Fathom Digital Manufacturing Corporation Class A

Manufacturing Earnings Conference Call. This call is being recorded and a replay will be available later today. After the company's presentation, there will be a Q&A session with the instructions to follow at that time. I would now like to turn the call over to Michael Simonyi, Fathom's Director of Investor Relations.

Thank you, Carla, and good morning, everyone. Welcome to Fathom's second quarter 2023 earnings conference call. Before we begin, I'd like to mention that today's presentation and earnings press release are available on Fathom's website at fathommfg.com, where you'll also find links to our SEC filings along with other important information about our company. Turning to slide two, we note this presentation contains forward-looking statements within the meaning of the Securities Exchange Act. We encourage you to read the risk factors contained in our filings with the SEC and understand that forward-looking statements are only estimates of future performance and should be taken as such. We also note today's presentation includes non-GAAP financial measures to describe the way in which we manage and operate our business. We reconcile these measures to be comparable GAAP measures, and you are encouraged to examine those reconciliations which are found in the appendix to our press release and presentation. With us today are Ryan Martin, Fathom's CEO, and Mark Frost, our CFO. I will now turn the call over to Ryan.

Thanks, Michael, and welcome everyone to Fathom's second quarter 2023 conference call. I'll begin my remarks on slide three, where we provide our Q2 highlights. Our performance for the quarter was in line with management's expectations as we continue to benefit from the ongoing execution of our optimization plan while further building our orders momentum in a challenging macro environment. In Q2, we generated orders totaling $38 million, up approximately 10% on a sequential basis, contributing to revenue of $34.5 million and expanding our backlog of new business. As a reminder, shipments for new orders, especially on the production side of the business, often extend over several quarters depending on the size and order type. Additionally, our adjusted EBITDA totaled $4.8 million, representing a margin of 14%, a notable improvement on a sequential basis. We continue to work closely with enterprise-level customers seeking a unified digital manufacturing partner with comprehensive capabilities and deep technical expertise to help them iterate faster and reduce time to market while creating a more efficient and responsive supply chain. As discussed on our previous call, we have renewed our focus on strengthening our go-to-market efforts under new leadership. Our vice president of sales, Kurt Bork, has been fully onboarded after joining the company in Q1, and I'm excited how our commercial team has steadily ramped up their activities. We continue to focus our commercial efforts on two primary areas, new product innovation, or MPI, and production. to help ensure greater alignment between our processes and resources and boost new orders through more effective and dedicated account teams. In furthering our commitment to build a proven and experienced management team to drive future results, we recently appointed Doug Beaton as Fathom's Chief Operating Officer, effective September 5th. Doug brings more than 25 years of leadership experience in the global industrials industry. having most recently served as the chief operating officer at a capital equipment manufacturer with multiple business units serving the medical, semiconductor, and aerospace markets. Doug also served in leadership capacities at Thermo Fisher Scientific, Danaher Corporation, and GE. In this newly created position, Doug will serve as a key member of our leadership team responsible for the day-to-day operational aspects of Fathom's national manufacturing footprint and delivering operational excellence throughout the business. He'll play a critical role in supporting our profitable growth objectives and we're thrilled to welcome someone with Doug's extensive operational expertise and proven track record of driving EBITDA growth while instilling a cohesive, high-performance operating culture. On slide four, we highlight some of our key business wins during the second quarter and year to date as we maintain our focus on accelerating customer engagement and increasing our orders momentum. The medical space has remained steady with a $1.8 million order from a new strategic customer that delivers innovative MRI technology for live diagnosis and treatment at the point of care. Additionally, our unique managed services business continues to outperform following a new $2.5 million order from an existing global technology customer. We also achieved new wins across a diverse range of other key end markets, including EV, semiconductor, and robotics, underscoring our differentiated approach utilizing 25-plus manufacturing processes, fast engineering services, and support systems to meet our customers' specific needs. And while not on this slide, we secured an initial order of approximately $400,000 following the recent approval as a certified production supplier for a leading manufacturer of thermal solutions for the EV industry, providing an important competitive advantage for Fathom. As a result, we believe this account has the opportunity to grow orders volumes into the multi-millions over the long term. As we have mentioned in the past, a core strength of the Fathom platform is its entrenched relationships with enterprise-level customers, which provide attractive recurring revenue streams given our strong retention rate of approximately 90%. By partnering with Fortune 500-tier companies, working with them across multiple sites, and developing multiple contacts within each company, we have shown a consistent ability to grow our revenues from strategic accounts since going public, despite overall lower volumes. During this time, we have also increased the number of strategic customers by approximately 8% as our performance among our strategic enterprise-level accounts continues to remain stable. As our commercial activities continue to gain traction based on these positive indicators, we held a customer event last month at our new Silicon Valley Technology Center, which opened in Q1. The event focused on our new Evolve Step technology and was attended by approximately 20 existing prospective customers representing a premier group of the world's class companies in consumer electronics, technology, EV, autonomous vehicles, alternate energy, and more. Attendees were able to learn firsthand how this disruptive additive solution produces high quality thermoplastic ABS parts with broad application from prototyping all through to production at high speeds, dramatically reducing lead times compared to traditional injection molding tools and parts. We're encouraged by the positive orders momentum from this event as we maintain our focus on expanding our share of wallet with strategic customers and aligning new corporate accounts. I will now turn the call over to Mark.