Protolabs Reports Financial Results for the Fourth Quarter and Full Year 2019

Record Full Year 2019 Revenue of $458.7 million, an increase of 3% over 2018

Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled, quick-turn, on-demand manufacturer, announced financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Highlights include:

  • Revenue for the fourth quarter of 2019 was $111.9 million, representing a 0.8 percent decrease compared to revenue of $112.8 million in the fourth quarter of 2018.
  • The number of unique product developers and engineers served totaled 20,595 in the fourth quarter of 2019, an increase of 0.9 percent over the fourth quarter of 2018.
  • Net income for the fourth quarter of 2019 was $15.2 million, or $0.56 per diluted share.
  • Non-GAAP net income was $17.1 million, or $0.63 per diluted share. See “Non-GAAP Financial Measures” below.

“The fourth quarter of 2019 played out as we expected, as global macroeconomic conditions continued to weaken through the end of 2019,” said Vicki Holt, President and Chief Executive Officer. “Despite softer revenue in the fourth quarter, our world-class e-commerce digital manufacturing offer still resonates with customers, as evidenced by our three percent growth in 2019 in these tough macro conditions.”

Additional Fourth Quarter 2019 Highlights include:

  • Gross margin was 50.6 percent of revenue for the fourth quarter of 2019, compared to 52.5 percent for the fourth quarter of 2018.
  • Operating expenses were 33.1 percent of revenue for the fourth quarter of 2019, compared to 34.6 percent for the fourth quarter of 2018.
  • GAAP operating margin was 17.5 percent of revenue during the fourth quarter of 2019, compared to 17.9 percent for the fourth quarter of 2018.
  • Non-GAAP operating margin was 19.2 percent of revenue during the fourth quarter of 2019, compared to 21.2 percent for the fourth quarter of 2018. See “Non-GAAP Financial Measures” below.
  • EBITDA was $27.0 million, or 24.1 percent of revenue, for the fourth quarter of 2019.
  • Adjusted EBITDA was $28.3 million, or 25.3 percent of revenue, for the fourth quarter of 2019. See “Non-GAAP Financial Measures” below.
  • The company generated $32.3 million in cash from operations during the fourth quarter of 2019.
  • Cash and investments balance was $173.6 million at December 31, 2019.

“Protolabs continued its track record of very strong cash generation in the fourth quarter of 2019, despite revenue softness and contraction in global manufacturing activity,” said John Way, Chief Financial Officer. “Our balance sheet remains very healthy as we enter into 2020, allowing us to make strategic investments focused on long term business performance.”

Full Year 2019 Financial Highlights include:

  • Revenue increased 2.9 percent to $458.7 million compared to $445.6 million in 2018.
  • Protolabs served 47,774 product developers during the year, an increase of 3.9 percent over 2018.
  • Net income for 2019 was $63.7 million, or $2.35 per diluted share.
  • Non-GAAP net income was $75.4 million, or $2.79 per diluted share. See “Non-GAAP Financial Measures” below.
  • Cash generated from operations during the year totaled $116.1 million.
  • The Company repurchased $33.5 million or 326,462 shares of common stock.

“Although macroeconomic headwinds across various industries have resulted in lower than expected purchasing from our customers in 2019, Protolabs remains committed to continually improving our offer and delighting our customers,” said Holt. “As we enter 2020, we are very excited about enhancements we are making to our e-commerce platform and back-end support systems. This project, called Protolabs 2.0, will build out our systems to support our customers and our strategy for the next decade and beyond. We have an outstanding team and are well-situated strategically and financially to expand our position as the leading e-commerce, digitally enabled supplier of custom manufacturing parts and services, which will lead to long-term shareholder value creation.”

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 disposal of businesses (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, unrealized (gain) loss on foreign currency, and disposal of businesses (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.

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