Velo3D CEO Benny Buller Steps Down as Company Explores Sale or Merger

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Metal 3D printing firm Velo3D (NYSE: VLD) has announced that Benny Buller has resigned as CEO at the request of the company’s Board of Directors. The news comes at a time when the entire publicly traded additive manufacturing (AM) industry is facing economic pressure for organizational change and the larger sector undergoes a transformation into industrial production.

“I want to thank Benny for his tireless efforts over the last nine years from founding the company to making Velo3D the technology leader in the rapidly growing additive manufacturing industry,” said Carl Bass, Chairman of the Board of Velo3D. “We are incredibly grateful to Benny for all his contributions. However, given the current environment, the Board believed a change would best position the company for future success. We look forward to continuing to benefit from Benny’s experience at the board level as we execute on our strategic technology and profitability initiatives.”

In response to this change, the Board has appointed Brad Kreger as the Interim CEO, effective from December 18, 2023. Kreger, who joined Velo3D in December 2022 as the Executive Vice President of Operations, brings a wealth of experience in managing and scaling manufacturing operations. His background includes significant roles at Affymetrix, Thermo Fisher Scientific, and Fluidigm Corporation. The search for a permanent CEO is underway as Velo3D prepares for its next phase of growth.

Former Velo3D CEO Benny Buller giving the opening keynote at Additive Manufacturing Strategies 2023.

 

Velo3D’s Finances

Buller stepped down during a time in which Velo3D has experienced substantial growth amid significant financial challenges. As of the trailing twelve months (TTM), total revenue has impressively grown to $100.843 million, indicating a strong market demand for its metal laser powder bed fusion (LPBF) technology, a substantial leap from $18.975 million in 2020. However, this growth is contrasted by considerable operational losses, with an operating income reported at a significant loss of -$99.676 million in the TTM period. The net income for common stockholders also mirrors this trend, showing a considerable loss of -$111.987 million. These figures underscore the high costs associated with Velo3D’s expansion and technological advancements. Furthermore, the company’s operating cash flow is deeply negative at -$113.947 million, despite a healthy end cash position of $29.649 million, reflecting the intense capital requirements of its growth strategy.

The Sapphire XC 1MZ 3D printer from Velo3D. Image courtesy of Velo3D.

With the release of its Q3 2023 data, Velo3D announced a large workforce reduction of 20 percent. Alongside the staff now leaving the company is Zach Murphee, a mainstay of Velo3D who began as Director of Product and Applications for the startup nearly eight years ago before ultimately becoming Vice President of Defense. He took this new position just three months before leaving the company and joining Velo3D competitor Freeform Future Corporation.

Whereas his predecessor focuses on manufacturing highly controlled LPBF equipment, Freeform is relying on a service bureau model to print parts using proprietary LPBF machines with 18 lasers. Notably, Freeform boasts former Velo3D employees among its roster, which also include ex-Carbon, Tesla, and Apple workers. Among its customers is new space AM company Ursa Major.

The restructuring may have officially begun in September, when the company’s Chief Financial Officer, William McCombe, resigned. McCombe played a pivotal role in guiding Velo3D through its listing process and growth phase. Bernard Chung, the company’s Vice President of Finance, was appointed as the Acting Chief Financial Officer.

Velo3D isn’t the only one undergo such a significant change. To enhance its operational effectiveness, 3D Systems took on a new Chief Financial Officer, while BICO and Materialise have hired on new CEOs. In the case of Materialise, this decision was five years in the making, however, we can likely expect other executive changes throughout the sector. A major difference in the case of Buller’s resignation is the fact that he founded Velo3D. While he is able to stay on the Board of Directors to ensure that he has a say in the firm’s direction, it can’t be easy to let go of something he’d worked so hard to establish.

Who Will Buy Velo3D?

Alongside these leadership changes, Velo3D’s Board of Directors has initiated a strategic review process to explore various alternatives aimed at maximizing shareholder value. This process might lead to a range of outcomes, including potential mergers, strategic transactions, business combinations, or a sale.

The company is not the only one exploring such possibilities. The whole year was marked by the potential for AM stalwart Stratasys to merger with another 3D printing firm, such as Desktop Metal (NYSE: DM), Nano Dimension (Nasdaq: NNDM), or 3D Systems (NYSE: DDD). Meanwhile, voxeljet, a manufacturer of large-format sand and polymer 3D printers, announced its pursuit of strategic transactions. Sigma Additive Solutions sold its intellectual property to Divergent Technologies and Stratasys has divested some of its service offerings.

3D Systems may be looking for someone to purchase its software business, Oqton. It’s worth mentioning that Velo3D Board Director Carl Bass was once on Oqton’s Board, as well. The former Autodesk CEO currently serves as the Directors for fellow AM companies Formlabs, nTopology, Dyndrite and Arris Composites.

If Velo3D does decide to merger or sell, a natural question that arises is who the other party might be. Given the importance of its machines to the new space industry, there are a number of companies that could acquire Velo3D to vertically integrate, including VAST, Ursa Major, and SpaceX. This last company was known early on to invest in Velo3D equipment and the possibility of an acquisition by SpaceX has been rumored in the past. This would also potentially align with the overall strategy of ARK Investment Management, given the overall support its CEO, Cathie Wood, has given to Elon Musk’s companies and ARK’s investment in Velo3D. Perhaps Musk could even rollup a number of AM firms, such as Markforged and Velo3D, to create a 3D printing powerhouse.

Otherwise, we could expect a merger with another printer manufacturer, such as Stratasys. However, these businesses are all experiencing a significant financial downturn, so it would be unlikely that they would be in a position to do so. That is, unless Nano Dimension still has enough cash after its stock buyback.

The news also comes at a time in which Chinese LPBF manufacturers are expanding very rapidly into the western market. With its eight-laser Sapphire XC system, Velo3D has a significant stake in the Laser Wars, characterized by large-format LPBF machines with many lasers. Since the likes of Nikon SLM Solutions and Velo3D kicked off the Laser Wars, these Chinese companies have all trumped the scale and energy output of these systems with massive 3D printers equipped with 20-plus lasers. Not only does this overshadow the industry-leading 12-laser PBF system from Nikon SLM, but it overtakes Freeform’s 18-laser configuration. There’s a very real chance that Velo3D has suffered from its Asian competitors.

Needless to say, strategic transactions don’t necessarily mean a sale or merger. During this period of review and transition, Velo3D assures that its operations and customer service capabilities will remain unaffected. As for the updates on the strategic review process, Velo3D has stated it will only make disclosures when deemed appropriate or necessary.

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