PRLB Proto Labs Inc

Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled quick-turn manufacturer, today announced its financial results for the first quarter ended March 31, 2012.

Highlights for Q1 2012 include:

• Revenue increased to a record $30.0 million, 34 percent above revenue of $22.3 million in the first quarter of 2011. On a sequential basis, revenue increased 17 percent compared to the fourth quarter of 2011.
• International revenue grew to $7.8 million, or 26 percent of revenue, in the first quarter of 2012 compared to $4.9 million, or 22 percent of revenue in the same quarter in 2011.
• During the first quarter of 2012, revenue from 753 new customer companies totaled $2.9 million and revenue from 2,931 existing customer companies totaled $27.1 million.
• Gross margin was 59.1 percent of revenue in the first quarter of 2012 compared with 62.3 percent in the first quarter of 2011 and 56.8 percent in the fourth quarter of 2011.
• Net income totaled $4.8 million, or $0.22 per share. After adding back the after-tax expense of stock compensation, non-GAAP net income was $5.4 million, or $0.24 per share. See “Non-GAAP Financial Measure” below.

“Our first quarter revenue demonstrates the growing demand for our unique, technology-enabled manufacturing services,” said Brad Cleveland, President and CEO of Proto Labs. “We are especially pleased with the growth of new customers as our experience shows that once a customer does business with us, they tend to come back in future periods and do even more business with us. Our marketing and sales engines continue to help drive our customer acquisition and revenue opportunities.”

Additional Q1 highlights include:

• Operating margin was 25.5 percent of revenue compared with 31.7 percent in the first quarter a year ago and 19.1 percent in the 2011 fourth quarter.
• Cash generated through the completion of the initial public offering was $72 million, net of offering expenses. As of March 31, 2012, cash and investment balances totaled $80 million.
• Expenditures on capital equipment were $8.3 million in the first quarter of 2012.

“We significantly strengthened our balance sheet in the quarter, enhancing our cash position and providing us with the financial resources necessary to pursue our growth strategy to drive revenue and enhanced profitability. We are focused on our opportunities to increase penetration of existing customer accounts, acquire new customers in existing markets, expand into new markets overseas, and broaden our part envelope and introduce new manufacturing processes to serve a broader range of customer needs. I would like to thank the Proto Labs team who remained focused on execution and generated excellent financial results in the quarter,” 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 first quarter financial results today, May 3, at 8:30 a.m. ET. To access the call, please dial 866-804-6929, or outside the U.S. 857-350-1675. Please use participant code 52469989. 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 of the final prospectus relating to the Proto Labs’ initial public offering, as filed with the SEC, as well as in Proto Labs’ subsequent 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)   March 31, December 31, 2012

2011

(Unaudited) Assets Current assets Cash $ 79,679 $ 8,135 Short-term marketable securities - 250 Accounts receivable, net 14,782 11,533 Inventory 3,905 3,797 Other current assets   4,310   4,362   Total current assets 102,676 28,077   Property and equipment, net   41,099   34,249   Total assets $ 143,775 $ 62,326     Liabilities, redeemable convertible stock and shareholder's equity (deficit) Current liabilities Accounts payable $ 5,788 $ 4,431 Accrued compensation 3,464 4,767 Accrued liabilities and other 4,053 351 Current portion of long-term debt obligations   389   390   Total current liabilities 13,694 9,939   Deferred tax liability 4,252 4,252 Long-term debt obligations 526 613 Other 856 871   Redeemable convertible preferred and common stock - 66,894   Shareholders' equity (deficit)   124,447   (20,243 ) Total liabilities, redeemable convertible stock and shareholders' equity (deficit) $ 143,775 $ 62,326                               Proto Labs, Inc. Condensed Consolidated Statements of Operations (In thousands, except share and per share amounts) (Unaudited)   Three Months Ended March 31, 2012 2011 Revenues Protomold $ 21,793 $ 16,921 Firstcut   8,177   5,414   Total revenues 29,970 22,335   Cost of revenues Protomold 8,936 6,198 Firstcut   3,307   2,231   Total cost of revenues   12,243   8,429   Gross profit 17,727 13,906   Operating expenses Marketing and sales 4,441 3,215 Research and development 1,660 1,112 General and administrative   3,988   2,506   Total operating expenses   10,089   6,833   Income from operations 7,638 7,073 Other expense, net   577   81   Income before income taxes 7,061 6,992 Provision for income taxes   2,279   2,269   Net income 4,782 4,723 Less: dividends on redeemable preferred stock - (1,031 ) Less: undistributed earnings allocated to preferred shareholders   -   (1,259 ) Net income attributable to common shareholders $ 4,782 $ 2,433     Net income per share: Basic $ 0.23 $ 0.21   Diluted $ 0.22 $ 0.19     Shares used to compute net income per share: Basic 20,934,948 11,581,430 Diluted 22,226,356 12,868,254                       Proto Labs, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)         Three Months Ended March 31, 2012 2011   Operating activities Net income $ 4,782 $ 4,723 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,328 893 Stock-based compensation expense 850 198 Changes in operating assets and liabilities:   451     182   Net cash provided by operating activities 7,411 5,996   Investing activities Purchases of property and equipment (8,264 ) (2,262 ) Proceeds from sale of marketable securities   250     250   Net cash used in investing activities (8,014 ) (2,012 )   Financing activities Proceeds from initial public offering, net of offering costs 71,675 - Payments on debt, net (94 ) (647 ) Proceeds from exercises of warrants and stock options   30     222   Net cash provided by (used in) financing activities 71,611 (425 )   Effect of exchange rate changes on cash   536     27     Net increase in cash 71,544 3,586   Cash, beginning of period   8,135     6,101     Cash, end of period $ 79,679   $ 9,687                             Proto Labs, Inc. Reconciliation of GAAP to Non-GAAP Financial Measure (In thousands, except share and per share amounts) (Unaudited)     Three Months Ended March 31, 2012 Non-GAAP net income, adjusted for stock-based compensation expense: GAAP net income $ 4,782 Add back: Stock-based compensation expense Cost of revenue 45 Marketing and sales 73 Research and development 78 General and administrative   654   Total stock-based compensation expense 850 Less: Tax benefit on stock-based compensation   (265 ) Non-GAAP net income $ 5,367     Non-GAAP net income per share: Basic $ 0.26   Diluted $ 0.24     Shares used to compute non-GAAP net income per share: Basic 20,934,948 Diluted 22,226,356