5.7% in the quarter despite currency headwinds,
softness in automotive and industrial markets, and the challenge of
transforming our newly acquired RAPID business to Protolabs’
business model,” said John Way, Chief Financial Officer. “We
continue to focus on delighting our customers, driving sequential
improvement in our business, and generating strong cash flows to
allow us to continue to invest in future growth.”
Non-GAAP Financial Measures
The company has included non-GAAP revenue growth that excludes
the impact of changes in foreign currency exchange rates
(collectively, “non-GAAP revenue growth”). Management believes
these metrics are useful in evaluating the underlying business
trends and ongoing operating performance of the company.
The company has included earnings before interest, taxes,
depreciation and amortization (“EBITDA”) and EBITDA, adjusted for
stock-based compensation expense and unrealized (gain) loss on
foreign currency (collectively, “Adjusted EBITDA”), in this press
release to provide investors with additional information regarding
the company’s financial results.
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
(gain) loss on foreign currency, and disposal of businesses
(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, non-GAAP operating margin, non-GAAP revenue
growth and Adjusted EBITDA, 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
second quarter 2019 financial results and third quarter outlook
today, July 25, 2019 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 presentation containing information
on the company’s second quarter 2019 financial results and third
quarter outlook will be available prior to the call. A simultaneous
webcast of the call and slide presentation will be available via
the investor relations section of the Protolabs website and the
following link: https://edge.media-server.com/mmc/p/sf4ezs6m. 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) June 30, December
31,
2019
2018
(Unaudited) Assets Current assets Cash and cash
equivalents
$
100,535
$
85,046
Short-term marketable securities
35,867
46,750
Accounts receivable, net
62,548
59,155
Inventory
9,688
10,087
Income taxes receivable
2,852
5,757
Prepaid expenses and other current assets
7,826
8,567
Total current assets
219,316
215,362
Property and equipment, net
248,816
228,001
Goodwill
128,752
128,752
Other intangible assets, net
18,116
19,850
Long-term marketable securities
14,268
23,579
Operating lease assets
12,249
-
Other long-term assets
4,010
3,441
Total assets
$
645,527
$
618,985
Liabilities and shareholders' equity Current
liabilities Accounts payable
$
21,230
$
17,411
Accrued compensation
14,068
18,130
Accrued liabilities and other
10,422
16,702
Current operating lease liabilities
3,296
-
Income taxes payable
2,417
491
Total current liabilities
51,433
52,734
Long-term operating lease liabilities
9,218
-
Long-term deferred tax liabilities
21,745
20,162
Other long-term liabilities
5,018
4,592
Shareholders' equity
558,113
541,497
Total liabilities and shareholders' equity
$
645,527
$
618,985
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,
2019
2018
2019
2018
Revenue Injection Molding
$
55,457
$
51,586
$
110,768
$
102,929
CNC Machining
38,888
37,788
76,760
74,519
3D Printing
15,266
13,248
29,746
25,573
Sheet Metal
5,472
6,309
10,497
12,550
Other
849
721
1,613
1,826
Total revenue
115,932
109,652
229,384
217,397
Cost of revenue
55,696
50,439
110,288
100,276
Gross profit
60,236
59,213
119,096
117,121
Operating expenses Marketing and sales
19,285
17,557
37,862
34,129
Research and development
8,169
7,032
16,182
13,697
General and administrative
13,209
12,640
26,031
25,583
Total operating expenses
40,663
37,229
80,075
73,409
Income from operations
19,573
21,984
39,021
43,712
Other income, net
1,125
808
1,338
986
Income before income taxes
20,698
22,792
40,359
44,698
Provision for income taxes
4,532
4,478
8,682
8,333
Net income
$
16,166
$
18,314
$
31,677
$
36,365
Net income per share: Basic
$
0.60
$
0.68
$
1.18
$
1.35
Diluted
$
0.60
$
0.67
$
1.17
$
1.34
Shares used to compute net income per share: Basic
26,875,153
26,972,990
26,919,016
26,925,673
Diluted
27,041,422
27,274,882
27,113,328
27,232,215
Proto Labs, Inc. Condensed Consolidated Statements
of Cash Flows (In thousands) (Unaudited)
Six Months Ended
June 30,
2019
2018
Operating activities
Net income
$
31,677
$
36,365
Adjustments to reconcile net
income to net cash provided by operating activities:
Depreciation and amortization
14,981
12,749
Stock-based compensation
expense
6,526
5,034
Deferred taxes
1,585
1,620
Gain on sale of businesses
-
(671
)
Amortization of held-to-maturity
securities
7
276
Other
(279
)
7
Changes in operating assets and
liabilities
391
3,937
Net cash provided by operating
activities
54,888
59,317
Investing activities
Purchases of property, equipment
and other capital assets
(34,136
)
(43,194
)
Cash used for acquisitions, net
of cash acquired
-
(90
)
Proceeds from sale of
businesses
-
284
Purchases of other assets and
investments
(4,000
)
-
Purchases of marketable
securities
(8,983
)
(17,129
)
Proceeds from maturities of
marketable securities
29,170
29,056
Net cash used in investing
activities
(17,949
)
(31,073
)
Financing activities
Payments on debt
-
(5,000
)
Proceeds from exercises of stock
options and other
2,243
4,696
Purchases of shares withheld for
tax obligations
(2,418
)
(1,390
)
Repurchases of common stock
(21,410
)
-
Net cash used in financing
activities
(21,585
)
(1,694
)
Effect of exchange rate changes on cash
and cash equivalents
135
(652
)
Net increase in cash and cash
equivalents
15,489
25,898
Cash and cash equivalents,
beginning of period
85,046
36,707
Cash and cash equivalents, end
of period
$
100,535
$
62,605
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,
2019
2018
2019
2018
Non-GAAP net income, adjusted for stock-based compensation expense,
amortization expense, unrealized (gain) loss on foreign currency
and disposal of businesses GAAP net income
$
16,166
$
18,314
$
31,677
$
36,365
Add back: Stock-based compensation expense
3,486
2,726
6,526
5,034
Amortization expense
863
799
1,734
1,563
Unrealized (gain) loss on foreign currency
(305
)
93
(58
)
248
Disposal of businesses
-
(671
)
-
(671
)
Total adjustments 1
4,044
2,947
8,202
6,174
Income tax benefits on adjustments 2
(1,074
)
(1,318
)
(1,993
)
(3,361
)
Non-GAAP net income
$
19,136
$
19,943
$
37,886
$
39,178
Non-GAAP net income per share: Basic
$
0.71
$
0.74
$
1.41
$
1.46
Diluted
$
0.71
$
0.73
$
1.40
$
1.44
Shares used to compute non-GAAP net income per share: Basic
26,875,153
26,972,990
26,919,016
26,925,673
Diluted
27,041,422
27,274,882
27,113,328
27,232,215
1 Stock-based compensation expense, amortization
expense, unrealized (gain) loss on foreign currency and disposal of
businesses were included in the following GAAP consolidated
statement of operations categories:
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Cost of revenue
$
797
$
363
$
1,530
$
650
Marketing and sales
614
443
1,163
820
Research and development
503
376
926
690
General and administrative
2,435
2,343
4,641
4,437
Total operating expenses
3,552
3,162
6,730
5,947
Other income, net
(305
)
(578
)
(58
)
(423
)
Total adjustments
$
4,044
$
2,947
$
8,202
$
6,174
2 For the three- and six-month periods ended June 30, 2019
and 2018, 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
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Revenue
$
115,932
$
109,652
$
229,384
$
217,397
Income from operations
19,573
21,984
39,021
43,712
GAAP operating margin
16.9
%
20.0
%
17.0
%
20.1
%
Add back: Stock-based compensation expense
3,486
2,726
6,526
5,034
Amortization expense
863
799
1,734
1,563
Total adjustments
4,349
3,525
8,260
6,597
Non-GAAP income from operations
$
23,922
$
25,509
$
47,281
$
50,309
Non-GAAP operating margin
20.6
%
23.3
%
20.6
%
23.1
%
Proto Labs, Inc. Reconciliation of GAAP Net Income
to EBITDA and Adjusted EBITDA (In thousands)
(Unaudited) Three Months Ended Six Months
Ended June 30, June 30,
2019
2018
2019
2018
GAAP net income
$
16,166
$
18,314
$
31,677
$
36,365
Amortization expense
863
799
1,734
1,563
Depreciation expense
6,678
5,691
13,246
11,186
Interest income, net
(465
)
(322
)
(1,046
)
(588
)
Tax expense
4,532
4,478
8,682
8,333
EBITDA
27,774
28,960
54,293
56,859
Add back: Stock-based compensation expense
3,486
2,726
6,526
5,034
Unrealized (gain) loss on foreign currency
(305
)
93
(58
)
248
Total adjustments
3,181
2,819
6,468
5,282
Adjusted EBITDA
$
30,955
$
31,779
$
60,761
$
62,141
Proto Labs, Inc. Comparison of GAAP to Non-GAAP
Revenue Growth (In thousands) (Unaudited)
Three Months EndedJune 30, 2019 Three MonthsEndedJune 30,
2018 % % ChangeConstant GAAP
Adjustments1 Non-GAAP GAAP Change2
Currencies3 Revenues United States
$
91,149
$
-
$
91,149
$
86,354
5.6
%
5.6
%
Europe
20,940
1,333
22,273
20,213
3.6
%
10.2
%
Japan
3,843
33
3,876
3,085
24.6
%
25.6
%
Total Revenue
$
115,932
$
1,366
$
117,298
$
109,652
5.7
%
7.0
%
Six Months EndedJune 30, 2019 Six
MonthsEndedJune 30, 2018 % % ChangeConstant
GAAP Adjustments1 Non-GAAP GAAP
Change2 Currencies3 Revenues United States
$
178,960
$
-
$
178,960
$
170,521
4.9
%
4.9
%
Europe
42,194
2,967
45,161
40,158
5.1
%
12.5
%
Japan
8,230
121
8,351
6,718
22.5
%
24.3
%
Total Revenue
$
229,384
$
3,088
$
232,472
$
217,397
5.5
%
6.9
%
1 Revenue for the three- and six-month periods ended June
30, 2019 has been recalculated using 2018 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 for the three- and
six-month periods ended June 30, 2018 to GAAP revenue for the
three- and six-month periods ended June 30, 2019. 3 This column
presents the percentage change from GAAP revenue for the three- and
six-month periods ended June 30, 2018 to non-GAAP revenue for the
three- and six-month periods ended June 30, 2019 (as recalculated
using the foreign currency exchange rates in effect during the
three- and six-month periods ended June 30, 2018) in order to
provide a constant-currency comparison.
Proto Labs, Inc.
Product Developer Information (Unaudited)
Three Months Ended Six Months Ended June 30,
June 30,
2019
2018
2019
2018
Unique product developers and engineers served
20,840
19,901
31,550
30,625
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version on businesswire.com: https://www.businesswire.com/news/home/20190725005126/en/
Investor Relations Contact: Protolabs Dan Schumacher,
763-479-7240 Director of Investor Relations
daniel.schumacher@protolabs.com or Media Contact: Protolabs Sarah
Ekenberg, 763-479-7560 Marketing Manager, PR & Media
sarah.ekenberg@protolabs.com
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