Record Full Year 2019 Revenue of $458.7
million, an increase of 3% over 2018
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, 2019.
Fourth Quarter 2019 Highlights include:
- Revenue for the fourth quarter of 2019 was $111.9 million,
representing a 0.8 percent decrease compared to revenue of $112.8
million in the fourth quarter of 2018.
- The number of unique product developers and engineers served
totaled 20,595 in the fourth quarter of 2019, an increase of 0.9
percent over the fourth quarter of 2018.
- Net income for the fourth quarter of 2019 was $15.2 million, or
$0.56 per diluted share.
- Non-GAAP net income was $17.1 million, or $0.63 per diluted
share. See “Non-GAAP Financial Measures” below.
“The fourth quarter of 2019 played out as we expected, as global
macroeconomic conditions continued to weaken through the end of
2019,” said Vicki Holt, President and Chief Executive Officer.
“Despite softer revenue in the fourth quarter, our world-class
e-commerce digital manufacturing offer still resonates with
customers, as evidenced by our three percent growth in 2019 in
these tough macro conditions.”
Additional Fourth Quarter 2019 Highlights include:
- Gross margin was 50.6 percent of revenue for the fourth quarter
of 2019, compared to 52.5 percent for the fourth quarter of
2018.
- Operating expenses were 33.1 percent of revenue for the fourth
quarter of 2019, compared to 34.6 percent for the fourth quarter of
2018.
- GAAP operating margin was 17.5 percent of revenue during the
fourth quarter of 2019, compared to 17.9 percent for the fourth
quarter of 2018.
- Non-GAAP operating margin was 19.2 percent of revenue during
the fourth quarter of 2019, compared to 21.2 percent for the fourth
quarter of 2018. See “Non-GAAP Financial Measures” below.
- EBITDA was $27.0 million, or 24.1 percent of revenue, for the
fourth quarter of 2019.
- Adjusted EBITDA was $28.3 million, or 25.3 percent of revenue,
for the fourth quarter of 2019. See “Non-GAAP Financial Measures”
below.
- The company generated $32.3 million in cash from operations
during the fourth quarter of 2019.
- Cash and investments balance was $173.6 million at December 31,
2019.
“Protolabs continued its track record of very strong cash
generation in the fourth quarter of 2019, despite revenue softness
and contraction in global manufacturing activity,” said John Way,
Chief Financial Officer. “Our balance sheet remains very healthy as
we enter into 2020, allowing us to make strategic investments
focused on long term business performance.”
Full Year 2019 Financial Highlights include:
- Revenue increased 2.9 percent to $458.7 million compared to
$445.6 million in 2018.
- Protolabs served 47,774 product developers during the year, an
increase of 3.9 percent over 2018.
- Net income for 2019 was $63.7 million, or $2.35 per diluted
share.
- Non-GAAP net income was $75.4 million, or $2.79 per diluted
share. See “Non-GAAP Financial Measures” below.
- Cash generated from operations during the year totaled $116.1
million.
- The Company repurchased $33.5 million or 326,462 shares of
common stock.
“Although macroeconomic headwinds across various industries have
resulted in lower than expected purchasing from our customers in
2019, Protolabs remains committed to continually improving our
offer and delighting our customers,” said Holt. “As we enter 2020,
we are very excited about enhancements we are making to our
e-commerce platform and back-end support systems. This project,
called Protolabs 2.0, will build out our systems to support our
customers and our strategy for the next decade and beyond. We have
an outstanding team and are well-situated strategically and
financially to expand our position as the leading e-commerce,
digitally enabled supplier of custom manufacturing parts and
services, which will lead to long-term shareholder value
creation.”
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, unrealized (gain) loss on foreign
currency, and disposal of businesses (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
fourth quarter and full year 2019 financial results and financial
guidance today, February 6, 2020 at 8:30 a.m. EST. 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. EST start
time. No participant code is required. A simultaneous webcast of
the call, and accompanying presentations will be available via the
investor relations section of the Protolabs website and the
following link: https://edge.media-server.com/mmc/p/mcknxyj8. 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) December 31,
December 31,
2019
2018 (Unaudited) Assets Current assets Cash
and cash equivalents
$
125,225
$
85,046
Short-term marketable securities
35,437
46,750
Accounts receivable, net
57,450
59,155
Inventory
10,075
10,087
Income taxes receivable
-
5,757
Prepaid expenses and other current assets
8,232
8,567
Total current assets
236,419
215,362
Property and equipment, net
263,712
228,001
Goodwill
128,752
128,752
Other intangible assets, net
17,369
19,850
Long-term marketable securities
12,960
23,579
Operating lease assets
11,425
-
Other long-term assets
3,030
3,441
Total assets
$
673,667
$
618,985
Liabilities and shareholders' equity
Current liabilities
Accounts payable
$
16,804
$
17,411
Accrued compensation
15,058
18,130
Accrued liabilities and other
11,057
16,702
Current operating lease liabilities
3,340
-
Income taxes payable
1,322
491
Total current liabilities
47,581
52,734
Long-term operating lease liabilities
8,565
-
Long-term deferred tax liabilities
26,283
20,162
Other long-term liabilities
5,448
4,592
Shareholders' equity
585,790
541,497
Total liabilities and shareholders' equity
$
673,667
$
618,985
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,
2019
2018
2019
2018
Revenue
Injection Molding
$
51,480
$
53,913
$
217,415
$
210,523
CNC Machining
38,494
38,157
155,473
153,521
3D Printing
15,708
13,924
61,352
53,342
Sheet Metal
5,223
5,996
21,000
24,998
Other
984
779
3,488
3,212
Total revenue
111,889
112,769
458,728
445,596
Cost of revenue
55,311
53,614
223,438
206,917
Gross profit
56,578
59,155
235,290
238,679
Operating expenses
Marketing and sales
17,510
17,586
72,976
68,533
Research and development
8,151
7,580
32,692
28,735
General and administrative
11,355
13,834
49,766
52,513
Total operating expenses
37,016
39,000
155,434
149,781
Income from operations
19,562
20,155
79,856
88,898
Other income, net
(229
)
1,381
1,337
2,757
Income before income taxes
19,333
21,536
81,193
91,655
Provision for income taxes
4,147
2,250
17,538
15,067
Net income
$
15,186
$
19,286
$
63,655
$
76,588
Net income per share:
Basic
$
0.57
$
0.71
$
2.37
$
2.84
Diluted
$
0.56
$
0.71
$
2.35
$
2.81
Shares used to compute net income per share:
Basic
26,777,536
27,040,207
26,866,985
26,982,614
Diluted
26,945,927
27,311,988
27,049,423
27,278,816
Proto Labs, Inc. Condensed Consolidated Statements
of Cash Flows (In thousands) (Unaudited)
Year Ended December 31,
2019
2018
Operating activities Net income
$
63,655
$
76,588
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
30,864
26,754
Stock-based compensation expense
10,781
10,928
Deferred taxes
6,106
11,936
Gain on sale of businesses
-
(671
)
Amortization of held-to-maturity securities
5
374
Other
391
(619
)
Changes in operating assets and liabilities
4,250
(2,361
)
Net cash provided by operating activities
116,052
122,929
Investing activities
Purchases of property, equipment and other capital assets
(62,230
)
(87,104
)
Cash used for acquisitions, net of cash acquired
-
(90
)
Proceeds from sale of businesses
-
284
Purchases of other assets and investments
(4,000
)
(126
)
Purchases of marketable securities
(46,403
)
(41,384
)
Proceeds from maturities of marketable securities
68,330
65,139
Net cash used in investing activities
(44,303
)
(63,281
)
Financing activities
Payments on debt
-
(5,000
)
Proceeds from exercises of stock options
4,391
8,935
Purchases of shares withheld for tax obligations
(2,487
)
(2,144
)
Repurchases of common stock
(33,521
)
(12,229
)
Net cash used in financing activities
(31,617
)
(10,438
)
Effect of exchange rate changes on cash and cash equivalents
47
(871
)
Net increase in cash and cash equivalents
40,179
48,339
Cash and cash equivalents, beginning of period
85,046
36,707
Cash and cash equivalents, end of period
$
125,225
$
85,046
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 Year Ended December 31, December
31,
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
$
15,186
$
19,286
$
63,655
$
76,588
Add back: Stock-based compensation expense
1,043
2,942
10,781
10,928
Amortization expense
889
862
3,482
3,233
Unrealized (gain) loss on foreign currency
286
(527
)
677
(380
)
Disposal of businesses
-
-
-
(671
)
Total adjustments 1
2,218
3,277
14,940
13,110
Provisional charges related to the tax effect of deemed
repatriation of foreign earnings
-
(719
)
-
(719
)
Revaluation of net deferred tax assets and liabilities
-
(496
)
-
(496
)
Income tax benefits on adjustments 2
(350
)
(1,086
)
(3,225
)
(5,660
)
Non-GAAP net income
$
17,054
$
20,262
$
75,370
$
82,823
Non-GAAP net income per share: Basic
$
0.64
$
0.75
$
2.81
$
3.07
Diluted
$
0.63
$
0.74
$
2.79
$
3.04
Shares used to compute non-GAAP net income per share: Basic
26,777,536
27,040,207
26,866,985
26,982,614
Diluted
26,945,927
27,311,988
27,049,423
27,278,816
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
Year Ended December 31, December 31,
2019
2018
2019
2018
Cost of revenue
$
933
$
448
$
3,335
$
1,543
Marketing and sales
708
562
2,631
1,942
Research and development
365
407
1,851
1,517
General and administrative
(74
)
2,387
6,446
9,159
Total operating expenses
999
3,356
10,928
12,618
Other income, net
286
(527
)
677
(1,051
)
Total adjustments
$
2,218
$
3,277
$
14,940
$
13,110
2 For the three-month and year-ended periods ended December
31, 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
Year Ended
December 31,
December 31,
2019
2018
2019
2018
Revenue
$
111,889
$
112,769
$
458,728
$
445,596
Income from operations
19,562
20,155
79,856
88,898
GAAP operating margin
17.5
%
17.9
%
17.4
%
20.0
%
Add back:
Stock-based compensation expense
1,043
2,942
10,781
10,928
Amortization expense
889
862
3,482
3,233
Total adjustments
1,932
3,804
14,263
14,161
Non-GAAP income from operations
$
21,494
$
23,959
$
94,119
$
103,059
Non-GAAP operating margin
19.2
%
21.2
%
20.5
%
23.1
%
Proto Labs, Inc. Reconciliation of GAAP Net Income
to EBITDA and Adjusted EBITDA (In thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2019
2018
2019
2018
GAAP net income
$
15,186
$
19,286
$
63,655
$
76,588
Amortization expense
889
862
3,482
3,233
Depreciation expense
7,317
6,372
27,383
23,521
Interest income, net
(560
)
(641
)
(2,095
)
(1,704
)
Tax expense
4,147
2,250
17,538
15,067
EBITDA
26,979
28,129
109,963
116,705
Add back:
Stock-based compensation expense
1,043
2,942
10,781
10,928
Unrealized (gain) loss on foreign currency
286
(527
)
677
(380
)
Disposal of businesses
-
-
-
(671
)
Total adjustments
1,329
2,415
11,458
9,877
Adjusted EBITDA
$
28,308
$
30,544
$
121,421
$
126,582
Proto Labs, Inc. Comparison of GAAP to Non-GAAP
Revenue Growth (In thousands) (Unaudited)
Three Months EndedDecember 31, 2019 Three
MonthsEndedDecember 31,2018 % % ChangeConstant
GAAP Adjustments1 Non-GAAP GAAP
Change2 Currencies3 Revenues United States
$
88,329
$
-
$
88,329
$
89,282
(1.1
%)
(1.1
%)
Europe
19,889
385
20,274
19,458
2.2
%
4.2
%
Japan
3,671
(131
)
3,540
4,029
(8.9
%)
(12.1
%)
Total Revenue
$
111,889
$
254
$
112,143
$
112,769
(0.8
%)
(0.6
%)
Year EndedDecember 31, 2019 Year
EndedDecember 31,2018 % % ChangeConstant
GAAP Adjustments1 Non-GAAP GAAP
Change2 Currencies3 Revenues United States
$
360,205
$
-
$
360,205
$
350,535
2.8
%
2.8
%
Europe
82,805
4,353
87,158
80,889
2.4
%
7.8
%
Japan
15,718
(150
)
15,568
14,172
10.9
%
9.9
%
Total Revenue
$
458,728
$
4,203
$
462,931
$
445,596
2.9
%
3.9
%
1 Revenue growth for the three-month and year-ended periods
ended December 31, 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 growth for the three-month and year-ended periods ended
December 31, 2018 to GAAP revenue growth for the three-month and
year-ended periods ended December 31, 2019. 3 This column presents
the percentage change from GAAP revenue for the three-month and
year-ended periods ended December 31, 2018 to non-GAAP revenue for
the three-month and year-ended periods ended December 31, 2019 (as
recalculated using the foreign currency exchange rates in effect
during the three-month and year-ended periods ended December 31,
2018) in order to provide a constant currency comparison.
Proto
Labs, Inc. Product Developer Information
(Unaudited) Three Months Ended Year
Ended December 31,
December 31,
2019
2018
2019
2018
Unique product developers and engineers served
20,595
20,403
47,774
45,968
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version on businesswire.com: https://www.businesswire.com/news/home/20200206005125/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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