Fathom Digital Manufacturing Corporation (NYSE:FATH) Q2 2023 Earnings Call Transcript

I would say some of the capital goods industries where there’s interest rate implications. We’ve seen a little bit of softness in some of those end markets that we serve as well as some building supply. Semiconductor, we remain very, very optimistic long term on that, especially as the money from the CHIPS Act and AI continues to become more integrated. We think we’re really well positioned there, but there still is some short-term softness there that we’ve seen, although we’ve seen month-over-month with some of our key semiconductor industries, orders starting to pick back up, which has been a positive sign. So as I mentioned in the remarks, we feel really good about the leadership team that we have in place and Kurt Bork really now being fully integrated into the business and the momentum that we’re starting to pick up from a commercial side of things, as you saw with the 10% orders growth versus Q1.

And we anticipate at this point to see that continue into Q3.

Greg Palm: Yes. Okay. And then just on the financial flexibility comment, you mentioned that based on what the guidance is, you’re not going to be able to comply with the covenants. What would — it sounds like you’re kind of an active dialogue right now with the lender, but what sort of a good outcome look like in your opinion?

Mark Frost: Sure, Greg. Now just to point out, we’re obviously not in — we’re in compliance right now at June 30. So this is a forward view that we took and we then, as soon as we had seen that, we initiated discussions. We’ve had a good relationship with our lenders. We’ve been able in the past to agree amendments that did provide us more flexibility. Our hope — our focus would be to try to get an agreement that takes us through the end of 2024. So we’re having this conversation, not on a couple of quarter basis, that has happened in the past quarter. So — we’ll focus as we — as I indicated in my comments, liquidity is fine. It’s the EBITDA covenant where we need to work with our lending group to figure out a better path forward as on that subject. So that’s where the focus would be, Greg, would be on the minimum EBITDA aspect of the covenant.

Operator: We have no further questions at this time. So with that, we can conclude today’s call. Thank you for your participation. You may now disconnect your lines.