Proto Labs Reports Record Revenue and Net Income for the First Quarter 2014

Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled quick-turn manufacturer, today announced record financial results for the first quarter ended March 31, 2014.

Highlights include:

• Revenue for the first quarter of 2014 increased to a record $46.1 million, 23 percent above revenue of $37.3 million in the first quarter of 2013.
• The record quarterly revenue was achieved through an 18 percent increase in the number of product developers served combined with an increase of 4 percent in spending per product developer.
• Net income for the first quarter of 2014 increased to a record $10.1 million, or $0.39 per diluted share. Non-GAAP net income, excluding the after tax expense of stock compensation, was $10.8 million, or $0.41 per diluted share. See “Non-GAAP Financial Measure” below.

“Our story in the first quarter of 2014 was about execution on many fronts. We successfully prepared for the formal launches in metal injection molding and liquid silicone rubber, both of which were announced the first week of April. Our revenue growth was strong, especially considering all the weather slow-downs and closures our customers experienced in the eastern half of the country. And of course, we completed the acquisition of FineLine Prototyping which we proudly announced a few days ago,” said Vicki Holt, President and Chief Executive Officer of Proto Labs.

Additional highlights include:

• Gross margin was 63.0 percent of revenue in the first quarter of 2014 compared with 62.4 percent during the same quarter in 2013.
• During the first quarter of 2014, spending on research and development, including the Protoworks initiatives, totaled $3.5 million, or 7.5 percent of revenue. This compares to $2.6 million, or 7.0 percent of revenue, during the first quarter of 2013.
• Operating margin was 31.4 percent of revenue during the first quarter of 2014 compared to 30.5 percent in the first quarter of 2013.
• As measured on a year-to-date basis, cash generated from operations totaled $15.3 million and expenditures on capital equipment were $9.9 million. Total cash, cash equivalents and investments totaled $149.9 million as of March 31, 2014.

“As much as we accomplished this past quarter, we expect the next few quarters will bring even more success. We are confident that our new services, LSR and MIM, will continue to gain momentum through 2014 and into 2015 as product developers become aware of and have experience with these new offerings. The integration of FineLine and its additive manufacturing service will bring more choices to product developers. We believe we are building the most dynamic parts supplier in the world with capabilities to supply our customers’ parts demand from quick-turn prototyping through short-run volume production via a robust portfolio of manufacturing technologies in a wide variety of material selections,” concluded Holt.

Non-GAAP Financial Measure

The company has included non-GAAP net income, adjusted for stock-based compensation expense, in this press release to provide investors with additional information regarding the company’s financial results. The company has provided below a reconciliation of non-GAAP net income, adjusted for stock-based compensation expense, to net income, the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP net income, adjusted for stock-based compensation expense, is used by the company’s management and board of directors to understand and evaluate operating performance and trends and provides a useful measure for period-to-period comparisons of the company’s business. Accordingly, the company believes that non-GAAP net income, adjusted for stock-based compensation expense, provides 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 financial results today, May 1, 2014 at 8:30 a.m. ET. To access the call in the U.S. please dial 866-700-6067. Outside the U.S. please dial 617-213-8834. Use participant code 17168050. A simultaneous webcast of the call will also be available on the investor relations section of the company’s website at www.protolabs.com/investors. An audio replay will be available for 14 days following the call on the investor relations section of Proto Labs’ website.

About Proto Labs, Inc.
Proto Labs is a leading online and technology-enabled quick-turn manufacturer of custom parts for prototyping and short-run production. Proto Labs provides “Real Parts, Really Fast” to product developers worldwide. Proto Labs utilizes computer numerical control (CNC) machining, injection molding, and additive manufacturing (3D printing), to manufacture custom parts for our customers. For more information, visit 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 Proto Labs 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 Proto Labs’ future results. The forward-looking statements included in this press release are made only as of the date hereof. Proto Labs cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Proto Labs expressly disclaims any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.