Nano Dimension Ltd.

Good day, ladies and gentlemen. Welcome to Nano Dimension's second quarter 2023 earnings conference call. My name is Anthony, and I'm your operator for today's event. On the call with us today are Yoaz Stern, Chairman and CEO, Yael Sandler, CFO, and Julian Letterman, VP of Corporate Development. Before we begin, may I remind our listeners that certain information provided on this call may contain forelooking statements, and the safe harbor statement outlined in today's earnings press release also pertains to statements made on 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. The replay of today's call will also be available on the investor relations section of the company's website. Yoav will begin the call with the business update, followed by a question and answer session at which time the management team will answer questions. I will now like to turn the call over to Nano Dimensions Chairman and CEO, Yoav Stern. Yoav, please go ahead.

Thank you very much. Hi, everybody. Welcome to the call. We will go through the presentation and then we'll open it to Q&A. Going to slide number three. Our quarter was an excellent quarter. It follows two other excellent quarters. Actually, it was Q4 of 2022, Q1 of 2023, and now Q2 each quarter. and the two others from the best quarters of the company until now. The key highlights is, first of all, and I'll repeat it five times, there's an organic growth for all people that were asking this for a long time, and not to speak about some Canadians that are also lying about these numbers, our growth. In organic growth in the last three and a half quarters is about 47%. Our growth from the same quarter last year is 33% in revenue. In the first half is higher by 38% from 2022. More importantly, our growth margins dramatically increased by 81% and 185% for a quarter and a half. And they went up from 40% to 48%, depends if you're speaking about adjusted gross margin or gross margin. And you can see this in the first column on the left, in the bottom, comparison for the quarters, both in IFRS and on IFRS. In the right column, you see a lot of new successes from customers. Certain things are even missing there because in the last few weeks, We got one of the major space companies that are buying dramatic amount of machines per one order and more orders to come. And similar names that I cannot disclose and in all across the product lines we have. On the DeepCube Artificial Intelligence, very, very important advancement by getting other companies that are building other machines or having other needs and are interested to buy the DeepCube deep learning machine to install them on their operations and manufacturing operations. Very, very exciting. They recognize the importance. And remember, we originally bought DeepCube for the purpose of applying the technology inside our machines and in our Cloud Network, Cloud Manufacturing Network. But now it seems like DeepCube is going to become a profit center by itself and a revenue generator by itself. It's in the process. And we have four or five customers already in the process of signing the contract and on a long-term basis. We have already one of the largest, call it semiconductors company in the world that already signed the contract. The rollout of the DeepCube machine, sorry, DeepCube engine inside the Dragify system is happening, is out. And for me, the most important advancement in R&D is, as I told people who invested when I raised the money two years ago, the key thing in additive manufacturing, contrary to what everybody is telling you maybe in this industry, is materials. Everything else is doable. and Artificial Intelligence. And in materials, we have a major investment over this year. In three quarters, we invested almost all our R&D in materials and we have major advancement which we will announce in November in the industry trade shows. Moving forward. Financial specifics. You can see the profit and loss statement in the comparison of Q2 and Q2, both Q2s of 2022 and 2023. Growth of revenue, organic growth since Q3 of 47%. And I don't want to repeat myself because I said it in the first slide, but here you see the actual numbers. The EBITDA A negative was $23 million out of which 13, I'm rounding figures, close to 13 was R&D expense. So yes, it is expense because we don't capitalize it, but it is an investment. We spent unnecessary activity at that time Q2 was $2 million on legal for all kind of proxy machinations, which is... As much as I'm concerned, it's a waste of money. But we didn't have a choice. We don't have a choice. We've been forced into that. The net cash used in operation is 28. But we made money from the cash. So really, the net net is only 21.5. So on a per quarter basis, we are making about... 10-12 million dollars a year in interest gets close to 50 million dollars per year at the interest rate as per today. The next slide will describe to you the growth of the revenue of the company on the last 12 months basis. Every quarter measured from the Q3 of 2021, which was 5 million dollars to Q2 23, 52, and where the run rate, if we continue the same rate, to be at 60 at the end of the year. If you compare this to what other companies in our industry did this quarter of the last few quarters, everybody is down on his revenue, down on his bottom lines. We are up. Next slide describes the margins graphically. Revenue on the left side and margins on the right side. And it shows it to you both on the IFRS basis and non-IFRS. Non-IFRS is basically taking out of the cost all kind of non-cash expenses or granting of options expenses that are non-cash to show the actual results in cash as the business actually performs. Next slide shows you the statement I just made about the performance of our peer group. We chose four or five companies out of maybe 10 that are public, including in Europe. And you can see that other than one, everybody had net shrinkage. And we had 33% growth. and the one that had growth at just 5% growth. All this is comparing to a year before. Can't skip my most favorite subject, which is the Proxified Annual General Meeting. You, if there are shareholders, I'm sure there are shareholders on the call, are called to vote. We have 10 more days to vote. and you basically have two choices. The left one is what we propose, which is to keep the board that you have now. The three people are being re-voted. We will continue with the strong fundamentals from the past. We have 12% of revenue growth, we have 60% run rate. We have about three to five M&A is ahead of us and two of them are very large companies. And notice what happened in this whole M&A activity when we removed our proposal to buy strategies. The whole M&A consolidation in this industry collapsed. Everybody's share went down except us, we went up. Stratasys went down from 21 to 14. 3D, which was going supposedly to buy Stratasys, went down from 11, 10.5 to 6. Death of Metal went down to $1 something, which is supposed to have a merger with Stratasys. And all this because we pulled our offer. and all this while our share went up from over the last, I think, two months from 2.3 to 3.2 and then back to 2.9, somewhere hovering around three. So that says something, still under the cash, mind you, but we're moving forward. If you look at our historical numbers, I don't want to repeat them, they are listed on the screen here on the left side, and you'll be able to see them, of course, on the website. This presentation is there. We have established a very strong base for global go-to-market NRD programs. We invested more money than a typical small company invests, which is something I have described when the money was raised and along the lines every quarter of the last eight quarters. and we deliver strong organic growth, not to forget now, 47%. This will continue. On the other side, on the right side, you have in red a group that has total no understanding in Nano's business, if they have any understanding in any business at all other than being a hedge fund, attempting to be activists. When you look at activist activity in the market, when Nelson Peltz as an activist wanted to get into Walt Disney, or when Carl Icahn wanted to get into Southwestern Gas, or when Elliot wanted to get into Athena Health, all of them came with a very serious analysis of the business of the target companies, which, by the way, happened to be much, much, much bigger companies. of what is the alternative they propose for the shareholders that they want them to vote for so they will end up by changing the way the company is run as much as asset allocation or as much as selling certain businesses or improving gross margin in other businesses so the share price eventually will go up. That's not the case here because we don't have Elliott or Starboard here. We have a small family and many others that want the cash, which we have, $1.1 billion including strategies, which we maintain, maintain meticulously because it's your money over the year and something that the prices in the market was too high and we are totally positioned now to use it to expand the growth much beyond $4 a share or $3.8 a share, which is The cash value per share right now. Because we were so careful, we have these kind of players, call them, trying to get to the cash and liquidate it. It's totally self-interested, opportunistic. There are nominees to the board. Each one of them got 50K just to put their buyers on the list, even if they're not going to be elected. Mind you, When I read the bios, some of them is not worth $5,000, but they get paid $50,000. It's nice, but they're golden handcuffed. You think about voting to them when they'll be directors in your company, when they've been paid before by an organization that wants to liquidate it for $4 or less a share. Do you want that to happen? Are they independent? Think about it. I'm thinking about it. I'm a shareholder. I voted. So if you want that to happen, I invite you to vote for the red side. And of course, we will respect your vote. I'll add to that in the next slide. Everything I say is factual. Contrary to a lot of bad data that I saw published about me over the last year, and I bent my head and let it slide over. But fake data and fake news. We are talking data. When I speak in the slide before about the right red side, it's not based on what I think. It's based as an example on a gentleman called Moshe Sarfati. Moshe Sarfati is the main senior analyst for Murchison out of maybe 10 employees that is testifying under oath In a court, when we were dealing with their illegal shareholder meeting in March, and it was asked by the honorary judge, I don't understand, the judge said, what exactly do you intend to do if you want to change the board? The answer now is a quote, I don't analyze the activity because I don't understand 3D printing. We really have no idea what is good and what is not good to do here. I think any other word is unnecessary. This is the person in Merchants Zone, almost the only one that knows something about the company. For him, he doesn't know nothing. He's testifying. So if you want this to happen, I will respect that. By the way, I will step down because I work for shareholders. And if the shareholders will vote to change the board with these kinds of people. Another way to work under them, not with them, not beside them, unless we are running the company. If they want to be partners, I'm welcoming them. If they want to stay investors, I'm more than welcoming them. If they want to stay shareholders, I'm promising Merchison, they will make money with us. But if they want to take over the company, liquidate, Unfortunately, I cannot be there. And I announced it before, so it's not new. I hope all of you will join us, and I hope now that you are on the call, you will ask me the tough questions and the challenging questions you usually ask, and I'd like very much to answer. Thank you.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If using a speakerphone, please pick up your handset before pressing the keys. To reply to a question, please press star then 2. At this time, we will pause momentarily to assemble our roster. If you have a question, please press star then 1. Our first question will come from Rami Rout, a private investor. You may now go ahead.