DM
Desktop Metal, INC
NYSE
8-K: Desktop Metal Announces Major Cost Reduction Plan Including 20% Workforce Reduction
Sentiment:
Strategic Business Review
24 January 2024 8:05 AM
Desktop Metal is implementing a strategic cost reduction plan, including a 20% workforce reduction, aiming for $50 million in annualized savings and a faster path to profitability.
Worse than expected
The company is implementing a significant workforce reduction and restructuring plan, indicating that the current financial performance is worse than expected.
The company is facing a downturn in the additive manufacturing industry and a softer demand environment, which are contributing to the need for these cost-cutting measures.
Summary
- Desktop Metal has announced a strategic integration and cost optimization initiative.
- This initiative includes a global workforce reduction of approximately 20%.
- The company will also consolidate facilities and rationalize its product offerings.
- Desktop Metal anticipates at least $50 million in aggregate cost savings from this initiative.
- These savings are expected to result in sequential cost reductions across the first half of 2024.
- The company expects to incur pre-tax restructuring charges between $24.3 million and $31.5 million.
- These charges include estimated termination benefits, inventory write-offs, and lease termination costs.
- The majority of the restructuring charges are non-cash, with $5.3 million to $7.5 million expected to be cash expenditures.
- The company expects the initiative to be substantially complete by the end of 2024.
Sentiment
Score: 4
Explanation: The sentiment is negative due to the significant workforce reduction and restructuring charges, although the company is taking steps to improve its financial position. The long-term outlook is positive, but the immediate impact is concerning.
Positives
- The company expects to achieve $50 million in annualized cost savings.
- The majority of the restructuring charges are non-cash, minimizing immediate cash impact.
- The company is taking decisive action to improve profitability.
- The company is committed to its Additive Manufacturing 2.0 vision.
- The company has a positive long-term outlook for the industry.
Negatives
- The company is reducing its global workforce by 20%.
- The company will incur significant pre-tax restructuring charges between $24.3 million and $31.5 million.
- The company is facing a downturn in the additive manufacturing industry.
- The company is experiencing a softer demand environment.
Risks
- The actual restructuring charges may differ materially from the estimates.
- The company may not achieve the expected cost savings.
- The company is subject to risks and uncertainties in the additive manufacturing industry.
- The company's future performance is subject to market conditions and other factors.
Future Outlook
Desktop Metal aims to achieve positive cash flow and sustainable profitability through cost reductions and strategic initiatives. The company maintains a positive long-term outlook for the additive manufacturing industry.
Management Comments
- Ric Fulop, Founder and CEO of Desktop Metal, stated that the cost-reduction plans will help generate positive cash flow in light of a softer demand environment.
- Ric Fulop also stated that the company is committed to getting profitable during this challenging period.
Industry Context
The announcement comes amid a downturn in the additive manufacturing industry, indicating that Desktop Metal is responding to challenging market conditions by focusing on cost reduction and efficiency. This is a common strategy for companies in the sector facing headwinds.
Comparison to Industry Standards
- The 20% workforce reduction is a significant move, comparable to other companies in the tech and manufacturing sectors that have recently undertaken similar cost-cutting measures in response to economic pressures.
- The estimated $50 million in cost savings is a substantial target, and its success will be crucial for Desktop Metal's path to profitability. Other companies in the 3D printing space, such as Stratasys and 3D Systems, have also been focusing on cost optimization, but the specific details of their plans and results vary.
- The restructuring charges, while significant, are not unusual for companies undergoing major strategic shifts. The mix of cash and non-cash charges is also typical, with inventory write-offs often being a major component of such restructurings.
Stakeholder Impact
- Shareholders will be impacted by the restructuring charges and potential short-term volatility.
- Employees will be impacted by the workforce reduction.
- Customers may experience changes in product offerings due to product rationalization.
- Suppliers may be affected by changes in the company's operations.
Next Steps
- The company will continue to review international workforce changes.
- The company will provide further details about the cost-reduction effort in its regulatory filings and end-of-year earnings release.
- The company expects to complete the majority of the cost reductions this quarter.
- The company will continue to invest in products and operations in line with near-term revenue generation.
Key Dates
- 2024-01-22: Date Desktop Metal committed to the strategic integration and cost optimization initiative.
- 2024-01-24: Date of the press release announcing the cost reduction plan.
- 2024-03: Expected date for end-of-year earnings release and conference call.
Keywords
cost reduction, workforce reduction, restructuring, additive manufacturing, profitability, cost savings, strategic integration, facilities consolidation, product rationalization
DM
Desktop Metal, INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
26 March 2025 5:20 PM
8-K Filing
- Revenue decreased from $189.7 million to $148.8 million year-over-year.
Worse than expected
31 October 2024 7:00 AM
Quarterly Report
- The company's revenue decreased by 15% year-over-year.
- The company reported a net loss of $35.4 million for the quarter and $191.0 million for the first nine months.
- The company's gross margin, while improved, is still relatively low at 9%.
Capital raise
31 October 2024 7:00 AM
Quarterly Report
- The company may need to raise additional capital through arrangements with Nano or from other sources, including equity and debt financings.
- The company has a multi-draw term loan credit facility with Nano for up to $20 million, available after January 7, 2025.
- The company may need to issue additional shares of capital stock or offer debt or other equity securities if the merger is not completed.
Worse than expected
23 September 2024 4:24 PM
Proxy Statement
- The company warns of potential dilutive financings or bankruptcy if the merger fails.
- Desktop Metal expects to run out of cash by the end of the first quarter of 2025 if the merger is not approved.
Worse than expected
13 September 2024 4:02 PM
Proxy Statement
- The company expects to run out of cash by the end of the first quarter 2025 if the merger is not approved.
- The company may need to undertake financings that may be severely dilutive to stockholders if the merger is not approved.
- There is a risk of bankruptcy if the merger is not approved.
Capital raise
13 September 2024 4:02 PM
Proxy Statement
- The document mentions that if the merger is not approved, Desktop Metal may need to undertake financings.
- These financings may be severely dilutive to stockholders.
Worse than expected
6 September 2024 4:38 PM
Proxy Statement
- Desktop Metal expects to run out of cash by the end of the first quarter of 2025 if the merger is not approved.
Capital raise
15 August 2024 7:00 AM
Definitive Proxy Statement
- The merger agreement includes a provision for a multi-draw term loan credit facility (Bridge Loan Facility) from Nano to Desktop Metal, up to $20 million, to provide working capital and liquidity.
Worse than expected
31 July 2024 4:15 PM
Earnings Conference Call Transcript
- The company's Q2 2024 revenue was down compared to the previous year.
- The company's non-GAAP gross margins were down compared to the previous year.
- The company's adjusted EBITDA was negative.
Worse than expected
30 July 2024 4:53 PM
Quarterly Report
- The company's revenue decreased by 27% compared to the same quarter last year.
- The company's gross margin was -83%, indicating significant losses on sales.
- The company's net loss increased significantly compared to the same quarter last year.
Capital raise
30 July 2024 4:53 PM
Quarterly Report
- The company plans to raise additional capital through a combination of potential options, including equity and debt financings.
- Nano Dimension agreed to provide a multi-draw term loan credit facility in an aggregate principal amount not to exceed $20.0 million, subject to certain conditions.
Worse than expected
30 July 2024 4:36 PM
Quarterly Report
- Revenue decreased from $53.3 million to $38.9 million compared to the same quarter last year.
- The company reported a net loss of $(103.4) million.
Worse than expected
30 July 2024 4:35 PM
Quarterly Report
- The company's revenue decreased significantly year-over-year.
- The company reported a substantial net loss, primarily due to one-time non-cash charges.
- The company's GAAP gross margin was negative, indicating poor profitability.
Delay expected
3 July 2024 4:24 PM
Merger Announcement
- The transaction is expected to close at the end of the year, but based on delays, maybe a few months later.
Worse than expected
3 July 2024 4:24 PM
Merger Announcement
- The combined company expects negative cash flow for the next six to eight quarters.
Delay expected
3 July 2024 7:32 AM
Merger Announcement
- The closing of the transaction is expected in the fourth quarter of 2024, but is subject to customary closing conditions, including regulatory approvals, which could cause delays.
Capital raise
3 July 2024 7:32 AM
Merger Announcement
- Nano Dimension has committed to providing Desktop Metal with a $20 million secured loan facility if the closing of the transaction extends into 2025.
- The purchase price may be adjusted based on the amount drawn from the loan facility prior to closing.
Worse than expected
3 July 2024 7:32 AM
Merger Announcement
- The final purchase price is subject to downward adjustments based on transaction expenses and potential draws on a loan facility, which could reduce the value of the deal for Desktop Metal shareholders.
Worse than expected
9 May 2024 6:02 AM
Quarterly Report
- The company's revenue decreased by 2% year-over-year, indicating worse than expected sales performance.
- The company reported a gross loss of $2.2 million, indicating worse than expected profitability.
- The company's net loss of $52.1 million was significant, indicating worse than expected financial results.
Capital raise
9 May 2024 6:02 AM
Quarterly Report
- The company entered into an Open Market Sale Agreement with Cantor Fitzgerald & Co. to sell shares of common stock for an aggregate offering price of up to $75.0 million.
- The company may need to further increase its capital resources by issuing additional shares of its capital stock or offering debt or other equity securities.
Better than expected
9 May 2024 6:00 AM
Quarterly Report
- The company's adjusted EBITDA improved by 44% year-over-year, indicating better than expected cost management.
- Non-GAAP operating expenses decreased for nine consecutive quarters, showing better than expected cost control.
- Cash consumption decreased by 47% year-over-year, demonstrating better than expected cash management.
Capital raise
23 April 2024 7:15 AM
Proxy Statement
- The company may offer common and preferred stock, debt securities, warrants, and units of up to $250.0 million in the aggregate under a shelf registration statement.
- The company may sell shares of its Class A common stock having aggregate sales proceeds of up to $75.0 million pursuant to an at the market offering program.
- The company intends to raise capital through equity or debt financing to fund its current operations.
Worse than expected
23 April 2024 7:15 AM
Proxy Statement
- The company needs to implement a reverse stock split to regain compliance with the NYSE minimum bid price requirement, indicating that the share price has fallen below acceptable levels.
Worse than expected
15 March 2024 4:12 PM
Annual Results
- The company experienced a net loss of $323.3 million in 2023, which is worse than the previous year.
- The company's revenue decreased by 9% in 2023 compared to 2022.
- The company's gross profit decreased by $25.2 million in 2023 compared to 2022.
Capital raise
15 March 2024 4:12 PM
Annual Results
- The company may need to further increase its capital resources by issuing additional shares of its capital stock or offering debt or other equity securities.
- The company may not be able to obtain additional financing on terms favorable to it, if at all.
Better than expected
15 March 2024 7:00 AM
Quarterly Report
- The company's net loss significantly decreased year-over-year, indicating improved financial performance.
- Adjusted EBITDA showed a substantial improvement, reaching the company's strongest quarterly performance to date.
- Non-GAAP gross margins improved significantly year-over-year.
Worse than expected
24 January 2024 8:05 AM
Strategic Business Review
- The company is implementing a significant workforce reduction and restructuring plan, indicating that the current financial performance is worse than expected.
- The company is facing a downturn in the additive manufacturing industry and a softer demand environment, which are contributing to the need for these cost-cutting measures.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.