Protolabs sets new revenue record in FY 2021 despite facing global supply chain challenges

Digital manufacturing service provider Protolabs (PRLB) has revealed that it generated its highest ever annual revenue during FY 2021. 

Despite encountering COVID, Brexit and US inflation-related challenges, which impacted on its ability to capitalize on rising demand, the firm still brought in $124 million in revenue in Q4 2021, 18% more than the $105 million it reported in Q4 2020.

Thanks in part to the 13% quarterly growth of its Hubs subsidiary, this better-than-expected performance enabled Protolabs to achieve a FY 2021 revenue figure of $488 million, a 12% rise on the $434 million it generated in FY 2020. Over the last two weeks, in anticipation of the publication of its record-sealing results, investor interest in the company has risen significantly, causing its shares to jump 18%. 

“We are pleased with the performance of our business in the fourth quarter, highlighted by strong growth and revenue above our expectations,” said Rob Bodor, President and CEO of Protolabs. “Like many companies, Protolabs faced its fair share of challenges during Q4 2021, [but] throughout the year, we overcame these and continued to invest.” 

“Despite an extremely hostile operating environment, our business’ potential and market opportunity have continued to grow.”

Protolabs' new Putzbrunn production facility.
Protolabs’ new Putzbrunn production facility opened in November 2021. Photo via Protolabs.

Protolabs’ Q4 2021 financials 

Broadly, Protolabs reports its revenue across four main segments: Injection Molding, CNC Machining, 3D Printing and Sheet Metal. As always, Injection Molding was the firm’s largest income-generator during Q4 2021, bringing in $54 million worth of revenue, but the strong recovery of its CNC Machining division was also vital to its record-breaking success. 

By far Protolabs’ fastest growing segment over the quarter, CNC Machining generated an income of $45 million, 41% more than the $32 million it reported a year earlier. According to the company, the division previously suffered a performance lull due to European supply chain and Brexit-related issues, which impacted upon its UK-based facility, but its production capacity is “now back to pre-Brexit levels.”

On the 3D printing front, Protolabs generated $19 million from its related activities in Q4 2021, with its Hubs subsidiary, which it acquired for $280 million just over a year ago, bringing in $9.9 million. This figure represents a 13% sequential rise on Q3 2021, something that the firm attributes to the popularity of Hubs’ offering in Europe, where supply problems are causing manufacturers to focus on cost. 

“The trend in Europe is a bit different [to that of Protolabs], as on the Hubs side, things are really strong,” explained Bodor on the firm’s earnings call. “In the legacy business, we surveyed customers. They’re dealing with a bottleneck in their supply chains around semiconductors and electronics. While they’re waiting, they can get parts from Hubs at a better price point.”

In fact, Hubs’ impact on Protolabs’ European business has been so pronounced, that without the $16 million it generated in FY 2021, its revenue for the region would be flat against FY 2020 at $75 million. By contrast, the firm’s US operation generated $384 million in the same period, which even without the $18 million ‘Hubs boost’ it benefited from, still represents a rise of 6% on the $345 million it reported in FY 2020. 

“Bottlenecks are affecting our quickturn business, but Hubs is benefiting from that.”

Revenue ($)  Q4 2020Q4 2021Difference (%) FY 2020FY 2021Difference (%) 
Injection Molding 52m54m+4218m226m+4
CNC Machining 32m45m+41131.5m167m+27
3D Printing 16m19m+1762.5m73m+17
Sheet Metal 4.5m6m+2419m20m+5
Total Revenue 105m124m+18434m488m+12

Protolabs’ tough but profitable Q4

Like many of its contemporaries, Protolabs’ earnings potential was severely dented by the impact of the COVID-19 Omicron variant in late-December/early-January. In the company’s financial call, its Interim CFO Dan Schumacher explained how this had effectively delayed the return of many staff post-Christmas, causing a sluggish start to the quarter, an issue that was “heightened in automotive.”

Yet, despite the continued challenges posed by the pandemic, Schumacher added that the firm’s overall revenue performance had been “stronger than expected.” When faced with questions of Hubs’ seemingly ongoing integration, he also emphasized that although it had “operated independently to-date,” its acquisition had boosted Protolabs’ reach, and it’s now working on “front-end integration.” 

Elsewhere, to combat the rising inflation of its transport, material and staffing costs, the firm has revealed that it has adjusted some of its pricing as well. However, Bodor suggested on Protolabs’ call that this was done “in a thoughtful way,” based on part complexity and composition analysis, and he expects the move to yield “continued improvements” in its bottom line in the coming quarters. 

In the early stages of FY 2022, the company has also made a number of business moves that should aid its growth moving forwards. Following the opening of its European 3D printing facility in Germany late last year, Protolabs has gone on to launch a new vapor smoothing service and gained ‘JOSCAR’ certification, a form of accreditation held in high regard by various UK defense contractors. 

A Protolabs engineer operating one of the sixty 3D printers at the new facility.
Protolabs expects to generate up to $126 million in Q1 2022. Photo via Protolabs.

Striving for double-digit revenue growth

In the closing stages of its earnings call, Bodor set out how Protolabs plans to embrace greater automation, pricing optimization and Hubs integration as a means of “accelerating growth” and “being a digital leader at scale.”

Based on the success of this strategy, and the promising order growth it has started to see in Q1, the firm has set its outlook at $116-126 million, which if realized, would represent annual growth of 0-8%. However, as the year goes on, Bodor added that he expects Protolabs’ rises in income to accelerate, as its “measures to address challenges” take effect, culminating in a FY 2022 of double-digit growth.         

“We ended Q4 well with a strong trajectory,” concluded Bodor on Protolabs’ earnings call. “We saw a slowdown in orders at the end of December and the first week of January, but since then our orders have been on a good trajectory so we’re confident of getting into double-digit growth by the end of the year.” 

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Featured image shows Protolabs’ new Putzbrunn production facility. Photo via Protolabs.