Massachusetts-based industrial 3D printer manufacturer Desktop Metal (DM) has announced a $50 million cost-reduction plan which will see the company reduce its workforce by 20%.
DM hopes that these actions will align its cost structure to current market dynamics. The majority of the $50 million annualized cost savings are expected to be realized by the end of the month.
This decision follows the termination of Stratasys’ deal to acquire Desktop Metal in September 2023, which saw 78.6% of Stratasys’ shareholders vote against the proposed merger. Following the collapse of the deal, Desktop Metal CEO Ric Fulop outlined that the company’s plans to “lower operating costs” and “generate revenue” were on track.
The $50 million cost reduction plan forms part of a broader strategic business review, and other cost-cutting actions. These include continued consolidation of facilities and product rationalization, aimed at accelerating the company’s path to profitability amidst what the company has called “a downturn in the additive manufacturing industry.” DM achieved $100 million savings in 2023 after implementing cost reductions.
“The cost-reduction plans announced today, in addition to the $100 million in cost reductions realized in 2023, will help us generate positive cash flow in light of a softer demand environment,” commented Fulop. “We are committed to getting profitable during this challenging period. The vast majority of the cuts will be completed this quarter, resulting in sequential cost reductions across the first half of 2024.”
Further details on Desktop Metal’s cost reduction plan will be disclosed in the company’s regulatory filings and end-of-year earnings release and conference call, expected to be available by the end of March.
Desktop Metal cutting costs
Desktop Metal has already notified the US-based employees impacted by the cuts. The company is continuing to review changes to its international workforce, with the timing of these announcements set to vary according to local regulatory requirements.
DM expects its $50 million cost reduction plan to incur restructuring charges of $24.3 million to $31.5 million. Most of these charges are non-cash. An estimated $5.3 million to $7.5 million of the restructuring charges will come from cash reserves.
This decision reflects DM’s latest efforts to streamline operations and cut costs. Following the collapse of the Stratasys merger, the company announced the sale of its Aerosint SA subsidiary to high-precision components and systems manufacturer Schaeffler Group.
Founded in 2016, Aerosint’s patented Selective Powder Deposition (SDP) technology enables simultaneous, multi-material 3D printing. Acquired in 2021, it was initially hoped that this partnership would advance DM’s acquisition-based ‘AM 2.0’ strategy. The financial details of Aerosint’s sale have not been disclosed.
Despite recent cost-cutting activity, Desktop Metal has stated that it is still pursuing its AM 2.0 approach. The company will continue to invest in products and operations to enable near-term revenue generation, and achieve its long-term financial goal of sustainable profitability.
“While our industry is working through a challenging period, Desktop Metal’s commitment to its Additive Manufacturing 2.0 vision has not changed. We continue to have a positive long- term outlook for this industry as it transitions to mass production,” added Fulop.
Restructuring to improve profitability
Desktop metal is not the only company to announce strategic restructuring initiatives in an effort to cut costs and maximize profitability.
French 3D printer manufacturer and service provider Prodways Group recently announced that it has discontinued sales of jewelry 3D printers. This decision comes after the wax and resin 3D printers, sold under the Solidscape brand, experienced poor sales in 2023. The products also generated limited turnover and “significant operating loss.”
Prodways will now reallocate resources to focus on its high-volume, industrial 3D printers which are said to possess high added value. The company hopes that this decision, which reflects its “growth and profitability strategy,” will improve its financial results and strengthen its position within the global 3D printing industry.
Elsewhere, it was announced last year that Global print and digital document corporation Xerox had sold its 3D printing business unit, Elem Additive Solutions.
The deal, which saw US-based metal additive manufacturing company ADDiTEC acquire Elem, formed part of Xerox’s efforts to refocus its strategic priorities and investments onto its core offerings. These include digital, print, and IT services. In-keeping with these goals, Xerox has also donated PARC to SRI International, and sold the Xerox Research Center of Canada to Myrant Capital Partners.
In its recently released financial results for FY 2023 and Q4 2023, Xerox claims that these actions have negatively impacted revenue, but expanded adjusted operating margin. In FY 2023, the company reported 3.1% Y/Y revenue decline, but expanded its adjusted operating margin by 170 basis points.
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Featured image shows Desktop Metal 3D printers. Photo via Desktop Metal.