Quick-turn manufacturer Proto Labs (PRLB 3.56%) reported another round of record earnings results Thursday morning for its fourth quarter and full-year 2014. For the quarter, Proto Labs' revenue grew by 27.3% year over year to $56.1 million, translating to $0.39 in earnings per share, or $0.43 on an adjusted basis. These figures came in slightly above Wall Street expectations, which called for Proto Labs to close out the year with $54.6 million in revenue and $0.42 in adjusted earnings. Looking past the headlines, Proto Labs' business appears to be operating well across a number of different metrics.
Digging into the details
Proto Labs served more unique product developers than ever before, suggesting that the company's breadth of quick-turn manufacturing and 3D printing services continues to offer a compelling value proposition in the marketplace. Including the company's relatively recent acquisition of 3D printing service bureau Fineline, Proto Labs served 40% more unique product developers in the fourth quarter than it did the year prior, and excluding Fineline, Proto Labs' legacy Protomold injection molding and Firstcut CNC machining manufacturing services increased the number of product developers served by 20.3% on a year-over-year basis.
Source: Proto Labs
Including Fineline, Proto Labs' revenue per product developer fell by 9.3% year over year in the fourth quarter, but that figure isn't comparable on an apples-to-apples basis because Fineline wasn't contributing to Proto Labs' business during the fourth quarter of 2013. Due to the nature of 3D printing, Proto Labs' 3D printing services tend to generate less revenue on a per-product-developer basis than Proto Labs' manufacturing-focused services, simply because there tend to be smaller part volumes produced with 3D printers than with more traditional, higher-volume manufacturing processes. Without Fineline, Proto Labs' fourth-quarter revenue per product developer edged slightly lower, down 1.5% year over year, which shouldn't overly concern investors, considering that the strong growth in legacy product developers served more than offset the decline:
Source: Proto Labs and author's calculation.
Despite the recent economic sluggishness in Europe, Proto Labs managed to drive strong fourth-quarter revenue growth of 10% year over year out of the region on a local currency basis. Adjusting for currency fluctuations, Proto Labs' fourth-quarter European revenue increased by 3.3% year over year and 6.8% sequentially.
Source: Proto Labs.
In Japan, Proto Labs' fourth-quarter revenue growth was even stronger, increasing 25% year over year on a local currency basis, which translated to a 10.1% year-over-year increase after accounting for currency fluctuations. Overall, Proto Labs' international revenues increased by 6.6% year over year in the fourth quarter and represented 24.7% of the company's total revenue.
Ending the year on a high note
Proto Labs ended the year with $128.4 million in cash, virtually zero debt, and a healthy gross profit margin of 59.9%. Going into 2015, Proto Labs' growth initiatives will be focused on adding new product developers, expanding the envelope of its existing manufacturing services, and commercializing new manufacturing processes. In the end, all is well at Proto Labs.
