by • July 28, 2016 • No Comments
Proto Labs Inc. (NYSE:PRLB), the 3D printing on-demand manufacturer, released financial outcomes for the 2nd quarter of 2016 on Thursday morning. Despite increasing revenue the company failed to met earnings targets. As a outcome the value of shares in the company dropped by 17% in early trading on the NYSE. There was a slight recovery and the share price was down 13% by close, trading at $53.29, $2.79 above the 52 week low.
During Thursday mornings earnings call with investors and analysts Proto Labs President and CEO, Vicki Holt revealed the company had missed EPS targets by a penny. Yet the $75 million headline revenue figure n represents a 17% increase on the previous year and is a record for the company. But expenses have increased at a higher rate major to a minimize in net profits. The direct costs of producing components for customers increased by 24% to $32.7m while operating costs increased by 36% to $27.3m. John A. Way, CFO, explained that operating costs included, “$873,000 related to the exit of our metal and magnesium injection molding operations” as a non-recurring expense. Holt addressed this area and said the coming months can see measures to improve, “Sales performance and efficiency through our operations.”
Million dollar savings
Proto Labs place “Product manufacturers at the center of our universe,” said Holt. Translating this to sales involves an element of customer education. The Proto Labs business version is not of just producing components quickly but is based upon strategic consultation. The sales system involves communicating to next users how the “differentiated digital business version assist them solve problems.” Holt says Proto Labs cuts the time to market and “can save millions of dollars in R&D and get [customers] to revenue faster.”
Excluding customers who purchased Alphaform products, Proto Labs report that 20,240 (17,194 H2 2015) product manufacturers and engineers were served in the 6-month period ending June 30 2016. This is an increase of 3,046 or 18% on the previous year. Growth in customer numbers by quarter shows a lower figure of 14% when Q2 of 2016 is compared to 2015. The reported growth in customer base, albeit at a slower rate, is yet encouraging. This indicates that although economic conditions may be unfavorable, enterprises see value in the services provided by Proto Labs. Analysis of this data shows that total revenue per customer has in addition increased marginally. For the many new quarter the average Proto Labs customer spent $5,545 compared with $5,411 in the comparative period, an increase of 2%. Employing net income to perform the analysis gives a figure of $790 per customer, a 20% minimize on prior period reports.
“The decline in revenue per product manufacturer is reflective of the mix of our business with sturdy growth in 3D printing and lower growth in our injection molding and CNC machining businesses,” said CFO Way. 3D Printing revenue increased by 67% or $3.6m to $9.1m when compared the same quarter in 2015. The value of 3D printing sales grew, and go ons to grow, by almost $400k each 3 months. This growth was achieved despite the fact the company relocated its DMLS and SLS 3D printing devices to a new facility. Stereolithography producing is in the system of moving and no disruption to services is assumed.
Fundamentals stay unchanged
3D Printing manufactures up 12% of Proto Labs’ revenue in the many new quarter, a 4% year on year increase. Injection molding accounts for 60% and CNC 26%, the staying few percent of sales are categorized as ‘other’. The increases in expenses are attributed partly to the lower profit margin on the 3D printing business. Whilst the gross profit margin on injection molding and CNC milling are slightly above 60%, this figure is almost 50% for the 3D printing business explained the CFO. Holt said that 3D printing revenue is expected to grow and can manufacture up, ”around 15% of our sales as it gets to extra
of an equilibrium.”
With sales failing to store pace with rising expenses Proto Labs reported a year on year minimize in net income of $995k. Total net income for the quarter was $10.7m. “The lower year-over-year growth was a reflection of a complex economic environment, as well as a few disruption to our sales team in the U.S,” explained Holt. The company, “expect to see improvement in sales growth, especially in the Americas, over time. We stay confident in the fundamentals in our business – our market dimensions, differentiated proposition and great customer experience.”
Analysis of revenue by geographic market share indicates a minimize in the U.S. market. In the many new quarter Proto Labs domestic revenue accounted for 69% of the total figure, versus 77% for the comparative period. This minimize was offset by a 7% increase in the share of revenue produced in Europe where the company reported total revenue of $17.2m ($10.1m Q2 2015). In Japan, Proto Labs increased sales for the quarter by $745k to $2.36m ($1.61m Q2 2015). Holt said, “We are in addition beginning to see traction of our expanded sales and marketing efforts of 3D printing in Europe and assume this business can go on to grow throughout the year.”
3D printing job opportunities
Data of the Economist’s poll of forecasters suggests that U.S. GDP growth for 2016 can be 1.8% with a 2% growth in the next year. For the Euro area the forecasts are 1.5% current year GDP growth and 1.2% for 2017. But, these may not be the most way to assess next earnings for Proto Labs, “It’s complex to select a single economic indicator, that consistently and unquestionably tracks the fluctuation in our revenue growth,” said Holt. Pointing to one measure by that the health the economy is measured Holt said, “Consumption of cutting tools, an indicator of utilization of U.S. machining shops, has declined 9% through May 2016 compared to the prior year.” Cutting tools are a consumable item utilized in producing and a minimize in the figure points to a weaker environment.
Commenting on the impact of Britain’s decision to leave the European Union the CFO said, “we feel the next impact can be partially mitigated due to the producing presence built in Germany as a outcome of the Alphaform acquisition.”
For readers searching for work, Proto Labs are already in the system of recruiting a Chief Revenue Officer and extra
Sales Managers. “We contribute robust and valuable business solutions to our customers. Our innovation, scale and business version are differentiated, compelling, and have worthwhile barriers to entry,” said Holt.
Looking to the next, Proto Labs,“Expect Q3 revenue to be in the range of $73 million to $78 million representing revenue growth of 7.5% to 15% over the prior year” said CFO Way.
by admin • March 5, 2017
by admin • November 28, 2016
by admin • November 28, 2016