Protolabs Reports Financial Results for the First Quarter of 2021

Rhea-AI Summary

Proto Labs, Inc. (NYSE: PRLB) reported Q1 2021 financial results, achieving revenue of $116.1 million, up 10.4% from the prior quarter. The acquisition of 3D Hubs contributed $5.8 million in revenue. Net income was $3.7 million, or $0.13 per diluted share, while non-GAAP net income reached $11 million or $0.40 per share. The company served 22,605 unique product developers, a 24.5% increase over Q4 2020. With a healthy balance sheet of $93.1 million in cash and no debt, Proto Labs is positioned for future growth.

Positive

• Revenue increased by 10.4% to $116.1 million compared to Q4 2020.
• Net income for Q1 2021 was $3.7 million, translating to $0.13 per diluted share.
• Non-GAAP net income was $11 million, or $0.40 per diluted share.
• 3D Hubs acquisition generated $5.8 million in revenue within the quarter.
• Served 22,605 unique product developers, representing a 24.5% increase from Q4 2020.
• Maintained a strong balance sheet with $93.1 million in cash and investments and no debt.

Negative

• None.

Proto Labs, Inc. (NYSE: PRLB), the world’s largest ecommerce manufacturer and supplier of on-demand prototype and production parts, today announced financial results for the first quarter ended March 31, 2021.

First Quarter 2021 Highlights include:

• Revenue for the first quarter of 2021 was $116.1 million, representing a 10.4 percent increase compared to revenue of $105.2 million in the fourth quarter of 2020.
  • 3D Hubs generated $5.8 million of revenue in the period between acquisition close (January 22, 2021) and the end of the first quarter.
• Net income for the first quarter of 2021 was $3.7 million, or $0.13 per diluted share.
• Non-GAAP net income was $11.0 million, or $0.40 per diluted share. See “Non-GAAP Financial Measures” below.

“During the first quarter of 2021, we achieved two very important milestones, the successful launch of Protolabs 2.0 and the transformative acquisition of 3D Hubs, which will enable us to accelerate growth,” said Rob Bodor, President and Chief Executive Officer. “I am very pleased that we also delivered strong first quarter financial performance within our expectations. As the COVID-19 vaccine rollout progresses and global demand continues to recover, our best-in-class digital manufacturing model positions us to expand our leadership position.”

Additional First Quarter 2021 Highlights include:

• Protolabs served 22,605 unique product developers during the year, representing a 24.5 percent increase over the fourth quarter of 2020.
• Gross margin in the first quarter of 2021 was 47.6 percent of revenue; Non-GAAP gross margin was 48.5 percent of revenue. See “Non-GAAP Financial Measures” below.
• EBITDA margin was 12.0 percent of revenue in the first quarter of 2021; adjusted EBITDA margin was 19.5 percent of revenue in the first quarter of 2021. See “Non-GAAP Financial Measures” below.
• Cash and investments balance was $93.1 million as of March 31, 2021.

“We managed our financial performance very well in the first quarter through the Protolabs 2.0 systems launch and acquisition of 3D Hubs,” added John Way, Chief Financial Officer. “Our balance sheet remains very healthy with $93 million in cash and investments and no debt, providing flexibility and allowing us to continue to invest to serve our customers and drive future growth.”

Non-GAAP Financial Measures

The company has included non-GAAP revenue growth that excludes the impact of changes in foreign currency exchange rates and revenue earned from our acquisition of 3D 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, 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 included non-GAAP operating margin, adjusted for stock-based compensation expense, amortization expense, 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 net income, adjusted for stock-based compensation expense, amortization expense, unrealized (gain) loss on foreign currency, 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 operating margin, non-GAAP revenue growth and Adjusted EBITDA, the most directly comparable measures calculated and presented in accordance with GAAP. These non-GAAP measures are used by the company’s management and board of directors to understand and evaluate operating performance and trends and provide useful measures for period-to-period comparisons of the company’s business. Accordingly, the company believes that these non-GAAP measures provide useful information to investors and others in understanding and evaluating operating results in the same manner as our management and board of directors.

Conference Call

The company has scheduled a conference call to discuss its first quarter 2021 financial results and second quarter 2021 outlook today, May 6, 2021 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/p2q42oaz. 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 digital manufacturing source for rapid prototyping and on-demand production. The technology-enabled company produces custom components in as fast as 1 day with automated 3D printing, CNC machining, sheet metal fabrication, and injection molding processes. Its digital approach to manufacturing enables accelerated time to market, reduces manufacturing costs, and enables supply chain agility throughout the product life cycle. Visit protolabs.com for more information.

Forward-Looking Statements

Statements contained in this press release regarding matters that are not historical or current facts are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors which may cause the results of Protolabs to be materially different than those expressed or implied in such statements. Certain of these risk factors and others are described in the “Risk Factors” section within reports filed with the 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,			December 31,
					2021			2020
					(Unaudited)
	Assets
	Current assets
		Cash and cash equivalents			$	43,774		$	127,603
		Short-term marketable securities				19,592			34,088
		Accounts receivable, net				74,666			57,877
		Inventory				9,918			10,862
		Prepaid expenses and other current assets				8,803			11,032
		Income taxes receivable				1,763			540
			Total current assets			158,516			242,002
	Property and equipment, net					279,901			282,666
	Goodwill					399,426			128,752
	Other intangible assets, net					46,883			14,350
	Long-term marketable securities					29,760			59,357
	Operating lease assets					12,819			9,855
	Financing lease assets					2,271			2,396
	Other long-term assets					4,872			4,826
			Total assets		$	934,448		$	744,204
	Liabilities and shareholders' equity
	Current liabilities
		Accounts payable			$	21,846		$	18,248
		Accrued compensation				11,745			11,989
		Accrued liabilities and other				16,705			16,193
		Current contingent consideration				5,221			-
		Current operating lease liabilities				2,732			3,272
		Current finance lease liabilities				553			552
		Income taxes payable				1,047			-
			Total current liabilities			59,849			50,254
	Long-term contingent consideration					4,789			-
	Long-term operating lease liabilities					11,534			7,586
	Long-term finance lease liabilities					1,779			1,919
	Long-term deferred tax liabilities					36,899			33,854
	Other long-term liabilities					6,167			6,235
	Shareholders' equity					813,431			644,356
	Total liabilities and shareholders' equity				$	934,448		$	744,204

Proto Labs, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
				Three Months Ended
				March 31,
				2021				2020
	Revenue
		Injection Molding		$	56,359			$	54,776
		CNC Machining			36,703				37,885
		3D Printing			17,235				15,948
		Sheet Metal			5,219				5,649
		Other			610				850
		Total revenue			116,126				115,108
	Cost of revenue				60,796				57,008
	Gross profit				55,330				58,100
	Operating expenses
		Marketing and sales			19,480				18,180
		Research and development			12,181				8,987
		General and administrative			19,408				14,108
		Total operating expenses			51,069				41,275
	Income from operations				4,261				16,825
	Other (loss) income, net				(313	)			1,054
	Income before income taxes				3,948				17,879
	Provision for income taxes				236				3,895
	Net income			$	3,712			$	13,984
	Net income per share:
		Basic		$	0.14			$	0.52
		Diluted		$	0.13			$	0.52
	Shares used to compute net income per share:
		Basic			27,464,136				26,776,806
		Diluted			27,698,195				26,929,640

Proto Labs, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
						Three Months Ended
						March 31,
						2021				2020
	Operating activities
		Net income				$	3,712			$	13,984
		Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization				10,059				7,958
			Stock-based compensation expense				5,620				3,033
			Deferred taxes				(69	)			3,392
			Amortization of marketable securities				137				55
			Realized gain on available-for-sale securities				(166	)			-
			Other				155				(644	)
			Changes in operating assets and liabilities				(13,023	)			(5,368	)
		Net cash provided by operating activities					6,425				22,410
	Investing activities
		Purchases of property, equipment and other capital assets					(6,546	)			(13,421	)
		Cash used for acquisitions, net of cash acquired					(127,709	)			-
		Purchases of other assets and investments					-				(3,000	)
		Purchases of marketable securities					(8,227	)			(37,629	)
		Proceeds from sales of marketable securities					45,194				-
		Proceeds from maturities of marketable securities					7,155				10,700
		Net cash used in investing activities					(90,133	)			(43,350	)
	Financing activities
		Proceeds from exercises of stock options and other					1,704				135
		Purchases of shares withheld for tax obligations					(1,994	)			(1,048	)
		Repurchases of common stock					-				(11,185	)
		Principal repayments of finance lease obligations					(137	)			-
		Net cash used in financing activities					(427	)			(12,098	)
	Effect of exchange rate changes on cash and cash equivalents						306				(282	)
	Net decrease in cash and cash equivalents						(83,829	)			(33,320	)
	Cash and cash equivalents, beginning of period						127,603				125,225
	Cash and cash equivalents, end of period					$	43,774			$	91,905

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,
				2021				2020
	Non-GAAP net income, adjusted for stock-based compensation expense,
	amortization expense, unrealized (gain) loss on foreign currency and
	transaction costs
		GAAP net income		$	3,712			$	13,984
		Add back:
		Stock-based compensation expense			5,620				3,033
		Amortization expense			1,543				754
		Unrealized (gain) loss on foreign currency			622				(797	)
		Transaction costs			2,515				-
		Total adjustments 1			10,300				2,990
		Income tax benefits on adjustments 2			(3,001	)			(675	)
		Non-GAAP net income		$	11,011			$	16,299
	Non-GAAP net income per share:
		Basic		$	0.40			$	0.61
		Diluted		$	0.40			$	0.61
	Shares used to compute non-GAAP net income per share:
		Basic			27,464,136				26,776,806
		Diluted			27,698,195				26,929,640
	1 Stock-based compensation expense, amortization expense, unrealized (gain) loss on foreign currency and transaction costs were included in the following GAAP consolidated statement of operations categories:
				Three Months Ended
				March 31,
				2021				2020
		Cost of revenue		$	977			$	863
		Marketing and sales			853				618
		Research and development			624				521
		General and administrative			7,224				1,785
		Total operating expenses			8,701				2,924
		Other income, net			622				(797	)
		Total adjustments		$	10,300			$	2,990
	2 For the three-month periods ended March 31, 2021 and 2020, income tax effects were calculated using the effective tax rate for the relevant jurisdictions. Our non-GAAP tax rates differ from our 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 Operating Margin
(In thousands)
(Unaudited)
				Three Months Ended
				March 31,
				2021				2020
	Revenue			$	116,126			$	115,108
	Income from operations				4,261				16,825
		GAAP operating margin			3.7	%			14.6	%
		Add back:
		Stock-based compensation expense			5,620				3,033
		Amortization expense			1,543				754
		Transaction costs			2,515				-
		Total adjustments			9,678				3,787
		Non-GAAP income from operations		$	13,939			$	20,612
		Non-GAAP operating margin			12.0	%			17.9	%

Proto Labs, Inc.
Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
				Three Months Ended
				March 31,
				2021				2020
	GAAP net income			$	3,712			$	13,984
		Amortization expense			1,543				754
		Depreciation expense			8,516				7,204
		Interest income, net			(87	)			(560	)
		Tax expense			236				3,895
		EBITDA			13,920				25,277
		EBITDA Margin			12.0	%			22.0	%
		Add back:
		Stock-based compensation expense			5,620				3,033
		Unrealized (gain) loss on foreign currency			622				(797	)
		Transaction costs			2,515				-
		Total adjustments			8,757				2,236
		Adjusted EBITDA		$	22,677			$	27,513
		Adjusted EBITDA Margin			19.5	%			23.9	%

Proto Labs, Inc.
Comparison of GAAP to Non-GAAP Revenue Growth
(In thousands)
(Unaudited)
			Three Months Ended March 31, 2021														Three Months Ended March 31, 2020
			GAAP			Foreign Currency1				3D Hubs Acquisition2				Non-GAAP			GAAP			% Change3			% Change Organic4
	Revenues
	United States		$	91,053		$	-			$	(3,157	)		$	87,896		$	90,076		1.1	%		(2.4	)%
	Europe			21,449			(1,560	)			(2,606	)			17,283			20,787		3.2			(16.9	)
	Japan			3,624			(85	)			-				3,539			4,245		(14.6	)		(16.6	)
	Total Revenue		$	116,126		$	(1,645	)		$	(5,763	)		$	108,718		$	115,108		0.9	%		(5.6	)%
1 Revenue for the three-month period ended March 31, 2021 has been recalculated using 2020 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 three-month period ended March 31, 2021 has been recalculated to exclude revenue earned from our acquisition of 3D Hubs to provide information useful in evaluating the underlying business trends excluding the impact of acquisitions.
3 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2020 to GAAP revenue for the three-month period ended March 31, 2021.
4 This column presents the percentage change from GAAP revenue for the three-month period ended March 31, 2020 to non-GAAP revenue for the three-month period ended March 31, 2021 (as recalculated using the foreign currency exchange rates in effect during the three-month period ended March 31, 2020, excluding the impact of 3D Hubs acquisition) in order to provide a constant-currency comparison.

Proto Labs, Inc.
Product Developer Information
(Unaudited)
			Three Months Ended
			March 31,
			2021		2020
	Unique product developers and engineers served		22,605		20,876

 

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FAQ

What were Proto Labs' earnings for Q1 2021?

Proto Labs reported earnings of $3.7 million, or $0.13 per diluted share, for Q1 2021.

How much revenue did Proto Labs generate in Q1 2021?

Proto Labs generated $116.1 million in revenue for Q1 2021.

What is the impact of the 3D Hubs acquisition on Proto Labs' revenue?

The 3D Hubs acquisition contributed $5.8 million in revenue to Proto Labs in Q1 2021.

What was Proto Labs' cash balance as of March 31, 2021?

As of March 31, 2021, Proto Labs had a cash and investments balance of $93.1 million.

What is the EBITDA margin for Proto Labs in Q1 2021?

Proto Labs reported an EBITDA margin of 12.0% of revenue in Q1 2021.