Fathom Digital Manufacturing Reports Second Quarter 2023

Fathom Digital Manufacturing Reports Second Quarter 2023 Financial Results

Consolidated Balance Sheets

	Period Ended
	June 30, 2023 (Unaudited)			December 31, 2022
Assets
Current assets
Cash	$	10,733		$	10,713
Accounts receivable, net		24,496			28,641
Inventory		17,177			15,718
Prepaid expenses and other current assets		2,618			3,588
Total current assets		55,024			58,660
Property and equipment, net		48,384			47,703
Right-of-use lease assets, net		12,034			12,565
Intangible assets, net		242,342			251,412
Other non-current assets		144			175
Total assets	$	357,928		$	370,515
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	10,311		$	7,982
Accrued expenses		8,155			8,176
Current lease liability		2,233			2,374
Other current liabilities		3,478			4,828
Current portion of debt, net		49,167			42,744
Total current liabilities		73,344			66,104
Long-term debt, net		109,551			114,327
Fathom earnout shares liability		808			5,960
Sponsor earnout shares liability		137			930
Warrant liability		600			2,780
Payable to related parties pursuant to the tax receivable agreement (includes $4,050 and $4,000 at fair value, respectively)		28,263			25,360
Noncurrent lease liability		10,285			11,083
Total liabilities		222,988			226,544
Commitments and Contingencies:
Contingently Redeemable Preferred Equity:
Redeemable non-controlling interest in Fathom OpCo		80,059			92,207
Shareholders' Equity:
Class A common stock, $0.0001 par value; 300,000,000 shares authorized; issued and outstanding 70,085,417 and 65,808,764 shares as of June 30, 2023 and December 31, 2022, respectively		7			7
Class B common stock, $0.0001 par value; 180,000,000 shares authorized; issued and outstanding 66,547,589 and 70,153,051 shares as of June 30, 2023 and December 31, 2022, respectively		7			7
Additional paid-in-capital		592,068			587,941
Accumulated other comprehensive loss		(107	)		(107	)
Accumulated deficit		(537,094	)		(536,084	)
Shareholders’ equity attributable to Fathom Digital Manufacturing Corporation		54,881			51,764
Total Liabilities, Shareholders’ Equity, and Redeemable Non-Controlling Interest	$	357,928		$	370,515

Consolidated Statements of Comprehensive Income (Loss)

	Three Months Ended						Six Months Ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022

Revenue	$	34,474		$	41,985		$	69,481		$	82,526
Cost of revenue		23,940			26,437			47,002			54,981
Gross profit		10,534			15,548			22,479			27,545
Operating expenses
Selling, general, and administrative		9,445			11,617			20,217			26,381
Depreciation and amortization		4,643			4,452			9,218			8,968
Restructuring		1,406			-			2,056			-
Total operating expenses		15,494			16,069			31,491			35,349
Operating loss		(4,960	)		(521	)		(9,012	)		(7,804	)
Interest expense and other (income) expense
Interest expense		3,959			1,858			7,429			3,332
Other expense		65			129			138			195
Other income		(1,784	)		(36,108	)		(8,103	)		(63,223	)
Total interest expense and other (income) expense, net		2,240			(34,121	)		(536	)		(59,696	)
Net income (loss) before income tax	$	(7,200	)	$	33,601		$	(8,476	)	$	51,892
Income tax (benefit) expense		64			(683	)		119			(1,386	)
Net income (loss)	$	(7,264	)	$	34,284		$	(8,595	)	$	53,278

Weighted average Class A common shares outstanding
Basic		69,703,407			52,259,885			68,382,896			51,530,961
Diluted		136,302,053			135,524,773			136,213,635			135,305,168

Q2 2023 Revenue by Product Line

	Three Months Ended
($ in thousands)	6/30/2023	% Revenue	6/30/2022	% Revenue	% Change
Revenue By Product Line
Additive manufacturing	$3,287	9.5%	$4,410	10.5%	-25.5%
Injection molding	$6,064	17.6%	$7,093	16.9%	-14.5%
CNC machining	$13,240	38.4%	$14,584	34.7%	-9.2%
Precision sheet metal	$10,164	29.5%	$14,751	35.1%	-31.1%
Other revenue	$1,719	5.0%	$1,147	2.7%	49.9%
Total	$34,474	100.0%	$41,985	100.0%	-17.9%

Six Months 2023 Revenue by Product Line

	Six Months Ended
($ in thousands)	6/30/2023	% Revenue	6/30/2022	% Revenue	% Change
Revenue By Product Line
Additive manufacturing	$6,875	9.9%	$8,559	10.4%	-19.7%
Injection molding	$10,743	15.5%	$13,908	16.9%	-22.8%
CNC machining	$27,470	39.5%	$27,910	33.8%	-1.6%
Precision sheet metal	$20,547	29.6%	$29,434	35.7%	-30.2%
Other revenue	$3,846	5.5%	$2,715	3.3%	41.7%
Total	$69,481	100.0%	$82,526	100.0%	-15.8%

Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income (Loss)

	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net (loss) income	$	(7,264)	$	34,284	$	(8,595)	$	53,278
Stock compensation		1,239		1,796		2,332		3,926
Inventory step-up amortization		-		-		-		3,241
Restructuring expense		1,406		-		2,056		-
Change in fair value of warrant liability ⁽¹⁾		(400)		(12,500)		(2,180)		(20,600)
Change in fair value of earnout share liabilities ⁽¹⁾		(1,115)		(22,930)		(5,945)		(41,900)
Change in fair value of tax receivable agreement ⁽¹⁾		(250)		(200)		50		(200)
Integration, non-recurring, non-operating, cash, and non-cash costs ⁽²⁾		715		1,047		1,111		2,951
Adjusted net loss	$	(5,669)	$	1,497	$	(11,171)	$	696

¹ Represents the impacts from the change in fair value related to the earnout shares liability, the warrant liability and the tax receivable agreement associated with the business combination completed on December 23, 2021; ² Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for acquisitions and severance.

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA

	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Net income (loss)	$	(7,264)	$	34,284	$	(8,595)	$	53,278
Depreciation and amortization		6,465		5,996		12,543		12,204
Interest expense, net		3,959		1,858		7,429		3,332
Income tax expense (benefit)		64		(378)		119		(1,386)
Stock compensation		1,239		1,796		2,332		3,926
Inventory step-up amortization		-		-		-		3,241
Restructuring expense		1,406		-		2,056		-
Change in fair value of warrant liability ⁽¹⁾		(400)		(12,500)		(2,180)		(20,600)
Change in fair value of earnout shares liability ⁽¹⁾		(1,115)		(22,930)		(5,945)		(41,900)
Change in fair value of tax receivable agreement ⁽¹⁾		(250)		(200)		50		(200)
Integration, non-recurring, non-operating, cash, and non-cash costs ⁽²⁾		715		1,047		1,111		2,951
Adjusted EBITDA	$	4,819	$	8,973	$	8,920	$	14,846

¹ Represents the impacts from the change in fair value related to the earnout shares liability, the warrant liability and the tax receivable agreement associated with the business combination completed on December 23, 2021; ² Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for acquisitions and severance.

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