Proto Labs, Inc.

Greetings. Welcome to Protolab's first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Jason Frankman, Vice President and Corporate Controller. Thank you. You may begin.

Thank you, Sherry, and welcome, everyone, to ProtoLabs' first quarter 2024 earnings conference call. I'm joined today by Rob Bedore, President and Chief Executive Officer, and Dan Schumacher, Chief Financial Officer. This morning, ProtoLabs issued a press release announcing its financial results for the first quarter ended March 31, 2024. The release is available on the company's website. In addition, a prepared slide presentation is available online at the web address provided in our press release. Our discussion today will include statements relating to future performance and expectations that are or may be considered forward-looking statements and subject to many risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K, for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. The results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release and the accompanying slide presentation at the Investor Relations section of our company website for a complete reconciliation of GAAP to non-GAAP results. Now I'll turn the call over to Rob Bedore. Rob?

Thanks, Jason. Good morning, everyone, and thank you for joining our first quarter 2024 earnings call. We demonstrated strong operational and financial execution in the quarter, delivering first quarter revenue at the top end of our guidance range and earnings above expectations. These results were driven by the continued execution of our two strategic priorities, increasing the number of customers using our comprehensive offer and driving higher revenue per customer through larger orders in all services. We delivered strong gross margins, earnings, and cash flow. I'll now expand on the progress being made across our two priorities, and then Dan will take us through the results momentarily. First, we continue to increase the number of customers using our comprehensive offer fulfilled through both the factory and the network. The combined offer brings immense value to customers enabling them to use ProtoLabs as a single source manufacturer throughout the product life cycle, from prototype to production to end of life. We have seen that those customers that use ProtoLabs across both the factory and the network spend approximately double what all other customers spend, demonstrating the significant synergy and value that our customers derive from the combined offer. Over the past few years, we've significantly expanded our offering and now serve more production needs than ever before, yet we are in the early innings of customers fully utilizing our combined offer. In fact, last year, less than 5% of the 53,000 total Protolabs customer contacts purchased parts fulfilled through both the factory and the network. This clearly presents a huge growth opportunity for Protolabs, and I am very excited about this potential. We have been and continue to be very focused on accelerating the continued adoption of our combined offer in order to capitalize on the attractive growth opportunities to add new clients and increase share of wallet. We also made progress on our second strategic priority, which is to drive higher revenue per customer through larger orders in all services. Of note, revenue per customer contact increased 5% year over year in the first quarter. We are benefiting from recent technological advancements to our offering, which allow us to win more in production. In the factory, we're beginning to see early returns on investments in production, including robotics, our patented automated mold polishing process, and machine perception in our quality verification process. We have also greatly supplemented our production offer with expanded capabilities and AI-enabled pricing options through the network. We believe that Protolabs has the strongest brand in the industry, known for our reliability and quality for the last 25 years. Let me now bring these remarks to life with several examples of how we're helping our customers positively impact the world. These customer examples begin on page six of our slide presentation. The first two examples highlight our role in enabling the profound advancements taking place in medical devices, specifically advanced prosthetic equipment. BioDapt has used ProtoLabs as their custom parts supplier since its founding in 2010. As we showcased on our website and a recent press release, BioDapt creates custom prosthetic equipment for elite adaptive athletes via our world-class factory CNC machining service. Our ability to iterate and rapidly manufacture high-performance custom prosthetic equipment allows us to serve Biodapt and provide bespoke, highly engineered solutions for elite athletes such as Mike Schultz, founder of Biodapt and former X Games and Paralympic Games gold medalist, as well as Noelle Lambert, former Division I lacrosse athlete who is training to compete at the 2024 Paralympic Games. CERCLEG, another manufacturer of advanced prosthetic equipment that enables amputees in East Africa to live active lives, needed a way to mass produce a design that can be adjusted to each individual while being highly affordable. Our Protolabs network provided design input and affordably manufactured high-strength stainless steel CNC machine components for CERCLEG's prosthetic system in the high volumes that they required. I'm deeply proud of the fact that we can play a role in helping society through our work with pioneering medical device companies like BioDapt and Circlic. Whether they need rapid prototyping for custom high requirement products or affordable manufacturing of critical components at high production volumes, we can bring unique value to our customers throughout the life cycle of their products through our combined offer. The next example that I'd like to share comes from our work with NASA. where we delivered custom metal components within 48 hours of their design. Our unique, highly automated digital factory enables us to serve NASA's needs faster than anyone else in the world. Over the years, our digital manufacturing offer has propelled NASA's design evolution and accelerated their innovations. In February, NASA partnered with Protolabs at the Power Source Global Summit where they crowdsourced requirements and design constraints for a tool to capture gases on the moon's surface. Conference attendees used generative design software to design metal components for lightweighting that could be manufactured using Protolabs 3D printing and CNC machining capabilities. Once ordered, Protolabs manufactured the parts in less than 24 hours. Less than 48 hours after they were designed, the physical parts were delivered to NASA at the conference. enabling these experts to innovate and move science forward. Protolabs is uniquely positioned to achieve this feat for NASA as the only digital manufacturer in the world that combines the digital thread with speed, reliability, and quality. This is a great example of the positive impact we can have for our customers by utilizing our unique capabilities to empower the world's most innovative organizations to bring new ideas and products to market. As I stated at the beginning of the call, we continue to execute well on our priorities during the first quarter, which drove strong financial and operational results. We are pleased with our progress to date and remain focused on executing on our strategic initiatives and generating strong financial results. I want to thank our entire team for their continued dedication to excellence and positioning Protolabs for success and value creation. Dan will now provide additional financial detail on our first quarter results as well as our outlook for the second quarter of 2024. Dan?