Nano Dimension Ltd.

Ladies and gentlemen, welcome to Nano Dimensions' third quarter 2023 earnings conference call. My name is Betsy, and I'm your operator for today's event. On the call with us today are Yoav Stern, CEO and member of the Board of Directors, Tomer Pinhoff, COO and Acting CFO, and Julian Lederman, VP of Corporate Development. 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 statements made on this call. If you have not yet received a copy of the press release, please view it in the investor relations section of the company's website. A replay of today's call will also be available on the investor's 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 the management team will answer your questions. I would now like to turn the call over to Nano Dimensions' CEO and member of the Board of Directors, Yoav Stern. Please go ahead.

Thank you very much. Good day to everybody. This is the third quarter results for 2023. It's the best third quarter in our history. It's the best nine months in our history. We completed in the third quarter about around the same revenue we had in four quarters last year. And fourth quarter, if proceeds as planned, will take us either close or on budget as we planned earlier this year. So very good, very happy. but we're starting a new stage, which I'll speak about. The organic growth was 22%. The organic growth for nine months was 33%. I'm emphasizing organic growth because, historically, you've been asking me many, many times, you did acquisitions, that's great. The acquisitions were small, but what about organic growth? So for the last 12 months, it's organic growth. Because we didn't do acquisitions, which we are now, and we'll speak about it separately, are getting into the larger play on M&A. But meanwhile, we're growing organically. We expect the end of the year to be close to 50% growth. We increased the gross profit. I would say it's even more important. You don't see this a lot if you look at companies in our industry or in general. Our gross profits were 200% higher in a similar quarter last year. And same for the nine months, but more interesting in the numbers themselves, the gross margin grew from 18% to 44% on a quarterly basis IFRS and 28% to 48% on a non-IFRS. So we are practically at a close to 50% gross margin, and we believe it will continue to grow. And I want to tell you something. It just didn't happen by itself. It happened with a lot of focus on changing our infrastructure in the cost of goods sold and manufacturing. And we'll talk about it if you have questions. Second thing that happened over the last few months is a major change in our corporate governance and management. Reason is some of the shareholders spoke with us and thought that it would be a good thing to do. ISS and Glass-Lewis, the two reputable advisory firms, spoke with us, and we basically did what they recommended. We reduced the board size by two members, which we stepped out. We added very, very serious false general Mike Garrett to our board, so sitting on Texacon. And we have made changes in roles where I don't know if you know, but I initially, when I joined just two years ago, I was not even on the board. I joined because of changes on the board, and I didn't have a choice. So I stepped, continued to do my CEO role as director, and Dr. Yovne Sankoin is now the chairman of the board. We work together. It's beautiful. I'm very, very happy. On the side of the business, beyond the numbers and the corporate governance, we have successes in the defense. We have successes in space, leading space technology companies. And we probably sold the biggest amount of machines to one of the largest computer company in the world. And not less important, because this is a major investment, is the product and R&D development. Software biocompatible materials, and I'll take you here back two years ago, when I told you, and some of you will remember that, the development of additive manufacturing and the network we're building of cloud manufacturing, while it sounds a lot to do with automation, robotics, software, of course. At the end of the day, there's one thing that's important, materials and process. And as I told you in the past, when we reach a real milestone, it'll be material milestone. So the first one has been reached. We came, we announced a new material for insulation, Insta 200. It's a revolutionary material for electronics, It was announced in the trade show actually in November, and it's going to be out in the market in the beginning of the year and beginning in January, and we're very excited about it. This is not the final move here. Very soon, we're coming with a totally different material, which is much better than this one, and that one will take us into, we believe, into production and mass production on the electronic side. We have a lot of other materials that we added on the editing manufacturing side, but I'm not going to get too deep into that unless there'll be questions. Next, let's talk a little bit about financials. I highlighted the gross margin and the gross profit. Interestingly here is to see that The adjusted EBITDA of $30 million, and I'll show you in a second what is adjusted comparing to regular EBITDA. A third of it, sorry, more than a half of it for the quarter is in R&D expenses. Sorry, actually it's less. It's a third in R&D expenses. It was more than a half in Q3 2022. The reason is it's very, very intended. We reduced 3.5%. million dollars, which is 20 percent, almost 25 percent, of R&D expenses this quarter, comparing to last quarter, the same quarter last year. It was the first move earlier this year in an initiative, which I described in the news list and I'll talk about, of moving nanodimension to the next business model phase, and I'll speak about it. Another thing that you'll see here, Activist damages. We have activist investors that are busy damaging the company. We have spent, until now, since the beginning of the year, close to $17 million paying lawyers, accountants, experts, advisors, for what we believe is a waste of $17 million. Be that as it may, Our shareholders voted for us, and we're moving forward. On the gross margins, I spoke, but if you now go to the bottom line on this table, look at the number on the bottom. We only burned $7.7 million, comparing to 20 in the same quarter last year. This is where we are going. We are hoping next year, actually already this quarter, to cut another $30 million in our expenses and to reach profitability at the end of the year, next year. That's even if we are just growing from where we are today, a run rate of 60, organically, if we do an acquisition, it will obviously change the whole formula, which is very, very exciting for us. Next slide, you will be able to see the reconciliation to understand exactly what is this large number, 66 million of net loss, and why is it ending up just $7 million of cash? So if you start from the top, you'll see what I colored in green is $11 million. 11-0-0-8 is interest income. We have about $45 million a year, maybe more, right?

Yeah, this year we are going to reach approximately $48 million of investment income. It's about $4 million a month. It's more than 5% interest on an annual basis.