HARTLAND - Fathom Digital Manufacturing Corp. (NYSE: FATH), an industry leader in on-demand digital manufacturing services, today announced financial results for the third quarter and nine months ended September 30, 2023.
On October 23, 2023, Fathom appointed Carey Chen as Chief Executive Officer of the company succeeding Ryan Martin. Mr. Chen has significant global manufacturing experience and an extensive background in supporting companies across the industrial landscape. He has served as a member of Fathom's Board of Directors since April 2021 and as a Director to Fathom's predecessor companies since 2019.
'I am optimistic that there are opportunities to return to revenue growth and sustainable profitability over time. We've added new sales and operating leadership,' said Carey Chen, Fathom's Chief Executive Officer. 'Together with the valued employees throughout Fathom, we will move with urgency to optimize the performance of the company.'
In commenting on the third quarter financial results, Mark Frost, Chief Financial Officer, said, 'Revenue in the quarter came in at the low-end of our expectations. We saw more stable order rates as the quarter progressed and believe we are set up to return to profitable growth in 2024 as we realize the full benefits of our cost optimization efforts.'
Third Quarter 2023 Highlights
Revenue totaled $31.5 million
Total orders were $29.0 million
Net loss totaled $(8.6) million; Adjusted net loss1 was $(7.1) million
Adjusted EBITDA1 totaled $3.1 million, representing an Adjusted EBITDA margin1 of 9.8%
Year to Date 2023 Highlights
Revenue totaled $100.9 million
Total orders were $104.4 million
Net loss totaled $(17.2) million; Adjusted net loss1 totaled $(18.3) million
Adjusted EBITDA1 was $12.0 million, representing an Adjusted EBITDA margin1 of 11.9%
Year Over Year Summary of Financial Results - (Third Quarter and Nine Months)
Revenue for the third quarter of 2023 was $31.5 million compared to $40.2 million in the third quarter of 2022, a decrease of 21.8% due to lower order volumes, primarily impacting Fathom's production precision sheet metal and CNC product lines. For the nine months ended September 30, 2023, revenue totaled $100.9 million versus $122.7 million compared to the comparable period last year.
Gross profit for the third quarter of 2023 totaled $8.3 million, or 26.3% of revenue, compared to $15.1 million, or 37.5% of revenue, in the same period a year ago. Gross profit for the nine months ended September 30, 2023, was $30.7 million, or 30.5% of revenue, compared to $42.6 million, or 34.7% of revenue, which includes approximately $3.2 million in non-cash purchase accounting adjustments, for the same period in 2022.
Net loss for the third quarter of 2023 was $(8.6) million compared to a net loss of $(1,039.0) million in the third quarter of 2022. Excluding the revaluation of Fathom warrants and earnout shares, stock compensation expense, optimization plan expenses, and other costs, Fathom reported an adjusted net loss in the third quarter of 2023 of $(7.2) million compared to an adjusted net income of $5.4 million for the same period in 2022.
Net loss for the nine months ended September 30, 2023, was $(17.2) million compared to net loss of $(985.7) million in the comparable period last year. For the nine months ended September 30, 2023, the adjusted net loss was $(18.3) million compared to the adjusted net income of $6.1 million for the same period in 2022.
Adjusted EBITDA for the third quarter of 2023 was $3.1 million versus $7.1 million for the same period in 2022 primarily due to lower volume leverage, partially offset by cost savings from the execution of Fathom's optimization plan. The Adjusted EBITDA margin in the quarter was 9.8%.
For the nine months ended September 30, 2023, Adjusted EBITDA and Adjusted EBITDA margin were $12.0 million and 11.9%, respectively, compared to Adjusted EBITDA loss of $21.9 million and 17.8% for the same period in 2022.
Amendment to Credit Agreement
On November 13, 2023, the Company entered into a third amendment to its Credit Agreement. For additional information, please refer to Fathom's Quarterly Report on Form 10-Q filed today, November 14, 2023, with the Securities and Exchange Commission.
About Fathom Digital Manufacturing
Fathom is one of the largest on-demand digital manufacturing platforms in North America, serving the comprehensive product development and low- to mid-volume manufacturing needs of some of the largest and most innovative companies in the world. With more than 25 quick turn manufacturing processes combined with an extensive national footprint, Fathom seamlessly blends in-house capabilities across plastic and metal additive technologies, CNC machining, injection molding and tooling, sheet metal fabrication, design and engineering, and more. Fathom has more than 35 years of industry experience and is at the forefront of the Industry 4.0 digital manufacturing revolution, serving clients in the technology, defense, aerospace, medical, automotive, IOT sectors, and others. Fathom's certifications include: ITAR Registered, ISO 9001:2015 Design Certified, ISO 9001:2015, ISO 13485:2016, AS9100:2016, and NIST 800-171.
Forward-Looking Statements
Certain statements made in this press release are 'forward-looking statements' within the meaning of the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995. Words such as 'estimates,' 'projects,' 'expects,' 'anticipates,' 'forecasts,' 'plans,' 'intends,' 'believes,' 'seeks,' 'may,' 'will,' 'would,' 'should,' 'future,' 'propose,' 'target,' 'goal,' 'objective,' 'outlook' and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of Fathom Digital Manufacturing Corporation ('Fathom') that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: the inability to recognize the anticipated benefits of our business combination with Altimar Acquisition Corp. II; changes in general economic conditions, including as a result of the COVID-19 pandemic or any future outbreaks of other highly infectious or contagious disease; the implementation of our optimization plan could result in greater costs and fewer benefits than we anticipate; the outcome of litigation related to or arising out of the business combination, or any adverse developments therein or delays or costs resulting therefrom; the ability to meet the New York Stock Exchange's listing standards following the consummation of the business combination; costs related to the business combination and additional factors discussed in Fathom's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (the 'SEC') on April 7, 2023, as amended on May 1, 2023, as well as Fathom's other filings with the SEC. If any of the risks described above materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by our forward-looking statements. There may be additional risks that Fathom does not presently know or that Fathom currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Fathom's expectations, plans or forecasts of future events and views as of the date of this press release. These forward-looking statements should not be relied upon as representing Fathom's assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements. Fathom undertakes no obligation to update or revise any forward-looking statements made by management or on its behalf whether as a result of future developments, subsequent events or circumstances or otherwise, except as required by law.
Contact:
Email: investors@fathommfg.com
FATHOM DIGITAL MANUFACTURING A 