PRLB Proto Labs Inc

Total Revenue of $128 Million; Protolabs Network Revenue up 39% YoY to $24 Million

GAAP Earnings Per Share of $0.20, Non-GAAP Earnings Per Share of $0.40

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, 2024.

First Quarter 2024 Financial Highlights:

• Revenue was $127.9 million, a 1.6% increase compared to the first quarter of 2023.
• Revenue generated from Protolabs Network was $23.9 million, a 38.9% increase compared to the first quarter of 2023.
• Net income was $5.3 million, or $0.20 per diluted share, compared to $2.7 million, or $0.10 per diluted share, in the first quarter of 2023.
• Non-GAAP net income was $10.4 million, or $0.40 per diluted share, compared to $7.9 million, or $0.30 per diluted share, in the first quarter of 2023. See “Non-GAAP Financial Measures” below.
• EBITDA was $15.7 million, or 12.3% of revenue. See “Non-GAAP Financial Measures” below.
• Adjusted EBITDA was $20.2 million, or 15.8% of revenue, compared to $17.8 million, or 14.1% of revenue, in the first quarter of 2023. See “Non-GAAP Financial Measures” below.

"We demonstrated strong financial and operational results in the first quarter," said Rob Bodor, President and Chief Executive Officer. "We are encouraged by our progress to-date and remain focused on driving profitable growth for the full year 2024. As we continue to execute against our strategy, we remain confident in our ability to increase the number of customers using our hybrid model and drive higher revenue per customer through larger orders in all services. We look forward to comprehensively serving our customers, driving growth and profitability, and increasing value for shareholders."

Dan Schumacher, Chief Financial Officer, commented, "Our results were driven by increased order growth relative to the beginning of the year as well as strong performance in our higher-margin Factory business. We remain committed to returning capital to shareholders as we repurchased $16.0 million of common stock in the quarter, equivalent to 85% of free cash flow."

Additional First Quarter 2024 Highlights:

• Customer contact information
  • Protolabs served 22,466 customer contacts during the quarter.
  • Revenue per customer contact increased 5.3% year-over-year to $5,693.
• Gross margin was 44.9% of revenue, compared to 42.7% of revenue in the first quarter of 2023.
• Non-GAAP gross margin was 45.6% of revenue, compared to 43.4% of revenue in the first quarter of 2023. See "Non-GAAP Financial Measures" below.
• Cash flow from operations was $21.3 million in the first quarter of 2024.
• Cash and investments balance was $112.9 million as of March 31, 2024.

Second Quarter 2024 Outlook

For the second quarter of 2024, the Company expects to generate revenue between $122 million and $130 million.

The Company expects second quarter 2024 diluted net income per share between $0.11 and $0.19, and non-GAAP diluted net income per share between $0.30 and $0.38. See "Non-GAAP Financial Measures" below.

Non-GAAP Financial Measures

The Company has included non-GAAP revenue growth by region and by service line that excludes the impact of changes in foreign currency exchange rates (collectively, “non-GAAP revenue growth”). Management believes these metrics, when viewed in conjunction with the comparable GAAP 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 (gain) loss on foreign currency and costs related to the Japan closure activities (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 (gain) loss on foreign currency and costs related to the Japan closure activities (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 gross margin, 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 included non-GAAP operating margin, adjusted for stock-based compensation expense, amortization expense and costs related to the closure of Japan (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, unrealized (gain) loss on foreign currency and costs related to the closure of Japan (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 gross margin, non-GAAP operating margin, non-GAAP revenue growth by region and by service, and Adjusted EBITDA 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 our management and board of directors.

Conference Call

The Company has scheduled a conference call to discuss its first quarter 2024 financial results and second quarter 2024 outlook today, May 3, 2024 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/44qaaegi/. 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 fastest and most comprehensive digital manufacturing service in the world. Our digital factories produce low-volume parts in days while Protolabs Network unlocks advanced capabilities and volume pricing through its highly vetted manufacturing partners. The result? One manufacturing source—from prototyping to production—for product developers, engineers, and supply chain teams across the globe. See what's next at protolabs.com.

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)

 

 

 

 

 

 

March 31, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

92,804

 

$

83,790

Short-term marketable securities

 

16,875

 

 

19,013

Accounts receivable, net

 

77,849

 

 

72,848

Inventory

 

12,823

 

 

13,657

Income taxes receivable

 

644

 

 

2,228

Prepaid expenses and other current assets

 

9,425

 

 

9,124

Total current assets

 

210,420

 

 

200,660

 

 

 

 

Property and equipment, net

 

247,798

 

 

253,655

Goodwill

 

273,991

 

 

273,991

Other intangible assets, net

 

24,407

 

 

25,584

Long-term marketable securities

 

3,257

 

 

8,019

Operating lease assets

 

4,185

 

 

4,628

Finance lease assets

 

893

 

 

960

Other long-term assets

 

4,852

 

 

4,856

Total assets

$

769,803

 

$

772,353

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

15,256

 

$

15,636

Accrued compensation

 

16,239

 

 

15,292

Accrued liabilities and other

 

21,216

 

 

16,872

Current operating lease liabilities

 

1,549

 

 

1,585

Current finance lease liabilities

 

299

 

 

296

Income taxes payable

 

3,877

 

 

—

Total current liabilities

 

58,436

 

 

49,681

 

 

 

 

Long-term operating lease liabilities

 

2,588

 

 

3,008

Long-term finance lease liabilities

 

519

 

 

595

Long-term deferred tax liabilities

 

16,482

 

 

18,742

Other long-term liabilities

 

4,468

 

 

5,032

 

 

 

 

Shareholders' equity

 

687,310

 

 

695,295

Total liabilities and shareholders' equity

$

769,803

 

$

772,353

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

Three Months Ended March 31,

 

2024

 

2023

Revenue

 

 

 

Injection Molding

$

52,663

 

$

51,948

CNC Machining

 

49,932

 

 

48,104

3D Printing

 

21,582

 

 

21,325

Sheet Metal

 

3,553

 

 

4,248

Other Revenue

 

160

 

 

234

Total Revenue

 

127,890

 

 

125,859

 

 

 

 

Cost of revenue

 

70,423

 

 

72,083

Gross profit

 

57,467

 

 

53,776

 

 

 

 

Operating expenses

 

 

 

Marketing and sales

 

23,160

 

 

22,451

Research and development

 

11,167

 

 

10,677

General and administrative

 

16,313

 

 

16,833

Closure of Japan business

 

—

 

 

66

Total operating expenses

 

50,640

 

 

50,027

Income from operations

 

6,827

 

 

3,749

Other income, net

 

899

 

 

1,290

Income before income taxes

 

7,726

 

 

5,039

Provision for income taxes

 

2,458

 

 

2,380

Net income

$

5,268

 

$

2,659

 

 

 

 

Net income per share:

 

 

 

Basic

$

0.21

 

$

0.10

Diluted

$

0.20

 

$

0.10

 

 

 

 

Shares used to compute net income per share:

 

 

 

Basic

 

25,624,949

 

 

26,580,279

Diluted

 

25,784,987

 

 

26,605,787

 

 

 

 

Proto Labs, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

 

 

Three Months Ended March 31,

 

2024

 

2023

Operating activities

 

 

 

Net income

$

5,268

 

 

$

2,659

 

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

 

 

 

Depreciation and amortization

 

9,103

 

 

 

9,388

 

Stock-based compensation expense

 

4,276

 

 

 

3,695

 

Deferred taxes

 

(2,247

)

 

 

(3,096

)

Interest on finance lease obligations

 

10

 

 

 

287

 

Gain on disposal of property and equipment

 

(22

)

 

 

—

 

Other

 

63

 

 

 

(46

)

Changes in operating assets and liabilities

 

4,887

 

 

 

9,691

 

Net cash provided by operating activities

 

21,338

 

 

 

22,578

 

 

 

 

 

Investing activities

 

 

 

Purchases of property, equipment and other capital assets

 

(2,587

)

 

 

(3,441

)

Proceeds from sales of property, equipment and other capital assets

 

22

 

 

 

194

 

Proceeds from call redemptions and maturities of marketable securities

 

6,984

 

 

 

7,630

 

Net cash provided by investing activities

 

4,419

 

 

 

4,383

 

 

 

 

 

Financing activities

 

 

 

Purchases of shares withheld for tax obligations

 

(533

)

 

 

(401

)

Repurchases of common stock

 

(16,013

)

 

 

(21,119

)

Principal repayments of finance lease obligations

 

(73

)

 

 

(82

)

Net cash used in financing activities

 

(16,619

)

 

 

(21,602

)

Effect of exchange rate changes on cash and cash equivalents

 

(124

)

 

 

134

 

Net increase in cash and cash equivalents

 

9,014

 

 

 

5,493

 

Cash and cash equivalents, beginning of period

 

83,790

 

 

 

56,558

 

Cash and cash equivalents, end of period

$

92,804

 

 

$

62,051

 

 

 

 

 

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,

 

2024

 

2023

Non-GAAP net income, adjusted for stock-based compensation expense, amortization expense, unrealized (gain) loss on foreign currency and costs related to Japan closure activities

 

 

 

GAAP net income

$

5,268

 

 

$

2,659

 

Add back:

 

 

 

Stock-based compensation expense

 

4,276

 

 

 

3,695

 

Amortization expense

 

987

 

 

 

1,526

 

Unrealized (gain) loss on foreign currency

 

237

 

 

 

(71

)

Costs related to Japan closure activities

 

—

 

 

 

66

 

Total adjustments 1

 

5,500

 

 

 

5,216

 

Income tax benefits on adjustments 2

 

(354

)

 

 

(2

)

Non-GAAP net income

$

10,414

 

 

$

7,873

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

Basic

$

0.41

 

 

$

0.30

 

Diluted

$

0.40

 

 

$

0.30

 

 

 

 

 

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

 

 

 

Basic

 

25,624,949

 

 

 

26,580,279

 

Diluted

 

25,784,987

 

 

 

26,605,787

 

 

 

 

 

1

Stock-based compensation expense, amortization expense, unrealized (gain) loss on foreign currency and costs related to Japan closure activities were included in the following GAAP consolidated statement of operations categories:

Three Months Ended March 31,

 

2024

 

2023

 

 

 

 

Cost of revenue

$

801

 

$

808

 

 

 

 

 

Marketing and sales

 

833

 

 

692

 

Research and development

 

692

 

 

572

 

General and administrative

 

2,937

 

 

3,149

 

Closure of Japan business

 

—

 

 

66

 

Total operating expenses

 

4,462

 

 

4,479

 

 

 

 

 

Other income (loss), net

 

237

 

 

(71

)

Total adjustments

$

5,500

 

$

5,216

 

2

For the three months ended March 31, 2024 and 2023, 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,

 

2024

 

2023

Revenue

$

127,890

 

 

$

125,859

 

Gross profit

 

57,467

 

 

 

53,776

 

GAAP gross margin

 

44.9

%

 

 

42.7

%

Add back:

 

 

 

Stock-based compensation expense

 

459

 

 

 

466

 

Amortization expense

 

342

 

 

 

342

 

Total adjustments

 

801

 

 

 

808

 

Non-GAAP gross profit

$

58,268

 

 

$

54,584

 

Non-GAAP gross margin

 

45.6

%

 

 

43.4

%

 

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Operating Margin

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2024

 

2023

Revenue

$

127,890

 

 

$

125,859

 

Income from operations

 

6,827

 

 

 

3,749

 

GAAP operating margin

 

5.3

%

 

 

3.0

%

Add back:

 

 

 

Stock-based compensation expense

 

4,276

 

 

 

3,695

 

Amortization expense

 

987

 

 

 

1,526

 

Costs related to Japan closure activities

 

—

 

 

 

66

 

Total adjustments

 

5,263

 

 

 

5,287

 

Non-GAAP income from operations

$

12,090

 

 

$

9,036

 

Non-GAAP operating margin

 

9.5

%

 

 

7.2

%

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2024

 

2023

Revenue

$

127,890

 

 

$

125,859

 

GAAP net income

 

5,268

 

 

 

2,659

 

GAAP net income margin

 

4.1

%

 

 

2.1

%

Add back:

 

 

 

Amortization expense

$

987

 

 

$

1,526

 

Depreciation expense

 

8,116

 

 

 

7,862

 

Interest income, net

 

(1,112

)

 

 

(350

)

Provision for income taxes

 

2,458

 

 

 

2,380

 

EBITDA

 

15,717

 

 

 

14,077

 

EBITDA Margin

 

12.3

%

 

 

11.2

%

Add back:

 

 

 

Stock-based compensation expense

 

4,276

 

 

 

3,695

 

Unrealized (gain) loss on foreign currency

 

237

 

 

 

(71

)

Costs related to Japan closure activities

 

—

 

 

 

66

 

Total adjustments

 

4,513

 

 

 

3,690

 

Adjusted EBITDA

$

20,230

 

 

$

17,767

 

Adjusted EBITDA Margin

 

15.8

%

 

 

14.1

%

 

 

 

Proto Labs, Inc.

Comparison of GAAP to Non-GAAP Revenue Growth by Region

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2024

 

Three Months Ended March 31, 2023

 

% Change2

 

% Change Organic3

 

GAAP

 

Foreign Currency1

 

Non-GAAP

 

GAAP

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

United States

$

101,481

 

$

—

 

 

$

101,481

 

$

97,746

 

3.8

%

 

3.8

%

Europe

 

26,409

 

 

(907

)

 

 

25,502

 

 

28,113

 

(6.1

%)

 

(9.3

%)

Total revenue

$

127,890

 

$

(907

)

 

$

126,983

 

$

125,859

 

1.6

%

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

1

Revenue for the three months ended March 31, 2024 has been recalculated using 2023 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 months ended March 31, 2023 to GAAP revenue for the three months ended March 31, 2024.

 

3

This column presents the percentage change from GAAP revenue for the three months ended March 31, 2023 to non-GAAP revenue for the three months ended March 31, 2024 (as recalculated using the foreign currency exchange rates in effect during the three months ended March 31, 2023) in order to provide a constant-currency comparison.

 

Proto Labs, Inc.

Comparison of GAAP to Non-GAAP Revenue Growth by Service Line

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2024

 

Three Months Ended March 31, 2023

 

% Change2

 

% Change Organic3

 

GAAP

 

Foreign Currency1

 

Non-GAAP

 

GAAP

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

Injection Molding

$

52,663

 

$

(408

)

 

$

52,255

 

$

51,948

 

1.4

%

 

0.6

%

CNC Machining

 

49,932

 

 

(308

)

 

 

49,624

 

 

48,104

 

3.8

 

 

3.2

 

3D Printing

 

21,582

 

 

(187

)

 

 

21,395

 

 

21,325

 

1.2

 

 

0.3

 

Sheet Metal

 

3,553

 

 

(4

)

 

 

3,549

 

 

4,248

 

(16.4

)

 

(16.5

)

Other Revenue

 

160

 

 

—

 

 

 

160

 

 

234

 

(31.6

)

 

(31.6

)

Total Revenue

$

127,890

 

$

(907

)

 

$

126,983

 

$

125,859

 

1.6

%

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

1

Revenue for the three months ended March 31, 2024 has been recalculated using 2023 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 months ended March 31, 2023 to GAAP revenue for the three months ended March 31, 2024.

 

3

This column presents the percentage change from GAAP revenue for the three months ended March 31, 2023 to non-GAAP revenue for the three months ended March 31, 2024 (as recalculated using the foreign currency exchange rates in effect during the three months ended March 31, 2023) in order to provide a constant-currency comparison.

 

 

 

 

 

 

Proto Labs, Inc.

Customer Contact Information

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2024

 

2023

Customer contacts

 

22,466

 

 

23,287

Revenue per customer contact

$

5,693

 

$

5,405

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Guidance

(In thousands, except per share and per share amounts)

(Unaudited)

 

 

 

 

 

 

Q2 2024 Outlook

 

Low

 

High

GAAP diluted net income per share

$

0.11

 

 

0.19

Add back:

 

 

 

Stock-based compensation expense

 

0.15

 

 

0.15

Amortization expense

 

0.03

 

 

0.03

Unrealized (gain) loss on foreign currency

 

0.00

 

 

0.00

Total adjustments

 

0.18

 

 

0.18

Non-GAAP diluted net income per share

$

0.30

 

$

0.38

 

 

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240503095196/en/

Investor Relations Contacts Protolabs Ryan Johnsrud, 612-225-4873 Manager – Investor Relations and FP&A ryan.johnsrud@protolabs.com Gateway Group, Inc. 949-574-3860 PRLB@gateway-grp.com Media Contact Protolabs Brent Renneke, 763-479-7704 Marketing Communications Manager brent.renneke@protolabs.com