Proto Labs, Inc.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Frankman, Vice President and Corporate Controller. Thank you. You may begin.

Thank you, Shamali. Good morning, everyone, and welcome to ProtoLab's first quarter 2025 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 31st, 2025. 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 earnings call. We started the year strong, delivering revenue of $126 million near the upper end of our guidance range. Profitability was solid as well, with earnings per share of 33 cents, also near the top end of our expectations. We also delivered sequential gross margin expansion and strong free cash flow. While first quarter revenue was down slightly versus the prior year amidst macroeconomic headwinds and manufacturing contraction, we remained confident in our strategy and our commitment to driving growth for the full year. Our first quarter performance sets a solid foundation for growth in 2025 and demonstrates our ability to deliver on expectations in a volatile environment, reinforcing the resilience of our model. In addition, free cash flow during the quarter represented 14% of revenue, reflecting continued industry-leading profitability. Because we believe in the strength of our model, we have continued to return capital to our shareholders by repurchasing our common stock, as Dan will discuss shortly. Shifting to an update on our strategic priorities, our hybrid model continues to yield positive outcomes and was successful once again. Customers utilizing our combined offer grew more than 45% over the trailing 12 months, and revenue per customer in Q1 increased by 3% year over year. We also continue to make significant progress in our initiatives to drive growth as outlined last quarter. First, our marketing investments to further establish Protolabs as a production manufacturer are gaining traction. Our new messaging is resonating within production buyer channels, reinforcing our brand positioning, and expanding awareness. At the start of this year, we made an incremental investment in marketing to inform and educate potential customers about our expanded capabilities across the product lifecycle. We have seen our share of voice in the market increase as a result of this new marketing, with over 2 million views of our prototype to production campaign to date. This has led to an increase in searches for protolabs as potential customers look to source their custom on-demand manufacturing. Online searches for protolabs are up double-digit percentage points versus last year, and this progressively increased each month during the first quarter, so we are seeing accelerated momentum for our production offerings. We will continue to invest in this campaign as we progress through 2025, tailoring to our target industries. Production revenue continued to grow nicely and exceeded our expectations in the first quarter. We are very pleased with customer engagement of our expanded production capabilities. To illustrate our success in production applications, I'd like to highlight some customer examples in aerospace and defense, one of our target industries. Our speed, extensive domestic manufacturing capabilities, and ability to produce complex high requirements parts make us an excellent partner to these innovative organizations. We offer ITAR certified parts through both the factory and through the manufacturing partners in the Protolabs network, enabling aerospace and defense customers full access to our combined offer. Revenue from these customers has increased very nicely in recent years, in part due to increased end user production orders. We manufacture flight-ready production parts through AS9100 certified facilities, and our metal 3D printing service is especially valuable as customers seek to design and procure durable, lightweight parts. We serve the largest and most advanced companies in this space, including 100% of aerospace and defense companies in the Fortune 500. Organizations like Blue Origin, NASA, and Lockheed Martin have all leveraged production in Protolabs. In one example, Protolabs is part of a team supporting Blue Origin's Blue Moon Mark I. The single-launch lunar cargo lander will remain on the moon's surface, providing safe, reliable, and affordable access to the lunar environment. NASA has said that the Mark I cargo lander could deliver a scientific payload to the moon's south polar region as soon as this summer. We've also had several Aero and Defense customers qualify our production solution after auditing our manufacturing facilities. These customers, some of which have used our prototyping services for many years, have already placed orders for production parts and injection molding, CNC machining, and 3D printing. This is a great example of continued growth driven by existing Protolabs customers leveraging both prototyping and production. Now transitioning to our second initiative to drive growth, our go-to-market reorganization. I am pleased to say that this is yielding positive results. Enhanced sales enablement tools and processes are improving our understanding of customer production needs, enabling us to deliver tailored solutions via team-based selling, better serving our customers, and driving growth. And third, the optimization of our fulfillment channels to meet customer needs is advancing very well. The closure of our German molding facility has streamlined our global operations as we continue to improve overall efficiency by aligning our manufacturing footprint with our global fulfillment strategy. This decision, which is part of the broader multi-year reshaping of our portfolio and began with the closure of our Japan operations in 2022, allows us to better leverage both factory and network capabilities. We are pleased with the results to date and remain focused on continuing to optimize our manufacturing footprint to better serve our customers globally. Turning to tariffs and strategic positioning. We are closely monitoring the evolving tariff policies and their potential impact on our customers and the broader manufacturing landscape. As we've demonstrated most recently during the COVID-19 pandemic, We can adapt faster than anyone to support our customers in times of supply and demand volatility. Speed and agility are central to our operations. While there is still uncertainty in regard to tariffs, we believe the current situation unfolding is a strong opportunity to drive growth for several reasons. First, our diverse and strategically located global manufacturing footprint provides resilience and flexibility. allowing us to adapt to shifting supply chain dynamics and serve our customers effectively regardless of geographical shifts. In fact, 90% of our revenue from American customers is already fulfilled by factories in the US through both our digital factories and our network. Our international operations are also highly adaptable with manufacturing capabilities spanning multiple countries we are not overly reliant on any single region and can and do shift capacity in response to changing demand. This positions us favorably as companies reevaluate sourcing strategies in response to tariff risks. Next, our pricing models are fulfilled and routing platforms are highly adaptable and driven by artificial intelligence. And finally, we consistently generate strong free cash flow. underscoring the fundamental strength of our business model. This financial stability, which is uncommon in our industry, enables us to invest in growth initiatives and navigate periods of uncertainty. We are actively reviewing pricing strategies to help offset impacts from tariffs where appropriate, ensuring that we stay competitive while preserving value for customers. The current economic uncertainty is causing customers to be more cautious about demand forecasting which may extend the timeline for shifting supply chains. But again, we believe this environment favors agile players like us. We pioneered on-demand manufacturing over 25 years ago, and we remain the fastest in the world. This is a vital solution for customers whose demand may be volatile or unclear, allowing them to only order what they need and receive delivery in days, not months. Before I hand the call over to Dan, I'd like to close with our 2025 priorities. Our primary focus for 2025 remains driving growth in our key indicators, which are increasing the number of customers utilizing our combined offer and increasing revenue per customer. To achieve this, we are, one, leveraging our newly streamlined organizational structure to enhance efficiency and accelerate growth across all areas of our business. Our teams are in place and they are properly incentivized. Two, we are expanding our production use cases by investing in advanced manufacturing capabilities and refining our go-to-market strategies to better meet customers where they are, positioning ourselves to capture a larger share of this growing market. And three, we're reinforcing our core prototyping business by investing in cutting-edge technologies and optimizing lead times, ensuring we maintain our industry-leading position. Protolab's unique combination of factory and network enables us to serve customers across product life cycles, from prototyping through production and into end of life. So in closing, we are confident in our position to navigate evolving market dynamics and deliver sustainable growth while maintaining industry-leading profitability and cash flow. Our strategic investments and operational efficiencies position us well to capitalize on emerging opportunities and create long-term value for our shareholders. Now I'll hand it over to Dan to cover the financials.