Desktop Metal (DM)

Jay Gentzkow Vice President, Investor Relations
Ric Fulop Chief Executive Officer, Chairman and Founder
James Haley Chief Financial Officer
John Hartner Director and Chief Executive Officer, ExOne
Noelle Dilts Stifel
Shannon Cross Cross Research
Danny Eggerich Craig Hallum
Josh Sullivan The Benchmark Company
Sarkis Sherbetchyan B. Riley Securities
Call transcript
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Good day, and welcome to Desktop Metal’s Second Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jay Gentzkow. Please go ahead.

Jay Gentzkow

Thank you, and thanks everyone for joining this afternoon's call. Doug Ric Haley, Chairman ExOne's CFO Hartner ExOne's are Desktop Founder CEO, today and James Metal; of CFO, me Fulop, and CEO, of John With Zemba. Desktop Metal, two Please note to this Investor presentation are call Relations releases and two under events of presentations on the press available section the referred in website. metals desktop our This Investor Relations same link at call the is also being webcast live with the website. following will be available replay this The call. and months accompanying slides webcast for for XX is call today’s The property of of content Metal. the Desktop It reproduced consent. transcribed our without cannot or be prior written

our views we August Harbor the materially and like Before slide Today’s I’d of and expectations to statements forward-looking of a These only begin, presentation include XX, Metal on may vary refer and ExOne's today, X actual of you X will based to results on acquisition presentation. statements. call risks number Safe reflect slide of Desktop and disclaimer uncertainties. and forward-looking Desktop XXXX as Metal’s

information about results and For financial Form impact with other call, on the nor acquisition today discussed section filed risk obligation ExOne each today and XX-Q Desktop company's to respected the and proposed any the X-K the please filings filed of Either forward-looking and acquisition, update the SEC. this Metal factors may more Form to to with respect business the the ExOne's Metal risk assume that refer statements. Desktop

in to measures. to a to intended session, of reconciliation the of today supplement, well accordance calculated or over company's my turn Q&A Ric non-GAAP ExOne the both presentation for the as non-GAAP These and it's discussed refer Fulop, this CEO contains results Founder following be substitute Desktop release that, to and call Each GAAP. other Metal. pleasure information the GAAP performance financial but quantitative With measures. to Metal during are financial Desktop to Additionally, with may not measures measures and as

Ric Fulop

for you quarter afternoon call. Thank financial and results you, joining thank XXXX second Desktop Jay. Good Metal

the number made revenue review expanded quarterly strong adoption a Revenue the than rapid of a developments. exciting for here the has start a presentation I'll with transaction John with announced and our more As our quarter XXXX. quarter have I'm to for accelerating slide financial we begin we'll quarter vision over on XXX% sequential may Metal in meaningfully industry with you definitive we manufacturing seen proud strategic acquire we rationale, of firing this into independent additive transaction before the afternoon agreement Metal. few first manufacturing progress ExOne. discuss We've to growth ExOne team's of the a growth, delivering company CEO and and XX% second of and I'm review a a increase this And Desktop Hartner. million, Desktop $XX on results quarter. cylinders, X a second executed XXXX of major briefly of on with is each to our all the the starting gross efforts in to highlights. delivered The margins X.X. of the very additive accelerate entered quarter

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Shop XXXX. sequentially System with Moving in business metals growth quarter Studio to new with this quarter's system installed additions P-X, of another X. our customer business first acceleration contributions This from base, from highlights; customer the strong the and included System we quarter XX% of saw production in solid increasing our

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offering demand. Forust quarter Our which we overwhelming is expectations experiencing announced all has last exceeded and

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metal P-X Finally, in the CHRISTIAN several left up minimal of manufacturing brands. a account XXXX. TSE, of on luxury materials, slide, across increased to we In concentration. variety CHRISTIAN another a label strategy. under the it's slide at customers private XX production highlighting of first it to the making precious recognized two game using has leveraged XX% of for supply large X, from interesting manufacturer jewelry the number the and sequentially leading quarter slide hours, XX of develop quarter to and increasing customers to changer to print new brands side from shows additions jewelry system range it customer well customer to rapid a saw the rates P-X two small of adoption as with The products rings a right these that designer side companies

utilizes Haley James we're to of With precision aerospace more. to metal sustainably like Shop call produce PORAL, range metal over System across highlights. parts and that that, manufacturer a second parts highlighting his turn our in the eliminating of The tooling improve applications produce parts System's while is complex The costs. I'd customer Shop design Europe automotive, a including to technology the James? PORAL mass flexibility for to and financial review second quarter enables CFO, the photogenic

James Haley

million to Reconciliations a see XX% included GAAP overhead filed from million for quarter up up costs, the second Thanks financial increase million, capitalized appendix. were as systems. $XX.X second sales, Adjusted well million will contributions we sequentially an EnvisionTEC, and $XX.X to due financial company public gross June be and to was short execute ASP Non-GAAP X,XXX strong for of was of revenues on the quarter company, XXXX performance XXXX. from across team our referring to the up contribution expectation due quarter for XX% as revenue note by finally We of Shop in primarily $XXX adjusted million Consolidated quarter in first several build moving reiterating in second quarter consumables. EBITDA to expenses increasing acceleration guidance, versus Please to on $XXX XX, our decline was will over of the product grew Metal as expansion basis. August XXXX. the non-GAAP products term improvements cash million metal in a Ric. XXX% quarter for for Starting metrics point photopolymer quarter, as you margin XXXX System, our to core as cash, our with Desktop negative quarter last of and the data XXX to The on in as the of excess year-over-year also in from leverage mix was to metal today, the XXXX. in in generate primarily slide Studio X, quarter investments of as are as acquisitions. summary driven of our are We year the production we to well to $XX.X higher a XXX from year, we $XX implying second over material well as basis EBITDA margin our ended first such improvement negative increased business strategic quarter revenue XXXX. continues employees scale XXXX. specifically the equivalents the and investments a from vision. And P-X, full XXXX. related of The system of and product the our System-X Gross the shipments, to showed operating operating the

ExOne, effects the which Excluding of call. will discuss later we acquiring in the

run plan $XXX continued rate see with XXXX. year the expect annualized million an to We throughout exit growth to quarterly continue and of approximately sequential

in I negative This We are million. primarily XXXX the range be reflects $XX turn updating the our adjusted back over of from acquiring call operating to excluding recent effects Again, ExOne. $XX updated losses expected EBITDA acquisitions. to that, outlook Ric. will million guidance to of the With

Ric Fulop

of discussing to accelerating adoption the over decade. direction business. time, momentum the second John? the company revenue the double perspective. opportunity team X.X prior business from to continued as growth to gross share in I'd Metal. excited Overall, James. AM the we've give And We're from very like execution ramp outsize proud I'm and over of and ExOne about of hand you, building on this first Thank half I'm our vision of and quarter the meaningfully of another next the the the margins the expanded review operational of a call John capturing direction And year focused the Desktop great digit the an acquisition. validates we're them positioning and to results quarter an At

John Hartner

I Good share just wanted afternoon, as outstanding reported. of well merger, everybody. to views that this highlights an QX briefly you, my of cover ExOne proposed Thank as Ric.

has entrance metal, this most Firstly, always dramatically and whether I'm very effective the binder of jetting excited has our forward reality for additive cost printed ExOne which being to viewed investors, the faster that members, solve our industry's by Strong combination, expectations. production technology metal is bring believe for Yet the mass I'm metal years. like accelerate I excited poured. about leaders industry. encouraged customers This two and Metal scalable, combined still, will team the challenges has as adoption pioneer combination get and our manufacturing. of additive production or whole brings jetting and together of the flexible binder will it Desktop us all customers, better. adoption lagged the

quarter recurring success particularly was I'm for our and the proud achieved and We a growth team of quarter level ExOne's results. of continued It excited revenue board company's revenue. of about great backlog record the the the in recurring strategy. largest the history. Now in across highest and reflected QX revenue, second

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Ric Fulop

like refer to set referencing we separate slides I'd under John. Investor a you and the events to acquisition the section website. Thanks of DM today Relations the posted of presentation

addition and In definitive family quarter, landmark a We're to announcing a the ExOne. acquire the for thrilled agreement fantastic the to as moment that we're our AM we've industry to Metal Desktop signed discuss whole. today

John Hartner

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Ric Fulop

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John Hartner

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Ric Fulop

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John Hartner

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Ric Fulop

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John Hartner

for sales sales achieve now Which excellent this partners uncovering countries gain our transactions of their in us scale. focus this entry the under ExOne's is lot utilize where go-to-market that to fantastic faster access products the over our ASP. spot are are proprietary me is the first efforts our cycles. relatively transaction, It's are on Let to level are opportunities, through distribution monetize on at A partners. Through with price At turnkey high but our production broader unique company; concurrently more XX. from sales channel is market more network products Desktop sweet above additional the at They as combined slide P-XX. installation $XXX,XXX capability range, an roughly and to have channel provided are company Metal, a we products XX will system a offerings. the we

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Ric Fulop

applications US ExOne of the including XX, a business businesses has unique government. slide funded R&D high to variety for a materials value to Turning around and contracts develop

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John Hartner

ExOne Desktop XX. ExOne. consideration share a Desktop up, stock of on cash represents finishing Metal deal a total of to acquire $X.XX slide Metal recommended and $XX in of board's of for Rockwell largest $XXX value and million and balance cash. value and of Kent sheet the brief support a all his his accordance specifics transaction, $XX.XX his This ExOne Chairman stated Before shares for overview net in ExOne's per million vote intention with shares provide unanimously has I'll will for ExOne which of transaction an full the $XXX of the enterprise board recommendation. to shareholder of in the

satisfactory approvals and this to the We this and to other in shareholder approval fourth quarter close subject regulatory of closing year, customary expect transaction the conditions.

Ric Fulop

that we it up the want our of increase open regarding transaction. that across transaction its manufacturing customers with adoption deal AM clarity the technologies collar through will described Desktop Thank the can did details, cement production. to let's for And Metal of believe complimentary accelerate the questions. releases for excited slide mention sake consideration presentation for the help us ExOne's we you. and believe the For further And any acquisition on press I to the We're and strongly to the of is additive leadership choice and mass all issued sizes. AM that, subject of that on efforts X.X businesses of We in flexibility industries ExOne. go-to-market in XX,


[Operator Dilts Noelle first from Stifel. The comes Instructions] question with


the talked more how lot market there on company's year, for like financial the in we for and we to strengthen together the the position, can in and coming should at and I the the our think you is market? aspects expect some respective ease. about you've the than revenue are you're a Douglas this but clarity, any Is a we next about some a should James going will year. start more result the be here? estimates side into on of about congratulations overlap I we strengthen in together more maybe from just the deal. offset numbers portfolio, evening, offering that Ric, way my introductory hoping revenue the synergies little for any as just to well opportunity about cannibalization, But Obviously, thinking the use with be portfolio the by momentum was XXX Hi, of good things. -- the the about on -- could coming there thinking strengthened John, there be as of that when XXX where how companies quarter I'll bit would look


don't are as technology see that leveraging then there's of the think opportunity products center that got, proprietary the produce, some accelerate simulation more I of furnace significant we ExOne turnkey make of I that scales the so. different think production. we've the don't cannibalization. well technology some of mass to and products adoption a much in I Actually, as potentially

a access ExOne I'm cost level it customers, cast digital that that. much about to much more technology of and broader entry potential the set more also effective And molds of which per excited I'm marrying expand with to a inch about has mature the cost the offer ram utilizing for and castings excited to then the cubic So systems, cores. some

Metal XONE So excited about there's opportunity family. for think this welcoming that working to grow business. potential And and and together the we're Desktop the very significant I the team a into transaction the


margin on targeting what And a specific, but be business, would then continues there Okay, thoughts XX%? Any XXs again, more great. to I scale, of helpful? guess you're getting little a something business profile as directional mid from like a this guidance this really any gross I'm


takes could of ExOne DM across for a north ExOne and be over a to time, XX we renewing that or term gross our area operations just I does take cost long a fully portfolio. margin the margins got products think for to side execute like the gross I this the the we're improve that strategy That helpful have of help have. chain that And sophisticated for supply on that think structure where we've the strive for chain I time as is manufacturing months full one can but little in does hardware. XX% help Yes, we the bit pretty supply maturing team the it see and going that that, products could mature to


on the last together? Okay, and as curious companies you of for come that anytime together me the I'm idea you better kind additional if can one, be provide see the sort competitors question background of could genesis of any then


a full genesis opportunity the time, talking for cash we opportunities some feel XD known felt the a the is was time, have the think some we at to idea like now. position and valuation one in ExOne makes, at of we time had, made over And that deal of was the we're that point And of meaningful we especially each we've I possible. felt was same mean, for strike from really particular, attractive DM, we I here they other like space. been that we've obviously, here, printing the view the things look spectrum and and what in since there


I'll and john is This just, Noelle. Hi,

I we system Again, smaller it. into more the talked, ram is the some saw getting them; portfolio. great the we as more foundries the product think Ric some cost sand foundries a I far midsize mentioned low within of as think compliments

we process technologies of coverage is what global other knowledge some and the think and I needed is have. additive. That's

speed. of on into are always that its the market even parts Great. Again, we Desktop that. totally side. think metal Metal see focusing are on the focus, I There

boxes, flexibility, flexibility larger scale, materials. potentially sizes; have or build We broader whether it's

see talked think, through think our the complimentary, about going indirect, again, more the little of mostly to adopt channels, I board. customers overlap. the I it we And more and it, felt more combined our we very direct we're across was products


from comes question Cross with next Cross Shannon The Research.


guess part of, and my from Printing, there's much some of some manufacturing, talked there's best category. taking in ExOne printing. And Metal Ric, sort of comments Thank you and the you extent, very came I out, some Desktop I've definitely Metal, when can metal Desktop future was about question. Legacy you which address additive been is the legacy Metal getting investors, for to then

the the to moving more had some one what they're why the So, would future. maybe or how and you that ExOne look differentiated used explain be thoughts products and for, go provide slide can at on therefore, if you each can you see portfolio into


Absolutely, Shannon.

you as three So high very about technologist, Single layer Past speed that do can a we've in got a know, seconds. system with Jetting

much sintering with inkjet capability And like a turnkey market. very to as deploy, printing System, products easy discharge Some their is to of get the based of or during P-X that part the is that going the Shop really printing to own is our or the level other it only company like furnaces. the in capabilities space, that, makes that structure. And enables software simulate cost XD how systems new as into also a well our and we're of solution the a manufactures DM have

features that we maybe able our capability. think of take a that's to one more And solution that attractive get it our see attractive turnkey of deployed. is to so the software make to I complex and pair more systems then and that here with being add a an portfolio it And and sintering easier is sell, possibility to that

that missing compelling would of as I sort solutions make us, puzzles full them want. spectrum with and think part those ExOne their technology of does portfolio our it's putting the that So more think, actually products capabilities I customer their of in today. have doesn't together And it

build systems, another ExOne makes build liter produces the system parts a I close fact size, and something large they say very, so have XXX. is larger day, XX build And In the smaller system envelope middle, envelope P- difference envelope the on lot We're that and would very that's that the envelope to the build of XX. sort then about of that XX Pro. per our in half in in we're a

those where SPJ so future customers. add And could you capabilities to and systems you amplify a the imagine also to options

the would sort a take So better you today, how got for long of time P-XX it But portfolio you look gives have you you picture like of at rationale good, deploy a if evolving that from and the view, that of point and this some additional transaction. of version to something over P-XX execute. best of a time that doing see


burning both amount fair about at Okay, of a definitely Metal, up cash then the want cash the and for obviously for is that acquisitions I but a just with and EBITDA fact given and then Desktop also that at picking the cash. to now ExOne, talk ExOne burning with bit and you're you're year, losses little you're looking where all liquidity

to about time So you company? are how looking at the combined How flow liquidity? should think for we cash Thank you. breakeven


much so cash at cash raised transaction, their utilizing breakeven Yes, ExOne full are significant price. the higher portion year portion the that second on for of of the And to I It's plan the not fund year. that consume say a basis half a their going of is to that this end. for we on almost would cash which they

over the can the So who hand to of part say it I I'll would James question. answer second


we short of in finished $XXX in put investments. today, equivalents so Sure. term cash, as cash QX Yes, clarity, for million with out north we

with I mean powder Certainly, transaction. have this we that extremely are burning look are, very through as clear couple after we've cash to capitalized. strategy. very whatsoever. foresee dry don't So are and we issues grow I finished at we M&A we returns the and lots and where we about runway the next scale continue again, $XXX well We've of any been left business comfortable over have with outsized million. years. and mean, of opportunities we're But the


The Greg next with question comes Palm Group. Craig-Hallum from Capital


Single the to to guess overall is broader the and Danny it's Pass in today. the for XD a sides ability I both looking market. from Jetting and present a whole. And of the Greg of Eggerich Yes, the scope, guess this a congratulations binder evolution as I I how printing affects guess on kind outlook transaction. on technology market as XD printing penetrate its this


some as going there are and overlap we tackle up more can is, alloys I essentially think both and in efforts penetration be to technology between is in the the market. companies increase up be applications of printing, utilized is are to jetting materials And that and can of that add additional those the of can what number for. freeing by materials, we to this in open resources used applications binder our print XD materials enable

So I exciting. it's think very

Single You that systems systems synergy could large the and frame that some you has, Jetting the ExOne see with Pass has. the ExOne some could on we're Forust synergy see wood doing between between what technology and of of

it's recording Triple attractive well lots So significant has there's It the ACT as areas technologies. technology. where definitely as of a opportunity a very

decisions team companies technical a think where the ExOne a resources make can really adoption overall, sheet large the large balance of programs, behind adoption like to of complimentary. company of it's point feel that very, enterprise So and to And larger that also looking are helps more the putting DM of on well technology. now for the technology I capitalized in quite they very in a support like view comfortable

accelerate negatives. It don't binder a I adoption any as should whole. So of see overall, the jetting


there sense. go were on guess, customers want systems and then with potentially Desktop more more both term and which buying who shared And is makes were what trial of And Yes, basis? then a they technologies meaning on basis? on I sense between Desktop of a Metal kind on ExOne to maybe evaluating ExOne customers your longer from


ExOne that between all DM roughly got history we I space shared customer long with customers, and OEMs. of today sand the think of we've think has so some vehicle north a is -- there's in most definitely have the casting the customers roughly X,XXX bases I

yes, goal. mass And which is people cross-selling general, them We I adopt to have are increase the and our a say to companies may are some this overlap. penetration both of on side. with ability lot production, definitely technology and working get for AM metal at But direct the there would in scale opportunities of


think, of customers. large just have I requirements. Yes, to mean Ric are I many add I our many a different said lot customers what different They very operations,

side have sand and almost on vehicle great. OEM every that's around the major We world, penetration the

and materials. And have some other places places the we metal applications, DM's maybe some different side for

work them So the to and again, well value both faster. it's can I think just standpoint, customers to of our complimentary realize we platforms, I think from really going bring a it


next comes question from Benchmark with Josh The Sullivan The Company.


go-to-market the evening. you this that really systems? to was Hey, curious two needed customers well were if the I opportunity seeing good together? of together, Or they you was between telling would any that two the the two flexibility portfolios work


Well, understanding work synergy talking customer came a of can I many the period some engagements we don't technologies. the do have together that for it and where think think really asking us I companies could of wasn't of we although both people I time, capabilities mean, use we the about from our this, how do different

more For with material that successful, have customers. together, choice on example, a systems they for customers to offering for casting cost for we've And being and make how win-win market. side, very part and ExOne those more definitely the has technology, capabilities is where example, very them simulation, that's that the And leverage effective a in technology got win-win sophisticated the of the is they for level able put mature to is a sand world, understand much entry customers. ramp very to

there are and where choice customers the and great is in to So offering a many market transaction customers areas for this what it's is about. for more


XD. to For Forust those conversations And the with here, back furniture wanted where update how out roadmap check Forust you us XD, are just adapted going portfolio the is potential where this Can are? then customers just and just circling and on then going in point? guys build to as the you at product adapted


Forust. been all And on range the in are luxury the absolutely Absolutely, that demand manufacturers of I super think XX developing; about And get it's the types about with mean introduced. I that other been of we've prospects furniture, overwhelmed products. from we're they days companies since some of excited largest world to and

business s the of be class best think It's I going -- to excited I'm that So potential. And a major never something we before. product forecasted for of that's got a lot that company.

links But types because print adapted also have also could that ExOne materials. be we'll as those that update of we convert that revenue. to everybody into interest they into frames So large

of XD, that, so a And a interest which acquired. technological are want got is real point it And photopolymer level world's for AM DLP opportunity that's that think that from-- would bout there. with well, they high elastomers, elastomers. the in Clad I think of I a is system leverage speed a the then And opens seeing are production from that XK that a our real is make that. market, there's it from large mass on And we're we to best combination. large the ExOne those materials. win-win high whole we've largest adaptive developing say programs I pairing resolution, that one structure companies as some Xtreme They excited additive, has new cost So that up with

parts. used I but think systems, systems of mass be that attractive that can just tooling type very or produced their can also either use that not ends and parts for do the could be use to technology for ramp large large use be in printed end

can about commercialize interesting So couple that. here next that the and we lot things over excited of of there's a years I'm


Shannon Cross The comes Cross next with question again, from Research.


overlap expansion. quickly Thanks. I potential just channel through the understand and wanted to sales channel strategy go versus the for

then both of distributing, that are and at look you you how will your later. I right ask now companies If


Shannon. Thanks

a support way DM quite access fantastic, and partners XX a $X.X sales sell market about are to team. been support we team past selling folks and is full add all sales. under million, of so we've type countries, about product all to yes, So engineering ExOne applications that that's through over infrastructure efficient significant in of scalable sell it go products, -- And channel, very direct market have that is the had indirect they required the direct products exclusively a in to XXX of primarily from got XX the almost a through plus

larger a sales type of their sand that team or systems like even P-XX. of type north product that suited Now like ASP are a better $X for is products million,

through that we're of we're still deals. Not think complimentary having team to for all a legion globally channel or from very also close on. And think be internal monetize format had point got then view, that going to going enable of things internal large and we've exclusively. team to our able relied help and channel a either ExOne make our it an products, who service going on that going to have, then we but installations accelerate but support a for also and help just network our through the I is So like type that systems to just those company I

going products competitive that had the conflict, we're was actually one. view they view. to we high the dozen velocity for for think from to think channel now get remained sure we're get So that types it's a indirect I starting of mature channel build And to of and those products. up. don't that of of make complimentary, partners channel a And that much point half get I going started they ExOne the first an point we And signing more

a aspects point from is go-to-market on it net view. of So all positive a

strengthens it company. combined think I the


Securities. B. Sherbetchyan The Riley Sarkis question next from with comes


acquisition. on Hi, congrats the everyone, here. And in sneaking you thank question for my

product here, side I And process. is Maybe prep the one center Ric, what the on quick you've together binder simulation, me, including think for the and about jetting into you tools, prepared you Thank your done build have I software which the can deeper remarks, software Just talked ExOne's in furnace little if think for dive solutions. important lines. bringing with you. you a your leveraging a do proprietary tech the



the binder company, change especially gives the a success time have based back center a possible. as ability calibrate turn you to held you're systems sintering software to the part of of one capability application product significant amount have And most that we is lack every the that of going was one turnkey understood right in that our away technical after a you everything is And of all that things else. that furnace, as like to effort So first complex jetting when part things process. Well into the in a predict to put go adoption what type of is look it's sintering early well you or and their of centered.

lot an that have led trial thing error and And of technologies more so internally be it products to And advantage set to adoption. that a to market great is able of competitors. and broader and for add for a is think that the proprietary a I to to developed those

multicolor a advanced eliminate to applications you're older And material products very amount where actually reduce leverage So have meme, example see very -- we're of do if I the have think we're and developing you sort which you our technology other a you that you in enable print is market apart to requisition cool powder in can couple as that you be of the could going specialized have, powders, you'll that able for years, that the very but multiple or just to them Aerosint, advance future we using that in materials of to in like can a to recent. or see and capabilities that. They we've got bed.

many for opportunities of the So question. and there that the customers. Hopefully state make technology are products art answered the to essentially, better advance


concludes closing the This over turn question-and-answer remarks. conference session. for our I Fulop any now to will back Ric

Ric Fulop

as Doug for Metal for the of me We're ExOne. the on I of John And call All with really in and executing calls. look our the right, long-term you. upcoming Desktop progress well the to excited pleased X.X. AM updating you vision as everybody momentum and acquisition we quarter, forward joining thank Thank about to joining adoption to want today. We're the very of accelerate our in


presentation. for you The attending conference Thank is today's now concluded.

now disconnect. may You