Proto Labs Reports Record Revenue And Net Income For The Third Quarter 2013 And Announces 2014 CEO Transition Plan

Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled quick-turn manufacturer, today announced record financial results for the third quarter ended September 30, 2013.

Highlights include:
  • Revenue for the third quarter of 2013 increased to a record $42.0 million, 29 percent above revenue of $32.5 million in the third quarter of 2012.
  • The record quarterly revenue was achieved through a 23 percent increase in the number of product developers served, combined with an increase of 5 percent in spending per product developer.
  • Net income for the third quarter of 2013 increased to a record $8.9 million, or $0.34 per diluted share. Non-GAAP net income, excluding the after tax expense of stock compensation, was $9.5 million, or $0.37 per diluted share. See “Non-GAAP Financial Measure” below.

“Our world-wide marketing and sales efforts led to a record number of product developers selecting Proto Labs to help them accelerate their ideas to markets. This resulted in record revenue globally and in each of our geographic markets. As we prepare to roll out additional services over the next few quarters, we remain confident that our ability to offer solutions to product developers will continue to drive our business forward,” said Proto Labs’ President and CEO Brad Cleveland.

Additional highlights include:
  • Gross margin was 61.8 percent of revenue in the third quarter of 2013 compared with 60.7 percent during the same quarter in 2012.
  • During the third quarter of 2013, spending on research and development, including the Protoworks initiatives, totaled $3.0 million, or 7.2 percent of revenue. This compares to $2.6 million, or 7.9 percent of revenue during the third quarter of 2012.
  • Operating margin was 31.9 percent of revenue during the third quarter of 2013 compared to 29.5 percent in the third quarter of 2012.
  • As measured on a year to date basis, cash generated from operations totaled $34.9 million and expenditures on capital equipment were $13.0 million.

Proto Labs also announced that CEO Brad Cleveland has notified the Board of Directors of his intent to resign once the Company has found a new CEO capable of leading the company’s continued growth.

“I feel very fortunate to be a part of this successful organization and I am grateful to have worked with so many talented people through the years. I’ve been the CEO from $1 million in revenue until today. I’ve thoroughly enjoyed the experience and would welcome the chance to someday do it all over again in another industry. I am confident that in the coming months we will recruit an excellent executive with the experience required to lead Proto Labs to even greater levels of success. I look forward to staying with the company through the entire leadership transition period,” concluded Mr. Cleveland.

Non-GAAP Financial Measure

The company has included non-GAAP net income, adjusted for stock-based compensation expense in this press release to provide investors with additional information regarding the company’s financial results. The company has provided below a reconciliation of non-GAAP net income, adjusted for stock-based compensation expense, to net income, the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP net income, adjusted for stock-based compensation expense, is used by the company’s management and board of directors to understand and evaluate operating performance and trends and provides a useful measure for period-to-period comparisons of the company’s business. Accordingly, the company believes that non-GAAP net income, adjusted for stock-based compensation expense, 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 financial results today, October 31 at 8:30 a.m. ET. To access the call in the U.S. please dial 877-415-3184. Outside the U.S. please dial 857-244-7327. Use participant code 58246380#. A simultaneous webcast of the call will also be available on the investor relations section of the company’s website at www.protolabs.com/investors. An audio replay will be available for 14 days following the call on the investor relations website of Proto Lab’s website.

About Proto Labs, Inc.Proto Labs is a leading online and technology-enabled quick-turn manufacturer of custom parts for prototyping and short-run production. Proto Labs provides “Real Parts, Really Fast” to product developers worldwide. Proto Labs utilizes computer numerical control (CNC) machining and injection molding to manufacture custom parts for our customers. For more information, visit protolabs.com.

Forward-Looking StatementsStatements 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, December 31,
2013 2012
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 39,382 $ 36,759
Short-term marketable securities 33,647 25,137
Accounts receivable, net 18,016 15,791
Inventory 4,966 4,619
Other current assets   8,302   7,850
Total current assets 104,313 90,156
 
Property and equipment, net 52,378 45,316
Long-term marketable securities 59,441 36,965
Other long-term assets   247   285
Total assets $ 216,379 $ 172,722
 
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 6,340 $ 4,758
Accrued compensation 6,848 5,995
Accrued liabilities and other 1,149 513
Current portion of long-term debt obligations   195   273
Total current liabilities 14,532 11,539
 
Deferred tax liabilities 3,345 3,346
Long-term debt obligations 206 356
Other long-term liabilities 699 782
 
Shareholders' equity   197,597   156,699
Total liabilities and shareholders' equity $ 216,379 $ 172,722
             
 
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,

2013

2012

2013

2012
Revenues
Protomold $ 29,534 $ 23,458 $ 84,338 $ 66,697
Firstcut   12,474   8,996   34,732   25,678  
Total revenues 42,008 32,454 119,070 92,375
 
Cost of revenues   16,053   12,760   44,983   37,242  
Gross profit 25,955 19,694 74,087 55,133
 
Operating expenses
Marketing and sales 5,409 4,442 16,222 13,440
Research and development 3,026 2,561 8,405 6,622
General and administrative   4,118   3,118   12,035   10,394  
Total operating expenses   12,553   10,121   36,662   30,456  
Income from operations 13,402 9,573 37,425 24,677
Other income (expense), net   31   314   149   (90 )
Income before income taxes 13,433 9,887 37,574 24,587
Provision for income taxes   4,561   3,185   11,804   7,957  
Net income $ 8,872 $ 6,702 $ 25,770 $ 16,630  
 
Net income per share:
Basic $ 0.35 $ 0.28 $ 1.03 $ 0.72  
Diluted $ 0.34 $ 0.26 $ 1.00 $ 0.68  
 
Shares used to compute net income per share:
Basic 25,384,940 24,052,409 25,121,941 22,975,950
Diluted 26,002,240 25,312,643 25,794,950 24,356,785
                   
 
Proto Labs, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
       
Nine Months Ended
September 30,
2013 2012
 
Operating activities
Net income $ 25,770 $ 16,630
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,528 4,380
Stock-based compensation expense 2,595 2,362
Deferred taxes (61 ) -
Excess tax benefit from stock-based compensation (8,198 ) (2,635 )
Amortization of held-to-maturity securities 1,007 173
Loss on disposal of property and equipment 111 -
Changes in operating assets and liabilities:   8,148     (1,476 )
Net cash provided by operating activities   34,900     19,434  
 
Investing activities
Purchases of property and equipment (12,976 ) (14,435 )
Purchases of marketable securities (82,657 ) (61,568 )
Proceeds from maturities of marketable securities   50,663     10,290  
Net cash used in investing activities   (44,970 )   (65,713 )
 
Financing activities
Proceeds from initial public offering, net of offering costs - 71,530
Payments on debt (211 ) (289 )
Proceeds from exercises of warrants and stock options 4,635 728
Excess tax benefit from stock-based compensation   8,198     2,635  
Net cash provided by financing activities   12,622     74,604  
Effect of exchange rate changes on cash and cash equivalents   71     (170 )
Net increase in cash and cash equivalents 2,623 28,155
Cash and cash equivalents, beginning of period   36,759     8,135  
Cash and cash equivalents, end of period $ 39,382   $ 36,290  
                 
 
Proto Labs, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measure
(In thousands, except share and per share amounts)
(Unaudited)
     
 
Three Months Ended Nine Months Ended
September 30, 2013 September 30, 2013
Non-GAAP net income, adjusted for stock-based compensation expense:
GAAP net income $ 8,872 $ 25,770
Add back: Stock-based compensation expense
Cost of revenue 89 233
Marketing and sales 154 455
Research and development 201 555
General and administrative   415     1,352  
Total stock-based compensation expense 859 2,595
Less: Tax benefit on stock-based compensation   (216 )   (624 )
Non-GAAP net income $ 9,515   $ 27,741  
 
Non-GAAP net income per share:
Basic $ 0.37   $ 1.10  
Diluted $ 0.37   $ 1.08  
 
Shares used to compute non-GAAP net income per share:
Basic 25,384,940 25,121,941
Diluted 26,002,240 25,794,950
                   
 
Proto Labs, Inc.
Revenue by Geography - Based on Shipping Location
(In thousands)
(Unaudited)
         
 
Three Months Ended Nine Months Ended
September 30, September 30,

2013

2012

2013

2012
Revenues
Domestic
United States $ 30,561 $ 24,807 $ 88,816 $ 69,887
International
Europe 8,556 5,771 21,860 16,305
Japan 1,588 1,101 4,253 3,418
United States   1,303   775   4,141   2,765
Total international   11,447   7,647   30,254   22,488
Total revenue $ 42,008 $ 32,454 $ 119,070 $ 92,375
                           
 
Proto Labs, Inc.
Customer Information
(In thousands, except customer amounts)
(Unaudited)
       
Nine Months Ended September 30,
2013 2012
Number of Revenue ($) Number of Revenue ($)
Customers Customers
 
New customers 2,261 $ 14,636 2,251 $ 13,564
Existing customers 5,315   104,434 4,394   78,811
Total 7,576 $ 119,070 6,645 $ 92,375
                 
 
Proto Labs, Inc.
Product Developer Information
(Unaudited)
       
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
 
Unique product developers served 7,308 5,928 13,421 11,126
                 
 

Copyright Business Wire 2010

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