Record Revenue of $125.3 million in the
Third Quarter of 2021, an increase of 17% year-over-year
Proto Labs, Inc. (NYSE: PRLB), the world’s leading provider of
digital manufacturing services, today announced financial results
for the third quarter ended September 30, 2021.
Third Quarter 2021 Highlights
include:
- Revenue for the third quarter of 2021 was $125.3 million,
representing a 16.6 percent increase compared to revenue of $107.5
million in the third quarter of 2020.
- Hubs generated $8.8 million of revenue in the third
quarter.
- Net income for the third quarter of 2021 was $4.8 million, or
$0.17 per diluted share.
- Non-GAAP net income was $9.7 million, or $0.35 per diluted
share. See “Non-GAAP Financial Measures” below.
“We achieved record revenue in the third quarter amidst a
difficult backdrop of global supply chain issues and labor and
materials constraints. During the quarter, we also received
external recognition of our best-in-class digital manufacturing
capabilities as the World Economic Forum announced our induction
into their Global Lighthouse Network, recognizing our industry
leading efforts to implement Fourth Industrial Revolution
technologies,” noted Rob Bodor, President and Chief Executive
Officer. “We continue to focus on the long-term market
opportunities and invest in the business to serve the evolving
needs of our customers.”
Additional Third Quarter 2021 Highlights
include:
- Protolabs served 23,457 unique product developers during the
quarter, representing a 24.8 percent increase over the third
quarter of 2020.
- Gross margin in the third quarter of 2021 was 44.1 percent of
revenue; Non-GAAP gross margin was 44.9 percent of revenue. See
“Non-GAAP Financial Measures” below.
- EBITDA margin was 13.7 percent of revenue in the third quarter
of 2021; adjusted EBITDA margin was 17.1 percent of revenue in the
third quarter of 2021. See “Non-GAAP Financial Measures”
below.
- Cash and investments balance was $83.9 million as of September
30, 2021.
“Our earnings in the third quarter were impacted by post
pandemic-related cost inflation, as well as continued investments
in our systems and product offering in order to maintain our
position as the largest and fastest provider of digital
manufacturing services,” added John Way, Chief Financial Officer.
“We have a very strong balance sheet with $84 million in cash and
investments and no debt, allowing us to continue to invest in
future growth and return capital to our shareholders.”
Non-GAAP Financial Measures
The company has included non-GAAP revenue growth that excludes
the impact of changes in foreign currency exchange rates and
revenue earned from our acquisition of Hubs (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 transaction costs (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, amortization expense, and
transaction costs (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 transaction costs
(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 third
quarter 2021 financial results and fourth quarter 2021 outlook
today, October 28, 2021 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 presentation will be available via the investor
relations section of the Protolabs website and the following link:
https://edge.media-server.com/mmc/p/kff4bprd. 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 leading provider of digital
manufacturing services. The e-commerce-based company offers
injection molding, CNC machining, 3D printing, and sheet metal
fabrication to product developers, engineers, and supply chain
teams across the globe. Protolabs serves customers using in-house
production capabilities that bring unprecedented speed in tandem
with Hubs, a Protolabs Company, which serves customers through its
network of premium manufacturing partners. Together, they help
companies bring new ideas to market with the fastest and most
comprehensive digital manufacturing service in the world. 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) September 30,
December 31,
2021
2020
(Unaudited) Assets Current assets Cash and cash
equivalents
$
47,802
$
127,603
Short-term marketable securities
16,542
34,088
Accounts receivable, net
85,629
57,877
Inventory
9,813
10,862
Income taxes receivable
1,766
540
Prepaid expenses and other current assets
10,571
11,032
Total current assets
172,123
242,002
Property and equipment, net
283,019
282,666
Goodwill
404,240
128,752
Other intangible assets, net
39,816
14,350
Long-term marketable securities
19,557
59,357
Operating lease assets
5,197
9,855
Finance lease assets
2,022
2,396
Other long-term assets
4,337
4,826
Total assets
$
930,311
$
744,204
Liabilities and shareholders' equity Current
liabilities Accounts payable
$
22,735
$
18,248
Accrued compensation
15,269
11,989
Accrued liabilities and other
12,636
16,193
Current contingent consideration
2,506
-
Current operating lease liabilities
2,362
3,272
Current finance lease liabilities
555
552
Total current liabilities
56,063
50,254
Long-term contingent consideration
2,294
-
Long-term operating lease liabilities
2,792
7,586
Long-term finance lease liabilities
1,498
1,919
Long-term deferred tax liabilities
36,331
33,854
Other long-term liabilities
6,712
6,235
Shareholders' equity
824,621
644,356
Total liabilities and shareholders' equity
$
930,311
$
744,204
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,
2021
2020
2021
2020
Revenue Injection Molding
$
57,685
$
53,257
$
172,212
$
165,927
CNC Machining
43,658
33,115
121,953
99,760
3D Printing
18,589
16,294
53,994
46,478
Sheet Metal
4,854
3,988
14,790
14,306
Other
556
850
1,567
2,716
Total revenue
125,342
107,504
364,516
329,187
Cost of revenue
70,018
52,861
197,237
163,988
Gross profit
55,324
54,643
167,279
165,199
Operating expenses
Marketing and sales
21,422
16,705
61,946
51,821
Research and development
10,614
7,915
33,855
25,550
General and administrative
16,361
12,354
44,186
38,983
Total operating expenses
48,397
36,974
139,987
116,354
Income from operations
6,927
17,669
27,292
48,845
Other income (expense), net
136
728
(40)
2,549
Income before income taxes
7,063
18,397
27,252
51,394
Provision for income taxes
2,228
3,700
5,790
10,106
Net income
$
4,835
$
14,697
$
21,462
$
41,288
Net income per share:
Basic
$
0.17
$
0.55
$
0.78
$
1.54
Diluted
$
0.17
$
0.55
$
0.77
$
1.54
Shares used to compute net income per
share: Basic
27,713,229
26,736,709
27,638,611
26,724,715
Diluted
27,730,105
26,886,433
27,707,784
26,861,647
Proto Labs, Inc. Condensed
Consolidated Statements of Cash Flows (In thousands)
(Unaudited) Nine Months Ended
September 30,
2021
2020
Operating activities Net income
$
21,462
$
41,288
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
30,231
23,891
Stock-based compensation expense
15,539
10,617
Deferred taxes
(139)
6,578
Amortization of marketable securities
374
202
Realized gain on available-for-sale securities
(72)
-
Changes in fair value of contingent consideration
(8,513)
-
Other
140
(865)
Changes in operating assets and liabilities
(26,797)
664
Net cash provided by operating activities
32,225
82,375
Investing activities Purchases of
property, equipment and other capital assets
(27,956)
(40,489)
Cash used for acquisitions, net of cash acquired
(127,413)
-
Purchases of other assets and investments
-
(3,000)
Purchases of marketable securities
(15,159)
(90,596)
Proceeds from sales of marketable securities
57,089
-
Proceeds from maturities of marketable securities
15,114
56,428
Net cash used in investing activities
(98,325)
(77,657)
Financing activities Proceeds from
exercises of stock options and other
3,838
5,674
Purchases of shares withheld for tax obligations
(4,209)
(3,367)
Repurchases of common stock
(13,036)
(14,686)
Principal repayments of finance lease obligations
(413)
-
Net cash used in financing activities
(13,820)
(12,379)
Effect of exchange rate changes on cash and cash equivalents
119
690
Net decrease in cash and cash equivalents
(79,801)
(6,971)
Cash and cash equivalents, beginning of period
127,603
125,225
Cash and cash equivalents, end of period
$
47,802
$
118,254
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,
2021
2020
2021
2020
Non-GAAP net income, adjusted for stock-based compensation expense,
amortization expense, unrealized (gain) loss on
foreign currency and transaction costs
GAAP net income
$
4,835
$
14,697
$
21,462
$
41,288
Add back: Stock-based compensation expense
4,978
3,945
15,539
10,617
Amortization expense
1,568
754
4,601
2,262
Unrealized (gain) loss on foreign currency
121
(84)
341
(1,020)
Transaction costs 1
(730)
-
(5,870)
-
Total adjustments 2
5,937
4,615
14,611
11,859
Income tax benefits on adjustments 3
(1,063)
(1,368)
(4,639)
(3,030)
Non-GAAP net income
$
9,709
$
17,944
$
31,434
$
50,117
Non-GAAP net income per
share: Basic
$
0.35
$
0.67
$
1.14
$
1.88
Diluted
$
0.35
$
0.67
$
1.13
$
1.87
Shares used to compute non-GAAP net income per
share: Basic
27,713,229
26,736,709
27,638,611
26,724,715
Diluted
27,730,105
26,886,433
27,707,784
26,861,647
1 Transaction costs
include direct costs incurred in our acquisition of Hubs, Inc. and
the impact of changes in the fair value of acquisition-related
contingent consideration obligations. 2 Stock-based compensation
expense, amortization expense, unrealized (gain) loss on foreign
currency and transaction costs were included in the following GAAP
consolidated statement of operations categories:
Three Months
Ended Nine Months Ended September 30,
September 30,
2021
2020
2021
2020
Cost of revenue
$
986
$
989
$
2,974
$
2,788
Marketing and sales
1,059
865
2,841
2,233
Research and development
776
638
2,144
1,766
General and administrative
2,995
2,207
6,311
6,092
Total operating expenses
4,830
3,710
11,296
10,091
Other (income) loss, net
121
(84)
341
(1,020)
Total adjustments
$
5,937
$
4,615
$
14,611
$
11,859
3 For the three and nine-month periods ended
September 30, 2021 and 2020, 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,
2021
2020
2021
2020
Revenue
$
125,342
$
107,504
$
364,516
$
329,187
Income from operations
6,927
17,669
27,292
48,845
GAAP operating margin
5.5%
16.4%
7.5%
14.8%
Add back: Stock-based compensation expense
4,978
3,945
15,539
10,617
Amortization expense
1,568
754
4,601
2,262
Transaction costs 1
(730)
-
(5,870)
-
Total adjustments
5,816
4,699
14,270
12,879
Non-GAAP income from operations
$
12,743
$
22,368
$
41,562
$
61,724
Non-GAAP operating margin
10.2%
20.8%
11.4%
18.8%
1 Transaction costs
include direct costs incurred in our acquisition of Hubs, Inc. and
the impact of changes in the fair value of acquisition-related
contingent consideration obligations.
Proto
Labs, Inc. Reconciliation of GAAP Net Income to EBITDA and
Adjusted EBITDA (In thousands) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2021
2020
2021
2020
GAAP net income
$
4,835
$
14,697
$
21,462
$
41,288
Amortization expense
1,568
754
4,601
2,262
Depreciation expense
8,536
7,282
25,630
21,629
Interest income, net
(55)
(255)
(207)
(1,183)
Tax expense
2,228
3,700
5,790
10,106
EBITDA
17,112
26,178
57,276
74,102
Add back: Stock-based compensation expense
4,978
3,945
15,539
10,617
Unrealized (gain) loss on foreign currency
121
(84)
341
(1,020)
Transaction costs 1
(730)
-
(5,870)
-
Total adjustments
4,369
3,861
10,010
9,597
Adjusted EBITDA
$
21,481
$
30,039
$
67,286
$
83,699
1 Transaction costs
include direct costs incurred in our acquisition of Hubs, Inc. and
the impact of changes in the fair value of acquisition-related
contingent consideration obligations.
Proto Labs, Inc. Comparison of GAAP to Non-GAAP
Revenue Growth (In thousands) (Unaudited)
Three Months EndedSeptember 30, 2021
Three Months EndedSeptember 30, 2020 %
GAAP
Foreign
Currency1
Hubs
Acquisition2
Non-GAAP GAAP
Change3
%
Change
Organic4
Revenues
United States
$
100,127
$
-
$
(4,729)
$
95,398
$
85,608
17.0
%
11.4
% Europe
22,155
(513)
(4,022)
17,620
18,897
17.2
(6.8)
Japan
3,060
114
-
3,174
2,999
2.0
5.8
Total Revenue
$
125,342
$
(399)
$
(8,751)
$
116,192
$
107,504
16.6
%
8.1
%
Nine Months EndedSeptember
30, 2021 Nine Months EndedSeptember 30,
2020 % GAAP
Foreign
Currency1
Hubs
Acquisition2
Non-GAAP GAAP
Change3
%
Change
Organic4
Revenues
United States
$
286,524
$
-
$
(12,512)
$
274,012
$
262,507
9.1
%
4.4
% Europe
68,259
(3,986)
(10,942)
53,331
56,413
21.0
(5.5)
Japan
9,733
83
-
9,816
10,267
(5.2)
(4.4)
Total Revenue
$
364,516
$
(3,903)
$
(23,454)
$
337,159
$
329,187
10.7
%
2.4
%
1 Revenue for the three and nine-month periods ended
September 30, 2021 has been recalculated using 2020 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 Revenue for the three and nine-month periods ended
September 30, 2021 has been recalculated to exclude revenue earned
from our acquisition of Hubs, Inc. to provide information useful in
evaluating the underlying business trends excluding the impact of
acquisitions. 3 This column presents the percentage change from
GAAP revenue for the three and nine-month periods ended September
30, 2020 to GAAP revenue for the three and nine-month periods ended
September 30, 2021. 4 This column presents the percentage change
from GAAP revenue for the three and nine-month periods ended
September 30, 2020 to non-GAAP revenue for the three and nine-month
periods ended September 30, 2021 (as recalculated using the foreign
currency exchange rates in effect during the three- and nine-month
periods ended September 30, 2020, excluding the impact of Hubs,
Inc. acquisition) 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,
2021
2020
2021
2020
Unique product developers and engineers served
23,457
18,796
49,300
37,504
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version on businesswire.com: https://www.businesswire.com/news/home/20211028005220/en/
Investor Relations Contact Protolabs Dan Schumacher,
763-479-7240 Vice President of Investor Relations and FP&A
daniel.schumacher@protolabs.com
Media Contact Protolabs Brent Renneke, 763-479-7704 PR
& Media Strategist brent.renneke@protolabs.com
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