Protolabs Reports Financial Results for the First Quarter 2020

First Quarter 2020 Revenue of $115.1 million, an increase of 1.5% over 2019

First Quarter 2020 GAAP EPS of $0.52, Non-GAAP EPS of $0.61

MAPLE PLAIN, Minn. — (BUSINESS WIRE) — April 30, 2020 — Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled, quick-turn, on-demand manufacturer, today announced financial results for the first quarter ended March 31, 2020.

“As Protolabs confronts the immediate challenges of the COVID-19 pandemic, our top priority is the health and safety of our employees, communities, and customers,” said Vicki Holt, President and Chief Executive Officer of Protolabs. “We continue to serve our customers during these uncertain times, and are thankful that we are able to be a part of the solution. I am very proud of the dedicated Protolabs employees who continue to support our customers and manufacture parts with critical applications in the fight against the Coronavirus.”

COVID-19 Response Highlights include:

  • Protolabs COVID-19 Commitment:
    • Remain fully operational as an essential business.
    • Prioritize COVID-19 related orders and customer needs.
    • Waive expedite fees for COVID-19 orders; parts manufactured and shipped in as fast as 1 day.
  • Protolabs has received COVID-19 related orders for applications including components for lifesaving equipment, diagnostic systems, and personal protective equipment (PPE).
  • In our manufacturing facilities we have implemented new cleaning and sanitizing standard operating procedures, new shift change procedures to minimize employee interaction and achieved social distancing with new employee work station layouts.
  • Our non-manufacturing employees have transitioned to a remote work environment; approximately 90 percent of our non-manufacturing employees are working from home.
  • Protolabs Foundation has accelerated annual STEM education grants to provide food and technology needs during distance learning. The Foundation also doubled its match for employee charitable contributions.

     

First Quarter 2020 Highlights include:

  • Revenue for the first quarter of 2020 was $115.1 million, representing a 1.5 percent increase compared to revenue of $113.5 million in the first quarter of 2019.
  • Net income for the first quarter of 2020 was $14.0 million, or $0.52 per diluted share.
  • Non-GAAP net income was $16.3 million, or $0.61 per diluted share. See “Non-GAAP Financial Measures” below.

“During the first two and a half months of the first quarter of 2020, ordering trends were in-line with our expectations,” added Holt. “In mid-March, as the global pandemic intensified and economic activity declined, ordering activity slowed. In the last week of March, we began to receive orders for COVID-19 related parts—primarily injection molding in the Americas—which helped mitigate the slowdown in other services and regions. In the midst of this unprecedented uncertainty, we were able to deliver essential parts to our customers and achieve strong financial performance. We will continue to produce the high-quality parts our customers have come to expect from Protolabs, and we are confident that our ecommerce digital manufacturing business model will thrive as manufacturing adapts in response to this pandemic.”

Additional First Quarter 2020 Highlights include:

  • Gross margin was 50.5 percent of revenue for the first quarter of 2020, compared to 51.9 percent for the firstquarter of 2019.
  • Operating expenses were 35.9 percent of revenue for the firstquarter of 2020, compared to 34.7 percent for the firstquarter of 2019.
  • GAAP operating margin was 14.6 percent of revenue during the firstquarter of 2020, compared to 17.1 percent for the firstquarter of 2019.
  • Non-GAAP operating margin was 17.9 percent of revenue during the firstquarter of 2020, compared to 20.6 percent for the firstquarter of 2019. See “Non-GAAP Financial Measures” below.
  • EBITDA was $25.3 million, or 22.0 percent of revenue, for the firstquarter of 2020.
  • Adjusted EBITDA was $27.5 million, or 23.9 percent of revenue, for the firstquarter of 2020. See “Non-GAAP Financial Measures” below.
  • The company generated $22.4 million in cash from operations during the firstquarter of 2020.
  • Cash and investments balance was $167.2 million at March 31, 2020.

“The ultimate financial impact of the COVID-19 pandemic is unknown at this time. We will continue to monitor demand levels and prudently manage expenses during this time,” said John Way, Chief Financial Officer. “The health of our balance sheet and the strength of our unique digital manufacturing model allow us to manage through these challenging times, deliver exceptional value to our customers, and provide long term benefits to our stakeholders.”

Non-GAAP Financial Measures

The company has included non-GAAP revenue growth that excludes the impact of changes in foreign currency exchange rates (collectively, “non-GAAP revenue growth”). Management believes these metrics are useful in evaluating the underlying business trends and ongoing operating performance of the company.

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

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

The company has included non-GAAP net income, adjusted for stock-based compensation expense, amortization expense, and unrealized (gain) loss on foreign currency (collectively, “non-GAAP net income”), in this press release to provide investors with additional information regarding the company’s financial results.

The company has provided below reconciliations of GAAP to non-GAAP net income, non-GAAP operating margin, non-GAAP revenue growth and Adjusted EBITDA, the most directly comparable measures calculated and presented in accordance with GAAP. These non-GAAP measures are used by the company’s management and board of directors to understand and evaluate operating performance and trends and provide useful measures for period-to-period comparisons of the company’s business. Accordingly, the company believes that these non-GAAP measures provide useful information to investors and others in understanding and evaluating operating results in the same manner as our management and board of directors.

Conference Call

The company has scheduled a conference call to discuss its first quarter 2020 financial results and financial guidance today, April 30, 2020 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 presentations will be available via the investor relations section of the Protolabs website and the following link: https://edge.media-server.com/mmc/p/5cshwxe6. A replay will be available for 14 days following the call on the investor relations section of the Protolabs website.

About Protolabs

Protolabs is a leading digital manufacturing source for rapid prototyping and on-demand production. The company produces custom parts and assemblies in as fast as one day with automated 3D printing, CNC machining, sheet metal fabrication, and injection molding processes. Its digital approach to manufacturing enables accelerated time to market, reduces development and production costs, and minimizes risk throughout the product life cycle. Visit protolabs.com for more information.

Forward-Looking Statements

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

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