Fathom Digital Manufacturing financials show 133% revenue growth

On-demand manufacturing service provider Fathom Digital Manufacturing (FTHM) revealed that its revenue increased by 133.1% in the fourth quarter of 2021.

Fathom’s first financials since its NYSE listing reveal it generated $44.3 million in revenue during the fourth quarter of 2021, more than double the $19 million it brought in during the fourth quarter. quarter of 2020. According to the company’s CEO, Ryan Martin, this rapid growth was due to “increased penetration among its existing base”, as well as the acquisition of several new customers, which together generated “multiple orders from several millions of dollars”.

“Fathom’s strong fourth quarter and full year 2021 financial results reflect growing demand for our comprehensive on-demand digital manufacturing services,” Martin said. “Our scalable, technology-independent platform for prototyping and low-to-mid-volume production uniquely positions Fathom to accelerate new product development and manufacturing innovation, for some of the largest and most most innovative in the world.”

Fathom’s revenue growth in the fourth quarter was largely driven by CNC machining, but it also expects strong growth for its other services. Photo via Fathom Digital Manufacturing.

Fathom’s Financial Results for the Fourth Quarter of 2021

Broadly, Fathom reports revenue across five key product segments: Additive Manufacturing, Injection Molding, CNC Machining, Precision Sheet Metal, and “Other Revenue.” During the fourth quarter of 2021, the company’s best-performing division was CNC machining, which brought in $14.2 million, or 32% of its total.

This 5.7-fold increase from the fourth quarter of 2020 was largely due to the five CNC Machining acquisitions Fathom made in fiscal 2021, although its chief financial officer Mark Frost was keen to point out during his call for results that even without these agreements, its overall revenue still grew 18.4% on an organic basis in the quarter, due to its strong demand for services and the execution of its growth strategy.

The company’s second-highest revenue generator in Q4 2021 was precision sheet metal, which brought in $13.9 million, about 138% more than Q4 2020, followed by injection molding. $9 million and additive manufacturing at $4.5 million. Frost added on the call that the first two segments benefited from an “upswing in shipments” during the quarter, due to the realization of cross-selling opportunities.

Elsewhere, on the profitability front, Martin explained that the company encountered purchase accounting implications, as well as on-site change and supply chain issues throughout fiscal 2021. , which affected its gross margins. However, Fathom’s CEO also pointed out that it was “already addressing these factors” and its adjusted EBITDA grew to $10.5 million in Q4 2021, representing an adjusted margin of 23.8%.

Finance ($) Q4 2020 Q4 2021 Difference (%) FISCAL YEAR 2020 FISCAL YEAR 2021 Difference (%)
Income 19m 44.3m +133.1 61.2m 152.2m +148.7
Net Income/Net Loss -6.9m 21m +404.3 -8m 13m +262.5
Adjusted EBITDA 1.5m 10.5m +600 11.2m 34.4m +207.1
Adjusted EBITDA (%) 7.9 23.8 +201.3 18.3 22.6 +23.5

Expansion into lucrative vertical markets

On Fathom’s earnings call, Martin revealed that he recently attracted four large orders from existing customers, as well as two new ones, reflecting how his services continue to grow in popularity among “customers of first order,” and highlighted how they’re helping those operating in a “diversity of end markets” improve their supply chain agility.

Likely due to NDAs, Martin did not reveal the identities of these customers, but explained that transactions from existing accounts brought in $20.9 million in orders, while his new accounts could bring in $10.2 million. extra dollars. Again, without giving too much away, the Fathom CEO also said these customers come from the high-growth sectors of medicine, electric vehicles and robotics, making their growing custom a promising development.

Going forward, while the company hasn’t ruled out new acquisitions, Martin said on the call that “organic growth is its biggest opportunity.” Citing the example of a semiconductor manufacturer his company worked with during the fourth quarter, he explained how he transitioned from using Fathom’s CNC machining to 3D printing services, and it could also serve as a model for entering other “fast-growing end markets”.

“What we’re hearing from these large enterprise customers is that they have a lot of challenges in their supply chains and are looking to unify their suppliers,” added Martin. “It’s an incredible growth opportunity for us, and that’s why we’re focusing on large enterprise customers, because we know they have complex manufacturing needs, they have significant spend, and that’s is truly a handy fruit for us.”

“We have several customer examples that we’ve introduced to Fathom’s broader manufacturing platform and capabilities.”

A set of integrated circuit boards.
Fathom hailed the growing adoption of its services in lucrative areas such as the semiconductor industry. Photo via Magnascan, Pixabay.

Growth driven by 3D printing in sight in 2022?

Along with its financials, Fathom released fiscal 2022 revenue forecasts of $182 million to $192 million, which, if realized, would represent up to 26.1% annual growth. Although the first quarter is generally a slow quarter for the company, it expects demand for its higher-margin additive manufacturing and injection molding offerings to grow as the year progresses. why it set a projected adjusted EBITDA of $40-45 million.

In terms of cash, although it raised $80 million through its SPAC merger last year, Fathom ended fiscal 2021 with $20.1 million in cash and cash equivalents as a result of its merger and acquisition last year. That being said, Fathom still has $23 million to draw on on a $50 million revolving credit facility, and in his closing remarks, Martin declined to rule out making further acquisitions to drive growth in 2022.

“We continue to see a lot of opportunity in the area of ​​mergers and acquisitions. For us, it’s about delivering a differentiated customer experience, as we review potential acquisition opportunities,” Martin concluded. have a proven track record of identifying, acquiring, integrating and growing acquisitions, so we plan to continue to focus on that.”

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The featured image shows a selection of 3D printers from Fathom’s extensive technology offering. Photo via Fathom Digital Manufacturing.