Desktop Metal to reduce workforce by 12% as part of strategic initiative
June 13, 2022
Desktop Metal, Boston, Massachusetts, USA, has announced a strategic integration and cost-optimisation initiative which will include an approximate 12% reduction of its global workforce, consolidation of facilities, and a more focused approach on products with potential for more immediate return on investments. These changes are projected to result in approximately $40 million of annualised run rate non-GAAP cost savings – $20 million of which is to take place in the second half of 2022 – and at least $100 million of aggregate cost savings for the company over the next twenty-four months.
“In 2021, we demonstrated significant growth, expanding our portfolio of products into new markets and innovative materials,” stated 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.”
One element of the initiative is aligning the operational structure of Desktop Metal and its acquired portfolio of brands under the company’s corporate umbrella. Key functions such as engineering, manufacturing, marketing, finance, legal, human resources and customer service will now be fully consolidated under Desktop Metal.
The growing number of customers of those brands – e.g., Desktop Health, ETEC, and ExOne, as well as Adaptive3D, Aerosint, Aidro, Desktop Labs, Figur and Forust – are expected to benefit from improved responsiveness and quality of support from 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,” Fulop added. “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.”
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 estimated offering expenses).
The company estimates it will incur one-time termination benefits and associated costs related to the downsizing initiative of approximately $14 million, of which approximately $11 million are expected to be incurred in the second quarter of 2022 and the remaining approximately $3 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.
“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.”
Desktop Metal anticipates that the initiative will be substantially complete by the end of 2023.