Desktop Metal release figures amid further acquisitions

Desktop Metal has released a robust set of figures for its second quarter this year and announced its acquisition of rival 3D printer manufacturer, ExOne, following on from its acquisition of Aerosint earlier this summer and EnvisionTec at the start of the year.

Multi-metal heat exchanger, with stainless steel exterior surfaces and copper alloy interior surfaces for improved corrosion resistance, printed with Aerosint selective powder deposition technology

The Q2 figures show revenue up 68 percent from the first quarter of 2021 to $19 million and up 767 percent when compared with the second quarter of 2020. Better still, 44 percent of customers were new to the company from the first quarter of 2021. Not surprisingly, gross margin was 25 percent, or 12 percent, according to Generally Accepted Accounting Practices, or GAAP. 

Ric Fulop, Founder and CEO of Desktop Metal, commented: “I’m proud of the team’s performance in the quarter delivering strong revenue growth and meaningfully expanding gross margins as our customer install base continues to grow.” He added: “We continue to see significant opportunities to gain share in the additive manufacturing market by leveraging our industry leading product portfolio and diversified materials platform. The Company is firing on all cylinders as we make rapid progress delivering on our vision to accelerate the adoption of AM 2.0.”

However, some of these gains appear to be due to the company bouncing back after experiencing the same downturn during the first phase of the pandemic last year that has affected most other manufacturing suppliers.

It is also worth noting that the company is running at a net loss, with the GAAP operating income down from -$24m in Q2 2020 to -$47.2m this quarter, and GAAP net income falling from -$23.8m in Q2 2020 to -$43.2m this quarter.

The acquisition trail

Desktop Metal also announced that it is in the process of acquiring ExOne, having secured the unanimous approval of the board of directors of ExOne. This acquisition has the advantage of taking out a direct competitor while at the same time rounding out the company’s portfolio. The plan is to combine ExOne’s direct sales force with Desktop Metal’s global distribution network of over 200 channel partners to make it easier to reach customers of all sizes and types. 

The deal values ExOne at $575 million, with ExOne shareholders receiving $8.50 in cash and $17 in shares of Desktop Metal common stock for each share of ExOne common stock, for a total consideration of $25.50 per share though the share consideration part of the deal can vary depending on the 20-day volume weighted average price. But essentially, when the deal closes, likely in the fourth quarter of this year, current Desktop Metal shareholders will own between 85 and 88% and current ExOne shareholders are expected to own between 12 and 15% of the combined company, respectively.

Fulop commented: “We believe this acquisition will provide customers with more choice as we leverage our complementary technologies and go-to-market efforts to drive continued growth. This transaction is a big step in delivering on our vision of accelerating the adoption of additive manufacturing 2.0.”

Desktop Metal has had a busy year so far, having already acquired the Belgian company Aerosint back in July. Aerosint has developed a unique powder deposition system based on a proprietary digital process that selectively deposits two or more powders to form a single, thin powder layer containing multiple materials. The company’s patented selective powder deposition technology enables full three-dimensional control of material placement during printing and can be integrated into any powder bed additive manufacturing (AM) process, such as laser powder bed fusion, binder jetting, high-speed sintering or selective laser sintering. This new, multi-material approach to powder deposition is designed to support high-speed printing of a broad range of polymers, metals, and ceramics.

Fulop explained: “Multi-material printing is the next frontier in AM. Today people print parts, but in the future, people will look to print full products, which may be composed of multiple materials. Industrializing Aerosint’s core technology and related powder processing systems will provide many benefits to the broad adoption of AM solutions. We look forward to partnering with our new colleagues at Aerosint to mature this unique technology and integrate it into upcoming Desktop Metal products over the next several years. We are also excited for Aerosint to independently continue its growth trajectory by offering selective powder deposition solutions and services to third-party manufacturers and customers of powder-based AM systems.”

Aerosint will operate as a wholly owned subsidiary of Desktop Metal and continue to be led by its founders Edouard Moens de Hase and Matthias Hick, who will serve as Managing Director and Innovation Director of the Aerosint business, respectively.

Desktop Metal itself was only publicly listed on the New York stock exchange in December 2020 following a reverse merger with Trine Acquisition. Leo Hindery, Chairman & Chief Executive Officer of Trine, commented at the time: “After evaluating more than 100 companies, we identified Desktop Metal as the most unique and compelling opportunity, a company that we believe is primed to be the leader in a rapidly growing industry thanks to their substantial technology moat, deep customer relationships across diverse end-markets, and impressive, recurring unit economics. Ric has put together an exceptional team and board of directors with whom we are excited to partner to create the only publicly traded pure-play Additive Manufacturing 2.0 company.” Hindery joined the board of Desktop Metal following the merger.

That deal has given the company the financial clout to go on an acquisition spree. Consequently, in addition to the ExOne and Aerosint deals, Desktop Metal completed its acquisition of EnvisionTec back in February this year, expanding its capability for polymer-based production, and acquired Adaptive3D to improve its materials offerings in May 2021. Not surprisingly, the company has grown its head count from 171 employees in August 2020 to over 500 today.

Desktop Metal is clearly a company worth keeping an eye on with a proven range and distribution network now rounded out by a sensible portfolio of additional technologies for both printers and materials. For now the company seems to be riding a wave, with its acquisitions boosting its revenues. However, leaving aside the relentless optimism of the company’s own PR, it’s continuing to run at a net loss which will leave it dangerously exposed to any disruption in its market, and it’s not as if we haven’t all had first hand experience as regards unexpected curveballs over the last 18 months or so. 

Nonetheless you can find more information from desktopmetal.com, and on the various companies its acquired this year from exone.com, aerosint.com, adaptive3d.com and envisiontec.com


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