Greetings, and welcome to the Proto Labs Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Dietrick, Vice President of Marketing for Proto Labs. Please go ahead, sir. William M. Dietrick - VP-Global Marketing & Head-Media Relations: Thank you, operator, and good morning, everyone. This morning, before the market opened, Proto Labs issued a press release announcing its fourth quarter and full-year financial results for the period ended December 31, 2015. 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 could 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 are given. The company does not undertake to update any projection or forward-looking statement. In addition, to supplement the GAAP numbers, we have provided revenue growth on a constant currency basis for both total revenue and revenue earned through legacy operations, adjusted consolidated statements of operations and adjusted net income and basic and diluted net income per share information on a non-GAAP basis. The non-GAAP adjusted…

Thank you, Vicki. We continue to produce excellent top-line growth, reporting revenue of $73.8 million in the fourth quarter, an increase of $17.7 million, or 31.6% over the same quarter in 2014. Fourth quarter's legacy revenue came from 12,414 unique product developers, a 21% increase over the same quarter of 2014. Consistent with historical seasonal patterns, the number of product developers in the fourth quarter was relatively flat with the third quarter. Average revenue per product developer increased 3% on a constant-currency basis, compared to last year. Our unique product developer count does not include Alphaform data, as this information is not available in a comparable format. Gross profit for the quarter was $41.3 million, an increase of $7.7 million over the comparable period for the prior year. Gross margin was 56%. This compares with 59.9% in the fourth quarter of 2014 and 59.4% in the third quarter of this year. Alphaform had a negative 260-basis-point impact on our gross margin. Foreign currency exchange rates had a negative impact on gross margin of 90 basis points year-over-year. The remaining fluctuation reflected additional investments in capacity across our broader portfolio of services to ensure we meet our brand promise. Our operating expenses were $24.7 million, or 33.5% of revenue in the quarter, compared with 33.8% in the prior year. Our marketing and sales organization is critical to driving the continued growth of our business. Sales and marketing expense was in line with our previous guidance at $10.8 million, or 14.6% of revenue for the quarter. We invested $4.9 million, or 6.6% of revenue in research and development this quarter. Fourth quarter operating expenses also included transaction costs of $343,000 associated with the Alphaform acquisition. These costs have been added back to adjusted net income in our non-GAAP reporting. Operating income was…

Thanks, Vicki. I'd like to begin with some general thoughts on 2016. As a management team, we're focused on driving long-term growth in revenue, earnings and earnings per share. In order to accomplish these long-term goals, we will make investments and other decisions that may impact short-term financial metrics with the ultimate goal of driving sustainable growth in our operating results. In an effort to align with the majority of your financial models, we'll be providing guidance on an adjusted non-GAAP basis. This reporting will not impact how we manage or operate the business. We anticipate continued strong growth in our business, including the contribution from Alphaform. We're targeting revenue growth for 2016 between 25% and 30%. We anticipate our GAAP operating income as a percentage of revenue to be between 23% and 26% and non-GAAP operating margins to be in the 25% to 28% range. This compares to GAAP operating margins of 25.4% and non-GAAP margins of 28.4% in 2015. The primary drivers impacting our operating margins include the following. Alphaform will have a negative impact of 100 basis points to 150 basis points on our operating margins. This impact is predominantly reflected in our gross margin line item. As we have stated previously, we expect Alphaform to be breakeven in 2016, which impacts our financial metrics, but not our operating earnings dollars. As we turnaround this business, it will provide a meaningful contribution in future years. The next driver is research and development. As Vicki noted previously, we'll be increasing our research and development expense. These incremental investments will have an approximately 50 basis point impact on operating margins. We will be expanding our operations in 3D printing and in Japan. These expansions will increase capacity and set us up to support our future growth, but will carry…

Our first question today is coming from Brian Drab from William Blair. Please proceed with your question. Brian P. Drab - William Blair & Co. LLC: Good morning. Congratulations on a great 2015. Victoria M. Holt - President, Chief Executive Officer & Director: Thanks, Brian.

Thanks, Brian. Brian P. Drab - William Blair & Co. LLC: Hey, John, did I miss it or did you give a range for EPS for 2016?

I didn't give a range for EPS. I provided it in the terms of our operating margins. Brian P. Drab - William Blair & Co. LLC: Okay. And you said for non-GAAP G&A 9% to 10.5%?

Just want to make sure I'm consistent here. Non-GAAP G&A for 2016... Victoria M. Holt - President, Chief Executive Officer & Director: 9% to 10.5%.

Yes, 9% to 10.5%. Brian P. Drab - William Blair & Co. LLC: Okay. And what was that on a GAAP basis, because that seemed a little bit high?

10% to 12% on a GAAP basis. I think what you're seeing there is Alphaform. So Alphaform has the majority of their costs from a G&A perspective hit that line and as we grow into that business, I think there is a little bit of an increase there. That's probably what you're seeing. Brian P. Drab - William Blair & Co. LLC: Okay. That makes sense. And can you quantify what the revenue was associated with those, sounded like, end-of-life orders at Alpha in the fourth quarter? Victoria M. Holt - President, Chief Executive Officer & Director: Yeah. As we mentioned earlier, when we did the acquisition, there were several contracts that were in place with Alphaform that, frankly, didn't reflect the way we do business, which is really based on the pricing of the – geometry of the part and moving directly with the product developers. So we have moved forward to cancel those contracts, renegotiate a different forward-looking position. But our revenue going forward there is uncertain, since it's a complete change in how we interface with those customers. So, at this point, it's unlikely that will recur. It's not what I would call hugely significant, but because we hope to be replacing that volume with volume that we will generate from our website and our e-commerce-based business. But we will see an impact in the first quarter, as we go through that transition between an old way of doing business and the new digital manufacturing, e-commerce, web-based approach that Proto Labs use. Brian P. Drab - William Blair & Co. LLC: Okay.

Yeah. Brian P. Drab - William Blair & Co. LLC: Is it fair to kind of guess – go ahead, John.

Yeah. So I mean, to break it out, $5.1 million is what we recognized in the fourth quarter. I guided to $4.5 million to $5 million. The majority of the downside of that is those contracts. Brian P. Drab - William Blair & Co. LLC: Okay. And sorry to bounce around, but I'm going to go back to those – the margin guidance for 2016. If you look at the selling and marketing, non-GAAP, I believe, you said 13.5% to 14.5%. Is it fair to assume that as we have lately that we still hover around the high end of that range in 2016?

Yes. That is fair. Brian P. Drab - William Blair & Co. LLC: Okay. And then just I'll ask one more question and pass it on. But on gross margin, how much of – this is a multipart question, though. How much of the 260 basis point impact from Alpha is transitory or one-time in nature, and what gross margin level do you expect the company to exit 2016 at?

Yeah. So I think looking at that, the 250 basis point to 260 basis point impact that we saw in the fourth quarter will recur at about the same level in Q1. For the full year, we're projecting an impact of 100 basis points to 150 basis points on gross margin from Alphaform. Victoria M. Holt - President, Chief Executive Officer & Director: We'll continue to see quarter-to-quarter improvements, particularly after Q1. In Q1 we've got some additional costs associated with the building that we're exiting there. So – but Q2, Q3, Q4 we'll see quarter-to-quarter improvement as we begin to put our business model on the Alphaform assets and the great people that we have there. But that will be a transition period that'll take us all the way through 2016 and probably well into 2017 with the intention of moving that business to gross margins that are closer to the level of our legacy 3D printing business. Brian P. Drab - William Blair & Co. LLC: Okay. Is the rough math – this rough math accurate? I guess roughly accurate? But if you have 260 basis points impact now, 100 basis points to 150 basis points average for the year, is Alphaform sort of like a 50 basis point headwind as when we complete 2016, is that the goal?

It's probably in the right range as we look at it. Brian P. Drab - William Blair & Co. LLC: Okay. Thanks very much.

Thank you. Our next question today is coming from Jim Ricchiuti from Needham & Co. Please proceed with your question. Jim A. Ricchiuti - Needham & Co. LLC: Hi. Thank you. Good morning. I just wanted to ask about the target gross margin longer-term. Just given the pieces of the business, and given the growth that you're seeing in 3D printing, that portion of the business, I wonder if you could help walk us through what might get you to the high end of that margin profile.

I think as you look at it, I think there is lot of components within there. We've launched a number of new services in the last year and those services right now are subscale. And as we're growing into them, we have to add capacity. And when you add capacity to service that has lower revenue, it has a greater impact on the short-term margin. So as some of those scale up, we'll see some improvements there. We also are deploying our lean process improvement initiatives and see some opportunities in that over time. As well as the 3D printing margins have improved, since we've acquired FineLine. And we think we can continue to drive that growth there. So I think it is just a combination of all of those components that will help us drive improved margins over time. Jim A. Ricchiuti - Needham & Co. LLC: But John, just from a structural standpoint, you don't really, doesn't sound like you see much of a drag longer-term from 3D printing in the Alpha business.

Yes, so I think 3D printing will always have a little bit lower margins. As we've experienced, but we've been able to show that we can improve those margins through efficiency in our manufacturing operations. I think there will be... Victoria M. Holt - President, Chief Executive Officer & Director: And the launch of quick turns. I mean, there's things that we've done that have improved the margins pretty significantly in the FineLine acquisition. We'll be deploying those same tactics with the European operations. So through our business model, web-based approach, use of quick turns and continued focus on what we're calling Proto Excellence, which is our operational lean continuous improvement efforts, I think, we've got margin opportunities across each one of our segments. Jim A. Ricchiuti - Needham & Co. LLC: Okay. That's helpful. And just switching gears a little bit. Was the production parts portion of the business – can you give us a sense of what that was in the quarter? And, I guess, just given the concerns that some people have about slowing economic growth, I wonder, is that – does that – do you have any window into what's happening out there just as it relates to that part of the business? Victoria M. Holt - President, Chief Executive Officer & Director: Yeah.

The split in – the production parts versus molds remained pretty consistent in Q4, compared to what it has been historically. The economic challenges are out there. But in our results that we've seen so far, it hasn't really impacted us that much. Victoria M. Holt - President, Chief Executive Officer & Director: Right. And, remember, we play a role in prototyping low-volume production, helping customers commercialize new products they're continuing to innovate. So we've got a lot of, actually, tailwinds behind us, as manufacturers look to bring new innovative products to market in this period of time. And we help them scale those very cost-effectively. So our parts business is often part of that continuation between prototyping to testing and then onto commercialization of the products launched. Jim A. Ricchiuti - Needham & Co. LLC: Got it. And last question and I'll turn it over. Japan has been, obviously, a smaller market for you. You're stepping up some investments there. Can you talk a little bit about whether you're thinking about that market, has it changed at all, or are these just some necessary investments you have to make? Victoria M. Holt - President, Chief Executive Officer & Director: Yeah. We're continuing to grow nicely in Japan. So we're completely out of space, so we've got no floor space to support what's been really nice growth there. We've continued to invest in our sales and marketing team in Japan and you're starting to see the result. I mean, fourth quarter was 54% year-over-year increase, so it's really strong. So it just continued investment in a market that has a good number of 3D CAD seats, and it represents an opportunity for us to continue to build a number of product developers that we serve and go wide and deep with the customer base we're continuing to grow there. Jim A. Ricchiuti - Needham & Co. LLC: Okay, thanks. Congrats on the quarter.

Thank you. Victoria M. Holt - President, Chief Executive Officer & Director: Thanks.

Thank you. Our next question is coming from Troy Jensen from Piper Jaffray. Please proceed with your question. Troy D. Jensen - Piper Jaffray & Co (Broker): Hey, Vicki and John. Congrats on another really strong quarter. Victoria M. Holt - President, Chief Executive Officer & Director: Thanks, Troy.

Thanks, Troy. Troy D. Jensen - Piper Jaffray & Co (Broker): Hey. So Vicki maybe just a follow-up on the previous question here. Just the industrial exposure that you guys have, are you seeing any specific verticals, maybe feeling some signs of weakness now? Victoria M. Holt - President, Chief Executive Officer & Director: Yeah. You know how widespread we are across all the verticals. We service just about every vertical in the whole industrial production mix. And, frankly, we haven't seen any that have shown particular weakness year-over-year. What I will say is that with our segmentation approach going a little bit more specific into the medical, the aerospace, and the automotive markets, those are growing a little bit faster than our business in general, which is I think the result of a little more targeted approach in those markets, but the others have not really seen any big dip. So, again, I think it's a reflection of where we play in the whole product development life cycle. And we are not in the big large mature end uses that might see a decline. Troy D. Jensen - Piper Jaffray & Co (Broker): All right. That is fair. And then quickly on new services here, so overmolding, should we think of that similar to LSR and lathe, where the first full year it's kind of low single-digit millions and ramping aggressively over that? And then to that point, is overmolding the service that Brad [Cleveland] got everybody excited about, being [indiscernible] (47:13). Victoria M. Holt - President, Chief Executive Officer & Director: Let me answer the first one first. So, yes, I would think about it just like liquid silicone rubber in that the first few quarters after introduction, it takes a while for customers to realize and understand…

Thank you. Our next question today is coming from Ben Hearnsberger from Stephens, Inc. Please proceed with your question.

Hey. Thanks for taking my question. This is Brandon in for Ben. Just real quick on the revenue per user. I see it grew pretty nicely year-over-year. Is this really a mix shift that's causing this? I would kind of assume with FineLine growth that may be down a little bit.

Yeah. That's exactly what's causing it – that and foreign currency would be the two big components there.

Got it. And then maybe if you could, what kind of on the three-segment level, your long-term growth rate now, op model, what kind of anticipated growth rate does this kind of bake in for all three? Does it assume 20%-plus in Firstcut and Protomold going forward or how should we think about that? Victoria M. Holt - President, Chief Executive Officer & Director: Well, I think the way we really need to look at it is we have a portfolio of services with that product developer right in the center. And we're going to supply that developer with injection molded, CNC Machine, or 3D printed parts that meet their needs. And the growth rate by service is going to vary quarter-to-quarter and year-over-year. I think overall, we feel very comfortable with the long-term model of 20% to 25% and next year – or this year 2016, we feel good with the 25% to 30%.

Yeah. I guess I would look at it just on a relative basis, without giving specific growth rates for each. I think 3D printing will grow faster than the overall average. CNC Machining will probably be in that range and the injection molding will be a little bit lower. But generally speaking, I think the combination of all of them will produce the growth ranges we've been providing.

Got it. Thanks for the color there. I appreciate it.

Thank you. Our next question today is coming from Bobby Burleson from Canaccord Genuity. Please proceed with your question.

Hey guys. Thanks for taking my questions. Victoria M. Holt - President, Chief Executive Officer & Director: Hi, Bobby.

Hi. So, I guess, just kind of going back to your strategic initiatives. Can you update us on the progress of the first of those initiatives, specifically it was the – just wondering what the early results are coming out of the vertical market segmentation? And then also, just new customer acquisition. You guys are also trying to focus, I guess, a little bit more on strategic customers, so just wondering, early results that you're seeing there over the last year. Victoria M. Holt - President, Chief Executive Officer & Director: So, the segmented approach to the market is really, we call it more of an evolution than a revolution, you know, just flip a switch. So our initial focus has been taking a look at a couple of industry verticals that our business model really resonates with, where speed is important, where there's a lot of iterations and we bring a lot of value, so that'd be medical, aerospace and automotive. And we're doing that with very tailored messaging, speaking the language of the industry and equipping our sales team with specific, industry-specific talking tracks as they deal with customers and speak with them about their programs. And the early success has been, the growth in those segments has been a little bit higher than our average, so we are pleased with that but we're really in the early innings of segmentation and learning a lot about what works and doesn't work and continue to evolve it, but we are pleased with that and I think it's going to bring the results. In terms of strategic selling, we're continuing with training to develop strategic selling skills among our sales force. The growth in the number of larger customers continues to grow, so we get more and more companies who do $0.5 million more with us. So that means we're going wide and deep and continuing to build those more strategic partnerships. So that's going well and, again, those are two elements that are driving the nice growth rates and the results that you've seen.

Great. And then on the overmolding, I guess soft launch early Q2, full launch end of this year, have you guys identified an overall TAM or, I guess, the specific piece of the TAM that you guys can address? Victoria M. Holt - President, Chief Executive Officer & Director: Yeah. It's really hard to get that pinpointed. In our space to really understand what portion of overmolding market, really to get that good size of what is overmolded. And then also what portion is really relevant to our TAM. So it is an important segment within injection molding. You know that the TAM that we've got out there in injection molding is almost to $4 billion, I think it's $3.8 billion TAM for injection molding. And I, certainly, think this is one of those envelope expansions that helps us with that.

Okay. Great. And then, I guess, just the last piece of this is that 20% to 25% long-term growth – when you think about kind of whether or not – given yours is at the high end or at the low end, do you see that mainly as a function of strengths for your core kind of Protomold business, how that performs in the year? Or is it really uncertainty about how sustainable these really high growth rates are for 3D printing? What are the main kind of dials that could push you to the high end or low end of that range? Victoria M. Holt - President, Chief Executive Officer & Director: I think it could be – again, the variability that we have week-to-week and month-to-month in demand is pretty high. So it really could be all the services hitting. And we have a really nice growth rate in that 25-plus percent that could drive that. So it reflects the variability in our business. And the difficulty that we have in actually pinpointing it quarter-to-quarter. We have a seven-day backlog of orders. So it is – there will be variability. We're an on-demand manufacturer.

Okay. Great. Thank you. Victoria M. Holt - President, Chief Executive Officer & Director: Does it help?

Yeah. Very helpful. Victoria M. Holt - President, Chief Executive Officer & Director: Okay. Thank you.

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments. Victoria M. Holt - President, Chief Executive Officer & Director: Thank you for joining us today. We're proud of the results we've generated in 2015, and we look forward to continuing our success in 2016. Once again, I'd like to thank you all for being here today, and I want to thank our employees for their outstanding performance. We look forward to updating you next quarter. Thank you.