Hartland-based Fathom Digital Manufacturing is still seeing the lingering impact of macroeconomic uncertainty as the company reported that its third quarter revenue decreased 21.8% from $40.2 million last year to $31.5 million this year. “Our performance for the quarter was mixed. We experienced order softness in several of our key end markets, including precision sheet
Hartland-based Fathom Digital Manufacturing is still seeing the lingering impact of macroeconomic uncertainty as the company reported that its third quarter revenue decreased 21.8% from $40.2 million last year to $31.5 million this year.
“Our performance for the quarter was mixed. We experienced order softness in several of our key end markets, including precision sheet metal and CNC (machining),” said Mark Frost, chief financial officer of Fathom.
CNC machining saw a 19.6% decrease in revenue in quarter three compared to the same period last year. Precision sheet metal saw a 30.4% decrease in revenue, additive manufacturing decreased 14.6% and injection molding decreased 10.2%.
When asked what the company’s biggest challenges have been over the last year, newly appointed CEO Carey Chen pointed to macroeconomic difficulties. To buffer some of these challenges, Fathom will look to work with companies that are more “recession proof” and have positive megatrends, according to Chen.
[caption id="attachment_578778" align="alignleft" width="288"] Carey Chen[/caption]
This will also include markets and industries that are less cyclical. The company has found the semiconductor industry to be less resilient than initially thought, which has affected Fathom’s CNC machining and sheet metal business segments. A key industry that’s new for Fathom is electric vehicle manufacturing.
“The sustainability that electric vehicles offer has proven to be a resilient market,” said Frost.
In quarter three, Fathom was awarded a $1.5 million injection molding contract with an unnamed EV manufacturer and another $1.1 million contract for CNC machining with a defense contractor. In addition to these two seven-figure contracts, Fathom received two other contracts worth $400,000, one contract worth $350,000 and another contract worth $300,00.
Fathom also continues to work through its optimization plan, which aims to reduce the company’s costs by $19.5 million.
To date, Fathom has reduced overall expenses by approximately $13 million. Looking ahead to the fourth quarter of 2023, the company projects another $4 million in cost savings stemming from the optimization plan. Fathom will continue to limit non-essential capital expenditures.
“In terms of our expense maintenance and reduction, we will continue to execute on the optimization plan we initiated earlier this year, and we will further identify opportunities to better align our expenses with sales and order flow,” said Chen.
Another priority for Chen is building scale throughout the entire organization so that Fathom will be able to capitalize on new growth opportunities in the future, as macroeconomic uncertainty finally clears.
“I’m excited to lead Fathom at this pivotal time in the company’s short history,” said Chen. “I am optimistic that there are opportunities to return to revenue growth and sustainable profitability over time. We’ve added new sales and operating leadership. Together, with the valued employees throughout Fathom, we will move with urgency to optimize the performance of the company.”
