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.