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Desktop Metal (DM)

Participants
Ric Fulop CEO
James Haley CFO
Jay Gentzkow Vice President, Investor Relations
John Hartner Participant
Greg Palm Craig Hallum Capital Group
Ashley Ellis Cross Research
Noelle Dilts Stifel
Martin Yang Oppenheimer
Call transcript
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Operator

Greetings and welcome to the Desktop Metal Third Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I President Investor Gentzkow, of Jay Vice Relations. ahead. go Please

Jay Gentzkow

webcast Thank of you. release are Founder Events And will being The Investor XX me thanks our our this of without also everyone be with for for is joining call note Please a slides webcast the our Ric and Haley, the call Presentations This that CEO, consent. and referred the content Desktop prior Metal, website. for on at live Relations Metal. is cannot call reproduced today results today's and property link the Relations Fulop, Chairman presentation or Desktop available and press call. replay today's Investor under following of months the financial be of James transcribed section The of CFO and are It website. Desktop call. accompanying slides available With to Metal.

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

may the addition in with obligation to information of amended, no the section Company's Factors Desktop forward-looking For on results, the Metal's XX-K, SEC. statements. to the that as the more Risk the please assume other impact annual risks about business update refer We and financial to Form filings report

gross These supplement to non-GAAP following Q&A EBITDA, measures the are substitute we with measures, and performance but this calculated for not refer adjusted to presentation measures in GAAP. may during and Additionally, intended including EBITDA, profit. accordance non-GAAP session,

to turn GAAP Ric other that, over to and be my it's financial Founder and of reconciliation the pleasure today, Fulop, of as information Desktop financial to release the contains the non-GAAP discussed to measures. as Metal. Our well quantitative call a results CEO With

Ric Fulop

joining Metal. us the welcoming you, afternoon, Thank Desktop and want off good the Jay, I by team today. thank you talented to ExOne to for kick everyone, and call

know, for combined ahead And I the of overall to we're to turn a balance business walk year, last Today, business thrilled financial ExOne will update. the for the the the an up few opportunities third for the quarter then call third at provide we're development we you the Company. financial quarter detail. strategy James will As highlight week our the completed for and we'll I acquisition and of through Q&A. results in over outlook it opening more and

strong Slide core million, of recent on representing acquisitions. of for in than combination start growth was XXX% of growth driven quarter well in contribution growth metals by $XX.X the was a Let's XXXX business, as XX% third more Revenue quarterly sequential Revenue year-over-year. our as X. performance from

opportunities our saw margin business expansion seeing commercial with gross also of platforms, some companies in With a a growth XXX than including points XX% developments volume this great sequentially. P-XX. continued in margins momentum system strong QX, XXX We more increased the Fortune production we're the up quarter, basis number production as across in non-GAAP

this P-XX We're against backdrop quarter. started of completing progressing aggressively the opportunities the to commercial targeted initial procurement builds develop for initial of P-XX continue production towards We these have shipments. and final shipments

of significant the While development platform. increase customers. this manufacturing manufacturing demand mass we're to on ExOne. focused best we We And of have supply After as In across out. to within for this to P-XX order our line new both getting customer-use you cycle our for as well milestone, roll-out to begin people look the game-changing cases transaction additive acquisition production. area-wide cements updating progress our excited our in forward challenges leadership shipments business, facility in this our are we're this technologies enough product, We'll P-XX in us production. capacity successfully of on chain dedicated confident impacting closed to the

acquisitions metals our available Mehta launched demand. businesses We not on need that made brings initiative may nicely that full We'll dovetail to smaller Aidro. additive the overflow and finally, ExOne of portfolio unveiled ready where X in We're through Desktop print our to their business the week. Health our that markets our in It's manufacturing bit relationship and to to a later The biofabrication further these new platform we the into materials presentation. a strategy each platform. speak manufacturing and later go I'll We to in key And systems broad also make and to capacity platforms to attack digital be strategic to in dental parts out Shapeways portfolio. purchase on under a traditional call. range these detail to build element product last more in the detail excited of our with core

our expected. what end into headwinds of us the encounter team environment, adapting performance have quantities impact prevented our the Before Ultimately, our targeted done these but began. Global some logistic in the ExOne execute thrilled quarter some spend the architectures supply I this year we're disruptions want sequential current of achieving more to the job Together, full-year towards And more our accessible, strengthens sense XK. competitive effect make speed, the casting ExOne, acquisition James And in in our areas. and highlights, to third unparalleled some and which grow that fourth want we from to drive we strong. an we're last the diving digital to section. our these platforms growth ability guidance review did we the to strong quarter, will to quarter, in of when end to and offer did with have X, portfolio slide our particularly the our shift didn't moments during third speak but quarter, a with has such combine address chain across to many of we Xtreme with very and Especially I part them expertise as good few that we products our printing quarter market. in printing resolution, results the issues On great costs, low-cost a opportunity the size. a product position to sand

complementary rate. flip Our opportunities combined introduce leveraging to while customers us at activities efforts model allow robust outsized growth the QX. our the believe look growth in set will $XX go-to-market to a ExOne's seizing a we to material accelerate forecast million materials forward which size at We on will of turnkey to built at to of which our ExOne new drive end to business to backlog, faster more conversion

IP review to tuck-ins, addition that our to strategy reflect with we're announce X around Next of on X, Slide materials, our in printers, materials, and the ExOne, In I'd as excited other conjunction killer like on material enable binder forward to larger faster on an organometallics high-speed focused greater has infiltrate We'll extending in our our and with to next-generation the acquisition binder require simultaneously to developing platforms functional bind to the during shrinkage binder particles a jetting markets functional additive. Mehta Improved and of part binder technology look powder part binder to even jetting Mehta binders jetting turnaround parts that build has of customers bed print potential reducing Mehta's through and use of broader by tolerance to sizes developed non-sacrificial the technology apps. materials. that the productivity. binders palette qualifying larger revolutionize times. process. This

In a to highlight slide, of the killer for also right side hydraulics, a Aidro, in added offering we Metals, use manifolds, next-generation apps of to foundation power this we've I'd differentiated customers the systems. cases leader additives. fluid this like service deliver market. And view the added manufacturing On in Aidro, as and

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AMR a outsized $XX our would on we've XX% consistent can of unlocked made has introduced We reach address investments believe strategic we to capitalize flows. market opportunity the that been Finally, particularly in the growth strategy over has this a deliver pillars -- observed and digital opportunities. it's of development, AM, by this billion took dental is with long part business penetration We for in materials, applications. largely non-orthodontic And term. to these our towards opportunities have technology

long-term additive the see on step top, solutions added platforms that legacy Turning can Slide achieve print throughput on manufacturing X, in we're X.X to improvement to times manufacturing a At support can the of success. processes. you focused XXX after function we built area-wide have portfolio

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slide new we on nearly for shown X, manufacturing every want launched Desktop Many for initiative in -- We're focused set our to recognize update which of you quarterly the I QX we've primary Health. added to will areas. under slide, our context Turning strategy X call.

print platforms use manufacturing. area-wide time, mass performance in benefiting leader First, versus over increase continually we a or production Moore's want improve in to to law, be from our technologies conventional that that us allowing competitiveness

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biofabrication additive production patients. These manufacturing today. to slide conventional parts markets are research-intensive X, traditional important for methods few to only with and labor the unique processes. emerging a huge Turning printed The and dental of parts are see killer include we because percentages as apps

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the capabilities sizes. that of adoption sintering have enable proprietary customers fastest the software platforms market, print in supported and We by all for

focus high-margin a comprehensive solutions, to diverse customer’s [Indiscernible]. end-to-end designs our Our deliver of production We array for parts providing and applications more portfolio materials killer growing enables including apps base. and on

call only We a high-margin also well materials This reliable, for finally, is in will world-class is complementary, the years win organization I third and share come. indirect as forward customers, revenue differentiation to the capabilities. quarter we vertical the recurring we James? business. now and James on our global parts will updating but robust service to highlights. market share how CFO our high-performance with support direct channels consumables marketplace financial stream look competitive for you have as to for for outperformance blueprint creates integration and not And and go-to-market our gains turn how and to continued to financial consistent this enables over Haley for

James Haley

summary to offset performance to Slide in up Beginning of business, driven metrics challenges, non-GAAP GAAP Like in of the acquisitions from a our second on in the quarter metals for by XXXX. on many Envision Ric. other core note, Thanks, of the XX, and be were $XX.X will by basis. strength logistics impacted Please we business see included quarter chain weakness revenues XXXX. filed our data quarterly referring XX% business. the global quarter for the several companies, specifically Revenue sequentially results. Reconciliation a our will was contributions TEC you the financial appendix. third from Consolidated financial million were and which polymers partially supply presented network the is

cash, entire product Company. public such of as business We to expenses as our Systems. third million acquisitions. decline negative $XXX.X delivered into the the outlook account Note, EBITDA finally, was Note, to scale anticipating excludes XXXX for range quarter business impacts of as increased $XXX XX, to primarily XXXX, full-year right-size growth $XX impact to overhead The less the XXXX full-year acquisition. return $XX.X acquisitions. quarter total We transaction of quarter. to recent full We to have expect by we basis from in consideration due well was in contributions short-term XXth, million quarter, moving for the revenue $XX XX% primarily across growth for are approximately adjusted representing as the investments for revenue operating in quarter. the sales, acquisition fourth quarter poised year and deal Metal million expectations year-over-year EBITDA and the full-year contributions from excludes margin a outlook take range another quarter leverage continued to of from revenue non-GAAP growth as quarter Investments the generate margin slide the of September in to performance the now margin the XXX% robust cash the third and XX% revising equivalents, previous to revenue guidance XXX% fourth operating updated sequentially related Gross $XX our to driven gross between XXXX. in loss for any Adjusted and on quarter than we ExOne, ExOne this performance, XXXX includes million versus to increased $XX third revenue, Non-GAAP EBITDA core This current set we the XXX third XXXX. and over While our of quarters, implies our $XX the are over with to our adjusted was to in fourth expected revenue the XX% to over includes million as XXXX. growth negative of expectations million And expansion. ended costs, gross third points strength fees. in quarter which which sequential excluding mix of XXXX. cash XXXX was quarter ASP

businesses, year expect the Envision the $XX note Also, recent range to system. our to please on the $XX excluding contributions does rely For of we revenue meaningful in for P-XX Metal XXXX core TEC not revenue Desktop million. updated from this full acquisitions, from and guidance generate

call second back XXXX. and the third performance now in XXth, figure effects from quarter We again $XX to acquisitions ExOne. also of to recent With completed This excluding XXXX acquiring August updated quarter of Ric. turn losses XXXX that, increased operating adjusted call the $XX the EBITDA negative since results billion, will range financial on takes our our outlook, into I updated over account

Ric Fulop

by share double-digit conclude, To our you, our adoption this Manufacturing decade. Additive James. market accelerating like way vision end of of Thank of on of the reiterate achieving to the I'd additive to X.X

of manufacturing which of solutions XXXX, XXXX I consistent growth differentiated business portfolio As our I as through and With additive we for over to as to with of momentum will term. probably that, the of positioned questions. we're deliver opportunity end the excited now ever stakeholders. the long drive better the right remain near our up about value and call our all Operator? to open the

Operator

the [Operator will Instructions]. now question-and-answer session. begin We

time, If you're At Please using Instructions] question X pause handset a momentarily before roster. speakerphone, X keys. up please assemble will and to the [Operator this limit follow-up. yourself pick your to pressing we

from Our Greg Capital with comes first Craig Group. question Hallum Palm

go ahead. may You

Greg Palm

the quarter, or in quantify any the on taking that it for thanks you challenges just was the chain Yes, whether here. guess supply ran off I logistical to impact some of these starting the way from questions shortfall into? revenue

Ric Fulop

for thanks -- -- logistics QX definitely fell we metals the to did QX would that Really, had growth for a sequential say chain Definitely QX. is Greg, the some we supply bit. will I as issues question. little short had issues, item side we the encouraging from of see well. on us some

polymer, of with side. much is it the And -- on really supply weaker than on more where chain the polymer we However, the was expected. we had that that issues specifically

Greg Palm

guess specifically to was I revenue shipped material couldn't get that out -- or I'm of And figure -- something it as you Can that. of in trying more XX% if

James Haley

components to for that catch time, will continue in-house had them but towards should some a for expecting We lot to end -- that didn't have have of had and Xtreme throughout just Greg. parts products, the ship Yes, end waiting been up that in up this our quarter. we're on weren't of on hopefully receiving made we We and the XK. drives those able we of quarter example some we that receiving

Ric Fulop

long-term journey So, is really year. the thing we this sequential do in our strong have QX is continue and But than we this -- the we certainly certainly, And expectations to we that. thesis say QX in growth end here. a QX would expect project growth was -- that to revenue the -- in believe us other but that great between and QX less for growth

Greg Palm

do how contribution follow-up in the Okay, ExOne specifically into excluding my fair contribution much QX. for P-XX guide the expect ExOne, enough. you implied And QX? on there guide? baked any but It's Is that's

Ric Fulop

Friday just that closed So you first, the ExOne on transaction side, to as know.

of accounting are purchase we implications. challenges are of the evaluating One any the

guidance yield XX ish the determine implications their - we at QX and actually looked results be you they've in acquisition much still post that then would If We P-XX, then P-XX purchase would this just it somewhere delivered this for revenue what ship and it at to still by the of And any gone your revenues neighborhood. prior terms to about deferred have QX end will point, of plan no I And associated mentioned. be until in the year. year. in is But there question next our of any forecasts. how

So, we start to until QX. the P-XX benefits won't see

Greg Palm

Got it.

it Thanks. Okay. I'll All leave right. there.

Operator

Research. comes next Ellis with Our from Cross Ashley question

ahead. You may go

Ashley Ellis

chain, fourth supply for I'm your wondering what year. quarter? It lowered [Indiscernible] like you expectations are seems full

quarter. parks doesn't the came in, the that -- it you're still closed, quarter while after in you necessarily I like guess So, recouping seem revenue fourth

then expect struggle to doing with follow-up. you do you that what supply have P-XX? Thank then you a and to enough do for the ensure I've So, still are And supply you.

Ric Fulop

Fulop for still supply Ric us we're substantial The QX with of from in a specific expecting terms the starting we're chain. growth. is challenge lower Certainly, here. base pretty

One side is of things. the we have the logistics on challenges of had

So, and we're have have here. growth are there to believe margin think for there 's QX expand continued expedite QX that -- track along their had we some we that we that way. steep margin I despite But that the freight and encouraged on to barrels very fact the are

John Hartner

ship product of going it's just the We're hope to got product products as you to get not there, But which no product honestly of some there's the alluded had Xtreme as into delayed XK, testing the the We're -- QX, fourth specific here. assembling we Ric the but in the And there's the challenges various validation on all that we've launch and now, them. in. parts. quarter through and

Ashley Ellis

more sense. will during expect at to your wondering, ramp then slower full a or in Okay, and that XXXX that the I'm capacity, XXXX? the new you be P-XX with triples for sometime capacity site, be maybe for it And P-XX makes do

James Haley

capacity have to significant Any as gradually, progresses. to product year ramp we that although the to start grow plans you

in the to number and are ramp as next more that the start field, right increase as on year and couple progresses a more production get be delivering product in and systems to will we'll basis now year. monthly we first continue and The

Ashley Ellis

Okay. you with or be okay And challenge? components also could a are feeling that

Ric Fulop

of we our with got significant and of people That on it. putting it product a working lot are We've is parts. best people supply lots good on on a chain

So, we've got you that that few we in-house, think run the parts in mechanical, short could but beyond but could when a trouble fortunately, by. of parts first fab run into capabilities, systems, are lot you those I could surprised we components there are get

So, more issues. and do to logistics from just to But our we're these far, best it be a around to to creative challenges. an we don't these shipping, try as so work some teams resolve trying lot as I our see work of it's as impediment

Ashley Ellis

Good you. luck. Thank Understood. Right.

Ric Fulop

Thanks.

Operator

Our Noelle next from Stifel. comes question with Dilts

ahead. go may You

Noelle Dilts

which could Hi. in afternoon. the in I orders pipeline you provide talked the would could touch just you. confidence P-XX of that you've the give was that us Thank manufacturing of Good think past. hoping terms about you to the I extend you bit And update there with on for what capacity great. also a basically, an be on

James Haley

could when XXX moving We're we pretty of hopefully good capacity OEMs what it. significant applications had is and several at significant about with it's number for clip. companies P-XX. large we're that doing. [Indiscernible] very We for developing keeps that feel And with need units applications. it. have large putting We It a that's pipeline -- Fortune a good We've

Noelle Dilts

and engaging Could and we've pretty the that how given you companies active terms been deal the And looks XXXX about you're you're ExOne this then point with? in acquisition speak what thinking into Okay. the M&A heading to pipeline on like Thanks. of at front.

Ric Fulop

have hasn't changed. time. platforms really we area-wide Print really that an So, I provide that continues that strategy areas. think X over improvements to It's our centered M&A are

these leverage value the focus vertical it that from And finally, look utilized. basically long to way -- on Moore's really the dependent Law, consumables ability to apps. and -- profit pool on the get integration at maximum and Systems run. what into share And on is our have impact benefit maximize then killer applications we the and As

going on market. same at $XX we've was had businesses attractive another that in segmented want not had our a target it are time So, billion consistent since that companies the Basically, that had list after public we've Company. that wouldn't we've market to the strategy segmented $XX were before we the that we that very been and -- billion -- there's of $X size you own. billion with are are it worth and companies

so, billion focusing run. and for which point that on the strategic than we're faster at gain share to to have going us grow And and market leverage long $X is

Noelle Dilts

Okay. Thank you.

Operator

Instructions]. [Operator

comes with question next Our from Yang Martin Oppenheimer.

You may go ahead.

Martin Yang

afternoon. Good Hi. Thank taking you question. my for

can agreement your $XX statement? million that and a more regarding your nature have to Shapeways, detailed Income the maybe fall your Now you on about of the talk announcement made structure commercial commercial partnership where of what with you deal and expect should we

Ric Fulop

things amount started a there's of do in the that be. I lot -- would bulk we're hit balance still the for it too some it's to What of QX, And going is of early quarter may we strategic companies. have some between in that our point-of-view first, with tell X of to We QX. where revenue doing a hit Yes. work -- to say

work I things aren't have AM of ready solution in we to in think capability do provide X that's about lot great people who to it's our of deal the fully equipment. available a of to run a it. then going have materials And with long accessible easily technologies and the all execute buy to this for that is to

this You launch deliver procure, still have lot -- to material. and in of their a process,

haven't some some and very that doing continue and there very us received exciting going that we're are the by them, but time, is it be well are is to I think a partnership for we think announced this that will that fully for yet market. strategic with things we

been Shapeways it Envision been And customer business bit a You and the as There's through years. quite ExOne the for long-time has a note of between Company that the has of should side the TEC well. companies. not -- through also

Martin Yang

it. Got great. That's

John Hartner

receive it's split how to XXXX full the a see point, expect pans stand-point. be To not rec do rev out, long-term we calendar but million to will Ric's year We relationship. that in a $XX from meant

Martin Yang

your Got And looking clarification. not one which but it. already in any you the have secured, Thanks the you there pipeline, have at announced? which similar are commercial Shapeways maybe for agreements other like

Ric Fulop

-- we systems filing, In usually of the deals. it, deals a on something this haven't our are was to but number announcements. large lot announced Well, had case, the large do a put in if customers let we it you

before So, has is production. certainly the us it, if like okay If shipping let that talking getting about And or particular they're would somebody or sensitive our talk with customers be cases, would that they are we we is or volume production technology but taking out PR before in talk do about we started up to can customers product, the our product let the cases. ours, with case. announce -- to it about something it, in we those those

John Hartner

one I -- we relationships the mean, with numerous lucky, had thing strategic where have you got

Ric Fulop

well. several working strategic are would would -- but us Shapeways. we with partnership Shapeways, people with It a preclude just as not I service our we customers bureaus from say that have doesn't

Martin Yang

for Thanks clarification. it. the Got

Operator

remarks. session. questions. [Operator the closing concludes Instructions] This no Ric any over conference question-and-answer to turn Fulop like There are for our back to I further would

Ric Fulop

Alright. vision I of new advancing call. to to team, forward joining as of want their look Thank thank at all mass We employees, our for to with want again speaking continued I thank you. manufacturing always. the added ExOne for including year-end our you for the today everybody to production. the dedication call especially

James Haley

Thank very much. you

Operator

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

You may now disconnect.