Revenue of $125.9 million in the First
Quarter of 2023 GAAP Earnings Per Share of $0.10, Non-GAAP
Earnings Per Share of $0.30
Proto Labs, Inc. (the "Company" or "Protolabs") (NYSE: PRLB),
the world’s leading provider of digital manufacturing services,
today announced financial results for the first quarter ended March
31, 2023.
First Quarter 2023 Highlights:
- Revenue for the first quarter of 2023 was $125.9 million,
representing a 1.4 percent increase compared to revenue of $124.2
million in the first quarter of 2022.
- Revenue generated from our digital network powered by Hubs was
$17.2 million in the first quarter, representing growth of 67.3
percent over the first quarter of 2022 and 16.3 percent sequential
growth compared to the fourth quarter of 2022.
- Net income for the first quarter of 2023 was $2.7 million, or
$0.10 per diluted share.
- Non-GAAP net income was $7.9 million, or $0.30 per diluted
share. See “Non-GAAP Financial Measures” below.
“As we continue to operate in a challenging economic
environment, amplified by rising interest rates and slowing
manufacturing activity, I am pleased with first quarter financial
results above our guidance ranges,” said Rob Bodor, President and
Chief Executive Officer. “As our Protolabs and Hubs teams together
build the most comprehensive offer in the digital manufacturing
space, we are pleased with the growth of our digital network
revenue fueled by cross selling efforts of our go-to-market
teams.”
Additional First Quarter 2023
Highlights:
- Protolabs served 23,287 unique product developers during the
quarter.
- The Company repurchased $21.1 million of shares during the
quarter.
- Gross margin was 42.7 percent of revenue in the first quarter
of 2023.
- Non-GAAP gross margin was 43.4 percent of revenue in the first
quarter of 2023. See “Non-GAAP Financial Measures” below.
- EBITDA was $14.1 million, or 11.2 percent of revenue, in the
first quarter of 2023, compared to $17.8 million, or 14.3 percent
of revenue, in the first quarter of 2022. See “Non-GAAP Financial
Measures” below.
- Adjusted EBITDA was $17.8 million, or 14.1% of revenue, in the
first quarter of 2023, compared to $22.3 million, or 17.9% of
revenue, in the first quarter of 2022. See “Non-GAAP Financial
Measures” below.
- Cash and investments balance was $104.7 million as of March 31,
2023.
“As customers shift their buying preferences to longer lead
times and lower-priced offerings, we continue to manage the
business and adapt our operations to align with demand,” said Dan
Schumacher, Chief Financial Officer. “We continue to innovate and
drive efficiencies to enable us to leverage our profitable
operating structure and, coupled with our strong financial position
in which we have no debt and generate strong operating cash flows,
are well-positioned to weather economic volatility and dynamic
customer preferences.”
Non-GAAP Financial Measures
The Company has included non-GAAP revenue growth by region and
by service line 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 costs related to the Japan closure activities
(collectively, “Adjusted EBITDA”), in this press release to provide
investors with additional information regarding the Company’s
financial results. The Company has also included earnings before
interest, taxes, depreciation and amortization margin (“EBITDA
margin”) and EBITDA margin, adjusted for stock-based compensation
expense, unrealized (gain) loss on foreign currency and costs
related to the Japan closure activities (collectively, “Adjusted
EBITDA margin”), in this press release to provide investors with
additional information regarding the Company’s financial
results.
The Company has included non-GAAP gross margin, 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 included non-GAAP operating margin, adjusted for
stock-based compensation expense, amortization expense and costs
related to the closure of Japan (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 gross margin excluding Japan,
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 included non-GAAP operating margin excluding Japan, stock-based
compensation expense, amortization expense and costs related to the
Japan closure activities (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 costs related to the closure of
Japan (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 gross margin, non-GAAP gross margin
excluding Japan, non-GAAP operating margin, non-GAAP operating
margin excluding Japan, non-GAAP revenue growth by region and by
service, and Adjusted EBITDA and Adjusted EBITDA margin, 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 2023 financial results and second quarter 2023 outlook
today, May 5, 2023 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/o8vnhfjc. 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 fastest and most comprehensive digital
manufacturing service in the world. Our digital factories produce
low-volume parts in days while our digital network of manufacturing
partners powered by Hubs unlocks advanced capabilities and volume
pricing at higher quantities. The result? One manufacturing
source—from prototyping to production—for product developers,
engineers, and supply chain teams across the globe. See what's next
at 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 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 Securities and Exchange Commission. 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,
2023
2022
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
62,051
$
56,558
Short-term marketable securities
22,851
23,568
Accounts receivable, net
77,619
76,225
Inventory
14,273
13,578
Income taxes receivable
821
4,042
Prepaid expenses and other current
assets
11,101
12,597
Total current assets
188,716
186,568
Property and equipment, net
253,616
257,785
Goodwill
273,991
273,991
Other intangible assets, net
29,869
31,250
Long-term marketable securities
19,824
26,419
Operating lease assets
3,315
3,844
Finance lease assets
17,266
17,532
Other long-term assets
4,776
4,779
Total assets
$
791,373
$
802,168
Liabilities and shareholders'
equity
Current liabilities
Accounts payable
$
19,854
$
17,356
Accrued compensation
14,695
12,743
Accrued liabilities and other
23,156
22,384
Income taxes payable
1,928
-
Current operating lease liabilities
1,295
1,561
Current finance lease liabilities
17,452
17,537
Total current liabilities
78,380
71,581
Long-term operating lease liabilities
1,983
2,255
Long-term deferred tax liabilities
23,258
26,322
Other long-term liabilities
4,615
4,362
Shareholders' equity
683,137
697,648
Total liabilities and shareholders'
equity
$
791,373
$
802,168
Proto Labs, Inc.
Condensed Consolidated
Statements of Operations
(In thousands, except share
and per share amounts)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenue
Injection Molding
$
51,948
$
53,398
CNC Machining
48,104
46,098
3D Printing
21,325
19,672
Sheet Metal
4,248
4,687
Other
234
313
Total revenue
125,859
124,168
Cost of revenue
72,083
68,364
Gross profit
53,776
55,804
Operating expenses
Marketing and sales
22,451
20,586
Research and development
10,677
10,557
General and administrative
16,833
16,771
Closure of Japan business
66
-
Total operating expenses
50,027
47,914
Income from operations
3,749
7,890
Other income (expense), net
1,290
(300
)
Income before income taxes
5,039
7,590
Provision for income taxes
2,380
2,495
Net income
$
2,659
$
5,095
Net income per share:
Basic
$
0.10
$
0.19
Diluted
$
0.10
$
0.19
Shares used to compute net income per
share:
Basic
26,580,279
27,502,941
Diluted
26,605,787
27,510,477
Proto Labs, Inc.
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Operating activities
Net income
$
2,659
$
5,095
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
9,388
10,232
Stock-based compensation expense
3,695
4,397
Deferred taxes
(3,096
)
(3,213
)
Interest on finance lease obligations
287
-
Other
(46
)
79
Changes in operating assets and
liabilities
9,691
1,193
Net cash provided by operating
activities
22,578
17,783
Investing activities
Purchases of property, equipment and other
capital assets
(3,441
)
(3,069
)
Proceeds from sales of property, equipment
and other capital assets
194
-
Purchases of marketable securities
-
(29,366
)
Proceeds from call redemptions and
maturities of marketable securities
7,630
6,600
Net cash provided by (used in) investing
activities
4,383
(25,835
)
Financing activities
Proceeds from exercises of stock options
and other
-
6
Purchases of shares withheld for tax
obligations
(401
)
(468
)
Repurchases of common stock
(21,119
)
-
Principal repayments of finance lease
obligations
(82
)
(139
)
Net cash used in financing activities
(21,602
)
(601
)
Effect of exchange rate changes on cash
and cash equivalents
134
(37
)
Net increase (decrease) in cash and
cash equivalents
5,493
(8,690
)
Cash and cash equivalents, beginning of
period
56,558
65,929
Cash and cash equivalents, end of
period
$
62,051
$
57,239
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,
2023
2022
Non-GAAP net income, adjusted for
stock-based compensation expense, amortization expense, unrealized
(gain) loss on foreign currency and costs related to Japan closure
activities
GAAP net income
$
2,659
$
5,095
Add back:
Stock-based compensation expense
3,695
4,397
Amortization expense
1,526
1,545
Unrealized (gain) loss on foreign
currency
(71
)
89
Costs related to Japan closure
activities
66
-
Total adjustments 1
5,216
6,031
Income tax benefits on adjustments 2
(2
)
(682
)
Non-GAAP net income
$
7,873
$
10,444
Non-GAAP net income per share:
Basic
$
0.30
$
0.38
Diluted
$
0.30
$
0.38
Shares used to compute non-GAAP net income
per share:
Basic
26,580,279
27,502,941
Diluted
26,605,787
27,510,477
1 Stock-based compensation expense,
amortization expense, unrealized (gain) loss on foreign currency
and costs related to Japan closure activities were included in the
following GAAP consolidated statement of operations categories:
Three Months Ended
March 31,
2023
2022
Cost of revenue
$
808
$
929
Marketing and sales
692
737
Research and development
572
629
General and administrative
3,149
3,647
Closure of Japan business
66
-
Total operating expenses
4,479
5,013
Other (income) expense, net
(71
)
89
Total adjustments
$
5,216
$
6,031
2 For the three-month periods ended March
31, 2023 and 2022, income tax effects were calculated using the
effective tax rate for the relevant jurisdictions. The Company's
non-GAAP tax rates differ from its 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 Gross Margin
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenue
$
125,859
$
124,168
Gross Profit
53,776
55,804
GAAP gross margin
42.7
%
44.9
%
Add back:
Stock-based compensation expense
466
587
Amortization expense
342
342
Total adjustments
808
929
Non-GAAP gross profit
$
54,584
$
56,733
Non-GAAP gross margin
43.4
%
45.7
%
Proto Labs, Inc.
Reconciliation of GAAP to
Non-GAAP Gross Margin Excluding Japan
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenue
$
125,859
$
124,168
Revenue excluding Japan
$
125,859
$
120,082
Gross Profit
53,776
55,804
GAAP gross margin
42.7
%
44.9
%
Less: Japan gross profit
-
2,040
Gross Profit excluding Japan
53,776
53,764
GAAP gross margin excluding Japan
42.7
%
44.8
%
Add back:
Stock-based compensation expense
466
587
Amortization expense
342
342
Less:
Japan stock-based compensation expense
-
25
Japan amortization expense
-
-
Total adjustments
808
904
Non-GAAP gross profit excluding Japan
$
54,584
$
54,668
Non-GAAP gross margin excluding Japan
43.4
%
45.5
%
Proto Labs, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Margin
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenue
$
125,859
$
124,168
Income from operations
3,749
7,890
GAAP operating margin
3.0
%
6.4
%
Add back:
Stock-based compensation expense
3,695
4,397
Amortization expense
1,526
1,545
Costs related to Japan closure
activities
66
-
Total adjustments
5,287
5,942
Non-GAAP income from operations
$
9,036
$
13,832
Non-GAAP operating margin
7.2
%
11.1
%
Proto Labs, Inc.
Reconciliation of GAAP to
Non-GAAP Operating Margin Excluding Japan
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenue
$
125,859
$
124,168
Revenue excluding Japan
$
125,859
$
120,082
Income from operations
3,749
7,890
GAAP operating margin
3.0
%
6.4
%
Less: Japan (loss) income from
operations
(346
)
546
Income from operations excluding Japan
4,095
7,344
GAAP operating margin excluding Japan
3.3
%
6.1
%
Add back:
Stock-based compensation expense
3,695
4,397
Amortization expense
1,526
1,545
Costs related to Japan closure
activities
66
-
Less:
Japan stock-based compensation expense
10
150
Japan amortization expense
-
-
Total adjustments
5,277
5,792
Non-GAAP income from operations excluding
Japan
$
9,372
$
13,136
Non-GAAP operating margin excluding
Japan
7.4
%
10.9
%
Proto Labs, Inc.
Reconciliation of GAAP Net
Income to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenue
$
125,859
$
124,168
GAAP net income
2,659
5,095
GAAP net income margin
2.1
%
4.1
%
Add back:
Amortization expense
$
1,526
$
1,545
Depreciation expense
7,862
8,687
Interest income, net
(350
)
(45
)
Tax expense
2,380
2,495
EBITDA
14,077
17,777
EBITDA Margin
11.2
%
14.3
%
Add back:
Stock-based compensation expense
3,695
4,397
Unrealized (gain) loss on foreign
currency
(71
)
89
Costs related to Japan closure
activities
66
-
Total adjustments
3,690
4,486
Adjusted EBITDA
$
17,767
$
22,263
Adjusted EBITDA Margin
14.1
%
17.9
%
Proto Labs, Inc.
Comparison of GAAP to Non-GAAP
Revenue Growth by Region
(In thousands)
(Unaudited)
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
%
GAAP
Foreign
Currency1
Non-GAAP
GAAP
Change2
% Change
Organic3
Revenues
United States
$
97,746
$
-
$
97,746
$
95,496
2.4
%
2.4
%
Europe
28,113
2,465
30,578
24,586
14.3
24.4
Japan
-
-
-
4,086
(100.0
)
(100.0
)
Total Revenue
$
125,859
$
2,465
$
128,324
$
124,168
1.4
%
3.3
%
1 Revenue for the three-month period ended
March 31, 2023 has been recalculated using 2022 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,
2022 to GAAP revenue for the three-month period ended March 31,
2023.
3 This column presents the percentage
change from GAAP revenue for the three-month period ended March 31,
2022 to non-GAAP revenue for the three-month period ended March 31,
2023 (as recalculated using the foreign currency exchange rates in
effect during the three-month period ended March 31, 2022) in order
to provide a constant-currency comparison.
Proto Labs, Inc.
Comparison of GAAP to Non-GAAP
Revenue Growth by Service Line
(In thousands)
(Unaudited)
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
%
GAAP
Foreign
Currency1
Non-GAAP
GAAP
Change2
% Change
Organic3
Revenues
Injection Molding
$
51,948
$
1,179
$
53,127
$
53,398
(2.7
)%
(0.5
)%
CNC Machining
48,104
735
48,839
46,098
4.4
5.9
3D Printing
21,325
536
21,861
19,672
8.4
11.1
Sheet Metal
4,248
10
4,258
4,687
(9.4
)
(9.2
)
Other
234
5
239
313
(25.2
)
(23.6
)
Total Revenue
$
125,859
$
2,465
$
128,324
$
124,168
1.4
%
3.3
%
1 Revenue for the three-month period ended
March 31, 2023 has been recalculated using 2022 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,
2022 to GAAP revenue for the three-month period ended March 31,
2023.
3 This column presents the percentage
change from GAAP revenue for the three-month period ended March 31,
2022 to non-GAAP revenue for the three-month period ended March 31,
2023 (as recalculated using the foreign currency exchange rates in
effect during the three-month period ended March 31, 2022) in order
to provide a constant-currency comparison.
Proto Labs, Inc.
Product Developer
Information
(Unaudited)
Three Months Ended
March 31,
2023
2022
Unique product developers and engineers
served
23,287
23,492
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230505005083/en/
Investor Relations Contact Protolabs Ryan Johnsrud,
612-225-4873 Manager – Investor Relations and FP&A
ryan.johnsrud@protolabs.com
Media Contact Protolabs Brent Renneke, 763-479-7704 PR
& Media Strategist brent.renneke@protolabs.com
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