PRLB - Earnings call transcript Q1 2024

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Operator

Greetings. Welcome to Proto Labs First Quarter 2024 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Jason Frankman, Vice President and Corporate Controller. Thank you.

begin. may You

Jason Frankman

Chief and XXXX Sherry, Rob to Labs' Dan Proto President Thank Conference welcome, Call. Quarter Schumacher, and Officer; Earnings Chief by Officer. I'm First and you, Executive everyone, Financial joined Bodor, today

release website. This results its March XXXX. for a available is ended financial The quarter announcing release morning, first on issued Proto XX, Labs press the the company's

provided presentation a available online address prepared web release. slide is in addition, press In the our at

and performance and XX-K and include be results will discussion including consistent could expectations. future to earnings annual from outcomes or and relating Our made Please financial will on at cause actual measures differ materially risks slide that statements that today. to press GAAP website to presentation past section our for of information release may filings, and our results expectations our report the results. to our press company cause considered discuss to subject for and today are certain The complete statements the a of could to uncertainties from we actual statements on accompanying with Please practice. guidance and reconciliation forward-looking release differ SEC materially Relations non-GAAP Form any refer refer Investor forward-looking non-GAAP many to our include adversely risks that recent

call the turn over to Rob I'll Now Rob? Bodor.

Robert Bodor

will using our our the all X earnings expand of for at made results We cash the operational Thanks, revenue quarter, by X quarter results continued Good the end first driving and Dan Increasing now comprehensive take flow. I'll and the Jason. and momentarily. and in per and strong customer above were on joining earnings strategic number our top and first priorities, execution customers delivering being across the call. the range These everyone, you through delivered services. thank our gross execution us priorities: earnings demonstrated driven of financial orders and XXXX expectations. through We strong morning, larger margins, offer guidance of then higher revenue our progress quarter

number offer First, our value the combined to immense end Labs fulfilled of enabling to customers we Proto cycle, and through increase manufacturer to life network. customers, to prototype the a both offer to brings from The factory as the throughout use continue comprehensive the production of life. single-source product using them

both that significant double combined other have spend We that use our the value those network, all seen Proto across synergy derive and and what from customers customers the demonstrating spend, approximately the that the Labs factory customers offer.

Over the ever more of customers yet needs we've years, few than serve fully combined offering, before, significantly our offer. now the in early production are past our we innings expanded utilizing and

XX,XXX Proto parts of clearly a less In potential. X% fact, total to customer and very last huge purchased through year, for contacts opportunity the both Labs, about this am fill excited and network. the presents Proto growth I This factory than Labs the

capitalize to of and order share and been the new clients the on on offer accelerating We to have focused growth combined continue add continued very wallet. adoption our to attractive opportunities be of in increase

services. made in the is revenue year-over-year larger quarter. X% which revenue priority, higher per also increased our Of We contact customer and drive second customer on to orders progress through per all first strategic note,

win mold factory, process patented advancements on including the automated investments production. technological to more offering, us we're In in early We our our are benefiting to in robotics, in polishing to process. returns see beginning machine verification which perception our and allow production, from quality recent

XX that network. and strongest AI-enabled known brand pricing years. the with Labs offer the through options our also greatly believe reliability We industry in for have last expanded the We production Proto and the supplemented has our quality capabilities for

of me remarks to positively begin presentation. how the Page bring helping customer Let we're X examples life examples slide these world. on of These customers with impact our several our now

The devices, Proto first founding as supplier our the advanced X examples BioDapt XXXX. highlight medical specifically in place role parts used Labs has equipment. their prosthetic custom taking in since profound enabling advancements its in

As we BioDapt custom for showcased CNC recent creates our adaptive prosthetic website on our a equipment Machining press and service. elite, factory via athletes release, world-class

Schultz, former equipment compete amputees manufacture high-performance BioDapt Medalist, former in Division Games to Gold bespoke, and be needed is for iterate athletes, to manufacturer highly engineered ability as solutions while Founder highly BioDapt can live equipment produce Our training Africa active to to another of Games. Circleg, us and X mass Paralympic a advanced and X such and allows Noelle rapidly adjusted custom Athlete, Games as Lambert, provide to prosthetic as prosthetic Mike Lacrosse that elite serve of way individual East being each the XXXX to a Paralympic enables affordable. who design that well lives,

value prosthetic manufactured Circleg's NASA, role components Proto for through high rapid device unique in BioDapt can like their prototyping XX high the and design high-strength medical that helping life they with the society of Machine steel for hours manufacturing custom our delivered or we a that required. I'm metal a next high bring their design. work I'd proud Our products play components of stainless to components from example throughout our companies, where can network volumes critical through pioneering production CNC offer. The we affordably Labs products we requirement with within combined affordable to input our deeply custom system share and fact comes that of Circleg. customers they like our in the cycle of Whether volumes, need and provided work

digital to anyone world. than enables in automated us needs Our else faster serve the factory unique, NASA's highly

surface. offer Global Labs digital at requirements moon the NASA our design tool their Over and accelerated capture gases a constraints the evolution Proto February, and crowd-sourced In manufacturing Power propelled where NASA's years, has partnered they Source Summit, to the on for with design innovations.

lightweighting customers CNC the Machining bring Proto this is design products ideas impact world's for the and after unique Printing digital positioned were ordered, is the digital Labs' generative world Once speed, in delivered they NASA utilizing to as capabilities have example to less reliability parts manufactured the Conference great and Labs using conference, manufacturer we to forward. Proto with to feat for at enabling parts achieve were hours. Less combines experts This physical empower thread the to only software hours uniquely than capabilities. design new XX that for XX the most designed, move to Proto science used organizations innovate our and be Labs in attendees NASA XD metal these of than manufactured and the quality. that components to could innovative can the our by positive a market.

call, to we the execute As at well first priorities which strong drove results. during stated of our the on I operational the financial quarter, continue beginning and

to on initiatives pleased executing strategic on date financial with generating progress and our are our remain results. strong and focused We

I value quarter team as first positioning Dan want for second and the success provide creation. will Proto financial as to for to additional detail now our thank for outlook entire of results quarter XXXX. and our dedication our Labs well their continued excellence on

Dan?

Dan Schumacher

Rob, and everyone. morning, Thanks, good

Page Our slide of XX financial begin the on results presentation.

earnings expectations, in the higher-margin year revenue beginning strong quarter at and in we the growth well performance an uptick range relative to by top as as our driven of Rob services. mentioned, delivered order As above end guidance of first the

was quarterly and guidance in X% of currencies. was quarter a constant $XX.X $XXX.X our First revenue Labs range Proto year-over-year XX% up constant Network million in grew revenue in million, record, currencies.

quarter X% expected, U.S. while large revenue quarter. declining grew year-over-year in XXXX than of not was softer Europe X% the did First primarily first due recur to in that year-over-year, revenue constant currencies, quarter this orders

addition, the of and in the contract demand. U.K. In to the continued manufacturing Eurozone quarter weak first on basis sectors

by XX revenue and service. to Slide Turning

grew currencies, First larger in particularly continued through by X% due constant quarter year-over-year grew growth Labs approximately revenue Molding Injection CNC parts Molding orders. year-over-year in constant network. growth currencies. continued Injection driven strong Proto to X% was Machining

quarter in First currencies. declined Printing revenue constant year-over-year. revenue Sheet XD year-over-year flat XX% was Metal

electronics is the Metal industry-wide previously mentioned, exposed softness. our Sheet which more experienced to As continued service computer vertical,

it the We carefully. have and monitoring rightsized business are

increased non-GAAP by in gross gross points non-GAAP XX XX.X%, basis quarter to gross factory sequentially Labs margin network margin First XX.X%. margins. Proto improvements driven was

share net by one top margin of end revenue gross our $X.XX. per to margins. in of driven outperformance First expectations the near and the was revenues guidance factory Americas, Molding our Gross our in exceeded quarter of largely was midpoint coming guidance services. due Injection the This above range diluted of better-than-expected in higher-margin $X.XX, non-GAAP our income range stronger-than-anticipated

margins we've The world's quarter. was of the as manufacturer. by the in improvements down and factory continued compensation higher in margins. that with advanced and partially the expenses and factory costs operating automation increased We seen in as were $X.XX first in improvement we primarily EPS to Non-GAAP innovation digital gross incentive due are drive higher increased sequentially most other $X.XX efficiency SG&A higher sequentially offset seasonal an volume gross costs including pleased

to Turning sheet and XX. Slide flow highlights cash on balance

our cash XX, in $XXX.X industry-leading equivalent stock investments sheet in the of XX% produced quarter, $XX operations. zero of million flow flow. million model and and Our cash on our quarter cash March cash million common had first balance $XX.X On free generation We repurchased to XXXX, from debt. of we

Turning now guidance. to forward-looking

quarter second XXXX on the is XX. Slide for guidance of Our outlined

March, orders of We of Easter. generate we $XXX of the beginning year-over-year We After as we approach some week the That strong in second growth the month second of expect $XXX April. the orders larger January and between million million. end revenue quarter expect of from quarter. do through softening revenue saw to through carried the

second XXXX. a have the currency expect We foreign impact to of compared quarter on revenue to negligible

effective second estimate $X.XX. guidance. $X.X of We non-GAAP quarter compensation $X.XX amortization XX earnings include of to or We the to non-GAAP points addbacks the quarter currently share in earnings in second of per minus approximately plus and rate between basis million. expense a $X stock-based quarter. summary, expense expect we and Moving anticipate In XX%, non-GAAP million tax second

our prepared open please questions. remarks. for the concludes Operator, That line

Operator

from is question first with William Brian Our Instructions] [Operator Blair. Drab

Brian Drab

I'd start just the like orders. on to

you you on a the up we had point pick that? pretty part been I terms picked it? you that and just So year of just sounds April. on slow in it picture, of start. And on X, later to seem February Can up the when a guess, just business off can elaborate I I have large think the in put February but finer it to March, maybe to getting but in whole slowed like the orders that or talked

Dan Schumacher

Yes.

But be softer bit a approaching and started pickup in March. at January, that and the saw for beginning really of year, end year -- So we of had year the period than strong And order and the continued and it order an the that continued this through beginning we've April. a was period, February we softer we as historically. last of to saw beginning of Easter us through

is guidance on and order of Our always trends, at the we've we the as looked based is -- guidance indicative do, that.

Molding In of we terms in region. or you about strength script, primarily we results strong areas Injection see that through were Americas, I asked terms had can which in time our really And specific geographies, frame. the you in larger about orders those of mean, in by talked the our

Brian Drab

it. gross that remind sustainable? And then moving margin XX%, because gross we the about know the are been but said, I again right don't where quarter? ask Got first with in can margin network, margin the you I above Is it's can the me, if And in you within gross direction.

Dan Schumacher

Yes.

So things, I of would say Brian. a couple

and with X started gross both through expanding the as and do that network, geographies. margin saw to in sourcing ] year in our in we -- into algorithm we improvements the to has areas. [ improve last network NPEs our different as well for pricing continuing One is First,

challenged gross historically from to a go we we lighter bit into a had us which margin the first perspective. of Year, in quarter impact causes Chinese a and be as the NPE more to network that capacity for stronger this So our New be year, from

algorithms sourcing quarter. expanding maintain the margins over helped in us the our and Our XX% first network in to

labs the and The say we orders, year and last facilities patent we improvement would that larger -- well, robotics, high polishing, into environment are, we right I that network range year should orders. seeing around period. as second efficiency, our mold where pleased gross macro maintain uneven macro to that still our the able margins until talked increased our to our Rob main thing, into we've we've the now those absolutely, from continued I through as of in this margin extend margins started be a that an are orders both to time And factory. From I end larger to in want if high And the we maintain been when our of first things automation at a perspective. talked last continue especially and wouldn't continue range. add we the and larger that we're in type get able in very margin about maybe and quarter. automated it our different which very we're side, get network and about quality with it

Brian Drab

the consolidated at automation of definitely, gross gross And the little throughout Yes, Last within me, XX% in impressive. the margin expectations. factory harder? the been above network, obviously, the can stay you Do seen, end margin high push is can I just has think that a I've question for very XXXX?

Dan Schumacher

But for now what be. next QX number But flat on would being it not and guidance a with healthy that because we quarter mean -- I guidance to say to forecast for assumes kind that's going midpoint right margin the QX slightly maintaining margins. limited percent earnings visibility not quarter. in based volume the the and have, that our to lower I volume healthy Yes. will to I'm I'm say the just going of gross try the -- first down than efficiency

Operator

Palm question Capital with next Group. from is Our Greg Craig-Hallum

Greg Palm

color do said dig guidance Can guidance? at I assumption April on on just think there? essentially -- about than levels? little Or it give a you of what how sense QX because it you've based things seen little Is just it on to bit some kind in you us wanted Just more is stronger a into that stabilizing improves normally, bit seasonally the is in maybe and approach I maybe April based from what you specifically. QX. the these

guide. on how So sense just approaching you're wanted the to some get

Dan Schumacher

interesting Greg, was Yes. if QX environment, QX. not a It's stronger this than seasonally look last you take year, us in at

right, that, what the -- businesses come think had forecast period range are we as the challenging at said. seeing looking end revenue input, are quarter where went a because is to are our because to last well. It's about fairly a a And environment, were on softwares we talked we We you so at quotation we and softening the to I the developing as trend. a a into again. We're being. from in now just And order strong, through the call, looking based going is that where they're orders as up

same terms focused of and this last can that's orders the say what at, going used in our focused first of and indicate something April else, we us did what environment And we've our have the so and year in the what in top are on information that help guide now. come where we grow, shown middle in, type to right both And that, on will we're growing, of macro our that's of project quarter. though, quarter, uneven we're on. that I we

Greg Palm

sense. makes Yes,

customers of And Did right? and I using think currently Okay. of the mentioned color thanks X% more sort I customers cross-sell a appreciate services. full the are that that bit that. you And I hear little for then on providing opportunity.

Robert Bodor

Yes. Less than X%. Yes.

Greg Palm

Where a year internally it to was are more want X%. increase year be, now a couple whether or that do Where than of years now? a that it's what doing Less number? you from ago? number And I importantly, to guess, from you

Robert Bodor

question. appreciate I the you. Thank Yes,

see that is is our we're factory the network dramatically that do are. to marketing our starting offering expanded quantity seeing, through orders cross-selling is our to We've, the and of larger what's we what very traction, more teams and we're years, fundamental This on. able the terms the take over focused So to efficiently, if This and in asking both you're production driving the are right? being sales and answer last several through strategy.

we're prototyping over we and bring have. got use who us to their now able support through to them And work products. cycle they for in We've and serve for XX,XXX relying used asking opportunities to that more have customers and able cases are that to them needs on that been life of us to the together different

to are the to broader we've capture Labs salespeople have communicating our our some this the right? around bring so working offerings and been the we our approaching to customers customers our United the that At beginning opportunities. with to Proto customers, and of with changed been we brand aggressively year, very of these And network, these

And bringing so I'm how surface. we're you just seeing early absolutely out, in right? We scratching grew number this, with pleased are innings the quickly that have point traction, with right? And we the zero as that to are remaining from the them a really and today. the to think growth what business. attacking opportunity our just about our it is huge is I'm because right, this of And clearly for XX% potential customers, excited this I

Operator

from question with Our Instructions] & Company. [Operator Jim next is Ricchiuti Needham

James Ricchiuti

the there variability recently, difference the we've in you the in business, given seen you're that seeing much vertical? Just U.S.? any in particular a any that is seeing any more change are the Or is softening -- Europe versus of

Dan Schumacher

is say the softness U.S. orders. think with more the is Europe Yes. that, I And softness to I do just a it would in from than Jim, of is in quarter-over-quarter that perspective. more larger

James Ricchiuti

QX. that I'm we by might business remind the portion comparison it. the QX at impacted Got look did year least just like you that see the And back period were what of larger trying ago of in had bounce of think me, QX, Europe you some in to that last in year? about orders in by how

Dan Schumacher

Yes.

didn't of business has large So that last about talking QX the really in of Europe, we're orders QX. factory Europe specifically our some side into when repeat in year

QX year's than -- for number lower was. the number QX factory Europe it was last So what

that decline from really the larger the Europe saw QX of you you of why reason the within of timing with comps part year orders tough Europe. did that's was last so in And

James Ricchiuti

it about we reasonable from should step-up a thinking How think is OpEx QX QX. we it. as in to be OpEx Got

on As OpEx? look out any we you be balance the over year, the of modeling how thoughts should

Dan Schumacher

Yes.

I higher be think in versus QX slightly QX. OpEx will

additional expense some we're perspective. investments from making have We some business. more in a trade There's the show

expect QX in to so a from And OpEx slight QX. uptick we

Operator

no are There time. questions further this at

conference. today's conclude will We

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

Proto Labs (PRLB) 3 May 242024 Q1 Earnings call transcript