Proto Labs Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Drab - William Blair & Company - Analyst : Hi, good morning, good morning. Hey Dan. Hey rep. I just wanted to start a gross margin. So yeah, the gross margin pretty solid and, and you know, higher than it's been in a while. You know, where, where do you expect to be able to sustain that? And, and how do you like? How do you see the fourth quarter in terms of gross margin? And, and then I'm, I'm also in asking this question looking at the network, you know, which is of course, you know, somewhat lower gross margin. And it looks like growth, there're decelerated some. So I'm just wondering if you, if you're seeing maybe, you know, a convergence in the growth rates of eventually here in, in the overall business between the network and the factory and maybe you don't have this, this headwind in terms of gross margin from the faster growth in the, in the on the network side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 12:30PM, PRLB.N - Q3 2024 Proto Labs Inc Earnings Call

Question: Brian Drab - William Blair & Company - Analyst : Right? Okay. And that's what I figured. I mean, obviously that's typical in the fourth quarter free. Yeah.

Question: Brian Drab - William Blair & Company - Analyst : Right? Rob on the blend of, you know, the idea that you're getting more people using the blend of the services. You know, what, where, what can you tell me about where that stands now in terms of like is still very early in that opportunity, right? Is it a low single digit percentage of the customer contacts that are using both.

Question: Brian Drab - William Blair & Company - Analyst : Okay, great. And then maybe I'll just ask one more and then pass it on. You touched on it in the prepared remarks. You know, I think that the increased inspection capabilities that, you know, I've talked to you guys a lot about, and, and see the capabilities in the, in the facility and it's impressive. You know, that seems like that's a key strategic, initiative that you have and, and it's making a difference. Can you just talk a little bit more about the traction that you're getting from the high volume work? Because, I mean, you know, obviously the, you know, you've got, you know, a challenging environment that you're operating in revenue is down. And but still the revenue per customer is up and, and you know, so this is like a key lever that you're pulling, and can you just talk about the traction you're getting in, in the higher volume orders through that.

Question: Brian Drab - William Blair & Company - Analyst : Alright, great. Thank you very much.

Question: Troy Jensen - Cantor Fitzgerald & Co - Analyst : Hey, gentlemen, congrats on the great margins and cost controls.

Question: Troy Jensen - Cantor Fitzgerald & Co - Analyst : Hey, so maybe I'll first start off with the German facility update. Was this the old, was it the alpha cam acquisition mainly additive out in Germany?

Question: Troy Jensen - Cantor Fitzgerald & Co - Analyst : Alpha form. Okay. Alright. Did you do much of the Mrs in Europe or is it all is all mostly polymers? And you did metals in your in in Raleigh?

Question: Troy Jensen - Cantor Fitzgerald & Co - Analyst : All Right. I guess. Well, two questions come with that then. Can you help me out with the Opex savings? I know we probably won't see it in Q4. But you know, how much will this reduce Opex in, like either March or June quarters of next year?

Question: Troy Jensen - Cantor Fitzgerald & Co - Analyst : Yeah, understood. I thought it was shuttering the facility, but it's just kind of rely on it. So.

Question: Troy Jensen - Cantor Fitzgerald & Co - Analyst : Okay, cool. And I get it, you're doing this because you can get better margins. You know, running through the network, curious if there's other products kind of in your, in your portfolio. That makes sense. I guess I'm wondering primarily about sheet metal. I think that to me that's like a lower gross margin product segment that hasn't grown for you guys. And would it make sense to kind of run that through the network business also?

Question: Greg Palm - Craig-Hallum Capital Group LLC - Analyst : Hey, thanks for taking the questions here. I may maybe just kind of starting with the, the out performance. I'm I'm curious if you, you know, can attribute any of the outperformance to the sort of the real realignment. It's Rob, it sounded like maybe a hint of that, maybe that was a little bit of that. And then just to be clear as it relates to the order trends, you said, you know, pick up August September, have those picked up in October and they stayed at similar rates. I'm just trying to gauge kind of the guide of where order rates are for the first four weeks versus kind of what normal seasonality is in the quarter.

Question: Greg Palm - Craig-Hallum Capital Group LLC - Analyst : Okay. And you know, the the margin, you know, performance was, was impressive. I'm curious on the network side, have you changed? You know, and you know, the algorithm at all the way you're sourcing stuff or, you know, do you attribute some of the, the out performance, not just this quarter, but you know, year-to-date is that more of a byproduct of the environment we're in, you know the fact that a lot of suppliers just have more open capacity right now.

Question: Greg Palm - Craig-Hallum Capital Group LLC - Analyst : Yeah. Okay. Makes sense. And I guess just, just lastly is it relate? I just want to make sure I'm, I'm clear on the P&L impact of sort of the recent news around the, the, the European facility. It, what, what is the expected P&L impact, I guess? You know, so it doesn't sound like much of an Opex, but it sounds like potentially some, you know, COGS savings are you able to, you know, quantify anything at all?

Question: Greg Palm - Craig-Hallum Capital Group LLC - Analyst : And I assume the revenue impact, I mean, it's more like in the hundreds of thousands of maybe business that gets lost versus millions or.

Question: Greg Palm - Craig-Hallum Capital Group LLC - Analyst : Yeah. Okay. That makes sense. All right, I will leave it there. Thanks.