Proto Labs Reports Record Revenue and Net Income for the Second Quarter 2014
Quarterly Revenue Increases 33% Year over Year to
Quarterly
Net Income Increases 27% Year over Year to
Company
Announces Retirement of CFO by Year End 2014
Highlights include:
-
Revenue for the second quarter of 2014 increased to a record
$52.9 million , 33 percent above revenue of$39.7 million in the second quarter of 2013. -
Revenue from additive services (3D printing) through the Fineline
acquisition completed last April totaled
$2.1 million . - The record quarterly revenue was achieved through a 19 percent increase in the number of product developers served combined with an increase of 7 percent in spending per product developer.
-
Net income for the second quarter of 2014 increased to a record
$11.0 million , or$0.42 per diluted share. Non-GAAP net income, excluding the after tax expense of stock compensation and amortization of intangibles, was$11.9 million , or$0.45 per diluted share. See “Non-GAAP Financial Measure” below.
“Our business performed wonderfully this past quarter and our employees
executed on many fronts. We rolled out new services for product
developers; we completed a strategic acquisition; we transitioned our
Firstcut operations to our new factory in
Additional highlights include:
-
Gross margin was 61.8 percent of revenue during the second quarter of
2014 compared with 62.5 percent during the same quarter in 2013. The
factory move of Firstcut operations to
Plymouth, Minnesota , was completed in May on schedule. -
During the second quarter of 2014, spending on research and
development, including the Protoworks initiatives, totaled
$3.9 million , or 7.4 percent of revenue. This compares to$2.8 million , or 6.9 percent of revenue, during the second quarter of 2013. - Operating margin was 30.2 percent of revenue during the second quarter of 2014 compared to 31.8 percent during the second quarter of 2013.
-
As measured on a year-to-date basis, cash generated from operations
totaled
$26.0 million . Cash, cash equivalents and investments totaled$105.4 million as ofJune 30, 2014 .
The company also announced that Chief Financial Officer
“Proto Labs has accomplished much during my tenure and I am proud to have been part of the success. Our company is in excellent shape and I leave knowing processes are in place to continue our growth strategies. I look forward to working with Vicki and the Board of Directors through the end of this year on a successful transition,” concluded Mr. Judd.
Non-GAAP Financial Measure
The company has included non-GAAP net income, adjusted for stock-based compensation expense and amortization 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 and amortization 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 and amortization 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 and amortization 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 second
quarter financial results today,
About
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, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
June 30, |
December 31, |
|||||||
2014 | 2013 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 22,854 | $ | 43,039 | ||||
Short-term marketable securities | 25,255 | 36,339 | ||||||
Accounts receivable, net | 25,187 | 18,320 | ||||||
Inventory | 5,755 | 5,166 | ||||||
Other current assets | 7,645 | 6,931 | ||||||
Total current assets | 86,696 | 109,795 | ||||||
Property and equipment, net | 87,313 | 56,101 | ||||||
Long-term marketable securities | 57,325 | 64,023 | ||||||
Goodwill | 28,916 | - | ||||||
Intangible assets, net | 4,456 | - | ||||||
Other long-term assets | 251 | 256 | ||||||
Total assets | $ | 264,957 | $ | 230,175 | ||||
Liabilities and shareholders' equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 11,818 | $ | 6,455 | ||||
Accrued compensation | 5,805 | 6,196 | ||||||
Accrued liabilities and other | 3,491 | 808 | ||||||
Current portion of long-term debt obligations | 194 | 204 | ||||||
Total current liabilities | 21,308 | 13,663 | ||||||
Long-term deferred tax liabilities | 3,731 | 3,682 | ||||||
Long-term debt obligations | 77 | 159 | ||||||
Other long-term liabilities | 759 | 1,028 | ||||||
Shareholders' equity | 239,082 | 211,643 | ||||||
Total liabilities and shareholders' equity | $ | 264,957 | $ | 230,175 | ||||
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, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||
Revenue | ||||||||||||||||||
Protomold | $ | 36,255 | $ | 27,924 | $ | 68,949 | $ | 54,804 | ||||||||||
Firstcut | 14,478 | 11,825 | 27,858 | 22,258 | ||||||||||||||
Fineline | 2,133 | - | 2,133 | - | ||||||||||||||
Total revenue | 52,866 | 39,749 | 98,940 | 77,062 | ||||||||||||||
Cost of revenue | 20,183 | 14,896 | 37,233 | 28,930 | ||||||||||||||
Gross profit | 32,683 | 24,853 | 61,707 | 48,132 | ||||||||||||||
Operating expenses | ||||||||||||||||||
Marketing and sales | 7,261 | 5,550 | 13,678 | 10,813 | ||||||||||||||
Research and development | 3,914 | 2,751 | 7,370 | 5,379 | ||||||||||||||
General and administrative | 5,534 | 3,923 | 10,237 | 7,917 | ||||||||||||||
Total operating expenses | 16,709 | 12,224 | 31,285 | 24,109 | ||||||||||||||
Income from operations | 15,974 | 12,629 | 30,422 | 24,023 | ||||||||||||||
Other income (expense), net | (66 | ) | 116 | 37 | 119 | |||||||||||||
Income before income taxes | 15,908 | 12,745 | 30,459 | 24,142 | ||||||||||||||
Provision for income taxes | 4,952 | 4,134 | 9,401 | 7,244 | ||||||||||||||
Net income | $ | 10,956 | $ | 8,611 | $ | 21,058 | $ | 16,898 | ||||||||||
Net income per share: | ||||||||||||||||||
Basic | $ | 0.43 | $ | 0.34 | $ | 0.82 | $ | 0.68 | ||||||||||
Diluted | $ | 0.42 | $ | 0.33 | $ | 0.81 | $ | 0.66 | ||||||||||
Shares used to compute net income per share: | ||||||||||||||||||
Basic | 25,620,005 | 25,258,932 | 25,597,055 | 25,030,283 | ||||||||||||||
Diluted | 26,146,848 | 25,850,247 | 26,132,265 | 25,627,382 | ||||||||||||||
Proto Labs, Inc. | ||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Six Months Ended | ||||||||||
June 30, | ||||||||||
2014 | 2013 | |||||||||
Operating activities | ||||||||||
Net income | $ | 21,058 | $ | 16,898 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 4,683 | 3,582 | ||||||||
Stock-based compensation expense | 2,248 | 1,736 | ||||||||
Deferred taxes | 107 | 307 | ||||||||
Excess tax benefit from stock-based compensation | (1,623 | ) | (5,929 | ) | ||||||
Amortization of held-to-maturity securities | 854 | 633 | ||||||||
Loss on disposal of property and equipment | - | 59 | ||||||||
Changes in operating assets and liabilities | (1,310 | ) | 2,162 | |||||||
Net cash provided by operating activities | 26,017 | 19,448 | ||||||||
Investing activities | ||||||||||
Purchases of property and equipment | (31,625 | ) | (6,069 | ) | ||||||
Acquisitions, net of cash acquired | (33,864 | ) | - | |||||||
Purchases of marketable securities | (38,463 | ) | (57,310 | ) | ||||||
Proceeds from maturities of marketable securities | 55,441 | 34,280 | ||||||||
Net cash used in investing activities | (48,511 | ) | (29,099 | ) | ||||||
Financing activities | ||||||||||
Payments on debt | (954 | ) | (166 | ) | ||||||
Acquisition-related contingent consideration | (400 | ) | - | |||||||
Proceeds from exercises of stock options and other | 1,806 | 2,870 | ||||||||
Excess tax benefit from stock-based compensation | 1,623 | 5,929 | ||||||||
Net cash provided by financing activities | 2,075 | 8,633 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 234 | (295 | ) | |||||||
Net decrease in cash and cash equivalents | (20,185 | ) | (1,313 | ) | ||||||
Cash and cash equivalents, beginning of period | 43,039 | 36,759 | ||||||||
Cash and cash equivalents, end of period | $ | 22,854 | $ | 35,446 | ||||||
Proto Labs, Inc. | ||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measure | ||||||||||
(In thousands, except share and per share amounts) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, 2014 | June 30, 2014 | |||||||||
Non-GAAP net income, adjusted for stock-based compensation and amortization expenses: |
||||||||||
GAAP net income | $ | 10,956 | $ | 21,058 | ||||||
Add back: Stock-based compensation expense | ||||||||||
Cost of revenue | 97 | 179 | ||||||||
Marketing and sales | 240 | 435 | ||||||||
Research and development | 268 | 483 | ||||||||
General and administrative | 645 | 1,151 | ||||||||
Total stock-based compensation expense | 1,250 | 2,248 | ||||||||
Income tax benefits on stock-based compensation | (398 | ) | (711 | ) | ||||||
Non-GAAP net income adjusted for stock based compensation | 11,808 | 22,595 | ||||||||
Add back: Amortization expense | ||||||||||
General and administrative | 124 | 124 | ||||||||
Income tax benefits on stock-based compensation | (43 | ) | (43 | ) | ||||||
Non-GAAP net income adjusted for stock based compensation and amortization |
$ | 11,889 | $ | 22,676 | ||||||
Non-GAAP net income per share: | ||||||||||
Basic | $ | 0.46 | $ | 0.89 | ||||||
Diluted | $ | 0.45 | $ | 0.87 | ||||||
Shares used to compute non-GAAP net income per share: | ||||||||||
Basic | 25,620,005 | 25,597,055 | ||||||||
Diluted | 26,146,848 | 26,132,265 | ||||||||
Proto Labs, Inc. | ||||||||
Revenue by Geography - Based on Shipping Location | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 30, 2014 | June 30, 2014 | |||||||
Revenues | ||||||||
Domestic | ||||||||
United States | $ | 39,966 | $ | 72,988 | ||||
International | ||||||||
Europe | 8,985 | 18,190 | ||||||
Japan | 1,447 | 3,332 | ||||||
United States | 2,468 | 4,430 | ||||||
Total international | 12,900 | 25,952 | ||||||
Total revenue | $ | 52,866 | $ | 98,940 | ||||
Proto Labs, Inc. | |||||||||||||||
Customer Information | |||||||||||||||
(In thousands, except customer amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | ||||||||||||||
Number of | Number of | ||||||||||||||
Customers | Revenue ($) | Customers | Revenue ($) | ||||||||||||
New customers - Protomold and Firscut | 1,659 | $ | 9,169 | 1,435 | $ | 7,952 | |||||||||
Existing customers - Protomold and Firscut | 5,366 | 89,771 | 4,644 | 69,110 | |||||||||||
Total | 7,025 | $ | 98,940 | 6,079 | $ | 77,062 | |||||||||
Note: the data above does not include customers who purchased Fineline products during the periods presented | |||||||||||||||
Proto Labs, Inc. | |||||||||||||
Product Developer Information | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
Unique product developers served - Protomold and Firscut | 8,222 | 6,885 | 12,103 | 10,219 | |||||||||
Note: the data above does not include product developers who purchased Fineline products during the periods presented | |||||||||||||
Source:
Investor Relations:
Proto Labs, Inc.
Jack Judd,
763-479-7408
jack.judd@protolabs.com
or
EVC
Group
Jenifer Kirtland, 408-656-9496
jkirtland@evcgroup.com
or
Media
Relations:
Proto Labs, Inc.
Bill Dietrick, 763-479-7664
bill.dietrick@protolabs.com