Protolabs Reports Record Revenue Growth and Net Income for Second Quarter 2018
Record Quarterly Revenue of
Record Quarterly Net Income of
Second Quarter 2018 highlights include:
-
Revenue for the second quarter of 2018 was a record
$109.7 million , representing a 33.7 percent increase over revenue of$82.0 million in the second quarter of 2017. - The number of unique product developers and engineers served through our web-based customer interface totaled 19,198 in the second quarter of 2018, an increase of 18.7 percent over the second quarter of 2017. This metric does not include unique product developers served in our recently acquired RAPID Manufacturing business.
-
Net income for the second quarter of 2018 was a record
$18.3 million , or$0.67 per diluted share. -
Non-GAAP net income was
$19.9 million , or$0.73 per diluted share. See “Non-GAAP Financial Measures” below.
“For the second straight quarter, Protolabs delivered 34% revenue growth
over 2017,” said
Additional Second Quarter 2018 highlights include:
- Gross margin was 54.0 percent of revenue for the second quarter of 2018, compared with 56.5 percent for the second quarter of 2017 with the change in gross margin largely driven by the RAPID Manufacturing acquisition.
- GAAP operating margin was 20.0 percent of revenue during the second quarter of 2018, compared to 20.0 percent for the second quarter of 2017.
- Non-GAAP operating margin was 23.3 percent of revenue during the second quarter of 2018, compared to 22.9 percent for the second quarter of 2017. See “Non-GAAP Financial Measures” below.
-
The company generated
$33.2 million in cash from operations during the second quarter of 2018. -
Cash and investments balance was
$144.9 million atJune 30, 2018 .
“Protolabs continues to produce strong financial results,” said
Non-GAAP Financial Measures
The company has included non-GAAP revenue growth that excludes the impact of changes in foreign currency exchange rates. Management believes these metrics are useful in evaluating the underlying business trends and ongoing operating performance of the company.
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, disposal of businesses, legal settlements and unrealized foreign currency activity (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, operating margin and revenues, 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 2018 financial results today,
About Protolabs
Protolabs is the world's fastest digital manufacturing source for rapid prototyping and on-demand production. The technology-enabled 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
Proto Labs, Inc. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(In thousands) | ||||||||||
June 30, | December 31, | |||||||||
2018 | 2017 | |||||||||
(Unaudited) | ||||||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 62,605 | $ | 36,707 | ||||||
Short-term marketable securities | 57,619 | 57,424 | ||||||||
Accounts receivable, net | 55,928 | 51,503 | ||||||||
Inventory | 9,590 | 11,271 | ||||||||
Income taxes receivable | - | 1,832 | ||||||||
Other current assets | 7,678 | 6,267 | ||||||||
Total current assets | 193,420 | 165,004 | ||||||||
Property and equipment, net | 197,339 | 166,440 | ||||||||
Long-term marketable securities | 24,636 | 37,034 | ||||||||
Goodwill | 128,752 | 128,504 | ||||||||
Other intangible assets, net | 18,521 | 19,084 | ||||||||
Other long-term assets | 3,519 | 2,672 | ||||||||
Total assets | $ | 566,187 | $ | 518,738 | ||||||
Liabilities and shareholders' equity | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 20,038 | $ | 15,876 | ||||||
Accrued compensation | 13,822 | 12,100 | ||||||||
Accrued liabilities and other | 9,885 | 8,408 | ||||||||
Short-term debt obligations | - | 5,000 | ||||||||
Income taxes payable | 637 | 2,371 | ||||||||
Total current liabilities | 44,382 | 43,755 | ||||||||
Long-term income taxes payable | 2,181 | 2,181 | ||||||||
Long-term deferred tax liabilities | 8,583 | 6,966 | ||||||||
Other long-term liabilities | 4,788 | 4,621 | ||||||||
Shareholders' equity | 506,253 | 461,215 | ||||||||
Total liabilities and shareholders' equity | $ | 566,187 | $ | 518,738 | ||||||
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, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenue | |||||||||||||||
Injection Molding | $ | 51,586 | $ | 46,792 | $ | 102,929 | $ | 94,708 | |||||||
CNC Machining | 37,788 | 24,180 | 74,519 | 46,152 | |||||||||||
3D Printing | 13,248 | 10,873 | 25,573 | 20,958 | |||||||||||
Sheet Metal | 6,309 | - | 12,550 | - | |||||||||||
Other | 721 | 195 | 1,826 | 389 | |||||||||||
Total revenue | 109,652 | 82,040 | 217,397 | 162,207 | |||||||||||
Cost of revenue | 50,439 | 35,671 | 100,276 | 70,565 | |||||||||||
Gross profit | 59,213 | 46,369 | 117,121 | 91,642 | |||||||||||
Operating expenses | |||||||||||||||
Marketing and sales | 17,557 | 14,630 | 34,129 | 27,617 | |||||||||||
Research and development | 7,032 | 6,084 | 13,697 | 11,907 | |||||||||||
General and administrative | 12,640 | 9,253 | 25,583 | 18,034 | |||||||||||
Total operating expenses | 37,229 | 29,967 | 73,409 | 57,558 | |||||||||||
Income from operations | 21,984 | 16,402 | 43,712 | 34,084 | |||||||||||
Other income, net | 808 | 1,173 | 986 | 1,488 | |||||||||||
Income before income taxes | 22,792 | 17,575 | 44,698 | 35,572 | |||||||||||
Provision for income taxes | 4,478 | 5,489 | 8,333 | 11,286 | |||||||||||
Net income | $ | 18,314 | $ | 12,086 | $ | 36,365 | $ | 24,286 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.68 | $ | 0.46 | $ | 1.35 | $ | 0.91 | |||||||
Diluted | $ | 0.67 | $ | 0.45 | $ | 1.34 | $ | 0.91 | |||||||
Shares used to compute net income per share: | |||||||||||||||
Basic | 26,972,990 | 26,541,978 | 26,925,673 | 26,554,262 | |||||||||||
Diluted | 27,274,882 | 26,649,152 | 27,232,215 | 26,710,217 | |||||||||||
Proto Labs, Inc. | |||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||||
(In thousands) | |||||||||||||
(Unaudited) | |||||||||||||
Six Months Ended | |||||||||||||
June 30, | |||||||||||||
2018 | 2017 | ||||||||||||
Operating activities | |||||||||||||
Net income | $ | 36,365 | $ | 24,286 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation and amortization | 12,749 | 8,700 | |||||||||||
Stock-based compensation expense | 5,034 | 3,958 | |||||||||||
Deferred taxes | 1,620 | 1,608 | |||||||||||
Gain on sale of businesses | (671 | ) | - | ||||||||||
Amortization of held-to-maturity securities | 276 | 592 | |||||||||||
Other | 7 | 77 | |||||||||||
Changes in operating assets and liabilities | 3,937 | 206 | |||||||||||
Net cash provided by operating activities | 59,317 | 39,427 | |||||||||||
Investing activities | |||||||||||||
Purchases of property and equipment | (43,194 | ) | (13,301 | ) | |||||||||
Cash used for acquisitions, net of cash acquired | (90 | ) | - | ||||||||||
Proceeds from sale of businesses | 284 | - | |||||||||||
Purchases of marketable securities | (17,129 | ) | (20,037 | ) | |||||||||
Proceeds from maturities of marketable securities | 29,056 | 25,194 | |||||||||||
Purchases of other assets and investments | - | (514 | ) | ||||||||||
Net cash used in investing activities | (31,073 | ) | (8,658 | ) | |||||||||
Financing activities | |||||||||||||
Payments on debt | (5,000 | ) | - | ||||||||||
Proceeds from exercises of stock options and other | 3,306 | 3,791 | |||||||||||
Repurchases of common stock | - | (4,410 | ) | ||||||||||
Net cash used in financing activities | (1,694 | ) | (619 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (652 | ) | 251 | ||||||||||
Net increase in cash and cash equivalents | 25,898 | 30,401 | |||||||||||
Cash and cash equivalents, beginning of period | 36,707 | 68,795 | |||||||||||
Cash and cash equivalents, end of period | $ | 62,605 | $ | 99,196 | |||||||||
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, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Non-GAAP net income, adjusted for stock-based compensation expense, amortization expense, unrealized loss (gain) on foreign currency, disposal of businesses, and legal settlement |
|||||||||||||||||||
GAAP net income | $ | 18,314 | $ | 12,086 | $ | 36,365 | $ | 24,286 | |||||||||||
Add back: | |||||||||||||||||||
Stock-based compensation expense | 2,726 | 2,242 | 5,034 | 3,958 | |||||||||||||||
Amortization expense | 799 | 125 | 1,563 | 288 | |||||||||||||||
Unrealized loss (gain) on foreign currency | 93 | (412 | ) | 248 | (349 | ) | |||||||||||||
Disposal of businesses | (671 | ) | - | (671 | ) | - | |||||||||||||
Legal settlement | - | (417 | ) | - | (417 | ) | |||||||||||||
Total adjustments 1 | 2,947 | 1,538 | 6,174 | 3,480 | |||||||||||||||
Income tax benefits on adjustments 2 | (1,318 | ) | (501 | ) | (3,361 | ) | (1,079 | ) | |||||||||||
Non-GAAP net income | $ | 19,943 | $ | 13,123 | $ | 39,178 | $ | 26,687 | |||||||||||
Non-GAAP net income per share: | |||||||||||||||||||
Basic | $ | 0.74 | $ | 0.49 | $ | 1.46 | $ | 1.01 | |||||||||||
Diluted | $ | 0.73 | $ | 0.49 | $ | 1.44 | $ | 1.00 | |||||||||||
Shares used to compute non-GAAP net income per share: | |||||||||||||||||||
Basic | 26,972,990 | 26,541,978 | 26,925,673 | 26,554,262 | |||||||||||||||
Diluted | 27,274,882 | 26,649,152 | 27,232,215 | 26,710,217 | |||||||||||||||
1 Stock-based compensation expense, amortization expense, unrealized loss (gain) on foreign currency, disposal of businesses, and legal settlement were included in the following GAAP consolidated statement of operations categories: |
|||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Cost of revenue | $ | 363 | $ | 237 | $ | 650 | $ | 434 | |||||||||||
Marketing and sales | 443 | 339 | 820 | 607 | |||||||||||||||
Research and development | 376 | 279 | 690 | 501 | |||||||||||||||
General and administrative | 2,343 | 1,512 | 4,437 | 2,704 | |||||||||||||||
Total operating expenses | 3,162 | 2,130 | 5,947 | 3,812 | |||||||||||||||
Other income, net | (578 | ) | (829 | ) | (423 | ) | (766 | ) | |||||||||||
Total adjustments | $ | 2,947 | $ | 1,538 | $ | 6,174 | $ | 3,480 | |||||||||||
2 For the three- and six-months ended June 30, 2018 and 2017, 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, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||
Revenue | $ | 109,652 | $ | 82,040 | $ | 217,397 | $ | 162,207 | |||||||||||
Income from operations | 21,984 | 16,402 | 43,712 | 34,084 | |||||||||||||||
GAAP operating margin | 20.0 | % | 20.0 | % | 20.1 | % | 21.0 | % | |||||||||||
Add back: | |||||||||||||||||||
Stock-based compensation expense | 2,726 | 2,242 | 5,034 | 3,958 | |||||||||||||||
Amortization expense | 799 | 125 | 1,563 | 288 | |||||||||||||||
Total adjustments | 3,525 | 2,367 | 6,597 | 4,246 | |||||||||||||||
Non-GAAP income from operations adjusted for stock-based | |||||||||||||||||||
compensation expense and amortization expense | $ | 25,509 | $ | 18,769 | $ | 50,309 | $ | 38,330 | |||||||||||
Non-GAAP operating margin | 23.3 | % | 22.9 | % | 23.1 | % | 23.6 | % | |||||||||||
Proto Labs, Inc. | ||||||||||||||||||||
Comparison of GAAP to Non-GAAP Revenue Growth | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended
June 30, 2018 |
Three Months Ended
June 30, 2017 |
% |
% Change
Constant |
|||||||||||||||||
GAAP |
Adjustments1 |
Non-GAAP | GAAP |
Change2 |
Currencies3 |
|||||||||||||||
Revenues | ||||||||||||||||||||
United States | $ | 86,354 | $ | - | $ | 86,354 | $ | 63,353 | 36.3 | % | 36.3 | % | ||||||||
Europe | 20,213 | (1,453 | ) | 18,760 | 16,131 | 25.3 | % | 16.3 | % | |||||||||||
Japan | 3,085 | (51 | ) | 3,034 | 2,556 | 20.7 | % | 18.7 | % | |||||||||||
Total Revenue | $ | 109,652 | $ | (1,504 | ) | $ | 108,148 | $ | 82,040 | 33.7 | % | 31.8 | % | |||||||
Six Months Ended
June 30, 2018 |
Six Months Ended
June 30, 2017 |
% |
% Change
Constant |
|||||||||||||||||
GAAP | Adjustments1 | Non-GAAP | GAAP |
Change2 |
Currencies3 | |||||||||||||||
Revenues | ||||||||||||||||||||
United States | $ | 170,521 | $ | - | $ | 170,521 | $ | 123,529 | 38.0 | % | 38.0 | % | ||||||||
Europe | 40,158 | (3,987 | ) | 36,171 | 33,130 | 21.2 | % | 9.2 | % | |||||||||||
Japan | 6,718 | (227 | ) | 6,491 | 5,548 | 21.1 | % | 17.0 | % | |||||||||||
Total Revenue | $ | 217,397 | $ | (4,214 | ) | $ | 213,183 | $ | 162,207 | 34.0 | % | 31.4 | % | |||||||
1 Revenue growth for the three- and six-month periods ended June 30, 2018 has been recalculated using 2017 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 growth for the three- and six-month periods ended June 30, 2017 to GAAP revenue growth for the three- and six-month periods ended June 30, 2018. | ||||||||||||||||||||
3 This column presents the percentage change from GAAP revenue growth for the three- and six-month periods ended June 30, 2017 (calculated using the foreign currency exchange rates in effect during that period) to non-GAAP revenue growth for the three- and six-month periods ended June 30, 2018 (as recalculated using 2017 foreign currency exchange rates) 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, | |||||||||
2018 | 2017 | 2018 | 2017 | |||||||
Unique product developers and engineers served | 19,198 | 16,174 | 28,598 | 24,255 | ||||||
Note: the information above does not include customers who do not utilize our web-based customer interface; these customers are principally related to our recent acquisitions. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180726005180/en/
Source:
Investor Relations Contact:
Protolabs
Dan Schumacher,
763-479-7240
Director of Investor Relations
daniel.schumacher@protolabs.com
or
Media
Contact:
Padilla for Protolabs
Tim Nelson, 612-455-1789
Tim.Nelson@PadillaCo.com