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Form 424B3 Fathom Digital Manufactu

August 16, 2022 10:57 AM EDT

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Filed Pursuant to Rule 424(b)(3)

Registration No. 333-262194

PROSPECTUS SUPPLEMENT NO. 2

(to prospectus dated May 2, 2022)

FATHOM DIGITAL MANUFACTURING CORPORATION

45,423,250 SHARES OF CLASS A COMMON STOCK

9,900,000 WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK

18,525,000 SHARES OF CLASS A COMMON STOCK UNDERLYING WARRANTS TO

PURCHASE CLASS A COMMON STOCK AND

90,570,234 SHARES OF CLASS A COMMON STOCK UNDERLYING CLASS B COMMON STOCK

This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated May 2, 2022, as supplemented by Prospectus Supplement No. 1, dated May 17, 2022 (and as may be further supplemented or amended from time to time, the “Prospectus”), with the information contained in (i) our Current Report on Form 8-K, which we filed with the Securities and Exchange Commission (“SEC”) on August 15, 2022 (the “Current Report”) and (ii) our Quarterly Report on Form 10-Q, which we filed with the SEC on August 15, 2022 (the “Quarterly Report”). Accordingly, we have attached the Current Report and the Quarterly Report to this prospectus supplement. Capitalized terms used but not defined in this prospectus supplement have the meanings given to such terms in the Prospectus.

The Prospectus and this prospectus supplement relate to the resale from time to time by the selling stockholders named in the Prospectus or their permitted transferees (collectively, the “Selling Stockholders”) of: (i) up to 36,661,014 shares of Class A common stock, par value $0.0001 per share (the “Class A common stock”) issued to the Legacy Fathom Owners in connection with the closing of the Business Combination, (ii) up to 4,770,000 shares of Class A common stock held by Altimar Sponsor II, LLC (“Sponsor”) and the other Altimar II Founders following the closing of the Business Combination, (iii) up to 2,724,736 Earnout Shares issued to certain Legacy Fathom Owners, and (iv) up to 1,267,500 Sponsor Earnout Shares. The Prospectus and this prospectus supplement also relate to (a) the resale of up to 9,900,000 Private Placement Warrants to purchase shares of Class A common stock held by Sponsor, (b) the issuance of up to 18,525,000 shares of Class A common stock upon the exercise of outstanding Public Warrants and Private Placement Warrants to purchase shares of Class A common stock, and (c) the issuance of up to 90,570,234 shares of Class A common stock issuable upon the exchange of New Fathom Units (together with a corresponding number of shares of Class B common stock) held by certain of the Selling Stockholders (including 6,275,264 Earnout Shares presently represented in the form of unvested New Fathom Units).

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

Our Class A common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “FATH.” On August 15, 2022, the closing price of our Class A common stock was $3.80 per share. Our Public Warrants are currently listed on the NYSE and trade under the symbol “FATH.WS.” On August 15, 2022, the closing price of our Public Warrants was $0.30 per Public Warrant.

Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 17 of the Prospectus. Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued under the Prospectus or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is August 16, 2022.


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 15, 2022

 

 

FATHOM DIGITAL MANUFACTURING CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

 

Delaware

 

001-39994

 

98-1571400

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

1050 Walnut Ridge Drive

Hartland, WI 53029

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (262) 367-8254

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange
on which registered

Class A common stock, par value $0.0001 per share

 

FATH

 

NYSE

Warrants to purchase Class A common stock

 

FATH.WS

 

NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


 

 

er next two years Expanded mid-volume production of existing program $1.7 million in 2021; expect $4-$8 million in 2022 orders Prototype with mid-volume production follow-on $4.5 million over three-month period New cross-sell of sheet metal low-volume production $450k in 2021; expect over $1.5 million in 2022 orders Prototype & low-volume production Global healthcare company Global semiconductor company Disruptive electric vehicle manufacturer Global leader in mobile robotics 1 2 3 4 5 6 Global leader in gas measurement instruments and technologies Leading subsea technology company $550K production order Expansion to higher volume production of existing program New Strategic Accounts Existing Strategic Accounts

Statement (preliminary unaudited) Repor

 

Item 2.02.

Results of Operations and Financial Condition.

On August 15, 2022, Fathom Digital Manufacturing Corporation (“Fathom”) issued a press release announcing its financial results for the quarter ended June 30, 2022. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information contained in Item 2.02 of this Current Report and in Exhibit 99.1 is being furnished and shall not be deemed “filed” with the Securities and Exchange Commission (the “SEC”) for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section and will not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.

Exhibit 99.1 to this Current Report contains certain financial measures that are considered “non-GAAP financial measures” as defined in the SEC rules. Exhibit 99.1 to this Current Report also contains the reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles, as well as the reasons why Fathom’s management believes that presentation of the non-GAAP financial measures provides useful information to investors regarding Fathom’s results of operations and, to the extent material, a statement disclosing any other additional purposes for which Fathom’s management uses the non-GAAP financial measures.

 

Item 7.01.

Regulation FD Disclosure.

Fathom is posting an earnings presentation for the second quarter ended June 30, 2022 to its website at https://investors.fathommfg.com. A copy of the presentation is being furnished herewith as Exhibit 99.2. Fathom will use the presentation during its conference call on August 15, 2022 and also may use the presentation from time to time in conversations with analysts, investors and others.

In accordance with General Instruction B.2 of Form 8-K, the information contained in Item 7.01 of this Current Report and in Exhibit 99.2 is being furnished and shall not be deemed “filed” with the Securities and Exchange Commission (the “SEC”) for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section and will not be incorporated by reference into any registration statement or other document filed under the Securities Act, or the Exchange Act, except as expressly set forth by specific reference in such filing.

The information contained in Exhibit 99.2 is summary information that is intended to be considered in the context of Fathom’s filings with the SEC. Fathom undertakes no duty or obligation to publicly update or revise the information contained in this Current Report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.

Exhibit 99.2 to this Current Report contains certain financial measures that are considered “non-GAAP financial measures” as defined in the SEC rules. Exhibit 99.2 to this Current Report also contains the reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles, as well as the reasons why Fathom’s management believes that presentation of the non-GAAP financial measures provides useful information to investors regarding Fathom’s preliminary unaudited results of operations and, to the extent material, a statement disclosing any other additional purposes for which Fathom’s management uses the non-GAAP financial measures.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits.

 

Exhibit
Number

 

Description

 

 

 

 

99.1

 

Press Release dated August 15, 2022

 

99.2

 

Fathom Presentation, August 15, 2022

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

FATHOM DIGITAL MANUFACTURING CORPORATION

 

 

By:

 

/s/ Mark Frost

Name:

 

Mark Frost

Title:

 

Chief Financial Officer

Date: August 15, 2022


 

 

Fathom Digital Manufacturing Reports

Second Quarter 2022 Financial Results

 

Second Quarter 2022 Highlights

Revenue increased 17.0% to $42.0 million
Total orders were flat at $39.7 million
Net income totaled $34.0 million; adjusted net income1 totaled $1.2 million
Adjusted EBITDA1 increased to $8.7 million, representing an Adjusted EBITDA margin1 of 20.6%
Revised financial guidance for full year 2022

 

First Half 2022 Highlights

Revenue increased 24.3% to $82.5 million
Total orders increased approximately 8% to $83.5 million
Net income totaled $51.8 million; adjusted net loss1 totaled $0.8 million
Adjusted EBITDA1 was $14.8 million, representing an Adjusted EBITDA margin1 of 18.0%

 

HARTLAND, Wis., August 15, 2022 -- Fathom Digital Manufacturing Corp. (NYSE: FATH), an industry leader in on-demand digital manufacturing services, today announced financial results for the three and six months ended June 30, 2022.

 

 

Three Months Ended

 

Six Months Ended

($ in thousands)

6/30/2022

6/30/2021

 

6/30/2022

6/30/2021

Revenue

$41,985

$35,872

 

$82,526

$66,406

Net income (loss)

$33,979

$(4,082)

 

$51,813

$(4,582)

Adjusted net income (loss)1

$1,192

$310

 

$(769)

$2,370

Adjusted EBITDA1

$8,668

$7,464

 

$14,846

$15,173

Adjusted EBITDA margin1

20.6%

20.8%

 

18.0%

22.8%

 

1 See “Non-GAAP Financial Information.” Reconciliations of non-GAAP financial measures are included in the appendix.

 

 

 

 

 

 

“In the second quarter, we built upon our proven history of growth and profitability as revenue rose 17% from continued growth in our strategic accounts and previous M&A activity while adjusted EBITDA increased 16.1% to $8.7 million, representing a leading industry margin,” said Ryan Martin, Fathom Chief Executive Officer. “We continue to benefit from our comprehensive manufacturing services by providing a diverse group of enterprise-level customers with timely, value-added solutions across both additive manufacturing and traditional manufacturing technologies. Our focus remains on investing in new technologies and expanding our breadth of leading offerings as we continue to take advantage of the positive long-term fundamentals of our business.”

 

Mr. Martin added, “For the full year, we have realigned our expectations with the current macro environment given the downshift in the broader economy. We continue to focus on strengthening our commercial team and expect to be in a strong position to achieve our go-forward growth target.”

 

Summary of Financial Results

Revenue for the second quarter of 2022 was $42.0 million compared to $35.9 million in the second quarter of 2021, an increase of $6.1 million, or 17.0%, of which approximately $3.6 million was organic and $2.5 was from


 

acquisitions completed in Q2 2021. For the six months ended June 30, 2022, revenue increased 24.3% to $82.5 million from $66.4 million for the six months ended June 30, 2021.

 

Gross profit for the second quarter of 2022 totaled $15.5 million, or 37.0% of revenue, compared to $13.5 million, or 37.6% of revenue, in the second quarter of 2021. Gross profit for the six months ended June 30, 2022 was $27.5 million, or 33.4% of revenue, which includes approximately $3.7 million in non-cash purchase accounting adjustments, compared to $26.9 million, or 40.5% of revenue, for the same period in 2021.

 

Net income for the second quarter of 2022 was $34.0 million compared to a net loss of $4.1 million in the second quarter of 2021. Excluding acquisition costs, stock compensation expense, the revaluation of Fathom warrants and earnout shares, and other costs, Fathom reported adjusted net income in the second quarter of 2022 of $1.2 million compared to adjusted net income of $0.3 million for the same period in 2021.

 

Net income for the six months ended June 30, 2022 was $51.8 million compared to a net loss of $4.6 million for the same period in 2021. For the six months ended June 30, 2022, the adjusted net loss was $0.8 million compared to adjusted net income of $2.4 million for the same period in 2021.

 

Adjusted EBITDA for the second quarter of 2022 increased to $8.7 million from $7.5 million for the same period in 2021 primarily due to higher volumes partially offset by the incurrence of public company expenses totaling approximately $2.4 million. The Adjusted EBITDA margin in the quarter was 20.6% compared to 20.8% in the second quarter of 2021.

 

For the six months ended June 30, 2022, Adjusted EBITDA and Adjusted EBITDA margin were $14.8 million and 18.0%, respectively, compared to $15.2 million and 22.8%, respectively, for the same period in 2021.

 

Revised 2022 Outlook

For 2022, Fathom currently expects year-over-year revenue growth of approximately 8% to 12% for a range between $165 million and $171 million. Fathom also expects Adjusted EBITDA to range between $32 million and $36 million, representing year-over-year growth of approximately (7%) to 5% and an implied Adjusted EBITDA margin of 19.4% to 21.1%. Fathom’s current guidance, as of August 15, 2022, excludes the impact of any potential new acquisitions.

 

Conference Call

Fathom will host a conference call on Monday, August 15, 2022, at 8:30 am Eastern Time. The dial-in number for callers in the U.S. is +1-844-200-6205 and the dial-in number for international callers is +1-929-526-1599. The access code for all callers is 489270. The conference call will be broadcast live over the Internet and include a slide presentation. To access the webcast and supporting materials, please visit the investor relations section of Fathom’s website at https://investors.fathommfg.com.

 

A replay of the conference call can be accessed through August 22, 2022, by dialing +1-866-813-9403 (US) or +1-226-828-7578 (international), and then entering the access code 896018. The webcast will also be archived on Fathom’s website.

 

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 unique manufacturing processes and a national footprint with nearly 450,000 square feet of manufacturing capacity across 12 facilities, Fathom seamlessly blends in-house capabilities across plastic and metal additive technologies, CNC machining, injection molding and tooling, sheet metal fabrication, and design and engineering. With more than 35 years of industry experience, Fathom is at the forefront of the Industry 4.0 digital manufacturing revolution, serving clients in the technology, defense, aerospace, medical, automotive and IOT sectors. To learn more, visit https://fathommfg.com/.

 

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; 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, 2021, filed with the Securities and Exchange Commission (the “SEC”) on April 8, 2022 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, including with respect to the revised financial guidance for full year 2022 contained herein, whether as a result of future developments, subsequent events or circumstances or otherwise, except as required by law.

 

Non-GAAP Financial Information
This press release includes Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures that we use to supplement our results presented in accordance with U.S. GAAP. We believe Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA margin are useful in evaluating our operating performance, as they are similar to measures reported by our public competitors and regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA margin are not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.

 

We define and calculate Adjusted Net Income as net income (loss) before the impact of any increase or decrease in the estimated fair value of the company’s warrants or earnout shares. We define and calculate Adjusted EBITDA as net income (loss) before the impact of interest income or expense, income tax expense and depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, and certain other non-cash and non-core items, as described in the reconciliation included in the appendix to this press release. Adjusted EBITDA excludes certain expenses that are required in accordance with U.S. GAAP because they are non-recurring (for example, in the case of transaction-related costs), non-cash (for example, in the case of depreciation, amortization and stock-based compensation) or are not related to our underlying business performance (for example, in the case of interest income and expense). Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenue. We include these non-GAAP financial measures because they are used by management to evaluate Fathom’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments.

 

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.

 

Contact:

Michael Cimini

Director, Investor Relations

Fathom Digital Manufacturing

(262) 563-5575

[email protected]

 

 


 

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

 

($ in thousands)

 

 

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30, 2022 (Successor)

 

 

 

June 30, 2021 (Predecessor)

 

 

June 30, 2022 (Successor)

 

 

 

June 30, 2021 (Predecessor)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

41,985

 

 

 

$

35,872

 

 

$

82,526

 

 

 

$

66,406

 

Cost of revenue

 

 

26,437

 

 

 

 

22,376

 

 

 

54,981

 

 

 

 

39,499

 

Gross profit

 

 

15,548

 

 

 

 

13,496

 

 

 

27,545

 

 

 

 

26,907

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

 

11,617

 

 

 

 

8,760

 

 

 

26,381

 

 

 

 

16,430

 

Depreciation and amortization

 

 

4,452

 

 

 

 

2,535

 

 

 

8,968

 

 

 

 

5,207

 

Total operating expenses

 

 

16,069

 

 

 

 

11,295

 

 

 

35,349

 

 

 

 

21,637

 

Operating (loss) income

 

 

(521

)

 

 

 

2,201

 

 

 

(7,804

)

 

 

 

5,270

 

Interest expense and other (income) expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

1,858

 

 

 

 

2,310

 

 

 

3,332

 

 

 

 

4,424

 

Other expense

 

 

129

 

 

 

 

7,110

 

 

 

195

 

 

 

 

8,650

 

Other income

 

 

(36,108

)

 

 

 

(3,206

)

 

 

(63,223

)

 

 

 

(3,300

)

Total interest expense and other (income) expense, net

 

 

(34,121

)

 

 

 

6,214

 

 

 

(59,696

)

 

 

 

9,774

 

Net income (loss) before income tax

 

$

33,601

 

 

 

$

(4,013

)

 

$

51,892

 

 

 

$

(4,504

)

Income tax (benefit) expense

 

 

(378

)

 

 

 

69

 

 

 

79

 

 

 

 

78

 

Net income (loss)

 

$

33,979

 

 

 

$

(4,082

)

 

$

51,813

 

 

 

$

(4,582

)

Net loss attributable to Fathom OpCo non-controlling interest

 

 

(442

)

 

 

 

-

 

 

 

(5,702

)

 

 

 

-

 

Net income attributable to controlling interest

 

 

34,421

 

 

 

 

(4,082

)

 

 

57,515

 

 

 

 

(4,582

)

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from foreign currency translation adjustments

 

 

-

 

 

 

 

2

 

 

 

(107

)

 

 

 

(105

)

Comprehensive income (loss), net of tax

 

$

34,421

 

 

 

$

(4,080

)

 

$

57,408

 

 

 

$

(4,687

)

Weighted average Class A common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

52,259,885

 

 

 

 

 

 

 

51,530,961

 

 

 

 

 

Diluted

 

 

135,524,773

 

 

 

 

 

 

 

135,305,168

 

 

 

 

 

 

 

 

 

 

 

 


 

Q2 2022 Revenue by Product Line

 

 

 

 

Reported Three Months Ended

($ in thousands)

6/30/2022

% Revenue

6/30/2021

% Revenue

% Change

Revenue By Product Line

 

 

 

 

 

  Additive manufacturing

$4,410

10.5%

$4,302

12.0%

2.5%

  Injection molding

$7,093

16.9%

$6,492

18.1%

9.3%

  CNC machining

$14,584

34.7%

$11,072

30.9%

31.7%

  Precision sheet metal

$14,751

35.1%

$12,093

33.7%

22.0%

  Other revenue

$1,147

2.7%

$1,913

5.3%

-40.0%

Total

$41,985

100%

$35,872

100%

17.0%

 

 

 

 

 

 

First Half 2022 Revenue by Product Line

 

 

 

Reported Six Months Ended

($ in thousands)

6/30/2022

% Revenue

6/30/2021

% Revenue

% Change

Revenue By Product Line

 

 

 

 

 

  Additive manufacturing

$8,559

10.4%

$8,842

13.3%

-3.2%

  Injection molding

$13,908

16.8%

$13,129

19.8%

5.9%

  CNC machining

$27,910

33.8%

$15,903

23.9%

75.5%

  Precision sheet metal

$29,434

35.7%

$25,210

38.0%

16.8%

  Other revenue

$2,715

3.3%

$3,322

5.0%

-18.3%

Total

$82,526

100%

$66,406

100%

24.3%

 

 

 


 

Consolidated Balance Sheets

 

($ in thousands)

 

 

 

 

 

Period Ended

 

 

 

June 30, 2022

 

 

December 31, 2021

 

 Assets

 

(unaudited)

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$

11,118

 

 

$

20,357

 

Accounts receivable, net

 

 

26,402

 

 

 

25,367

 

Inventory

 

 

14,100

 

 

 

13,165

 

Prepaid expenses and other current assets

 

 

3,802

 

 

 

1,836

 

Total current assets

 

 

55,422

 

 

 

60,725

 

Property and equipment, net

 

 

46,908

 

 

 

44,527

 

Right-of-use operating lease assets, net

 

 

8,081

 

 

 

-

 

Right-of-use financing lease assets, net

 

 

2,363

 

 

 

-

 

Intangible assets, net

 

 

260,483

 

 

 

269,622

 

Goodwill

 

 

1,188,441

 

 

 

1,189,464

 

Other non-current assets

 

 

1,415

 

 

 

2,036

 

Total assets

 

$

1,563,113

 

 

$

1,566,374

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

11,468

 

 

$

9,409

 

Accrued expenses

 

 

7,254

 

 

 

5,957

 

Current operating lease liability

 

 

2,976

 

 

 

-

 

Current financing lease liability

 

 

190

 

 

 

-

 

Contingent consideration

 

 

700

 

 

 

2,748

 

Current portion of debt

 

 

31,179

 

 

 

29,697

 

Other current liabilities

 

 

3,767

 

 

 

2,058

 

Total current liabilities

 

 

57,534

 

 

 

49,869

 

Long-term debt, net

 

 

117,677

 

 

 

120,491

 

Fathom earnout shares liability

 

 

27,690

 

 

 

64,300

 

Sponsor earnout shares liability

 

 

4,090

 

 

 

9,380

 

Warrant liability

 

 

13,300

 

 

 

33,900

 

Noncurrent contingent consideration

 

 

-

 

 

 

850

 

Noncurrent operating lease liability

 

 

5,160

 

 

 

-

 

Noncurrent financing lease liability

 

 

2,227

 

 

 

-

 

Deferred tax liability

 

 

12,335

 

 

 

17,570

 

Other noncurrent liabilities

 

 

-

 

 

 

4,655

 

Payable to related parties pursuant to the tax receivable agreement (includes $4,440 and $4,600 at fair value, respectively)

 

 

9,400

 

 

 

4,600

 

Total liabilities

 

 

249,413

 

 

 

305,615

 

Commitments and Contingencies:

 

 

 

 

 

 

Redeemable non-controlling interest in Fathom OpCo

 

 

749,615

 

 

 

841,982

 

Shareholders' Equity:

 

 

 

 

 

 

Class A common stock, $0.0001 par value; 300,000,000 shares authorized; 61,596,519 issued and outstanding as of June 30, 2022 and 50,785,656 issued and outstanding as of December 31, 2021

 

 

6

 

 

 

5

 

Class B common stock, $0.0001 par value; 180,000,000 shares authorized; 74,014,640 shares issued and outstanding as of June 30, 2022 and 84,294,971 shares issued and outstanding as of December 31, 2021

 

 

7

 

 

 

8

 

Class C common stock, $.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021

 

 

-

 

 

 

-

 

Preferred Stock, $.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021

 

 

-

 

 

 

-

 

Treasury stock, at cost; 301,302 and 0 shares as of June 30, 2022 and December 31, 2021, respectively

 

 

(2,258

)

 

 

-

 

Additional paid-in-capital

 

 

556,417

 

 

 

466,345

 

Accumulated other comprehensive loss

 

 

 

 

 

-

 

Retained earnings (Accumulated deficit)

 

 

9,913

 

 

 

(47,581

)

Shareholders’ equity attributable to Fathom Digital Manufacturing Corporation

 

 

564,085

 

 

 

418,777

 

Total Liabilities, Shareholders’ Equity, and Redeemable Non-Controlling Interest

 

$

1,563,113

 

 

$

1,566,374

 

 

 


 

 

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

 

 

($ in thousands)

Q2 2022

Q2 2021

 

1H 2022

1H 2021

Net income (loss)

$33,979

($4,082)

 

$51,813

($4,582)

Acquisition expenses1

-

2,876

 

-

4,045

Stock compensation

1,796

-

 

3,926

-

Inventory step-up amortization

-

-

 

3,241

277

Change in fair value of warrant liability2

(12,500)

-

 

(20,600)

-

Change in fair value of earnout share liability2

(22,930)

-

 

(41,900)

-

Change in fair value of tax receivable agreement (TRA)

(200)

-

 

(200)

-

Integration, non-recurring, non-operating, cash, and non-cash costs3

1,047

1,516

 

2,951

2,630

Adjusted net income (loss)

$1,192

$310

 

($769)

$2,370

 

1 Represents expenses incurred related to business acquisitions; 2 Represents the impacts from the change in fair value related to both the earnout share liability and the warrant liability associated with the business combination completed on December 23, 2021; 3 Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for new acquisitions, severance, and management fees paid to our principal owner.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA

 

 

($ in thousands)

Q2 2022

Q2 2021

 

1H 2022

1H 2021

Net income (loss)

$33,979

($4,082)

 

$51,813

($4,582)

Depreciation and amortization

5,996

4,099

 

12,204

7,625

Interest expense, net

1,858

2,310

 

3,332

4,424

Income tax expense

(378)

69

 

79

78

Acquisition expenses1

-

2,876

 

-

4,045

Inventory step-up amortization

-

-

 

3,241

277

Stock compensation

1,796

-

 

3,926

-

Change in fair value of warrant liability2

(12,500)

-

 

(20,600)

-

Change in fair value of earnout share liability2

(22,930)

-

 

(41,900)

-

Change in fair value of tax receivable agreement (TRA)

(200)

-

 

(200)

-

Contingent consideration3

-

(1,355)

 

-

(1,355)

Loss on extinguishment of debt4

-

2,031

 

-

2,031

Integration, non-recurring, non-operating, cash, and non-cash costs5

1,047

1,516

 

2,951

2,630

Adjusted EBITDA

$8,668

$7,464

 

$14,846

$15,173

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 


Slide 1

Q2 2022 Financial Results August 15, 2022


Slide 2

Forward-Looking Statements Certain statements made in this presentation 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; 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, 2021, filed with the Securities and Exchange Commission (the “SEC”) on April 8, 2022 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 presentation. These forward-looking statements should not be relied upon as representing Fathom’s assessments as of any date subsequent to the date of this presentation. 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, including with respect to the revised financial guidance for full year 2022 contained herein, whether as a result of future developments, subsequent events or circumstances or otherwise, except as required by law. Non-GAAP Information This presentation includes Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP financial measures that we use to supplement our results presented in accordance with U.S. GAAP. We believe Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA margin are useful in evaluating our operating performance, as they are similar to measures reported by our public competitors and regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA margin are not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. We define and calculate Adjusted Net Income as net income (loss) before the impact of any increase or decrease in the estimated fair value of the company’s warrants or earnout shares. We define and calculate Adjusted EBITDA as net income (loss) before the impact of interest income or expense, income tax expense and depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, and certain other non-cash and non-core items, as described in the reconciliation included in the appendix to this presentation. Adjusted EBITDA excludes certain expenses that are required in accordance with U.S. GAAP because they are non-recurring (for example, in the case of transaction-related costs), non-cash (for example, in the case of depreciation, amortization and stock-based compensation) or are not related to our underlying business performance (for example, in the case of interest income and expense). Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenue. We include these non-GAAP financial measures because they are used by management to evaluate Fathom’s core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. 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. Disclaimers


Slide 3

Q2 2022 Highlights 1 Adjusted EBITDA is a non-GAAP financial measure. Reconciliations of Non-GAAP financial measures are included in the Appendix. Total Orders: $39.7 million Revenue: $42.0 million Adjusted EBITDA1: $8.7 million Fathom delivered profitable growth in Q2 amid downshift in macro environment


Slide 4

Optimization Plan to Drive Future Results Enhance Production Efficiencies and Capabilities Transfer Oakland CNC operations and majority of Additive business to Hartland Create Silicon Valley technology center to showcase new additive technologies Consolidate and Expand Texas Footprint Open greenfield CNC site in Austin, TX Consolidate nearby sites Accelerate “One Fathom” Operating Platform Transition leadership Create accounting shared service organization Accelerating profitable growth Implement activities to enhance efficiencies, consolidate footprint and increase scale Anticipate annualized pre-tax cost savings totaling approximately $5.5 million Projected restructuring charges expected to total approximately $2.0 million


Slide 5

Q2 2022 Revenue 1 Pro forma revenue is a non-GAAP financial measure. Calculation of Q2 2021 pro forma revenue is included in the Appendix. Revenue growth of 17% driven by acquisition-related activity and growth in strategic accounts Fathom completed four acquisitions in Q2 2021 focused on CNC Machining Q2 2022 revenue over Q2 2021 pro forma revenue1 increased 9.4% with growth in all four key product lines; double-digit growth achieved in Precision Sheet Metal and CNC Machining +17.0% +24.3%


Slide 6

Q2 2022 Adjusted EBITDA1 1 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. Reconciliation of GAAP net income (loss) to Adjusted EBITDA is included in the Appendix. Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenue. Q2 2022 Adjusted EBITDA increased 16.1% to $8.7 million SG&A increased to $11.6 million primarily due to the incurrence of public company expenses Sequentially, SG&A declined over 21% Public company costs totaled ~$2.4 million versus ~$3.6 million in Q1 2022 Q2 2022 Adjusted EBITDA margin1 was 20.6%; up 540 basis points sequentially -2.2% +16.1%


Slide 7

Liquidity and Cash Flow Availability Liquidity ($ in millions) 6/30/2022 Term debt $123.4 Secured revolving credit facility $27.0 Gross debt $150.4 Cash and cash equivalents $11.1 Net debt $139.3 Undrawn revolver commitments $23.0 Available liquidity $34.1 Cash Flow Summary ($ in millions) Q2 2022 Net cash provided by operations $3.3 Capital expenditures $3.3 Available liquidity totaled $34.1 million as of 6/30/2022 Includes one-time, non-operational payments totaling ~$5 million Net debt totaled $139.3 million as of 6/30/2022 Net cash provided by operations totaled $3.3 million Capital expenditures were $3.3 million in Q2 2022


Slide 8

Financial Guidance 1 Source: Fathom’s full year 2022 forecast, as of August 15, 2022, reflects first half results, management projections and macroeconomic outlook. 2 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. See Appendix for a reconciliation of GAAP net income (loss) to Adjusted EBITDA. Adjusted EBITDA margin represents Adjusted EBITDA divided by total revenue. ($ in millions) Current Outlook1 Full Year 2021 Revenue $165.0 - $171.0 $152.2 Adjusted EBITDA2 $32.0 - $36.0 $34.4 Full Year 2022 Forecast Key Takeaways Projected annual revenue growth of approximately 8% to 12% Adjusted EBITDA2 expected to grow approximately (7%) to 5% Adjusted EBITDA margin2 expected to range between 19.4% and 21.1% Annual guidance excludes the impact of unannounced future acquisitions


Slide 9

Summary 1 Reconciliations of non-GAAP financial measures to the most comparable GAAP measures are included in the Appendix. Q2 revenue growth of 17.0%, or 9.4% organic1, demonstrates positive business fundamentals 1 2 4 5 3 Adjusted EBITDA1 of $8.7 million up 16.1% from prior year period and 40.3% sequentially Maintain focus on expanding best-in-class offerings and deleveraging balance sheet Leverage resilient business model to deliver continued growth despite macro headwinds Launched reorganization plan to accelerate profitable growth


Slide 10

Appendix


Slide 11

Income Statement 1 See reconciliation of GAAP net income (loss) to adjusted net income (loss) in the Appendix.   Reported Three Months Ended   Reported Six Months Ended ($ in thousands) 6/30/2022 6/30/2021   6/30/2022 6/30/2021 Revenue $41,985 $35,872   $82,526 $66,406 Cost of revenue $26,437 $22,376   $54,981 $39,499 Gross profit $15,548 $13,496   $27,545 $26,907             Selling, general, and administrative (SG&A) $11,617 $8,760   $26,381 $16,430 Depreciation and amortization $4,452 $2,535   $8,968 $5,207 Total operating expenses $16,069 $11,295   $35,349 $21,637             Operating income (loss) ($521) $2,201   ($7,804) $5,270             Interest expense $1,858 $2,310   $3,332 $4,424 Other expense (income), net ($35,979) $3,904   ($63,028) $5,350             Income (loss) before taxes $33,601 ($4,013)   $51,892 ($4,504)             Income tax expense (benefit) ($378) $69   $79 $78             Net income (loss) $33,979 ($4,082)   $51,813 ($4,582)             Adjusted net income (loss)1 $1,192 $310   ($769) $2,370


Slide 12

Revenue By Product Line   Reported Three Months Ended   Reported Six Months Ended ($ in thousands) 6/30/2022 % Revenue 6/30/2021 % Revenue % Change   6/30/2022 % Revenue 6/30/2021 % Revenue % Change Revenue By Product Line                       Additive manufacturing $4,410 10.5% $4,302 12.0% 2.5%   $8,559 10.4% $8,842 13.3% -3.2% Injection molding $7,093 16.9% $6,492 18.1% 9.3%   $13,908 16.8% $13,129 19.8% 5.9% CNC machining $14,584 34.7% $11,072 30.9% 31.7%   $27,910 33.8% $15,903 23.9% 75.5% Precision sheet metal $14,751 35.1% $12,093 33.7% 22.0%   $29,434 35.7% $25,210 38.0% 16.8% Other revenue $1,147 2.7% $1,913 5.3% -40.0%   $2,715 3.3% $3,322 5.0% -18.3% Total $41,985 100% $35,872 100% 17.0%   $82,526 100% $66,406 100% 24.3%


Slide 13

Reconciliation of GAAP Q2 2021 Revenue to Q2 2021 Pro Forma Revenue1 ($ in thousands) Q2 2021 GAAP Revenue $35,872 Q2 2021 Acquisitions revenue2 2,521 Pro forma revenue $38,393 1 Pro forma revenue is a non-GAAP financial measure. 2 As described in Fathom’s 2021 Annual Report on Form 10-K, during Q2 2021, Fathom completed the acquisitions of Centex Machine and Welding, Inc., Laser Manufacturing, Inc. and Sureshot Precision, LLC d/b/a Micropulse West and Precision Process, LLC. Information gives pro forma effect to the Q2 2021 Acquisitions as though such transactions occurred on January 1, 2021.


Slide 14

Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income (Loss) ($ in thousands) Q2 2022 Q2 2021 1H 2022 1H 2021 Net income (loss) $33,979 ($4,082) $51,813 ($4,582) Acquisition expenses1 - 2,876 - 4,045 Stock compensation 1,796 - 3,926 - Inventory step-up amortization - - 3,241 277 Change in fair value of warrant liability2 (12,500) - (20,600) - Change in fair value of earnout share liability2 (22,930) - (41,900) - Change in fair value of tax receivable agreement (TRA) (200) - (200) - Integration, non-recurring, non-operating, cash, and non-cash costs3 1,047 1,516 2,951 2,630 Adjusted net income (loss) $1,192 $310 ($769) $2,370 1 Represents expenses incurred related to business acquisitions; 2 Represents the impacts from the change in fair value related to both the earnout share liability and the warrant liability associated with the business combination completed on December 23, 2021; 3 Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for new acquisitions, severance, and management fees paid to our principal owner.    


Slide 15

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA   ($ in thousands) Q2 2022 Q2 2021   1H 2022 1H 2021     Net income (loss) $33,979 ($4,082)   $51,813 ($4,582)     Depreciation and amortization 5,996 4,099   12,204 7,625     Interest expense, net 1,858 2,310   3,332 4,424     Income tax expense (378) 69   79 78     Acquisition expenses1 - 2,876   - 4,045     Inventory step-up amortization - -   3,241 277     Stock compensation 1,796 -   3,926 -     Change in fair value of warrant liability2 (12,500) -   (20,600) -     Change in fair value of earnout share liability2 (22,930) -   (41,900) -     Change in fair value of tax receivable agreement (TRA) (200) -   (200) -     Contingent consideration3 - (1,355)   - (1,355)     Loss on extinguishment of debt4 - 2,031   - 2,031     Integration, non-recurring, non-operating, cash, and non-cash costs5 1,047 1,516   2,951 2,630     Adjusted EBITDA $8,668 $7,464   $14,846 $15,173   1 Represents expenses incurred related to business acquisitions; 2 Represents the impacts from the change in fair value related to both the earnout share liability and the warrant liability associated with the business combination completed on December 23, 2021; 3 Represents the change in fair value of contingent consideration payable to former owners of acquired businesses; 4 Represents amounts paid to refinance debt in April of 2021; 5 Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for new acquisitions, severance, and management fees paid to our principal owner.


Slide 16

 



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