Custom parts maker Proto Labs plans to raise $100 million in IPO

Fast-growing Proto Labs of Maple Plain said Monday that it plans to raise $100 million through an initial public stock offering.

The company, about 30 minutes west of downtown Minneapolis, has achieved profitability in the last several years thanks to success of its high-margin, fast-turnaround, specialty machined and injection-molded custom parts. The company's customers include product developers and manufacturers around the globe.

Proto Labs earned $4.4 million on sales of $65 million in 2010, according to a registration statement filed Monday with the Securities and Exchange Commission.

Sales were up nearly 50 percent last year. They rose nearly 70 percent, to $22.3 million, in the first quarter of this year.

Proto Labs, which employs about 400, was founded in 1999 by Chief Technical Officer Larry Lukis.

Lukis, 63, had grown frustrated with the time and expense involved in securing prototype molds for the plastic components used in printers that he once designed for the former LaserMaster Technologies.

CEO Brad Cleveland, a veteran engineering and financial executive, joined the development-stage company in 2001.

Proto Labs Inc. is the second Minnesota company currently planning to raise money through an initial public offering. Direct-marketing retailer Bluestem Brands Inc. of Eden Prairie registered for an initial public offering on April 2 seeking $150 million.

On Feb. 11, Kips Bay Medical Inc. raised $16.5 million by selling more than 2 million shares at $8 per share to become the state's first completed IPO of the year.

If both Proto Labs and Bluestem complete IPO offerings this year it would be the most successful year for Minnesota-based IPOs since four companies went public in 2007, after none in 2008, one in 2009 and two in 2010.

If either Proto Labs or Bluestem successfully complete their offerings, it would mark the largest IPO in Minnesota since AGA Medical of Plymouth raised nearly $200 million in October 2009.

Proto Labs ownership

The prospectus, which likely will be updated prior to the actual offering, doesn't indicate who may sell stock into the offering.

Cleveland, 51, who owns about 8 percent of the stock, was paid $455,312 last year in salary and bonus. That would make him the 80th-highest paid CEO on the Bloomberg-Star Tribune 100 list of Minnesota's top-paid CEOs of publicly held companies. And that would put Cleveland behind a number of executives who were paid more for losing money.

"It will be great to have another publicly held, leading-edge technology company," said Dan Carr, CEO of the Collaborative, a membership forum that matches emerging companies with financiers. Carr knows the principals. "It's a classic Minnesota innovation story. Market needs have matched with value-added engineering services and local manufacturing talent, and in the same tradition as MTS, 3M and Compellent Technologies."

In fact, two new additions to Proto Labs have just arrived from Compellent, an eight-year-old memory storage company that went public in 2007 and was sold earlier this year to Dell Computer in a nearly $1 billion deal.

Last month John Judd, Compellent's former chief financial officer, signed on as CFO with Proto Labs. Judd, 54, will be paid $240,000 and is eligible for a $120,000 bonus, as well as the right to buy 12,500 stock options.

The clients of Proto Labs, which has operations in North America, Europe and Japan, include customers such as Visteon Corp. and Stanley Black and Decker.

Proto Labs said in the SEC filing that no one customer accounts for more than 1 percent of its sales.