Home / 3D Printing Processes / Injection Molding Goes Down, 3D Printing Goes Up at Proto Labs in FY 2016

Injection Molding Goes Down, 3D Printing Goes Up at Proto Labs in FY 2016

Proto Labs, Inc., a leading online and technology-enabled, quick-turn, on-demand manufacturer, closed it fourth quarter and full year on December 31, 2016 with growing 3D printing (and CNC) revenues which contributed to an overall positive performance.

Revenue from 3D printing for the fourth quarter of 2016 totaled $9.8 million, an increase of eight percent (8%) over the prior year’s fourth quarter. Reflected in the 2015 fourth quarter results was revenue from unprofitable 3D printing contracts at Alphaform that have been terminated. Excluding these unprofitable contracts, revenue from 3D printing increased 16.6 percent.

On the other hand, revenues from the injection molding (formative) business, which remain the main source of revenues for Proto Labs (57% or $41.6 million), declined by 5.2%, while the CNC (subtractive) business also grew by 6.7% to $ 20.9 million

Overall revenue for the fourth quarter of 2016 was $72.4 million compared with $73.8 million in revenue in the fourth quarter of 2015. The Alphaform acquisition was completed on October 9, 2015, resulting in comparable year-over-year comparisons for the fourth quarters of 2016 and 2015. The number of unique product developers and engineers served totaled 14,046 in the fourth quarter of 2016, an increase of 13.1 percent over the fourth quarter of 2015.

Overall net income for the fourth quarter of 2016 was $9.4 million, or $0.35 per diluted share. Non-GAAP net income, excluding the after-tax expense of stock compensation, amortization of intangibles, charges related to the exit of facilities and unrealized foreign currency gains, was $10.8 million, or $0.41 per diluted share. Revenue for FY 2016 increased 12.9 percent to $298.1 million compared with $264.1 million in 2015.
Net income for 2016 was $42.7 million, or $1.61 per diluted share, compared with $46.5 million, or $1.77 per diluted share in 2015. Non-GAAP net income, excluding the after-tax expense of stock compensation, amortization of intangibles, asset impairment expense, and facilities-related charges, was $47.6 million, or $1.79 per diluted share.

Cash generated from operations during the year totaled $75.0 million. Cash, cash equivalents and investments increased $47.2 million during the year and were $192.8 million at December 31, 2016 compared with $145.6 million at December 31, 2015.

Our fourth quarter financial results continued to reflect the challenges that we faced throughout 2016 with general economic conditions affecting the R&D spending in certain industries, a trend that was felt with greater impact as we closed out the year,” said Vicki Holt, President and Chief Executive Officer. “3D printing revenue growth remained healthy and we look for continued strong growth in this segment”.

From an operational standpoint, we achieved several important milestones during 2016 that have strengthened our competitive position and enhanced our ability to generate improved top and bottom line growth across all our businesses going forward. They include strengthening the management team, integrating our acquisition in Germany to enhance our 3D printing operations in Europe, the successful launch of overmolding and the expansion of our Liquid Silicone Rubber and lathe offerings, and the expansion to new manufacturing facilities in North Carolina and Japan. During 2017, we will be building on these initiatives to drive additional revenue growth.”

Additional Fourth Quarter 2016 Highlights include:

Gross margin was 55.7 percent of revenue for the fourth quarter of 2016 compared with 56.0 percent for the fourth quarter of 2015 and 57.2 percent in the third quarter of 2016.
GAAP operating margin was 20.5 percent of revenue during the fourth quarter of 2016 compared to 22.4 percent for the fourth quarter of 2015. On a non-GAAP basis, operating margin was 23.1 percent for the fourth quarter of 2016. See “Non-GAAP Financial Measures” below.

For 2017 we will be focused on three strategic priorities. Our first initiative will be to improve our sales and marketing productivity to bring in new product developers and generate increased revenue. We will continue to expand our envelope of services to capture more of our customers’ needs. As part of this effort, we launched Insert Molding as an expansion of our Injection Molding service this quarter. Finally, we will work to improve our gross margin to achieve our 58 to 60 percent of revenue target. We remain very optimistic about the prospects for Proto Labs and the stock repurchase plan is a testament to our financial strength and positive long-term outlook,” Ms. Holt concluded.

Stock Repurchase Program

The Board of Directors has authorized the repurchase of up to $50 million of the company’s common stock from time to time on the open market or in privately negotiated transactions, in compliance with applicable securities laws and other legal requirements. The term of the program runs through December 31, 2021.

The timing and amount of any shares of the company’s common stock that are repurchased under the program will be determined by the company’s management based on its evaluation of market conditions and other factors. The share repurchase program may be suspended or discontinued at any time.

The company expects to fund the share repurchase program through cash generated from operations and cash on hand. At December 31, 2016, the company had 26,504,868 common shares outstanding.

Proto Labs is the world’s fastest digital manufacturing source for custom prototypes and low-volume production parts. The technology-enabled company uses advanced 3D printing, CNC machining and injection molding technologies to produce parts within days. The result is an unprecedented speed-to-market value for product designers and engineers worldwide. Visit protolabs.com for more information.

*Disclosure: the author pf this post own Proto Labs stock (in fact he just purchased them)

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