DM
Desktop Metal, INC
NYSE
10-Q: Desktop Metal Reports Q3 2024 Results Amidst Proposed Nano Dimension Merger
Sentiment:
Quarterly Report
31 October 2024 7:00 AM
Desktop Metal's Q3 2024 results show a decrease in revenue and a net loss, while the company progresses with its proposed merger with Nano Dimension.
Worse than expected
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
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.
Summary
- Desktop Metal reported a revenue of $36.4 million for the third quarter of 2024, a decrease of 15% compared to the same period last year.
- The company's net loss for the quarter was $35.4 million, and the net loss for the first nine months of 2024 was $191.0 million.
- Product revenue decreased due to lower unit shipments, while service revenue saw a slight increase.
- The company's gross margin increased to 9% in Q3 2024 from 5% in Q3 2023, primarily due to reduced amortization expenses.
- Operating expenses decreased in research and development and sales and marketing, but increased in general and administrative.
- The company is undergoing restructuring initiatives aimed at cost optimization, including workforce reductions and facility consolidations.
- Desktop Metal's cash and cash equivalents stood at $30.6 million as of September 30, 2024.
- The company's stockholders approved the merger with Nano Dimension on October 2, 2024, which is subject to regulatory approvals and other closing conditions.
Sentiment
Score: 3
Explanation: The document presents a challenging financial picture with declining revenue and significant losses. While there are some positive aspects like improved gross margin and cost-saving initiatives, the overall sentiment is negative due to the company's financial instability and the uncertainty surrounding the merger.
Positives
- Gross margin improved to 9% in Q3 2024, up from 5% in Q3 2023.
- Operating expenses decreased in research and development and sales and marketing.
- The company has made progress on its merger with Nano Dimension, securing stockholder approval.
- The company is actively implementing cost-saving initiatives, which are expected to yield $50 million in annualized savings.
Negatives
- Revenue decreased by 15% in Q3 2024 compared to the same period last year.
- The company reported a net loss of $35.4 million for Q3 2024 and a net loss of $191.0 million for the first nine months of 2024.
- The company has an accumulated deficit of $1.8 billion as of September 30, 2024.
- The company's cash and cash equivalents are at $30.6 million, while current liabilities are at $61.2 million.
- The company has incurred significant restructuring charges related to cost optimization initiatives.
Risks
- The company's ability to continue as a going concern is in doubt due to negative cash flows and limited financial resources.
- The proposed merger with Nano Dimension is subject to regulatory approvals and other closing conditions, and may not be completed.
- The company faces risks related to the integration of acquired companies and the realization of expected benefits.
- The additive manufacturing industry is characterized by rapid technological change, requiring continuous innovation.
- The company is subject to price competition and may face pressure on margins.
- The company's operations are subject to various risks, including those related to global operations, supply chain disruptions, and cybersecurity threats.
- The company is subject to various legal proceedings, which could result in significant expenses and diversion of management time.
- The company's indebtedness could limit cash flow available for operations and expose it to risks.
Future Outlook
The company expects to continue to incur net losses and negative cash flows from operations in the near term. The company believes that its existing capital resources will be sufficient to support its operating plan and cash commitments into the first quarter of 2025. The company anticipates at least $50 million of aggregate annualized cost savings resulting from the 2024 Initiative.
Management Comments
- Management believes the sales were conducted on terms equivalent to those prevailing in an arms-length transaction.
- Management does not believe that the outcome of any current legal proceedings will have a material adverse impact on the Company's condensed consolidated financial statements.
Industry Context
The document highlights the challenges faced by the additive manufacturing industry, including macroeconomic pressures and the need for continuous innovation. The proposed merger with Nano Dimension reflects a trend of consolidation in the industry.
Comparison to Industry Standards
- The document does not provide specific comparisons to industry standards, but it does mention that the company is subject to price competition.
- The company's performance is impacted by the adoption and capital expenditure cycles of its customers, which is typical in the industrial manufacturing sector.
- The company's restructuring initiatives and cost-saving measures are in line with industry trends of optimizing operations in response to economic pressures.
- The company's focus on Additive Manufacturing 2.0 and its efforts to develop new technologies are consistent with the industry's push towards mass production and end-use parts.
Stakeholder Impact
- Shareholders face the risk of dilution and potential loss of investment due to the company's financial instability and potential capital raises.
- Employees are affected by workforce reductions and restructuring initiatives.
- Customers may experience uncertainty due to the company's financial challenges and the proposed merger.
- Suppliers and creditors may face increased risk due to the company's financial instability.
Next Steps
- The company will continue to implement its cost optimization initiatives.
- The company will work towards completing the merger with Nano Dimension, subject to regulatory approvals and other closing conditions.
- The company will continue to develop and commercialize new products and technologies.
- The company will continue to evaluate strategic alternatives for its photopolymer business.
Legal Proceedings
- The company is involved in several legal proceedings, including a class action lawsuit and stockholder complaints related to the Nano merger.
- 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, Bloom Energy, and Viewray Systems, which are affiliated with members of the company's board of directors or a shareholder.
Key Dates
- May 2022: The company issued $115.0 million principal amount of convertible senior notes due in 2027.
- May 25, 2023: The company entered into a merger agreement with Stratasys Ltd., which was later terminated.
- September 29, 2023: The company completed the sale of Aerosint SA.
- November 22, 2023: The company was notified by the NYSE that it was not in compliance with listing requirements.
- January 22, 2024: The company committed to a strategic integration and cost optimization initiative (the 2024 Initiative).
- March 14, 2024: The company approved an additional cost reduction plan, including a review of strategic alternatives for its photopolymer business.
- June 10, 2024: The company effected a 1-for-10 reverse stock split.
- July 2, 2024: The company entered into a merger agreement with Nano Dimension Ltd.
- October 2, 2024: The company's stockholders approved the merger with Nano Dimension.
- October 28, 2024: The Court of Appeals affirmed the dismissal of the Consolidated Complaint in the securities class action.
Keywords
additive manufacturing, 3D printing, merger, Nano Dimension, restructuring, cost optimization, financial results, revenue, net loss, gross margin, convertible notes, stockholders equity
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.
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 4:53 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.
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.
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 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.
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.
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
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.
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.
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.
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