Boston’s Additive Edge: Ric Fulop’s Bold Move with Desktop Metal Amid Industry Turbulence

Just days after Desktop Metal (NYSE: DM) announced its merger deal with Nano Dimension (Nasdaq: NNDM) on July 3, 2024, I visited the company’s headquarters to sit down with CEO Ric Fulop. Fulop shared valuable insights into the implications of this significant industry move, the company’s growth trajectory, and the broader trends in 3D printing. Expected to have a massive impact the additive manufacturing (AM) industry, this deal could help both companies grow and become more sustainable. It follows last year’s intense competition between Desktop Metal and Nano Dimension for Stratasys and aims to combine their strengths for better market positioning.

“The merger is critical. We need consolidation in this industry,” Fulop stressed. “There are no profitable EBITDA generating companies that are public today in additive manufacturing. For the industry to succeed, we need to get it to scale.”

Fulop’s comments point to the main challenge facing the 3D printing sector: achieving profitability through economies of scale. The merger with Nano Dimension, a company with over a billion dollars in cash through stock sales, is crucial to this goal. By joining forces, the two companies aim to combine their strengths, boost market positioning, and create a more sustainable and scalable business model.

“The industry is relatively small, with no billion-dollar companies,” Fulop noted. “It’s important that we get companies with a stronger market and strong fundamentals. At this point, I think it’s essential that some of these pieces come together to make it a sustainable industry. This merger aims to combine the strengths of both companies, leveraging their complementary technologies and market positions.”

Ric Fulop during the CEO Panel presentation at AMS 2024. Image courtesy of Ashley Alleyne, 3DPrint.com

Fulop has been an entrepreneur for many years. He co-founded A123 Systems in 2001, a company that made lithium-ion batteries and energy storage systems, playing a significant role in advancing energy storage technology. A123 Systems went public in 2009, raising approximately $378 million with a market value of nearly $2 billion, but was later sold to China’s Wanxiang Group for $256.6 million in 2012.

Now leading Desktop Metal, Fulop remains a passionate advocate for additive manufacturing. During my visit to the company’s expansive headquarters, the summer timing might have contributed to a quieter atmosphere, yet Fulop’s enthusiasm was unwavering. His optimism about the potential of 3D printing, even after years in the tech sector, stands out as one of his key strengths.

The merger promises significant technological synergies. Fulop highlighted Nano Dimension’s Global Inkjet Systems (GIS), a subsidiary that develops software, drive electronics, and ink delivery systems for industrial inkjet printing. These technologies are essential for controlling and optimizing the performance of inkjet printheads used in high-precision applications such as additive manufacturing.

Fulop explained: “Our furnaces can be used with their additively manufactured electronics systems. There are many applications. There are site consolidation opportunities. For example, here in Boston, they have a site in Waltham. We have a site here. The same thing is true in Munich. So, there’s room to become more efficient. These efficiencies are expected to accelerate the path to profitability for the combined entity.”

Nano Dimension, headquartered in Ness Ziona, Israel, with additional locations in Waltham and Munich, creates 3D printing technologies for electronics and complex manufacturing. On the other hand, Desktop Metal, based in Burlington, Massachusetts, specializes in metal and polymer additive manufacturing systems for a range of industries, like aerospace, automotive, and healthcare. The upcoming merger plans to combine the strengths of both companies by integrating their advanced inkjet and furnace technologies while optimizing operational efficiencies through site consolidations.

Desktop Metal scaled its business significantly, growing from $16 million in annual revenue at the time of its initial public offering to around $190 million annually. Fulop attributes this revenue increase to Desktop Metal holding 80% of the market share in the binder jetting market, highlighting the company as a dominant player in this specific niche of the 3D printing industry.

However, Fulop was candid about the challenges posed by recent economic conditions. “We’re currently in a downturn cycle. The 11 interest rate hikes have significantly impacted our industry, and we are still feeling the effects,” he said.

The series of interest rate hikes by the U.S. Federal Reserve between March 2022 and July 2023, aimed at curbing inflation, have made borrowing more expensive and slowed down investment across many sectors, including additive manufacturing.

During the interview, Fulop also emphasized that Desktop Metal’s challenges are part of broader industry patterns rather than isolated issues. He noted, “Everybody went up together, and everybody’s come down together.”

Despite these hurdles, Fulop says Desktop Metal continues to innovate and expand its product portfolio. This year, the company has introduced several new products, including a new base for Flexcera, a dental resin for high-quality dental prosthetics, and the Pure Center sintering furnace. Fulop also hinted at several new products planned for launch in the last quarter of the year and gave a glimpse into a new machine that the R&D department has been working on for the past two years.

Inside the tech. Image courtesy of Desktop Metal.

For Fulop, one of the most striking aspects of Desktop Metal’s technology is its versatility. The company has 3D printed parts in planes, trains, cars, and rockets, with applications ranging from defense to high-complexity components for helicopters and satellites. Their technology is used by leading automotive manufacturers like Mercedes-Benz and BMW to make molds and engine parts, as well as by aerospace companies to produce critical components for aircraft and space missions. To Fulop, this widespread application across various industries highlights the impact and potential of Desktop Metal’s additive manufacturing solutions.

As the merger with Nano Dimension progresses, Fulop remains optimistic about the future. “We need to get something to scale to have a self-sustaining industry that can actually grow,” he asserted. The combined company aims to work better together, improve its products, and push the industry forward, all while trying to make a profit in a sector that has often struggled to do so.

“Nano Dimension is the best-capitalized company in our space. I think we can do something very interesting together,” Fulop noted. The merger aims to integrate technical strengths, streamline operations, and create a stronger market presence. “We are making progress on many fronts and continue to develop new products despite the challenging economic environment,” Fulop added.

Once finalized, the merger with Nano Dimension will influence Desktop Metal’s future direction and financial performance. While the deal holds promise for scaling the company’s operations and improving profitability, its ultimate impact will depend on how well Desktop Metal navigates the evolving market conditions.