DM
Desktop Metal, INC
NYSE
10-Q: Desktop Metal Reports Q1 2024 Results Amidst Restructuring and Market Challenges
Sentiment:
Quarterly Report
9 May 2024 6:02 AM
Desktop Metal's first quarter of 2024 saw a net loss of $52.1 million and a revenue decrease of 2% year-over-year, as the company continues its restructuring efforts.
Worse than expected
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
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.
Summary
- Desktop Metal reported a net loss of $52.1 million for the first quarter of 2024, compared to a $52.6 million loss in the same period last year.
- Total revenue decreased by 2% year-over-year to $40.6 million, with product revenue declining and service revenue increasing.
- The company's gross loss was $2.2 million, a decrease from the $1.4 million loss in the first quarter of 2023.
- Operating expenses totaled $47.2 million, down from $51 million in the prior year.
- Desktop Metal used $17.4 million in operating activities during the quarter and ended with $66.1 million in cash, cash equivalents, and short-term investments.
- The company is undergoing a strategic integration and cost optimization initiative, expecting at least $50 million in aggregate cost savings in 2024.
- Restructuring charges for the quarter were $14.2 million, including $12 million in incremental depreciation and amortization related to the photopolymer business.
Sentiment
Score: 4
Explanation: The document presents a mixed picture with cost-cutting measures and restructuring efforts, but significant losses and revenue decline indicate a challenging financial situation. The company is taking steps to improve, but the overall sentiment is cautious.
Positives
- Operating expenses decreased by $3.8 million year-over-year, indicating progress in cost management.
- Service revenue increased by 8% year-over-year, showing growth in recurring revenue streams.
- The company anticipates at least $50 million in cost savings from its 2024 restructuring initiative.
- Research and development expenses decreased by $3.3 million, or 14%, year-over-year.
Negatives
- Total revenue decreased by 2% year-over-year, primarily due to a reduction in product shipments.
- The company reported a gross loss of $2.2 million for the quarter.
- Net loss remained significant at $52.1 million.
- The company used $17.4 million in operating activities during the quarter.
- The company recorded $14.2 million in restructuring charges for the quarter.
Risks
- The company faces risks related to the adoption of additive manufacturing solutions and the timing of new product launches.
- Macroeconomic conditions are impacting customer spending and may lead to extended sales cycles and pricing pressure.
- The company's restructuring activities may not achieve the intended results and could lead to additional costs.
- The company is subject to risks associated with global operations, including currency fluctuations and political instability.
- The company's reliance on third-party contract manufacturers and suppliers poses risks to its supply chain.
- The company has identified material weaknesses in its internal control over financial reporting.
- The company is subject to ongoing litigation, which could result in significant expenses and diversion of management time.
Future Outlook
The company anticipates at least $50 million of aggregate cost savings resulting in sequential cost reductions across the first half of 2024 from the 2024 Initiative. The company expects the 2024 Initiative to be substantially complete by the end of 2024. The company is exploring alternatives for the photopolymer business, which may include divestitures, curtailment of investment or winding down of the business.
Management Comments
- Management believes that existing cash and short-term investments as of March 31, 2024 will be sufficient to fund operating and capital expenditure requirements through at least twelve months from the date of issuance of these condensed consolidated financial statements.
- Management believes the sales were conducted on terms equivalent to those prevailing in an arms-length transaction.
Industry Context
The report reflects the challenges faced by companies in the additive manufacturing industry, including fluctuating demand, pricing pressures, and the need for continuous innovation. The company's restructuring efforts and cost optimization initiatives are indicative of a broader trend in the industry to streamline operations and improve profitability.
Comparison to Industry Standards
- Desktop Metal's revenue decline of 2% contrasts with some competitors who have shown growth, indicating potential market share loss.
- The company's gross loss and net loss are significant, suggesting challenges in achieving profitability compared to industry leaders.
- The restructuring and cost-cutting measures are similar to actions taken by other companies in the sector facing economic headwinds.
- The company's focus on cost optimization and strategic integration is a common response to market pressures, but the success of these initiatives will determine its competitive position.
- Compared to companies like 3D Systems and Stratasys, Desktop Metal's financial performance indicates a need for significant improvement in revenue generation and cost management.
Stakeholder Impact
- Shareholders face the risk of further dilution and potential stock price volatility.
- Employees are affected by workforce reductions and restructuring efforts.
- Customers may experience changes in product offerings and support services.
- Suppliers and contract manufacturers may be impacted by changes in the company's supply chain and production strategies.
- Creditors may be affected by the company's debt obligations and financial performance.
Next Steps
- The company will continue to implement its 2024 Initiative, including workforce reductions and facilities consolidation.
- The company will explore strategic alternatives for its photopolymer business.
- The company will continue to work with Schaeffler on developing the technology for binder jet 3D printing.
- The company will continue to evaluate opportunities to raise capital through the issuance of debt or equity.
Legal Proceedings
- The company is involved in ongoing legal proceedings, including a class action lawsuit related to the ExOne merger and a securities class action complaint.
- The company believes that these complaints are without merit and intends to defend against them vigorously.
Related Party Transactions
- The company has lease agreements with related parties for facilities.
- The company sells products to Lightforce Orthodontics, which is affiliated with a member of the company's Board of Directors.
- The company sells products to Viewray Systems, which is an entity controlled by a shareholder.
Key Dates
- May 25, 2023: Desktop Metal entered into a merger agreement with Stratasys Ltd., which was later terminated.
- September 28, 2023: Stratasys shareholders did not approve the merger agreement, leading to its termination.
- September 29, 2023: Desktop Metal completed the sale of Aerosint SA.
- October 6, 2023: Stratasys paid Desktop Metal $10 million for reimbursement of expenses related to the terminated merger agreement.
- January 22, 2024: Desktop Metal committed to a strategic integration and cost optimization initiative (the 2024 Initiative).
- March 14, 2024: The Board of Directors approved an additional cost reduction plan, including a review of strategic alternatives for the photopolymer business.
- March 31, 2024: End of the first quarter of 2024.
- May 7, 2024: There were 330,395,959 shares of the registrants Class A common stock outstanding.
- May 9, 2024: Date of filing of the Quarterly Report on Form 10-Q.
Keywords
additive manufacturing, 3D printing, restructuring, financial results, cost optimization, revenue, net loss, operating expenses, strategic integration, photopolymer, convertible notes
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.