Protolabs Reports Financial Results for the First Quarter of 2023

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

« Previous Page 1 | 2 | 3 Next Page »