Quarterly Revenue Increases 27.3% Year over
Year to $56.1 Million
Full Year 2014 Revenue Increases 28.5% from
2013 to $209.6 Million
Proto Labs, Inc. (NYSE:PRLB), a leading online and
technology-enabled, quick-turn, on-demand manufacturer, today
announced financial results for the fourth quarter and full year
ended December 31, 2014.
Fourth Quarter 2014 Highlights include:
- Revenue for the fourth quarter of 2014
increased to a record $56.1 million, 27.3 percent above revenue of
$44.0 million in the fourth quarter of 2013.
- Revenue for the fourth quarter of 2014
from additive services (3D printing) through the Fineline
acquisition completed last April increased to $3.9 million, a 48
percent increase compared to Fineline’s fourth quarter of
2013.
- The record quarterly revenue was driven
by a 40 percent increase in the number of unique product developers
and engineers, including those served by the Fineline
business.
- Net income for the fourth quarter of
2014 increased to $10.2 million, or $0.39 per diluted share.
Non-GAAP net income, excluding the after tax expense of stock
compensation and amortization of intangibles, was $11.2 million, or
$0.43 per diluted share. See “Non-GAAP Financial Measure”
below.
“The fourth quarter was a solid ending to a strong year,
reflecting record quarterly revenues in all three geographies on a
local currency basis,” said Vicki Holt, President and Chief
Executive Officer of Proto Labs. “Our business in North America,
excluding the contribution from Fineline, grew 23 percent year over
year. Revenue in Europe in the fourth quarter increased 10 percent
from the fourth quarter of last year and revenue in Japan grew 25
percent in the fourth quarter year over year in local
currency.”
“2014 was an excellent year for the company. We made good
operational progress and achieved strong financial performance,”
continued Ms. Holt. “Revenue grew 28.5 percent; our gross margin
was 61.3 percent; and we maintained a 29 percent GAAP operating
margin. During the year, we successfully executed on our first
acquisition. We launched two new processes and ten new materials
and capabilities. Including Fineline, we served 21,550 unique
product developers and engineers, an increase of 34 percent over
2013. Excluding the Fineline business, we increased the product
developers and engineers served by 20%. We invested in capacity
infrastructure for all three of our product lines and we expanded
our sales and marketing teams. These initiatives will be critical
in the years ahead as we continue to pursue our strategies for
growth.”
Additional Fourth Quarter 2014 Highlights include:
- Gross margin was 59.9 percent of
revenue during the fourth quarter of 2014 compared with 62.7
percent during the same quarter of 2013. The decline reflects an 80
basis point impact of Fineline, which carries a lower gross margin
than the legacy products, investments in manufacturing capacity of
80 basis points to support recently launched services and expected
growth and a 110 basis point impact of foreign exchange rates.
- Spending on research and development,
including the Protoworks initiatives and integration activities
related to Fineline, totaled $4.7 million, or 8.3 percent of
revenue. This compares to $3.5 million, or 7.8 percent of revenue,
during the fourth quarter of 2013.
- Sales and marketing expense increased
32 percent to $8.1 million, or 14.5 percent of revenue, reflecting
the planned expansion of sales and marketing staff to drive revenue
growth.
- GAAP operating margin was 26.2 percent
of revenue during the fourth quarter of 2014 compared to 31.5
percent during the fourth quarter of 2013.
Full Year 2014 Highlights include:
- Revenue increased 28.5 percent to
$209.6 million compared with $163.1 million in 2013.
- Net income for 2014 increased to $41.6
million, or $1.60 per diluted share. Non-GAAP net income, excluding
the after tax expense of stock compensation and amortization of
intangibles, was $45.2 million, or $1.73 per diluted share. See
“Non-GAAP Financial Measure” below.
- Cash generated from operations during
the year totaled $57.2 million. Cash, cash equivalents and
investments were $128.4 million at December 31, 2014.
“During 2015, we will continue to focus on pursuing the growth
opportunities we see for the company from our three growth vectors:
adding new product developers and engineers, expanding the envelope
of our product offerings and commercializing new processes. The
integration of Fineline is nearly complete and we are realizing the
benefits of cross-selling and the expanded manufacturing capacity
we put in place there and expect the benefits to be increasingly
evident throughout the year. Our LSR and metal injection molding,
introduced last year, are gaining traction in the market. Our soft
launch of turned machined parts progressed well in the fourth
quarter and we are on track for our full launch later this quarter.
We are focused on improving our customers’ experience and driving
awareness and sales of Proto Labs’ unique capabilities to product
developers and engineers around the world through a larger,
well-trained sales force and more targeted marketing campaigns. I
remain very confident about the potential for the company and the
ability of our team to deliver on the growth and profitability
targets in support of our long-term model,” Ms. Holt concluded.
Non-GAAP Financial Measure
The company has included non-GAAP net income, adjusted for
stock-based compensation expense and amortization 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 and amortization 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 and amortization 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 and
amortization 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
fourth quarter financial results today, February 5, 2015 at 8:30
a.m. ET. To access the call in the U.S. please dial 877-709-8150.
Outside the U.S. please dial 201-689-8354. No participant code is
required. 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 section of
Proto Labs’ website.
About Proto Labs, Inc.
Proto Labs is a leading online and technology-enabled,
quick-turn, on-demand manufacturer of custom parts for prototyping
and short-run production. Proto Labs provides “Real Parts, Really
Fast” to product developers and engineers worldwide. Proto Labs
utilizes computer numerical control (CNC) machining, injection
molding, and additive manufacturing (3D printing), to manufacture
custom parts for our customers. For more information, visit
protolabs.com.
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 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)
December 31,
December 31, 2014
2013 (Unaudited)
Assets Current assets Cash and cash equivalents $ 43,329 $
43,039 Short-term marketable securities 30,706 36,339 Accounts
receivable, net 24,226 18,320 Inventory 6,194 5,166 Other current
assets 3,889 6,931 Total current assets 108,344
109,795 Property and equipment, net 91,626 56,101 Long-term
marketable securities 54,318 64,023 Goodwill 28,916 - Other
intangible assets, net 4,083 - Other long-term assets 227
256 Total assets $ 287,514 $ 230,175
Liabilities
and shareholders' equity Current liabilities Accounts payable $
7,882 $ 6,455 Accrued compensation 6,067 6,196 Accrued liabilities
and other 2,718 808 Income taxes payable 1,953 - Current portion of
long-term debt obligations 139 204 Total current
liabilities 18,759 13,663 Long-term deferred tax liabilities
1,846 3,682 Long-term debt obligations 10 159 Other long-term
liabilities 1,360 1,028 Shareholders' equity 265,539
211,643 Total liabilities and shareholders' equity $ 287,514
$ 230,175
Proto Labs, Inc. Condensed
Consolidated Statements of Operations (In thousands, except
share and per share amounts) (Unaudited)
Three Months
Ended Year Ended December 31,
December 31, 2014
2013 2014
2013 Revenue Protomold $ 35,678 $ 30,731 $
140,282 $ 115,069 Firstcut 16,507 13,311 59,914 48,043 Fineline
3,884 -
9,387 - Total revenue 56,069
44,042 209,583 163,112 Cost of revenue
22,457 16,427
81,182 61,410 Gross profit 33,612
27,615 128,401 101,702 Operating expenses Marketing and
sales 8,115 6,164 29,144 22,386 Research and development 4,682
3,458 16,607 11,863 General and administrative
6,152 4,119
22,122 16,154 Total operating
expenses
18,949 13,741
67,873 50,403 Income from
operations 14,663 13,874 60,528 51,299 Other income, net
22 129 3
279 Income before income taxes 14,685 14,003
60,531 51,578 Provision for income taxes
4,492
4,496 18,896
16,301 Net income
$ 10,193
$ 9,507 $
41,635 $ 35,277 Net
income per share: Basic
$ 0.39
$ 0.37 $ 1.62
$ 1.40 Diluted
$
0.39 $ 0.36 $
1.60 $ 1.36 Shares
used to compute net income per share: Basic 25,815,973 25,506,107
25,692,699 25,198,556 Diluted 26,152,891 26,115,866 26,100,320
25,859,741
Proto Labs, Inc.
Condensed Consolidated Statements of Cash Flows (In
thousands) (Unaudited)
Year Ended December 31, 2014 2013
Operating activities Net income $ 41,635 $ 35,277
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 11,138 7,569
Stock-based compensation expense 4,809 3,461 Deferred taxes (1,875
) 467 Excess tax benefit from stock-based compensation (4,470 )
(9,873 ) Amortization of held-to-maturity securities 1,517 1,468
Loss on disposal of property and equipment - 110 Changes in
operating assets and liabilities
4,456
9,962 Net cash provided by operating
activities
57,210
48,441 Investing activities
Purchases of property and equipment (43,507 ) (18,753 )
Acquisitions, net of cash acquired (33,864 ) - Purchases of
marketable securities (60,186 ) (106,298 ) Proceeds from sales and
maturities of marketable securities
74,058
66,570 Net cash used in investing
activities
(63,499 )
(58,481 ) Financing
activities Payments on debt (1,055 ) (258 ) Acquisition-related
contingent consideration (1,200 ) - Proceeds from exercises of
stock options and other 4,821 6,496 Excess tax benefit from
stock-based compensation
4,470
9,873 Net cash provided by financing activities
7,036 16,111
Effect of exchange rate changes on cash and cash equivalents
(457 ) 209
Net increase in cash and cash equivalents 290 6,280
Cash
and cash equivalents, beginning of period
43,039 36,759
Cash and cash equivalents, end of period $
43,329 $ 43,039
Proto Labs, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measure (In
thousands, except share and per share amounts)
(Unaudited) Three
Months Ended Year Ended December 31,
2014 December 31, 2014
Non-GAAP net income, adjusted for
stock-based compensation and amortization expenses:
GAAP net income $ 10,193 $ 41,635 Add back: Stock-based
compensation expense Cost of revenue 104 386 Marketing and sales
242 927 Research and development 278 1,048 General and
administrative
624
2,448 Total stock-based compensation expense
1,248 4,809 Income tax benefits on stock-based compensation expense
(396 ) (1,524
) Non-GAAP net income adjusted for stock-based
compensation expense
11,045
44,920 Add back: Amortization expense General
and administrative 186 496 Income tax benefits on amortization
expense
(65 )
(174 )
Non-GAAP net income adjusted for
stock-based compensation and amortization expenses
$ 11,166 $
45,242 Non-GAAP net income per share:
Basic
$ 0.43 $
1.76 Diluted
$ 0.43
$ 1.73 Shares used
to compute non-GAAP net income per share: Basic 25,815,973
25,692,699 Diluted 26,152,891 26,100,320
Proto Labs, Inc. Revenue by Geography - Based on
Shipping Location (In thousands) (Unaudited)
Three
Months Ended Year Ended December 31,
December 31, 2014
2013 2014
2013 Revenues Domestic United States $ 42,223 $
31,054 $ 156,033 $ 119,870 International Europe 9,967 9,653 37,490
31,513 Japan 1,766 1,604 6,976 5,857 United States
2,113 1,731
9,084 5,872 Total international
13,846 12,988
53,550 43,242 Total revenue
$ 56,069 $
44,042 $ 209,583
$ 163,112
Proto Labs, Inc.
Customer Information (In thousands, except customer
amounts) (Unaudited)
Year Ended December 31, 2014
2013 Number of Number of Customers
Revenue ($) Customers Revenue ($) New
customers - Protomold and Firstcut 3,425 $ 25,596 3,027 $ 22,532
Existing customers - Protomold and Firstcut
6,719
174,600 5,734
140,580 Total
10,144 $
200,196 8,761 $
163,112
Note: the data
above does not include customers who purchased Fineline products
during the periods presented.
Proto Labs, Inc.
Product Developer Information (Unaudited)
Three Months
Ended Year Ended December 31, December 31,
2014 2013 2014 2013 Unique
product developers served - Protomold and Firstcut 8,773 7,290
19,294 16,128 Unique product developers served - Fineline 1,939 -
3,329 - Product developer overlap*
(481 )
- (1,071 ) -
Total unique product developers served
10,231
7,290 21,552 16,128
* Product developer overlap
represents product developers and engineers who purchased both our
legacy Protomold/Firstcut products and newly acquired Fineline
products during the periods presented.
For Proto Labs, Inc.Investor Relations:John Way,
763-479-7726john.way@protolabs.comorJenifer Kirtland,
408-656-9496jkirtland@evcgroup.comorMedia Relations:Bill
Dietrick, 763-479-7664bill.dietrick@protolabs.com
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