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Proto Labs to Kick Off 3D Printing Earnings Season: What to Watch

By Beth McKenna - Feb 7, 2021 at 2:35PM

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With its stock up 41% in 2021, the quick-turn contract manufacturer has a lot to prove when it reports Q4 results on Friday.

Proto Labs (PRLB 1.26%), a leading digital contract manufacturer, is slated to report its fourth-quarter and full-year 2020 results before the market opens on Friday, Feb. 12. 

As it usually does, the company (which offers both traditional manufacturing and 3D printing services) will kick off the quarterly earnings season for the 3D printing space. Pure-play 3D printing company 3D Systems is scheduled to release its official results on Wednesday, Feb. 24, while fellow pure-play Stratasys hasn't yet announced a date for its release.

As with many companies that serve customers in the industrial sector, Proto Labs' business has been hurt by the COVID-19 pandemic. But the company has done a good job navigating this challenging crisis, and has easily beat Wall Street's earnings expectations in each of the first three quarters of 2020.

Investors have responded accordingly, driving shares up 91.6% over the one-year period through Friday, Feb. 5. The S&P 500 has returned 18.7% over this period.

A male operator standing next to a 3D printing machine in a Proto Labs production facility.

Concept Laser's metal 3D printers in a Proto Labs manufacturing facility. Image source: Proto Labs.

Key numbers 

Metric

Q4 2019 Result

Q4 2020 Wall Street Consensus Estimate

 Projected Change YOY

Revenue

$111.9 million

$102.5 million

(8.4%)

Adjusted earnings per share (EPS)

$0.63

$0.49

(22%)

Data sources: Proto Labs and Yahoo! Finance. YOY = year over year.

For Q4, management guided for revenue in the range of $96 million to $106 million. 

For context, in the third quarter, Proto Labs' revenue fell 8.5% year over year to $107.5 million. Adjusted for one-time items, net income was $17.9 million, which translated to EPS of $0.67, down 12% year over year.

As I recently wrote, "On last quarter's earnings call, CFO John Way explained the reasons for the expected sequential [sales] decline: 'The third quarter included $3 million of COVID-related orders, and we expect less COVID-related revenue in the fourth quarter. Additionally, our fourth-quarter revenue tends to be lower than the third quarter, due to our normal seasonality pattern.' "

Proto Labs 2.0 e-commerce digital manufacturing platform

On the earnings call, investors can expect management to give an update on the status of the company's new e-commerce digital manufacturing platform. In the third-quarter's earnings release, CEO Vicki Holt said that this platform "will go live in Europe in November, followed by a U.S. debut in the first quarter of 2021."

Management believes this platform will help the company further extend its leadership position in digital manufacturing.

3D Hubs acquisition

Investors can probably also expect that management will provide some additional information about 3D Hubs, which Proto Labs acquired on Jan. 25. The Netherlands-based company is a leading online manufacturing platform that provides customers with on-demand access to a global network of manufacturing partners.

We already know that Proto Labs expects this acquisition to be accretive to its revenue growth rate but slightly dilutive to its adjusted EPS in 2021.

This acquisition should position Proto Labs as more of a global player. The company currently generates the lion's share of its revenue in the United States. In the first nine months of 2020, 80% of its sales were in the U.S.

First-quarter 2021 guidance

The stock market looks ahead. So, its reaction to Proto Labs' earnings release will probably hinge more on the company's Q1 2021 guidance than its Q4 2020 results, relative to Wall Street's expectations.

For Q1, analysts are modeling for adjusted EPS of $0.49 on revenue of $110.3 million, representing year-over-year declines of 20% and 4%, respectively.

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Stocks Mentioned

Proto Labs, Inc. Stock Quote
Proto Labs, Inc.
PRLB
$48.38 (1.26%) $0.60
Stratasys Ltd. Stock Quote
Stratasys Ltd.
SSYS
$19.68 (2.13%) $0.41
3D Systems Corporation Stock Quote
3D Systems Corporation
DDD
$10.52 (0.48%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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