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| Statement |
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| But in particular, in injection molding, I think that's really been successful for us with more and more of our customers to be able to do those larger orders |
| And I think there's just tremendous opportunity for us to grow with our existing customers |
| Fourth quarter non-GAAP diluted net income per share was $0.46, adjusted EPS came in higher than our guidance midpoint of $0.30 for several reasons |
| I mean, I'm pleased with our performance in Q4 overall with the growth we saw there and in 2023 as a whole, right? And I'm particularly glad that we could, have that kind of performance in the presence of contraction in the manufacturing sector, right? And I think we attribute it to our ability to have done more production work with our customers across all of our services and seeing that growth |
| I think there's a tremendous opportunity for us to grow and expand within our existing customer base |
| ProtoLabs is a great place to work and we will improve the employee experience through continued investments in areas like talent acquisition, training and development, and total rewards |
| And so we've got a great customer base of innovative customers |
| We are incredibly excited to continue our work with this customer and help create a more sustainable future through emissions-free vehicles |
| Resilient execution in 2023 enabled us to meet our commitments and take share in the market despite headwinds from manufacturing contraction |
| And we feel that is the business model that is the best way for us to grow |
| On the network side, we also improved our margin in 2023, and that's through improvements in our AI-enabled pricing algorithms that we have within the network |
| Dan Schumacher When I talked about on the call in terms of how 2023 played out, we had improved the growth margin, both in the factory and in the network |
| I'm very pleased with that |
| Our ability to quickly provide high quality precision parts through comprehensive manufacturing services allows companies like Space Inventor to develop satellite systems and advance aerospace technology |
| We are encouraged by our strong finish to 2023 and believe we have the right strategy and priorities in place for continued success |
| At $504 million, total revenue surpassed $500 million for the first time in our history |
| Both factory and network gross margins improved year-over-year, and 2023 non-GAAP earnings per share grew 6% over 2022 |
| For the full year 2023, we generated revenue above $500 million for the first time in ProtoLabs' 25-year history, while delivering improved earnings, robust cash flow, and returning substantial capital to shareholders |
| Next, gross margin exceeded our expectations in the fourth quarter due to do largely to stronger than anticipated revenues and injection molding, one of our higher margin services |
| These are just four short examples of the innovations we get to accelerate every day in exciting industries which positively impact the world |
| Our business model generates industry-leading cash flows allowing us to invest in organic growth and return capital to shareholders |
| I'm proud to say that in 2023, we contributed to the greater good while successfully executing against our business priorities |
| Congratulations on a really solid year in a tough environment |
| We confirmed that our strategy to combine the factory and network offers is the right one, demonstrated by 70% growth in ProtoLabs' network and continued customer adoption of the combined offer |
| Our leadership team executed on our strategic objectives and I'm proud of what we accomplished |
| I am very pleased with our increase in revenue per customer in 2023 |
| I am pleased to report that we successfully delivered on both of those priorities |
| Success in these priority areas will lead to improved financial performance and continued shareholder value creation |
| We continue to execute well on our priorities through the fourth quarter, resulting in a record year and strong financial and operational results |
| I think it is a strong indication of the success of our strategy |
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| Fourth quarter non-GAAP gross margin decreased 70 basis points sequentially to 45.3% primarily due to lower factory volume |
| One, we do expect gross margin to come down quarter-over-quarter |
| Sheet metal revenue declined 8% year-over-year in constant currencies |
| Lastly, our fourth quarter selling, general and administrative expenses were below forecast driven partially by lower incentive compensation |
| We expect the volume at the midpoint to be down quarter-over-quarter because of that softness we saw |
| This guidance reflects a softer start to 2024 due to December and early January order levels being lower than historical periods |
| In addition, because the factory business is going to be a little bit softer, their margins are going be a little bit lower from fourth to first quarter because of not having as much volume to absorb those costs |
| Those things create a headwind quarter-over-quarter in SG&A |
| We will continue to guide on a quarterly basis due to the quick-turn nature of our business and continued macroeconomic uncertainty |
| So we saw lower than historical levels starting to like mid-December and then that persisted into January and so things did not pick up at the same historical time |
| I'm curious, as we think about the guide for Q1 and specifically sort of the bridge from Q4 to Q1, revenue at the midpoint, flat to down a little bit, but profitability, whether it's EPS or implied EBITDA, down pretty substantially from Q4 |
| When I talked on the last quarter call, what we were seeing was softness specifically in CNC is what I pointed out |
| When I talked about that blip that impacted the factory business more, that softening at the end of December, start of January, impacted the factory business more than it impacted the network business |
| So, we're going to have a headwind from a mixed perspective |
| You said in the guidance that you are assuming -- I think what you are saying is that you saw the typical seasonal softness in December and January and your guidance assumes that you don't see the typical seasonal uptick in March |
| We talked about some slowing in activity in the early part of October and then, clearly things picked up |
| I don't know if that had something to do with the timing of the holidays, of where they were from their budgets as they closed the year and started the new year but it was lower than, we normally see a seasonal dip but that dip was lower than what it had been in prior years |
| And I assume that's, what you're describing as really is driving to accelerating growth in the U.S., which, frankly over the last year or so, has been the growth rate's been somewhat tepid |
| This customer had an unexpected delay arise at an existing supplier |
| You're kind of assuming that that seasonal softness persists through the first quarter |
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