Nano Dimension Ltd.

Ladies and gentlemen, thank you for standing by. All participants are present in listen-only mode. Welcome to today's conference call to discuss Nano Dimensions 2022 first quarter results. On the call with us today are Yoav Stern, CEO, and Yael Sandler, CFO. Before we begin, may I remind our listeners that certain information provided on this call may contain forward-looking statements, and the safe harbor statement outlined in today's earnings press release also pertains to this call. If you have not received a copy of the press release, please view it in the investor relations section of the company's website. Yoav will begin the call with a business update, followed by a question and answer session, at which time Yael will answer questions regarding the first quarter 2022 financial results. As a reminder, this conference is being recorded May 31st, 2022. I would now like to hand the call to Mr. Yoav Stern. Mr. Stern, would you like to begin?

Sure. Thank you very much. I will change a little bit the order. I will speak about business and some numbers and then Yael will give a little bit of an input as well from her point of view about the numbers. And then we'll open it to Q&A and both of us will answer accordingly. So we're completing a successful quarter. The numbers speak for themselves. We have about $10.5 million, $10.4 million revenue. And We have, if you look at the, more importantly, the revenue of the last quarter was 7 and change, I think 7.6, 7.5. And obviously the revenue of the same quarter a year ago was dramatically lower. So if you just look at the last two quarters and multiply it by two, the run rate, you'll find out where are we in this year, and we may even be higher. considering the fact that first quarter traditionally is a less strong quarter in any year, even though with the situation specifically in Europe, there's a little bit of unknowns. And we see this in our European revenue. If not that, our revenue would be higher than the 10.4. So that's good news. I gave you some information We gave you some information that's beyond just the revenue, of course. We start by gross margin with the 37%. I invited you to read the CEO method, which I wrote in detail what it's consisting of. And it's important to note that because it actually consists of the typical or different assortment of businesses and technologies we have, the more advanced, And disruptive technology, which is in electronics, is above 60% gross margin, which is great. And that's before doing value engineering to the machines and reducing the cost, which we originally tested, considered doing it a year and a half ago in China and increased our gross margin by almost 20%. Obviously, we didn't do it luckily, but we can do it in the future and not only in China. So that's on the 60% side. And then we have other assortment that spread between 35% to 50%. And interestingly enough, the portions that are 35% to 50% deliver beautiful dollars to the bottom line. So it's a combination by now. It's much more a balanced business as it was a year and a half ago. And it's slowly maturing into a growth business. As we grow and the product assortment and the sales will change, so will our gross margin accordingly. And that's the reason why I also gave you EBITDA numbers with a net of certain depreciation of shared based payment, which is another call it data point that will indicate to you, how do we manage a profitability and how do we intend to take dollars to the bottom line? And in this case, it's important also to look at the cash side as well. And also taking into consideration that the share-based payment and depreciation and amortization is not necessarily a steady expense forever. As we do acquisitions, there's a bit more of that. And eventually, if we don't and we stop, we will be less than those that goes down. And the last input, so EBITDA is 19.2 net of the non-cash expenses. The other data point I gave is How much EBITDA without R&D? Because R&D is a major, major investment. And mostly, not only, but mostly in additive manufacturing electronics, which is also delivering high growth margin, which is good. Without that, we would be already minus 7.5 million EBITDA. And if we look a little bit further ahead with growth, this will turn into profit. it ain't going to happen. And we really have to look at our business as two arms. One arm is the most disruptive innovation technology, which we intend to invest in R&D and continue to invest in this way. And the other part of the business, which we invest in R&D, but a bit less in ratio to revenue, and it's growth with profitability. Where we aim is for this to merge And I wrote in the CEO message what we expect in how long a time. And obviously to merge and eventually deliver dollars to the EBITDA level and to the profit level. So we are in a very good position. Another positive development for us, unfortunately for others, is that the prices in the market are going down. It's all led by the public markets. It's always starting to affect the private markets. And the amount of carefulness within which we manage the cash over the last year and a half in spite of pressure to spend and buy and buy bigger companies and why aren't we doing it? Our cash now is worth much more than $1.3 million in a way of saying because what we can buy with it is changing slowly to be dramatically more. And by now we did so many searches and discussions and valuations that we know what we're looking for and at what values we're ready to buy them. So we are hoping there'll be a continuous trend in this direction and it will enable us to buy within reasonable price. And just to remind you, The last two acquisitions which we bought, which was not the technologies we bought earlier in 2021, we bought at around between less than one times revenue to a little bit more than one time revenue. And both companies were profitable. One of them was 10% EBITDA, the other one close to that. So we did pay the right price, otherwise we wouldn't have bought them. And of course, there's technology synergies and business synergies with that. So that's on the acquisition side. Of course, the market going down affects our share as well. But since we don't intend to raise more money and we don't need to raise more money, then it is an effect that is more a psychological effect, obviously, on all of us, including myself as a shareholder, which just recently bought an open market, and you. But we're not going to use this share price as we raise more money. we're just going to do the right thing on the business side. And we actually also in a process in court to get approval for shares buyback program, which we intend to implement as approved by the board. And I announced about it. So that's in order to affect the share, our share price, because we realized that by now people are buying with one share, they're buying $3 of cash or almost that. just by buying the share for $3, which is pretty attractive, actually. So that's what I have to tell you. And as usual, I prefer, of course, to answer your questions because you direct me toward things that are more interesting for you. But before, I want to say a few words.

Thank you, Yav. So I would really like to just point out a few items in our financials. We continue to have a strong balance sheet with cash and deposits balance of $1.3 billion. And as Yav mentioned, if you look at our profit and loss statement, you will really see that the expenses include a lot of depreciation and amortization as well as share-based payment expenses. This is why this quarter we added the EBITDA and adjusted EBITDA calculation and reconciliation with all the details, which you can see towards the end of the press release. So we basically adjusted almost $14 million of non-cash expenses, and this is how we arrived to the adjusted EBITDA of $19.2 million. Minus $19.2 million. Yes, loss. We also added in this quarter the report on cash flow. We, until today, didn't publish the statement of cash flow on a quarterly basis. So from this quarter going forward, we will add it on a quarterly basis as well. So you will see how we use the cash. So if you look at it, the net cash used in operations is minus $21.4 million. And you can also see in the net cash use and investing activity, the acquisitions that we did in the first quarter. And if you have any questions regarding the financial, I will be happy to answer them.