prlb-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM 10-Q


			(Mark One)

þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from ___________ to ___________

Commission File Number: 001-35435

Proto Labs, Inc.

(Exact name of registrant as specified in its charter)


Minnesota			41-1939628
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

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

(763) 479-3680

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þYes oNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þYes oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes þNo

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 25,785,903 shares of Common Stock, par value $0.001 per share, were outstanding at October 31, 2023.

Table of Contents

Proto Labs, Inc.

TABLE OF CONTENTS


Item	Description	Page

PART I
1.	Financial Statements	2
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
3.	Quantitative and Qualitative Disclosures about Market Risk	27
4.	Controls and Procedures	28
PART II
1.	Legal Proceedings	29
1A.	Risk Factors	29
2.	Unregistered Sales of Equity Securities , Use of Proceeds and Issuer Purchases of Equity Securities	29
3.	Defaults Upon Senior Securities	29
4.	Mine Safety Disclosures	29
5.	Other Information	30
6.	Exhibits	30

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Proto Labs, Inc.

Consolidated Balance Sheets

(In thousands, except share and per share amounts)



	September 30, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	83,496	$	56,558
Short-term marketable securities	19,204		23,568
Accounts receivable, net of allowance for doubtful accounts of $2,665 and $1,706 as of September 30, 2023, and December 31, 2022, respectively	78,395		76,225
Inventory	13,803		13,578
Income taxes receivable	891		4,042
Prepaid expenses and other current assets	8,722		12,597
Total current assets	204,511		186,568
Property and equipment, net	243,022		257,785
Goodwill	273,991		273,991
Other intangible assets, net	26,668		31,250
Long-term marketable securities	12,212		26,419
Operating lease assets	2,737		3,844
Finance lease assets	16,763		17,532
Other long-term assets	4,341		4,779
Total assets	$	784,245	$	802,168

Liabilities and shareholders' equity
Current liabilities
Accounts payable	$	17,922	$	17,356
Accrued compensation	16,337		12,743
Accrued liabilities and other	21,027		22,384
Current operating lease liabilities	1,568		1,561
Current finance lease liabilities	16,630		17,537
Income taxes payable	1,144		-
Total current liabilities	74,628		71,581
Long-term operating lease liabilities	1,545		2,255
Long-term finance lease liabilities	671		—
Long-term deferred tax liabilities	17,138		26,322
Other long-term liabilities	5,341		4,362
Total liabilities	99,323		104,520

Shareholders' equity
Preferred stock, $0.001 par value, authorized 10,000,000 shares; issued and outstanding 0 shares as of each of September 30, 2023, and December 31, 2022	-		-
Common stock, $0.001 par value, authorized 150,000,000 shares; issued and outstanding 25,785,903 and 26,888,425 shares as of September 30, 2023, and December 31, 2022, respectively	26		27
Additional paid-in capital	463,908		473,740
Retained earnings	251,276		258,236
Accumulated other comprehensive loss	(30,288)		(34,355)
Total shareholders' equity	684,922		697,648
Total liabilities and shareholders' equity	$	784,245	$	802,168

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Proto Labs, Inc.

Consolidated Statements of Comprehensive Income

(In thousands, except share and per share amounts)

(Unaudited)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

Statements of Operations:
Revenue	$	130,705	$	121,721	$	378,829	$	372,791
Cost of revenue	71,423		68,089		212,648		205,933
Gross profit	59,282		53,632		166,181		166,858
Operating expenses
Marketing and sales	21,682		20,594		65,863		62,235
Research and development	10,105		9,309		30,647		29,316
General and administrative	17,058		16,477		49,713		49,770
Closure of Japan business	22		1,194		186		6,388
Total operating expenses	48,867		47,574		146,409		147,709
Income from operations	10,415		6,058		19,772		19,149
Other income (loss), net	320		(24)		(1,758)		(323)
Income before income taxes	10,735		6,034		18,014		18,826
Provision for income taxes	2,781		2,083		7,784		7,223
Net income	$	7,954	$	3,951	$	10,230	$	11,603

Net income per share:
Basic	$	0.31	$	0.14	$	0.39	$	0.42
Diluted	$	0.31	$	0.14	$	0.39	$	0.42

Shares used to compute net income per share:
Basic	26,023,830		27,505,097		26,296,304		27,512,057
Diluted	26,028,456		27,508,217		26,327,606		27,522,734

Comprehensive Income (Loss) (net of tax)
Comprehensive income (loss)	$	6,887	$	(6,924)	$	14,297	$	(18,604)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Proto Labs, Inc.

Consolidated Statements of Shareholders' Equity

(In thousands, except share amounts)



	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount

Balance at December 31, 2022	26,888,425	27		473,740		258,236		(34,355)		697,648
Common shares issued on exercise of options and other, net of shares withheld for tax obligations	26,798	-		(401)		-		-		(401)
Stock-based compensation expense	-	-		3,695		-		-		3,695
Repurchases of common stock and other	(712,500)	(1)		(11,849)		(9,475)		-		(21,325)
Net income	-	-		-		2,659		-		2,659
Other comprehensive income
Foreign currency translation adjustment	-	-		-		-		527		527
Net unrealized gains (losses) on investments in securities	-	-		-		-		334		334
Comprehensive income										3,520
Balance at March 31, 2023	26,202,723	$	26	$	465,185	$	251,420	$	(33,494)	$	683,137
Common shares issued on exercise of options and other, net of shares withheld for tax obligations	169,229	-		962		-		-		962
Stock-based compensation expense	-	-		3,675		-		-		3,675
Repurchases of common stock and other	(276,518)	-		(4,872)		(4,107)		-		(8,979)
Net loss	-	-		-		(383)		-		(383)
Other comprehensive income
Foreign currency translation adjustment	-	-		-		-		4,254		4,254
Net unrealized gains (losses) on investments in securities	-	-		-		-		19		19
Comprehensive income										3,890
Balance at June 30, 2023	26,095,434	$	26	$	464,950	$	246,930	$	(29,221)	$	682,685
Common shares issued on exercise of options and other, net of shares withheld for tax obligations	1,037	-		(11)		-		-		(11)
Stock-based compensation expense	-	-		4,441		-		-		4,441
Repurchases of common stock and other	(310,568)	-		(5,472)		(3,608)		-		(9,080)

SEC Form 10-Q filed by Proto Labs Inc.