What happened

Shares of quick-turn contract manufacturer Proto Labs (PRLB 0.13%) dropped 11.9% in September, according to data from S&P Global Market Intelligence

For context, the S&P 500 and Nasdaq indexes fell 3.8% and 5.2%, respectively, last month.

A male machine operator standing in front of a 3D printer.

Image source: Proto Labs.

So what

Proto Labs didn't release any notable specific news last month. We can attribute its stock's weak September performance largely to a continuation of the downward momentum it's experienced this year.

Like many companies that have a large proportion of industrial customers, Proto Labs has been struggling to grow its business due heavily to the widespread temporary business closures stemming from the COVID-19 pandemic.

Its most recent earnings release occurred in late July. For the second quarter, Proto Labs' revenue declined 8.1% year over year to $106.6 million. This result was actually solid relative to the Wall Street consensus estimate of $100.5 million.

Likewise, the bottom line also dropped from the year-ago period, but managed to exceed analysts' expectations. Adjusted earnings per share (EPS) landed at $0.59, down 17% year over year. The Street had been projecting EPS of $0.36.

Here's part of what CEO Vicki Holt had to say in the earnings release: 

The first half of 2020 has presented a great deal of challenges to all businesses, and Protolabs is no exception. We have a solid financial foundation, a healthy balance sheet, and resilient business model to weather the uncertain environment. The COVID-19 pandemic provides an opportunity for Protolabs to demonstrate the value our digital business model can provide. During the quarter, we delivered over 8 million parts to support the medical industry, generating $12 million in revenue. 

(Sharp-eyed readers probably noticed the spelling of the company's name is one word in this statement, not two words as in the rest of the article. There's an explanation, but suffice it to say that neither spelling is a typo.)  

CFO John Way added, "Our business model continues to generate strong cash flow, despite the uncertainty in the market." Indeed, in the second quarter, the company generated $31 million in cash from operations, up from $22.4 million in the first quarter.

Now what

On the second quarter earnings call, Way guided for third quarter revenue of $98 million to $110 million, compared to $117.5 million in the year-ago period.

The revenue guidance range is larger than usual due to the "ongoing uncertainty related to COVID-19," Way said. The company did not provide guidance for the second quarter due to the even greater uncertainty stemming from the global crisis at the time it reported its first quarter results.