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Form 8-K Proto Labs Inc For: May 06

May 6, 2022 6:15 AM EDT

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Exhibit 99.1

 

 

 
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3D Printing

CNC Machining

Sheet Metal Fabrication

Injection Molding

 

 

 

Protolabs Reports Financial Results for the First Quarter of 2022

 

Revenue of $124.2 million in the First Quarter of 2022;

GAAP Earnings Per Share of $0.19, Non-GAAP Earnings Per Share of $0.38

 

MAPLE PLAIN, Minn. May 6, 2022 – Proto Labs, Inc. ("Protolabs" or the "Company") (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the first quarter ended March 31, 2022.

 

First Quarter 2022 Highlights include:

 

 

Revenue for the first quarter of 2022 was $124.2 million, representing a 6.9 percent increase compared to revenue of $116.1 million in the first quarter of 2021.

 

Hubs generated $10.3 million of revenue in the first quarter, representing year-over-year growth of 78.6 percent, or approximately 38.2 percent organically. Hubs was acquired on January 22, 2021.

 

Net income was $5.1 million, or $0.19 per diluted share.

 

Non-GAAP net income was $10.4 million, or $0.38 per diluted share. See “Non-GAAP Financial Measures” below.

 

“Protolabs finished the first quarter strong after a slow start in January, and we also made progress on our 2022 strategic priorities,” said Rob Bodor, President and Chief Executive Officer. “As an ever-increasing group of companies adopt Manufacturing 4.0, Protolabs will continue to lead the way through focused execution of our strategy.”

 

Additional First Quarter 2022 Highlights include:

 

 

Protolabs served 23,492 unique product developers during the first quarter of 2022.

 

Gross margin was 44.9 percent of revenue; Non-GAAP gross margin was 45.7 percent of revenue. See "Non-GAAP Financial Measures" below.

 

EBITDA was $17.8 million, or 14.3 percent of revenue; Adjusted EBITDA was $22.3 million, or 17.9 percent of revenue. See "Non-GAAP Financial Measures" below.

 

Cash and investments balance was $105.3 million as of March 31, 2022.

 

“We are pleased to report first quarter margins ahead of our expectations,” said Dan Schumacher, Interim Chief Financial Officer. “We remain confident in our long-term strategy and are focused on execution. Protolabs will continue to reinforce our sustainable, long-term competitive advantage through profitable growth.”

 

 

 

Non-GAAP Financial Measures

 

The Company has included non-GAAP revenue growth that excludes the impact of changes in foreign currency exchange rates and revenue earned from its acquisition of Hubs (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, unrealized loss on foreign currency, and transaction costs (collectively, “Adjusted EBITDA”), in this press release to provide investors with additional information regarding the Company’s financial results. The Company has also included earnings before interest, taxes, depreciation and amortization margin (“EBITDA margin”) and EBITDA margin, adjusted for stock-based compensation expense, unrealized loss on foreign currency, and transaction costs (collectively, “Adjusted EBITDA margin”), 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, amortization expense, and transaction costs (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 gross margin, adjusted for stock-based compensation expense and amortization expense, (collectively, “non-GAAP gross 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, unrealized loss on foreign currency, and transaction costs (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 net income per share, non-GAAP operating margin, non-GAAP income from operations, non-GAAP revenue growth, non-GAAP gross profit, non-GAAP gross margin, EBITDA, Adjusted EBITDA, EBITDA margin, and Adjusted EBITDA margin, 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 management and the board of directors.

 

Conference Call

 

The Company has scheduled a conference call to discuss its first quarter 2022 financial results and second quarter 2022 outlook today, May 6, 2022 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 presentation will be available via the investor relations section of the Protolabs website and the following link: https://edge.media-server.com/mmc/p/n7feufxj. A replay will be available for 14 days following the call on the investor relations section of the Protolabs website.

 

 

 

About Protolabs

 

Protolabs is the world’s leading provider of digital manufacturing services. The e-commerce-based company offers injection molding, CNC machining, 3D printing, and sheet metal fabrication to product developers, engineers, and supply chain teams across the globe. Protolabs serves customers using in-house production capabilities that bring unprecedented speed in tandem with Hubs, a Protolabs Company, which serves customers through its network of premium manufacturing partners. Together, they help companies bring new ideas to market with the fastest and most comprehensive digital manufacturing service in the world. 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 Securities and Exchange Commission. 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. To the extent permitted under applicable law, Protolabs expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.

 

Source: Proto Labs, Inc.

 

Investor Relations Contact

 

Protolabs

Ryan Johnsrud, 612-225-4873

Manager – Investor Relations and FP&A

[email protected]

 

Media Contact

 

Protolabs

Brent Renneke, 763-479-7704

PR & Media Strategist

[email protected]

 

 

 

Proto Labs, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

   

March 31,

   

December 31,

 
   

2022

   

2021

 
   

(Unaudited)

         

Assets

               

Current assets

               

Cash and cash equivalents

  $ 57,239     $ 65,929  

Short-term marketable securities

    19,914       11,580  

Accounts receivable, net

    85,960       80,051  

Inventory

    14,227       13,161  

Income taxes receivable

    687       1,321  

Prepaid expenses and other current assets

    10,185       11,450  

Total current assets

    188,212       183,492  
                 

Property and equipment, net

    270,946       280,346  

Goodwill

    398,319       400,610  

Other intangible assets, net

    36,234       37,998  

Long-term marketable securities

    28,196       14,340  

Operating lease assets

    4,800       5,578  

Finance lease assets

    1,773       1,898  

Long-term assets held for sale

    1,985       -  

Other long-term assets

    4,286       4,320  

Total assets

  $ 934,751     $ 928,582  
                 

Liabilities and shareholders' equity

               

Current liabilities

               

Accounts payable

  $ 17,511     $ 25,364  

Accrued compensation

    13,094       13,704  

Accrued liabilities and other

    23,030       11,980  

Current operating lease liabilities

    2,253       3,298  

Current finance lease liabilities

    493       550  

Income taxes payable

    3,870       -  

Total current liabilities

    60,251       54,896  
                 

Long-term operating lease liabilities

    2,514       2,245  

Long-term finance lease liabilities

    1,269       1,351  

Long-term deferred tax liabilities

    32,661       35,892  

Other long-term liabilities

    6,021       5,705  
                 

Shareholders' equity

    832,035       828,493  

Total liabilities and shareholders' equity

  $ 934,751     $ 928,582  
                 

 

 

 

Proto Labs, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2022

   

2021

 

Revenue

               

Injection Molding

  $ 53,398     $ 56,359  

CNC Machining

    46,098       36,703  

3D Printing

    19,672       17,235  

Sheet Metal

    4,687       5,219  

Other

    313       610  

Total revenue

    124,168       116,126  
                 

Cost of revenue

    68,364       60,796  

Gross profit

    55,804       55,330  
                 

Operating expenses

               

Marketing and sales

    20,586       19,480  

Research and development

    10,557       12,181  

General and administrative

    16,771       19,408  

Total operating expenses

    47,914       51,069  

Income from operations

    7,890       4,261  

Other loss, net

    (300 )     (313 )

Income before income taxes

    7,590       3,948  

Provision for income taxes

    2,495       236  

Net income

  $ 5,095     $ 3,712  
                 

Net income per share:

               

Basic

  $ 0.19     $ 0.14  

Diluted

  $ 0.19     $ 0.13  
                 

Shares used to compute net income per share:

               

Basic

    27,502,941       27,464,136  

Diluted

    27,510,477       27,698,195  
                 

 

 

 

Proto Labs, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2022

   

2021

 

Operating activities

               

Net income

  $ 5,095     $ 3,712  

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

               

Depreciation and amortization

    10,232       10,059  

Stock-based compensation expense

    4,397       5,620  

Deferred taxes

    (3,213 )     (69 )

Other

    79       126  

Changes in operating assets and liabilities

    1,193       (13,023 )

Net cash provided by operating activities

    17,783       6,425  
                 

Investing activities

               

Purchases of property, equipment and other capital assets

    (3,069 )     (6,546 )

Cash used for acquisitions, net of cash acquired

    -       (127,709 )

Purchases of marketable securities

    (29,366 )     (8,227 )

Proceeds from sales of marketable securities

    -       45,194  

Proceeds from call redemptions and maturities of marketable securities

    6,600       7,155  

Net cash used in investing activities

    (25,835 )     (90,133 )
                 

Financing activities

               

Proceeds from exercises of stock options and other

    6       1,704  

Purchases of shares withheld for tax obligations

    (468 )     (1,994 )

Principal repayments of finance lease obligations

    (139 )     (137 )

Net cash used in financing activities

    (601 )     (427 )

Effect of exchange rate changes on cash and cash equivalents

    (37 )     306  

Net decrease in cash and cash equivalents

    (8,690 )     (83,829 )

Cash and cash equivalents, beginning of period

    65,929       127,603  

Cash and cash equivalents, end of period

  $ 57,239     $ 43,774  
                 

 

 

 

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

 
   

March 31,

 
   

2022

   

2021

 

Non-GAAP net income, adjusted for stock-based compensation expense, amortization expense, unrealized loss on foreign currency and transaction costs

               

GAAP net income

  $ 5,095     $ 3,712  

Add back:

               

Stock-based compensation expense

    4,397       5,620  

Amortization expense

    1,545       1,543  

Unrealized loss on foreign currency

    89       622  

Transaction costs 1

    -       2,515  

Total adjustments 2

    6,031       10,300  

Income tax benefits on adjustments 3

    (682 )     (3,001 )

Non-GAAP net income

  $ 10,444     $ 11,011  
                 
                 

Non-GAAP net income per share:

               

Basic

  $ 0.38     $ 0.40  

Diluted

  $ 0.38     $ 0.40  
                 

Shares used to compute non-GAAP net income per share:

               

Basic

    27,502,941       27,464,136  

Diluted

    27,510,477       27,698,195  
                 

 

1 Transaction costs include direct costs incurred in the Company's acquisition of Hubs, Inc. 

2 Stock-based compensation expense, amortization expense, unrealized loss on foreign currency and transaction costs were included in the following GAAP consolidated statement of operations categories:

 

   

Three Months Ended

 
   

March 31,

 
   

2022

   

2021

 
                 

Cost of revenue

  $ 929     $ 977  
                 

Marketing and sales

    737       853  

Research and development

    629       624  

General and administrative

    3,647       7,224  

Total operating expenses

    5,013       8,701  
                 

Other (income) expense, net

    89       622  

Total adjustments

  $ 6,031     $ 10,300  

 

3 For the three-month periods ended March 31, 2022 and 2021, income tax effects were calculated using the effective tax rate for the relevant jurisdictions. The  Company's non-GAAP tax rates differ from its 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 Gross Margin

(In thousands)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2022

   

2021

 

Revenue

  $ 124,168     $ 116,126  

Gross Profit

    55,804       55,330  

GAAP gross margin

    44.9 %     47.6 %

Add back:

               

Stock-based compensation expense

    587       635  

Amortization expense

    342       342  

Total adjustments

    929       977  

Non-GAAP gross profit

  $ 56,733     $ 56,307  

Non-GAAP gross margin

    45.7 %     48.5 %
                 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Operating Margin

(In thousands)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2022

   

2021

 

Revenue

  $ 124,168     $ 116,126  

Income from operations

    7,890       4,261  

GAAP operating margin

    6.4 %     3.7 %

Add back:

               

Stock-based compensation expense

    4,397       5,620  

Amortization expense

    1,545       1,543  

Transaction costs 1

    -       2,515  

Total adjustments

    5,942       9,678  

Non-GAAP income from operations

  $ 13,832     $ 13,939  

Non-GAAP operating margin

    11.1 %     12.0 %

 

 

1 Transaction costs include direct costs incurred in the Company's acquisition of Hubs, Inc. 

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA

(In thousands)

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2022

   

2021

 

Revenue

  $ 124,168     $ 116,126  

GAAP net income

    5,095       3,712  

GAAP net income margin

    4.1 %     3.2 %
                 

GAAP net income

  $ 5,095     $ 3,712  

Amortization expense

    1,545       1,543  

Depreciation expense

    8,687       8,516  

Interest income, net

    (45 )     (87 )

Tax expense

    2,495       236  

EBITDA

    17,777       13,920  

EBITDA Margin

    14.3 %     12.0 %

Add back:

               

Stock-based compensation expense

    4,397       5,620  

Unrealized loss on foreign currency

    89       622  

Transaction costs 1

    -       2,515  

Total adjustments

    4,486       8,757  

Adjusted EBITDA

  $ 22,263     $ 22,677  

Adjusted EBITDA Margin

    17.9 %     19.5 %

 

 

1 Transaction costs include direct costs incurred in the Company's acquisition of Hubs, Inc. 

 

 

 

 

Proto Labs, Inc.

Comparison of GAAP to Non-GAAP Revenue Growth

(In thousands)

(Unaudited)

 

   

Three Months Ended
March 31, 2022

   

Three Months Ended
March 31, 2021

   

 

%
         
   

GAAP

   

Foreign Currency1

   

Hubs Acquisition2

   

Non-GAAP

   

GAAP

   

Change3

   

% Change Organic4

 

Revenues

                                                       

United States

  $ 95,496     $ -     $ (1,049 )   $ 94,447     $ 91,053       4.9

%

    3.7

%

Europe

    24,586       1,151       (1,279 )     24,458       21,449       14.6       14.0  

Japan

    4,086       392       -       4,478       3,624       12.7       23.6  

Total Revenue

  $ 124,168     $ 1,543     $ (2,328 )   $ 123,383     $ 116,126       6.9

%

    6.2

%

                                                         

 

1 Revenue for the three-month period ended March 31, 2022 has been recalculated using 2021 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 Revenue for the three-month period ended March 31, 2022 has been recalculated to exclude revenue earned from the Company's acquisition of Hubs, Inc. for the period from January 1, 2022 to January 21, 2022 to provide information useful in evaluating the underlying business trends excluding the impact of acquisitions. The Hubs, Inc. acquisition occurred on January 22, 2021 and was included in 2021 revenue after that date.

 

3 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2021 to GAAP revenue for the three-month period ended March 31, 2022.

 

4 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2021 to non-GAAP revenue for the three-month period ended March 31, 2022 (as recalculated using the foreign currency exchange rates in effect during the three-month period ended March 31, 2021, excluding the impact of Hubs, Inc. acquisition) in order to provide a constant-currency comparison.

 

 

 

 

Proto Labs, Inc.

Product Developer Information

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2022

   

2021

 

Unique product developers and engineers served

    23,492       22,605  

 

 

 


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