Desktop Metal has announced workforce reductions of 12% and a consolidation of its global facilities footprint to ‘simplify its operational structure, reduce expenses and support continued revenue growth.’
The company says the developments will result in approximately $40 million of annualised run rate non-GAAP cost savings, $20m of which is to take place in the second half of 2022, and at least $100m of aggregate cost savings over the next 24 months. Staff in the US are being informed of how the layoffs will impact them today, with the company continuing to review international workforce changes – the timing of which will vary according to local regulatory requirements.
Desktop Metal’s ‘strategic integration and cost optimisation initiative’ follows several strategic acquisitions which were made throughout 2021, including takeovers of ExOne, Aidro, EnvisionTEC, Aerosint and Adaptive3D. The initiative has been enacted to align the operational structure of Desktop Metal and its acquired portfolio of brands under the company’s corporate umbrella - engineering, manufacturing, finance, legal, human resources and customer service will now be fully consolidated under Desktop Metal.
The company says the initiative will allow a tighter focus on products and development programmes that ‘prioritise near-term revenue and margin expansion across high-growth applications,’ while customers of the aforementioned brands – as well as divisions like Forust and Desktop Health – will ‘benefit from improved responsiveness and quality of support.’
“In 2021, we demonstrated significant growth, expanding our portfolio of products into new markets and innovative materials,” commented Ric Fulop, Founder and CEO of Desktop Metal. “While the acquisitions we completed in 2021 contributed to this growth and to our total market opportunity as we focused initially on harvesting product and go-to-market synergies, they also increased our cost base and global facilities footprint. Today’s announcement of our strategic integration and cost optimisation initiative is the result of a comprehensive portfolio and business operations review conducted across all functions at Desktop Metal.
“As outlined on prior financial results calls, we have been focused on identifying opportunities to optimise our expense structure while maintaining our growth opportunities. We believe this initiative, which builds on steps we began to take in the second half of 2021 to integrate our teams, positions Desktop Metal to meet our near- and long-term financial commitments and supports our path to profitability.
“We look forward to combining industry leading innovation with disciplined cost management to drive value for shareholders as we continue our mission to achieve a double-digit share of the rapidly growing additive manufacturing market by the end of the decade. We value the dedicated team at Desktop Metal, including our departing colleagues, for all their hard work and contributions towards this goal.”
As of March 31, 2022, Desktop Metal had over $317 million in cash, cash equivalents, and short-term investments on an as-adjusted basis after giving effect to the receipt of proceeds from the offering of $115 million aggregate principal amount of convertible notes in May 2022 (less the initial purchasers’ discounts, and commissions and our estimated offering expenses).
Desktop Metal estimates it will incur one-time termination benefits and associated costs related to the strategic integration and cost optimisation initiative of approximately $14.0 million, of which approximately $11.0 million are expected to be incurred in the second quarter of 2022 and the remaining approximately $3.0 million are expected to be incurred by the end of 2023. Desktop Metal estimates that $6.2 million of these charges will result in future cash expenditures. Lease termination costs associated with the initiative have yet to be determined, pending completion of a facility rationalisation assessment. Desktop Metal anticipates that the initiative will be substantially complete by the end of 2023.
