Proto Labs, Inc. (PRLB) reported adjusted earnings of 44 cents per share for third-quarter 2014. The bottom line surpassed the Zacks Consensus Estimate of 43 cents per share and increased 18.9% from 37 cents earned in the year-ago quarter.
Revenues
Proto Labs generated revenues of $54.6 million, rising 29.9% year over year but below the Zacks Consensus Estimate of $56 million. The year-over-year improvement can be attributed to increases of 20.7% and 24.7% in Protomold and Firstcut revenues, respectively. Fineline revenues in the quarter were $3.4 million.
On a geographical basis, Proto Labs’ domestic sales increased 33.6% year over year to $40.8 million while its international revenues grew 20.1% to $13.8 million.
Margins
Proto Labs’ cost of sales increased 33.9% and represented 39.4% of total revenue as against 38.2% in the year-ago quarter. Gross margin declined 120 basis points (bps) year over year to 60.6%. Total operating expenses soared 40.5% year over year, representing 32.3% of total revenue.
Operating margin plummeted 360 bps year over year to 28.3% in the quarter.
Balance Sheet and Cash Flow
Exiting third-quarter 2014, Proto Labs had cash and cash equivalents of $34.3 million as against $22.9 million in the preceding quarter. Long-term debt obligations stood at $42 million, down compared with $77 million in the previous quarter.
In the nine months ended Sep 30, Proto Labs generated cash of $40 million from its operating activities versus $34.9 million in the year-ago comparable period. Capital spending surged 176.9% to $35.9 million.
With a market capitalization of $1.6 billion, Proto Labs, Inc. currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Nordson Corporation (NDSN), AO Smith Corp. (AOS) and Manitex International, Inc. (MNTX). All these stocks carry a Zacks Rank #2 (Buy).
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