After a break-out year in 2018, the third quarter was a falling back to earth of sorts for digital manufacturer Proto Labs Inc.
For the quarter ended Sept. 30, Protolabs, which use 3D printing and digital blueprints to construct items by adding or removing materials layer by layer; additive manufacturing, a form of 3D printing used to add materials to build products; injection molding, a process by which material is forced into a mold to form a product; and CNC, or computer numerical control, a process by which machining or milling tools operate via computer programming, sales grew 1.7% to $117.45 million from $115.43 million in the prior year.
Net income for the third quarter was $16.79 million, compared with net income of $20.93 million in the third quarter of 2018.
Minneapolis-based Protolabs is the latest publicly traded manufacturer or distributor with a hefty investment in business-to-business ecommerce to report weaker financial results because of softening economic conditions. Last week W.W. Grainger Inc. and MSC Industrial Supply Co. also reported less-than-stellar financial results.
“To demonstrate the impact of the economy to our business our top 100 customers grew nearly 20% in the first nine months of 2018,” CEO Vicki Holt told Wall Street analysts on the Q3 earnings call based on a transcript from MotleyFool.com. “In the first nine months of this year revenue generated from those same 100 customers was essentially flat—all these customers remain key Proto Labs customers, but their investment levels have varied due to the economic environment.”
The growth area for Protolabs in the third quarter was 3D printing, which grew year over year 14.8% to $15.89 million from $13.84 million.
“3D printing revenue was a record and increased 14.8% over the prior year,” Holt told analysts. “The 3D printing market continues to expand, and we continue to rapidly produce 3D printed parts with outstanding quality and repeatability.”
For the first nine months of the year, revenue for Protolabs grew 6% to $165.93 million from $156.61 million in the first nine months of 2018. Net income for the first three quarters was $48.46 million, compared with net income of $50.37 million in the first nine months of 2018.
“Due to a weakening macroeconomic environment and difficult comparisons, after a tremendous 2018 for Protolabs, our 2019 year-over-year growth rates have been lower than historical levels,” Holt said. “Although, we continue to invest in the business to allow for future growth, we are taking a disciplined approach and managing expenses during this time of macroeconomic uncertainty.”