First Quarter 2020 Revenue of $115.1
million, an increase of 1.5% over 2019
First Quarter 2020 GAAP EPS of $0.52,
Non-GAAP EPS of $0.61
Proto Labs, Inc. (NYSE: PRLB), a leading online and
technology-enabled, quick-turn, on-demand manufacturer, today
announced financial results for the first quarter ended March 31,
2020.
“As Protolabs confronts the immediate challenges of the COVID-19
pandemic, our top priority is the health and safety of our
employees, communities, and customers,” said Vicki Holt, President
and Chief Executive Officer of Protolabs. “We continue to serve our
customers during these uncertain times, and are thankful that we
are able to be a part of the solution. I am very proud of the
dedicated Protolabs employees who continue to support our customers
and manufacture parts with critical applications in the fight
against the Coronavirus.”
COVID-19 Response Highlights
include:
- Protolabs COVID-19 Commitment:
- Remain fully operational as an essential business.
- Prioritize COVID-19 related orders and customer needs.
- Waive expedite fees for COVID-19 orders; parts manufactured and
shipped in as fast as 1 day.
- Protolabs has received COVID-19 related orders for applications
including components for lifesaving equipment, diagnostic systems,
and personal protective equipment (PPE).
- In our manufacturing facilities we have implemented new
cleaning and sanitizing standard operating procedures, new shift
change procedures to minimize employee interaction and achieved
social distancing with new employee work station layouts.
- Our non-manufacturing employees have transitioned to a remote
work environment; approximately 90 percent of our non-manufacturing
employees are working from home.
- Protolabs Foundation has accelerated annual STEM education
grants to provide food and technology needs during distance
learning. The Foundation also doubled its match for employee
charitable contributions.
First Quarter 2020 Highlights
include:
- Revenue for the first quarter of 2020 was $115.1 million,
representing a 1.5 percent increase compared to revenue of $113.5
million in the first quarter of 2019.
- Net income for the first quarter of 2020 was $14.0 million, or
$0.52 per diluted share.
- Non-GAAP net income was $16.3 million, or $0.61 per diluted
share. See “Non-GAAP Financial Measures” below.
“During the first two and a half months of the first quarter of
2020, ordering trends were in-line with our expectations,” added
Holt. “In mid-March, as the global pandemic intensified and
economic activity declined, ordering activity slowed. In the last
week of March, we began to receive orders for COVID-19 related
parts—primarily injection molding in the Americas—which helped
mitigate the slowdown in other services and regions. In the midst
of this unprecedented uncertainty, we were able to deliver
essential parts to our customers and achieve strong financial
performance. We will continue to produce the high-quality parts our
customers have come to expect from Protolabs, and we are confident
that our ecommerce digital manufacturing business model will thrive
as manufacturing adapts in response to this pandemic.”
Additional First Quarter 2020 Highlights
include:
- Gross margin was 50.5 percent of revenue for the first quarter
of 2020, compared to 51.9 percent for the firstquarter of
2019.
- Operating expenses were 35.9 percent of revenue for the
firstquarter of 2020, compared to 34.7 percent for the firstquarter
of 2019.
- GAAP operating margin was 14.6 percent of revenue during the
firstquarter of 2020, compared to 17.1 percent for the firstquarter
of 2019.
- Non-GAAP operating margin was 17.9 percent of revenue during
the firstquarter of 2020, compared to 20.6 percent for the
firstquarter of 2019. See “Non-GAAP Financial Measures” below.
- EBITDA was $25.3 million, or 22.0 percent of revenue, for the
firstquarter of 2020.
- Adjusted EBITDA was $27.5 million, or 23.9 percent of revenue,
for the firstquarter of 2020. See “Non-GAAP Financial Measures”
below.
- The company generated $22.4 million in cash from operations
during the firstquarter of 2020.
- Cash and investments balance was $167.2 million at March 31,
2020.
“The ultimate financial impact of the COVID-19 pandemic is
unknown at this time. We will continue to monitor demand levels and
prudently manage expenses during this time,” said John Way, Chief
Financial Officer. “The health of our balance sheet and the
strength of our unique digital manufacturing model allow us to
manage through these challenging times, deliver exceptional value
to our customers, and provide long term benefits to our
stakeholders.”
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 and unrealized (gain) loss on
foreign currency (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, and
unrealized (gain) loss on foreign currency (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 first
quarter 2020 financial results and financial guidance today, April
30, 2020 at 8:30 a.m. EDT. 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. EDT 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/5cshwxe6. A replay will be
available for 14 days following the call on the investor relations
section of the Protolabs website.
About Protolabs
Protolabs is a leading digital manufacturing source for rapid
prototyping and on-demand production. The 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)
March 31,
December 31,
2020
2019
(Unaudited)
Assets Current assets Cash and cash equivalents
$
91,905
$
125,225
Short-term marketable securities
38,194
35,437
Accounts receivable, net
62,091
57,450
Inventory
10,507
10,075
Prepaid expenses and other current assets
9,777
8,232
Total current assets
212,474
236,419
Property and equipment, net
268,001
263,712
Goodwill
128,752
128,752
Other intangible assets, net
16,615
17,369
Long-term marketable securities
37,077
12,960
Operating lease assets
10,548
11,425
Other long-term assets
4,623
3,030
Total assets
$
678,090
$
673,667
Liabilities and shareholders' equity Current
liabilities Accounts payable
$
18,219
$
16,804
Accrued compensation
12,460
15,058
Accrued liabilities and other
12,950
11,057
Current operating lease liabilities
3,254
3,340
Income taxes payable
414
1,322
Total current liabilities
47,297
47,581
Long-term operating lease liabilities
7,871
8,565
Long-term deferred tax liabilities
29,652
26,283
Other long-term liabilities
5,530
5,448
Shareholders' equity
587,740
585,790
Total liabilities and shareholders' equity
$
678,090
$
673,667
Proto Labs, Inc.
Condensed Consolidated
Statements of Operations
(In thousands, except share
and per share amounts)
(Unaudited)
Three Months Ended
March 31,
2020
2019
Revenue Injection Molding
$
54,776
$
55,311
CNC Machining
37,885
37,872
3D Printing
15,948
14,480
Sheet Metal
5,649
5,025
Other
850
764
Total revenue
115,108
113,452
Cost of revenue
57,008
54,592
Gross profit
58,100
58,860
Operating expenses Marketing and sales
18,180
18,577
Research and development
8,987
8,013
General and administrative
14,108
12,822
Total operating expenses
41,275
39,412
Income from operations
16,825
19,448
Other income, net
1,054
213
Income before income taxes
17,879
19,661
Provision for income taxes
3,895
4,150
Net income
$
13,984
$
15,511
Net income per share: Basic
$
0.52
$
0.58
Diluted
$
0.52
$
0.57
Shares used to compute net income per share:
Basic
26,776,806
26,963,366
Diluted
26,929,640
27,177,039
Proto Labs, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2020
2019
Operating activities Net income
$
13,984
$
15,511
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
7,958
7,439
Stock-based compensation expense
3,033
3,040
Deferred taxes
3,392
379
Amortization of held-to-maturity securities
55
16
Other
(644
)
236
Changes in operating assets and liabilities
(5,368
)
(8,619
)
Net cash provided by operating activities
22,410
18,002
Investing activities Purchases of property, equipment
and other capital assets
(13,421
)
(12,735
)
Cash used for acquisitions, net of cash acquired
-
-
Purchases of other assets and investments
(3,000
)
(4,000
)
Purchases of marketable securities
(37,629
)
-
Proceeds from maturities of marketable securities
10,700
17,006
Net cash (used in) provided by investing activities
(43,350
)
271
Financing activities Proceeds from exercises of stock
options and other
135
174
Purchases of shares withheld for tax obligations
(1,048
)
(594
)
Repurchases of common stock
(11,185
)
(17,309
)
Net cash used in financing activities
(12,098
)
(17,729
)
Effect of exchange rate changes on cash and cash equivalents
(282
)
(240
)
Net (decrease) increase in cash and cash equivalents
(33,320
)
304
Cash and cash equivalents, beginning of period
125,225
85,046
Cash and cash equivalents, end of period
$
91,905
$
85,350
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
March 31,
2020
2019
Non-GAAP net income, adjusted for stock-based compensation expense,
amortization expense and unrealized (gain) loss on foreign
currency GAAP net income
$
13,984
$
15,511
Add back: Stock-based compensation expense
3,033
3,040
Amortization expense
754
871
Unrealized (gain) loss on foreign currency
(797
)
247
Total adjustments 1
2,990
4,158
Income tax benefits on adjustments 2
(675
)
(919
)
Non-GAAP net income
$
16,299
$
18,750
Non-GAAP net income per share:
Basic
$
0.61
$
0.70
Diluted
$
0.61
$
0.69
Shares used to compute non-GAAP net income per share:
Basic
26,776,806
26,963,366
Diluted
26,929,640
27,177,039
1 Stock-based
compensation expense, amortization expense and unrealized (gain)
loss on foreign currency were included in the following GAAP
consolidated statement of operations categories:
Three Months Ended
March 31,
2020
2019
Cost of revenue
$
863
$
733
Marketing and sales
618
549
Research and development
521
423
General and administrative
1,785
2,206
Total operating expenses
2,924
3,178
Other income, net
(797
)
247
Total adjustments
$
2,990
$
4,158
2 For the three-month periods ended March 31, 2020
and 2019, 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
March 31,
2020
2019
Revenue
$
115,108
$
113,452
Income from operations
16,825
19,448
GAAP operating margin
14.6
%
17.1
%
Add back: Stock-based compensation expense
3,033
3,040
Amortization expense
754
871
Total adjustments
3,787
3,911
Non-GAAP income from operations
$
20,612
$
23,359
Non-GAAP operating margin
17.9
%
20.6
%
Proto Labs, Inc.
Reconciliation of GAAP Net
Income to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2020
2019
GAAP net income
$
13,984
$
15,511
Amortization expense
754
871
Depreciation expense
7,204
6,568
Interest income, net
(560
)
(581
)
Tax expense
3,895
4,150
EBITDA
25,277
26,519
Add back: Stock-based compensation expense
3,033
3,040
Unrealized (gain) loss on foreign currency
(797
)
247
Total adjustments
2,236
3,287
Adjusted EBITDA
$
27,513
$
29,806
Proto Labs, Inc.
Comparison of GAAP to Non-GAAP
Revenue Growth
(In thousands)
(Unaudited)
Three Months Ended March 31,
2020
Three Months Ended March 31,
2019
%
% Change Constant
GAAP
Adjustments1
Non-GAAP
GAAP
Change2
Currencies3
Revenues United States
$
90,076
$
-
$
90,076
$
87,811
2.6
%
2.6
%
Europe
20,787
648
21,435
21,254
(2.2
)
0.9
Japan
4,245
(55
)
4,190
4,387
(3.2
)
(4.5
)
Total Revenue
$
115,108
$
593
$
115,701
$
113,452
1.5
%
2.0
%
1 Revenue for the three-month
period ended March 31, 2020 has been recalculated using 2019
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 for the three-month period ended March 31, 2019 to GAAP
revenue for the three-month period ended March 31, 2020.
3 This column presents the percentage change from GAAP revenue
for the three-month period ended March 31, 2019 to non-GAAP revenue
for the three-month period ended March 31, 2020 (as recalculated
using the foreign currency exchange rates in effect during the
three-month period ended March 31, 2019) in order to provide a
constant-currency comparison.
Proto Labs, Inc.
Product Developer
Information
(Unaudited)
Three Months Ended
March 31,
2020
2019
Unique product developers and engineers served
20,876
20,573
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version on businesswire.com: https://www.businesswire.com/news/home/20200430005197/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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