Second Quarter 2020 Revenue of $106.6 million
Second Quarter 2020 GAAP EPS of $0.47, Non-GAAP EPS of $0.59
MAPLE PLAIN, Minn. — (BUSINESS WIRE) — July 28, 2020 — Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled, quick-turn, on-demand manufacturer, today announced financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Highlights include:
- Revenue for the second quarter of 2020 was $106.6 million, representing an 8.1 percent decrease compared to revenue of $115.9 million in the second quarter of 2019.
- Net income for the second quarter of 2020 was $12.6 million, or $0.47 per diluted share.
- Non-GAAP net income was $15.9 million, or $0.59 per diluted share. See “Non-GAAP Financial Measures” below.
“The first half of 2020 has presented a great deal of challenges to all businesses, and Protolabs is no exception. We have a solid financial foundation, a healthy balance sheet, and resilient business model to weather the uncertain environment,” said Vicki Holt, President and Chief Executive Officer of Protolabs. “The COVID-19 pandemic provides an opportunity for Protolabs to demonstrate the value our digital business model can provide. During the quarter, we delivered over 8 million parts to support the medical industry, generating $12 million in revenue. Our dynamic digital manufacturing business model, and our agile and creative employees, will allow us to thrive as customer activity begins to re-accelerate.”
Additional Second Quarter 2020 Highlights include:
- Gross margin was 49.2 percent of revenue for the second quarter of 2020, compared to 50.5 percent for the first quarter of 2020 on lower revenue.
- Operating expenses were $38.1 million or 35.8 percent of revenue for the second quarter of 2020, down $3.2 million from $41.3 million of operating expenses in the first quarter of 2020.
- GAAP operating margin was 13.5 percent of revenue during the second quarter of 2020, compared to 14.6 percent for the first quarter of 2020 due to lower revenue.
- Non-GAAP operating margin was 17.6 percent of revenue during the second quarter of 2020, compared to 17.9 percent for the first quarter of 2020. See “Non-GAAP Financial Measures” below.
- The company generated $31.0 million in cash from operations during the second quarter of 2020 up from $22.4 million in first quarter 2020.
“Our business model continues to generate strong cash flow, despite the uncertainty in the market,” said John Way, Chief Financial Officer. “We will continue to monitor demand levels and prudently manage expenses, while continuing to invest in and execute on key strategic initiatives to position our business for strong growth in the future.”
Non-GAAP Financial Measures
The company has included non-GAAP revenue growth 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 and unrealized gain on foreign currency (collectively, “Adjusted EBITDA”), 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 and amortization expense (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, and unrealized gain on foreign currency (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 operating margin, non-GAAP revenue growth and Adjusted EBITDA, 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 second quarter 2020 financial results and financial guidance today, July 28, 2020 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 presentations will be available via the investor relations section of the Protolabs website and the following link: https://edge.media-server.com/mmc/p/9crcgv9j. A replay will be available for 14 days following the call on the investor relations section of the Protolabs website.
About Protolabs
Protolabs is a leading digital manufacturing source for rapid prototyping and on-demand production. The company produces custom parts and assemblies in as fast as one day with automated 3D printing, CNC machining, sheet metal fabrication, and injection molding processes. Its digital approach to manufacturing enables accelerated time to market, reduces development and production costs, and minimizes risk throughout the product life cycle. Visit protolabs.com for more information.
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 SEC. 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) | ||||||||
June 30, |
December 31, |
|||||||
2020 |
2019 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ |
98,003 |
$ |
125,225 |
||||
| Short-term marketable securities |
|
33,128 |
|
35,437 |
||||
| Accounts receivable, net |
|
61,297 |
|
57,450 |
||||
| Inventory |
|
10,774 |
|
10,075 |
||||
| Income taxes receivable |
|
95 |
|
- |
||||
| Prepaid expenses and other current assets |
|
9,670 |
|
8,232 |
||||
| Total current assets |
|
212,967 |
|
236,419 |
||||
| Property and equipment, net |
|
281,129 |
|
263,712 |
||||
| Goodwill |
|
128,752 |
|
128,752 |
||||
| Other intangible assets, net |
|
15,861 |
|
17,369 |
||||
| Long-term marketable securities |
|
44,127 |
|
12,960 |
||||
| Operating lease assets |
|
11,049 |
|
11,425 |
||||
| Other long-term assets |
|
4,560 |
|
3,030 |
||||
| Total assets | $ |
698,445 |
$ |
673,667 |
||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ |
17,556 |
$ |
16,804 |
||||
| Accrued compensation |
|
15,138 |
|
15,058 |
||||
| Accrued liabilities and other |
|
15,041 |
|
11,057 |
||||
| Current operating lease liabilities |
|
3,368 |
|
3,340 |
||||
| Income taxes payable |
|
- |
|
1,322 |
||||
| Total current liabilities |
|
51,103 |
|
47,581 |
||||
| Long-term operating lease liabilities |
|
8,379 |
|
8,565 |
||||
| Long-term deferred tax liabilities |
|
31,907 |
|
26,283 |
||||
| Other long-term liabilities |
|
5,807 |
|
5,448 |
||||
| Shareholders' equity |
|
601,249 |
|
585,790 |
||||
| Total liabilities and shareholders' equity | $ |
698,445 |
$ |
673,667 |
||||
| Proto Labs, Inc. | |||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||
| Revenue | |||||||||||||||||
| Injection Molding | $ |
57,894 |
$ |
55,457 |
$ |
112,670 |
$ |
110,768 |
|||||||||
| CNC Machining |
|
28,760 |
|
38,888 |
|
66,645 |
|
76,760 |
|||||||||
| 3D Printing |
|
14,236 |
|
15,266 |
|
30,184 |
|
29,746 |
|||||||||
| Sheet Metal |
|
4,669 |
|
5,472 |
|
10,318 |
|
10,497 |
|||||||||
| Other |
|
1,016 |
|
849 |
|
1,866 |
|
1,613 |
|||||||||
| Total revenue |
|
106,575 |
|
115,932 |
|
221,683 |
|
229,384 |
|||||||||
| Cost of revenue |
|
54,119 |
|
55,696 |
|
111,127 |
|
110,288 |
|||||||||
| Gross profit |
|
52,456 |
|
60,236 |
|
110,556 |
|
119,096 |
|||||||||
| Operating expenses | |||||||||||||||||
| Marketing and sales |
|
16,936 |
|
19,285 |
|
35,116 |
|
37,862 |
|||||||||
| Research and development |
|
8,648 |
|
8,169 |
|
17,635 |
|
16,182 |
|||||||||
| General and administrative |
|
12,521 |
|
13,209 |
|
26,629 |
|
26,031 |
|||||||||
| Total operating expenses |
|
38,105 |
|
40,663 |
|
79,380 |
|
80,075 |
|||||||||
| Income from operations |
|
14,351 |
|
19,573 |
|
31,176 |
|
39,021 |
|||||||||
| Other income, net |
|
767 |
|
1,125 |
|
1,821 |
|
1,338 |
|||||||||
| Income before income taxes |
|
15,118 |
|
20,698 |
|
32,997 |
|
40,359 |
|||||||||
| Provision for income taxes |
|
2,511 |
|
4,532 |
|
6,406 |
|
8,682 |
|||||||||
| Net income | $ |
12,607 |
$ |
16,166 |
$ |
26,591 |
$ |
31,677 |
|||||||||
| Net income per share: | |||||||||||||||||
| Basic | $ |
0.47 |
$ |
0.60 |
$ |
1.00 |
$ |
1.18 |
|||||||||
| Diluted | $ |
0.47 |
$ |
0.60 |
$ |
0.99 |
$ |
1.17 |
|||||||||
| Shares used to compute net income per share: | |||||||||||||||||
| Basic |
|
26,660,498 |
|
26,875,153 |
|
26,718,652 |
|
26,919,016 |
|||||||||
| Diluted |
|
26,760,866 |
|
27,041,422 |
|
26,837,938 |
|
27,113,328 |
|||||||||
| Proto Labs, Inc. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (In thousands) | |||||||||||
| (Unaudited) | |||||||||||
| Six Months Ended | |||||||||||
| June 30, | |||||||||||
2020 |
2019 |
||||||||||
| Operating activities | |||||||||||
| Net income | $ |
26,591 |
|
$ |
31,677 |
|
|||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization |
|
15,855 |
|
|
14,981 |
|
|||||
| Stock-based compensation expense |
|
6,672 |
|
|
6,526 |
|
|||||
| Deferred taxes |
|
5,651 |
|
|
1,585 |
|
|||||
| Amortization of held-to-maturity securities |
|
129 |
|
|
7 |
|
|||||
| Other |
|
(854 |
) |
|
(279 |
) |
|||||
| Changes in operating assets and liabilities |
|
(627 |
) |
|
391 |
|
|||||
| Net cash provided by operating activities |
|
53,417 |
|
|
54,888 |
|
|||||
| Investing activities | |||||||||||
| Purchases of property, equipment and other capital assets |
|
(33,305 |
) |
|
(34,136 |
) |
|||||
| Purchases of other assets and investments |
|
(3,000 |
) |
|
(4,000 |
) |
|||||
| Purchases of marketable securities |
|
(57,212 |
) |
|
(8,983 |
) |
|||||
| Proceeds from maturities of marketable securities |
|
28,225 |
|
|
29,170 |
|
|||||
| Net cash used in investing activities |
|
(65,292 |
) |
|
(17,949 |
) |
|||||
| Financing activities | |||||||||||
| Proceeds from exercises of stock options and other |
|
2,855 |
|
|
2,243 |
|
|||||
| Purchases of shares withheld for tax obligations |
|
(3,367 |
) |
|
(2,418 |
) |
|||||
| Repurchases of common stock |
|
(14,686 |
) |
|
(21,410 |
) |
|||||
| Net cash used in financing activities |
|
(15,198 |
) |
|
(21,585 |
) |
|||||
| Effect of exchange rate changes on cash and cash equivalents |
|
(149 |
) |
|
135 |
|
|||||
| Net (decrease) increase in cash and cash equivalents |
|
(27,222 |
) |
|
15,489 |
|
|||||
| Cash and cash equivalents, beginning of period |
|
125,225 |
|
|
85,046 |
|
|||||
| Cash and cash equivalents, end of period | $ |
98,003 |
|
$ |
100,535 |
|
|||||
| 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 | Six Months Ended | ||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||||||
| Non-GAAP net income, adjusted for stock-based compensation expense, amortization expense and unrealized gain on foreign currency | |||||||||||||||||||||
| GAAP net income | $ |
12,607 |
|
$ |
16,166 |
|
$ |
26,591 |
|
$ |
31,677 |
|
|||||||||
| Add back: | |||||||||||||||||||||
| Stock-based compensation expense |
|
3,639 |
|
|
3,486 |
|
|
6,672 |
|
|
6,526 |
|
|||||||||
| Amortization expense |
|
754 |
|
|
863 |
|
|
1,508 |
|
|
1,734 |
|
|||||||||
| Unrealized gain on foreign currency |
|
(139 |
) |
|
(305 |
) |
|
(936 |
) |
|
(58 |
) |
|||||||||
| Total adjustments 1 |
|
4,254 |
|
|
4,044 |
|
|
7,244 |
|
|
8,202 |
|
|||||||||
| Income tax benefits on adjustments 2 |
|
(987 |
) |
|
(1,074 |
) |
|
(1,662 |
) |
|
(1,993 |
) |
|||||||||
| Non-GAAP net income | $ |
15,874 |
|
$ |
19,136 |
|
$ |
32,173 |
|
$ |
37,886 |
|
|||||||||
| Non-GAAP net income per share: | |||||||||||||||||||||
| Basic | $ |
0.60 |
|
$ |
0.71 |
|
$ |
1.20 |
|
$ |
1.41 |
|
|||||||||
| Diluted | $ |
0.59 |
|
$ |
0.71 |
|
$ |
1.20 |
|
$ |
1.40 |
|
|||||||||
| Shares used to compute non-GAAP net income per share: | |||||||||||||||||||||
| Basic |
|
26,660,498 |
|
|
26,875,153 |
|
|
26,718,652 |
|
|
26,919,016 |
|
|||||||||
| Diluted |
|
26,760,866 |
|
|
27,041,422 |
|
|
26,837,938 |
|
|
27,113,328 |
|
|||||||||
| 1 Stock-based compensation expense, amortization expense and unrealized gain on foreign currency were included in the following GAAP consolidated statement of operations categories: | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||||||
| Cost of revenue | $ |
936 |
|
$ |
797 |
|
$ |
1,799 |
|
$ |
1,530 |
|
|||||||||
| Marketing and sales |
|
750 |
|
|
614 |
|
|
1,368 |
|
|
1,163 |
|
|||||||||
| Research and development |
|
607 |
|
|
503 |
|
|
1,128 |
|
|
926 |
|
|||||||||
| General and administrative |
|
2,100 |
|
|
2,435 |
|
|
3,885 |
|
|
4,641 |
|
|||||||||
| Total operating expenses |
|
3,457 |
|
|
3,552 |
|
|
6,381 |
|
|
6,730 |
|
|||||||||
| Other income, net |
|
(139 |
) |
|
(305 |
) |
|
(936 |
) |
|
(58 |
) |
|||||||||
| Total adjustments | $ |
4,254 |
|
$ |
4,044 |
|
$ |
7,244 |
|
$ |
8,202 |
|
|||||||||
| 2 For the three and six-month periods ended June 30, 2020 and 2019, income tax effects were calculated using the effective tax rate for the relevant jurisdictions. Our non-GAAP tax rates differ from our 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 Operating Margin | |||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||||||
| Revenue | $ |
106,575 |
|
$ |
115,932 |
|
$ |
221,683 |
|
$ |
229,384 |
|
|||||||||
| Income from operations |
|
14,351 |
|
|
19,573 |
|
|
31,176 |
|
|
39,021 |
|
|||||||||
| GAAP operating margin |
|
13.5 |
% |
|
16.9 |
% |
|
14.1 |
% |
|
17.0 |
% |
|||||||||
| Add back: | |||||||||||||||||||||
| Stock-based compensation expense |
|
3,639 |
|
|
3,486 |
|
|
6,672 |
|
|
6,526 |
|
|||||||||
| Amortization expense |
|
754 |
|
|
863 |
|
|
1,508 |
|
|
1,734 |
|
|||||||||
| Total adjustments |
|
4,393 |
|
|
4,349 |
|
|
8,180 |
|
|
8,260 |
|
|||||||||
| Non-GAAP income from operations | $ |
18,744 |
|
$ |
23,922 |
|
$ |
39,356 |
|
$ |
47,281 |
|
|||||||||
| Non-GAAP operating margin |
|
17.6 |
% |
|
20.6 |
% |
|
17.8 |
% |
|
20.6 |
% |
|||||||||
| Proto Labs, Inc. | |||||||||||||||||||||
| Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA | |||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||||||
| GAAP net income | $ |
12,607 |
|
$ |
16,166 |
|
$ |
26,591 |
|
$ |
31,677 |
|
|||||||||
| Amortization expense |
|
754 |
|
|
863 |
|
|
1,508 |
|
|
1,734 |
|
|||||||||
| Depreciation expense |
|
7,143 |
|
|
6,678 |
|
|
14,347 |
|
|
13,246 |
|
|||||||||
| Interest income, net |
|
(368 |
) |
|
(465 |
) |
|
(928 |
) |
|
(1,046 |
) |
|||||||||
| Tax expense |
|
2,511 |
|
|
4,532 |
|
|
6,406 |
|
|
8,682 |
|
|||||||||
| EBITDA |
|
22,647 |
|
|
27,774 |
|
|
47,924 |
|
|
54,293 |
|
|||||||||
| Add back: | |||||||||||||||||||||
| Stock-based compensation expense |
|
3,639 |
|
|
3,486 |
|
|
6,672 |
|
|
6,526 |
|
|||||||||
| Unrealized gain on foreign currency |
|
(139 |
) |
|
(305 |
) |
|
(936 |
) |
|
(58 |
) |
|||||||||
| Total adjustments |
|
3,500 |
|
|
3,181 |
|
|
5,736 |
|
|
6,468 |
|
|||||||||
| Adjusted EBITDA | $ |
26,147 |
|
$ |
30,955 |
|
$ |
53,660 |
|
$ |
60,761 |
|
|||||||||
| Proto Labs, Inc. | |||||||||||||||||||||||
| Comparison of GAAP to Non-GAAP Revenue Growth | |||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three Months Ended
June 30, 2020 |
Three Months Ended
June 30, 2019 |
% | % Change
Constant |
||||||||||||||||||||
| GAAP | Adjustments1 | Non-GAAP | GAAP | Change2 | Currencies3 | ||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| United States | $ |
86,823 |
$ |
- |
|
$ |
86,823 |
$ |
91,149 |
(4.7) |
|
(4.7) |
|||||||||||
| Europe |
|
16,729 |
|
417 |
|
|
17,146 |
|
20,940 |
(20.1) |
|
(18.1) |
|||||||||||
| Japan |
|
3,023 |
|
(62 |
) |
|
2,961 |
|
3,843 |
(21.3) |
|
(23.0) |
|||||||||||
| Total Revenue | $ |
106,575 |
$ |
355 |
|
$ |
106,930 |
$ |
115,932 |
(8.1) |
|
(7.8) |
|||||||||||
| Six Months Ended
June 30, 2020 |
Six Months Ended
June 30, 2019 |
% | % Change
Constant |
||||||||||||||||||||
| GAAP | Adjustments1 | Non-GAAP | GAAP | Change2 | Currencies3 | ||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| United States | $ |
176,899 |
$ |
- |
|
$ |
176,899 |
$ |
178,960 |
(1.2) |
|
(1.2) |
|||||||||||
| Europe |
|
37,516 |
|
1,065 |
|
|
38,581 |
|
42,194 |
(11.1) |
|
(8.6) |
|||||||||||
| Japan |
|
7,268 |
|
(117 |
) |
|
7,151 |
|
8,230 |
(11.7) |
|
(13.1) |
|||||||||||
| Total Revenue | $ |
221,683 |
$ |
948 |
|
$ |
222,631 |
$ |
229,384 |
(3.4) |
|
(2.9) |
|||||||||||
| 1 Revenue for the three and six-month periods ended June 30, 2020 has been recalculated using 2019 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 and six-month periods ended June 30, 2019 to GAAP revenue for the three and six-month periods ended June 30, 2020. | |||||||||||||||||||||||
| 3 This column presents the percentage change from GAAP revenue for the three and six-month periods ended June 30, 2019 to non-GAAP revenue for the three and six-month periods ended June 30, 2020 (as recalculated using the foreign currency exchange rates in effect during the three- and six-month periods ended June 30, 2019) in order to provide a constant-currency comparison. | |||||||||||||||||||||||
| Proto Labs, Inc. | ||||||||
| Product Developer Information | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | |||||||
2020 |
2019 |
2020 |
2019 |
|||||
| Unique product developers and engineers served | 17,037 |
20,840 |
29,703 |
31,550 |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200728005141/en/
Contact:
Investor Relations Contact:
Protolabs
Dan Schumacher, 763-479-7240
Director of Investor Relations
daniel.schumacher@protolabs.com
or
Media Contact:
Protolabs
Sarah Ekenberg, 763-479-7560
Marketing Manager, PR & Media
sarah.ekenberg@protolabs.com