Net income jumped, climbing from $3.7 million to $5.1 million. That translates to a year-over-year growth rate of 7%. Revenue, for instance, managed to increase, rising from $116.1 million in the first quarter of 2021 to $124.2 million the same time this year. This kind of mixed performance continued into the 2022 fiscal year. Even worse was the increase in general and administrative expenses, which ultimately rose from 11.9% of revenue to 14%, with much of that cost increase coming from its aforementioned acquisition and from a $5 million rise in professional service expenses. Other costs for the company also rose, with marketing and sales costs climbing from 16% of revenue to 16.8%, while research and development costs rose from 8.5% to 9.1%. Raw material costs were also a component of this, accounting for $9.6 million of the increase. Of the $48.8 million increase in cost revenue for the year, $28.2 million resulted from its acquisition of Hubs, while $20.6 million came as a result of increased volumes and wage inflation for the company, including increased overtime as the business suffered with a labor shortage. Management attributed this to a couple of factors. For instance, the company saw its gross profit margin shrink from 50.1% in 2020 to 45.6% last year. And EBITDA ultimately declined from $107.9 million to $89.5 million.īottom line performance for 2021 largely suffered because of increased costs. If we adjust for changes in working capital, it would have fallen from $105.8 million to $80.9 million. Operating cash flow went from $107 million down to $55.2 million. Other profitability metrics also followed suit. It also marks the third year in a row in which profitability fell sequentially. That represents a decrease of 34.4% compared to the $50.9 million reported for 2020. Net income last year came in at $33.4 million. On the other hand, profitability for the company was worse across the board. On the positive side, the company saw revenue increase nicely, climbing 12.4% from $434.4 million in 2020 to $488.1 million last year. Its best role is as a means for the on-demand products and prototyping that Proto Labs emphasizes.Īnother issue seems to be the volatility of Proto Labs from a fundamental perspective. Although additive manufacturing, more commonly referred to as 3D printing, has the potential to save customers money, it can also be a rather expensive endeavor when it's substituted for general production. More likely than not, this recent downside is attributable to concerns that a weakening economy might lead companies to cutting back on additive manufacturing and other related services. With the S&P 500 down by 18.1%, shares of Proto Labs are down 22.3%. Since then, the business has performed only slightly worse than I would have anticipated. At the end of the day, however, the lofty trading price of the company, combined with its historical bottom line volatility, led me to rate it a ‘hold’. Even so, I viewed the company as being on solid footing and I said that as future was likely bright even though the 2021 fiscal year would probably be difficult. I acknowledged that the company had experienced some pain recently, including some pain that existed prior to the COVID-19 pandemic. In that article, I classified the company as a valid play on the additive manufacturing market. Continued mixed performanceīack in November of 2021, I wrote my first article about Proto Labs. Because of this, I have decided to retain my ‘hold’ rating on the company, indicating my belief that its returns will probably more or less match the broader market moving forward. But in the grand scheme of things, the company is still expensive from an earnings perspective, and, at best, it is more or less fairly valued from a cash flow perspective. The good news, at least, is that the company does look cheaper than some similar firms. In recent months, shares of the enterprise have taken quite a beating, not only following the market lower but also performing worse than it. Revenue has mostly trended higher, but profitability has not always followed suit. This firm, which operates as one of the world's largest and fastest digital manufacturers of custom prototypes and on-demand production parts, has generally performed well in recent years. One of the most unique companies on the market today is Proto Labs ( NYSE: PRLB).
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