MAPLE PLAIN, Minn.–(BUSINESS WIRE)–Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled, quick-turn on-demand manufacturer, today announced financial results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights include:
- Revenue for the fourth quarter of 2020 was $105.2 million, representing a 2.1 percent decline compared to revenue of $107.5 million in the third quarter of 2020.
- EBITDA margin was 19.1 percent of revenue in the fourth quarter of 2020, compared to 24.4 percent in the third quarter of 2020.
- Adjusted EBITDA margin was 23.0 percent of revenue in the fourth quarter of 2020, compared to 27.9 percent in the third quarter of 2020. See “Non-GAAP Financial Measures” below.
- Net income for the fourth quarter of 2020 was $9.6 million, or $0.36 per diluted share.
- Non-GAAP net income was $13.5 million, or $0.50 per diluted share. See “Non-GAAP Financial Measures” below.
“Protolabs responded very well in the face of unforeseen challenges driven by the emergence of the global pandemic and the ensuing substantial decline in global economic activity during 2020. As an organization, we prioritized the health of our employees, while continuing to serve our customers and advance our long-term business opportunities. As a result, we further enhanced our leadership in the digital manufacturing space,” said Vicki Holt, President and Chief Executive Officer.
“2020 showcased the adaptability of our workforce and our ability to further expand and improve our digital model,” said Rob Bodor, Vice President and General Manager of the Americas and incoming President and Chief Executive Officer. “There is tremendous opportunity ahead of us, and we have clear strategic objectives for 2021 and beyond: create a world-class customer experience, expand our digital manufacturing offer, and further invest in our employees. With the successful go-live of Protolabs 2.0 and the addition of 3D Hubs, we are uniquely positioned to capitalize on that opportunity. I look forward to partnering with all employees to drive the long-term success of Protolabs.”
Full Year 2020 Highlights include:
- 2020 revenue of $434.4 million, compared to $458.7 million in 2019.
- Protolabs served 40,267 product developers during the year.
- Gross margin was 50.1 percent of revenue in 2020, compared to 51.3 percent in 2019.
- EBITDA margin was 21.7 percent of revenue in 2020, compared to 24.0 percent in 2019.
- Adjusted EBITDA margin was 24.8 percent of revenue in 2020, compared to 26.5 percent in 2019. See “Non-GAAP Financial Measures” below.
- Net income for 2020 was $50.9 million, or $1.89 per diluted share.
- Non-GAAP net income was $63.6 million, or $2.36 per diluted share.
- The company generated $107.0 million in cash from operations in 2020.
- Cash and investments balance was $221.0 million at December 31, 2020.
“2020 was the most difficult backdrop our business has ever faced, yet our digital manufacturing model continued its strong cash flow generation, allowing us to proceed with investments to support the long-term growth of the business, while maintaining our financial strength and flexibility,” added John Way, Chief Financial Officer.
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, 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 fourth quarter and full year 2020 financial results today, February 12, 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 will be available via the investor relations section of the Protolabs website and the following link: https://edge.media-server.com/mmc/p/7ayaedkz. 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 source for digital manufacturing services. 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) December 31,
December 31,
2020
2019
(Unaudited)
Assets Current assets Cash and cash equivalents $ 127,603
$ 125,225
Short-term marketable securities 34,088
35,437
Accounts receivable, net 57,877
57,450
Inventory 10,862
10,075
Income taxes receivable 540
–
Prepaid expenses and other current assets 11,032
8,232
Total current assets 242,002
236,419
Property and equipment, net 282,666
263,712
Goodwill 128,752
128,752
Other intangible assets, net 14,350
17,369
Long-term marketable securities 59,357
12,960
Operating lease assets 9,855
11,425
Finance lease assets 2,396
–
Other long-term assets 4,826
3,030
Total assets $ 744,204
$ 673,667
Liabilities and shareholders’ equity Current liabilities Accounts payable $ 18,248
$ 16,804
Accrued compensation 11,989
15,058
Accrued liabilities and other 16,193
11,057
Current operating lease liabilities 3,272
3,340
Current finance lease liabilities 552
–
Income taxes payable –
1,322
Total current liabilities 50,254
47,581
Long-term operating lease liabilities 7,586
8,565
Long-term finance lease liabilities 1,919
–
Long-term deferred tax liabilities 33,854
26,283
Other long-term liabilities 6,235
5,448
Shareholders’ equity 644,356
585,790
Total liabilities and shareholders’ equity $ 744,204
$ 673,667
Proto Labs, Inc. Condensed Consolidated Statements of Operations (In thousands, except share and per share amounts) (Unaudited) Three Months Ended
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Revenue Injection Molding $ 52,065
$ 51,480
$ 217,992
$ 217,415
CNC Machining 31,827
38,494
131,587
155,473
3D Printing 16,024
15,708
62,502
61,352
Sheet Metal 4,532
5,223
18,838
21,000
Other 760
984
3,476
3,488
Total revenue 105,208
111,889
434,395
458,728
Cost of revenue 52,580
55,311
216,568
223,438
Gross profit 52,628
56,578
217,827
235,290
Operating expenses Marketing and sales 17,488
17,510
69,309
72,976
Research and development 11,390
8,151
36,940
32,692
General and administrative 12,759
11,355
51,742
49,766
Total operating expenses 41,637
37,016
157,991
155,434
Income from operations 10,991
19,562
59,836
79,856
Other income, net 560
(229)
3,109
1,337
Income before income taxes 11,551
19,333
62,945
81,193
Provision for income taxes 1,972
4,147
12,078
17,538
Net income $ 9,579
$ 15,186
$ 50,867
$ 63,655
Net income per share: Basic $ 0.36
$ 0.57
$ 1.90
$ 2.37
Diluted $ 0.36
$ 0.56
$ 1.89
$ 2.35
Shares used to compute net income per share: Basic 26,775,279
26,777,536
26,737,425
26,866,985
Diluted 26,976,582
26,945,927
26,896,357
27,049,423
Proto Labs, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Year Ended
December 31,
2020
2019
Operating activities Net income $ 50,867
$ 63,655
Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,594
30,864
Stock-based compensation expense 14,673
10,781
Deferred taxes 7,577
6,106
Amortization of held-to-maturity securities 415
5
Other (336)
391
Changes in operating assets and liabilities 1,179
4,250
Net cash provided by operating activities 106,969
116,052
Investing activities Purchases of property, equipment and other capital assets (47,010)
(62,230)
Purchases of other assets and investments (3,000)
(4,000)
Purchases of marketable securities (113,200)
(46,403)
Proceeds from maturities of marketable securities 67,737
68,330
Net cash used in investing activities (95,473)
(44,303)
Financing activities Principal repayments of finance lease obligations (154)
–
Proceeds from exercises of stock options 7,557
4,391
Purchases of shares withheld for tax obligations (3,443)
(2,487)
Repurchases of common stock (14,686)
(33,521)
Net cash used in financing activities (10,726)
(31,617)
Effect of exchange rate changes on cash and cash equivalents 1,608
47
Net increase in cash and cash equivalents 2,378
40,179
Cash and cash equivalents, beginning of period 125,225
85,046
Cash and cash equivalents, end of period $ 127,603
$ 125,225
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
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Non-GAAP net income, adjusted for stock-based compensation expense, amortization expense, unrealized (gain) loss on foreign currency and transaction costs GAAP net income $
9,579
$
15,186
$
50,867
$
63,655
Add back: Stock-based compensation expense
4,056
1,043
14,673
10,781
Amortization expense
754
889
3,016
3,482
Unrealized (gain) loss on foreign currency
(353
)
286
(1,373
)
677
Transaction costs
427
–
427
–
Total adjustments 1
4,884
2,218
16,743
14,940
Income tax benefits on adjustments 2
(1,013
)
(350
)
(4,043
)
(3,225
)
Non-GAAP net income $
13,450
$
17,054
$
63,567
$
75,370
Non-GAAP net income per share: Basic $
0.50
$
0.64
$
2.38
$
2.81
Diluted $
0.50
$
0.63
$
2.36
$
2.79
Shares used to compute non-GAAP net income per share: Basic
26,775,279
26,777,536
26,737,425
26,866,985
Diluted
26,976,582
26,945,927
26,896,357
27,049,423
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
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Cost of revenue $
1,032
$
933
$
3,820
$
3,335
Marketing and sales
888
708
3,121
2,631
Research and development
675
365
2,441
1,851
General and administrative
2,642
(74
)
8,734
6,446
Total operating expenses
4,205
999
14,296
10,928
Other income, net
(353
)
286
(1,373
)
677
Total adjustments $
4,884
$
2,218
$
16,743
$
14,940
2 For the three-month and year-ended periods ended December 31, 2020 and 2019, 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
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Revenue $
105,208
$
111,889
$
434,395
$
458,728
Income from operations
10,991
19,562
59,836
79,856
GAAP operating margin
10.4
%
17.5
%
13.8
%
17.4
%
Add back: Stock-based compensation expense
4,056
1,043
14,673
10,781
Amortization expense
754
889
3,016
3,482
Transaction costs
427
–
427
–
Total adjustments
5,237
1,932
18,116
14,263
Non-GAAP income from operations $
16,228
$
21,494
$
77,952
$
94,119
Non-GAAP operating margin
15.4
%
19.2
%
17.9
%
20.5
%
Proto Labs, Inc. Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA (In thousands) (Unaudited) Three Months Ended
Year Ended
December 31,
December 31,
2020
2019
2020
2019
GAAP net income $
9,579
$
15,186
$
50,867
$
63,655
Amortization expense
754
889
3,016
3,482
Depreciation expense
7,949
7,317
29,578
27,383
Interest income, net
(149
)
(560
)
(1,332
)
(2,095
)
Tax expense
1,972
4,147
12,078
17,538
EBITDA
20,105
26,979
94,207
109,963
Add back: Stock-based compensation expense
4,056
1,043
14,673
10,781
Unrealized (gain) loss on foreign currency
(353
)
286
(1,373
)
677
Transaction costs
427
–
427
–
Total adjustments
4,130
1,329
13,727
11,458
Adjusted EBITDA $
24,235
$
28,308
$
107,934
$
121,421
Proto Labs, Inc. Comparison of GAAP to Non-GAAP Revenue Growth (In thousands) (Unaudited) Three Months Ended
December 31, 2020
Three Months Ended
December 31, 2019
%
% Change
ConstantGAAP
Adjustments1
Non-GAAP
GAAP
Change2
Currencies3
Revenues United States $
83,201
$
–
$
83,201
$
88,329
(5.8
%)
(5.8
%)
Europe
18,383
(955
)
17,428
19,889
(7.6
%)
(12.4
%)
Japan
3,624
(145
)
3,479
3,671
(1.3
%)
(5.2
%)
Total Revenue $
105,208
$
(1,100
)
$
104,108
$
111,889
(6.0
%)
(7.0
%)
Year Ended
December 31, 2020Year Ended
December 31, 2019% % Change
ConstantGAAP Adjustments1 Non-GAAP GAAP Change2
Currencies3
Revenues United States $
345,708
$
–
$
345,708
$
360,205
(4.0
%)
(4.0
%)
Europe
74,796
(718
)
74,078
82,805
(9.7
%)
(10.5
%)
Japan
13,891
(298
)
13,593
15,718
(11.6
%)
(13.5
%)
Total Revenue $
434,395
$
(1,016
)
$
433,379
$
458,728
(5.3
%)
(5.5
%)
1 Revenue growth for the three-month and year-ended periods ended December 31, 2020 has been recalculated using 2019 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 growth for the three-month and year-ended periods ended December 31, 2019 to GAAP revenue growth for the three-month and year-ended periods ended December 31, 2020. 3 This column presents the percentage change from GAAP revenue for the three-month and year-ended periods ended December 31, 2019 to non-GAAP revenue for the three-month and year-ended periods ended December 31, 2020 (as recalculated using the foreign currency exchange rates in effect during the three-month and year-ended periods ended December 31, 2019) in order to provide a constant currency comparison.
Proto Labs, Inc. Product Developer Information (Unaudited) Three Months Ended
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Unique product developers and engineers served 18,157
20,595
40,267
47,774