Metal desk (DM -7.95%) is expected to release its second quarter 2022 results after market close on Monday, August 8. A conference call with analysts is scheduled for the same day at 4:30 p.m. ET.
3D printing company 3D systems also plans to release its report after the August 8 closing bell, while Stratasys is on deck before the market opens on Wednesday August 3rd. (Click to read 3D Systems Earnings Snapshot and Stratasys Earnings Snapshot.)
Investors will likely approach Desktop Metal’s upcoming report with caution. Shares fell 61% after last quarter’s report was released. The main catalyst was likely the company’s announcement of a $150 million offering of convertible senior notes due 2027. Its high rate of cash burn necessitated this offering and continued apace. quickly in the first trimester. A related issue is shareholder dilution, as the company has issued new shares to help fund some of its acquisitions.
Some investors are also increasingly worried about the growth prospects of the P-50 production system, as we will see in a moment. This unease could have intensified after the company recently announced the resignation of its chief financial officer. Such an event could be meaningless or be a negative sign.
Here’s what to watch for in Desktop Metal’s upcoming Q2 report.
Desktop Metal key figures
|Metric||Q2 2021 result||Wall Street consensus estimate for Q2 2022||The Projected Change of Wall Street|
|Revenue||$19.0 million||$54.7 million||188%|
|Adjusted earnings per share||($0.10)||($0.08)||(25%)|
The reportable quarter will be the second quarter in which revenue receives a full quarter boost from the company’s acquisition of ExOne, which took place in November. Revenue will also benefit from other acquisitions. The company hasn’t provided organic revenue results on a quarterly basis, so investors likely won’t know how much revenue was generated from acquisitions made in the past year.
For context, in the first quarter Desktop revenue jumped 286% year-over-year to $43.7 million. This result included a full quarter of contribution from ExOne and contributions from other acquisitions. Adjusted for non-recurring items, net loss was $43.4 million, or $0.14 per share, compared to net income of $7 million, or $0.03 per share, at same period last year.
In the first quarter, Desktop used $56.3 million for its operations, compared to $41.1 million the year before. It ended the first quarter with $206.5 million in cash, cash equivalents and short-term investments. This figure is before cash received from the $150 million convertible senior note offering.
Cash consumption should continue to be the number one priority for investors. Liquidity will be even more important than usual if the US economy slides into recession. If this happens, many industrial companies will reduce their orders, including 3D printers.
In February, Desktop delivered its first P-50 to Stanley Black & Decker. The P-50 is its flagship 3D printing system for mass production of end-use metal parts.
Although it is still in its infancy, some investors are no doubt concerned about the market’s reception of this product, the launch of which has been postponed several times over the past few years.
Any notable changes to Desktop Metal’s forecast for 2022 would likely move the stock. Here is its current annual outlook:
- Revenues of approximately $260 million, representing annual growth of 131%.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately negative $90 million. In 2021, Adjusted EBITDA was negative $96.1 million, so management expects this loss to narrow by approximately 6%.