Greetings. Welcome to Protolabs' second quarter 2024 earnings call. At this time, all participants are being in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll now turn the conference over to Jason Frankman, Vice President and Corporate Controller. Jason, you may now begin your presentation. Thank you, and welcome everyone, to Protolabs' second quarter 2024 earnings conference call. I'm joined today by Rob Bodor, President and Chief Executive Officer, and Dan Schumacher, Chief Financial Officer. This morning, Protolabs issued a press release announcing its financial results for the second quarter ended June 30, 2024. The release is available on the company's website. In addition, a prepared slide presentation is available online at the web address provided in our press release. Our discussion today will include statements relating to future performance and expectations that are or may be considered forward-looking statements and subject to many risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to our earnings press release and recent SEC filings, including our annual report on Form 10-K for information on certain risks that could cause actual outcomes to differ materially and adversely from any forward-looking statements made today. The results and guidance we will discuss include non-GAAP financial measures consistent with our past practice. Please refer to our press release and the accompanying slide presentation at the investor relations section of our company website for a complete reconciliation of GAAP to non-GAAP results. Now I'll turn the call over to Rob Bodor. Rob? Thanks, Jason. Good morning, everyone, and thank you for joining our second quarter earnings call. Despite operating in a challenging macro environment, on a year-over-year basis, Protolabs' first half 2024 revenue grew 2%, and non-GAAP earnings per share grew 25%. In an environment in which manufacturing activity has contracted in the U.S. and Europe, we continue to take share and improve our industry-leading profitability. We've improved the efficiency of our AI-enabled pricing algorithms, increased the automation in our digital factories, and managed our costs with volume. No business is immune from the manufacturing headwinds currently at play in the market, but our resilient model has produced growth and improved profitability. In the second quarter of 2024, we made good progress against our two strategic initiatives, increasing the number of customers using our comprehensive offer and driving higher revenue per customer through larger orders. Our customers continue to recognize, adopt, and benefit from our comprehensive offer, fulfilled through both factory and network. As we've previously discussed, our comprehensive offer enables customers to use Protolabs as a single-source manufacturer throughout the product lifecycle, from prototype to production to end of life. We are still in the early stages of customers fully utilizing our combined offer, which presents an incredible long-term growth opportunity, and we're focused on driving adoption. In fact, in the last 12 months, the number of customers using the combined offer is up over 50% year-over-year. We're also focused on driving higher revenue per customer through larger orders across services. While large one-time orders decreased slightly compared to the first quarter, second quarter revenue per customer contact increased 7% year-over-year. There will be fluctuations in larger order quantities quarter to quarter as we continue to shift toward more production work, but we strive to increase revenue per customer contact over the long term, and I'm pleased with this result. Let me now share an example of the value we bring to customers with our unique capabilities. A medical device company called Solmetex was working to launch a new water treatment product for dental offices. Time to market was critical for this product, and it was also important that the learnings captured in the prototype phase were transferred to the production of these critical components. Solmetex was looking for one supplier to partner with on prototyping through production. With our combined factory and network fulfillment model, Protolabs was the perfect fit. We manufactured prototypes through both 3D printing and injection molding in our digital factories, enabling Solmetex's innovation through our world-class lead times. We then fulfilled injection molding production quantities via the network. So prototyping the factory, production through the network. Solmetex is fully utilizing Protolabs' combined offer to add value to their customers and their own business, which aligns with our first strategic initiative. As for our second strategic initiative, our relationship with Solmetex has also increased our revenue per customer contact because of the production work. So this is really a wonderful example of how our combined factory and network offer enables a customer to gain value by using Protolabs as a single source manufacturer throughout the product lifecycle. While we are seeing a growing number of customers use Protolabs for both prototyping and production, there are still many cases in which customers order prototypes from Protolabs and eventually go elsewhere to procure their production volumes. Capturing additional production work from existing prototype customers is a massive growth opportunity for Protolabs. However, we're currently operating in an environment that is challenging, and customers have been impacted by macro factors, including higher interest rates, reduced demand for manufactured goods, broad-based cost-cutting efforts, and moderating capital expenditures. As I mentioned earlier, we grew in the first half of 2024, while U.S. and Europe manufacturing activity contracted. In fact, manufacturing indices have indicated contraction consistently for the last two years in the U.S. and the Eurozone. In the U.S., we have seen continued slowing growth in orders for core capital goods, industrial machinery, and other durable goods since the post-COVID surge in 2021. Just yesterday, we learned that the U.S. manufacturing PMI in July hit an 8-month low as manufacturing activity enters deeper into contraction. Despite these persistent challenges, we continue to focus on what we can control and are taking action in order to accelerate our growth. While we showed growth in the first half of the year amidst the constrained broader manufacturing environment, I am not satisfied and believe Protolabs can grow much faster, faster than we have in the past few years, in fact. We operate in a large addressable market, and Protolabs capabilities are unique. In order to unlock accelerated growth, we're making changes to our internal structure. I'd like to take a few minutes to walk you through these changes that we believe will better position the business for improved financial performance in the long term. Going forward, we're separating revenue generation from the operational and fulfillment work. Our regional organizations will now be entirely focused on revenue and ensuring the best possible customer engagement and experience, and we will have a global operations organization with the sole responsibility of seamlessly fulfilling customer part orders as a single unified offering, encompassing both factory and network. This change enables the regional revenue teams to focus on executing our strategy of serving more customer needs across the product lifecycle and accelerating revenue growth. The new org structure also ensures complete integration between factory and network. The global operations organization will also allow us to more efficiently serve customers' production needs. So I'm excited about this change. But as a result of the reorganization, we've eliminated the regional general manager roles, impacting two of our executive team members. Mike Kenison, former GM of the Americas, has transitioned to a newly created position as head of the global operations organization. In this role, Mike is now responsible for our global manufacturing strategy, focused on world-class global fulfillment through both factory and network. Mike has nearly 30 years of manufacturing operations leadership experience, and led operations for Protolabs in the Americas from 2006 until being named the GM of the Americas in 2021. So Mike brings a wealth of experience in operational leadership, and I am confident that he is the right person to lead the new operations organization. As noted in our SEC filing on July 24th, Bjoern Klaas is no longer GM of our EMEA region. Bjoern led our European business for almost seven years, and we are very thankful for his contributions. I am personally thankful for Bjoern's leadership over that period, and I truly wish him the best in his future endeavors. But I'm very excited about the potential growth that our new regional revenue organizations will drive. Going forward, the Americas revenue organization will be led by Sean Farrell, our current VP of sales in the Americas. Sean joined Protolabs in 2023 and has extensive leadership experience in B2B sales. The Europe Revenue org will be led by Pjotr Horowitz, currently Managing Director of Protolabs Network, which he joined in 2022. Protolabs Network has performed very well under Pjotr's leadership, and in his new role, he will draw on prior successes in several B2B sales leadership roles. The leadership of Sean and Piotr, two experienced sales leaders with strong track records of driving growth, is a key reason for my optimism that this reorganization will enable our sales teams to accelerate our revenue. We believe our strategy will continue to drive strong top and bottom-line results, and we've aligned our org to support that strategy, accelerate our next phase of growth, and improve efficiency while diligently managing our costs. I am confident these changes will enable us to serve customers from prototyping to production and accelerate customer adoption of our comprehensive offerings. These changes make me even more excited about the future of Protolabs. Protolabs delivered year-over-year growth and strong profitability and cash flow in the first half of 2024, despite a challenging operating environment. As we move into the back half of the year, our priorities remain intact, and we believe our unique combined offer, industry-leading brand, and reputation for reliability and quality will continue to provide advantages in a very dynamic marketplace. I am incredibly proud of our team's deep commitment to serving our customers and executing on our strategy. Thank you to all Protolabs employees. I'll now hand it over to Dan to cover our financials in detail, as well as our outlook for the third quarter. Dan? Thanks, Rob, and good morning, everyone. Our financial results begin on page 7 of the slide presentation. Second quarter revenue of $125.6 million grew 2.8% year-over-year in constant currencies. Protolabs Network revenue was $24.7 million in the quarter, up 22.7% in constant currencies. Turning to revenue growth by service and constant currencies outlined on slide 9. Second quarter injection molding revenue was flat year-over-year. Injection molding orders from larger project customers continued to grow, while smaller prototype orders declined. CNC machining grew 6% year-over-year, driven by continued strong growth through Protolabs Network. Second quarter 3D printing revenue grew 1% year-over-year. Sheet metal revenue was flat year-over-year and up 10% compared to the first quarter. Turning to slide 10. Second quarter Non-GAAP gross margin increased 10 basis points sequentially to 45.7%. Protolabs Network Non-GAAP gross margin was 32.8%, up from 31.7% in the first quarter, while factory Non-GAAP gross margin was unchanged sequentially. Non-GAAP operating expenses were flat compared to the first quarter of 2024, as a decrease in employee-related expenses was offset by an increase in various discretionary costs. As a result, second quarter Non-GAAP diluted net income per share was $0.38, at the top end of our expectations, and down $0.02 compared to the first quarter of 2024. The sequential decline was due to lower volume, partially offset by a slight improvement in gross margin. As Rob mentioned earlier, our first half 2024 adjusted the EPS increased 25% over the first half of 2023. Our industry-leading profitability continues to improve year-over-year, driven by increases in both factory and network gross margins. Total Protolabs non-GAAP gross margin in the first half of 2024 was 45.6%, up 190 basis points year-over-year. Transitioning to cash flow and balance sheet highlights on slide 11. Cash flow from operations was $14.4 million. Our business model generates best-in-class cash flows, allowing us to invest in growth and return capital to shareholders. We repurchased $10.9 million of common shares in the quarter. On June 30, 2024, we had $112.9 million of cash and investments and 0 debt. Our outlook for the third quarter of 2024 is outlined on slide 13. This outlook reflects a more pronounced, challenging operating environment than we have experienced in previous quarters, and manufacturing contraction across the geographies that we operate. Customer ordering patterns softened in June, and that has continued in July. We expect to generate revenue between $117 million and $125 million. Order rates in early July were low due to the U.S. holiday. Historically, we have seen an acceleration in daily rates as the third quarter progresses. Accordingly, the guidance reflects a pickup in August and September. We expect foreign currency to have a $200,000 favorable impact on revenue compared to the third quarter of 2023. Moving to earnings guidance. We expect to incur $500,000 of one-time costs associated with the reorganization that Rob mentioned earlier. We anticipate non-GAAP add-backs in the third quarter to include stock-based compensation expense of $4.4 million and amortization expense of $900,000. We currently estimate a non-GAAP effective tax rate between 22% and 23%. In summary, we expect third quarter non-GAAP EPS between $0.29 and $0.37. To reiterate, Rob mentioned earlier that we are not satisfied with our recent performance and believe Protolabs can grow much faster. As a result, we are taking action. The organizational changes Rob described represent a new structure to support our strategy and accelerate our revenue growth in the long term. Regional revenue teams will be better positioned to focus on the customer and serve them throughout the product life cycle. The global operations organization will focus on driving efficiencies and fulfillment as a single unified offering via factory and network. We believe this new structure will improve the customer experience and accelerate growth. We are focused on e-efficiencies across Protolabs, not just through fulfillment. As such, we will continue to be prudent with our expense management and maintain best-in-class profitability. Earnings are a key differentiator for Protolabs, and we will continue to drive that and preserve our advantage. That concludes our prepared remarks. Operator, please open the line for questions. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, please press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Thank you. Our first question will be coming from the line of Brian Drab with William Blair. Please proceed with your questions. Morning. Thanks for taking my questions. I guess I just was hoping we could start with the reorg, and I'm not sure I caught all of it the first time through. So I was wondering, Rob, if you could just elaborate on what you're doing and what the impetus is for it and how it accelerates growth. And then, like, a follow-up also is, you know, what it sounds like the team is slightly smaller now, and kind of what is the potential impact in the medium term on margins or cost takeouts? Yeah, sure. Thanks for the question, Brian. So the purpose of the reorganization is to really focus us around serving our customer even better than we have been and more holistically, and it does that in several ways. So one, we're moving from regionally organized, where we had all our PNLs were regional in the U.S. and in Europe, and we had general managers, right, who were overseeing that. And that came from our old model of really fulfilling in the regions where we were going to market from the factory business. We're now moving to a global operations organization, right? Whether it's factory or network, we've got one unified organization whose job it is to bring our broad, comprehensive offer to every customer in a unified way, so that we can really ensure that we're giving our customers the best experience and full exposure to our full capabilities from an operations standpoint, and that we can then, you know, find opportunities to drive productivity in that. From a go-to-market standpoint, now we've got revenue on customer-facing teams in each region, focusing on driving customer demand in a unified way, with you know, they'll be having single, unified incentive plans and really just focusing on bringing that offering to our customers even more effectively than we had been. So that's the rationale for the reorganization, and we're very excited about it here internally. you asked about my- Can, can, uh- Go ahead. Yeah, yeah, I asked about the cost, but before we get there, just- Sure. Maybe an example of a customer, you know, benefiting from this reorg would be helpful. Is this the... Or, like, just how this would benefit Protolabs and the customer, I guess. But, I'm just picturing, like, maybe it's a customer in Europe, for example, who is doing a lot of product development activity and running fast with the factory, but then they're moving to production, and then, you know, maybe you're gonna use the network. And that same team then will provide a more seamless customer experience and suggesting that they move, you know, to the network for some higher volume production work that maybe will be done even in Asia or something- Uh-huh. but it's all more holistically offered. Is that kind... Am I on the right track at all there? You got it, you got it exactly, right. So it's one unified team. They're seeing the full scope. You know, we remove the need for handoffs, and- Mm-hmm ... therefore, we can just serve the customer more efficiently with that- Right - comprehensive offer. Brian, what I would also just highlight, you've got a team that is just focused on the customer. They're just focusing on getting the customer what it needs, what it wants, right? Mm-hmm. And that could be, you know, in terms of our customers, that could be the fastest speed prototype out of our CNC facility, or that might be somebody who's in production, and they need that fulfillment out of the network. And they're not worried about, oh, I need to get so many revenue into one fulfillment option or another. They're just worried about getting the customer what they want. The operations organization is then fulfilling that in the most efficient way possible through our broadest kind of scope of fulfillment options that are available. So it is narrowly focusing our organization on the things that matter to drive success to the customer. Mm-hmm. Yep. Yeah, it makes sense. Okay, thank you. I've got a couple more questions, but maybe I'll just ask one more now. How do you foresee in the next year or so, the trend in your customer count going? Because, you know, it has been challenged, right? The customer count is down. I know that your revenue per customer is up nicely, because of, you know, the network strategy. But do you think that ultimately, like, that you're gonna be able to get that total customer count kind of reverse course and start growing again? Yeah. Yeah, we absolutely do, and our focus is on driving that and, and driving overall growth, right, by, by improving our, our revenue per customer. Mm. Now, you know, of course, we all understand that this is a very difficult, macro environment. And- Yep ... as you talk to our customers who are manufacturers, they're dealing with- Mm-hmm ... interest rates, inflation, uncertainty politically because of elections, uncertainty because of trade policy, et cetera. So, you know, many of them are having a difficult time in this, in this period. And, you know, I attribute what we're seeing with total customer count, you know, a reflection of that, of that kind of macro. So we're driving what we can drive and driving what we can control around serving our customers better, about being for them, being, being there for them throughout the product life cycle. I think we have a tremendous opportunity for growth as we go forward.... Last year, we served 53,000 customers. They came to us for their prototyping. They've told us that they want to use us more broadly across the product life cycle. We are working hard to, you know, to get them to be adopting that. We saw a 50% growth year-over-year in customers using us in that way. That alone is driving significant leverage and increase in our average revenue per customer. So our focus is on, you know, better serving the customers. We reorganized to really make us exceptional at doing that, so that we can grow in the long term, and that's what we're focused on right now. Thank you. Right. Okay, thank you very much. Thanks, Brian. Our next questions are from the line of Troy Jensen with Cantor Fitzgerald. Please proceed with your questions. Hey, gentlemen. Congrats on a good Q2 in a tough environment. Thanks, Troy. Maybe just a couple of questions. Oh, you're very welcome. For Daniel, though, can you talk about what you think gross margins is gonna look like at kind of the midpoint of the guidance range for Q3? Then also find out, following up on Brian's question about cost takeouts, do you think OpEx is gonna be, you know, up, flat, or down sequentially on an absolute basis here in September? Yeah. So, you know, with the middle of the guidance range, I would expect gross margins to be down slightly quarter-over-quarter. You know, it. We are still pushing efficiencies, automation through our factory, you know, and continuing to working the algorithm on the network side. But, you know, there is gonna be some pressure from the volume. So I would see the gross margin down slightly quarter-over-quarter. From an operating expense perspective, you know, I would expect operating expenses to be down slightly quarter-over-quarter as well. I think if you factor those things in, you get to the middle of our guidance range from an EPS perspective. Got you. Okay. Was there a second part to that question, or did I answer it? Well, there was a follow-up to that, Daniel, and- Okay. That one of you guys, actually. But just the Hubs business, you know, I know on a year-over-year basis, it's been growing nicely, but the last four quarters, we've been stuck in kinda $23 million-$25 million. I know your biggest competitor out there is growing significantly faster. So can you just talk about, you know, about share shifts or kinda why Hubs isn't growing as fast as maybe some of the others out there? So I think our focus has been on really serving the customer holistically and driving production with them. I think we've seen that that has been quite successful for us whether that's in injection molding or in CNC through the network. I believe that long term, we are going to be able to see really strong growth in that as we continue to expose that to our customers. Of course, right now, in this environment, there's clearly headwinds for customers in terms of the use cases and their adoption. And so I think that that's affecting us, right? We're not independent of the overall market. Gotcha. That's fair. Okay, so, good luck here in Q3. Thanks, Troy. Thank you. Our next question is in the line of Jim Ricchiuti with Needham & Company. Please proceed with your questions. Hi, thanks. Good morning. So if we think about this, this reorganization, it appears to be more of a redeployment of resources as opposed to, you know, as you go through this process, would you anticipate any additional investments having to be made? And how soon do you think you would anticipate seeing the benefits of the reorganization, or at least we'll see some of the... be able to see the benefits? Yeah, thanks for the question, Jim. So the purpose of the reorganization, again, is really revenue-focused, and it is about redeploying our resources in the most effective way, make sure that we are operating seamlessly as one team, as we face the customer and as we work to fulfill their orders and fully leverage our full global capabilities. Right? So that's really what it's about. We believe that longer term, this will set us up to, you know, find additional productivity and so forth, but we're focused on growth and serving our customer better, and so that's really the key rationale for it. Dan, what would you add? Jim, when I look at... You know, we grew EPS 25% through the first half of the year, but we only grew revenue 2%, right? And growing in a tougher environment is good, but as Rob stated earlier, we're not satisfied with that level of growth. And realigning and getting the organization focused on the right things for the customer are extremely important to us in order for us to really grow meaningfully, grow through production, grow through improved customer experiences. And so this alignment does this. With that growth, right, over time, we will see a pickup in margins as our growth numbers get larger and larger. The other thing I would tell you is, you know, streamlining into a unified operations organization will have a longer-term benefit, and we'll see efficiencies through that streamline over the longer term. Got it. Thank you. You know, the slowing that you called out in June and in July. It seems to be pretty consistent with what we're hearing out there. But, you know, I'm wondering if you could provide any additional color. It appears to be in both your major geographic regions. Any other color you could provide in terms of the market verticals where you're seeing some changes? Yeah. So, you know, Jim, we saw a slowing at the beginning of June, and, honestly, from the desk I was sitting at, I was like: Okay, well, there'll be some pickup before the Fourth of July. Before people go on holiday, they're gonna put their orders in, and that really did not happen. Then after the Fourth of July, while we saw increasing order rates, you know, after that U.S. holiday, they were not to the increasing level that we've seen in prior years. As we talk to our salespeople about what's going on, I think generally what we're hearing is, you know, starting in June, as you talk with a customer about, you know, closing a project and so forth, it would go through more approval cycles. It, you know, there was more delay in trying to get an answer to close an order. And that type of, you know, hesitancy, you know, continued into July. And so that's the environment in which, you know, we're playing in, but we're still focused on, you know, solving our customers' problems with, you know, with what we have, and driving the growth and capturing as many of the opportunities that are there. So, you asked also about industries. I would say that we're seeing this to be pretty broad-based and affecting most of the industries that we serve. But I would just also add, Jim, that, you know, this has been a tough environment for the last two years in the U.S. and in Europe, and I think we've proven that we can outperform in this environment. We grew all of last year. We grew in the first half of this year. We've been executing our discipline around cost management and been able to expand margins in this environment. I think if you look back in our history, in strong economies, we outperform GDP by multiples. So I think we have a very robust business. We are profitable, we are a strong cash generator, we carry no debt. We are focused on serving our customers as best as possible in any macroeconomy, and we're driving what we can control, which is to make sure we serve our customer in the best way possible. We will absolutely weather this storm, and when the cycle improves, I expect we will be demonstrating strong growth. Got it. That's helpful. Best of luck going forward. Thank you. Thank you. Thank you. Our next question is from the line of Greg Palm, Craig-Hallum Capital. Please proceed with your question. Yeah, good morning. Wanted to just dig in to that July comment a little bit more. Dan, it sounded like you, you know... It sounded, based on your past answer, that maybe orders picked up a little bit in July, but, you know, I think what you said was the guidance was based on what you saw in July and assumes an improvement or recovery in August and September. Those don't exactly, you know, tie out, 'cause I think that would assume that July trends were pretty awful. So can you maybe just tie that out, if you can? Yeah. It's not a recovery. What I'm talking about is normal seasonality patterns that we see on a lower base, right? So if you, if you draw that trend across August and September, right, August and September will be lower than, than what we had last year, which is why the guide is, is down year-over-year, if that makes sense, Greg. Okay. I mean, could you give us any sense in terms of, like, quantifying the declines in July and what's baked into the guidance or at least sort of ballpark? No, we just give guide on the overall quarter, right, and not specifically on what is, you know, month-to-month. But I would say in general, the decline in July is consistent with what the middle of the guide is year-over-year. Okay. I'm curious, you know, under this new organizational change strategy that you talked about, does it change how you view, you know, revenue by service? For instance, you know, sheet metal, which has been declining basically every year since, you know, that business was acquired, and even, you know, if I look back at, you know, 3D printing, you know, which was historically a pretty good grower, and it's kind of stagnated here the last couple of quarters. I guess what I'm trying to figure out is, how much of this is due to cyclical versus structural reasons? And, you know, is there any focus on either de-emphasizing that further, walking away from certain processes? Just would like to get a little bit more color there. Yeah, thank you for the question. So in terms of the reorganization, again, this is about how can we serve our customers holistically, and how can we be efficiently organized to do that as seamlessly as possible. It does not change the services that we are bringing to market, and we want to continue to be able to bring to market all services to meet the needs of our customers as effectively as possible. Certainly, we have some services that are performing better than others in this macro environment, and we are working to drive and improve our overall revenue, and that's really where my focus is. So I guess, I mean, do you think some of the organizational changes could help reaccelerate activity in some of those lower-performing segments then? Is that the hope? Absolutely. Absolutely. Yep, okay. All right, I will leave it there. Thanks. Thanks, Greg. Thank you. This will conclude our question and answer session and also conclude today's conference. You may now disconnect your lines at this time. Thank you for your participation.