Desktop Metal, Inc. (NYSE:DM) Q4 2022 Earnings Conference Call March 1, 2023 4:30 PM ET Company Participants Jay Gentzkow - Vice President, Investor Relations Ric Fulop - Founder and Chief Executive Officer Jason Cole - Chief Financial Officer Conference Call Participants Troy Jensen - Lake Street Capital Markets Greg Palm - Craig Hallum Noelle Dilts - Stifel Operator Greetings and welcome to the Desktop Metal Fourth Quarter and Full Year 2022 Financial Results Conference Call. [Operator Instructions] As a ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Desktop Metal pioneers Additive Manufacturing 2.0, providing comprehensive solutions for volume production of end-use parts across diverse materials and industries - Desktop Metal is pioneering **Additive Manufacturing 2.0**, focusing on the **volume production** of end-use parts across a wide range of materials and industries[16](index=16&type=chunk) - The company's growth strategy emphasizes **significant investment in R&D**, expansion of its **global distribution network**, and the development of **high-value production applications**, referred to as 'killer apps'[20](index=20&type=chunk)[38](index=38&type=chunk)[44](index=44&type=chunk) - Key competitive advantages are built on a portfolio of **over 950 patents** or pending applications, proprietary technologies like **Single Pass Jetting (SPJ)** and **Digital Light Processing (DLP)** that enable high-speed printing, and offering **integrated, turnkey solutions**[20](index=20&type=chunk)[45](index=45&type=chunk)[49](index=49&type=chunk) - The company utilizes a **hybrid sales model**, combining a direct sales force with a global distribution network of **over 140 resellers** in **more than 40 countries**[22](index=22&type=chunk)[92](index=92&type=chunk) - As of December 31, 2022, the company had **over 1,200 employees**, with a **majority engaged in research and development** and related functions[99](index=99&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including product commercialization delays, market adoption challenges, substantial net losses, and internal control weaknesses - The company has a history of significant net losses, reporting a **net loss of $740.3 million** for the year ended December 31, 2022, and may not achieve or maintain profitability in the future[196](index=196&type=chunk) - There are **significant risks of delays** in the design, production, and launch of new additive manufacturing solutions, which could prevent successful commercialization on planned timelines[121](index=121&type=chunk)[124](index=124&type=chunk) - The company faces **difficulties in integrating acquired businesses** like EnvisionTEC and ExOne, which could disrupt operations and prevent the realization of anticipated benefits[185](index=185&type=chunk) - **Material weaknesses in internal controls** over financial reporting were identified as of December 31, 2022, which could impair the ability to produce timely and accurate financial statements[273](index=273&type=chunk) - The business is **dependent on a limited number of third-party contract manufacturers and suppliers**, and any disruption could significantly impact operations and product shipments[216](index=216&type=chunk)[221](index=221&type=chunk) [Unresolved Staff Comments](index=86&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - There are **no unresolved staff comments**[284](index=284&type=chunk) [Properties](index=86&type=section&id=Item%202.%20Properties) Desktop Metal's global footprint includes approximately 690,000 square feet of space, with plans to consolidate facilities for operational savings - The company's corporate headquarters are in Burlington, Massachusetts, with a total global footprint of approximately **690,000 square feet** of owned or leased space as of year-end 2022[285](index=285&type=chunk)[286](index=286&type=chunk) - As part of its ongoing strategic initiative, the company intends to **close four facilities** and **consolidate them into four core locations** in the United States to achieve **operational savings**[287](index=287&type=chunk) [Legal Proceedings](index=86&type=section&id=Item%203.%20Legal%20Proceedings) The company faces multiple class action and derivative lawsuits primarily related to disclosures and practices at its subsidiary EnvisionTEC - The company is facing **multiple lawsuits**, including a **class action** (Campanella v. The ExOne Company) and several **securities class actions**, primarily related to disclosures and practices at its subsidiary, **EnvisionTEC**, in connection with the **ExOne Merger**[292](index=292&type=chunk)[293](index=293&type=chunk) - **Shareholder derivative actions** have also been filed, alleging that certain officers and directors caused harm to the company by making **false or misleading statements** regarding EnvisionTEC[294](index=294&type=chunk) - Desktop Metal states its belief that all current legal complaints are **without merit** and plans to **defend its position vigorously**[296](index=296&type=chunk) [Mine Safety Disclosures](index=88&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - **Not applicable**[297](index=297&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=89&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Desktop Metal's Class A common stock trades on the NYSE under 'DM', with the company retaining earnings for growth and not paying cash dividends - The company's Class A common stock is listed on the **NYSE** under the symbol **'DM'**[299](index=299&type=chunk) - The company has a policy of **not paying dividends** and intends to **retain all future earnings** to fund business operations and growth[301](index=301&type=chunk) Issuer Purchases of Equity Securities (Q4 2022) | Period | Total shares purchased | Average price paid per share | | :--- | :--- | :--- | | October 1-31, 2022 | — | $ — | | November 1-30, 2022 | 5,383 | $ 2.19 | | December 1-31, 2022 | 1,276 | $ 1.98 | | **Total** | **6,659** | | [Selected Financial Data](index=90&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is not applicable as per the report - **Not applicable**[307](index=307&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=90&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2022, revenue grew to **$209.0 million**, but a **$740.3 million net loss** was driven by a **$498.8 million goodwill impairment**, with **$115 million convertible debt** issued and **$100 million cost savings** planned Key Financial Results (FY 2022) | Metric | Amount (in millions) | | :--- | :--- | | Revenue | $209.0 | | Net Loss | $(740.3) | | Cash Used in Operating Activities | $(181.5) | | Cash, Cash Equivalents, and Short-term Investments (Year-End) | $184.5 | - In May 2022, the company issued **$115.0 million** in 6.0% Convertible Senior Notes due 2027[315](index=315&type=chunk)[413](index=413&type=chunk) - A strategic integration and cost optimization initiative was implemented, which is expected to generate annualized cost savings of **$100 million** in 2023[316](index=316&type=chunk)[317](index=317&type=chunk) - The company recorded a goodwill impairment charge of **$498.8 million** during the year ended December 31, 2022, which was a primary driver of the substantial net loss[318](index=318&type=chunk)[360](index=360&type=chunk) - The company believes its existing capital resources are **sufficient to support its operating plan for at least the next 12 months**, but may need to raise additional capital in the future[417](index=417&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=121&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations and foreign currency translation, but does not currently use derivative instruments for hedging - The primary market risks are **interest rate fluctuations** impacting the investment portfolio and **foreign currency translation risk** from European and Asian operations[452](index=452&type=chunk) - The company **does not currently use derivative financial instruments** for trading, speculative, or hedging purposes[452](index=452&type=chunk)[454](index=454&type=chunk) [Financial Statements and Supplementary Data](index=121&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements, with the auditor issuing an unqualified opinion on financials but an adverse opinion on internal controls - The independent auditor, Deloitte & Touche LLP, issued an **adverse opinion** on the company's **internal control over financial reporting** as of December 31, 2022, due to identified **material weaknesses**[498](index=498&type=chunk)[507](index=507&type=chunk) Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $336,416 | $402,009 | | **Total Assets** | $754,347 | $1,388,596 | | **Total Current Liabilities** | $83,387 | $104,065 | | **Total Liabilities** | $226,845 | $140,246 | | **Total Stockholders' Equity** | $527,502 | $1,248,350 | Consolidated Statement of Operations Data (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | **Total Revenues** | $209,023 | $112,408 | | **Gross Profit (Loss)** | $15,071 | $18,293 | | **Loss from Operations** | $(731,763) | $(201,455) | | **Net Loss** | $(740,343) | $(240,334) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=121&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - **None**[456](index=456&type=chunk) [Controls and Procedures](index=121&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2022, due to material weaknesses across all five COSO components - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2022, due to **material weaknesses** in internal control over financial reporting[457](index=457&type=chunk) - Material weaknesses were identified in **all five components of the COSO framework**: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring[461](index=461&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk)[464](index=464&type=chunk)[465](index=465&type=chunk) - **Remediation efforts are underway**, including hiring additional accounting personnel, engaging consultants, integrating systems, and implementing a new ERP system. However, these measures were **not fully remediated by year-end**[467](index=467&type=chunk)[468](index=468&type=chunk)[469](index=469&type=chunk) [Other Information](index=125&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - **None**[473](index=473&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=125&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This section is not applicable to the company - **Not applicable**[474](index=474&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=125&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is **incorporated by reference** from the forthcoming 2023 Proxy Statement[476](index=476&type=chunk) [Executive Compensation](index=125&type=section&id=Item%2011.%20Executive%20Compensation) Information detailing executive compensation is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is **incorporated by reference** from the forthcoming 2023 Proxy Statement[478](index=478&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=125&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is **incorporated by reference** from the forthcoming 2023 Proxy Statement[479](index=479&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=127&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is **incorporated by reference** from the forthcoming 2023 Proxy Statement[480](index=480&type=chunk) [Principal Accountant's Fees and Services](index=127&type=section&id=Item%2014.%20Principal%20Accountant%27s%20Fees%20and%20Services) Information detailing principal accountant's fees and services is incorporated by reference from the forthcoming 2023 Proxy Statement - Information is **incorporated by reference** from the forthcoming 2023 Proxy Statement[481](index=481&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=127&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists exhibits and financial statement schedules filed with the report, noting the omission of schedules where information is included elsewhere - This item includes the **financial statements**, **financial statement schedules** (which are omitted), and a **list of exhibits** filed with the report[483](index=483&type=chunk) [Form 10-K Summary](index=127&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - **None**[484](index=484&type=chunk)

Desktop Metal, Inc. (NYSE:DM) Q3 2022 Earnings Conference Call November 9, 2022 4:30 PM ET Company Participants Jay Gentzkow - VP, IR Ric Fulop - Co-Founder & CEO Jason Cole - CFO Conference Call Participants Noelle Dilts - Stifel Shannon Cross - Crédit Suisse Troy Jensen - Lake Street Capital Danny Eggerichs - Craig-Hallum Operator Greetings and welcome to Desktop Metals Third Quarter 2022 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, ...

Revenue Performance - Total revenue for Q3 2022 was $47.1 million, an increase of $21.7 million or 85% compared to $25.4 million in Q3 2021[273]. - Product revenue accounted for $42.9 million (91% of total revenue) in Q3 2022, up from $23.9 million (94% of total revenue) in Q3 2021, representing a growth of $18.99 million or 79%[271]. - Service revenue increased to $4.1 million (9% of total revenue) in Q3 2022, compared to $1.5 million (6% of total revenue) in Q3 2021, marking a growth of $2.66 million or 179%[271]. - Total revenue for the three months ended September 30, 2022, was $47.1 million, an increase of 85% from $25.4 million in the same period of 2021[276]. - Total revenue for the nine months ended September 30, 2022, was $148.5 million, an increase of 167% from $55.7 million in the same period of 2021[295]. - Product revenue for the nine months ended September 30, 2022, increased by approximately 161%, totaling $135.1 million compared to $51.8 million in 2021[296]. Cost and Expenses - Total cost of sales for the three months ended September 30, 2022, was $47.4 million, reflecting a 120% increase from $21.5 million in the prior year[277]. - Total cost of sales for the nine months ended September 30, 2022, was $141.7 million, a 183% increase from $50.0 million in the prior year[302]. - Research and development expenses increased by 16% to $22.4 million for the three months ended September 30, 2022, compared to $19.3 million in the prior year[283]. - Research and development expenses increased by $32.6 million, or 71%, totaling $78.4 million for the nine months ended September 30, 2022, compared to $45.8 million in 2021[308]. - Sales and marketing expenses rose by $26.7 million, or 90%, reaching $56.3 million for the nine months ended September 30, 2022, compared to $29.6 million in 2021[309]. - General and administrative expenses increased by $15.7 million, or 34%, totaling $62.5 million for the nine months ended September 30, 2022, compared to $46.8 million in 2021[310]. Profitability and Losses - The company incurred net losses of $60.8 million for the three months ended September 30, 2022[253]. - GAAP net loss for the three months ended September 30, 2022, was $60.774 million, compared to a net loss of $66.879 million for the same period in 2021[339]. - The company incurred a net loss of $428.0 million for the nine months ended September 30, 2022, compared to a net loss of $169.2 million for the same period in 2021[340]. - Non-GAAP operating loss for the nine months ended September 30, 2022, was $107.461 million, compared to a loss of $75.343 million for the same period in 2021[332]. - Non-GAAP gross margin for the three months ended September 30, 2022, was $9.387 million, up from $6.811 million in the same period of 2021, representing a 37.5% increase[332]. Cash Flow and Financial Position - Cash used in operating activities was $150.8 million as of September 30, 2022, with cash and cash equivalents totaling $217.3 million[253]. - As of September 30, 2022, the company had $217.3 million in cash, cash equivalents, and short-term investments[341]. - Net cash used in operating activities for the nine months ended September 30, 2022, was $150.8 million, primarily due to $427.2 million in net losses[352]. - The company expects to continue incurring net losses and negative cash flows from operations as it invests in commercialization and new product development[348]. - Future cash requirements will depend on revenue, R&D efforts, and potential acquisitions, with a belief that existing capital resources will support operations for at least the next 12 months[348]. Strategic Initiatives and Acquisitions - The company anticipates $20.0 million in cost savings from a strategic integration and cost optimization initiative in the second half of 2022, with at least $100.0 million in total savings expected by June 2024[257]. - The acquisition of The ExOne Company was completed for a total purchase price of $613.0 million, including $201.4 million in cash and $411.6 million in stock[254]. - The company has invested significant resources in R&D, supported by over 950 patents or pending applications, to enhance its additive manufacturing technologies[247]. - The company operates in over 65 countries, leveraging a global distribution network to market and sell its additive manufacturing solutions[249]. Market Conditions - The ongoing macroeconomic conditions, including inflation and supply chain constraints, are impacting customer purchasing decisions and may extend sales cycles[269]. - The company is exposed to market risks from fluctuations in interest rates and foreign currency translation, which may adversely affect its financial condition[363].

Company and Industry Overview * **Company**: Desktop Metal, Inc. (NYSE:DM) * **Industry**: 3D Printing, Additive Manufacturing * **Focus**: Binder jetting and area-wide photopolymer printing for mass production * **Market**: Expected to reach $100 billion by 2030, with Desktop Metal targeting a double-digit share Key Points * **Technology and Performance**: * Desktop Metal's technology offers significant advantages over legacy manufacturing processes, with throughput over 100 times faster and a doubling of performance every three years. * The company's binder jetting and area-wide photopolymer printing processes are competitive with conventional manufacturing methods. * Desktop Metal's products are used for end-use parts, not just prototyping. * **Market Position and Growth**: * Desktop Metal has a strong market position, with a leading share in binder jetting, digital casting, printed hydraulics, and printed foams. * The company has a large installed base of over 6,000 customers across various industries, including automotive, consumer electronics, healthcare, and defense. * Organic growth in 2021 was 163%. * **Revenue Streams**: * Desktop Metal's business model includes recurring revenue streams from consumables, such as proprietary materials and resins. * The company expects to achieve a 50% gross margin range in the long term. * **Strategic Initiatives**: * Desktop Metal is focused on expanding its recurring revenue streams and increasing its market share. * The company is investing in research and development to continue improving its technology and expanding its material library. * Desktop Metal is working with leading companies and organizations, including BMW, Caterpillar, Tesla, Lockheed Martin, and the Department of Defense, to develop new applications for its technology. Additional Information * Desktop Metal has a strong intellectual property portfolio, with over 650 patents pending and applied for. * The company has a global network of over 250 partners in 65 countries. * Desktop Metal's technology has applications in various industries, including aerospace, automotive, healthcare, and defense. * The company is well-positioned for long-term growth and is targeting $1 billion in revenue by the mid-decade.

Desktop Metal, Inc. (NYSE:DM) Jefferies Industrials Conference August 9, 2022 3:00 PM ET Company Participants Ric Fulop - CEO and Founder Conference Call Participants Andy McCleneghen - Jefferies Andy McCleneghen Good afternoon, everyone, and welcome to the Jefferies 2022 Industrials Conference. My name is Andy McCleneghen. I’m an associate with the investment banking team here at Jefferies. And today, it’s my pleasure to introduce Ric Fulop, who is the Founder and CEO of Desktop Metal. We’ll leave a few mi ...

Desktop Metal, Inc. (NYSE:DM) Q2 2022 Earnings Conference Call August 8, 2022 4:30 PM ET Company Participants Jay Gentzkow - VP, IR James Haley - CFO & Treasurer Ric Fulop - Co-Founder & CEO Conference Call Participants Joshua Sullivan - The Benchmark Company Noelle Dilts - Stifel, Nicolaus & Company Troy Jensen - Lake Street Capital Markets Operator Greetings and welcome to the Desktop Metal's Second Quarter 2022 Financial Results Conference Call. [Operator Instructions]. As a reminder, this conference is ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-38835 | --- | --- | |------------------------------------------------------------------------------------------------------------------------|------------- ...

Desktop Metal, Inc. (NYSE:DM) Stifel 2022 Cross Sector Insight Conference Transcript June 7, 2022 4:10 PM ET Executives Ric Fulop - Chairman and CEO Analysts Noelle Dilts - Stifel Noelle Dilts All right. Sounds good. Hi, everyone. I’m Noelle Dilts. I cover advanced manufacturing here at Stifel and in addition to a couple of other groups. So we’re joined here today by rated Desktop Metal. Ric Fulop is with us. He is CEO and Chairman. And he has served as the CEO since 2015. And before founding DM, Ric was a ...

Desktop Metal, Inc. (NYSE:DM) Q1 2022 Earnings Conference Call May 10, 2022 8:00 AM ET Company Participants Jay Gentzkow - Vice President, Investor Relations Ric Fulop - Founder and Chief Executive Officer James Haley - Chief Financial Officer Conference Call Participants Josh Sullivan - The Benchmark Company Greg Palm - Craig-Hallum Capital Group Martin Yang - Oppenheimer & Company Troy Jensen - Lake Street Capital Noelle Dilts - Stifel Operator Good day and welcome to the Desktop Metal’s First Quarter 202 ...