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| 8-K - FORM 8-K - Proto Labs Inc | d620826d8k.htm |
Exhibit 99.1
Proto Labs Reports Record Revenue and Net Income for the Third Quarter 2013 and Announces 2014 CEO Transition Plan
Quarterly Revenue Increases 29% Year over Year to $42.0 Million
Quarterly Net Income Increases 32% Year over Year to $8.9 Million
MAPLE PLAIN, Minn.—October 31, 2013— Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled quick-turn manufacturer, today announced record financial results for the third quarter ended September 30, 2013.
Highlights include:
| • | Revenue for the third quarter of 2013 increased to a record $42.0 million, 29 percent above revenue of $32.5 million in the third quarter of 2012. |
| • | The record quarterly revenue was achieved through a 23 percent increase in the number of product developers served, combined with an increase of 5 percent in spending per product developer. |
| • | Net income for the third quarter of 2013 increased to a record $8.9 million, or $0.34 per diluted share. Non-GAAP net income, excluding the after tax expense of stock compensation, was $9.5 million, or $0.37 per diluted share. See “Non-GAAP Financial Measure” below. |
“Our world-wide marketing and sales efforts led to a record number of product developers selecting Proto Labs to help them accelerate their ideas to markets. This resulted in record revenue globally and in each of our geographic markets. As we prepare to roll out additional services over the next few quarters, we remain confident that our ability to offer solutions to product developers will continue to drive our business forward,” said Proto Labs’ President and CEO Brad Cleveland.
Additional highlights include:
| • | Gross margin was 61.8 percent of revenue in the third quarter of 2013 compared with 60.7 percent during the same quarter in 2012. |
| • | During the third quarter of 2013, spending on research and development, including the Protoworks initiatives, totaled $3.0 million, or 7.2 percent of revenue. This compares to $2.6 million, or 7.9 percent of revenue during the third quarter of 2012. |
| • | Operating margin was 31.9 percent of revenue during the third quarter of 2013 compared to 29.5 percent in the third quarter of 2012. |
| • | As measured on a year to date basis, cash generated from operations totaled $34.9 million and expenditures on capital equipment were $13.0 million. |
Proto Labs also announced that CEO Brad Cleveland has notified the Board of Directors of his intent to resign once the Company has found a new CEO capable of leading the company’s continued growth.
“I feel very fortunate to be a part of this successful organization and I am grateful to have worked with so many talented people through the years. I’ve been the CEO from $1 million in revenue until today. I’ve thoroughly enjoyed the experience and would welcome the chance to someday do it all over again in another industry. I am confident that in the coming months we will recruit an excellent executive with the experience required to lead Proto Labs to even greater levels of success. I look forward to staying with the company through the entire leadership transition period,” 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 31 at 8:30 a.m. ET. To access the call in the U.S. please dial 877-415-3184. Outside the U.S. please dial 857-244-7327. Use participant code 58246380#. 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.
Contacts:
Investor Relations:
Jack Judd, 763-479-7408
jack.judd@protolabs.com
Media Relations:
Bill Dietrick, 763-479-7664
bill.dietrick@protolabs.com
Proto Labs, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (Unaudited) | ||||||||
| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 39,382 | $ | 36,759 | ||||
| Short-term marketable securities |
33,647 | 25,137 | ||||||
| Accounts receivable, net |
18,016 | 15,791 | ||||||
| Inventory |
4,966 | 4,619 | ||||||
| Other current assets |
8,302 | 7,850 | ||||||
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| Total current assets |
104,313 | 90,156 | ||||||
| Property and equipment, net |
52,378 | 45,316 | ||||||
| Long-term marketable securities |
59,441 | 36,965 | ||||||
| Other long-term assets |
247 | 285 | ||||||
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| Total assets |
$ | 216,379 | $ | 172,722 | ||||
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| Liabilities and shareholders’ equity |
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| Current liabilities |
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| Accounts payable |
$ | 6,340 | $ | 4,758 | ||||
| Accrued compensation |
6,848 | 5,995 | ||||||
| Accrued liabilities and other |
1,149 | 513 | ||||||
| Current portion of long-term debt obligations |
195 | 273 | ||||||
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| Total current liabilities |
14,532 | 11,539 | ||||||
| Deferred tax liabilities |
3,345 | 3,346 | ||||||
| Long-term debt obligations |
206 | 356 | ||||||
| Other long-term liabilities |
699 | 782 | ||||||
| Shareholders’ equity |
197,597 | 156,699 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 216,379 | $ | 172,722 | ||||
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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, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenues |
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| Protomold |
$ | 29,534 | $ | 23,458 | $ | 84,338 | $ | 66,697 | ||||||||
| Firstcut |
12,474 | 8,996 | 34,732 | 25,678 | ||||||||||||
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| Total revenues |
42,008 | 32,454 | 119,070 | 92,375 | ||||||||||||
| Cost of revenues |
16,053 | 12,760 | 44,983 | 37,242 | ||||||||||||
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| Gross profit |
25,955 | 19,694 | 74,087 | 55,133 | ||||||||||||
| Operating expenses |
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| Marketing and sales |
5,409 | 4,442 | 16,222 | 13,440 | ||||||||||||
| Research and development |
3,026 | 2,561 | 8,405 | 6,622 | ||||||||||||
| General and administrative |
4,118 | 3,118 | 12,035 | 10,394 | ||||||||||||
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| Total operating expenses |
12,553 | 10,121 | 36,662 | 30,456 | ||||||||||||
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| Income from operations |
13,402 | 9,573 | 37,425 | 24,677 | ||||||||||||
| Other income (expense), net |
31 | 314 | 149 | (90 | ) | |||||||||||
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| Income before income taxes |
13,433 | 9,887 | 37,574 | 24,587 | ||||||||||||
| Provision for income taxes |
4,561 | 3,185 | 11,804 | 7,957 | ||||||||||||
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| Net income |
$ | 8,872 | $ | 6,702 | $ | 25,770 | $ | 16,630 | ||||||||
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| Net income per share: |
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| Basic |
$ | 0.35 | $ | 0.28 | $ | 1.03 | $ | 0.72 | ||||||||
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| Diluted |
$ | 0.34 | $ | 0.26 | $ | 1.00 | $ | 0.68 | ||||||||
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| Shares used to compute net income per share: |
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| Basic |
25,384,940 | 24,052,409 | 25,121,941 | 22,975,950 | ||||||||||||
| Diluted |
26,002,240 | 25,312,643 | 25,794,950 | 24,356,785 | ||||||||||||
Proto Labs, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2013 | 2012 | |||||||
| Operating activities |
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| Net income |
$ | 25,770 | $ | 16,630 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
5,528 | 4,380 | ||||||
| Stock-based compensation expense |
2,595 | 2,362 | ||||||
| Deferred taxes |
(61 | ) | — | |||||
| Excess tax benefit from stock-based compensation |
(8,198 | ) | (2,635 | ) | ||||
| Amortization of held-to-maturity securities |
1,007 | 173 | ||||||
| Loss on disposal of property and equipment |
111 | — | ||||||
| Changes in operating assets and liabilities: |
8,148 | (1,476 | ) | |||||
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| Net cash provided by operating activities |
34,900 | 19,434 | ||||||
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| Investing activities |
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| Purchases of property and equipment |
(12,976 | ) | (14,435 | ) | ||||
| Purchases of marketable securities |
(82,657 | ) | (61,568 | ) | ||||
| Proceeds from maturities of marketable securities |
50,663 | 10,290 | ||||||
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| Net cash used in investing activities |
(44,970 | ) | (65,713 | ) | ||||
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| Financing activities |
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| Proceeds from initial public offering, net of offering costs |
— | 71,530 | ||||||
| Payments on debt |
(211 | ) | (289 | ) | ||||
| Proceeds from exercises of warrants and stock options |
4,635 | 728 | ||||||
| Excess tax benefit from stock-based compensation |
8,198 | 2,635 | ||||||
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| Net cash provided by financing activities |
12,622 | 74,604 | ||||||
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| Effect of exchange rate changes on cash and cash equivalents |
71 | (170 | ) | |||||
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| Net increase in cash and cash equivalents |
2,623 | 28,155 | ||||||
| Cash and cash equivalents, beginning of period |
36,759 | 8,135 | ||||||
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| Cash and cash equivalents, end of period |
$ | 39,382 | $ | 36,290 | ||||
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Proto Labs, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measure
(In thousands, except share and per share amounts)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||
| September 30, 2013 | September 30, 2013 | |||||||
| Non-GAAP net income, adjusted for stock-based compensation expense: |
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| GAAP net income |
$ | 8,872 | $ | 25,770 | ||||
| Add back: Stock-based compensation expense |
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| Cost of revenue |
89 | 233 | ||||||
| Marketing and sales |
154 | 455 | ||||||
| Research and development |
201 | 555 | ||||||
| General and administrative |
415 | 1,352 | ||||||
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| Total stock-based compensation expense |
859 | 2,595 | ||||||
| Less: Tax benefit on stock-based compensation |
(216 | ) | (624 | ) | ||||
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| Non-GAAP net income |
$ | 9,515 | $ | 27,741 | ||||
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| Non-GAAP net income per share: |
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| Basic |
$ | 0.37 | $ | 1.10 | ||||
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| Diluted |
$ | 0.37 | $ | 1.08 | ||||
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| Shares used to compute non-GAAP net income per share: |
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| Basic |
25,384,940 | 25,121,941 | ||||||
| Diluted |
26,002,240 | 25,794,950 | ||||||
Proto Labs, Inc.
Revenue by Geography—Based on Shipping Location
(In thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenues |
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| Domestic |
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| United States |
$ | 30,561 | $ | 24,807 | $ | 88,816 | $ | 69,887 | ||||||||
| International |
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| Europe |
8,556 | 5,771 | 21,860 | 16,305 | ||||||||||||
| Japan |
1,588 | 1,101 | 4,253 | 3,418 | ||||||||||||
| United States |
1,303 | 775 | 4,141 | 2,765 | ||||||||||||
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| Total international |
11,447 | 7,647 | 30,254 | 22,488 | ||||||||||||
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| Total revenue |
$ | 42,008 | $ | 32,454 | $ | 119,070 | $ | 92,375 | ||||||||
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Proto Labs, Inc.
Customer Information
(In thousands, except customer amounts)
(Unaudited)
| Nine Months Ended September 30, | ||||||||||||||||
| 2013 | 2012 | |||||||||||||||
| Number of Customers |
Revenue ($) | Number of Customers |
Revenue ($) |
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| New customers |
2,261 | $ | 14,636 | 2,251 | $ | 13,564 | ||||||||||
| Existing customers |
5,315 | 104,434 | 4,394 | 78,811 | ||||||||||||
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| Total |
7,576 | $ | 119,070 | 6,645 | $ | 92,375 | ||||||||||
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Proto Labs, Inc.
Product Developer Information
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Unique product developers served |
7,308 | 5,928 | 13,421 | 11,126 | ||||||||||||
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