Revenue of $121.7 million in the Third Quarter of 2022;

GAAP Earnings Per Share of $0.14, Non-GAAP Earnings Per Share of $0.40

Proto Labs, Inc. (NYSE: PRLB), the world’s leading provider of digital manufacturing services, today announced financial results for the third quarter ended September 30, 2022.

Third Quarter 2022 Highlights include:

• Revenue for the third quarter of 2022 was $121.7 million, representing a 2.9 percent decrease compared to revenue of $125.3 million in the third quarter of 2021.
• Hubs generated $12.1 million of revenue in the third quarter, representing year-over-year growth of 38.5 percent.
• On a GAAP basis, costs related to the closure of Japan operations were $1.2 million in the quarter. Total costs year to date are $6.4 million. These costs have been excluded from our Non-GAAP results. See “Non-GAAP Financial Measures” below.
• Net income was $4.0 million, or $0.14 per diluted share.
• Non-GAAP net income was $10.9 million, or $0.40 per diluted share.

“We experienced continued softening of our Injection Molding business, however, we are pleased with the continued growth of our other digital manufacturing services and Hubs business,” said Rob Bodor, President and Chief Executive Officer. “As we face an uncertain economic environment ahead, I am confident in our strategy and the value we bring to market, and the ability of our team to deliver long term revenue growth and profitability.”

Additional Third Quarter 2022 Highlights include:

• Protolabs served 23,816 unique product developers during the third quarter of 2022.
• Gross margin was 44.1 percent of revenue, compared to 45.2 percent of revenue in the second quarter of 2022.
• Non-GAAP gross margin was 44.8 percent of revenue, compared to 45.9 percent of revenue in the second quarter of 2022.
• EBITDA was $15.5 million, or 12.7 percent of revenue.
• Adjusted EBITDA was $22.0 million, or 18.0 percent of revenue.
• Cash and investments balance was $113.9 million as of September 30, 2022.

“Our financial position remains strong as we produced $20.5 million in cash from operations in the quarter,” said Dan Schumacher, Chief Financial Officer. “As we monitor the economy, we are tightening our cost controls and will continue to focus investments to fuel the execution of our strategy.”

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 and revenue earned from our acquisition of Hubs (collectively, “non-GAAP revenue growth”). Management believes these 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, costs related to the Japan closure activities and transaction costs (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, costs related to the Japan closure activities and transaction costs (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, costs related to the Japan closure activities and transaction costs (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 gross margin excluding Japan, 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 excluding Japan, adjusted for stock-based compensation expense, amortization expense, costs related to the Japan closure activities and transaction costs (collectively, “non-GAAP operating margin excluding Japan”), 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, costs related to Japan closure activities and transaction costs (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 gross margin excluding Japan, non-GAAP operating margin, non-GAAP operating margin excluding Japan, 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 third quarter 2022 financial results and fourth quarter 2022 outlook today, November 4, 2022 at 8:30 a.m. EST. 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. EST 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/gfmzxbyg. 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 world’s leading provider of digital manufacturing services. The e-commerce-based company offers injection molding, CNC machining, 3D printing, and sheet metal fabrication to product developers, engineers, and supply chain teams across the globe. Protolabs serves customers using in-house production capabilities that bring unprecedented speed in tandem with Hubs, a Protolabs Company, which serves customers through its network of premium manufacturing partners. Together, they help companies bring new ideas to market with the fastest and most comprehensive digital manufacturing service in the world. Visit protolabs.com for more information.

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.