Proto Labs Reports Record Revenue and Net Income for the Third Quarter 2012

Proto Labs Reports Record Revenue and Net Income for the Third Quarter 2012

Quarterly Revenue Increases 21% Year over Year to $32.5 Million

Quarterly Net Income Increases 22% Year over Year to $6.7 Million


MAPLE PLAIN, Minn.--(BUSINESS WIRE)-- Proto Labs, Inc. (NYS: PRLB) , a leading online and technology-enabled quick-turn manufacturer, today announced its financial results for the third quarter and the first nine months ended September 30, 2012.

Highlights include:

  • Revenue for the third quarter of 2012 increased to a record $32.5 million, 21 percent above revenue of $26.9 million in the third quarter of 2011.

  • European revenue grew 14 percent and Japan revenue grew 15 percent sequentially in the third quarter of 2012 compared to the second quarter.

  • For the first nine months of 2012, revenue increased to $92.4 million, or 26 percent above revenue of $73.3 million during the first nine months of 2011.

  • During the first nine months of 2012, revenue from 2,251 new customer companies totaled $13.6 million and revenue from 4,394 existing customer companies totaled $78.8 million.

  • Net income during the third quarter of 2012 totaled $6.7 million, or $0.26 per diluted share. After adding back the after-tax expense of stock compensation, non-GAAP net income was $7.3 million, or $0.29 per diluted share. See "Non-GAAP Financial Measure" below.

"We are pleased to report record quarterly revenue for Proto Labs," said Brad Cleveland, President and CEO. "It is particularly encouraging that all of our global operations contributed to this result, with sequential growth occurring in the United States, Europe and Japan."

Additional highlights include:

  • Gross margin was 60.7 percent of revenue in the third quarter of 2012 compared with 59.1 percent in the second quarter of 2012.

  • During the third quarter of 2012, spending on research and development, including the Protoworks initiatives, totaled $2.6 million, or 7.9 percent of revenue. This compares to $2.4 million, or 8.0 percent of revenue during the second quarter of 2012.

  • Operating margin was 29.5 percent of revenue during the third quarter of 2012 compared to 24.9 percent in the second quarter of 2012.

  • Cash generated from operations totaled $19.3 million in the first nine months of 2012. Expenditures on capital equipment were $14.4 million in the first nine months of 2012.

"Our record quarterly net income reflects the impact of our ongoing margin expansion initiatives around the world, and I would like to congratulate my global colleagues for their achievements despite macro-economic challenges," 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 third quarter financial results today, October 25, at 8:30 a.m. ET. To access the call in the U.S. please dial 800-798-2864. Outside the U.S. please dial. 617-614-6206. Use participant code 66508620#. 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 of the final prospectus relating to the Proto Labs' initial public offering, as filed with the SEC, as well as in Proto Labs' subsequent 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)

September 30,

December 31,

2012

2011

(Unaudited)

Assets

Current assets

Cash and cash equivalents

$

36,290

$

8,135

Short-term marketable securities

21,704

250

Accounts receivable, net

15,304

11,533

Inventory

4,343

3,797

Other current assets

5,172

4,362

Total current assets

82,813

28,077

Property and equipment, net

44,457

34,249

Long-term marketable securities

29,651

-

Total assets

$

156,921

$

62,326

Liabilities, redeemable convertible stock and

shareholder's equity (deficit)

Current liabilities

Accounts payable

$

4,159

$

4,431

Accrued compensation

5,516

4,767

Accrued liabilities and other

725

351

Current portion of long-term debt obligations

335

390

Total current liabilities

10,735

9,939

Deferred tax liability

4,252

4,252

Long-term debt obligations

401

613

Other

800

871

Redeemable convertible preferred and common stock

-

66,894

Shareholders' equity (deficit)

140,733

(20,243

)

Total liabilities, redeemable convertible stock and

shareholders' equity (deficit)

$

156,921

$

62,326

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,

2012

2011

2012

2011

Revenues

Protomold

$

23,458

$

19,951

$

66,697

$

55,087

Firstcut

8,996

6,964

25,678

18,215

Total revenues

32,454

26,915

92,375

73,302

Cost of revenues

Protomold

$

9,186

$

7,471

$

26,821

$

20,642

Firstcut

3,574

2,834

10,421

7,609

Total cost of revenues

12,760

10,305

37,242

28,251

Gross profit

19,694

16,610

55,133

45,051

Operating expenses

Marketing and sales

4,442

4,000

13,440

11,139

Research and development

2,561

1,304

6,622

3,639

General and administrative

3,118

3,038

10,394

8,297

Total operating expenses

10,121

8,342

30,456

23,075

Income from operations

9,573

8,268

24,677

21,976

Other income (expense), net

314

21

(90

)

18

Income before income taxes

9,887

8,289

24,587

21,994

Provision for income taxes

3,185

2,801

7,957

7,252

Net income

6,702

5,488

16,630

14,742

Less: dividends on redeemable preferred stock

-

(1,053

)

-

(3,126

)

Less: undistributed earnings allocated to preferred shareholders

-

(1,415

)

-

(3,834

)

Net income attributable to common shareholders

$

6,702

$

3,020

$

16,630

$

7,782

Net income per share:

Basic

$

0.28

$

0.23

$

0.72

$

0.64

Diluted

$

0.26

$

0.22

$

0.68

$

0.58

Shares used to compute net income per share:

Basic

24,052,409

12,895,918

22,975,950

12,162,808

Diluted

25,312,643

13,560,400

24,356,785

13,496,238

Proto Labs, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2012

2011

Operating activities

Net income

$

16,630

$

14,742

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

4,380

3,009

Stock-based compensation expense

2,362

742

Deferred taxes

-

1,463

Excess tax benefit from stock-based compensation

(2,635

)

-

Loss on disposal of property and equipment

-

(11

)

Changes in operating assets and liabilities:

(1,476

)

(610

)

Net cash provided by operating activities

19,261

19,335

Investing activities

Purchases of property and equipment

(14,435

)

(10,083

)

Purchases of marketable securities

(61,395

)

-

Proceeds from sale of marketable securities

10,290

500

Net cash used in investing activities

(65,540

)

(9,583

)

Financing activities

Proceeds from initial public offering, net of offering costs

71,530

-

Payments on debt

(289

)

(3,955

)

Proceeds from exercises of warrants and stock options

728

547

Excess tax benefit from stock-based compensation

2,635

-

Net cash provided by (used in) financing activities

74,604

(3,408

)

Effect of exchange rate changes on cash and cash equivalents

(170

)

(92

)

Net increase in cash and cash equivalents

28,155

6,252