Beyond its relentless focus on speed and quick-turn manufacturing service, Proto Labs (NYSE: PRLB ) is constantly evaluating the needs of its customers to determine when it's appropriate to enter new markets. As part of this ongoing commitment to customers, Proto Labs recently acquired Fineline Prototyping, a leading 3-D printing-as-service provider based in Raleigh, N.C. Fineline allows Proto Labs to compete in the rapidly growing 3-D printing as a service space, while also complimenting its existing portfolio of rapid manufacturing services. According to Proto Labs, 70% of its customers already use 3-D printing as part of their product development process.
I recently had the opportunity to engage in an email exchange with Proto Labs' Chief Executive Officer, Vicki Holt, who replaced former CEO Brad Cleveland in February. In the excerpt below, we talk about some of the high-level, global expansion plans Proto Labs has for Fineline. Because 70% of Proto Labs' customers already utilize 3-D printing, investors should reasonably expect that Fineline will become an increasingly important part of Proto Labs' business -- especially as it grows its worldwide 3-D printing capabilities.
Steve Heller: Will the Raleigh facility be sufficient to meet Proto Labs' expected worldwide demand for additive manufacturing [3-D printing] services? Will more additive service centers be brought online in the next one to three years?
Vicki Holt: Raleigh will remain our headquarter location for our Fineline Additive Manufacturing service domestically. Will it be enough for what we're doing globally? Absolutely not. We will be expanding our additive manufacturing operation into our U.K. and Japan facilities while continuing to build our additive presence in the United States
Just like our Firstcut and Protomold services, we will be evaluating additive manufacturing technologies as we move forward. With Protomold, for example, we've recently launched liquid silicone rubber molding and metal injection molding, which are two envelope expansions within one our three primary services -- we'll be doing the same thing with our Fineline Additive Manufacturing service. We'll be looking at technology as it develops and expanding with additional processes as our customers demand it.
To be clear, acquisition is not a strategy, it is a tactic. Our strategy is to provide product developers with a full palette of services so that we can help accelerate an idea to commercialization. Sometimes if we have a capabilities gap, it might make sense to acquire a company, like Fineline, that is the right cultural fit and the best at that particular technology. But sometimes it will work better to grow our processes organically within the company.
Heller: How large of a capital investment will it require to outfit Proto Labs' worldwide service operations with additive [3-D printing]?
Holt: We update our capital expenditure forecasts at each of our quarterly earnings releases, so that will be made public in our second quarter earnings release in mid-July. We'll be incorporating what we think will be the investment that needs to be made for Fineline along with our other services.
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