Second Quarter 2023 Highlights
- Revenue totaled $34.5 million
- Total orders were $38.0 million
- Net loss totaled $(7.3) million; Adjusted net loss1 was $(5.7)
million
- Adjusted EBITDA1 totaled $4.8 million, representing an Adjusted
EBITDA margin1 of 14.0%
First Half 2023 Highlights
- Revenue totaled $69.5 million
- Total orders were $72.6 million
- Net loss totaled $(8.6) million; adjusted net loss1 totaled
$(11.2) million
- Adjusted EBITDA1 was $8.9 million, representing an Adjusted
EBITDA margin1 of 12.8%
Fathom Digital Manufacturing Corp. (NYSE: FATH), an
industry leader in on-demand digital manufacturing services, today
announced financial results for the second quarter and six months
ended June 30, 2023.
Three Months Ended
Six Months Ended
($ in thousands)
6/30/2023
6/30/2022
6/30/2023
6/30/2022
Revenue
$34,474
$41,985
$69,481
$82,526
Net income (loss)
$(7,264)
$34,284
$(8,595)
$53,278
Adjusted net income (loss)1
$(5,669)
$1,497
$(11,171)
$696
Adjusted EBITDA1
$4,819
$8,973
$8,920
$14,846
Adjusted EBITDA margin1
14.0%
21.4%
12.8%
18.0%
1 See “Non-GAAP Financial Information.”
Reconciliations of non-GAAP financial measures are included in the
appendix.
“Fathom’s results for the second quarter were consistent with
our expectations as we continue to realize cost savings from our
previously announced optimization plan, partially offsetting the
impact of a challenging macro environment,” said Ryan Martin,
Fathom Chief Executive Officer. “During the quarter, we grew order
volumes approximately 10% on a sequential basis, increasing our
backlog, and improved sequentially our Adjusted EBITDA and Adjusted
EBITDA margin by 17.5% and 230 basis points, respectively. Our
focus remains on fully leveraging our comprehensive capabilities to
meet the high-mix, low-to-mid volume production needs of
enterprise-level customers and driving profitable, long-term
growth.”
Summary of Financial Results
Revenue for the second quarter of 2023 was $34.5 million
compared to $42.0 million in the second quarter of 2022, a decrease
of 17.9% primarily due to lower production volumes driven by the
softer macroeconomic environment, primarily impacting Fathom’s
production precision sheet metal product line. For the six months
ended June 30, 2023, revenue totaled $69.5 million versus $82.5
million for the six months ended June 30, 2022.
Gross profit for the second quarter of 2023 totaled $10.5
million, or 30.6% of revenue, compared to $15.5 million, or 37.0%
of revenue, in the second quarter of 2022. Gross profit for the six
months ended June 30, 2023 was $22.5 million, or 32.4% of revenue,
compared to $27.5 million, or 33.4% of revenue, which includes
approximately $3.2 million in non-cash purchase accounting
adjustments, for the same period in 2022.
Net loss for the second quarter of 2023 was $(7.3) million
compared to net income of $34.3 million in the second quarter of
2022. Excluding the revaluation of Fathom warrants and earnout
shares, stock compensation expense, optimization plan expenses, and
other costs, Fathom reported an adjusted net loss in the second
quarter of 2023 totaling $(5.7) million compared to adjusted net
income of $1.5 million for the same period in 2022.
Net loss for the six months ended June 30, 2023 was $(8.6)
million compared to net income of $53.3 million for the same period
in 2022. For the six months ended June 30, 2023, the adjusted net
loss was $(11.2) million compared to adjusted net income of $0.7
million for the same period in 2022.
Adjusted EBITDA for the second quarter of 2023 totaled $4.8
million versus $9.0 million for the same period in 2022 primarily
due to lower volume leverage, partially offset by cost savings from
the execution of Fathom’s optimization plan. The Adjusted EBITDA
margin in the quarter was 14.0% compared to 21.4% in the second
quarter of 2022.
For the six months ended June 30, 2023, Adjusted EBITDA and
Adjusted EBITDA margin were $8.9 million and 12.8%, respectively,
compared to $14.8 million and 18.0%, respectively, for the same
period in 2022.
Conference Call
Fathom will host a conference call on Monday, August 14, 2023 at
8:30 am Eastern Time to discuss the results for the second quarter
2023 and provide the company’s outlook for the third quarter 2023.
The dial-in number for callers in the U.S. is +1-833-470-1428 and
the dial-in number for international callers is +1-404-975-4839.
The access code for all callers is 900561. The conference call will
be broadcast live over the Internet and include a slide
presentation. To access the webcast and supporting materials,
please visit the investor relations section of Fathom’s website at
https://investors.fathommfg.com.
A replay of the conference call can be accessed through August
21, 2023, by dialing +1-866-813-9403 (US) or +1-929-458-6194
(international), and then entering the access code 173691. The
webcast will also be archived on Fathom’s website.
About Fathom Digital Manufacturing
Fathom is one of the largest on-demand digital manufacturing
platforms in North America, serving the comprehensive product
development and low- to mid-volume manufacturing needs of some of
the largest and most innovative companies in the world. With more
than 25 quick turn manufacturing processes combined with an
extensive national footprint, Fathom seamlessly blends in-house
capabilities across plastic and metal additive technologies, CNC
machining, injection molding and tooling, sheet metal fabrication,
design and engineering, and more. Fathom has more than 35 years of
industry experience and is at the forefront of the Industry 4.0
digital manufacturing revolution, serving clients in the
technology, defense, aerospace, medical, automotive, IOT sectors,
and others. Fathom's certifications include: ITAR Registered, ISO
9001:2015 Design Certified, ISO 9001:2015, ISO 13485:2016,
AS9100:2016, and NIST 800-171. To learn more, visit
https://fathommfg.com/.
Forward-Looking Statements
Certain statements made in this press release are
“forward-looking statements” within the meaning of the “safe
harbor” provisions of the United States Private Securities
Litigation Reform Act of 1995. Words such as “estimates,”
“projects,” “expects,” “anticipates,” “forecasts,” “plans,”
“intends,” “believes,” “seeks,” “may,” “will,” “would,” “should,”
“future,” “propose,” “target,” “goal,” “objective,” “outlook” and
variations of these words or similar expressions (or the negative
versions of such words or expressions) are intended to identify
forward-looking statements. These forward-looking statements are
not guarantees of future performance, conditions or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
the control of Fathom Digital Manufacturing Corporation (“Fathom”)
that could cause actual results or outcomes to differ materially
from those discussed in the forward-looking statements. Important
factors, among others, that may affect actual results or outcomes
include: the inability to recognize the anticipated benefits of our
business combination with Altimar Acquisition Corp. II; changes in
general economic conditions, including as a result of the COVID-19
pandemic or any future outbreaks of other highly infectious or
contagious disease; the implementation of our optimization plan
could result in greater costs and fewer benefits than we
anticipate; the outcome of litigation related to or arising out of
the business combination, or any adverse developments therein or
delays or costs resulting therefrom; the ability to meet the New
York Stock Exchange’s listing standards following the consummation
of the business combination; costs related to the business
combination and additional factors discussed in Fathom’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2022,
filed with the Securities and Exchange Commission (the “SEC”) on
April 7, 2023, as amended on May 1, 2023, as well as Fathom’s other
filings with the SEC. If any of the risks described above
materialize or our assumptions prove incorrect, actual results
could differ materially from the results implied by our
forward-looking statements. There may be additional risks that
Fathom does not presently know or that Fathom currently believes
are immaterial that could also cause actual results to differ from
those contained in the forward-looking statements. In addition,
forward-looking statements reflect Fathom’s expectations, plans or
forecasts of future events and views as of the date of this press
release. These forward-looking statements should not be relied upon
as representing Fathom’s assessments as of any date subsequent to
the date of this press release. Accordingly, undue reliance should
not be placed upon the forward-looking statements. Fathom
undertakes no obligation to update or revise any forward-looking
statements made by management or on its behalf whether as a result
of future developments, subsequent events or circumstances or
otherwise, except as required by law.
Non-GAAP Financial Information
This press release includes Adjusted Net Income, Adjusted EBITDA
and Adjusted EBITDA margin, which are non-GAAP financial measures
that we use to supplement our results presented in accordance with
U.S. GAAP. We believe Adjusted Net Income, Adjusted EBITDA and
Adjusted EBITDA margin are useful in evaluating our operating
performance, as they are similar to measures reported by our public
competitors and regularly used by security analysts, institutional
investors and other interested parties in analyzing operating
performance and prospects. Adjusted Net Income, Adjusted EBITDA and
Adjusted EBITDA margin are not intended to be a substitute for any
U.S. GAAP financial measure and, as calculated, may not be
comparable to other similarly titled measures of performance of
other companies in other industries or within the same
industry.
We define and calculate Adjusted Net Income as net income (loss)
before the impact of any change in the estimated fair value of the
company’s warrants or earnout shares, tax receivable agreement
liability, optimization plan expenses, goodwill impairment,
stock-based compensation, and certain other non-cash and non-core
items, as described in the reconciliation included in the appendix
to this press release. We define and calculate Adjusted EBITDA as
net income (loss) before the impact of interest income or expense,
income tax expense and depreciation and amortization, and further
adjusted for the following items: change in the estimated fair
value of the company’s warrants or earnout shares, tax receivable
agreement liability, optimization plan expenses, goodwill
impairment, stock-based compensation, and certain other non-cash
and non-core items, as described in the reconciliation included in
the appendix to this press release. Adjusted EBITDA excludes
certain expenses that are required in accordance with U.S. GAAP
because they are non-recurring (for example, in the case of
optimization plan expenses), non-cash (for example, in the case of
depreciation, amortization, goodwill impairment, and stock-based
compensation) or are not related to our underlying business
performance (for example, in the case of interest income and
expense). Adjusted EBITDA margin represents Adjusted EBITDA divided
by total revenue. We include these non-GAAP financial measures
because they are used by management to evaluate Fathom’s core
operating performance and trends and to make strategic decisions
regarding the allocation of capital and new investments.
Information reconciling forward-looking Adjusted EBITDA to GAAP
financial measures is unavailable to Fathom without unreasonable
effort. The company is not able to provide reconciliations of
forward-looking Adjusted EBITDA to GAAP financial measures because
certain items required for such reconciliations are outside of
Fathom's control and/or cannot be reasonably predicted, such as the
provision for income taxes. Preparation of such reconciliations
would require a forward-looking balance sheet, statement of income
and statement of cash flow, prepared in accordance with GAAP, and
such forward-looking financial statements are unavailable to Fathom
without unreasonable effort. Fathom provides a range for its
Adjusted EBITDA forecast that it believes will be achieved, however
it cannot accurately predict all the components of the Adjusted
EBITDA calculation. Fathom provides an Adjusted EBITDA forecast
because it believes that Adjusted EBITDA, when viewed with the
company's results under GAAP, provides useful information for the
reasons noted above. However, Adjusted EBITDA is not a measure of
financial performance or liquidity under GAAP and, accordingly,
should not be considered as an alternative to net income or cash
flow from operating activities as an indicator of operating
performance or liquidity.
Consolidated Balance Sheets
Period Ended
June 30, 2023
(Unaudited)
December 31, 2022
Assets
Current assets
Cash
$
10,733
$
10,713
Accounts receivable, net
24,496
28,641
Inventory
17,177
15,718
Prepaid expenses and other current
assets
2,618
3,588
Total current assets
55,024
58,660
Property and equipment, net
48,384
47,703
Right-of-use lease assets, net
12,034
12,565
Intangible assets, net
242,342
251,412
Other non-current assets
144
175
Total assets
$
357,928
$
370,515
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
10,311
$
7,982
Accrued expenses
8,155
8,176
Current lease liability
2,233
2,374
Other current liabilities
3,478
4,828
Current portion of debt, net
49,167
42,744
Total current liabilities
73,344
66,104
Long-term debt, net
109,551
114,327
Fathom earnout shares liability
808
5,960
Sponsor earnout shares liability
137
930
Warrant liability
600
2,780
Payable to related parties pursuant to the
tax receivable agreement (includes $4,050 and $4,000 at fair value,
respectively)
28,263
25,360
Noncurrent lease liability
10,285
11,083
Total liabilities
222,988
226,544
Commitments and Contingencies:
Contingently Redeemable Preferred
Equity:
Redeemable non-controlling interest in
Fathom OpCo
80,059
92,207
Shareholders' Equity:
Class A common stock, $0.0001 par value;
300,000,000 shares authorized; issued and outstanding 70,085,417
and 65,808,764 shares as of June 30, 2023 and December 31, 2022,
respectively
7
7
Class B common stock, $0.0001 par value;
180,000,000 shares authorized; issued and outstanding 66,547,589
and 70,153,051 shares as of June 30, 2023 and December 31, 2022,
respectively
7
7
Additional paid-in-capital
592,068
587,941
Accumulated other comprehensive loss
(107
)
(107
)
Accumulated deficit
(537,094
)
(536,084
)
Shareholders’ equity attributable to
Fathom Digital Manufacturing Corporation
54,881
51,764
Total Liabilities, Shareholders’ Equity,
and Redeemable Non-Controlling Interest
$
357,928
$
370,515
Consolidated Statements of
Comprehensive Income (Loss)
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Revenue
$
34,474
$
41,985
$
69,481
$
82,526
Cost of revenue
23,940
26,437
47,002
54,981
Gross profit
10,534
15,548
22,479
27,545
Operating expenses
Selling, general, and administrative
9,445
11,617
20,217
26,381
Depreciation and amortization
4,643
4,452
9,218
8,968
Restructuring
1,406
-
2,056
-
Total operating expenses
15,494
16,069
31,491
35,349
Operating loss
(4,960
)
(521
)
(9,012
)
(7,804
)
Interest expense and other (income)
expense
Interest expense
3,959
1,858
7,429
3,332
Other expense
65
129
138
195
Other income
(1,784
)
(36,108
)
(8,103
)
(63,223
)
Total interest expense and other (income)
expense, net
2,240
(34,121
)
(536
)
(59,696
)
Net income (loss) before income tax
$
(7,200
)
$
33,601
$
(8,476
)
$
51,892
Income tax (benefit) expense
64
(683
)
119
(1,386
)
Net income (loss)
$
(7,264
)
$
34,284
$
(8,595
)
$
53,278
Weighted average Class A common shares
outstanding
Basic
69,703,407
52,259,885
68,382,896
51,530,961
Diluted
136,302,053
135,524,773
136,213,635
135,305,168
Q2 2023 Revenue by Product Line
Three Months Ended
($ in thousands)
6/30/2023
% Revenue
6/30/2022
% Revenue
% Change
Revenue By Product Line
Additive manufacturing
$3,287
9.5%
$4,410
10.5%
-25.5%
Injection molding
$6,064
17.6%
$7,093
16.9%
-14.5%
CNC machining
$13,240
38.4%
$14,584
34.7%
-9.2%
Precision sheet metal
$10,164
29.5%
$14,751
35.1%
-31.1%
Other revenue
$1,719
5.0%
$1,147
2.7%
49.9%
Total
$34,474
100.0%
$41,985
100.0%
-17.9%
Six Months 2023 Revenue by Product
Line
Six Months Ended
($ in thousands)
6/30/2023
% Revenue
6/30/2022
% Revenue
% Change
Revenue By Product Line
Additive manufacturing
$6,875
9.9%
$8,559
10.4%
-19.7%
Injection molding
$10,743
15.5%
$13,908
16.9%
-22.8%
CNC machining
$27,470
39.5%
$27,910
33.8%
-1.6%
Precision sheet metal
$20,547
29.6%
$29,434
35.7%
-30.2%
Other revenue
$3,846
5.5%
$2,715
3.3%
41.7%
Total
$69,481
100.0%
$82,526
100.0%
-15.8%
Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income
(Loss)
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Net (loss) income
$
(7,264)
$
34,284
$
(8,595)
$
53,278
Stock compensation
1,239
1,796
2,332
3,926
Inventory step-up amortization
-
-
-
3,241
Restructuring expense
1,406
-
2,056
-
Change in fair value of warrant
liability(1)
(400)
(12,500)
(2,180)
(20,600)
Change in fair value of earnout share
liabilities(1)
(1,115)
(22,930)
(5,945)
(41,900)
Change in fair value of tax receivable
agreement(1)
(250)
(200)
50
(200)
Integration, non-recurring, non-operating,
cash, and non-cash costs(2)
715
1,047
1,111
2,951
Adjusted net loss
$
(5,669)
$
1,497
$
(11,171)
$
696
1 Represents the impacts from the change
in fair value related to the earnout shares liability, the warrant
liability and the tax receivable agreement associated with the
business combination completed on December 23, 2021; 2 Represents
adjustments for other integration, non-recurring, non-operating,
cash, and non-cash costs related primarily to integration costs for
acquisitions and severance.
Reconciliation of GAAP Net Income
(Loss) to Adjusted EBITDA
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Net income (loss)
$
(7,264)
$
34,284
$
(8,595)
$
53,278
Depreciation and amortization
6,465
5,996
12,543
12,204
Interest expense, net
3,959
1,858
7,429
3,332
Income tax expense (benefit)
64
(378)
119
(1,386)
Stock compensation
1,239
1,796
2,332
3,926
Inventory step-up amortization
-
-
-
3,241
Restructuring expense
1,406
-
2,056
-
Change in fair value of warrant
liability(1)
(400)
(12,500)
(2,180)
(20,600)
Change in fair value of earnout shares
liability(1)
(1,115)
(22,930)
(5,945)
(41,900)
Change in fair value of tax receivable
agreement(1)
(250)
(200)
50
(200)
Integration, non-recurring, non-operating,
cash, and non-cash costs(2)
715
1,047
1,111
2,951
Adjusted EBITDA
$
4,819
$
8,973
$
8,920
$
14,846
1 Represents the impacts from the change
in fair value related to the earnout shares liability, the warrant
liability and the tax receivable agreement associated with the
business combination completed on December 23, 2021; 2 Represents
adjustments for other integration, non-recurring, non-operating,
cash, and non-cash costs related primarily to integration costs for
acquisitions and severance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230813867621/en/
Michael Cimini Director, Investor Relations Fathom Digital
Manufacturing (262) 563-5575 michael.cimini@fathommfg.com
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