Exhibit 99.1

 

 

 

Protolabs Reports Record Revenue and

Net Income for Third Quarter 2018

 

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

 

 

MAPLE PLAIN, Minn. – October 25, 2018 – 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.

Source: Proto Labs, Inc.

 

Investor Relations Contact:
Protolabs
Dan Schumacher, 763-479-7240
Director of Investor Relations
daniel.schumacher@protolabs.com

 

or

 

Media Contact:
Padilla for Protolabs
Tim Nelson, 612-455-1789
Tim.Nelson@PadillaCo.com

 

 

 

 

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 Ended
September 30, 2018

   

Three Months

Ended

September 30,

2017

   

%

   

% Change
Constant

 
   

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 Ended
September 30, 2018

   

Nine Months

Ended

September 30,

2017

   

%

   

% Change
Constant

 
   

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.

 

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  

 

 

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