Second Quarter 2022 Highlights
- Revenue increased 17.0% to $42.0 million
- Total orders were flat at $39.7 million
- Net income totaled $34.0 million; adjusted net income1 totaled
$1.2 million
- Adjusted EBITDA1 increased to $8.7 million, representing an
Adjusted EBITDA margin1 of 20.6%
- Revised financial guidance for full year 2022
First Half 2022 Highlights
- Revenue increased 24.3% to $82.5 million
- Total orders increased approximately 8% to $83.5 million
- Net income totaled $51.8 million; adjusted net loss1 totaled
$0.8 million
- Adjusted EBITDA1 was $14.8 million, representing an Adjusted
EBITDA margin1 of 18.0%
Fathom Digital Manufacturing Corp. (NYSE: FATH), an
industry leader in on-demand digital manufacturing services, today
announced financial results for the three and six months ended June
30, 2022.
Three Months Ended
Six Months Ended
($ in thousands)
6/30/2022
6/30/2021
6/30/2022
6/30/2021
Revenue
$41,985
$35,872
$82,526
$66,406
Net income (loss)
$33,979
$(4,082)
$51,813
$(4,582)
Adjusted net income (loss)1
$1,192
$310
$(769)
$2,370
Adjusted EBITDA1
$8,668
$7,464
$14,846
$15,173
Adjusted EBITDA margin1
20.6%
20.8%
18.0%
22.8%
1 See “Non-GAAP Financial Information.”
Reconciliations of non-GAAP financial measures are included in the
appendix.
“In the second quarter, we built upon our proven history of
growth and profitability as revenue rose 17% from continued growth
in our strategic accounts and previous M&A activity while
adjusted EBITDA increased 16.1% to $8.7 million, representing a
leading industry margin,” said Ryan Martin, Fathom Chief Executive
Officer. “We continue to benefit from our comprehensive
manufacturing services by providing a diverse group of
enterprise-level customers with timely, value-added solutions
across both additive manufacturing and traditional manufacturing
technologies. Our focus remains on investing in new technologies
and expanding our breadth of leading offerings as we continue to
take advantage of the positive long-term fundamentals of our
business.”
Mr. Martin added, “For the full year, we have realigned our
expectations with the current macro environment given the downshift
in the broader economy. We continue to focus on strengthening our
commercial team and expect to be in a strong position to achieve
our go-forward growth target.”
Summary of Financial Results
Revenue for the second quarter of 2022 was $42.0 million
compared to $35.9 million in the second quarter of 2021, an
increase of $6.1 million, or 17.0%, of which approximately $3.6
million was organic and $2.5 was from acquisitions completed in Q2
2021. For the six months ended June 30, 2022, revenue increased
24.3% to $82.5 million from $66.4 million for the six months ended
June 30, 2021.
Gross profit for the second quarter of 2022 totaled $15.5
million, or 37.0% of revenue, compared to $13.5 million, or 37.6%
of revenue, in the second quarter of 2021. Gross profit for the six
months ended June 30, 2022 was $27.5 million, or 33.4% of revenue,
which includes approximately $3.7 million in non-cash purchase
accounting adjustments, compared to $26.9 million, or 40.5% of
revenue, for the same period in 2021.
Net income for the second quarter of 2022 was $34.0 million
compared to a net loss of $4.1 million in the second quarter of
2021. Excluding acquisition costs, stock compensation expense, the
revaluation of Fathom warrants and earnout shares, and other costs,
Fathom reported adjusted net income in the second quarter of 2022
of $1.2 million compared to adjusted net income of $0.3 million for
the same period in 2021.
Net income for the six months ended June 30, 2022 was $51.8
million compared to a net loss of $4.6 million for the same period
in 2021. For the six months ended June 30, 2022, the adjusted net
loss was $0.8 million compared to adjusted net income of $2.4
million for the same period in 2021.
Adjusted EBITDA for the second quarter of 2022 increased to $8.7
million from $7.5 million for the same period in 2021 primarily due
to higher volumes partially offset by the incurrence of public
company expenses totaling approximately $2.4 million. The Adjusted
EBITDA margin in the quarter was 20.6% compared to 20.8% in the
second quarter of 2021.
For the six months ended June 30, 2022, Adjusted EBITDA and
Adjusted EBITDA margin were $14.8 million and 18.0%, respectively,
compared to $15.2 million and 22.8%, respectively, for the same
period in 2021.
Revised 2022 Outlook
For 2022, Fathom currently expects year-over-year revenue growth
of approximately 8% to 12% for a range between $165 million and
$171 million. Fathom also expects Adjusted EBITDA to range between
$32 million and $36 million, representing year-over-year growth of
approximately (7%) to 5% and an implied Adjusted EBITDA margin of
19.4% to 21.1%. Fathom’s current guidance, as of August 15, 2022,
excludes the impact of any potential new acquisitions.
Conference Call
Fathom will host a conference call on Monday, August 15, 2022,
at 8:30 am Eastern Time. The dial-in number for callers in the U.S.
is +1-844-200-6205 and the dial-in number for international callers
is +1-929-526-1599. The access code for all callers is 489270. 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
22, 2022, by dialing +1-866-813-9403 (US) or +1-226-828-7578
(international), and then entering the access code 896018. 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 unique manufacturing processes and a national footprint
with nearly 450,000 square feet of manufacturing capacity across 12
facilities, Fathom seamlessly blends in-house capabilities across
plastic and metal additive technologies, CNC machining, injection
molding and tooling, sheet metal fabrication, and design and
engineering. With more than 35 years of industry experience, Fathom
is at the forefront of the Industry 4.0 digital manufacturing
revolution, serving clients in the technology, defense, aerospace,
medical, automotive and IOT sectors. 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; 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, 2021,
filed with the Securities and Exchange Commission (the “SEC”) on
April 8, 2022 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, including with respect to the revised financial
guidance for full year 2022 contained herein, 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 increase or decrease in the estimated fair
value of the company’s warrants or earnout shares. 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:
stock-based compensation, transaction-related costs, 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 transaction-related costs), non-cash (for
example, in the case of depreciation, amortization 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 Statements of
Comprehensive Income (Loss) (Unaudited)
($ in thousands)
Three months ended
Six months ended
June 30, 2022
(Successor)
June 30, 2021
(Predecessor)
June 30, 2022
(Successor)
June 30, 2021
(Predecessor)
Revenue
$
41,985
$
35,872
$
82,526
$
66,406
Cost of revenue
26,437
22,376
54,981
39,499
Gross profit
15,548
13,496
27,545
26,907
Operating expenses
Selling, general, and administrative
11,617
8,760
26,381
16,430
Depreciation and amortization
4,452
2,535
8,968
5,207
Total operating expenses
16,069
11,295
35,349
21,637
Operating (loss) income
(521
)
2,201
(7,804
)
5,270
Interest expense and other (income)
expense
Interest expense
1,858
2,310
3,332
4,424
Other expense
129
7,110
195
8,650
Other income
(36,108
)
(3,206
)
(63,223
)
(3,300
)
Total interest expense and other (income)
expense, net
(34,121
)
6,214
(59,696
)
9,774
Net income (loss) before income tax
$
33,601
$
(4,013
)
$
51,892
$
(4,504
)
Income tax (benefit) expense
(378
)
69
79
78
Net income (loss)
$
33,979
$
(4,082
)
$
51,813
$
(4,582
)
Net loss attributable to Fathom OpCo
non-controlling interest
(442
)
-
(5,702
)
-
Net income attributable to controlling
interest
34,421
(4,082
)
57,515
(4,582
)
Comprehensive income (loss):
Loss from foreign currency translation
adjustments
-
2
(107
)
(105
)
Comprehensive income (loss), net of
tax
$
34,421
$
(4,080
)
$
57,408
$
(4,687
)
Weighted average Class A common shares
outstanding
Basic
52,259,885
51,530,961
Diluted
135,524,773
135,305,168
Q2 2022 Revenue by Product Line
Reported Three Months
Ended
($ in thousands)
6/30/2022
% Revenue
6/30/2021
% Revenue
% Change
Revenue By Product Line
Additive manufacturing
$4,410
10.5%
$4,302
12.0%
2.5%
Injection molding
$7,093
16.9%
$6,492
18.1%
9.3%
CNC machining
$14,584
34.7%
$11,072
30.9%
31.7%
Precision sheet metal
$14,751
35.1%
$12,093
33.7%
22.0%
Other revenue
$1,147
2.7%
$1,913
5.3%
-40.0%
Total
$41,985
100%
$35,872
100%
17.0%
First Half 2022 Revenue by Product
Line
Reported Six Months
Ended
($ in thousands)
6/30/2022
% Revenue
6/30/2021
% Revenue
% Change
Revenue By Product Line
Additive manufacturing
$8,559
10.4%
$8,842
13.3%
-3.2%
Injection molding
$13,908
16.8%
$13,129
19.8%
5.9%
CNC machining
$27,910
33.8%
$15,903
23.9%
75.5%
Precision sheet metal
$29,434
35.7%
$25,210
38.0%
16.8%
Other revenue
$2,715
3.3%
$3,322
5.0%
-18.3%
Total
$82,526
100%
$66,406
100%
24.3%
Consolidated Balance Sheets
($ in thousands)
Period Ended
June 30, 2022
December 31, 2021
Assets
(unaudited)
Current assets
Cash
$
11,118
$
20,357
Accounts receivable, net
26,402
25,367
Inventory
14,100
13,165
Prepaid expenses and other current
assets
3,802
1,836
Total current assets
55,422
60,725
Property and equipment, net
46,908
44,527
Right-of-use operating lease assets,
net
8,081
-
Right-of-use financing lease assets,
net
2,363
-
Intangible assets, net
260,483
269,622
Goodwill
1,188,441
1,189,464
Other non-current assets
1,415
2,036
Total assets
$
1,563,113
$
1,566,374
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
11,468
$
9,409
Accrued expenses
7,254
5,957
Current operating lease liability
2,976
-
Current financing lease liability
190
-
Contingent consideration
700
2,748
Current portion of debt
31,179
29,697
Other current liabilities
3,767
2,058
Total current liabilities
57,534
49,869
Long-term debt, net
117,677
120,491
Fathom earnout shares liability
27,690
64,300
Sponsor earnout shares liability
4,090
9,380
Warrant liability
13,300
33,900
Noncurrent contingent consideration
-
850
Noncurrent operating lease liability
5,160
-
Noncurrent financing lease liability
2,227
-
Deferred tax liability
12,335
17,570
Other noncurrent liabilities
-
4,655
Payable to related parties pursuant to the
tax receivable agreement (includes $4,440 and $4,600 at fair value,
respectively)
9,400
4,600
Total liabilities
249,413
305,615
Commitments and Contingencies:
Redeemable non-controlling interest in
Fathom OpCo
749,615
841,982
Shareholders' Equity:
Class A common stock, $0.0001 par value;
300,000,000 shares authorized; 61,596,519 issued and outstanding as
of June 30, 2022 and 50,785,656 issued and outstanding as of
December 31, 2021
6
5
Class B common stock, $0.0001 par value;
180,000,000 shares authorized; 74,014,640 shares issued and
outstanding as of June 30, 2022 and 84,294,971 shares issued and
outstanding as of December 31, 2021
7
8
Class C common stock, $.0001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding as of
June 30, 2022 and December 31, 2021
-
-
Preferred Stock, $.0001 par value;
10,000,000 shares authorized; 0 shares issued and outstanding as of
June 30, 2022 and December 31, 2021
-
-
Treasury stock, at cost; 301,302 and 0
shares as of June 30, 2022 and December 31, 2021, respectively
(2,258
)
-
Additional paid-in-capital
556,417
466,345
Accumulated other comprehensive loss
-
Retained earnings (Accumulated
deficit)
9,913
(47,581
)
Shareholders’ equity attributable to
Fathom Digital Manufacturing Corporation
564,085
418,777
Total Liabilities, Shareholders’ Equity,
and Redeemable Non-Controlling Interest
$
1,563,113
$
1,566,374
Reconciliation of GAAP Net Income
(Loss) to Adjusted Net Income (Loss)
($ in thousands)
Q2 2022
Q2 2021
1H 2022
1H 2021
Net income (loss)
$33,979
($4,082)
$51,813
($4,582)
Acquisition expenses1
-
2,876
-
4,045
Stock compensation
1,796
-
3,926
-
Inventory step-up amortization
-
-
3,241
277
Change in fair value of warrant
liability2
(12,500)
-
(20,600)
-
Change in fair value of earnout share
liability2
(22,930)
-
(41,900)
-
Change in fair value of tax receivable
agreement (TRA)
(200)
-
(200)
-
Integration, non-recurring, non-operating,
cash, and non-cash costs3
1,047
1,516
2,951
2,630
Adjusted net income (loss)
$1,192
$310
($769)
$2,370
1 Represents expenses incurred related to
business acquisitions; 2 Represents the impacts from the change in
fair value related to both the earnout share liability and the
warrant liability associated with the business combination
completed on December 23, 2021; 3 Represents adjustments for other
integration, non-recurring, non-operating, cash, and non-cash costs
related primarily to integration costs for new acquisitions,
severance, and management fees paid to our principal owner.
Reconciliation of GAAP Net Income
(Loss) to Adjusted EBITDA
($ in thousands)
Q2 2022
Q2 2021
1H 2022
1H 2021
Net income (loss)
$33,979
($4,082)
$51,813
($4,582)
Depreciation and amortization
5,996
4,099
12,204
7,625
Interest expense, net
1,858
2,310
3,332
4,424
Income tax expense
(378)
69
79
78
Acquisition expenses1
-
2,876
-
4,045
Inventory step-up amortization
-
-
3,241
277
Stock compensation
1,796
-
3,926
-
Change in fair value of warrant
liability2
(12,500)
-
(20,600)
-
Change in fair value of earnout share
liability2
(22,930)
-
(41,900)
-
Change in fair value of tax receivable
agreement (TRA)
(200)
-
(200)
-
Contingent consideration3
-
(1,355)
-
(1,355)
Loss on extinguishment of debt4
-
2,031
-
2,031
Integration, non-recurring, non-operating,
cash, and non-cash costs5
1,047
1,516
2,951
2,630
Adjusted EBITDA
$8,668
$7,464
$14,846
$15,173
1 Represents expenses incurred related to
business acquisitions; 2 Represents the impacts from the change in
fair value related to both the earnout share liability and the
warrant liability associated with the business combination
completed on December 23, 2021; 3 Represents the change in fair
value of contingent consideration payable to former owners of
acquired businesses; 4 Represents amounts paid to refinance debt in
April of 2021; 5 Represents adjustments for other integration,
non-recurring, non-operating, cash, and non-cash costs related
primarily to integration costs for new acquisitions, severance, and
management fees paid to our principal owner.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220814005012/en/
Michael Cimini Director, Investor Relations Fathom Digital
Manufacturing (262) 563-5575 michael.cimini@fathommfg.com
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