Fathom Digital Manufacturing Reports Fourth Quarter and Full

Fathom Digital Manufacturing Reports Fourth Quarter and Full Year 2022 Preliminary Unaudited Financial Results

Financial Disclosure Disclaimer

Fathom has not yet completed its reporting process for the three and twelve months ended December 31, 2022. The company expects to submit a notification of late filing on Form 12b-25 with the SEC on March 31, 2023. The preliminary unaudited results presented herein are based on Fathom’s reasonable estimates and the information available at this time. The amounts reported herein are subject to various adjustments that are still under review and relate specifically to potential changes in the provision for income taxes. Such adjustments may be material and could impact the results reported herein.

Consolidated Balance Sheets (preliminary unaudited)

($ in thousands)	Period Ended
	December 31, 2022		December 31, 2021
Assets
Current assets
Cash	$	10,713	$	20,357
Accounts receivable, net		28,641		25,367
Inventory		15,718		13,165
Prepaid expenses and other current assets		3,588		1,836
Total current assets		58,660		60,725
Property and equipment, net		47,703		44,527
ROU Lease Assets - operating		10,312		-
ROU Lease Assets - financing		2,253
Intangible assets, net		251,412		269,622
Goodwill		-		1,189,464
Other non-current assets		175		2,036
Total assets	$	370,515	$	1,566,374
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable		7,982		9,409
Accrued expenses		8,176		5,957
Current operating lease liability		2,174		-
Current finance lease liability		200		-
Other current liabilities		4,128		2,748
Contingent consideration		700		29,697
Current portion of debt		42,744		2,058
Total current liabilities		66,104		49,869
Long-term debt, net		114,327		120,491
Fathom earnout shares liability		5,960		64,300
Sponsor earnout shares liability		930		9,380
Warrant liability		2,780		33,900
Payable to related parties pursuant to the tax receivable agreement (includes $5,200 and $4,600 at fair value, respectively)		25,360		4,600
Long-term contingent consideration		-		850
Noncurrent operating lease liability		8,958		-
Noncurrent finance lease liability		2,125
Deferred tax liability		-		17,570
Other noncurrent liabilities		-		4,655
Total liabilities		226,544		305,615
Commitments and Contingencies:
Redeemable non-controlling interest in Fathom OpCo		101,911		841,982
Shareholders' Equity:
Class A common stock, $0.0001 par value; 300,000,000 shares authorized; issued and outstanding 65,808,764 and 50,785,656 shares as of December 31, 2022 and December 31, 2021, respectively		7		5
Class B common stock, $0.0001 par value; 180,000,000 shares authorized; issued and outstanding 70,153,051 and 84,294,971 shares as of December 31, 2022 and December 31, 2021, respectively		7		8
Additional paid-in-capital		577,599		466,345
Accumulated other comprehensive loss		(107)		-
Accumulated deficit		(535,446)		(47,581)
Shareholders’ equity attributable to Fathom Digital Manufacturing Corporation		42,060		418,777
Total Liabilities, Shareholders’ Equity, and Redeemable Non-Controlling Interest	$	370,515	$	1,566,374

Consolidated Statements of Comprehensive Income (Loss) (preliminary unaudited)

	Three Months Ended				Twelve Months Ended
($ in thousands)	December 31, 2022		December 31, 2021		December 31, 2022		December 31, 2021

Revenue	$	38,402	$	44,309	$	161,141	$	152,196
Cost of revenue		28,417		26,923		108,623		93,003
Gross profit		9,985		17,386		52,518		59,193
Operating expenses
Selling, general, and administrative		11,528		13,529		49,869		40,640
Depreciation and amortization		4,584		3,418		18,179		10,773
Restructuring		926		-		1,897		-
Goodwill Impairment		122,954		-		1,189,518		-
Total operating expenses		139,992		16,947		1,259,463		51,413
Operating (loss) income		(130,007)		439		(1,206,945)		7,780
Interest expense and other (income) expense
Interest expense		3,355		4,514		9,015		13,314
Other expense		50		12,308		350		21,315
Other income		(10,389)		(37,419)		(99,160)		(40,634)
Total interest expense and other (income) expense, net		(6,984)		(20,597)		(89,795)		(6,005)
Net income (loss) before income tax		(123,023)		21,036		(1,117,150)		13,785
Income tax (benefit) expense		(8,147)		(4,018)		(7,979)		(3,211)
Net income (loss)		(114,876)		25,054		(1,109,171)		16,996

Q4 2022 Revenue by Product Line (preliminary unaudited)

	Reported Three Months Ended
($ in thousands)	12/31/2022	Percentage	12/31/2021	Percentage	% Change
Revenue By Product Line
Additive manufacturing	$3,204	8.3%	$4,514	10.2%	-29.0%
Injection molding	$5,318	13.8%	$9,032	20.4%	-41.1%
CNC machining	$14,947	38.9%	$14,196	32.0%	5.3%
Precision sheet metal	$12,154	31.6%	$13,855	31.3%	-12.3%
Other revenue	$2,779	7.2%	$2,712	6.1%	2.5%
Total	$38,402	100.0%	$44,309	100.0%	-13.3%

Full Year 2022 Revenue by Product Line (preliminary unaudited)

	Reported Twelve Months Ended
($ in thousands)	12/31/2022	Percentage	12/31/2021	Percentage	% Change
Revenue By Product Line
Additive manufacturing	$14,917	9.3%	$17,830	11.7%	-16.3%
Injection molding	$25,210	15.6%	$28,892	19.0%	-12.7%
CNC machining	$58,388	36.2%	$43,149	28.4%	35.3%
Precision sheet metal	$55,307	34.3%	$53,445	35.1%	3.5%
Other revenue	$7,319	4.5%	$8,880	5.8%	-17.6%
Total	$161,141	100.0%	$152,196	100.0%	5.9%

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

	Three Months Ended				Twelve Months Ended
($ in thousands)	12/31/2022		12/31/2021			12/31/2022		12/31/2022
Net income (loss)	$	(114,876)	$	25,054	$	(1,109,171)	$	16,996
Acquisition expenses ⁽¹⁾		-		-		-		4,045
Transaction costs ⁽²⁾		-		12,515		-		12,515
Stock compensation		1,699		-		7,386		-
Inventory step-up amortization		-		-		3,241		-
Goodwill impairment		122,954		-		1,189,518		-
Restructuring		901		-		1,897		-
Change in fair value of warrant liability ⁽³⁾		(3,120)		(8,200)		(31,120)		(8,200)
Change in fair value of earnout shares liabilities ⁽³⁾		(6,810)		(27,260)		(66,790)		(27,260)
Change in fair value of tax receivable agreement (TRA) liability ⁽³⁾		(400)		300		(600)		300
Integration, non-recurring, non-operating, cash, and non-cash costs ⁽⁴⁾		1,337		(5,309)		4,780		-
Adjusted net income (loss)	$	1,685	$	(2,900)	$	(859)	$	(1,604)

¹ Represents expenses incurred related to business acquisitions; ² Represents legal, consulting, and auditing costs associated with the business combination completed on December 23, 2021; ³ 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; ⁴ Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for new acquisitions, severance, charges for the increase of fair value of inventory related to acquisitions, and management fees paid to our principal owner during the predecessor period.

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA (preliminary unaudited)

	Three Months Ended				Twelve Months Ended
($ in thousands)		12/31/2022		12/31/2021		12/31/2022		12/31/2021
Net income (loss)	$	(114,876)	$	25,054	$	(1,109,171)	$	16,996
Depreciation and amortization		6,357		4,612		24,896		16,618
Interest expense, net		3,277		4,514		9,015		13,314
Income tax expense (benefit)		(8,146)		(4,018)		(7,979)		(3,211)
Acquisition expenses ⁽¹⁾		-		-		-		4,045
Transaction costs ⁽²⁾		-		12,515		-		12,515
Stock compensation		1,699		-		7,386		-
Inventory step-up amortization		-		-		3,241		-
Goodwill impairment		122,954		-		1,189,518		-
Restructuring		901		-		1,897		-
Change in fair value of warrant liability ⁽³⁾		(3,120)		(8,200)		(31,120)		(8,200)
Change in fair value of earnout shares liability ⁽³⁾		(6,810)		(27,260)		(66,790)		(27,260)
Change in fair value of tax receivable agreement (TRA) liability ⁽³⁾		(400)		300		(600)		300
Loss on extinguishment of debt ⁽⁴⁾		-		-		-		2,031
Contingent consideration ⁽⁵⁾		(148)		(2,430)		(148)		(3,550)
Integration, non-recurring, non-operating, cash, and non-cash costs ⁽⁶⁾		1,337		5,444		4,780		10,753
Adjusted EBITDA	$	3,025	$	10,531	$	24,925	$	34,351

¹ Represents expenses incurred related to business acquisitions; ² Represents legal, consulting, and auditing costs associated with the business combination completed on December 23, 2021; ³ 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; ⁴ Represents amounts paid to refinance debt in April of 2021; ⁵ Represents the change in fair value of contingent consideration payable to former owners of acquired businesses; ⁶ Represents adjustments for other integration, non-recurring, non-operating, cash, and non-cash costs related primarily to integration costs for new acquisitions, severance, charges for the increase of fair value of inventory related to acquisitions, and management fees paid to our principal owner during the predecessor period.

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