Protolabs Reports Financial Results for the Third Quarter 2020
Third Quarter 2020 Revenue of
Third Quarter 2020 GAAP EPS of
Third Quarter 2020 Highlights include:
-
Revenue for the third quarter of 2020 was
$107.5 million , representing an 8.5 percent decrease compared to revenue of$117.5 million in the third quarter of 2019, and a sequential increase of 0.9% over the second quarter of 2020. -
GAAP net income for the third quarter of 2020 was
$14.7 million , or$0.55 per diluted share. -
Non-GAAP net income was
$17.9 million , or$0.67 per diluted share in the third quarter. See “Non-GAAP Financial Measures” below.
“We delivered third quarter revenue and non-GAAP earnings per share above expectations driven by improved productivity and disciplined cost management,” said
Additional Third Quarter 2020 Highlights include:
- Gross margin was 50.8 percent of revenue for the third quarter of 2020, up from 49.2 percent for the second quarter of 2020.
-
Operating expenses were
$37.0 million or 34.4 percent of revenue for the third quarter of 2020, down from$38.1 million or 35.8 percent of revenue in the second quarter of 2020. - GAAP operating margin was 16.4 percent of revenue during the third quarter of 2020, up from 13.5 percent for the second quarter of 2020.
- Non-GAAP operating margin was 20.8 percent of revenue during the third quarter of 2020, compared to 17.6 percent for the second quarter of 2020. See “Non-GAAP Financial Measures” below.
- Adjusted EBITDA margins were 27.9% in the third quarter of 2020, compared to 27.5% in the third quarter of 2019.
-
The company generated
$29.0 million in cash from operations during the third quarter of 2020, compared to$31.0 million in second quarter 2020. -
Our cash and marketable securities balance exceeded
$200.0 million at the end of the third quarter.
“Our increased focus and execution on managing costs resulted in significant sequential margin improvement in the third quarter,” said
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) loss 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) loss 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 third quarter 2020 financial results and financial guidance today,
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
Condensed Consolidated Balance Sheets | ||||||||
(In thousands) | ||||||||
2020 |
2019 |
|||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents |
$ |
118,254 |
$ |
125,225 |
||||
Short-term marketable securities |
|
30,993 |
|
35,437 |
||||
Accounts receivable, net |
|
61,250 |
|
57,450 |
||||
Inventory |
|
10,402 |
|
10,075 |
||||
Income taxes receivable |
|
16 |
|
- |
||||
Prepaid expenses and other current assets |
|
10,198 |
|
8,232 |
||||
Total current assets |
|
231,113 |
|
236,419 |
||||
Property and equipment, net |
|
281,895 |
|
263,712 |
||||
|
128,752 |
|
128,752 |
|||||
Other intangible assets, net |
|
15,107 |
|
17,369 |
||||
Long-term marketable securities |
|
51,369 |
|
12,960 |
||||
Operating lease assets |
|
10,485 |
|
11,425 |
||||
Finance lease assets |
|
2,087 |
|
- |
||||
Other long-term assets |
|
5,318 |
|
3,030 |
||||
Total assets |
$ |
726,126 |
$ |
673,667 |
||||
Liabilities and shareholders' equity | ||||||||
Current liabilities | ||||||||
Accounts payable |
$ |
15,452 |
$ |
16,804 |
||||
Accrued compensation |
|
13,539 |
|
15,058 |
||||
Accrued liabilities and other |
|
19,047 |
|
11,057 |
||||
Current operating lease liabilities |
|
3,330 |
|
3,340 |
||||
Current finance lease liabilities |
|
325 |
|
- |
||||
Income taxes payable |
|
- |
|
1,322 |
||||
Total current liabilities |
|
51,693 |
|
47,581 |
||||
Long-term operating lease liabilities |
|
8,003 |
|
8,565 |
||||
Long-term finance lease liabilities |
|
1,758 |
|
- |
||||
Long-term deferred tax liabilities |
|
32,849 |
|
26,283 |
||||
Other long-term liabilities |
|
6,002 |
|
5,448 |
||||
Shareholders' equity |
|
625,821 |
|
585,790 |
||||
Total liabilities and shareholders' equity |
$ |
726,126 |
$ |
673,667 |
||||
Condensed Consolidated Statements of Operations | |||||||||||||||
(In thousands, except share and per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
|
|
|
2020 |
2019 |
|
2020 |
2019 |
||||||||
Revenue | |||||||||||||||
Injection Molding |
$ |
53,257 |
$ |
55,167 |
$ |
165,927 |
$ |
165,935 |
|||||||
CNC Machining |
|
33,115 |
|
40,219 |
|
99,760 |
|
116,979 |
|||||||
3D Printing |
|
16,294 |
|
15,898 |
|
46,478 |
|
45,644 |
|||||||
Sheet Metal |
|
3,988 |
|
5,280 |
|
14,306 |
|
15,777 |
|||||||
Other |
|
850 |
|
891 |
|
2,716 |
|
2,504 |
|||||||
Total revenue |
|
107,504 |
|
117,455 |
|
329,187 |
|
346,839 |
|||||||
Cost of revenue |
|
52,861 |
|
57,839 |
|
163,988 |
|
168,127 |
|||||||
Gross profit |
|
54,643 |
|
59,616 |
|
165,199 |
|
178,712 |
|||||||
Operating expenses | |||||||||||||||
Marketing and sales |
|
16,705 |
|
17,604 |
|
51,821 |
|
55,466 |
|||||||
Research and development |
|
7,915 |
|
8,359 |
|
25,550 |
|
24,541 |
|||||||
General and administrative |
|
12,354 |
|
12,380 |
|
38,983 |
|
38,411 |
|||||||
Total operating expenses |
|
36,974 |
|
38,343 |
|
116,354 |
|
118,418 |
|||||||
Income from operations |
|
17,669 |
|
21,273 |
|
48,845 |
|
60,294 |
|||||||
Other income, net |
|
728 |
|
228 |
|
2,549 |
|
1,566 |
|||||||
Income before income taxes |
|
18,397 |
|
21,501 |
|
51,394 |
|
61,860 |
|||||||
Provision for income taxes |
|
3,700 |
|
4,709 |
|
10,106 |
|
13,391 |
|||||||
Net income |
$ |
14,697 |
$ |
16,792 |
$ |
41,288 |
$ |
48,469 |
|||||||
Net income per share: | |||||||||||||||
Basic |
$ |
0.55 |
$ |
0.63 |
$ |
1.54 |
$ |
1.80 |
|||||||
Diluted |
$ |
0.55 |
$ |
0.62 |
$ |
1.54 |
$ |
1.79 |
|||||||
Shares used to compute net income per share: | |||||||||||||||
Basic |
|
26,736,709 |
|
26,846,030 |
|
26,724,715 |
|
26,894,420 |
|||||||
Diluted |
|
26,886,433 |
|
27,005,341 |
|
26,861,647 |
|
27,072,873 |
|||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
Nine Months Ended | |||||||||||
|
|
|
|
2020 |
|
2019 |
|||||
Operating activities | |||||||||||
Net income |
$ |
41,288 |
|
$ |
48,469 |
|
|||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization |
|
23,891 |
|
|
22,658 |
|
|||||
Stock-based compensation expense |
|
10,617 |
|
|
9,738 |
|
|||||
Deferred taxes |
|
6,578 |
|
|
1,599 |
|
|||||
Amortization of held-to-maturity securities |
|
202 |
|
|
(5 |
) |
|||||
Other |
|
(865 |
) |
|
(133 |
) |
|||||
Changes in operating assets and liabilities |
|
664 |
|
|
1,453 |
|
|||||
Net cash provided by operating activities |
|
82,375 |
|
|
83,779 |
|
|||||
Investing activities | |||||||||||
Purchases of property, equipment and other capital assets |
|
(40,489 |
) |
|
(46,151 |
) |
|||||
Purchases of other assets and investments |
|
(3,000 |
) |
|
(4,000 |
) |
|||||
Purchases of marketable securities |
|
(90,596 |
) |
|
(17,443 |
) |
|||||
Proceeds from maturities of marketable securities |
|
56,428 |
|
|
54,352 |
|
|||||
Net cash used in investing activities |
|
(77,657 |
) |
|
(13,242 |
) |
|||||
Financing activities | |||||||||||
Proceeds from exercises of stock options and other |
|
5,674 |
|
|
2,486 |
|
|||||
Purchases of shares withheld for tax obligations |
|
(3,367 |
) |
|
(2,420 |
) |
|||||
Repurchases of common stock |
|
(14,686 |
) |
|
(33,521 |
) |
|||||
Net cash used in financing activities |
|
(12,379 |
) |
|
(33,455 |
) |
|||||
Effect of exchange rate changes on cash and cash equivalents |
|
690 |
|
|
(560 |
) |
|||||
Net (decrease) increase in cash and cash equivalents |
|
(6,971 |
) |
|
36,522 |
|
|||||
Cash and cash equivalents, beginning of period |
|
125,225 |
|
|
85,046 |
|
|||||
Cash and cash equivalents, end of period |
$ |
118,254 |
|
$ |
121,568 |
|
|||||
Reconciliation of GAAP to Non-GAAP Net Income per Share | |||||||||||||||||
(In thousands, except share and per share amounts) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Non-GAAP net income, adjusted for stock-based compensation expense, amortization expense and unrealized (gain) loss on foreign currency | |||||||||||||||||
GAAP net income |
$ |
14,697 |
|
$ |
16,792 |
|
$ |
41,288 |
|
$ |
48,469 |
|
|||||
Add back: | |||||||||||||||||
Stock-based compensation expense |
|
3,945 |
|
|
3,212 |
|
|
10,617 |
|
|
9,738 |
|
|||||
Amortization expense |
|
754 |
|
|
859 |
|
|
2,262 |
|
|
2,593 |
|
|||||
Unrealized (gain) loss on foreign currency |
|
(84 |
) |
|
449 |
|
|
(1,020 |
) |
|
391 |
|
|||||
Total adjustments 1 |
|
4,615 |
|
|
4,520 |
|
|
11,859 |
|
|
12,722 |
|
|||||
Income tax benefits on adjustments 2 |
|
(1,368 |
) |
|
(882 |
) |
|
(3,030 |
) |
|
(2,875 |
) |
|||||
Non-GAAP net income |
$ |
17,944 |
|
$ |
20,430 |
|
$ |
50,117 |
|
$ |
58,316 |
|
|||||
Non-GAAP net income per share: | |||||||||||||||||
Basic |
$ |
0.67 |
|
$ |
0.76 |
|
$ |
1.88 |
|
$ |
2.17 |
|
|||||
Diluted |
$ |
0.67 |
|
$ |
0.76 |
|
$ |
1.87 |
|
$ |
2.15 |
|
|||||
Shares used to compute non-GAAP net income per share: | |||||||||||||||||
Basic |
|
26,736,709 |
|
|
26,846,030 |
|
|
26,724,715 |
|
|
26,894,420 |
|
|||||
Diluted |
|
26,886,433 |
|
|
27,005,341 |
|
|
26,861,647 |
|
|
27,072,873 |
|
|||||
1 Stock-based compensation expense, amortization expense and unrealized (gain) loss on foreign currency were included in the following GAAP consolidated statement of operations categories: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||
Cost of revenue |
$ |
989 |
|
$ |
872 |
|
$ |
2,788 |
|
$ |
2,402 |
|
|||||
Marketing and sales |
|
865 |
|
|
760 |
|
|
2,233 |
|
|
1,923 |
|
|||||
Research and development |
|
638 |
|
|
560 |
|
|
1,766 |
|
|
1,486 |
|
|||||
General and administrative |
|
2,207 |
|
|
1,879 |
|
|
6,092 |
|
|
6,520 |
|
|||||
Total operating expenses |
|
3,710 |
|
|
3,199 |
|
|
10,091 |
|
|
9,929 |
|
|||||
Other income, net |
|
(84 |
) |
|
449 |
|
|
(1,020 |
) |
|
391 |
|
|||||
Total adjustments |
$ |
4,615 |
|
$ |
4,520 |
|
$ |
11,859 |
|
$ |
12,722 |
|
|||||
2 For the three and nine-month periods ended |
|||||||||||||||||
Reconciliation of GAAP to Non-GAAP Operating Margin | ||||||||||||||||||
(In thousands) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||||
Revenue |
$ |
107,504 |
|
$ |
117,455 |
|
$ |
329,187 |
|
$ |
346,839 |
|
||||||
Income from operations |
|
17,669 |
|
|
21,273 |
|
|
48,845 |
|
|
60,294 |
|
||||||
GAAP operating margin |
|
16.4 |
% |
|
18.1 |
% |
|
14.8 |
% |
|
17.4 |
% |
||||||
Add back: | ||||||||||||||||||
Stock-based compensation expense |
|
3,945 |
|
|
3,212 |
|
|
10,617 |
|
|
9,738 |
|
||||||
Amortization expense |
|
754 |
|
|
859 |
|
|
2,262 |
|
|
2,593 |
|
||||||
Total adjustments |
|
4,699 |
|
|
4,071 |
|
|
12,879 |
|
|
12,331 |
|
||||||
Non-GAAP income from operations |
$ |
22,368 |
|
$ |
25,344 |
|
$ |
61,724 |
|
$ |
72,625 |
|
||||||
Non-GAAP operating margin |
|
20.8 |
% |
|
21.6 |
% |
|
18.8 |
% |
|
20.9 |
% |
||||||
Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA | |||||||||||||||||
(In thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
|
|
2020 |
2019 |
|
2020 |
2019 |
|||||||||||
GAAP net income |
$ |
14,697 |
|
$ |
16,792 |
|
$ |
41,288 |
|
$ |
48,469 |
|
|||||
Amortization expense |
|
754 |
|
|
859 |
|
|
2,262 |
|
|
2,593 |
|
|||||
Depreciation expense |
|
7,282 |
|
|
6,820 |
|
|
21,629 |
|
|
20,066 |
|
|||||
Interest income, net |
|
(255 |
) |
|
(489 |
) |
|
(1,183 |
) |
|
(1,535 |
) |
|||||
Tax expense |
|
3,700 |
|
|
4,709 |
|
|
10,106 |
|
|
13,391 |
|
|||||
EBITDA |
|
26,178 |
|
|
28,691 |
|
|
74,102 |
|
|
82,984 |
|
|||||
Add back: | |||||||||||||||||
Stock-based compensation expense |
|
3,945 |
|
|
3,212 |
|
|
10,617 |
|
|
9,738 |
|
|||||
Unrealized (gain) loss on foreign currency |
|
(84 |
) |
|
449 |
|
|
(1,020 |
) |
|
391 |
|
|||||
Total adjustments |
|
3,861 |
|
|
3,661 |
|
|
9,597 |
|
|
10,129 |
|
|||||
Adjusted EBITDA |
$ |
30,039 |
|
$ |
32,352 |
|
$ |
83,699 |
|
$ |
93,113 |
|
|||||
Comparison of GAAP to Non-GAAP Revenue Growth | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended |
Three Months Ended |
% | % Change Constant |
||||||||||||||||||
GAAP | Adjustments1 | Non-GAAP | GAAP | Change2 | Currencies3 | ||||||||||||||||
Revenues | |||||||||||||||||||||
$ |
85,608 |
$ |
- |
|
$ |
85,608 |
$ |
92,916 |
(7.9 |
) |
(7.9 |
) |
|||||||||
|
18,897 |
|
(828 |
) |
|
18,069 |
|
20,721 |
(8.8 |
) |
(12.8 |
) |
|||||||||
|
2,999 |
|
(36 |
) |
|
2,963 |
|
3,818 |
(21.5 |
) |
(22.4 |
) |
|||||||||
Total Revenue |
$ |
107,504 |
$ |
(864 |
) |
$ |
106,640 |
$ |
117,455 |
(8.5 |
) |
(9.2 |
) |
||||||||
Nine Months Ended |
Nine Months Ended |
% | % Change Constant |
||||||||||||||||||
GAAP | Adjustments1 | Non-GAAP | GAAP | Change2 | Currencies3 | ||||||||||||||||
Revenues | |||||||||||||||||||||
$ |
262,507 |
$ |
- |
|
$ |
262,507 |
$ |
271,877 |
(3.4 |
) |
(3.4 |
) |
|||||||||
|
56,413 |
|
237 |
|
|
56,650 |
|
62,915 |
(10.3 |
) |
(10.0 |
) |
|||||||||
|
10,267 |
|
(153 |
) |
|
10,114 |
|
12,047 |
(14.8 |
) |
(16.0 |
) |
|||||||||
Total Revenue |
$ |
329,187 |
$ |
84 |
|
$ |
329,271 |
$ |
346,839 |
(5.1 |
) |
(5.1 |
) |
||||||||
1 Revenue for the three and nine-month periods ended |
|||||||||||||||||||||
2 This column presents the percentage change from GAAP revenue for the three and nine-month periods ended |
|||||||||||||||||||||
3 This column presents the percentage change from GAAP revenue for the three and nine-month periods ended |
|||||||||||||||||||||
Product Developer Information | ||||||||
(Unaudited) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Unique product developers and engineers served |
18,796 |
21,471 |
37,504 |
40,791 |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005324/en/
Investor Relations Contact:
Protolabs
Director of Investor Relations
daniel.schumacher@protolabs.com
or
Media Contact:
Protolabs
Sr. Marketing Communications Manager
will.martin@protolabs.com
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