Proto Labs (PRLB +5.21%) released better than expected fourth-quarter and full-year 2021 results before the market open on Friday.
Shares of the quick-turn contract manufacturing company jumped 5.3% on Friday. That performance is stronger than this number suggests because the market was under pressure. On Friday, the S&P 500 and tech stock-heavy Nasdaq Composite were down 1.9% and 2.8%, respectively.
The market's positive reaction to the release is attributable to fourth-quarter revenue and earnings both easily surpassing Wall Street's consensus estimates.
Image source: Getty Images.
Key quarterly numbers
|
Metric |
Q4 2021 |
Change YOY |
|---|---|---|
|
Revenue |
$123.6 million |
18% |
|
GAAP operating income |
$13.1 million | 19% |
|
GAAP net income |
$11.9 million | 24% |
|
Adjusted net income |
$11.4 million | (15%) |
|
GAAP earnings per share (EPS) |
$0.43 | 19% |
|
Adjusted EPS |
$0.41 | (18%) |
Data source: Proto Labs. YOY = year over year. GAAP = generally accepted accounting principles.
3D Hubs, an online manufacturing platform that Proto Labs acquired in January 2021, generated $9.9 million of revenue in the fourth quarter. Excluding its contribution and the effect of foreign currency, Proto Labs' revenue grew 8.6% in the quarter.
For the quarter, Wall Street was looking for adjusted EPS of $0.27 on revenue of $117.4 million, as outlined in my earnings preview. So, the company beat both expectations by a wide margin.
For context, in the third quarter, Proto Labs' revenue grew 17% year over year to $125.3 million. Excluding the contribution from 3D Hubs, revenue rose 8.4%. Adjusted for one-time items, net income was $9.7 million, or $0.35 per share, down 48% year over year. That result missed the $0.43 Wall Street had expected.
For full-year 2021, Proto Labs generated $55.2 million in cash from operations, down from $107 million in 2020. It ended the year with $77.5 million in cash, cash equivalents, and short-term investments.
Quarterly revenue results by service
|
Manufacturing Service |
Revenue Q4 2021 |
Change YOY |
|---|---|---|
|
Injection molding |
$53.9 million | 3.5% |
|
CNC machining |
$44.9 million | 41% |
|
3D printing |
$18.7 million | 17% |
|
Sheet metal |
$5.6 million | 24% |
|
Other |
$485,000 | (36%) |
|
Total |
$123.6 million | 18% |
Data source: Proto Labs. YOY = year over year.
By geographic region, year-over-year Q4 revenue grew 18% to $97.9 million in the U.S., grew 20% to $22.1 million in Europe, and edged down 3% to $3.5 million in Japan.
3D Hubs contributed $5.1 million to U.S. revenue and $4.8 million to Europe revenue.
The quarter's organic revenue (which excludes the contribution from 3D Hubs and the effects of foreign currency) increased 12% in the U.S., declined 4% in Europe, and increased 5% in Japan.
On the earnings call, interim CFO Dan Schumacher attributed the decline in European revenue to "continued supply chain challenges in the overall European manufacturing environment, especially heightened in automotive."
First-quarter 2022 guidance
On the earnings call, Schumacher guided for first-quarter revenue between $116 million and $126 million, representing year-over-year growth of up to 8%.
Going into the report, Wall Street had been modeling for Q1 revenue of $125.9 million, which is the high end of the company's outlook range.
Schumacher explained the reason for the relatively light revenue guidance:
We saw a slow start to the first quarter of our legacy businesses as the omicron variant slowed demand in manufacturing reflected by U.S. manufacturing activity falling to a 14-month low in January. However, as the quarter progressed and the omicron wave began to recede, our orders have begun to accelerate, creating optimism for the back half of the quarter and the rest of 2022.
In short, Proto Labs had a solid fourth quarter. First-quarter revenue guidance was a little light, but there was a good reason for it.
