Ladies and gentlemen, thank you for standing by. Welcome to the Proto Labs Second Quarter 2013 Conference Call. During today’s presentation all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Thursday, August 1, 2013. I’d now like to turn the conference over to Bill Dietrick, Vice President of Marketing at Proto Labs. Please go ahead, Mr. Dietrick.

Thank you, operator, and good morning everyone. This morning before the market opened, Proto Labs issued a press release announcing its second quarter financial results for the period ended June 30, 2013. The release is available on the Company's website at protolabs.com. Before we get started, during the course of this conference call, the Company will provide financial projections and make other statements about its business that are forward-looking and subject to many risks and uncertainties that would cause actual results to differ materially from expectations. A detailed discussion of the risks and uncertainties that affect the business is contained in the Company's annual report filed on Form 10-K and other SEC filings, particularly under the heading Risk Factors. Copies of these filings are available online from the SEC or on the Proto Labs website. The Company's projections and other forward-looking statements are based on factors that are subject to change, and therefore these statements speak only as of the date they’re given. The Company does not undertake to update any projection or forward-looking statement. In addition, to supplement the GAAP numbers, we’ve provided non-GAAP adjusted net income and basic and diluted net income per share information that excludes the after-tax costs of stock compensation. We believe that this non- GAAP number provides meaningful supplemental information and is helpful in assessing our historical and future performance. A table reconciling the GAAP information to the non-GAAP information is included in our financial release. Now I’d like to turn the call over to Jack Judd, Chief Financial Officer of Proto Labs. Jack?

Good morning everyone. Thank you for joining us today on our second quarter 2013 conference call. Brad Cleveland, our President and CEO recently had surgery and is home recovering, unable to be on the call today. We expect Brad will be back in the office on August 12. With me today is Rob Bodor, our Chief Technology Officer. I will provide a brief overview of our second quarter 2013 financial results and some related commentary. Rob will review the market sizing work that we’ve talked about previously. Then I will provide a more detailed look in our financial results and offer our views on the outlook for the third quarter of 2013. At the end of our remarks, Rob and I will be glad to take your questions. Proto Labs again generated record revenue of $39.7 million in our just completed second quarter, a 33% increase over the prior-year. The effects of negative currency translation amounted to 515,000 this past quarter. Without this our revenue in the quarter would have been $40.3 million, a 34% increase over the prior-year. Our results so far this year continue to demonstrate the strength of our business model, combined with solid execution, and as we reported during our first quarter earnings call, this excellent performance was once again the result of record quarterly revenues from each of our global operations in the United States, Europe, and Japan. Our record quarterly revenue helped us achieve record quarterly earnings. Our net income for the second quarter was $8.6 million or $0.33 per diluted share. Every quarter Proto Labs sells its services to product developers, many for the first time as well as those that have used us for many projects through the years. To help our investors understand this concept better, we’ve provided a customer company…

Thank you, Jack, and good morning, everyone. Starting early this year, Proto Labs sponsored a study to understand the nature and size of the markets for prototyping and short run productions of parts manufactured by either injection molding or CNC machining processes. The study was jointly conducted by the Industrial Designers Society of America or IDSA and ORC International. IDSA is the world’s largest and oldest member driven society for industrial design. IDSA represents professionals in product design, ergonomics, design management and related design fields. ORC founded in 1938 is a leading global market research firm specializing in research related to product development and innovation. ORC conducted approximately two dozen interviews and together they surveyed an additional 563 engineers and product designers across the major manufacturing industries to understand the volume of products they make, their demand for contract manufacturing and how they outsource prototyping and small volume production of their products. ORC use these results to build an estimate of the total market for injection molded and CNC machine prototype and small volume production parts globally in the geographic regions where Proto Labs operate. Constraint to fit Proto Labs business practices including limiting the part size to match our envelope and excluding any parts that require additional services, which we do not provide. With these constraints in place, ORC International believes that the market for Proto Lab services as offered today is approximately $6 billion globally and $2.6 billion in the U.S. In addition, the study founded by manufacturing process CNC machining and injection molding make up two of the largest segments of outsourced functional prototyping and small volume production. Together these two processes account for more than 50% of the total spend on outsourced prototyping and equate to approximately 5% of the total R&D budgets of companies across all industries globally. IDSA and ORC will be releasing a white paper that summarizes the survey results shortly. We expect this report will be available from one or both of their websites by the middle of August and we’ll provide a link to the report by visiting our website and clicking on the Investors tab.

Thanks Rob for the great summary. Last quarter in our call we discussed our plans to open additional factory capacity in the U.S. in support of our Firstcut operations. We indicated a need to have space online by the end of the fiscal year. Recent productivity improvements, especially in regards to the amount of parts we can produce with our current inventory of CNC mills have given us some additional room for growth, which pushed out our timeline for this space. We are close to making a facility decision and maybe able to announce something soon. If we’re successful in finding space with reasonable retrofit requirements our move will occur in the second quarter of 2014. We do not expect that this timeline will have any negative impact on our ability to fulfill customer orders. We will give additional information on this when the new building is purchased and a short-term cost of the move can be better estimated. Our Cool Idea! program continues to attract interest from product developers and entrepreneurs, both here in the United States and Europe. So far this year, the program has received close to 100 idea submissions and four awards have been granted. The Cool Idea! program continues to be a reliable source of media exposure for Proto Labs services. The flip out Tantrum electric screwdriver which was named the Cool Idea! winner in may was awarded tooling and initial production run of parts to help launch the product and was featured in USA Today’s top 10 gadget gifts for Fathers Day. This past quarter our Firstcut machine service also attracted the attention of Jamie Hyneman, executive producer, host and engineer of the popular Discovery Channel series Mythbusters. Working on a personal project, Jamie turned to Firstcut for prototype parts for a cutting edge…

Thank you. (Operator Instructions) And your first question comes from Troy Jensen from Piper. Please go ahead. Troy Jensen - Piper Jaffray & Co.: Nice results gentlemen.

Thank you for being on the call Troy. Troy Jensen - Piper Jaffray & Co.: So Jack, if you look at gross margins here, the last three quarters it seems like they’ve really kind of stabilized at 62.7. Any thoughts going forward second half of the year, do you see any reason we’d deviate from that level given you’re not adding capacity now until Q2 of next year?

I think our gross margins will be at the top end of our target model for the next couple of quarters. You’re correct. And that of course assumes that we do a good job on managing our labor and that our orders flow in patterns that would equal or be similar to past times. Troy Jensen - Piper Jaffray & Co.: Okay. Perfect. How about – two more questions, traction with some of the new metals, could you touch on that please?

I think our progress on the R&D side is going forward as expected. We still are very much on a beta side on both MIM and [fix the Molding with] Magnesium. I’d say that our stainless steel continues to track forward, but there will be no material announcements or levels of business on stainless steel that would be worth reporting right now. Troy Jensen - Piper Jaffray & Co.: Okay, perfect. And last question, could you let us know what Larry’s involvement is going to be with the Company going forward now?

Larry is still very involved into a similar level that he was before Rob got the new responsibilities and the new job title. So Larry is still very much involved. He just stepped aside from the role of Chief Technology Officer, so Rob is probably more involved on the R&D side maybe than he was before. And I still want to emphasize that he still is the Chairman of the Board. Troy Jensen - Piper Jaffray & Co.: Yeah. Okay, perfect. Good luck to Brad and good luck in the second half.

Thank you.

Thank you. And your next question comes from Nicole DeBlase from Morgan Stanley. Please go ahead.

Yeah, good morning, Jack.

Good morning, Nicole.

So, can you just talk a little bit about how volumes trended during of the quarter? Did you guys see sequential acceleration within the months or was the volume pretty steady?

We generally have not commented in the past about how orders flow from month to month in the quarter, because again the nature of our business is a quick turn and so our business can vary or be volatile, week to week very easily. So, I don’t think I want to comment explicitly on your question there.

Okay fair enough. I’ll use a different one then. Europe looks like it strengthened quite a bit this quarter, can you just talk about the key drivers and what you’re seeing in the region?

I think, I’m glad that you notice that Europe did a good job, and special thank you to that team over there, that they’ve gone through about five or six quarters now of some awfully hard work to be able to keep the business on track with some tougher economic situations in the Euro zone. But I think the key for Europe has been the same thing as it is always has been its going often finding new customers, new product developers, doing a good job on everything they do, getting their products out the door. This is the same blocking and tackling that is there to grow the business when revenue rates were going faster. So nothing to do explicitly in the call.

Understood. And I’ll just ask one more and then I’ll pass it on. The G&A expense is pretty flat Q-on-Q. You guys did a good job managing that despite the pretty nice increase in sales. So, I’m just curious at what level do you think – of sales growth do you think you need to start adding overhead?

I think our G&A is pretty solid where it’s at. We have added overhead. There is a little bit of seasonality that can go on in G&A. Second quarter will be a little bit less G&A expense in the first quarter. But I do not see any large increase in the next year, two years on G&A for growth in our revenue.

Great. Thank you, Jack.

Thank you.

Thank you. And your next question comes from Brian Drab from William Blair. Please go ahead. Brian Drab - William Blair & Company: Good morning.

Good morning, Brian. Brian Drab - William Blair & Company: First question on new customer revenue. It’s clear why the existing customer revenue is improving given your targeted marketing strategy to dig deeper. What’s driving the new customer revenue growth because that’s really accelerated in 2013?

Let me see if I understand the question. So you’re … Brian Drab - William Blair & Company: The new – revenue per new customer.

Customer company or the product developers, since we gave both metrics? Brian Drab - William Blair & Company: Let me restate it again, revenue per new customer company, which is up 12%. It was up 12% in the first quarter, up 12% year-to-date?

I think an off a lot of the our initiatives around marketing, the trade shows we attend, the development of our website, the new products and services, definitely the – our sales group going out and doing cold calls and asking for more referrals within product developers, all those things together really are necessary in part of our growth strategy defining new companies to do business with. Brian Drab - William Blair & Company: Is there anything you can point to though, Jack that’s different this year from last year given the same metric revenue per new customer company was down 2% last year, which I always ascribe to increasing mix toward Firstcut which had somewhat lower price point. But the mix this year even leans a little bit further in the first half of the year to Firstcut than it did last year. So is there anything that is particularly different this year?

Well, I think which you’re seeing us having far more infrastructure in the sales team that we had a year-ago. I mean, I will just pick a number off the top of my head, but it might be 25 people more in our sales organization if you include the support functions besides just the people that are on the phone everyday. And so there is definitely more people making calls everyday. Brian Drab - William Blair & Company: Okay. Okay, great. And then on Japan, the revenue has been flat there for about three quarters. Is there anything in particular that would be restraining the growth there?

Are you talking sequentially flat are you talking year-over-year flat? Brian Drab - William Blair & Company: I’m not looking at the growth rates, I’m just looking at the absolute dollars in Japan and it’s been $1.4 million or $1.3 million for fourth quarter, first quarter and second quarter?

We are pleased with the Japan result this past quarter. They grew nicely year-over-year and Japan has more seasonal influence than the rest of our markets. And then also you need to take into effect that the foreign currency. It was quite dramatic in Japan this quarter. Most of that 515,000 was really in Japan. So, if you could – on a constant dollar basis, the growth rate would be higher. Brian Drab - William Blair & Company: Okay, got it. That’s helpful.

Constant yen basis, I guess would be a better way to put it. Brian Drab - William Blair & Company: Yeah, right. Okay. Congratulations on the great results.

Thank you.

Thank you. And your next question comes from Jim Ricchiuti from Needham & Co. Please go ahead. James Ricchiuti - Needham & Company: Thank you. Good morning.

Good morning. James Ricchiuti - Needham & Company: Jack, I’m looking at this new data that you’re providing, the unique product developers serve data and I’m wondering, can you tell us approximately how many organizations these 6,900 product developers represent? You always want more right?

Probably I could, if I had a spreadsheet in front of you right now, but in our press release we give year-to-date product developers that we’ve done business with and that you would then have to put that number against the year-to-date numbers for customer companies that we did business with. James Ricchiuti - Needham & Company: Okay.

So you’ve to look at year-to-date customer companies though, because we don’t provide detail on a quarterly number for that. So, look at year-to-date product developers against year-to-date customer companies. And I think you’re going to see is that roughly maybe 2/3s of our business comes from distinct companies and the other third of our business comes from multiple product developers in the same customer company. James Ricchiuti - Needham & Company: Got it. Okay. And then I’ve a question – another question on Europe. And as I look at the – what I think is pretty successful results out of Europe considering the macro environment, what I’m wondering is if we look at Europe versus the U.S., is it a case where your business in Europe is more heavily skewed toward new customers as opposed to the U.S., which perhaps is more skewed toward existing customers or is the profile similar?

Profiles are very similar. We run our worldwide sales and marketing organizations relatively consistent, no matter what the geography is. We do small tweaking for the cultures of different countries. But the strategy behind growing Europe is the same strategy as we have here in the U.S. and the sales and marketing teams that are based out of England, Germany, France, Italy are all trying to get business the same way as here. James Ricchiuti - Needham & Company: Okay. And just on that last note, sales and marketing and R&D, can you give us any sense as to where you see head count going and maybe if you’ve any of those numbers, I’m not sure if you gave any of those?

I don’t have any – we didn’t provide the exact numbers for those teams in our press release. But those teams have experienced expansion this year as you would expect and I think and I expect that the – especially in the sales area that we will continue to do aggressive hiring in the coming quarters. James Ricchiuti - Needham & Company: Okay. Thank you.

Thank you. Your next question comes from John Baliotti from Janney Capital Markets. Please go ahead.

Good morning, Jack.

Good morning, John.

It looks like if you look at the number of new customer companies, I know that was a question last quarter because it was kind of as you pointed out before that it’s been fairly flat over a long time. But it looks likes sequentially that picked up about 2% and I’m just curious is that marketing effort or as you pointed out a couple of things you’re doing on the marketing side and I know the marketing dollars were a little bit higher even though as a percent of sales they were more efficient. So that was my first question.

Well, I think John we go back to what we’ve talked about this in past quarters is that most of our marketing and selling efforts go to product developers and companies tend to flow out of that versus start the process. And so little movements up or down in percentages tend to be more random. I think that this past quarter you can see more of the effects of our sales and marketing by how we look at the number of product developers that we did business with. Keep in mind that if one of – somebody in our sales team finds a new customer companies do business with, one of the first things they do is try to leverage that one relationship into greater and more quantity relationships with other engineers and product developers in that company. And so the efforts of – the success of their efforts don’t always show up in customer companies, but they do show up in product developers.

Okay, great. And then – and to that point of the revenue per product developer, you pointed out was up about 8% year-over-year. Any color on what those developers is it – are they more of – if they’re Firstcut customers more of that or are they – are they kind of switching back and forth to Protomold? Is that you get any sense of what’s driving that increased revenue?

I think the way to put that would be our sales force being successful in selling both services. So if a product developer comes in and buys a couple of Firstcut parts from them, we’re back on the phone with them making sure they know about injection molding. And if they’re getting injection molded parts, we make sure that they know they can get aluminum parts on Firstcut. So its an expansion of services. Its also a reflection of our parts business being able to get parts businesses off of mold. That is a significant part of our business and we don’t want to forget that.

Right. You point out earlier that you’ve been able to find additional capacity through just better utilization of your equipment and I’m – do you feel, I mean, that – do you feel that it looks like this is being pushed out to about the middle of 2014, which I understand given the progress you’ve made. Do you feel like there is still even what you’ve been able to do for the first six months of the year that there is still more as these revenues continue to ramp that there is additional capacity if you can find through greater efficiency in the system?

I’m an optimist, so I always say that our systems can provide greater efficiencies and we can get by with less staffing and less equipment with same revenue level. I can tell you that what’s happened in the past six months, the past nine months is more of a step function in terms of productivity and the next productivity improvements will not have that kind of a step. But I’m very positive and bullish on our manufacturing operations worldwide.

Great. Thanks, Jack.

Thank you. And your next question comes from Steve Dyer from Craig-Hallum. Please go ahead.

Thanks. Good morning, Jack.

Good morning.

Just one question most of mine had been answered. Your margins would suggest that you’re still – you’re not seeing a lot on the competitive front. You’re still able to be relatively selective sort of get the margins you want, take the projects you want, et cetera. Is that a fair assessment, anything new that’s – that you’re seeing there?

I would change the way you referred to our business. It’s slightly different. I agree with you, we’re still not aware of anybody at scale anywhere in the world that can do what we can do. But I’d say we have disciplined with pricing and disciplined to stay within the box of parts and services that we can provide really, really fast. I wouldn’t say that we try to exploit pricing on a part by part basis that would be virtually impossible to do with the number of different orders that we take everyday. But I think that discipline to our model is still very, very important for us to attain the margins that we have.

Okay. Thank you.

Thank you. Your next question comes from Peter Misek from Jefferies. Please go ahead. Peter Misek - Jefferies & Company: Thank you. Just a couple questions digging a little deeper into the new versus existing customers, any ability to give us margin profile? Would agree that really that new customer ramp is a nice acceleration, love to understand if there is any kind of margin difference. And then penetration within companies, are they actively promoting you folks within the company, is it word of mouth? How do you radiate when you get into a new company? I would be curious to understand that dynamic a little better.

Let me see if I got both questions correct. Regarding margins, our business is designed really to have very similar margins whether you buy Firstcut services, Protomold services, whether you buy parts – production parts from us and as whether you’re a new customer or an existing customer. The margin profiles are all designed to be the same. We don’t change our pricing model at all on a daily basis or on a customer by customer basis. And again, every part is unique, so it isn’t as if one can compare a part today against a part in a week. The second part of your question again was, is that how are we been successful in getting our existing product developers to do more business with us? Peter Misek - Jefferies & Company: Well, it was more within a company. Let's say you are doing work with Tesla for example. You’ve got one product engineered at Tesla using your services and suddenly you’ve ten product engineers doing it. I know that’s a dream, but I’m curious to see how that evolves whether it’s a word of mouth, is there a way that you get one lead and your sales person says hey, is there anyone else in your firm? Just love to understand that a little bit.

I think you’re talking about viral marketing and I cant think of anything that is more important to us than one product developer saying, I cant believe how lucky I’m that I found you guys. I got to tell my co-workers about that. And then they go down at lunch time, phone numbers were passed out to us, we make phone calls, we introduce this to us. That trying to deeper and wider within companies and finding more product developers is one of the key ways that our sales force is successful and they grow their business. In the United States especially. Peter Misek - Jefferies & Company: I’m going to try this question again in terms of a lead time or ability to forecast. Clearly you guys have had some great results here. Any other gauges or metrics that you could help us understand how we should look at or think about this into the future, any indicator, I mean, industrial production globally seems to be rebounding here a little bit. Should we be thinking of that as helping you folks or providing a tailwind into the end of the year? And that’s it for me. Thank you.

I wish there was something that gets published by the government or whatever that you people look and you could really use to help predict revenue. I do believe that a healthy economy, surprise, surprise helps us. But I don’t think that alone should allow you to be much better of a forecaster. We still live internally with 15 days worth of orders in our business at any one given time. We have great confidence in our ability to extend our growth curve and we’re just growing kind of the same position. I can say that we’re very happy that Rob’s work in talking about our TAM that it did confirm that our TAM is very, very large and that we still have a lot of opportunity to grow. So we’re very happy that those results are out there. Peter Misek - Jefferies & Company: Great, thank you.

Thank you. Your next question comes from Greg McKinley from Dougherty. Please go ahead. Greg McKinley - Dougherty & Company: Yes, thank you. Jack, the customer count metrics and then the product developer metrics you’ve shared, I guess, I wonder if it’s suggesting that maybe there is a trend change in the sense that Proto Labs is doing business with larger and larger companies simply because it would suggest that these are companies with bigger product development staffs. Is that a fair observation and is there anyway you can describe if there has been a shift in the profile of the customer companies you are working with?

I don’t think the shift is enough to really notice. It could be that material. But we do have a good hunk of our resources that are calling into organizations that have 100s and 1000s of product developers. I mean that’s why I think that we’re going to try to emphasize more of this customer metric that’s around product developers versus companies, because I think it’s more meaningful to the market. Greg McKinley - Dougherty & Company: But you wouldn’t necessarily call that out as a change in the how you describe your customer companies from say 12 or 24 months ago, it’s just more effectively selling within those large organizations?

No, I don’t think there is anything that would be new or different in the last few quarters than it was before. Greg McKinley - Dougherty & Company: Okay. Thank you.

Thank you

Thank you. Your next question comes from Tom Hayes from Thompson Research Group. Please go ahead.

Good morning, Jack.

Good morning.

Most of my questions have been answered. I was just wondering about the business in Europe. Do you guys are susceptible to a lot of the seasonality that a lot of the manufacturing businesses experience in the third quarter was typically one of the seasonally challenged quarters?

We will experience a slight seasonality in Europe here in the month of August. We know that we expected. It is not as significant as other businesses have in Europe. So, but it will be a touch, but its really – it does not affect our business overall consolidated especially for the quarter.

Great. Thank you.

Thank you. And your next question comes from Brian Drab from William Blair. Please go ahead. Brian Drab - William Blair & Company: Hi, just one more quick question.

Hey, Brian. Brian Drab - William Blair & Company: That study that you did that concluded 6 billion global market size, 2.6 billion U.S. that’s a very exciting estimate. And I’m just wondering though is that a number that you would expect is going to actually increase quite a bit as you expand the part envelope? As I understood it I need to go back to the transcript, it sounded like this market estimate is very specific to your capabilities to your part envelope and as you’re expanding that, I imagine that 6 billion could move up.

Thank you for asking the question on the study. When we were preparing for this call, we were wondering where the emphasis would be on questions and I was surprised that we haven’t had anything on that. So, I’m going to let Rob talk about this and he did about 99.7% of the work.

Yes, thanks Brian. Good question. The answer is yes. We designed the study to focus on the existing capabilities with the intension that as we extent our capabilities such as our part envelope and other services, there will be a corresponding increase in the total addressable market size. So, we do expect that, that number could go up in the future as we do that. Brian Drab - William Blair & Company: So is this a number that you’ll be able to update us on quarterly or annually?

Yeah. We will be able to update you on those in the future. I’m not certain about what the cadence would be. Brian Drab - William Blair & Company: Right. Okay. Thanks very much.

Thank you. Thanks, Rob.

Thank you. You have no questions at this time. (Operator Instructions) No further questions have come through. I’d now like to turn the call over to Jack Judd for closing remarks.

Again everybody thank you for joining us today. We really enjoyed doing these calls and again the chance to talk about our fine business and I hope we’ve portrayed and conveyed a sense of confidence and our continuing strength of Proto Labs business model and our excitement about the growth and opportunities ahead for us. We look forward to updating you on our progress during our third quarter conference call at the end of October. Thank you everybody.

Thank you. And thank you for your participation in today’s conference. That concludes the presentation. You may now disconnect and have a great day.