PRLB - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to Proto Labs Q4 and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to Investor conference Relations. like Schumacher, to now of Director would turn over the Daniel I Thank you.

begin. may You

Dan Schumacher

Thank for you, Officer; operator, is and This good morning, everyone. market the our our the protolabs.com. December issued The Financial XX, a opened, results and morning, release announcing Way, company's before and at Vicki quarter is its release With President Labs Chief fourth full on John Executive and Chief Officer. Holt, me today Web XXXX. site Proto financial available press the year ended

to will cause expectations. cause remind company subject on release Before information on site The and guidance for XX-K, include press for statements statements we practice. non-GAAP made we consistent our our Investor Please actual will our results reconciliation refer like and may would future any Please section non-GAAP begin, or materially including results Annual Relations our earnings past outcomes Report certain complete and to refer today. and expectations to with results. discuss the could that our could adversely of statements forward-looking to and from to measures, to I differ many forward-looking financial press everyone be to within that actual that release considered are risks of differ risks a our materially discussion Web to GAAP and from Form filings, recent relating performance that include SEC uncertainties

Now, Holt, Vicki? Officer to Proto President Vicki I’d and call Executive to of over like Chief Labs. the turn

Victoria Holt

I fourth financial key as and our everyone. us morning, full year call XXXX. with as Thank our joining Good quarter on Thanks, the fourth well for call. quarter conference begin for will accomplishments XXXX results Dan. you

of the quarter had our of revenue John quarter After an another of strong outlook Next, for that, XXXX. we of our provide XXXX priorities Then, take I view give will your first our financial quarter finally, will Labs in-depth John and Proto provide overview will gladly financials. fourth for a more will And growth. XXXX. questions.

quarter earnings representing Manufacturing We expectations. primarily XXX results inefficiencies with fourth a of CNC Rapid growth on range financial driven recent of the and million financial provided of the XXXX. our the However, saw the fall of October. shortfall relocation results revenue below over XXX quarter we extent We to quarter, XXX performance strong These to facility. to This million of by acquisition fourth in were associated end operations start lesser a a of XX% was did in our the reported our that of call the million lower to on third our guidance new quarter.

we softened through progressed as However, the sales quarter.

this The full beginning customer-facing offer to Rapid Manufacturing disruption the quarter. not the on and expanded As merging from they offering service Xst. quarter, metal force the on the for expanded January each products Rapid is a customer to including sheet year sell reallocating training accounts our the expectations. past, we’ve revenue teams Xst. involved on In discussed sales revenue an in to team services CNC accounts, us suite growth difficult services, U.S. is and and January earnings our sales would meeting an in we the was This from predict no and impact all the This exception. the had of in prepared month December sell the and our acquisition of our

industry. the produced the largest quarter by revenue year, fourth year-over-year molding Europe Rapid in constant the slow market, expected December the for including a growth and slower As our in prior produced revenue geography, currency. injection automotive we at of Revenue U.S., demand was than over particularly XX.X% by revenue X.X% from of look Europe softness our growth driven the results in service, acquisition.

distribution with Japan. in our grew we call, Japan described our XX.X% constant in Our On Misumi currency. QX partnership region

We and are progress as volume pleased the Labs with demand order to of Japan. in Proto for continued this it partnership has accelerate

by metal all increased fourth organic experienced X.X% quarter from and strong was increased XD in Injection We revenue In And service. XX.X% a to XXXX. year-over-year produced molding quarter, and record also machining growth finally of to printing driver quarter million revenue strong prior quarter revenue a of Moving in CNC fourth the revenue the growth sheet the throughout CNC regions. record year. contributed Fourth XXXX. $X the quarter. was was XX.X%. compared growth

earnings. of the over to share, representing fourth EPS growth We quarter non-GAAP fourth quarter XXXX. XX% per $X.XX Turning reported of

our grew we below earnings earnings per were expectations. share quarter XX% Although year-over-year, fourth our

Our ability valuable to meet deliver to high-quality to value, quickly In ensure our the able demand. to we parts of needs to and ahead capacity are reliably reliably in of this need manufacture customers. order is provide invest we

in XXXX investments meet made acquired operations particularly to fourth in the equipment in have to we of and and worked capacity quarter, we’ve the demand from we integration expect both As in business. activities the headcount terms ensure the Rapid through we this

underperforming. operations Our at continue capacity quarter to Rapid first by serve to impacted as time our earnings growth when add we revenue a anticipated were the was

and meet the quarter, facility. America to no employees. CNC over our relocation and our the new move delivery during involved North to orders production XXX We the to six-week we our place The with period and a on-time move a CNC injuries of fulfill metrics were related able mills relocated equipment. During took in operations

higher a terms our demand such in overtime. the we in invested However, we on the start support of quarter strong revenue accommodate of we to increased and during the services. move in production saw underestimated to impact higher and productivity finally, And the resulting in and as the staffing costs form for

we commitment XXXX. structure As cost as our our sales the jeopardizing during were unable customers adjust we quarter, to tapered without off to the begin

end led with to in created These look fourth of results. the combined provide will that at we We shortfall our business financial will in quarter. low expect guidance, continued in-depth EPS to our relative the capacity factors, in our our the a the John the more at quarter growth utilize guidance. effectively revenue

was Moving to performance, full Proto a our tremendous Labs. year year for XXXX

to serve profitability while continued better evolve growing We our of creating customers and shareholder the to value. significant needs

million at XX% range Our of XXXX was XXXX million end growth over guidance to year toward revenue XXX represented year. $XXX provided of the the and full the of XXX upper million the beginning of

of EPS to $X.XX Our of provided per at grew full XX% year $X.XX year. share beginning share to that our a exceeding non-GAAP guidance the we $X.XX the

our most to notably revenue number a manufacturing future in facility state-of-the-art a in CNC ways, the the addition very also machining profitability, Minnesota. in for in of new invested and move we In strong to We growth expanded XXXX. digital capacity

in We businesses added And New that also the the in reengineered Rapid to acquisition. our the Hampshire capacity and look the operations came with XXXX. of to combined capitalize we process flow synergies on

the be leader a industry. in recognized to continue as We manufacturing

Our excellence our winning production sheet to adds national in metal Sullivan efforts lean earned manufacturing and metal overall that evolution & operations offer manufacturing digital This from the recently our our Industry XXXX. quick of XXXX FABRICATOR's past turn operational the recognition award award Award, for year. Frost capabilities, recognizes an over sheet

through is of corporations MIT’s academic is Another partnerships. participation consortium through Autodesk, with way on manufacturing well-respected new the In and minds General or and EOS, and Volkswagen a Motors, future in institutions. others. we Technologies, partnerships with together founding Production and ADAPT, focused Advanced education scaling Additive the research industry and along bringing academia. Digital invested best ADAPT December, for our as several we In member we’ve initiated announced XXXX, a technology

relationship We add are excited and affiliations to further XXXX be with our part The to announced previously in initiatives HP, GE and Additive, beyond. of ADAPT ADAPT [indiscernible] help and Misumi.

to capacity Rapid an the growth result and volume. our of in long-term on-demand were look inefficiencies that as acquisition the our positive in-depth financials. requires at to nature ahead XXXX the yield primarily These were in and of now long-term customers our commitment to quarter necessary will challenges our to John CNC move. are fourth a us recent invest of Our confident provide full business related investments investments we our the and return. will of QX The and year support

John Way

you, in the million XX.X% Thank million, quarter Revenue an or Vicki. increase quarter $XXX.X over the fourth was in XXXX. same of $XX.X

acquisition Our Manufacturing. includes our this of revenue Rapid quarter growth

the represented currency a headwind quarter. Foreign $XXX,XXX in

revenue recognize work to QX. in This As change million of call, standards QX discussed our us pulled of end QX each revenue. being revenue from process the earnings new accounting adopted recognition at in the we in require into the resulted $X.X XXXX of as quarter in beginning

QX the less decrease we accounting million $X.X a to the QX impact ended of with sequential than revenue. total sequential for was in quarter to million our resulting the fourth began this The we fourth from decline quarter work in quarter revenue. Additionally, in decrease a $X.X in progress

fourth establishes the seasonality for accounted As for new a was a in and reminder, sequential our guidance quarterly impact pattern quarter XXXX.

fourth increased decline the prior drivers the the the in was product reduction the by or XX% year. profit of unique decline to to driven comparable revenue Gross Gross growth $XX.X million primary the quarter for Turning include the sequential related prior to developers an revenue million growth, of our year. The million the adjustment. over product $X.X million, declined quarter profit of quarter served recognition to developer $X.X increase sequential compared following. XX,XXX sequentially. $X.X A

in we impact anticipated move margin the lower the quarter-over-quarter. of operations. with offset our operations these our quarter, anticipation Rapid growth softness margins XX.X% in gross the gross resulted through revenue attributable sequential with CNC the than increased The is The XX.X% to volumes decline resulted due from quarter, in Our at end in acquired our to $X.X quarter. decrease a the in factors remaining and for the the a inefficiency the first in of in combination volumes quarter in third our by million combined related of the of of recorded acquired services adding operations capacity decline to other

As the of we Rapid XXXX point to margin our for running following represented XXXX. of decreased million anticipated $XX of XX.X% the in was last basis headwind. gross the or QX. headwind with point XXX due decrease The move, two of related XX and fourth in in timing the XXXX, challenge to quarter. represented our compared margins basis fourth revenue gross quarter consolidated from revenue facilities $X.X quarter about of XXX higher the Inefficiencies compression to to cost the fourth look time, for quarter QX basis XX.X% of the factors. costs short Operating to the remaining from an due was points year-over-year, CNC in than quarter up structure totaled expenses total fourth period including million margins Year-over-year concurrent flexing year. gross at a the

of the XX.X% As quarter’s The than was operating higher sequential last a in XX.X% our consisted and following. percent than this XXXX. in of of lower QX expenses increase revenue,

we on start QX As low quarter, was in and expenses. artificially call due last stated marketing other timing the to sales and of dates

growth in associated tradeshows with also continued quarter. in move marketing our result in incremental costs XX.X% to and We $XXX,XXX. investing cost attended new facility support headcount objectives, the of and revenue was administrative the that other general in and sales and CNC expense during included invest our of We and of totaling

Our reported expense. $XXX,XXX benefit included approximately compensation to also of a expenses due operating lower incentive

The the not from rate reporting due On a increased and XX.X% higher incentive $X.XX. lower reduction of amortization expected million operating net were decrease results sequential recognition, Adjusting XXXX $X.XX, share. fourth to the of costs to adjusted of quarter over accounting was was CNC EPS in follows; GAAP old a million quarter of XX.X% in sequential On resulting adjusted X.X% to prior categories. revenue share. to and a the gains due related expense tax tax tax tax related quarter acquisition our of fourth quarter true-ups earnings XX.X%, revenue achieving our in R&D $X.XX third quarter. a a stock XX.X% in items XX.X% finalizing $X.XX the share per These the revenue down of related reform the reform, $X.XX increase negative expenses GAAP estimate. from basis, per The breakdown finalization the were or non-GAAP estimate the favorable of in our currency $X.XX income third non-GAAP share challenges intangibles, the our the the return. our our to relocating representing income basis, related of and corresponding as XXXX. Rapid compensation across sequential from On the per On basis, expense $X.XX our in per and $X.X fourth rate items specific basis, downward to tax million The and decrease quarter of is per year foreign the in the to With unrealized compensation, a tax levels tax share our quarter gross was U.S. earnings credits our unfavorable was in share in after-tax non-GAAP tax in diluted impact per in profit the a our quarter due for share to to of quarter $XX.X third a diluted operating they in the tax as decrease. per our our per guidance. share in the XX.X% results, cost to $X.XX operations reform. of expense to resulting all to inefficiencies we third decreased for rate a represented from the our of GAAP original $XX.X accounted provided a quarter fourth non-GAAP totaled

the in a incentive operating representing share investment associated decreases non-GAAP represented benefit sales marketing income of during tax favorable were quarter, increase share. by benefit and per per offset of expense, $X.XX $X.XX including rate by compensation, effective a the other with cost lower Our headwind. offset the and lower These

We Now $XX.X and spend infrastructure. $XX new in was continued in investment turning facility, cash generated million the quarter systems during CNC Capital quarter. our as equipment, fourth including operations in investment from cash flow. to well as million, the IT in

and million following on driven factors. $XXX.X million year Revenue in was was capital our by service improvements service $XXX.X XXX,XXX Shifting gross the in basis XXXX. XXX We to in the a our in headwinds the front impact of margins $XXX.X XX margin. revenue compared offset change had These consisted the XX.X% our our benefit. required was had full XX.X% Americas by a also repurchasing or point basis our move results. equipment, Investments in new profit CNC to year-over-year The including by year our tremendous impact. $XX.X year-over-year in growth scale leadership of Rapid XXXX of in to and into consolidated keep of customers. operations XD continued or returned common over printing XX.X% or XXXX for margin to representing in gross our XX million, revenue increase stock. investments were The million to facility point to of a full quality exceptional a to XXXX. shares Gross now compression the shareholders remaining point Europe deliver gross basis

or Our XXXX. on XX% revenue operating $XX.X or income for the year was was of of is $XX.X our XX% XXXX. And a XX.X% increase million or This an basis, revenue. million compared income XX.X% from $XXX.X in million adjusted to operating

cash cash $XX.X facility in in Now including flow. quarter. was service XXXX, was placed $XXX.X turning the spending Capital new from to in the year. on CNC operations $XX million We during million our fourth million during generated that

year marketable program. the from We under $XXX of XXXX. the stock cash with also the and during year We securities million capital stock up million, shareholders balance our at ended repurchasing XX $XXX of to million common by of returned end buyback

our for overview Now, back the I’d XXXX. turn for like over to Vicki priorities call an to of

Victoria Holt

Thanks, John.

priorities Now forward let’s to look XXXX. for our

are the opportunity enable digital revolution trends. to customers emerging industries diverse market We are capitalize have in a and excited many leader set spanning manufacturing our on the of to to

of to will priorities this front I in of meet investments significant go opportunities the potential growth us. these customers. our for We needs us will require our through we to year. for as discuss invest have Capitalizing expanding on the

second, to continue of the improve our our and to Rapid earnings experience; areas third, services performance transaction the meet enhance a to the evolve revenue customer efficiency acquired in fourth, improve company; four focus our model; our finally, as of are to overall Our first, targets. go-to-market and

of Let’s more in discuss these detail. each priorities

the breadth customer our Our resonates been priority product developers efficiently enhance to relationships requires evolution years us XX,XXX number We with the where served first far XXXX. customers of proposition of a for This our our to over continue that of future. Serving most. is the continue one into in a value ours has will base model. this continued of and go-to-market priority

will Our new attract sales marketing from penetrate activities our further revenue customer accelerate existing existing and to teams concentrate and highest potential companies, customers customers.

this investment of to expanding in include the technical investments sales assist specific our area resources Some process. in our

us technical customer they problems customers our retention. rates like terms us pays tell Our improved back solve in expertise close tells their helping our and data this and investment in of

voice customers of sales as use increase efficiency. a promising to we will operations growth to we large to opportunities our also base. resources And of We further data and sales investing we data needs most and ensure investing continue the and capture this in align fully will such will our the diverse and be the be utilize with understand analytics across customer greatest customer sales to team to also revenue

area Next, an improving focus. is of our customer experience

As to customers. a interface digitally company, evolve e-commerce make delight enabled sure to that we to customer our want our continue we

XX developer Our was looking to e-commerce off intended for ago constructed years originally part one Internet. the custom platform one serve product

their addition since and then. allow continue growth as have to as new evolved our customers we well for much while of significantly services also e-commerce And experience improve future. needs the in evolved, Our the has and

all and we As our continue market, advance to enter customers. e-commerce world competitors will class provide the experience more a for

priority third Our efficiency. to XXXX relates in

processes become As much continue efficient our and in to we systems growth. to the we operations our scale more to grow, support

through efficiency our continue will program. improvement we Proto initiatives to benefits, Excellence Specifically, realize continuous

growth continued improves well systems, leverage in A Proto also positioned We and success. interconnectivity Labs efficient more turn will overall efficiency. software our technology internal which business of will be for and functionality our and

revenue software researching our development activities in in our existing XXXX. in and envelope third business, the invested As services, our customers. the second broadening capabilities it support relate These support to X.X% and in new relates processes to internal improving and of investments improving of we research priorities, part our manufacturing to

in and capacity and expanded offering, continue were XXXX. the development And finally, earnings capacity the force expect as acquisition. our part made significant accelerate we’ve metal To-date, and very company capabilities growth invest synergies sales getting and acquisitions Rapid growth growth what the We in research very which CNC income In growth to XX%. revenue XXXX, I activities expectation. revenue strong accomplished will automation, is XXXX, laser-focused this not net in to investment the sheet and be progress on meeting of through and nearly proud including we to within and on adjusted returns investments. of XX% we has subsequent of am our

needs. As we we we’ve on to far celebrate and servicing opportunities look look ahead exciting our it assist and customers our trends is prototyping have impressive come. very in capitalizing underlying market volume the how see production back XXth It’s the also to anniversary, see numerous very low to their and by

Our are through aligned operations. experience XXXX enhanced efficient customer serving around priorities customers and relationship, our improved

deliver customers drive our help us shareholder on return. Focusing will growth strong and

for Now quarter John XXXX. of the will our financial first outlook provide

John Way

We in currently Vicki. expect million in to range the factors. the to revenue This guidance XXX be growth range to million XXX reflects or the QX Thanks, following of XX%. revenue of X%

improve our selling metal as in in sales to January, expected. this the service believe here our entire level has experienced related of results is will progressing turning and we as progress on sheet sales the growth early note services the we it through Our is expect of not that the comfort year. force to is force We one to item

to in In reliably demand required their in not aggressively want speed. since to new we demand did capacity service addition, place prior having services XXXX marketing begun we have these to at only the drive January

from grow. and these increases awareness we customer to our team our sales revenue matures, services gradually As expect

to and operate is the in The impact uncertainty regions customers. Europe we other guidance impacting our and the tariffs Brexit factor potential to our the in related

$X.XX We approximately million million also anticipate a $X.X to relating headwind of to currency foreign translation.

earnings to guidance. Moving

QX. QX. $XXX,XXX. million quarter compared the tax currently headwind compensation to rate amortization costs in a to non-GAAP estimate stock of for about This our approximately add-backs $X.XX non-GAAP We approximately of Our QX will EPS include and to XX% represents be $X

to the be earlier, the be in go-to-market representing Taking share expectations. EPS will investing we $X.XX to non-GAAP into Vicki and of Rapid our consideration per to $X.XX R&D compared above, share acquisition quarterly initiative did our described quarter. the and first in to $X.XX per fourth quarter, $X.XX We In the between not all activities, expect QX. our perform

to portion for a this their business. have We dedicated improving of and our plan results the

may guidance. results take these is reflected our QX in and some achieving However, time this

as leadership term. priority remarks. long will That We customers We, progresses. be over concludes focused our earnings and are revenue this formal team, as serving driving growth our updating on the and the you on year a

you Vicki the can I Now up take line? your open Operator, happy and would please to be questions.

Operator

Thank you. [Operator Instructions].

with proceed first William is Brian your Drab from question with Our Blair. Please questions.

Brian Drab

guys. morning, Good Hi.

Victoria Holt

Brian. Hi,

Brian Drab

to So revenue you’ve still digits about the in low-double comments and looking basically to at and revenue the the quarter. numbers it got million your was relative seemed Rapid, initially like for miss organic overall X listening guidance fourth company growth the

in feel first a quarter So Rapid. the like John, for I for revenue But, miss. and XX% seeing X% growth some But quarter? January the call might doesn’t Because you first to up the your thing revenue like fourth troubling feeling more what you’re far happening you’ve the that most I that major guidance had end understandable in has I was being what’s quarter heard in is on first you the that’s regarding a little seeing a I that challenges are think doing on growth at It are hard in deceleration. think so January? at you given yourselves X% you thinking that seasonality. it’s What too only

John Way

a couple of the of think is biggest I which Rapid. factors, So there’s

So were is that the there growth we not materializing. anticipating

services that and drive have we do focused growth. to that Rapid started and in very we we’re quarter So slow the the on

into talked and the to January year December think about We we other being well. that as December ended the thing, I in predict. soft carried difficult

to first pick a and the pattern up within is then strong we seasonality have slow through and Our every starts March. quarter year starts February January

roughly very some have with recall, services. backlog can furthest see the in you out. little our as That’s seven-day of visibility we we of the So

of best guidance our performance by So month seeing the us the is in we impacted January have let what in March. quarter But that the to just we’re provided. Rapid

Victoria Holt

me Let to too. little a that add color

We drive to metal customers. our growth term that we CNC over and from expanded are the confident able the will to sheet revenue long our be offerings

XX% business in As metal base said actually buy the of just month heavy started before, our in marketing heavy of January. legacy products. have customers given very the start said the until we’ve early January, the month. We they product launching sheet that marketing it’s slow fully in and offering. course of of marketing weeks in really And and we that third didn’t start second the But

And in uploads, the slow gets slower with close base see It’s our sales starting comfortable frankly team increase so but some new driving service. it’s there. and even as to our in we’re the quoting, customer

actual slow the We uplift. really grow it’s of quarter, form we’re in And the to got of seeing right terms but a that expect to guidance what now throughout in gradually start to we’ve put our the January.

Brian Drab

of be can put sales a growth point. put little growth thing was which rapid XX% marketing and at like I that this you this XX% that double-digit that this do and better remember than correctly before took its you do would get just own an stalling it? you that you So power back behind ownership to power think then integration and even guys you about business Rapid just growing revenue it feel it’s on that it, It’s the you issue for if was behind maybe confusing the can that

Victoria Holt

in at consistent add what was way, that XX% Yes. revenue growing. was let it that. It growth, little and wasn’t through to early was grow going me me on XX but asset – put 'XX, a But let that but XXXX did color but it a not quite it

business, of we need scalability and XX,XXX this individual our and Proto when the Labs have automation particular the to not acquired the that So the to growth did on turn developers we business revenue on service. drive product in level

the frankly scalable the offering sits Labs and product even turn, So of presented make to we a is invest that to it needed sure offering. model how quick asset scalability highly of within in that Proto

that’s change. so of a And bit a

sales and sheet a or haven’t are even that brand an legacy our for CNC it’s customers also change people metal the positioning it’s So who sales a with expanded who for current current sold new offering offering. people offering

So confident out help to training what our days as people that. people the we’ll to quarter that time. That growth train as that In for business base restore well offering we rates. sales takes educate they’re sales many advantage both the I’m bit having our fourth little just take can a how people New we able of legacy had to customer learn to new many, And Hampshire our and they double-digit for sales also of need that. of on is that be very to that offering.

to expanded offering Our be is customers have business. CNC told a the in CNC complement existing and great will our us sheet metal very important them to

each got the in we long to ramp of that look take as point quarter confident term. going how that view place to to just I’m from a So see timing XXXX. It’s through of we’ve really is progress

Brian Drab

year? we should we be progressing progress through modeling year as in it. then of got you through do where speaking the think you margin gross for terms And the exit what Okay, gross XXXX, margin? And of could

John Way

Yes.

think I facility with a our cost but of starting for I One, So revenue I be couple that margin. QX upon roughly associated we QX, Right margin the gross had flat in variable one model it the now will in. reasons. highly of would dependent comes think where be with brought the in revenue big CNC gross in, facility month we that will

facility. getting and getting to new our We in a efficiency up And we’re three speed in we’re will QX. back operating have also months as

the to costs improve think in in I’m So of that we we comfortable gross have those that as some absorb will But will through QX. year, margins facility. go I those here

is through would the year. progress improve something also expect Rapid we as we think I to

don’t go know to think I as ask progress a is expect improvement XXXX. a we that guide see specific you we up. The but as But can you where I now I magnitude volume me, be really now, we right would number right to if going I of through would to continue I sequential we component here. that end of big improve

Brian Drab

quarter, Just say flat you or to in in year-over-year? sequential clarify. when is you first flat guess gross the John, margin a [indiscernible]

John Way

Sequential.

Brian Drab

Got it.

Thank up follow I’ll Okay. you. more later.

John Way

Brian. Thanks,

Operator

Andrew question your with with next Berenberg. DeGasperi from Please questions. proceed Our is

Andrew DeGasperi

in first we’re have what you despite injection that my cyclical low well up. considering confident wondering just the then a question, the seems a saw I feel of guess they with industrial given be to I and have more weakness business side? lot hearing up do was now molding holding be I And that Thanks. follow you volume? on Europe Could

Victoria Holt

Yes.

what So in beginning we’re penetrate seeing also illustrates injection within on-demand both with applications we’re molding injection actually of to which our new manufacturing we’re growth for that also mold prototype and but customers. growth molding, terms pleased

we’re really be business with pleased injection molding that. So cyclical. can The somewhat

However, amount I significant a of a to total volume available there lot for us bring in also low when market terms there’s we prototyping, of looking to of both but ownership speed tooling at should point cost in out mold total value and capture injection that you’re of customers production.

electronics here of the you When the nice in one as the marketplace – we softness molding. automotive we have that. But showed still injection XXXX. base most the industrial that breadth have, at growth Automotive the major exited look market some really to impact consumer So is sell we are that medical industry with customer we has on do verticals. and an injection market, molding, the

effort. we’re over marketing to confident we’ll to continue that in that of So starting our we be and some growth see drive to manufacturing, sales term, of on-demand feel results able the long business and the

Andrew DeGasperi

of both Brooklyn Plymouth lot Great. space in facility. And as that have to relocation now you far a as the and Park,

you both? you’re believe you you there? new add wondering, enough Are to seeing to more that Just demand equipment machines are planning in comfortable add

Victoria Holt

Yes, sure for machines that’s CNC CNC. adds. nook right positive on of so have of a can of in to every machine needs now cramming expanded make we Plymouth that cranny as available we into and order we service that added customers’ told were little almost We the floor margins. the We’ve We floor of side around headwind gross space. the bit doubled space actually story lot John the

now which but We for expand tooling injection to terms facility we to grow that’s years out add space America. in milling we our growth where And us three injection our Rosemount the going floor follow-on as have do to the five Plymouth capabilities, mold So be more some the tooling machines. important running business, then think is North for to parts. in CNC of space to our have plant space production we we in cover of mold in able opportunity next comfortably we’re further also

of parts pressure mold some going we’re able plant relieving to up of injection those in our the have move some production Rosemount. to space So we Plymouth be to down for

because that’s to important. really few need absorbed So impact short-term here in see But and now need equipment. to cost machining the lot a molding a and of as margin that we yes, next and don’t Americas the just that. with add years in space We injection add floor associated that the expand, we kind we’ve floor it’s of new space we CNC for

Andrew DeGasperi

Great.

John Way

And pretty as Andrew, see relatively that. nimble we the we add add and quickly we be do it demand equipment with can and

those services dictates. grow we’ll the and as We be to equipment expect adding demand

Andrew DeGasperi

And you’re demand now. as side it. seeing as right far on what Got just quickly the

seeing really You’re CNC lot of the now? molding injection as not right softness and in a of

Victoria Holt

No, or the XD printing.

is business legacy good. Our pretty

were tailed in end horrible holidays ship to the of in they all very weak of timing the things Europe down for available couldn’t even ship customers a December that December. of January. – Europe. particularly was was of The Now because were closed off because beginning just It

as to of a the quarter. in are moving So was be as start them we finish it legacy our expected businesses we But December. this kind year, really to slow

from in shortfall would of what It’s seeing Rapid. is see we marketing. we’re from terms thought services on we acquired just the had than expected big bit had turned what what we little we we when Our a slower

the the our the uploads complexity think message bring in the customer and selling in a it’s getting to I bring base. of additional combination service this from prospects marketing of really and right

Andrew DeGasperi

Right.

that be XX% you’re stable. issues demand that just So X% is revenues over. with get of trying There’s to to seems growing, just

very Okay. much. you Thank

Victoria Holt

Yes.

Operator

[Operator Instructions].

is Our proceed Greg questions. next with your with from question Palm Please Craig-Hallum.

Greg Palm

so-called do hear could customers? your didn’t Good this out morning. us work the but you hit, maybe for of could I Presumably be remind you how have hoping overflow you Thanks. to was some this I call the exposure specifically.

Victoria Holt

can’t their prototype mean like you like work -- from they do internally, So that

Greg Palm

the capacity so have past more guys. customers specifically outsourced Yes, they’ve CNC but the in-house in you that to maybe

Victoria Holt

– that’s I huge think Okay. their a don’t our Labs is customers CNC who for a lot businesses of use routinely parts. Proto

in-house who sure huge have amount getting from a not CNC. of I’m we’re So companies overflow

may tight they have XXXX that from to have us machine traditional machine that probably might get and shop. instead Now did to CNC who shop wanted capacity parts on came customers we a purchase of been in then

the share. business So The CNC believe organically we grew. the tell way our because picked we would market do didn’t you grow up numbers

doesn’t scale, So could a to can like XXXX machining might of buying the on can been by not just demand trouble way have of labor. we traditional definitely had labor the Proto scale CNC scale that CNC quite equipment. share that kind skilled fact of bit and that really finding some the shops need and machine because up Proto Labs picked Labs in has they to have We machine

Greg Palm

Maybe Okay. think maybe as I of Yes, called part but the years – number businesses. a I maybe you’ve ago important I of [indiscernible]. as thought not know that you or it’s out

So that’s why was I asking.

go-to-market, wise, what near-term R&D all of are I it in a but In terms of of investments, focus top like mind capacity priorities? terms guess sounds is

Victoria Holt

and investment use terms to clearly the priorities, to our in continuing sales all which data market ones the and opportunities. is key go mentioned, four prioritizing of got of really marketing I as our we’ve evolve of and Yes,

sales got close growth. the as Labs that marketing wealth What’s out driving of drive on really probabilities become highest most so Proto in data of now we’ve great opportunities being quickly important the because can And efficient history marketplace that. ones efficiency more possible. as our a We the just of we is that for and in tailor and the have in have to many focus

that’s driver. clearly So a

area the in that’s in the experience is comes in experience. of we in it e-commerce to and then terms continually our customer our R&D piece and experience, other R&D The investment are software bit isn’t equipment. upgrade we drive in efficient and investments our in It’s be really on growth 'XX. investment people to an service 'XX us. on capitalizing Manufacturing and investing form with throughout digital efficiencies. we how R&D And that’s in customers from the And priority – really a our going Remember on making can each more Rapid other capitalize and And or end-to-end growing are and digital so interconnectivity about to scale interact we other of company, for is the from laser-focused This to point and the sales made we a around then platforms we’re marketing with the those investment offering with view. those that efficient that in driving in and is our that the we’re and that revenue systems investments order be and made an execution of a quite that’s investments system. of being

So those the priorities. are

Greg Palm

Understood.

Sounds your luck. but for thanks lot good and in like plate, a the help

Victoria Holt

you. Thank right. All

Operator

turn management our I the question-and-answer reached for would like to of the back session. over have to end remarks. We closing call

Victoria Holt

our opportunities a press into since In as breadth single space. well We’ve of to with offering joining our new and us in customers. order a a the injection-molding focused garage. manufacturing long million with Great. increasing still was for depth markets expand feet There’s Labs of to founded today. service runway grow, Proto we as current on XXXX approximately markets. way adjacent come growth X in Thank square you in then for with

We in next are Labs XX for outlook years excited of the the Proto operations. about

differentiated Our their market help digital than the to technology-enabled and ability faster get demonstrated competition. has the to entrepreneurs products manufacturing platform companies

to I for we thank and I accomplishments Labs their As Proto to the evolve to we’ve for in want in employees thank all the XXXX. past innovate efforts our to customers experience. enhance done want and XX their years, also continue support. will our customers’

We term. are call. our in shareholder much. look you value to We progress next you on long and very XXXX to our committed driving the greater forward during reporting over to Thank

Operator

Thank you. This concludes today’s conference.

this your disconnect thank may your and you lines You participation. time for at

Proto Labs (PRLB) 7 Feb 192018 Q4 Earnings call transcript