Fathom Digital Manufacturing Reports Fourth Quarter and Full Year 2021 Preliminary Unaudited Financial Results

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.

As described in the Proxy Statement/Prospectus, during 2020 Fathom completed the acquisitions of Incodema Holdings, Inc., Newchem, Inc., GPI Prototype and Manufacturing Services, LLC, Dahlquist Machine, Inc., Majestic Metals, LLC, and Mark Two Engineering, Inc. (the “2020 Acquisitions”). During 2021 we completed the acquisitions of Summit Tooling, Inc., Summit Plastics, LLC, Centex Machine and Welding, Inc., Laser Manufacturing, Inc. and Screenshot Precisions, LLC d/b/a Micropulse West and Precisions Process Corp. (the “2021 Acquisitions”). Pro forma revenue gives pro forma effect to the 2020 Acquisitions and 2021 Acquisitions, as though such transactions occurred on January 1, 2020.

Financial Disclosure Disclaimer
Fathom has not yet completed its reporting process for the three and twelve months ended December 31, 2021. Full financial statements for these periods will be filed on or before March 31, 2022. The preliminary unaudited results presented herein are based on Fathom’s reasonable estimates and the information available at this time. The amounts reported herein are subject to various adjustments that are still under review, including potential adjustments relating to changes in the estimated fair value of warrants and earnout shares, purchase accounting and provision for income taxes. Such adjustments may be material and could impact the results reported herein.

 
Q4 2021 U.S GAAP Income Statement (preliminary unaudited)
($ in thousands)

 

 

 

Three Months Ended December 31,

 

2021

 

2020

Net Sales

44,330

 

19,040

Cost of Revenue1

26,290

 

10,178

Gross Profit

18,040

 

8,862

Operating expenses

 

 

 

Selling, general, and administrative (SG&A)1

12,276

 

8,713

Depreciation and amortization

3,309

 

2,028

Total operating expenses

15,585

 

10,741

Operating income (loss)

2,455

 

(1,879)

 

 

 

Interest expense

3,536

 

1,330

Other expense (income)

9,387

 

3,811

Other income

(30,985)

 

(162)

Total other expense, net

(18,062)

 

4,979

Net income (loss) before income tax

20,517

 

(6,858)

Provision for income tax (benefit)

(464)

 

 

Net income (loss)

20,981

 

(6,858)

Net income (loss) attributable to noncontrolling interest

13,092

 

-

Net income (loss) attributable to Fathom Digital Manufacturing Corporation

7,889

 

(6,858)

 

 

 

 

1 Fathom reclassified certain historically reported expenses within the statement of operations to reflect go-forward policy. Specifically, cost of revenue included a reclassification of certain expenses equal to 4.4% and 0.5% of revenue for the three months ended December 31, 2021, and December 31, 2020, respectively. Additionally, SG&A included a reclassification of certain expenses equal to 1.8% and 3.4% net of revenue for the three months ended December 31, 2021, and December 31, 2020, respectively. Prior to the Company’s ownership of applicable acquired entities, these expenses were recorded inconsistently. The accounting reclassification had no impact on net income (loss).
Full Year 2021 US GAAP Income Statement (preliminary unaudited)
($ in thousands)

 

 

 

 

Year Ended December 31,

 

2021

 

2020

Net Sales

152,196

 

61,240

Cost of Revenue 1

92,388

 

33,064

Gross Profit

59,808

 

28,176

Operating expenses

 

 

 

Selling, general, and administrative (SG&A) 1

39,490

 

24,642

Depreciation and amortization

10,606

 

4,672

Total operating expenses

50,096

 

29,314

Operating income (loss)

9,712

 

(1,138)

 

 

 

 

Interest expense

12,318

 

3,635

Other expense

14,846

 

2,208

Other expense (income)

(30,872)

 

959

Total other expense, net

(3,707)

 

6,802

Net income (loss) before income tax

13,419

 

(7,940)

Provision for income tax

400

 

23

Net income (loss)

13,019

 

(7,963)

Net income (loss) attributable to noncontrolling interest

8,124

 

-

Net income (loss) attributable to Fathom Digital Manufacturing Corporation

4,895

 

(7,963)

 

 

 

 

 

1 Fathom reclassified certain historically reported expenses within the statement of operations to reflect go-forward policy. Specifically, cost of revenue included a reclassification of certain expenses equal to 6.2% and 0.5% of revenue for the twelve months ended December 31, 2021, and December 31, 2020, respectively. Additionally, SG&A included a reclassification of certain expenses equal to 3.4% net of revenue for both the twelve months ended December 31, 2021, and December 31, 2020. Prior to the Company’s ownership of applicable acquired entities, these expenses were recorded inconsistently. The accounting reclassification had no impact on net income (loss).
Consolidated Balance Sheet (preliminary unaudited)
($ in thousands)

 

December 31,

2021

 

December 31,

2020

 

 

 

 

 

 

Assets

 

 

 

 

 

Cash and cash equivalents

$

20,099

 

$

8,188

Account receivables, net

 

25,367

 

 

15,563

Inventory

 

10,539

 

 

6,325

Prepaid expenses and other current assets

 

1,980

 

 

2,598

Total current assets

 

57,985

 

 

32,674

Investments held in trust account

 

 

 

Property and equipment, net

 

42,377

 

 

26,386

Intangible & other

 

249,575

 

 

83,466

Goodwill

 

1,242,482

 

 

63,215

Other non-current assets

 

9,813

 

 

1,038

Total assets

$

1,602,232

 

$

206,779

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

Accounts payable

$

9,409

 

$

4,404

Accrued expenses

 

4,391

 

 

4,181

Other current liabilities

 

4,698

 

 

2,778

Contingent consideration

 

2,750

 

 

4,066

Current portion of debt

 

30,096

 

 

2,853

Total current liabilities

 

51,345

 

 

18,282

 

 

 

 

 

 

Long-term debt, net

 

120,913

 

 

90,486

Long-term contingent consideration

 

65,150

 

 

7,373

Deferred tax liability

 

 

 

Founders share liability

 

9,400

 

 

Other non-current liabilities

 

1,788

 

 

514

Warrant liability

 

16,608

 

 

Payable to related parties pursuant to tax receivable agreement

 

4,600

 

 

Total liabilities

$

269,804

 

$

116,655

 

 

 

 

 

 

Contingently Redeemable Preferred Equity

 

 

 

 

 

Class A Contingently Redeemable Preferred Units; $100 par value, authorized 1,167,418 units, issued and outstanding and 1,167,418 units as of December 31, 2021 and 2020, respectively

$

 

$

54,105

Equity:

 

 

 

 

 

Class A common stock

 

5

 

 

35,869

Class B common stock

 

8

 

 

14,450

Additional paid-in capital

 

491,050

 

 

Accumulated other comprehensive loss

 

 

 

(68)

Accumulated deficit

 

(1,585)

 

 

(14,232)

Non-controlling interest in subsidiaries

 

842,950

 

 

Total stockholders' equity

 

1,332,428

 

 

36,019

Total liabilities and stockholders' equity

$

1,602,232

 

$

206,779

Q4 2021 Revenue by Product Line (preliminary unaudited)

 

 

 

 

 

 

 

Reported Revenue for Three Months Ended

($ in thousands)

12/31/2021

Percentage

12/31/2020

Percentage

$ Change

Additive manufacturing

$4,514

10.2%

$4,320

22.7%

$194

Injection molding

$9,032

20.4%

$4,905

25.8%

$4,127

CNC machining

$14,196

32.0%

$2,484

13.0%

$11,712

Precision sheet metal

$13,855

31.3%

$5,819

30.6%

$8,036

Other revenue

$2,733

6.2%

$1,512

7.9%

$1,173

Total

$44,330

100.0%

$19,040

100.0%

$25,241

 

 

 

 

 

 

Full Year 2021 Revenue by Product Line (preliminary unaudited)

 

 

 

 

 

 

 

Reported Revenue for Twelve Months Ended

($ in thousands)

12/31/2021

Percentage

12/31/2020

Percentage

$ Change

Additive manufacturing

$17,830

11.7%

$17,075

27.9%

$755

Injection molding

$28,892

19.0%

$17,904

29.2%

$10,988

CNC machining

$43,149

28.4%

$10,380

16.9%

$32,769

Precision sheet metal

$53,445

35.1%

$10,166

16.6%

$43,279

Other revenue

$8,880

5.8%

$5,715

9.3%

$3,166

Total

$152,196

100.0%

$61,240

100.0%

$90,957

 

 

 

 

 

 

Pro Forma Revenue Calculation (preliminary unaudited)
 

($ in thousands)

Q4 2021

Q4 2020

Full Year 2021

Full Year 2020

GAAP reported revenue

$44,330

$19,040

$152,196

$61,240

2020 Acquisitions adjusted revenue 1

-

9,328

-

49,294

2021 Acquisitions adjusted revenue 2

-

9,087

10,380

38,866

Pro forma revenue

$44,330

$37,455

$162,576

$149,400

 
1 As described in the Proxy Statement/Prospectus, during 2020 Fathom completed the acquisitions of Incodema Holdings, Inc., Newchem, Inc., GPI Prototype and Manufacturing Services, LLC, Dahlquist Machine, Inc., Majestic Metals, LLC, and Mark Two Engineering, Inc. (the “2020 Acquisitions”). During 2021, we completed the acquisitions of Summit Tooling, Inc., Summit Plastics, LLC, Centex Machine and Welding, Inc., Laser Manufacturing, Inc. and Screenshot Precisions, LLC d/b/a Micropulse West and Precisions Process Corp. (the “2021 Acquisitions”). Information gives pro forma effect to the 2020 Acquisitions, as though such transactions occurred on January 1, 2020.
2 Information gives pro forma effect the 2021 Acquisitions, as though such transactions occurred on January 1, 2020.
Reconciliation of GAAP Net Income to Adjusted Net Loss (preliminary unaudited)

 

 

 

 

 

 

($ in thousands)

Q4 2021

Q4 2020

 

FY 2021

FY 2020

Net income (loss)

$20,981

($6,858)

 

$13,019

$(7,963)

Acquisition expenses 1

-

1,840

 

4,236

3,765

Transaction costs

8,000

-

 

8,000

-

Change in fair value of tax receivable agreement (TRA)

300

-

 

300

-

Change in fair value of warrant liability 2

(4,103)

-

 

(4,103)

-

Change in fair value of earnout share payable 2

(26,860)

-

 

(26,860)

-

Adjusted net income (loss)

($1,682)

($5,018)

 

($5,408)

($4,198)

 
1 Represents expenses incurred related to business acquisitions; 2Represents the income statement impacts from the change in fair value related to both the earnout liability and the warrant liability associated with the business combination completed on December 23, 2021.
Reconciliation of GAAP Net Income to Adjusted EBITDA (preliminary unaudited)

 

 

 

 

 

 

($ in thousands)

Q4 2021

Q4 2020

 

FY 2021

FY 2020

Net income (loss)

$20,981

($6,858)

 

$13,019

$(7,963)

Depreciation and amortization

4,428

2,399

 

16,452

7,390

Interest expense, net

3,536

1,330

 

12,318

3,635

Income tax expense

(465)

-

 

400

23

Contingent consideration 1

-

1,055

 

(1,120)

1,055

Acquisition expenses 2

-

1,840

 

4,236

3,765

Loss on extinguishment of debt 3

996

-

 

4,491

-

Transaction costs

8,000

-

 

8,000

-

Change in fair value of tax receivable agreement (TRA)

300

-

 

300

-

Change in fair value of warrant liability 4

(4,103)

-

 

(4,103)

-

Change in fair value of earnout share payable 4

(26,860)

-

 

(26,860)

-

Non-recurring and non-cash costs 5

3,721

1,744

 

7,220

3,289

Adjusted EBITDA

$10,534

$1,510

 

$34,353

$11,194

 
1 Represents the change in fair value of contingent consideration payable to former owners of acquired businesses; 2 Represents expenses incurred related to business acquisitions; 3 Represents amounts paid to refinance debt in April of 2021; 4 Represents the impacts from the change in fair value related to both the earnout liability and the warrant liability associated with the business combination completed on December 23, 2021; 5 Represents adjustments for other non-recurring, non-operating, and non-cash costs related primarily to integration costs for new acquisitions, severance, and charges for the increase of fair value of inventory related to acquisitions, and management fees paid to Fathom’s principal owner.

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