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Protolabs Reports Financial Results for the Third Quarter of 2022

Protolabs Reports Financial Results for the Third Quarter of 2022

Revenue of $121.7 million in the Third Quarter of 2022;
GAAP Earnings Per Share of $0.14, Non-GAAP Earnings Per Share of $0.40

Proto Labs, Inc. (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the third quarter ended September 30, 2022.

Third Quarter 2022 Highlights include:

  • Revenue for the third quarter of 2022 was $121.7 million, representing a 2.9 percent decrease compared to revenue of $125.3 million in the third quarter of 2021.
  • Hubs generated $12.1 million of revenue in the third quarter, representing year-over-year growth of 38.5 percent.
  • On a GAAP basis, costs related to the closure of Japan operations were $1.2 million in the quarter. Total costs year to date are $6.4 million. These costs have been excluded from our Non-GAAP results. See “Non-GAAP Financial Measures” below.
  • Net income was $4.0 million, or $0.14 per diluted share.
  • Non-GAAP net income was $10.9 million, or $0.40 per diluted share.

“We experienced continued softening of our Injection Molding business, however, we are pleased with the continued growth of our other digital manufacturing services and Hubs business,” said Rob Bodor, President and Chief Executive Officer. “As we face an uncertain economic environment ahead, I am confident in our strategy and the value we bring to market, and the ability of our team to deliver long term revenue growth and profitability.”

Additional Third Quarter 2022 Highlights include:

  • Protolabs served 23,816 unique product developers during the third quarter of 2022.
  • Gross margin was 44.1 percent of revenue, compared to 45.2 percent of revenue in the second quarter of 2022.
  • Non-GAAP gross margin was 44.8 percent of revenue, compared to 45.9 percent of revenue in the second quarter of 2022.
  • EBITDA was $15.5 million, or 12.7 percent of revenue.
  • Adjusted EBITDA was $22.0 million, or 18.0 percent of revenue.
  • Cash and investments balance was $113.9 million as of September 30, 2022.

“Our financial position remains strong as we produced $20.5 million in cash from operations in the quarter,” said Dan Schumacher, Chief Financial Officer. “As we monitor the economy, we are tightening our cost controls and will continue to focus investments to fuel the execution of our strategy.”

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 and revenue earned from our acquisition of Hubs (collectively, “non-GAAP revenue growth”). Management believes these metrics are useful in evaluating the underlying business trends and ongoing operating performance of the company.

The company has included earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA, adjusted for stock-based compensation expense, unrealized (gain) loss on foreign currency, costs related to the Japan closure activities and transaction costs (collectively, “Adjusted EBITDA”), in this press release to provide investors with additional information regarding the company’s financial results. The company has also included earnings before interest, taxes, depreciation and amortization margin (“EBITDA margin”) and EBITDA margin, adjusted for stock-based compensation expense, unrealized (gain) loss on foreign currency, costs related to the Japan closure activities and transaction costs (collectively, “Adjusted EBITDA margin”), in this press release to provide investors with additional information regarding the company’s financial results.

The company has included non-GAAP 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, costs related to the Japan closure activities and transaction costs (collectively, “non-GAAP operating margin”), in this press release to provide investors with additional information regarding the company’s financial results.

The company has included non-GAAP gross margin 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, adjusted for stock-based compensation expense, amortization expense, costs related to the Japan closure activities and transaction costs (collectively, “non-GAAP operating margin excluding Japan”), 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, costs related to Japan closure activities and transaction costs (collectively, “non-GAAP net income”), in this press release to provide investors with additional information regarding the company’s financial results.

The company has provided below reconciliations of GAAP to non-GAAP net income, non-GAAP 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 third quarter 2022 financial results and fourth quarter 2022 outlook today, November 4, 2022 at 8:30 a.m. EST. 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. EST 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/gfmzxbyg. A replay will be available for 14 days following the call on the investor relations section of the Protolabs website.

About Protolabs

Protolabs is the world’s leading provider of digital manufacturing services. The e-commerce-based company offers injection molding, CNC machining, 3D printing, and sheet metal fabrication to product developers, engineers, and supply chain teams across the globe. Protolabs serves customers using in-house production capabilities that bring unprecedented speed in tandem with Hubs, a Protolabs Company, which serves customers through its network of premium manufacturing partners. Together, they help companies bring new ideas to market with the fastest and most comprehensive digital manufacturing service in the world. Visit protolabs.com for more information.

Forward-Looking Statements

Statements contained in this press release regarding matters that are not historical or current facts are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause the results of Protolabs to be materially different than those expressed or implied in such statements. Certain of these risk factors and others are described in the “Risk Factors” section within reports filed with the 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)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2022

 

2021

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,361

 

$

65,929

Short-term marketable securities

 

 

25,253

 

 

11,580

Accounts receivable, net

 

 

80,611

 

 

80,051

Inventory

 

 

14,617

 

 

13,161

Income taxes receivable

 

 

763

 

 

1,321

Prepaid expenses and other current assets

 

 

11,752

 

 

11,450

Total current assets

 

 

192,357

 

 

183,492

 

 

 

 

 

 

 

Property and equipment, net

 

 

259,856

 

 

280,346

Goodwill

 

 

383,558

 

 

400,610

Other intangible assets, net

 

 

31,907

 

 

37,998

Long-term marketable securities

 

 

29,257

 

 

14,340

Operating lease assets

 

 

4,293

 

 

5,578

Finance lease assets

 

 

1,524

 

 

1,898

Other long-term assets

 

 

4,186

 

 

4,320

Total assets

 

$

906,938

 

$

928,582

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

16,893

 

$

25,364

Accrued compensation

 

 

15,087

 

 

13,704

Accrued liabilities and other

 

 

25,478

 

 

11,980

Current operating lease liabilities

 

 

1,773

 

 

3,298

Current finance lease liabilities

 

 

1,484

 

 

550

Income taxes payable

 

 

5

 

 

-

Total current liabilities

 

 

60,720

 

 

54,896

 

 

 

 

 

 

 

Long-term operating lease liabilities

 

 

2,477

 

 

2,245

Long-term finance lease liabilities

 

 

-

 

 

1,351

Long-term deferred tax liabilities

 

 

26,864

 

 

35,892

Other long-term liabilities

 

 

6,031

 

 

5,705

 

 

 

 

 

 

 

Shareholders' equity

 

 

810,846

 

 

828,493

Total liabilities and shareholders' equity

 

$

906,938

 

$

928,582

 

 

 

 

 

 

 

Proto Labs, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Injection Molding

 

$

48,940

 

$

57,685

 

$

155,693

 

 

$

172,212

CNC Machining

 

 

47,489

 

 

43,658

 

 

141,809

 

 

 

121,953

3D Printing

 

 

19,823

 

 

18,589

 

 

59,458

 

 

 

53,994

Sheet Metal

 

 

5,219

 

 

4,854

 

 

15,066

 

 

 

14,790

Other

 

 

250

 

 

556

 

 

765

 

 

 

1,567

Total revenue

 

 

121,721

 

 

125,342

 

 

372,791

 

 

 

364,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

68,089

 

 

70,018

 

 

205,933

 

 

 

197,237

Gross profit

 

 

53,632

 

 

55,324

 

 

166,858

 

 

 

167,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and sales

 

 

20,594

 

 

21,422

 

 

62,235

 

 

 

61,946

Research and development

 

 

9,309

 

 

10,614

 

 

29,316

 

 

 

33,855

General and administrative

 

 

16,477

 

 

16,361

 

 

49,770

 

 

 

44,186

Closure of Japan business

 

 

1,194

 

 

-

 

 

6,388

 

 

 

-

Total operating expenses

 

 

47,574

 

 

48,397

 

 

147,709

 

 

 

139,987

Income from operations

 

 

6,058

 

 

6,927

 

 

19,149

 

 

 

27,292

Other income (loss), net

 

 

(24)

 

 

136

 

 

(323

)

 

 

(40)

Income before income taxes

 

 

6,034

 

 

7,063

 

 

18,826

 

 

 

27,252

Provision for income taxes

 

 

2,083

 

 

2,228

 

 

7,223

 

 

 

5,790

Net income

 

$

3,951

 

$

4,835

 

$

11,603

 

 

$

21,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.14

 

$

0.17

 

$

0.42

 

 

$

0.78

Diluted

 

$

0.14

 

$

0.17

 

$

0.42

 

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

27,505,097

 

 

27,713,229

 

 

27,512,057

 

 

 

27,638,611

Diluted

 

 

27,508,217

 

 

27,730,105

 

 

27,522,734

 

 

 

27,707,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Nine Months Ended

 

 

September 30,

 

 

2022

 

2021

Operating activities

 

 

 

 

 

 

Net income

 

$

11,603

 

 

$

21,462

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

29,981

 

 

 

30,231

 

Stock-based compensation expense

 

 

13,335

 

 

 

15,539

 

Deferred taxes

 

 

(8,920

)

 

 

(139

)

Changes in fair value of contingent consideration

 

 

-

 

 

 

(8,513

)

Impairments related to closure of Japan business

 

 

2,842

 

 

 

-

 

Gain on disposal of property and equipment

 

 

(1,174

)

 

 

-

 

Other

 

 

11

 

 

 

442

 

Changes in operating assets and liabilities

 

 

3,886

 

 

 

(26,797

)

Net cash provided by operating activities

 

 

51,564

 

 

 

32,225

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of property, equipment and other capital assets

 

 

(16,414

)

 

 

(27,956

)

Proceeds from sales of property, equipment and other capital assets

 

 

3,227

 

 

 

-

 

Cash used for acquisitions, net of cash acquired

 

 

-

 

 

 

(127,413

)

Purchases of marketable securities

 

 

(45,872

)

 

 

(15,159

)

Proceeds from sales of marketable securities

 

 

1,998

 

 

 

57,089

 

Proceeds from call redemptions and maturities of marketable securities

 

 

13,696

 

 

 

15,114

 

Net cash used in investing activities

 

 

(43,365

)

 

 

(98,325

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from exercises of stock options and other

 

 

2,311

 

 

 

3,838

 

Purchases of shares withheld for tax obligations

 

 

(1,615

)

 

 

(4,209

)

Repurchases of common stock

 

 

(13,074

)

 

 

(13,036

)

Principal repayments of finance lease obligations

 

 

(417

)

 

 

(413

)

Net cash used in financing activities

 

 

(12,795

)

 

 

(13,820

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(1,972

)

 

 

119

 

Net decrease in cash and cash equivalents

 

 

(6,568

)

 

 

(79,801

)

Cash and cash equivalents, beginning of period

 

 

65,929

 

 

 

127,603

 

Cash and cash equivalents, end of period

 

$

59,361

 

 

$

47,802

 

 

 

 

 

 

 

 

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

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

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

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

3,951

 

 

$

4,835

 

 

$

11,603

 

 

$

21,462

 

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

4,907

 

 

 

4,978

 

 

 

13,335

 

 

 

15,539

 

Amortization expense

 

 

1,510

 

 

 

1,568

 

 

 

4,582

 

 

 

4,601

 

Unrealized (gain) loss on foreign currency

 

 

382

 

 

 

121

 

 

 

742

 

 

 

341

 

Costs related to Japan closure activities

 

 

1,194

 

 

 

-

 

 

 

6,388

 

 

 

-

 

Transaction costs 1

 

 

-

 

 

 

(730

)

 

 

-

 

 

 

(5,870

)

Total adjustments 2

 

 

7,993

 

 

 

5,937

 

 

 

25,047

 

 

 

14,611

 

Income tax benefits on adjustments 3

 

 

(1,060

)

 

 

(1,063

)

 

 

(2,518

)

 

 

(4,639

)

Non-GAAP net income

 

$

10,884

 

 

$

9,709

 

 

$

34,132

 

 

$

31,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.40

 

 

$

0.35

 

 

$

1.24

 

 

$

1.14

 

Diluted

 

$

0.40

 

 

$

0.35

 

 

$

1.24

 

 

$

1.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

27,505,097

 

 

 

27,713,229

 

 

 

27,512,057

 

 

 

27,638,611

 

Diluted

 

 

27,508,217

 

 

 

27,730,105

 

 

 

27,522,734

 

 

 

27,707,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Transaction costs include direct costs incurred in the Company's acquisition of Hubs, Inc. and the impact of changes in the fair value of acquisition-related contingent consideration obligations.

 

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

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

902

 

$

986

 

$

2,701

 

$

2,974

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and sales

 

 

929

 

 

1,059

 

 

2,479

 

 

2,841

Research and development

 

 

602

 

 

776

 

 

1,702

 

 

2,144

General and administrative

 

 

3,984

 

 

2,995

 

 

11,035

 

 

6,311

Closure of Japan business

 

 

1,194

 

 

-

 

 

6,388

 

 

-

Total operating expenses

 

 

6,709

 

 

4,830

 

 

21,604

 

 

11,296

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense, net

 

 

382

 

 

121

 

 

742

 

 

341

Total adjustments

 

$

7,993

 

$

5,937

 

$

25,047

 

$

14,611

3 For the three- and nine-month periods ended September 30, 2022 and 2021, income tax effects were calculated using the effective tax rate for the relevant jurisdictions. The Company's non-GAAP tax rates differ from its GAAP tax rates due primarily to the mix of activity incurred in domestic and foreign tax jurisdictions and removing effective tax rate benefits from stock-based compensation activity in the quarter.

 

 

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Gross Margin

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

Three Months Ended

 

 

September 30,

 

September 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

121,721

 

 

$

125,342

 

 

$

372,791

 

 

$

364,516

 

 

$

126,902

 

 

$

123,048

 

Gross Profit

 

 

53,632

 

 

 

55,324

 

 

 

166,858

 

 

 

167,279

 

 

 

57,422

 

 

 

56,625

 

GAAP gross margin

 

 

44.1

%

 

 

44.1

%

 

 

44.8

%

 

 

45.9

%

 

 

45.2

%

 

 

46.0

%

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

560

 

 

 

644

 

 

 

1,674

 

 

 

1,947

 

 

 

528

 

 

 

668

 

Amortization expense

 

 

342

 

 

 

342

 

 

 

1,027

 

 

 

1,027

 

 

 

342

 

 

 

343

 

Total adjustments

 

 

902

 

 

 

986

 

 

 

2,701

 

 

 

2,974

 

 

 

870

 

 

 

1,011

 

Non-GAAP gross profit

 

$

54,534

 

 

$

56,310

 

 

$

169,559

 

 

$

170,253

 

 

$

58,292

 

 

$

57,636

 

Non-GAAP gross margin

 

 

44.8

%

 

 

44.9

%

 

 

45.5

%

 

 

46.7

%

 

 

45.9

%

 

 

46.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Gross Margin Excluding Japan

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

121,721

 

 

$

125,342

 

 

$

372,791

 

 

$

364,516

 

Revenue excluding Japan

 

$

120,434

 

 

$

122,282

 

 

$

364,562

 

 

$

354,783

 

Gross Profit

 

 

53,632

 

 

 

55,324

 

 

 

166,858

 

 

 

167,279

 

GAAP gross margin

 

 

44.1

%

 

 

44.1

%

 

 

44.8

%

 

 

45.9

%

Less: Japan gross profit

 

 

47

 

 

 

1,151

 

 

 

3,150

 

 

 

3,845

 

Gross Profit excluding Japan

 

 

53,585

 

 

 

54,173

 

 

 

163,708

 

 

 

163,434

 

GAAP gross margin excluding Japan

 

 

44.5

%

 

 

44.3

%

 

 

44.9

%

 

 

46.1

%

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

560

 

 

 

644

 

 

 

1,674

 

 

 

1,947

 

Amortization expense

 

 

342

 

 

 

342

 

 

 

1,027

 

 

 

1,027

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Japan stock-based compensation expense

 

 

13

 

 

 

26

 

 

 

61

 

 

 

70

 

Japan amortization expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total adjustments

 

 

889

 

 

 

960

 

 

 

2,640

 

 

 

2,904

 

Non-GAAP gross profit excluding Japan

 

$

54,474

 

 

$

55,133

 

 

$

166,348

 

 

$

166,338

 

Non-GAAP gross margin excluding Japan

 

 

45.2

%

 

 

45.1

%

 

 

45.6

%

 

 

46.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Operating Margin

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

121,721

 

 

$

125,342

 

 

$

372,791

 

 

$

364,516

 

Income from operations

 

 

6,058

 

 

 

6,927

 

 

 

19,149

 

 

 

27,292

 

GAAP operating margin

 

 

5.0

%

 

 

5.5

%

 

 

5.1

%

 

 

7.5

%

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

4,907

 

 

 

4,978

 

 

 

13,335

 

 

 

15,539

 

Amortization expense

 

 

1,510

 

 

 

1,568

 

 

 

4,582

 

 

 

4,601

 

Transaction costs 1

 

 

-

 

 

 

(730

)

 

 

-

 

 

 

(5,870

)

Costs related to Japan closure activities

 

 

1,194

 

 

 

-

 

 

 

6,388

 

 

 

-

 

Total adjustments

 

 

7,611

 

 

 

5,816

 

 

 

24,305

 

 

 

14,270

 

Non-GAAP income from operations

 

$

13,669

 

 

$

12,743

 

 

$

43,454

 

 

$

41,562

 

Non-GAAP operating margin

 

 

11.2

%

 

 

10.2

%

 

 

11.7

%

 

 

11.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Transaction costs include direct costs incurred in the Company's acquisition of Hubs, Inc. and the impact of changes in the fair value of acquisition-related contingent consideration obligations.

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Operating Margin Excluding Japan

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

121,721

 

 

$

125,342

 

 

$

372,791

 

 

$

364,516

 

Revenue excluding Japan

 

$

120,434

 

 

$

122,282

 

 

$

364,562

 

 

$

354,783

 

Income from operations

 

 

6,058

 

 

 

6,927

 

 

 

19,149

 

 

 

27,292

 

GAAP operating margin

 

 

5.0

%

 

 

5.5

%

 

 

5.1

%

 

 

7.5

%

Less: Japan income from operations

 

 

(724

)

 

 

(521

)

 

 

(720

)

 

 

(1,174

)

Income from operations excluding Japan

 

 

6,782

 

 

 

7,448

 

 

 

19,869

 

 

 

28,466

 

GAAP operating margin excluding Japan

 

 

5.6

%

 

 

6.1

%

 

 

5.5

%

 

 

8.0

%

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

4,907

 

 

 

4,978

 

 

 

13,335

 

 

 

15,539

 

Amortization expense

 

 

1,510

 

 

 

1,568

 

 

 

4,582

 

 

 

4,601

 

Transaction costs 1

 

 

-

 

 

 

(730

)

 

 

-

 

 

 

(5,870

)

Costs related to Japan closure activities

 

 

1,194

 

 

 

-

 

 

 

6,388

 

 

 

-

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Japan stock-based compensation expense

 

 

89

 

 

 

160

 

 

 

386

 

 

 

464

 

Japan amortization expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total adjustments

 

 

7,522

 

 

 

5,656

 

 

 

23,919

 

 

 

13,806

 

Non-GAAP income from operations excluding Japan

 

$

14,304

 

 

$

13,104

 

 

$

43,788

 

 

$

42,272

 

Non-GAAP operating margin excluding Japan

 

 

11.9

%

 

 

10.7

%

 

 

12.0

%

 

 

11.9

%

 

 

 

 

 

 

 

 

1 Transaction costs include direct costs incurred in the Company's acquisition of Hubs, Inc. and the impact of changes in the fair value of acquisition-related contingent consideration obligations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

121,721

 

 

$

125,342

 

 

$

372,791

 

 

$

364,516

 

GAAP net income

 

 

3,951

 

 

 

4,835

 

 

 

11,603

 

 

 

21,462

 

GAAP net income margin

 

 

3.2

%

 

 

3.9

%

 

 

3.1

%

 

 

5.9

%

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization expense

 

$

1,510

 

 

$

1,568

 

 

$

4,582

 

 

$

4,601

 

Depreciation expense

 

 

8,197

 

 

 

8,536

 

 

 

25,399

 

 

 

25,630

 

Interest income, net

 

 

(265

)

 

 

(55

)

 

 

(459

)

 

 

(207

)

Tax expense

 

 

2,083

 

 

 

2,228

 

 

 

7,223

 

 

 

5,790

 

EBITDA

 

 

15,476

 

 

 

17,112

 

 

 

48,348

 

 

 

57,276

 

EBITDA Margin

 

 

12.7

%

 

 

13.7

%

 

 

13.0

%

 

 

15.7

%

Add back:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

4,907

 

 

 

4,978

 

 

 

13,335

 

 

 

15,539

 

Unrealized (gain) loss on foreign currency

 

 

382

 

 

 

121

 

 

 

742

 

 

 

341

 

Costs related to Japan closure activities

 

 

1,194

 

 

 

-

 

 

 

6,388

 

 

 

-

 

Transaction costs 1

 

 

-

 

 

 

(730

)

 

 

-

 

 

 

(5,870

)

Total adjustments

 

 

6,483

 

 

 

4,369

 

 

 

20,465

 

 

 

10,010

 

Adjusted EBITDA

 

$

21,959

 

 

$

21,481

 

 

$

68,813

 

 

$

67,286

 

Adjusted EBITDA Margin

 

 

18.0

%

 

 

17.1

%

 

 

18.5

%

 

 

18.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Transaction costs include direct costs incurred in the Company's acquisition of Hubs, Inc. and the impact of changes in the fair value of acquisition-related contingent consideration obligations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Comparison of GAAP to Non-GAAP Revenue Growth by Region

(In thousands)

(Unaudited)

 

 

Three Months Ended
September 30, 2022

 

Three Months Ended
September 30, 2021

 

%

 

%

 

 

GAAP

 

Foreign Currency1

 

Hubs Acquisition

 

Non-GAAP

 

GAAP

 

Change3

 

Change Organic4

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

98,970

 

$

-

 

$

-

 

$

98,970

 

$

100,127

 

 

(1.2

)%

 

 

(1.2

)%

Europe

 

 

21,464

 

 

3,789

 

 

-

 

 

25,253

 

 

22,155

 

 

(3.1

)

 

 

14.0

 

Japan

 

 

1,287

 

 

310

 

 

-

 

 

1,597

 

 

3,060

 

 

(57.9

)

 

 

(47.8

)

Total Revenue

 

$

121,721

 

$

4,099

 

$

-

 

$

125,820

 

$

125,342

 

 

(2.9

)%

 

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended
September 30, 2022

 

Nine Months Ended
September 30, 2021

 

%

 

%

 

 

GAAP

 

Foreign Currency1

 

Hubs Acquisition2

 

Non-GAAP

 

GAAP

 

Change3

 

Change Organic4

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

$

295,121

 

$

-

 

$

(1,049

)

 

$

294,072

 

$

286,524

 

 

3.0

%

 

 

2.6

%

Europe

 

 

69,441

 

 

7,165

 

 

(1,279

)

 

 

75,327

 

 

68,259

 

 

1.7

 

 

 

10.4

 

Japan

 

 

8,229

 

 

1,226

 

 

-

 

 

 

9,455

 

 

9,733

 

 

(15.5

)

 

 

(2.9

)

Total Revenue

 

$

372,791

 

$

8,391

 

$

(2,328

)

 

$

378,854

 

$

364,516

 

 

2.3

%

 

 

3.9

%

1 Revenue for the three- and nine-month periods ended September 30, 2022 has been recalculated using 2021 foreign currency exchange rates in effect during comparable periods to provide information useful in evaluating the underlying business trends excluding the impact of changes in foreign currency exchange rates.

 

2 Revenue for the nine-month period ended September 30, 2022 has been recalculated to exclude revenue earned from the Company's acquisition of Hubs, Inc. for the period from January 1, 2022 to January 21, 2022 to provide information useful in evaluating the underlying business trends excluding the impact of acquisitions. The Hubs, Inc. acquisition occurred on January 22, 2021 and was included in 2021 revenue after that date.

 

3 This column presents the percentage change from GAAP revenue for the three- and nine-month periods ended September 30, 2021 to GAAP revenue for the three- and nine-month periods ended September 30, 2022.

 

4 This column presents the percentage change from GAAP revenue for the three- and nine-month periods ended September 30, 2021 to non-GAAP revenue for the three- and nine-month periods ended September 30, 2022 (as recalculated using the foreign currency exchange rates in effect during the three- and nine-month periods ended September 30, 2021, excluding the impact of Hubs, Inc. acquisition) 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
September 30, 2022

 

Three Months Ended
September 30, 2021

 

%

 

%

 

 

GAAP

 

Foreign Currency1

 

Hubs Acquisition

 

Non-GAAP

 

GAAP

 

Change3

 

Change Organic4

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Injection Molding

 

$

48,940

 

$

1,677

 

$

-

 

$

50,617

 

$

57,685

 

 

(15.2

)%

 

 

(12.3

)%

CNC Machining

 

 

47,489

 

 

1,580

 

 

-

 

 

49,069

 

 

43,658

 

 

8.8

 

 

 

12.4

 

3D Printing

 

 

19,823

 

 

803

 

 

-

 

 

20,626

 

 

18,589

 

 

6.6

 

 

 

11.0

 

Sheet Metal

 

 

5,219

 

 

39

 

 

-

 

 

5,258

 

 

4,854

 

 

7.5

 

 

 

8.3

 

Other

 

 

250

 

 

-

 

 

-

 

 

250

 

 

556

 

 

(55.0

)

 

 

(55.0

)

Total Revenue

 

$

121,721

 

$

4,099

 

$

-

 

$

125,820

 

$

125,342

 

 

(2.9

)%

 

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended
September 30, 2022

 

Nine Months Ended
September 30, 2021

 

%

 

%

 

 

GAAP

 

Foreign Currency1

 

Hubs Acquisition2

 

Non-GAAP

 

GAAP

 

Change3

 

Change Organic4

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Injection Molding

 

$

155,693

 

$

4,102

 

$

(189

)

 

$

159,606

 

$

172,212

 

 

(9.6

)%

 

 

(7.3

)%

CNC Machining

 

 

141,809

 

 

2,693

 

 

(1,637

)

 

 

142,865

 

 

121,953

 

 

16.3

 

 

 

17.1

 

3D Printing

 

 

59,458

 

 

1,553

 

 

(408

)

 

 

60,603

 

 

53,994

 

 

10.1

 

 

 

12.2

 

Sheet Metal

 

 

15,066

 

 

39

 

 

(84

)

 

 

15,021

 

 

14,790

 

 

1.9

 

 

 

1.6

 

Other

 

 

765

 

 

4

 

 

(10

)

 

 

759

 

 

1,567

 

 

(51.2

)

 

 

(51.6

)

Total Revenue

 

$

372,791

 

$

8,391

 

$

(2,328

)

 

$

378,854

 

$

364,516

 

 

2.3

%

 

 

3.9

%

1 Revenue for the three- and nine-month periods ended September 30, 2022 has been recalculated using 2021 foreign currency exchange rates in effect during comparable periods to provide information useful in evaluating the underlying business trends excluding the impact of changes in foreign currency exchange rates.

 

2 Revenue for the nine-month period ended September 30, 2022 has been recalculated to exclude revenue earned from the Company's acquisition of Hubs, Inc. for the period from January 1, 2022 to January 21, 2022 to provide information useful in evaluating the underlying business trends excluding the impact of acquisitions. The Hubs, Inc. acquisition occurred on January 22, 2021 and was included in 2021 revenue after that date.

 

3 This column presents the percentage change from GAAP revenue for the three- and nine-month periods ended September 30, 2021 to GAAP revenue for the three- and nine-month periods ended September 30, 2022.

 

4 This column presents the percentage change from GAAP revenue for the three- and nine-month periods ended September 30, 2021 to non-GAAP revenue for the three- and nine-month periods ended September 30, 2022 (as recalculated using the foreign currency exchange rates in effect during the three- and nine-month periods ended September 30, 2021, excluding the impact of Hubs, Inc. acquisition) in order to provide a constant-currency comparison.

 

 

 

 

 

 

 

 

 

 

 

 

 

Proto Labs, Inc.

Product Developer Information

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Unique product developers and engineers served

 

 

23,816

 

 

23,457

 

 

47,793

 

 

46,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20221104005157/en/

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