Protolabs recovers from “slow start in January” to deliver 7% revenue growth in Q1 2022

Digital manufacturing service provider Protolabs (PRLB) has recovered from a COVID-hit start to Q1 2022 to achieve 7% revenue growth for the period. 

During Q1 2022, Protolabs brought in $124.2 million, $8.1 million more than the $116.1 million it generated in Q1 2021, and a $10.7 million rise on the $113.5 million it reported in the pre-pandemic Q1 2019. On the firm’s earnings call, its CEO Rob Bodor explained how this growth was primarily driven by its 3D Printing and CNC Machining services, which saw “increased [order] volumes from key customers.”

“I’m happy to report that our results were slightly ahead of expectations,” said Bodor. “As I communicated on our fourth quarter call, demand was impacted in January as the Omicron variant delayed our seasonal demand growth by several weeks. Our demand strengthened starting in February, and we finished the quarter strongly.”

Protolabs 3D printing facility in Morrisville, North Carolina. Photo via Protolabs.
Protolabs’ 3D printing facility in Morrisville, North Carolina. Photo via Protolabs.

Protolabs’ Q1 2022 financials 

Protolabs reports its revenue in four divisions: Injection Molding, CNC Machining, 3D Printing and Sheet Metal. Over the course of Q1 2022, Injection Molding may have remained the firm’s highest revenue generator, bringing in $53.4 million, but the division’s earnings declined 3.7% on the $56.4 million it attracted in Q1 2021. 

Bodor explained on Protolabs’ earnings call that this drop-off was due to the fact it had fulfilled “large COVID-related orders” in Q1 2021, and though he admitted that its Injection Molding division had “underperformed” against expectations, he said it continues to “actively work to increase volume” across related services. 

Likewise, the company’s Sheet Metal revenue also fell 9.6% over the same period, declining from $5.2 million to $4.7 million, a figure still 6% short of pre-COVID levels, but after a slow start to 2022, Bodor added that the segment is recovering “nicely.”

On the flipside, the fastest growing area of Protolabs’ business in Q1 2022 was CNC Machining, which brought in $46.1 million, 25.6% more than the $36.7 million it generated in Q1 2021. On the firm’s earnings call, Bodor said the addition of longer lead time CNC services courtesy of its $280 million Hubs acquisition, contributed to this rise. That being said, the segment also grew 18.6% on an organic basis. 

Similarly, the company’s 3D Printing arm achieved significant growth of 14.5% in Q1 2022, something Bodor said is being driven by demand for both its metal and polymer offerings, although he did admit that the “plastics side of its business is still larger,” thus suggesting that the latter drove any advances made in this area.

Revenue ($) Q1 2021Q1 2022 Difference (%) Q1 2019 (Pre-Covid)Q1 2022 Difference (%) 
Injection Molding 56.4m53.4m-3.755.3m53.4m-3.4
CNC Machining 36.7m46.1m+25.637.9m46.1m+21.6
3D Printing 17.2m19.7m+14.514.5m19.7m+35.9
Sheet Metal5.2m4.7m-9.65m4.7m-6
Total Revenue 116.1m124.2m+7113.5m124.2m+9.4

Targeting “well-groomed” services 

Over the last year, Protolabs has invested heavily in diversifying its mix of global partners to ensure that its services are competitive in as many markets as possible. This expansion was rewarded in Q1 2022, with the firm serving 23,492 unique product developers, 3.9% more than it managed to in Q1 2021, a statistic that reflects its ‘quality over quantity’ approach to selecting partners that meet clients’ needs. 

“Our strategy is not necessarily to have the biggest network, but rather have a very well-groomed premium network of manufacturers that are highly-qualified, and we can send material business to,” explained Bodor. “We believe that this helps us to ensure very high quality and high reliability, and because we understand our network partners well, we can really tailor the jobs that we send them.”

During Q1 2022, this strategy proved particularly effective in attracting industrial and commercial machinery customers, as well as those operating in aerospace, with business from each of these client bases growing year-over-year. 

Regionally, this growth was most prevalent in Europe, where the company generated $21.4 million, a 14.6% rise over the same period. According to Bodor, Protolabs managed to achieve this despite Russia’s war on Ukraine, due to the fact that none of its customers or suppliers are based in either country, and while its Japanese and US divisions also grew, this was by 12.7% and 4.9% respectively. 

Robert Bodor will succeed Vicki Holt as President and CEO of Protolabs, effective March 1, 2021. Image via Protolabs.
Protolabs CEO and President Rob Bodor. Photo via Protolabs.

Projecting growth in a difficult climate 

As Protolabs moves into Q2 2022, Bodor says that it’s seeing an inflation of its logistical and raw material costs, but it is no longer encountering the shortages of earlier this year. The firm is also continually working on ways to offset market-induced expenditure rises, and with this in mind, it remains confident of generating revenue of $123 million to $131 million next quarter, representing up to 7% growth. 

Although the introduction of Protolabs 2.0 delayed the company’s full integration of Hubs in 2021, it expects to launch its combined CNC Machining offering later this year, and Bodor wrapped up Protolabs’ earnings call by anticipating that joining with Hubs ‘profitably’ will enable it to “reinforce its sustainable, long-term competitive market advantage.”

“As we look on the horizon, we are on the precipice of revolutionizing manufacturing for a second time with a broader offering, and unified digital experience, which combines our digital thread with our digital network,” concluded Bodor. “As an ever-increasing group of companies adopt manufacturing 4.0, Protolabs will continue to lead the way.”

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Featured image shows Protolabs’ 3D printing facility in Morrisville, North Carolina. Photo via Protolabs.