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Desktop Metal Announces First Quarter 2022 Financial Results

DM

  • Revenue growth of 286% from the first quarter of 2021 to $43.7 million
  • Commenced shipments of Production System P-50
  • Installed initial Production System P-1 in China at a hyperscale account with technical and commercial developments across multiple sizable opportunities
  • Launched the all-new S-Max Flex for affordable and scalable digital sand casting
  • Reaffirming full year 2022 guidance of approximately $260 million for revenue, representing 131% growth from 2021, and approximately $(90) million for adjusted EBITDA

Desktop Metal, Inc. (NYSE: DM) today announced its financial results for the quarter ended March 31, 2022.

“Following a revolutionary year in which we made significant progress building a foundation of AM 2.0 technologies to achieve our goal of double-digit share of the additive market by the end of the decade, we are off to a great start to 2022,” said Ric Fulop, Founder and CEO of Desktop Metal. “We delivered strong topline growth of 286% year-over-year as we continue to capture market share and rapidly grow revenue at scale. With several exciting product launches to kick off the year, and demand as strong as ever for our broad portfolio of AM 2.0 solutions, we are well-positioned for outsized growth and margin expansion through the balance of 2022.”

First Quarter 2022 and Recent Business Highlights:

  • Commenced shipments of Production System™ P-50
  • Installed initial Production System™ P-1 in China at a hyperscale account with technical and commercial developments across multiple sizable opportunities
  • Launched the all-new S-Max Flex® for affordable and scalable digital sand casting, integrating Desktop Metal Single Pass Jetting™ technology with ExOne sand binder jetting process and materials expertise
  • Awarded a major sub-contract through the Defense Logistics Agency (DLA) of the Department of Defense
  • Significant uptick in demand to support onshoring projects and help customers respond to supply chain disruption
  • Launched Einstein™ series of high-precision 3D printers designed for volume production of dental and healthcare parts
  • Launched Flexcera™ Smile Ultra+, a hybrid nanoceramic resin for permanent restorations and one of the strongest dental resins in the market

First Quarter 2022 Financial Highlights:

  • Revenue of $43.7 million, up 286% from first quarter 2021 revenue of $11.3 million, including broad-based growth and contributions from acquisitions
  • GAAP gross margin of (3.0)%; non-GAAP gross margin of 17.1%, increasing more than 1,150 basis points from 5.5% in first quarter 2021
  • Net loss of $69.9 million, including $9.8 million in amortization of acquired intangible assets
  • Adjusted EBITDA of $(41.6) million
  • Cash, cash equivalents, and short-term investments of $206.5 million as of March 31, 2022

Outlook for Full Year 2022:

  • Reaffirming revenue expectation of approximately $260 million for 2022, representing 131% growth from 2021
  • Reaffirming adjusted EBITDA expectation of approximately $(90) million for 2022

Conference Call Information:

Desktop Metal will host a conference call on Tuesday, May 10, 2022 at 8:00 a.m. EST to discuss first quarter 2022 results. Participants may access the call at 1-855-560-2573, international callers may use 1-412-317-5237, 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 https://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, Inc., based in Burlington, Massachusetts, is accelerating the transformation of manufacturing with an expansive portfolio of 3D printing solutions, from rapid prototyping to mass production. Founded in 2015 by leaders in advanced manufacturing, metallurgy, and robotics, the company is addressing the unmet challenges of speed, cost, and quality to make additive manufacturing an essential tool for engineers and manufacturers around the world. Desktop Metal was selected as one of the world’s 30 most promising Technology Pioneers by the World Economic Forum, named to MIT Technology Review’s list of 50 Smartest Companies, and the 2021 winner of Fast Company’s Innovation by Design Award in materials.

For more information, visit www.desktopmetal.com.

Forward-looking Statements:

This press release contains certain forward-looking statements within the meaning of the federal securities laws. 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, 2022, 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,

2022

2021

Assets

Current assets:

Cash and cash equivalents

$

103,590

$

65,017

Current portion of restricted cash

2,166

2,129

Short‑term investments

102,895

204,569

Accounts receivable

36,661

46,687

Inventory

81,876

65,399

Prepaid expenses and other current assets

22,446

18,208

Total current assets

349,634

402,009

Restricted cash, net of current portion

1,112

1,112

Property and equipment, net

58,082

58,710

Goodwill

630,022

639,301

Intangible assets, net

251,000

261,984

Other noncurrent assets

32,143

25,480

Total Assets

$

1,321,993

$

1,388,596

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

30,431

$

31,558

Customer deposits

16,911

14,137

Current portion of lease liability

5,326

5,527

Accrued expenses and other current liabilities

31,615

33,829

Current portion of deferred revenue

19,261

18,189

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

731

825

Total current liabilities

104,275

104,065

Long-term debt, net of current portion

523

548

Warrant liability

Contingent consideration, net of current portion

2,596

4,183

Lease liability, net of current portion

19,856

13,077

Deferred revenue, net of current portion

4,047

4,508

Deferred tax liability

9,506

10,695

Other noncurrent liabilities

3,165

3,170

Total liabilities

143,968

140,246

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, 2022 and December 31, 2021, respectively

Common Stock, $0.0001 par value—500,000,000 shares authorized; 312,999,991 and 311,737,858 shares issued at March 31, 2022 and December 31, 2021, respectively, 312,825,572 and 311,473,950 shares outstanding at March 31, 2022 and December 31, 2021, respectively

31

31

Additional paid‑in capital

1,833,998

1,823,344

Accumulated deficit

(638,555)

(568,611)

Accumulated other comprehensive loss

(17,449)

(6,414)

Total Stockholders’ Equity

1,178,025

1,248,350

Total Liabilities and Stockholders’ Equity

$

1,321,993

$

1,388,596

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

Three Months Ended

March 31,

2022

2021

Revenues

Products

$

39,476

$

10,311

Services

4,230

1,002

Total revenues

43,706

11,313

Cost of sales

Products

41,902

10,487

Services

3,132

1,413

Total cost of sales

45,034

11,900

Gross profit/(loss)

(1,328)

(587)

Operating expenses

Research and development

24,605

10,858

Sales and marketing

19,689

5,449

General and administrative

23,857

13,846

Total operating expenses

68,151

30,153

Loss from operations

(69,479)

(30,740)

Change in fair value of warrant liability

(56,576)

Interest expense

32

(73)

Interest and other (expense) income, net

(1,753)

361

Loss before income taxes

(71,200)

(87,028)

Income tax benefit

1,256

27,920

Net loss

$

(69,944)

$

(59,108)

Net loss per share—basic and diluted

$

(0.22)

$

(0.25)

Weighted average shares outstanding, basic and diluted

312,016,627

238,243,779

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

Three Months Ended

March 31,

2022

2021

Net loss

$

(69,944)

$

(59,108)

Other comprehensive (loss) income, net of taxes:

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

12

1

Foreign currency translation adjustment

(11,047)

(13)

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

$

(80,979)

$

(59,120)

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

Three Months Ended March 31, 2022

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paid‑in

Accumulated

(Loss)

Stockholders’

Shares

Amount

Capital

Deficit

Income

Equity

BALANCE—January 1, 2022

311,473,950

$

31

$

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)

Issuance of Common Stock for acquisitions

Stock‑based compensation expense

9,912

9,912

Vesting of Trine Founder shares

Exercise of warrants

Net loss

(69,944)

(69,944)

Other comprehensive income (loss)

(11,035)

(11,035)

BALANCE—March 31, 2022

312,825,572

$

31

$

1,833,998

$

(638,555)

$

(17,449)

$

1,178,025

Three Months Ended March 31, 2021

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paid‑in

Accumulated

(Loss)

Stockholders’

Shares

Amount

Capital

Deficit

Income

Equity

BALANCE—January 1, 2021

224,626,597

$

23

$

844,188

$

(328,277)

$

(9)

$

515,925

Exercise of Common Stock options

163,228

180

180

Vesting of restricted Common Stock

56,015

Vesting of restricted stock units

15,265

Repurchase of shares for employee tax withholdings

(2,241)

(54)

(54)

Issuance of Common Stock for acquisitions

5,036,142

159,847

159,847

Stock‑based compensation expense

2,217

2,217

Vesting of Trine Founder shares

1,850,938

Exercise of warrants

20,690,975

2

320,567

320,569

Net loss

(59,108)

(59,108)

Other comprehensive income (loss)

(12)

(12)

BALANCE—March 31, 2021

252,436,919

$

25

$

1,326,945

$

(387,385)

$

(21)

$

939,564

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

Three Months Ended March 31,

2022

2021

Cash flows from operating activities:

Net loss

$

(69,944)

$

(59,108)

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

Depreciation and amortization

12,883

3,892

Stock‑based compensation

9,912

2,217

Change in fair value of warrant liability

56,576

Amortization (accretion) of discount on investments

413

406

Amortization of debt financing cost

4

Provision for bad debt

419

72

Loss on disposal of property and equipment

2

Foreign exchange (gains) losses on intercompany transactions, net

185

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

949

(240)

Net unrealized (gain) loss on marketable securities

(25)

Net unrealized (gain) loss on equity investment

1,700

Deferred tax benefit

(1,256)

(27,921)

Change in fair value of contingent consideration

(114)

Foreign currency transaction (gain) loss

10

Changes in operating assets and liabilities:

Accounts receivable

9,489

(61)

Inventory

(15,506)

(2,381)

Prepaid expenses and other current assets

(4,087)

(4,276)

Other assets

(210)

(30)

Accounts payable

(1,333)

(3,856)

Accrued expenses and other current liabilities

(3,391)

(5,247)

Customer deposits

2,980

(1,234)

Current portion of deferred revenue

721

105

Change in right of use assets and lease liabilities, net

(108)

(22)

Other liabilities

12

Net cash used in operating activities

(56,274)

(41,129)

Cash flows from investing activities:

Purchases of property and equipment

(4,074)

(262)

Proceeds from sale of property and equipment

6

Purchase of marketable securities

(92,386)

Proceeds from sales and maturities of marketable securities

98,625

48,241

Cash paid for acquisitions, net of cash acquired

(23)

(137,646)

Net cash provided by (used in) investing activities

94,534

(182,053)

Cash flows from financing activities:

Proceeds from reverse recapitalization, net of issuance costs

(1,239)

Proceeds from the exercise of stock options

900

180

Proceeds from the exercise of stock warrants

158,308

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

(158)

(54)

Repayment of term loan

(43)

Net cash provided by financing activities

699

157,195

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

(349)

26

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

38,610

(65,961)

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

68,258

484,137

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

$

106,868

$

418,176

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

$

103,590

416,379

Restricted cash included in other current assets

2,166

1,021

Restricted cash included in other noncurrent assets

1,112

776

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

$

106,868

$

418,176

Supplemental cash flow information:

Interest paid

$

$

73

Non‑cash investing and financing activities:

Net unrealized (gain) loss on investments

$

(12)

$

(1)

Exercise of private placement warrants

$

$

149,904

Common Stock issued for acquisitions

$

$

159,847

Additions to right of use assets and lease liabilities

$

7,784

$

364

Purchase of property and equipment included in accounts payable

$

313

$

50

Transfers from property and equipment to inventory

$

1,721

$

Transfers from inventory to property and equipment

$

605

$

Receivable for warrants exercised

$

$

12,357

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.

  • We define Non-GAAP gross margin as GAAP gross margin excluding the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related and other transactional charges and inventory step-up adjustments
  • We define Non-GAAP operating loss as GAAP operating loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related and other transactional charges and inventory step-up adjustments
  • We define Non-GAAP net loss as GAAP net loss excluding the effect of stock-based compensation, amortization of acquired intangible assets, acquisition-related and other transactional charges, inventory step-up adjustments, change in fair value of investments and change in fair value of warrant liability
  • We define Non-GAAP operating expense as GAAP operating expense excluding the effect of stock-based compensation, amortization of acquired intangible assets and acquisition-related and other transactional charges
  • We define EBITDA as GAAP net income (loss) excluding interest, income taxes and depreciation and amortization expense
  • We define Adjusted EBITDA as EBITDA excluding stock-based compensation, inventory step-up adjustments, change in fair value of warrant liability, change in fair value of investments and acquisition-related and other transactional charges

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, 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.

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

For the Three Months Ended

March 31,

(Dollars in thousands)

2022

2021

GAAP gross margin

$

(1,328)

$

(587)

Stock-based compensation included in cost of sales

487

117

Amortization of acquired intangible assets included in cost of sales

5,990

1,091

Acquisition-related and other transactional charges included in cost of sales

1,138

Inventory step-up adjustment in cost of sales

1,181

Non-GAAP gross margin

$

7,468

$

621

GAAP operating loss

$

(69,479)

$

(30,740)

Stock-based compensation

9,912

2,217

Amortization of acquired intangible assets

9,784

2,299

Inventory step-up adjustment in cost of sales

1,181

Acquisition-related and other transactional charges

3,986

4,984

Non-GAAP operating loss

$

(44,616)

$

(21,240)

GAAP net loss

$

(69,944)

$

(59,108)

Stock-based compensation

9,912

2,217

Amortization of acquired intangible assets

9,784

2,299

Inventory step-up adjustment in cost of sales

1,181

Acquisition-related and other transactional charges

3,986

4,984

Change in fair value of investments

1,700

Change in fair value of warrant liability

56,576

Non-GAAP net loss

$

(43,381)

$

6,968

DESKTOP METAL, INC.
NON-GAAP OPERATING EXPENSE RECONCILIATION TABLE

For the Three Months Ended

March 31,

(Dollars in thousands)

2022

2021

GAAP operating expenses

$

68,151

$

30,153

Stock-based compensation included in operating expenses

(9,425)

(2,100)

Amortization of acquired intangible assets included in operating expenses

(3,794)

(1,208)

Acquisition-related and other transactional charges included in operating expenses

(2,848)

(4,984)

Non-GAAP operating expenses

$

52,084

$

21,861

DESKTOP METAL, INC.
ADJUSTED EBITDA RECONCILIATION TABLE

For the Three Months Ended

March 31,

(Dollars in thousands)

2022

2021

Net loss attributable to common stockholders

$

(69,944)

$

(59,108)

Interest (income) expense, net

(32)

(42)

Income tax benefit

(1,256)

(27,920)

Depreciation and amortization

12,883

3,892

EBITDA

(58,349)

(83,178)

Change in fair value of warrant liability

56,576

Change in fair value of investments

1,700

Inventory step-up adjustment

1,181

Stock compensation expense

9,912

2,217

Acquisition-related and other transactional charges

3,986

4,984

Adjusted EBITDA

$

(41,570)

$

(19,401)