Desktop Metal Announces First Quarter 2023 Financial Results :: Desktop Metal, Inc. (DM)

Nov 16, 2023

BOSTON--(BUSINESS WIRE)--Desktop Metal, Inc. (NYSE: DM) today announced its financial results for the first quarter ended March 31, 2023.

"Desktop Metal is off to a solid start to 2023 following very strong growth last year," said Ric Fulop, Founder and CEO of Desktop Metal. "Customer demand trends for our unique portfolio of AM 2.0 mass production solutions remain resilient, despite an unsteady macro environment, giving us confidence in our growth projections for this year. Additionally, we’ve made significant progress on our cost reduction efforts initiated last year and expanded in February 2023. Going forward, we expect to demonstrate continued reductions in our cost structure in order to expand margins and deliver on our adjusted EBITDA commitments. We believe we can differentiate ourselves as we navigate a difficult economic backdrop relative to our industry peers."

First Quarter 2023 and Recent Business Highlights:

First Quarter 2023 Financial Highlights:

Financial Outlook:

Desktop Metal has not provided a reconciliation of its Adjusted EBITDA outlook to net income because estimates of all of the reconciling items cannot be provided without unreasonable efforts. See "Non-GAAP Financial Information."

Conference Call Information:

Desktop Metal will host a conference call on Wednesday, May 10, 2023 to discuss first quarter 2023 results. Participants may access the call at 1-877-407-4018, international callers may use 1-201-689-8471, and request to join the Desktop Metal financial results conference call. A simultaneous webcast of the conference call and the accompanying summary presentation may be accessed online at the Events & Presentations section of ir.desktopmetal.com. A replay will be available shortly after the conclusion of the conference call at the same website.

About Desktop Metal:

Desktop Metal (NYSE:DM) is driving Additive Manufacturing 2.0, a new era of on-demand, digital mass production of industrial, medical, and consumer products. Our innovative 3D printers, materials, and software deliver the speed, cost, and part quality required for this transformation. We’re the original inventors and world leaders of the 3D printing methods we believe will empower this shift, binder jetting and digital light processing. Today, our systems print metal, polymer, sand and other ceramics, as well as foam and recycled wood. Manufacturers use our technology worldwide to save time and money, reduce waste, increase flexibility, and produce designs that solve the world's toughest problems and enable once-impossible innovations. Learn more about Desktop Metal and our #TeamDM brands at www.desktopmetal.com.

Forward-looking Statements:

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in these communications, including statements regarding Desktop Metal's future results of operations and financial position, financial targets, business strategy, plans and objectives for future operations, are forward-looking statements. Forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to risks associated with the integration of the business and operations of acquired businesses, our ability to realize the benefits from cost saving measures, and supply and logistics disruptions, including shortages and delays. For more information about risks and uncertainties that may impact Desktop Metal's business, financial condition, results of operations and prospects generally, please refer to Desktop Metal's reports filed with the SEC, including without limitation the "Risk Factors" and/or other information included in the Form 10-Q filed with the SEC on May 10, 2023, and such other reports as Desktop Metal has filed or may file with the SEC from time to time. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Desktop Metal, Inc. assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

DESKTOP METAL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)(in thousands, except share and per share amounts)

March 31,

December 31,

2023

2022

Assets

Current assets:

Cash and cash equivalents

101,252

76,291

Current portion of restricted cash

4,595

4,510

Short‑term investments

48,554

108,243

Accounts receivable

35,603

38,481

Inventory

98,221

91,736

Prepaid expenses and other current assets

21,067

16,325

Assets held for sale

6,871

830

Total current assets

316,163

336,416

Restricted cash, net of current portion

612

1,112

Property and equipment, net

45,262

56,271

Goodwill

113,571

112,955

Intangible assets, net

210,117

219,830

Other noncurrent assets

28,461

27,763

Total Assets

714,186

754,347

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

21,988

25,105

Customer deposits

12,300

11,526

Current portion of lease liability

6,106

5,730

Accrued expenses and other current liabilities

28,026

26,723

Current portion of deferred revenue

14,639

13,719

Current portion of long‑term debt, net of deferred financing costs

403

584

Total current liabilities

83,462

83,387

Long-term debt, net of current portion

252

311

Convertible notes

112,017

111,834

Lease liability, net of current portion

17,679

17,860

Deferred revenue, net of current portion

3,965

3,664

Deferred tax liability

8,074

8,430

Other noncurrent liabilities

3,167

1,359

Total liabilities

228,616

226,845

Commitments and Contingencies (Note 17)

Stockholders’ Equity

Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

—

Common Stock, $0.0001 par value—500,000,000 shares authorized; 320,477,686 and 318,235,106 shares issued at March 31, 2023 and December 31, 2022, respectively, 320,401,389 and 318,133,434 shares outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid‑in capital

1,883,764

1,874,792

Accumulated deficit

(1,361,596)

(1,308,954)

Accumulated other comprehensive loss

(36,630)

(38,368)

Total Stockholders’ Equity

485,570

527,502

Total Liabilities and Stockholders’ Equity

714,186

754,347

DESKTOP METAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)(in thousands, except per share amounts)

Three Months Ended

March 31,

2023

2022

Revenues

Products

36,697

39,476

Services

4,619

4,230

Total revenues

41,316

43,706

Cost of sales

Products

38,891

41,902

Services

3,789

3,132

Total cost of sales

42,680

45,034

Gross profit (loss)

(1,364)

(1,328)

Operating expenses

Research and development

23,144

24,605

Sales and marketing

9,607

19,689

General and administrative

18,202

23,857

Total operating expenses

50,953

68,151

Loss from operations

(52,317)

(69,479)

Interest expense

(811)

Interest and other (expense) income, net

(71)

(1,753)

Loss before income taxes

(53,199)

(71,200)

Income tax benefit

557

1,256

Net loss

(52,642)

(69,944)

Net loss per share—basic and diluted

(0.16)

(0.22)

Weighted average shares outstanding, basic and diluted

319,095,656

312,016,627

DESKTOP METAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(UNAUDITED)(in thousands)

Three Months Ended

March 31,

2023

2022

Net loss

(52,642)

(69,944)

Other comprehensive (loss) income, net of taxes:

Unrealized gain (loss) on available-for-sale marketable securities, net

189

Foreign currency translation adjustment

1,549

(11,047)

Total comprehensive (loss) income, net of taxes of $0

(50,904)

(80,979)

DESKTOP METAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(UNAUDITED)(in thousands, except share amounts)

Three Months Ended March 31, 2023

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paid‑in

Accumulated

(Loss)

Stockholders’

Amount

Capital

Deficit

Income

Equity

BALANCE—January 1, 2023

318,133,434

1,874,792

(1,308,954)

(38,368)

527,502

Exercise of Common Stock options

495,876

—

597

—

597

Vesting of restricted Common Stock

25,375

—

Vesting of restricted stock units

1,808,422

—

Repurchase of shares for employee tax withholdings

(61,718)

—

(99)

—

(99)

Stock‑based compensation expense

—

8,474

—

8,474

Net loss

—

(52,642)

—

(52,642)

Other comprehensive income (loss)

—

1,738

BALANCE—March 31, 2023

320,401,389

1,883,764

(1,361,596)

(36,630)

485,570

Three Months Ended March 31, 2022

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paid‑in

Accumulated

(Loss)

Stockholders’

Amount

Capital

Deficit

Income

Equity

BALANCE—January 1, 2022

311,473,950

1,823,344

(568,611)

(6,414)

1,248,350

Exercise of Common Stock options

786,693

—

900

—

900

Vesting of restricted Common Stock

84,384

—

Vesting of restricted stock units

520,265

—

Repurchase of shares for employee tax withholdings

(39,720)

—

(158)

—

(158)

Stock‑based compensation expense

—

9,912

—

9,912

Net loss

—

(69,944)

—

(69,944)

Other comprehensive income (loss)

—

(11,035)

BALANCE—March 31, 2022

312,825,572

1,833,998

(638,555)

(17,449)

1,178,025

DESKTOP METAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(in thousands)

Three Months Ended March 31,

2023

2022

Cash flows from operating activities:

Net loss

(52,642)

(69,944)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

13,433

12,883

Stock‑based compensation

9,313

9,912

Amortization (accretion) of discount on investments

(382)

413

Amortization of deferred costs on convertible notes

183

—

Provision for bad debt

179

419

Loss on disposal of property and equipment

519

Net increase (decrease) in accrued interest related to marketable securities

(8)

949

Net unrealized (gain) loss on equity investment

402

1,700

Deferred tax benefit

(557)

(1,256)

Change in fair value of contingent consideration

—

(114)

Foreign currency transaction (gain) loss

(25)

195

Changes in operating assets and liabilities:

Accounts receivable

2,792

9,489

Inventory

(6,892)

(15,506)

Prepaid expenses and other current assets

(4,664)

(4,087)

Other assets

991

(210)

Accounts payable

(3,011)

(1,333)

Accrued expenses and other current liabilities

878

(3,391)

Customer deposits

705

2,980

Current portion of deferred revenue

1,127

721

Change in right of use assets and lease liabilities, net

(1,493)

(108)

Other liabilities

1,806

Net cash used in operating activities

(37,346)

(56,274)

Cash flows from investing activities:

Purchases of property and equipment

(1,011)

(4,074)

Proceeds from sale of property and equipment

3,071

Purchase of marketable securities

(4,973)

—

Proceeds from sales and maturities of marketable securities

64,840

98,625

Cash paid for acquisitions, net of cash acquired

(500)

(23)

Net cash provided by investing activities

61,427

94,534

Cash flows from financing activities:

Proceeds from the exercise of stock options

597

900

Payment of taxes related to net share settlement upon vesting of restricted stock units

(99)

(158)

Repayment of loans

(250)

(43)

Net cash provided by financing activities

248

699

Effect of exchange rate changes on cash, cash equivalents and restricted cash

217

(349)

Net increase (decrease) in cash, cash equivalents, and restricted cash

24,546

38,610

Cash, cash equivalents, and restricted cash at beginning of period

81,913

68,258

Cash, cash equivalents, and restricted cash at end of period

106,459

106,868

Supplemental disclosures of cash flow information

Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:

Cash and cash equivalents

101,252

103,590

Restricted cash included in other current assets

4,595

2,166

Restricted cash included in other noncurrent assets

612

1,112

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows

106,459

106,868

Supplemental cash flow information:

Interest paid

—

Taxes paid

—

Non‑cash investing and financing activities:

Net unrealized (gain) loss on investments

(189)

(12)

Additions to right of use assets and lease liabilities

1,531

7,784

Purchase of property and equipment included in accounts payable

183

313

Purchase of property and equipment included in accrued expense

—

Transfers from property and equipment to inventory

275

1,721

Transfers from PP&E to Asset Held-For-Sale

6,040

—

Transfers from inventory to property and equipment

1,067

605

Non-GAAP Financial Information

This press release contains non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA.

In addition to Desktop Metal's results determined in accordance with GAAP, Desktop Metal's management uses this non-GAAP financial information to evaluate the Company's ongoing operations and for internal planning and forecasting purposes. We believe that this non-GAAP financial information, when taken collectively, may be helpful to investors in assessing Desktop Metal's operating performance.

We believe that the use of Non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends because it eliminates the effect of financing, capital expenditures, and non-cash expenses such as stock-based compensation and warrants, and provides investors with a means to compare Desktop Metal's financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. However, investors should be aware that when evaluating non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA, we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of these measures may not be comparable to other similarly titled measures computed by other companies because not all companies calculate these measures in the same fashion.

Because of these limitations, non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP gross margin, non-GAAP operating loss, non-GAAP net loss, non-GAAP operating expense, EBITDA and Adjusted EBITDA on a supplemental basis. Management uses, and investors should consider, our non-GAAP financial measures only in conjunction with our GAAP results. Desktop Metal has not provided a reconciliation of its Adjusted EBITDA outlook to net income because estimates of all of the reconciling items cannot be provided without unreasonable efforts.

Set forth below is a reconciliation of each non-GAAP financial measure used in this press release to its most directly comparable GAAP financial measure.

DESKTOP METAL, INC.NON-GAAP RECONCILIATION TABLE(in thousands)

For the Three Months Ended

March 31,

(Dollars in thousands)

2023

2022

GAAP gross margin

(1,364)

(1,328)

Stock-based compensation included in cost of sales(1)

680

487

Amortization of acquired intangible assets included in cost of sales

6,927

5,990

Restructuring expense in cost of sales

717

—

Acquisition-related and integration costs included in cost of sales

479

1,138

Inventory step-up adjustment in cost of sales

—

1,181

Non-GAAP gross margin

7,439

7,468

GAAP operating loss

(52,317)

(69,479)

Stock-based compensation(2)

9,313

9,912

Amortization of acquired intangible assets

10,442

9,784

Restructuring expense

3,618

—

Inventory step-up adjustment in cost of sales

—

1,181

Acquisition-related and integration costs

1,406

3,986

Non-GAAP operating loss

(27,538)

(44,616)

GAAP net loss

(52,642)

(69,944)

Stock-based compensation(2)

9,313

9,912

Amortization of acquired intangible assets

10,442

9,784

Restructuring expense

3,618

—

Inventory step-up adjustment in cost of sales

—

1,181

Acquisition-related and integration costs

1,406

3,986

Change in fair value of investments

179

1,700

Non-GAAP net loss

(27,684)

(43,381)

(1)

Includes $0.2 million and $0.0 million of liability-award stock-based compensation expense for the three months ended March 31, 2023 and 2022, respectively.

(2)

Includes $1.6 million and $0.0 million of liability-award stock-based compensation expense for the three months ended March 31, 2023 and 2022, respectively.

DESKTOP METAL, INC.NON-GAAP OPERATING EXPENSE RECONCILIATION TABLE(in thousands)

For the Three Months Ended

March 31,

(Dollars in thousands)

2023

2022

GAAP operating expenses

50,953

68,151

Stock-based compensation included in operating expenses(1)

(8,633)

(9,425)

Amortization of acquired intangible assets included in operating expenses

(3,515)

(3,794)

Restructuring expense included in operating expenses

(2,901)

—

Acquisition-related and integration costs included in operating expenses

(927)

(2,848)

Non-GAAP operating expenses

34,977

52,084

(1)

Includes $1.6 million and $0.0 million of liability-award stock-based compensation expense for the three months ended March 31, 2023 and 2022, respectively.

DESKTOP METAL, INC.NON-GAAP ADJUSTED EBITDA RECONCILIATION TABLE(in thousands)

For the Three Months Ended

March 31,

(Dollars in thousands)

2023

2022

Net loss attributable to common stockholders

(52,642)

(69,944)

Interest (income) expense, net

811

(32)

Income tax expense (benefit)

(557)

(1,256)

Depreciation and amortization

13,433

12,883

EBITDA

(38,955)

(58,349)

Change in fair value of investments

179

1,700

Inventory step-up adjustment

—

1,181

Stock-based compensation expense(1)

9,313

9,912

Restructuring expense

3,618

—

Acquisition-related and integration costs

1,406

3,986

Adjusted EBITDA

(24,439)

(41,570)

(1)

Includes $1.6 million and $0.0 million of liability-award stock-based compensation for the three months ended March 31, 2023 and 2022, respectively.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230510005937/en/

Investor Relations:Jay Gentzkow(781) [email protected]

Media Relations:Sarah Webster(313) [email protected]

Source: Desktop Metal, Inc.

Released May 10, 2023

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