Proto Labs CEO Brad Cleveland to leave after decade of growth

Proto Labs CEO Brad Cleveland, who took the builder of custom parts for manufacturers from about $1 million in 2001 revenue to $119 million through this year's first nine months, plans to leave the company in 2014.

"Building a world-class management team, expanding internationally and taking the company public were all a lot fun," Cleveland told analysts and investors, who learned the news Thursday when the company announced quarterly results.

"The company has never been healthier and the future never looked brighter," he said. "So I would feel great handing it over to someone who has the background to take it to the next level."

Proto Labs shares dove from $84 to less than $72 after Cleveland's announcement, but they finished down only 14 cents at $83.86 per share in very heavy trading.

Analysts said the stock's recovery from the day's lows is a sign that investors believe in the company's long-term progress and an orderly leadership transition.

Proto Labs, Minnesota's most-successful initial public offering of the last decade, has risen by more than 400 percent since it went public in February 2012 at $16 per share.

In an interview, Cleveland, 53, said he was the right guy to take the company to $100 million in revenue but not the one who should try to take it to $1 billion.

Cleveland, who has made tens of millions in the stock, invested $600,000 when he joined founder Larry Lukis, the technologist who is chairman, and about 10 other employees at the company in 2001.

Today, Proto Labs has 735 employees, three plant locations around the Twin Cities, and in the United Kingdom and Japan.

The company, headquartered in Maple Plain, about 30 miles west of downtown Minneapolis, takes Internet orders for custom parts that manufacturers use to prototype and make short production runs of new products.

In the third quarter, Proto Labs' net profit rose 32 percent to $8.9 million, or 34 cents a diluted share, at the low end of analysts' estimates. Revenue was up 29 percent to $42 million, the company said.

During the conference call, analysts indicated that they were encouraged by widening operating margins, strong growth in Europe and new-product introductions.