Proto Labs Reports Record Revenue and Net Income for the Second Quarter 2013

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Proto Labs Reports Record Revenue and Net Income for the Second Quarter 2013

Quarterly Revenue Increases 33% Year over Year to $39.7 Million

Quarterly Net Income Increases 67% Year over Year to $8.6 Million


MAPLE PLAIN, Minn.--(BUSINESS WIRE)-- Proto Labs, Inc. (NYS: PRLB) , a leading online and technology-enabled quick-turn manufacturer, today announced its record financial results for the second quarter ended June 30, 2013.

Highlights include:

  • Revenue for the second quarter of 2013 increased to a record $39.7 million, 33 percent above revenue of $30.0 million in the second quarter of 2012.
  • The record quarterly revenue was achieved through a 22 percent increase in the number of product developers served combined with an increase of 8 percent in spending per product developer.
  • Net income for the second quarter of 2013 increased to a record $8.6 million, or $0.33 per diluted share. Non-GAAP net income, excluding the after tax expense of stock compensation, was $9.3 million, or $0.36 per diluted share. See "Non-GAAP Financial Measure" below.

"This past quarter again demonstrates that product developers value our services. Businesses today compete globally and need to use technology to accelerate their new ideas to the market. As the world's fastest provider of CNC and injection-molded parts using engineering-grade materials and real manufacturing processes, we are well-placed to benefit from this trend and make product developers more successful," said Proto Labs' President and CEO Brad Cleveland.

Additional highlights include:

  • Gross margin was 62.5 percent of revenue in the second quarter of 2013 compared with 59.1 percent during the same quarter in 2012.
  • During the second quarter of 2013, spending on research and development, including the Protoworks initiatives, totaled $2.8 million, or 6.9 percent of revenue. This compares to $2.4 million, or 8.0 percent of revenue during the second quarter of 2012.
  • Operating margin was 31.8 percent of revenue during the second quarter of 2013 compared to 24.9 percent in the second quarter of 2012.
  • Gross margin in the second quarter exceeded the target model for the third consecutive quarter; and for the fourth consecutive quarter, operating margin also exceeded the target model.
  • As measured on a year to date basis, cash generated from operations totaled $19.4 million and expenditures on capital equipment were $6.1 million.

"Our sales and marketing teams dig deeper and wider in our customer base. We are making progress in our R&D efforts to expand the part envelope and services we offer. Our world-wide manufacturing teams stress both productivity and quality and these results are clearly seen in our excellent gross margins. We anticipate that all of these efforts will generate solid growth for our company in future quarters," concluded Mr. Cleveland.

Non-GAAP Financial Measure

The company has included non-GAAP net income, adjusted for stock-based compensation 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, 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, 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, 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 second quarter financial results today, August 1 at 8:30 a.m. ET. To access the call in the U.S. please dial 877-474-9506. Outside the U.S. please dial 857-244-7559. Use participant code 36641968#. 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 website of Proto Lab's website.

About Proto Labs, Inc.
Proto Labs is a leading online and technology-enabled quick-turn manufacturer of custom parts for prototyping and short-run production. Proto Labs provides "Real Parts, Really Fast" to product developers worldwide. Proto Labs utilizes computer numerical control (CNC) machining and injection molding 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)
       
    
June 30,December 31,
20132012
(Unaudited)
Assets
Current assets
Cash and cash equivalents$35,446$36,759
Short-term marketable securities30,33025,137
Accounts receivable, net17,52915,791
Inventory4,8754,619
Other current assets 8,461 7,850
Total current assets96,64190,156
 
Property and equipment, net47,14445,316
Long-term marketable securities54,16936,965
Other long-term assets 246 285
Total assets$198,200$172,722
 
Liabilities and shareholders' equity

Current liabilities

Accounts payable$5,712$4,758
Accrued compensation4,3725,995
Accrued liabilities and other623513
Current portion of long-term debt obligations 180 273
Total current liabilities10,88711,539
 
Deferred tax liabilities3,3463,346
Long-term debt obligations241356
Other long-term liabilities700782
 
Shareholders' equity 183,026 156,699
Total liabilities and shareholders' equity$198,200$172,722
         
        
Proto Labs, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
 
Three Months EndedSix Months Ended
June 30,June 30,

2013

2012

2013

2012

Revenues
Protomold$27,924$21,446$54,804$43,239
Firstcut 11,825 8,505 22,258 16,682 
Total revenues39,74929,95177,06259,921
 
Cost of revenues 14,896 12,239 28,930 24,482 
Gross profit24,85317,71248,13235,439
 
Operating expenses
Marketing and sales5,5504,55710,8138,998
Research and development2,7512,4015,3794,061
General and administrative 3,923 3,288 7,917 7,276 
Total operating expenses 12,224 10,246 24,109 20,335 
Income from operations12,6297,46624,02315,104
Other income (expense), net 116 173 119 (404)
Income before income taxes12,7457,63924,14214,700
Provision for income taxes 4,134 2,493 7,244 4,772 
Net income$8,611$5,146$16,898$9,928 
 
Net income per share:
Basic$0.34$0.22$0.68$0.44 
Diluted$0.33$0.20$0.66$0.42 
 
Shares used to compute net income per share:
Basic25,258,93223,929,88625,030,28322,432,415
Diluted25,850,24725,280,83525,627,38223,743,122
                  
    
Proto Labs, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Six Months Ended
June 30,
20132012
 
Operating activities
Net income$16,898$9,928
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization3,5822,768
Stock-based compensation expense1,7361,620
Deferred taxes307-
Excess tax benefit from stock-based compensation(5,929)-
Amortization of held-to-maturity securities63324
Loss on disposal of property and equipment59-
Changes in operating assets and liabilities: 2,162  (2,838)
Net cash provided by operating activities 19,448  11,502 
 
Investing activities
Purchases of property and equipment(6,069)(12,664)
Purchases of marketable securities(57,310)(34,366)
Proceeds from maturities of marketable securities 34,280  250 
Net cash used in investing activities (29,099) (46,780)
 
Financing activities
Proceeds from initial public offering, net of offering costs-71,530
Payments on debt(166)(191)
Proceeds from exercises of warrants and stock options2,87037
Excess tax benefit from stock-based compensation 5,929  - 
Net cash provided by financing activities 8,633  71,376 
Effect of exchange rate changes on cash and cash equivalents (295) 153 
Net increase (decrease) in cash and cash equivalents(1,313)36,251
Cash and cash equivalents, beginning of period 36,759  8,135 
Cash and cash equivalents, end of period$35,446 $44,386 
           
    
Proto Labs, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measure
(In thousands, except share and per share amounts)
(Unaudited)
 
 
Three Months EndedSix Months Ended
June 30, 2013June 30, 2013
Non-GAAP n
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