00:00U.S. manufacturing is getting a boost from growing demand across defense, aerospace, and drones.
00:05ProtoLab is tapping into that demand using digital manufacturing to produce custom parts in as little as a day.
00:12Its customers include major players like Lockheed Martin, NASA, and Airbus.
00:16I'm pleased to stay joining us is the CEO of ProtoLab.
00:19That's Suresh Krishna.
00:21Suresh, great to see you this morning.
00:23And just looking at your company, first of all, your stock is at more than 60% or nearly up
00:2960% in the past 12 months.
00:31In the second quarter, you set a record earnings figure in which you raised your outlook.
00:36What's been going on?
00:37What has turned the corner for ProtoLab this year?
00:41Danny, thanks for having me on the show.
00:44We are absolutely a pioneer in software and digitally-enabled manufacturing.
00:50And with the growth we are seeing in aerospace and defense, we are able to support all of the companies
00:58involved in that sector
01:00and drive the growth along with that sector's growth.
01:03In fact, aerospace and defense is about 25% of our revenues this past quarter.
01:09And we grew almost 20% for our aerospace and defense business year over year.
01:14And on that raised full-year guidance, I'm curious to know how much of that was down to data centers
01:22and their expansion.
01:24Yeah, we are industry agnostic, if I could use the word.
01:28We serve over 18,000 customers every year.
01:32And data centers, robotics, drones, space, all of these are important industries for us.
01:41We are serving companies like Amphenol and Comscope in data centers.
01:46We make very specialized products which are fire-resistant cable trays, which are used extensively all over a data center.
01:54And that is growing almost 100% year over year for us, that particular sector.
02:00I'd love to get your take then, Suresh, just how closely intertwined you are with the data centers and understand
02:05this industry.
02:06What some of the political backlash has done, we were talking about earlier in the show that there was a
02:11Heatmap Pro polling show that 75% of Americans are now opposed to local data centers.
02:16As a supplier to this industry, how much is the local political pushback of data centers rolling the speed of
02:24your customers' expansion, for example?
02:28Yeah, we are further down in the supply chain, right?
02:32So, we would be supplying to companies like Amphenol and Comscope who serve Meta and Google and Amazon.
02:39So, we are a little further removed from that.
02:41So, right now, what we are seeing is there is still significant activity that is flowing through our factories.
02:47And we see that for the foreseeable several quarters to continue.
02:53As far as the political backlash, we're not close enough to it to know how this might impact the future.
02:59But a lot of the announced projects are still going through.
03:02So, I looked through your filings.
03:04I looked on the terminal.
03:06Correct me if I'm wrong, but I don't think you have any debt at a corporate level.
03:09So, I was curious to know if you have any plans for debt or equity issuance, or are you just
03:17targeting organic growth, or are there potential inorganic growth opportunities for you out there?
03:24Absolutely.
03:24That's a great question, Sally.
03:26We are looking at organic and inorganic growth.
03:29Our strategic plan, which we announced earlier this year, is to double over the next five years.
03:34And as part of that, while we are driving organic growth and we've done double-digit growth for two quarters
03:40in a row, we are looking at a pipeline of acquisitions.
03:44You know, what our customers look for, and we serve 95% of Fortune 500 companies, they're looking for resilience
03:53in the supply chain.
03:55They're looking for speed as a strategic advantage, and the supply chain in the U.S. has not traditionally moved
04:02at the pace that these customers want us to move.
04:05So, expanding capacity is an important aspect of how we would leverage our balance sheet.
04:11We are sitting on about $160 million of cash, and we would use that for investing in capacity growth for
04:17our customers and also making acquisitions so that we can provide more services to our customers.
04:23We are known for being the best and the fastest prototype manufacturing company.
04:30As part of our strategy, we are expanding our services to being a production supplier while being very good at
04:38prototype parts as well.
04:39And to do that, we can grow organically.
04:43We also will want to use inorganic acquisitions to build that capability rapidly.
04:48Your sort of aim and ability to move fast and the desire for that right now just underscores how much
04:54change the manufacturing industry as a whole has been undergoing,
04:58whether it be the demand for defensive goods and what AI and data centers are doing for things.
05:03You're also a board member of the National Association of Manufacturers.
05:07What are you hearing from other CEOs who are trying to navigate this landscape?
05:12Yeah, Danny, you know, NAM has a very critical role to represent the voice of manufacturers in this country, not
05:19just big manufacturers, but also the small ones.
05:22There's about 30,000 small manufacturers in the United States, which are the backbone of manufacturing for this country.
05:29NAM has advocated very successfully policies to help bring back manufacturing to the United States.
05:37And I'm really proud of the fact that I can partner with Jace Timmons, our president, and able to drive
05:43those policies to help the manufacturing industry,
05:46most important being the rapid depreciation for capital goods investment.
05:52We need that kind of investment to happen in the U.S. to help build what I would call a
05:58sovereign supply chain for U.S.
06:00When we look at the defense industry in particular, and there is rapid disruption because we don't have the capacity
06:08in our supply chain today
06:10to build up everything that our defense industries need, we need the policies that NAM is advocating for to help
06:18our supply base rapidly scale up.
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