According to a story that we first saw on MarketWatch, authored by WSJ journalist Will Feuer, production AM hardware manufacturer Desktop Metal will lay off 160 staff, which is about 12% of its current workforce, as it seeks to control costs after a string of acquisitions last year.
While Desktop Metal acquired several young startups (Aerosint, Meta Additive, Forust) and smaller strategic companies (Aidro) to further develop their technologies and applications know-how, the main redundancies are likely to be found in the larger acquisition, ExOne and EnvisionTEC (rebranded ETEC), as the company has been implementing a streamlining strategy along with brand coordination.
According to Feuer, the company, which offers additive manufacturing technologies focused on the production of end-use parts, said it expects to take a one-time charge tied to termination benefits of about $14 million, most of which are expected in the second quarter of 2022. That doesn’t include lease-termination costs, the company said.
While it is true that Desktop Metal stocks have lost over 80% of their value since the initial listing (via SPAC merger), and is very far from its peak value of $31 (something not entirely uncommon for 3D printing-related stocks, which are among the most volatile that exist), such cost reduction initiatives are likely relatively standard consequence of a very complex merger, between multiple companies operating in the same or similar segments.
Desktop Metal said it expects its cost-optimization plan to be substantially complete by the end of 2023. The plan is expected to result in about $40 million of annualized run-rate adjusted cost savings, and at least $100 million of aggregate cost savings over the next 24 months.
Desktop Metal Chief Executive Ric Fulop said the company’s 2021 acquisitions increased its cost base and global facilities footprint. He said the optimization plan is the result of a comprehensive operations review.
The company is still reviewing international workforce changes, it said, though the impact to the US workforce will be announced to employees Monday. As of March 31, Desktop Metal had more than $317 million in cash, cash equivalents and short-term investments, the company said.