Protolabs Reports Financial Results for the First Quarter of 2023 By: Proto Labs, Inc. via Business Wire May 05, 2023 at 06:00 AM EDT Revenue of $125.9 million in the First Quarter of 2023 GAAP Earnings Per Share of $0.10, Non-GAAP Earnings Per Share of $0.30 Proto Labs, Inc. (the "Company" or "Protolabs") (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the first quarter ended March 31, 2023. First Quarter 2023 Highlights: Revenue for the first quarter of 2023 was $125.9 million, representing a 1.4 percent increase compared to revenue of $124.2 million in the first quarter of 2022. Revenue generated from our digital network powered by Hubs was $17.2 million in the first quarter, representing growth of 67.3 percent over the first quarter of 2022 and 16.3 percent sequential growth compared to the fourth quarter of 2022. Net income for the first quarter of 2023 was $2.7 million, or $0.10 per diluted share. Non-GAAP net income was $7.9 million, or $0.30 per diluted share. See “Non-GAAP Financial Measures” below. “As we continue to operate in a challenging economic environment, amplified by rising interest rates and slowing manufacturing activity, I am pleased with first quarter financial results above our guidance ranges,” said Rob Bodor, President and Chief Executive Officer. “As our Protolabs and Hubs teams together build the most comprehensive offer in the digital manufacturing space, we are pleased with the growth of our digital network revenue fueled by cross selling efforts of our go-to-market teams.” Additional First Quarter 2023 Highlights: Protolabs served 23,287 unique product developers during the quarter. The Company repurchased $21.1 million of shares during the quarter. Gross margin was 42.7 percent of revenue in the first quarter of 2023. Non-GAAP gross margin was 43.4 percent of revenue in the first quarter of 2023. See “Non-GAAP Financial Measures” below. EBITDA was $14.1 million, or 11.2 percent of revenue, in the first quarter of 2023, compared to $17.8 million, or 14.3 percent of revenue, in the first quarter of 2022. See “Non-GAAP Financial Measures” below. Adjusted EBITDA was $17.8 million, or 14.1% of revenue, in the first quarter of 2023, compared to $22.3 million, or 17.9% of revenue, in the first quarter of 2022. See “Non-GAAP Financial Measures” below. Cash and investments balance was $104.7 million as of March 31, 2023. “As customers shift their buying preferences to longer lead times and lower-priced offerings, we continue to manage the business and adapt our operations to align with demand,” said Dan Schumacher, Chief Financial Officer. “We continue to innovate and drive efficiencies to enable us to leverage our profitable operating structure and, coupled with our strong financial position in which we have no debt and generate strong operating cash flows, are well-positioned to weather economic volatility and dynamic customer preferences.” 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 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 gross margin excluding Japan, 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 excluding Japan, stock-based compensation expense, amortization expense and costs related to the Japan closure activities (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 gross margin excluding Japan, non-GAAP operating margin, non-GAAP operating margin excluding Japan, 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 2023 financial results and second quarter 2023 outlook today, May 5, 2023 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/o8vnhfjc. 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 our digital network of manufacturing partners powered by Hubs unlocks advanced capabilities and volume pricing at higher quantities. 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 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. 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, December 31, 2023 2022 (Unaudited) Assets Current assets Cash and cash equivalents $ 62,051 $ 56,558 Short-term marketable securities 22,851 23,568 Accounts receivable, net 77,619 76,225 Inventory 14,273 13,578 Income taxes receivable 821 4,042 Prepaid expenses and other current assets 11,101 12,597 Total current assets 188,716 186,568 Property and equipment, net 253,616 257,785 Goodwill 273,991 273,991 Other intangible assets, net 29,869 31,250 Long-term marketable securities 19,824 26,419 Operating lease assets 3,315 3,844 Finance lease assets 17,266 17,532 Other long-term assets 4,776 4,779 Total assets $ 791,373 $ 802,168 Liabilities and shareholders' equity Current liabilities Accounts payable $ 19,854 $ 17,356 Accrued compensation 14,695 12,743 Accrued liabilities and other 23,156 22,384 Income taxes payable 1,928 - Current operating lease liabilities 1,295 1,561 Current finance lease liabilities 17,452 17,537 Total current liabilities 78,380 71,581 Long-term operating lease liabilities 1,983 2,255 Long-term deferred tax liabilities 23,258 26,322 Other long-term liabilities 4,615 4,362 Shareholders' equity 683,137 697,648 Total liabilities and shareholders' equity $ 791,373 $ 802,168 Proto Labs, Inc. Condensed Consolidated Statements of Operations (In thousands, except share and per share amounts) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue Injection Molding $ 51,948 $ 53,398 CNC Machining 48,104 46,098 3D Printing 21,325 19,672 Sheet Metal 4,248 4,687 Other 234 313 Total revenue 125,859 124,168 Cost of revenue 72,083 68,364 Gross profit 53,776 55,804 Operating expenses Marketing and sales 22,451 20,586 Research and development 10,677 10,557 General and administrative 16,833 16,771 Closure of Japan business 66 - Total operating expenses 50,027 47,914 Income from operations 3,749 7,890 Other income (expense), net 1,290 (300 ) Income before income taxes 5,039 7,590 Provision for income taxes 2,380 2,495 Net income $ 2,659 $ 5,095 Net income per share: Basic $ 0.10 $ 0.19 Diluted $ 0.10 $ 0.19 Shares used to compute net income per share: Basic 26,580,279 27,502,941 Diluted 26,605,787 27,510,477 Proto Labs, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Operating activities Net income $ 2,659 $ 5,095 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,388 10,232 Stock-based compensation expense 3,695 4,397 Deferred taxes (3,096 ) (3,213 ) Interest on finance lease obligations 287 - Other (46 ) 79 Changes in operating assets and liabilities 9,691 1,193 Net cash provided by operating activities 22,578 17,783 Investing activities Purchases of property, equipment and other capital assets (3,441 ) (3,069 ) Proceeds from sales of property, equipment and other capital assets 194 - Purchases of marketable securities - (29,366 ) Proceeds from call redemptions and maturities of marketable securities 7,630 6,600 Net cash provided by (used in) investing activities 4,383 (25,835 ) Financing activities Proceeds from exercises of stock options and other - 6 Purchases of shares withheld for tax obligations (401 ) (468 ) Repurchases of common stock (21,119 ) - Principal repayments of finance lease obligations (82 ) (139 ) Net cash used in financing activities (21,602 ) (601 ) Effect of exchange rate changes on cash and cash equivalents 134 (37 ) Net increase (decrease) in cash and cash equivalents 5,493 (8,690 ) Cash and cash equivalents, beginning of period 56,558 65,929 Cash and cash equivalents, end of period $ 62,051 $ 57,239 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, 2023 2022 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 $ 2,659 $ 5,095 Add back: Stock-based compensation expense 3,695 4,397 Amortization expense 1,526 1,545 Unrealized (gain) loss on foreign currency (71 ) 89 Costs related to Japan closure activities 66 - Total adjustments 1 5,216 6,031 Income tax benefits on adjustments 2 (2 ) (682 ) Non-GAAP net income $ 7,873 $ 10,444 Non-GAAP net income per share: Basic $ 0.30 $ 0.38 Diluted $ 0.30 $ 0.38 Shares used to compute non-GAAP net income per share: Basic 26,580,279 27,502,941 Diluted 26,605,787 27,510,477 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, 2023 2022 Cost of revenue $ 808 $ 929 Marketing and sales 692 737 Research and development 572 629 General and administrative 3,149 3,647 Closure of Japan business 66 - Total operating expenses 4,479 5,013 Other (income) expense, net (71 ) 89 Total adjustments $ 5,216 $ 6,031 2 For the three-month periods ended March 31, 2023 and 2022, 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, 2023 2022 Revenue $ 125,859 $ 124,168 Gross Profit 53,776 55,804 GAAP gross margin 42.7 % 44.9 % Add back: Stock-based compensation expense 466 587 Amortization expense 342 342 Total adjustments 808 929 Non-GAAP gross profit $ 54,584 $ 56,733 Non-GAAP gross margin 43.4 % 45.7 % Proto Labs, Inc. Reconciliation of GAAP to Non-GAAP Gross Margin Excluding Japan (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 Revenue excluding Japan $ 125,859 $ 120,082 Gross Profit 53,776 55,804 GAAP gross margin 42.7 % 44.9 % Less: Japan gross profit - 2,040 Gross Profit excluding Japan 53,776 53,764 GAAP gross margin excluding Japan 42.7 % 44.8 % Add back: Stock-based compensation expense 466 587 Amortization expense 342 342 Less: Japan stock-based compensation expense - 25 Japan amortization expense - - Total adjustments 808 904 Non-GAAP gross profit excluding Japan $ 54,584 $ 54,668 Non-GAAP gross margin excluding Japan 43.4 % 45.5 % Proto Labs, Inc. Reconciliation of GAAP to Non-GAAP Operating Margin (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 Income from operations 3,749 7,890 GAAP operating margin 3.0 % 6.4 % Add back: Stock-based compensation expense 3,695 4,397 Amortization expense 1,526 1,545 Costs related to Japan closure activities 66 - Total adjustments 5,287 5,942 Non-GAAP income from operations $ 9,036 $ 13,832 Non-GAAP operating margin 7.2 % 11.1 % Proto Labs, Inc. Reconciliation of GAAP to Non-GAAP Operating Margin Excluding Japan (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 Revenue excluding Japan $ 125,859 $ 120,082 Income from operations 3,749 7,890 GAAP operating margin 3.0 % 6.4 % Less: Japan (loss) income from operations (346 ) 546 Income from operations excluding Japan 4,095 7,344 GAAP operating margin excluding Japan 3.3 % 6.1 % Add back: Stock-based compensation expense 3,695 4,397 Amortization expense 1,526 1,545 Costs related to Japan closure activities 66 - Less: Japan stock-based compensation expense 10 150 Japan amortization expense - - Total adjustments 5,277 5,792 Non-GAAP income from operations excluding Japan $ 9,372 $ 13,136 Non-GAAP operating margin excluding Japan 7.4 % 10.9 % Proto Labs, Inc. Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 GAAP net income 2,659 5,095 GAAP net income margin 2.1 % 4.1 % Add back: Amortization expense $ 1,526 $ 1,545 Depreciation expense 7,862 8,687 Interest income, net (350 ) (45 ) Tax expense 2,380 2,495 EBITDA 14,077 17,777 EBITDA Margin 11.2 % 14.3 % Add back: Stock-based compensation expense 3,695 4,397 Unrealized (gain) loss on foreign currency (71 ) 89 Costs related to Japan closure activities 66 - Total adjustments 3,690 4,486 Adjusted EBITDA $ 17,767 $ 22,263 Adjusted EBITDA Margin 14.1 % 17.9 % Proto Labs, Inc. Comparison of GAAP to Non-GAAP Revenue Growth by Region (In thousands) (Unaudited) Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 % GAAP Foreign Currency1 Non-GAAP GAAP Change2 % Change Organic3 Revenues United States $ 97,746 $ - $ 97,746 $ 95,496 2.4 % 2.4 % Europe 28,113 2,465 30,578 24,586 14.3 24.4 Japan - - - 4,086 (100.0 ) (100.0 ) Total Revenue $ 125,859 $ 2,465 $ 128,324 $ 124,168 1.4 % 3.3 % 1 Revenue for the three-month period ended March 31, 2023 has been recalculated using 2022 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-month period ended March 31, 2022 to GAAP revenue for the three-month period ended March 31, 2023. 3 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2022 to non-GAAP revenue for the three-month period ended March 31, 2023 (as recalculated using the foreign currency exchange rates in effect during the three-month period ended March 31, 2022) 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, 2023 Three Months Ended March 31, 2022 % GAAP Foreign Currency1 Non-GAAP GAAP Change2 % Change Organic3 Revenues Injection Molding $ 51,948 $ 1,179 $ 53,127 $ 53,398 (2.7 )% (0.5 )% CNC Machining 48,104 735 48,839 46,098 4.4 5.9 3D Printing 21,325 536 21,861 19,672 8.4 11.1 Sheet Metal 4,248 10 4,258 4,687 (9.4 ) (9.2 ) Other 234 5 239 313 (25.2 ) (23.6 ) Total Revenue $ 125,859 $ 2,465 $ 128,324 $ 124,168 1.4 % 3.3 % 1 Revenue for the three-month period ended March 31, 2023 has been recalculated using 2022 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-month period ended March 31, 2022 to GAAP revenue for the three-month period ended March 31, 2023. 3 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2022 to non-GAAP revenue for the three-month period ended March 31, 2023 (as recalculated using the foreign currency exchange rates in effect during the three-month period ended March 31, 2022) in order to provide a constant-currency comparison. Proto Labs, Inc. Product Developer Information (Unaudited) Three Months Ended March 31, 2023 2022 Unique product developers and engineers served 23,287 23,492 View source version on businesswire.com: https://www.businesswire.com/news/home/20230505005083/en/Contacts Investor Relations Contact Protolabs Ryan Johnsrud, 612-225-4873 Manager – Investor Relations and FP&A ryan.johnsrud@protolabs.com Media Contact Protolabs Brent Renneke, 763-479-7704 PR & Media Strategist brent.renneke@protolabs.com
Revenue of $125.9 million in the First Quarter of 2023 GAAP Earnings Per Share of $0.10, Non-GAAP Earnings Per Share of $0.30
Proto Labs, Inc. (the "Company" or "Protolabs") (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the first quarter ended March 31, 2023. First Quarter 2023 Highlights: Revenue for the first quarter of 2023 was $125.9 million, representing a 1.4 percent increase compared to revenue of $124.2 million in the first quarter of 2022. Revenue generated from our digital network powered by Hubs was $17.2 million in the first quarter, representing growth of 67.3 percent over the first quarter of 2022 and 16.3 percent sequential growth compared to the fourth quarter of 2022. Net income for the first quarter of 2023 was $2.7 million, or $0.10 per diluted share. Non-GAAP net income was $7.9 million, or $0.30 per diluted share. See “Non-GAAP Financial Measures” below. “As we continue to operate in a challenging economic environment, amplified by rising interest rates and slowing manufacturing activity, I am pleased with first quarter financial results above our guidance ranges,” said Rob Bodor, President and Chief Executive Officer. “As our Protolabs and Hubs teams together build the most comprehensive offer in the digital manufacturing space, we are pleased with the growth of our digital network revenue fueled by cross selling efforts of our go-to-market teams.” Additional First Quarter 2023 Highlights: Protolabs served 23,287 unique product developers during the quarter. The Company repurchased $21.1 million of shares during the quarter. Gross margin was 42.7 percent of revenue in the first quarter of 2023. Non-GAAP gross margin was 43.4 percent of revenue in the first quarter of 2023. See “Non-GAAP Financial Measures” below. EBITDA was $14.1 million, or 11.2 percent of revenue, in the first quarter of 2023, compared to $17.8 million, or 14.3 percent of revenue, in the first quarter of 2022. See “Non-GAAP Financial Measures” below. Adjusted EBITDA was $17.8 million, or 14.1% of revenue, in the first quarter of 2023, compared to $22.3 million, or 17.9% of revenue, in the first quarter of 2022. See “Non-GAAP Financial Measures” below. Cash and investments balance was $104.7 million as of March 31, 2023. “As customers shift their buying preferences to longer lead times and lower-priced offerings, we continue to manage the business and adapt our operations to align with demand,” said Dan Schumacher, Chief Financial Officer. “We continue to innovate and drive efficiencies to enable us to leverage our profitable operating structure and, coupled with our strong financial position in which we have no debt and generate strong operating cash flows, are well-positioned to weather economic volatility and dynamic customer preferences.” 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 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 gross margin excluding Japan, 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 excluding Japan, stock-based compensation expense, amortization expense and costs related to the Japan closure activities (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 gross margin excluding Japan, non-GAAP operating margin, non-GAAP operating margin excluding Japan, 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 2023 financial results and second quarter 2023 outlook today, May 5, 2023 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/o8vnhfjc. 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 our digital network of manufacturing partners powered by Hubs unlocks advanced capabilities and volume pricing at higher quantities. 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 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. 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, December 31, 2023 2022 (Unaudited) Assets Current assets Cash and cash equivalents $ 62,051 $ 56,558 Short-term marketable securities 22,851 23,568 Accounts receivable, net 77,619 76,225 Inventory 14,273 13,578 Income taxes receivable 821 4,042 Prepaid expenses and other current assets 11,101 12,597 Total current assets 188,716 186,568 Property and equipment, net 253,616 257,785 Goodwill 273,991 273,991 Other intangible assets, net 29,869 31,250 Long-term marketable securities 19,824 26,419 Operating lease assets 3,315 3,844 Finance lease assets 17,266 17,532 Other long-term assets 4,776 4,779 Total assets $ 791,373 $ 802,168 Liabilities and shareholders' equity Current liabilities Accounts payable $ 19,854 $ 17,356 Accrued compensation 14,695 12,743 Accrued liabilities and other 23,156 22,384 Income taxes payable 1,928 - Current operating lease liabilities 1,295 1,561 Current finance lease liabilities 17,452 17,537 Total current liabilities 78,380 71,581 Long-term operating lease liabilities 1,983 2,255 Long-term deferred tax liabilities 23,258 26,322 Other long-term liabilities 4,615 4,362 Shareholders' equity 683,137 697,648 Total liabilities and shareholders' equity $ 791,373 $ 802,168 Proto Labs, Inc. Condensed Consolidated Statements of Operations (In thousands, except share and per share amounts) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue Injection Molding $ 51,948 $ 53,398 CNC Machining 48,104 46,098 3D Printing 21,325 19,672 Sheet Metal 4,248 4,687 Other 234 313 Total revenue 125,859 124,168 Cost of revenue 72,083 68,364 Gross profit 53,776 55,804 Operating expenses Marketing and sales 22,451 20,586 Research and development 10,677 10,557 General and administrative 16,833 16,771 Closure of Japan business 66 - Total operating expenses 50,027 47,914 Income from operations 3,749 7,890 Other income (expense), net 1,290 (300 ) Income before income taxes 5,039 7,590 Provision for income taxes 2,380 2,495 Net income $ 2,659 $ 5,095 Net income per share: Basic $ 0.10 $ 0.19 Diluted $ 0.10 $ 0.19 Shares used to compute net income per share: Basic 26,580,279 27,502,941 Diluted 26,605,787 27,510,477 Proto Labs, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Operating activities Net income $ 2,659 $ 5,095 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,388 10,232 Stock-based compensation expense 3,695 4,397 Deferred taxes (3,096 ) (3,213 ) Interest on finance lease obligations 287 - Other (46 ) 79 Changes in operating assets and liabilities 9,691 1,193 Net cash provided by operating activities 22,578 17,783 Investing activities Purchases of property, equipment and other capital assets (3,441 ) (3,069 ) Proceeds from sales of property, equipment and other capital assets 194 - Purchases of marketable securities - (29,366 ) Proceeds from call redemptions and maturities of marketable securities 7,630 6,600 Net cash provided by (used in) investing activities 4,383 (25,835 ) Financing activities Proceeds from exercises of stock options and other - 6 Purchases of shares withheld for tax obligations (401 ) (468 ) Repurchases of common stock (21,119 ) - Principal repayments of finance lease obligations (82 ) (139 ) Net cash used in financing activities (21,602 ) (601 ) Effect of exchange rate changes on cash and cash equivalents 134 (37 ) Net increase (decrease) in cash and cash equivalents 5,493 (8,690 ) Cash and cash equivalents, beginning of period 56,558 65,929 Cash and cash equivalents, end of period $ 62,051 $ 57,239 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, 2023 2022 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 $ 2,659 $ 5,095 Add back: Stock-based compensation expense 3,695 4,397 Amortization expense 1,526 1,545 Unrealized (gain) loss on foreign currency (71 ) 89 Costs related to Japan closure activities 66 - Total adjustments 1 5,216 6,031 Income tax benefits on adjustments 2 (2 ) (682 ) Non-GAAP net income $ 7,873 $ 10,444 Non-GAAP net income per share: Basic $ 0.30 $ 0.38 Diluted $ 0.30 $ 0.38 Shares used to compute non-GAAP net income per share: Basic 26,580,279 27,502,941 Diluted 26,605,787 27,510,477 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, 2023 2022 Cost of revenue $ 808 $ 929 Marketing and sales 692 737 Research and development 572 629 General and administrative 3,149 3,647 Closure of Japan business 66 - Total operating expenses 4,479 5,013 Other (income) expense, net (71 ) 89 Total adjustments $ 5,216 $ 6,031 2 For the three-month periods ended March 31, 2023 and 2022, 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, 2023 2022 Revenue $ 125,859 $ 124,168 Gross Profit 53,776 55,804 GAAP gross margin 42.7 % 44.9 % Add back: Stock-based compensation expense 466 587 Amortization expense 342 342 Total adjustments 808 929 Non-GAAP gross profit $ 54,584 $ 56,733 Non-GAAP gross margin 43.4 % 45.7 % Proto Labs, Inc. Reconciliation of GAAP to Non-GAAP Gross Margin Excluding Japan (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 Revenue excluding Japan $ 125,859 $ 120,082 Gross Profit 53,776 55,804 GAAP gross margin 42.7 % 44.9 % Less: Japan gross profit - 2,040 Gross Profit excluding Japan 53,776 53,764 GAAP gross margin excluding Japan 42.7 % 44.8 % Add back: Stock-based compensation expense 466 587 Amortization expense 342 342 Less: Japan stock-based compensation expense - 25 Japan amortization expense - - Total adjustments 808 904 Non-GAAP gross profit excluding Japan $ 54,584 $ 54,668 Non-GAAP gross margin excluding Japan 43.4 % 45.5 % Proto Labs, Inc. Reconciliation of GAAP to Non-GAAP Operating Margin (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 Income from operations 3,749 7,890 GAAP operating margin 3.0 % 6.4 % Add back: Stock-based compensation expense 3,695 4,397 Amortization expense 1,526 1,545 Costs related to Japan closure activities 66 - Total adjustments 5,287 5,942 Non-GAAP income from operations $ 9,036 $ 13,832 Non-GAAP operating margin 7.2 % 11.1 % Proto Labs, Inc. Reconciliation of GAAP to Non-GAAP Operating Margin Excluding Japan (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 Revenue excluding Japan $ 125,859 $ 120,082 Income from operations 3,749 7,890 GAAP operating margin 3.0 % 6.4 % Less: Japan (loss) income from operations (346 ) 546 Income from operations excluding Japan 4,095 7,344 GAAP operating margin excluding Japan 3.3 % 6.1 % Add back: Stock-based compensation expense 3,695 4,397 Amortization expense 1,526 1,545 Costs related to Japan closure activities 66 - Less: Japan stock-based compensation expense 10 150 Japan amortization expense - - Total adjustments 5,277 5,792 Non-GAAP income from operations excluding Japan $ 9,372 $ 13,136 Non-GAAP operating margin excluding Japan 7.4 % 10.9 % Proto Labs, Inc. Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA (In thousands) (Unaudited) Three Months Ended March 31, 2023 2022 Revenue $ 125,859 $ 124,168 GAAP net income 2,659 5,095 GAAP net income margin 2.1 % 4.1 % Add back: Amortization expense $ 1,526 $ 1,545 Depreciation expense 7,862 8,687 Interest income, net (350 ) (45 ) Tax expense 2,380 2,495 EBITDA 14,077 17,777 EBITDA Margin 11.2 % 14.3 % Add back: Stock-based compensation expense 3,695 4,397 Unrealized (gain) loss on foreign currency (71 ) 89 Costs related to Japan closure activities 66 - Total adjustments 3,690 4,486 Adjusted EBITDA $ 17,767 $ 22,263 Adjusted EBITDA Margin 14.1 % 17.9 % Proto Labs, Inc. Comparison of GAAP to Non-GAAP Revenue Growth by Region (In thousands) (Unaudited) Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 % GAAP Foreign Currency1 Non-GAAP GAAP Change2 % Change Organic3 Revenues United States $ 97,746 $ - $ 97,746 $ 95,496 2.4 % 2.4 % Europe 28,113 2,465 30,578 24,586 14.3 24.4 Japan - - - 4,086 (100.0 ) (100.0 ) Total Revenue $ 125,859 $ 2,465 $ 128,324 $ 124,168 1.4 % 3.3 % 1 Revenue for the three-month period ended March 31, 2023 has been recalculated using 2022 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-month period ended March 31, 2022 to GAAP revenue for the three-month period ended March 31, 2023. 3 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2022 to non-GAAP revenue for the three-month period ended March 31, 2023 (as recalculated using the foreign currency exchange rates in effect during the three-month period ended March 31, 2022) 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, 2023 Three Months Ended March 31, 2022 % GAAP Foreign Currency1 Non-GAAP GAAP Change2 % Change Organic3 Revenues Injection Molding $ 51,948 $ 1,179 $ 53,127 $ 53,398 (2.7 )% (0.5 )% CNC Machining 48,104 735 48,839 46,098 4.4 5.9 3D Printing 21,325 536 21,861 19,672 8.4 11.1 Sheet Metal 4,248 10 4,258 4,687 (9.4 ) (9.2 ) Other 234 5 239 313 (25.2 ) (23.6 ) Total Revenue $ 125,859 $ 2,465 $ 128,324 $ 124,168 1.4 % 3.3 % 1 Revenue for the three-month period ended March 31, 2023 has been recalculated using 2022 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-month period ended March 31, 2022 to GAAP revenue for the three-month period ended March 31, 2023. 3 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2022 to non-GAAP revenue for the three-month period ended March 31, 2023 (as recalculated using the foreign currency exchange rates in effect during the three-month period ended March 31, 2022) in order to provide a constant-currency comparison. Proto Labs, Inc. Product Developer Information (Unaudited) Three Months Ended March 31, 2023 2022 Unique product developers and engineers served 23,287 23,492 View source version on businesswire.com: https://www.businesswire.com/news/home/20230505005083/en/
Investor Relations Contact Protolabs Ryan Johnsrud, 612-225-4873 Manager – Investor Relations and FP&A ryan.johnsrud@protolabs.com Media Contact Protolabs Brent Renneke, 763-479-7704 PR & Media Strategist brent.renneke@protolabs.com