Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 2, 2024

Proto Labs, Inc.

(Exact name of registrant as specified in its charter)

Minnesota

001-35435

41-1939628

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer
Identification Number)


5540 Pioneer Creek Drive Maple Plain, Minnesota						55359
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code:						(763) 479-3680


Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


			☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

			☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

			☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

			☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.001 Per Share	PRLB	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02.			Results of Operations and Financial Condition.

On August 2, 2024, Proto Labs, Inc. issued a press release announcing its second quarter 2024 financial results. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated herein by reference.


Item 9.01.			Financial Statements and Exhibits.

(d)Exhibits


99.1			Press release of Proto Labs, Inc. dated August 2 , 2024
104			Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Proto Labs, Inc.

Date:

August 2, 2024

By:

/s/ Daniel Schumacher

Daniel Schumacher

Chief Financial Officer

Exhibit 99.1

Protolabs Reports Financial Results for the Second Quarter of 2024

Total Revenue of $126 Million

GAAP Earnings Per Share of $0.18, Non-GAAP Earnings Per Share of $0.38

MINNEAPOLIS – August 2, 2024 – Proto Labs, Inc. ("Protolabs" or the "Company") (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Financial Highlights:

•Revenue was $125.6 million, a 2.8% increase compared to the second quarter of 2023.

•Revenue generated from Protolabs Network was $24.7 million, a 22.0% increase compared to the second quarter of 2023.

•Net income was $4.5 million, or $0.18 per diluted share, compared to net loss of $0.4 million, or $0.01 per diluted share, in the second quarter of 2023.

•Non-GAAP net income was $9.5 million, or $0.38 per diluted share, compared to $8.7 million, or $0.33 per diluted share, in the second quarter of 2023. See “Non-GAAP Financial Measures” below.

•EBITDA was $15.2 million, or 12.1% of revenue. See “Non-GAAP Financial Measures” below.

•Adjusted EBITDA was $19.3 million, or 15.4% of revenue, compared to $19.2 million, or 15.7% of revenue, in the second quarter of 2023. See “Non-GAAP Financial Measures” below.

"We executed well through the first half of 2024 despite operating in a challenging macroeconomic environment,” said Rob Bodor, President and Chief Executive Officer. "We continue to make progress on driving customer adoption of our combined offer fulfilled through both Factory and Network, while also increasing our revenue per customer. We have aligned our organization to support our initiatives, accelerate our next phase of growth, and improve our efficiency."

Dan Schumacher, Chief Financial Officer, commented, "Our results were driven by strong performance in our Network business and gross margin improvement across both Factory and Network. We remain committed to returning capital to shareholders as we repurchased $10.9 million of common stock in the quarter."

Additional Second Quarter 2024 Highlights:

•Customer contact information

◦Protolabs served 22,456 customer contacts during the quarter.

◦Revenue per customer contact increased 7.0% year-over-year to $5,595.

•Gross margin was 45.0% of revenue, compared to 43.4% of revenue in the second quarter of 2023.

•Non-GAAP gross margin was 45.7% of revenue, compared to 44.1% of revenue in the second quarter of 2023. See "Non-GAAP Financial Measures" below.

•Cash flow from operations was $14.4 million in the second quarter of 2024.

•Cash and investments balance was $112.9 million as of June 30, 2024.

Third Quarter 2024 Outlook

For the third quarter of 2024, the Company expects to generate revenue between $117 million and $125 million.

The Company expects third quarter 2024 diluted net income per share between $0.10 and $0.18, and non-GAAP diluted net income per share between $0.29 and $0.37. See "Non-GAAP Financial Measures" below.

Non-GAAP Financial Measures

The Company has included non-GAAP revenue growth by region and by service line that excludes the impact of changes in foreign currency exchange rates (collectively, “non-GAAP revenue growth”). Management believes these metrics, when viewed in conjunction with the comparable GAAP 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 costs related to the Japan closure activities (collectively, “Adjusted EBITDA”), in this press release to provide investors with additional information regarding the Company’s financial results. The Company has also included earnings before interest, taxes, depreciation and amortization margin (“EBITDA margin”) and EBITDA margin, adjusted for stock-based compensation expense, unrealized (gain) loss on foreign currency and costs related to the Japan closure activities (collectively, “Adjusted EBITDA margin”), in this press release to provide investors with additional information regarding the Company’s financial results.

The Company has included non-GAAP gross margin, adjusted for stock-based compensation expense and amortization expense 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 costs related to the closure of Japan (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 costs related to the closure of Japan (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 gross margin, non-GAAP operating margin, non-GAAP revenue growth by region and by service, and Adjusted EBITDA and Adjusted EBITDA margin, 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 second quarter 2024 financial results and third quarter 2024 outlook today, August 2, 2024 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 presentation will be available via the investor relations section of the Protolabs website and the following link: https://edge.media-server.com/mmc/p/b94yu8yp/. 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 fastest and most comprehensive digital manufacturing service in the world. Our digital factories produce low-volume parts in days while Protolabs Network unlocks advanced capabilities and volume pricing through its highly vetted manufacturing partners. The result? One manufacturing source—from prototyping to production—for product developers, engineers, and supply chain teams across the globe. See what's next at protolabs.com.

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.

Source: Proto Labs, Inc.

Investor Relations Contacts:

Protolabs

Ryan Johnsrud, 612-225-4873

Manager – Investor Relations and FP&A

ryan.johnsrud@protolabs.com

Gateway Group, Inc.

949-574-3860

PRLB@gateway-grp.com

Media Contact:

Protolabs

Brent Renneke, 763-479-7704

Marketing Communications Manager

brent.renneke@protolabs.com

Proto Labs, Inc.

Condensed Consolidated Balance Sheets

(In thousands)



	June 30, 2024		December 31, 2023
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	96,149	$	83,790
Short-term marketable securities	16,792		19,013
Accounts receivable, net	70,891		72,848
Inventory	12,357		13,657
Income taxes receivable	1,400		2,228
Prepaid expenses and other current assets	10,034		9,124
Total current assets	207,623		200,660

Property and equipment, net	243,710		253,655
Goodwill	273,991		273,991
Other intangible assets, net	23,427		25,584
Long-term marketable securities	—		8,019
Operating lease assets	3,790		4,628
Finance lease assets	826		960
Other long-term assets	4,839		4,856
Total assets	$	758,206	$	772,353

Liabilities and shareholders' equity
Current liabilities
Accounts payable	$	15,910	$	15,636
Accrued compensation	15,544		15,292
Accrued liabilities and other	17,656		16,872
Current operating lease liabilities	1,534		1,585
Current finance lease liabilities	302		296

Total current liabilities	50,946		49,681

Long-term operating lease liabilities	2,203		3,008
Long-term finance lease liabilities	443		595
Long-term deferred tax liabilities	14,588		18,742
Other long-term liabilities	4,790		5,032

Shareholders' equity	685,236		695,295
Total liabilities and shareholders' equity	$	758,206	$	772,353

Proto Labs, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue
Injection Molding	$	49,080	$	48,819	$	101,743	$	100,767
CNC Machining	51,239		48,297		101,171		96,401
3D Printing	21,281		21,005		42,863		42,330
Sheet Metal	3,922		3,939		7,475		8,187
Other Revenue	109		205		269		439
Total Revenue	125,631		122,265		253,521		248,124

Cost of revenue	69,085		69,142		139,508		141,225
Gross profit	56,546		53,123		114,013		106,899

Operating expenses
Marketing and sales	23,291		21,730		46,451		44,181
Research and development	10,661		9,865		21,828		20,542
General and administrative	16,595		15,822		32,908		32,655
Closure of Japan business	—		98		—		164
Total operating expenses	50,547		47,515		101,187		97,542
Income from operations	5,999		5,608		12,826		9,357
Other income (loss), net	1,361		(3,368)		2,260		(2,078)
Income before income taxes	7,360		2,240		15,086		7,279
Provision for income taxes	2,820		2,623		5,278		5,003
Net income (loss)	$	4,540	$	(383)	$	9,808	$	2,276

Net income (loss) per share:
Basic	$	0.18	$	(0.01)	$	0.39	$	0.09
Diluted	$	0.18	$	(0.01)	$	0.38	$	0.09

Shares used to compute net income (loss) per share:
Basic	25,313,036		26,210,478		25,473,937		26,414,467
Diluted	25,372,972		26,210,478		25,573,344		26,445,427

Proto Labs, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	Six Months Ended June 30,
	2024		2023
Operating activities
Net income	$	9,808	$	2,276
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	18,075		18,883
Stock-based compensation expense	8,520		7,370
Deferred taxes	(4,144)		(5,605)
Interest on finance lease obligations	18		568
Loss on foreign currency translation	—		3,906
Gain on disposal of property and equipment	(20)		(428)
Other	64		215
Changes in operating assets and liabilities	3,460		4,682
Net cash provided by operating activities	35,781		31,867

Investing activities
Purchases of property, equipment and other capital assets	(6,784)		(6,829)
Proceeds from sales of property, equipment and other capital assets	30		623



Proceeds from call redemptions and maturities of marketable securities	10,419		14,020
Net cash provided by investing activities	3,665		7,814

Financing activities
Proceeds from exercises of stock options	2,094		1,986
Purchases of shares withheld for tax obligations	(1,920)		(1,425)
Repurchases of common stock	(26,940)		(30,064)
Principal repayments of finance lease obligations	(146)		(163)
Net cash used in financing activities	(26,912)		(29,666)
Effect of exchange rate changes on cash and cash equivalents	(175)		(80)
Net increase in cash and cash equivalents	12,359		9,935
Cash and cash equivalents, beginning of period	83,790		56,558
Cash and cash equivalents, end of period	$	96,149	$	66,493

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Net Income (Loss) per Share

(In thousands, except share and per share amounts)

(Unaudited)



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
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 (loss)	$	4,540	$	(383)	$	9,808	$	2,276
Add back:
Stock-based compensation expense	4,244		3,675		8,520		7,370
Amortization expense	921		1,484		1,908		3,010
Unrealized (gain) loss on foreign currency	(88)		187		149		115
Costs related to Japan closure activities	—		4,004		—		4,070
Total adjustments 1	5,077		9,350		10,577		14,565
Income tax benefits on adjustments 2	(85)		(296)		(439)		(298)
Non-GAAP net income	$	9,532	$	8,671	$	19,946	$	16,543


Non-GAAP net income per share:
Basic	$	0.38	$	0.33	$	0.78	$	0.63
Diluted	$	0.38	$	0.33	$	0.78	$	0.63

Shares used to compute non-GAAP net income per share:
Basic	25,313,036		26,210,478		25,473,937		26,414,467
Diluted	25,372,972		26,224,562		25,573,344		26,445,427

1Stock-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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Cost of revenue	$	810	$	803	$	1,611	$	1,611

Marketing and sales	819		855		1,652		1,547
Research and development	667		641		1,359		1,212
General and administrative	2,869		2,861		5,806		6,010
Closure of Japan business	—		98		—		164
Total operating expenses	4,355		4,455		8,817		8,933

Other income (loss), net	(88)		4,092		149		4,021
Total adjustments	$	5,077	$	9,350	$	10,577	$	14,565

2For the three and six months ended June 30, 2024 and 2023, 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 June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue	$	125,631		$	122,265		$	253,521		$	248,124
Gross profit	56,546			53,123			114,013			106,899
GAAP gross margin	45.0		%	43.4		%	45.0		%	43.1		%
Add back:
Stock-based compensation expense	468			461			927			927
Amortization expense	342			342			684			684
Total adjustments	810			803			1,611			1,611
Non-GAAP gross profit	$	57,356		$	53,926		$	115,624		$	108,510
Non-GAAP gross margin	45.7		%	44.1		%	45.6		%	43.7		%

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Operating Margin

(In thousands)

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue	$	125,631		$	122,265		$	253,521		$	248,124
Income from operations	5,999			5,608			12,826			9,357
GAAP operating margin	4.8		%	4.6		%	5.1		%	3.8		%
Add back:
Stock-based compensation expense	4,244			3,675			8,520			7,370
Amortization expense	921			1,484			1,908			3,010
Costs related to Japan closure activities	—			98			—			164
Total adjustments	5,165			5,257			10,428			10,544
Non-GAAP income from operations	$	11,164		$	10,865		$	23,254		$	19,901
Non-GAAP operating margin	8.9		%	8.9		%	9.2		%	8.0		%

Proto Labs, Inc.

Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA

(In thousands)

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue	$	125,631		$	122,265		$	253,521		$	248,124
GAAP net income (loss)	4,540			(383)			9,808			2,276
GAAP net income (loss) margin	3.6		%	(0.3		%)	3.9		%	0.9		%
Add back:
Amortization expense	$	921		$	1,484		$	1,908		$	3,010
Depreciation expense	8,051			8,011			16,167			15,873
Interest income, net	(1,149)			(372)			(2,261)			(722)
Provision for income taxes	2,820			2,623			5,278			5,003
EBITDA	15,183			11,363			30,900			25,440
EBITDA Margin	12.1		%	9.3		%	12.2		%	10.3		%
Add back:
Stock-based compensation expense	4,244			3,675			8,520			7,370
Unrealized (gain) loss on foreign currency	(88)			187			149			115
Costs related to Japan closure activities	—			4,004			—			4,070
Total adjustments	4,156			7,866			8,669			11,555
Adjusted EBITDA	$	19,339		$	19,229		$	39,569		$	36,995
Adjusted EBITDA Margin	15.4		%	15.7		%	15.6		%	14.9		%

Proto Labs, Inc.

Comparison of GAAP to Non-GAAP Revenue Growth by Region

(In thousands)

(Unaudited)



	Three Months Ended June 30, 2024						Three Months Ended June 30, 2023		% Change2		% Change Organic3
	GAAP		Foreign Currency1		Non-GAAP		GAAP
Revenues
United States	$	98,541	$	—	$	98,541	$	96,321	2.3	%	2.3	%
Europe	27,090		24		27,114		25,944		4.4	%	4.5	%
Total revenue	$	125,631	$	24	$	125,655	$	122,265	2.8	%	2.8	%


	Six Months Ended June 30, 2024						Six Months Ended June 30, 2023		% Change2		% Change Organic3
	GAAP		Foreign Currency1		Non-GAAP		GAAP
Revenues
United States	$	200,022	$	—	$	200,022	$	194,067	3.1	%	3.1	%
Europe	53,499		(883)		52,616		54,057		(1.0	%)	(2.7	%)
Total revenue	$	253,521	$	(883)	$	252,638	$	248,124	2.2	%	1.8	%

1Revenue for the three and six months ended June 30, 2024 has been recalculated using 2023 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.

2This column presents the percentage change from GAAP revenue for the three and six months ended June 30, 2023 to GAAP revenue for the three and six months ended June 30, 2024.

3This column presents the percentage change from GAAP revenue for the three and six months ended June 30, 2023 to non-GAAP revenue for the three and six months ended June 30, 2024 (as recalculated using the foreign currency exchange rates in effect during the three and six months ended June 30, 2023) 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 June 30, 2024						Three Months Ended June 30, 2023		% Change2		% Change Organic3
	GAAP		Foreign Currency1		Non-GAAP		GAAP
Revenues
Injection Molding	$	49,080	$	(60)	$	49,020	$	48,819	0.5	%	0.4	%
CNC Machining	51,239		90		51,329		48,297		6.1		6.3
3D Printing	21,281		(20)		21,261		21,005		1.3		1.2
Sheet Metal	3,922		17		3,939		3,939		(0.4)		—
Other Revenue	109		(3)		106		205		(46.8)		(48.3)
Total Revenue	$	125,631	$	24	$	125,655	$	122,265	2.8	%	2.8	%



	Six Months Ended June 30, 2024						Six Months Ended June 30, 2023		% Change2		% Change Organic3
	GAAP		Foreign Currency1		Non-GAAP		GAAP
Revenues
Injection Molding	$	101,743	$	(468)	$	101,275	$	100,767	1.0	%	0.5	%
CNC Machining	101,171		(218)		100,953		96,401		4.9		4.7
3D Printing	42,863		(207)		42,656		42,330		1.3		0.8
Sheet Metal	7,475		13		7,488		8,187		(8.7)		(8.5)
Other Revenue	269		(3)		266		439		(38.7)		(39.4)
Total Revenue	$	253,521	$	(883)	$	252,638	$	248,124	2.2	%	1.8	%

2This column presents the percentage change from GAAP revenue for the three and six months ended June 30, 2023 to GAAP revenue for the three and six months ended June 30, 2024.

Proto Labs, Inc.

Customer Contact Information

(Unaudited)



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Customer contacts	22,456		23,377		34,338		35,743
Revenue per customer contact	$	5,595	$	5,230	$	7,383	$	6,942

Proto Labs, Inc.

Reconciliation of GAAP to Non-GAAP Guidance

(In thousands, except per share and per share amounts)

(Unaudited)



	Q3 2024 Outlook
	Low		High
GAAP diluted net income per share	$	0.10	$	0.18
Add back:
Stock-based compensation expense	0.16		0.16
Amortization expense	0.03		0.03
Unrealized (gain) loss on foreign currency	0.00		0.00
Total adjustments	0.19		0.19
Non-GAAP diluted net income per share	$	0.29	$	0.37

Cover	Aug. 02, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Aug. 02, 2024
Entity Registrant Name	Proto Labs, Inc.
Entity Incorporation, State or Country Code	MN
Entity File Number	001-35435
Entity Tax Identification Number	41-1939628
Entity Address, Address Line One	5540 Pioneer Creek Drive
Entity Address, City or Town	Maple Plain
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55359
City Area Code	(763)
Local Phone Number	479-3680
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, Par Value $0.001 Per Share
Trading Symbol	PRLB
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001443669
Amendment Flag	false