Nano Dimension Ltd.

Good day, ladies and gentlemen. Welcome to Nano Dimensions' third quarter 2024 conference call. My name is Wyatt, 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, Tamar Pinchas, CFO and COO, and Julian Letterman, VP, 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 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 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 would now like to turn the call over to Netadimension CEO and member of the Board of Directors, Yoav Stern. You may please go ahead.

Thank you very much, Ryan. Ladies and gentlemen, thank you for participating this morning and this afternoon. I want to preempt and tell you that I'm talking to you today from Frankfurt, which is one of the main annual events of which is the industry, the manufacturing industry trade show. And it's the most successful one that Nano has ever seen. I've never seen so much interest in both and what we're doing, both in the existing Nano and the excitement around the two acquisitions, some of which are already having people from other companies coming and visiting Nano. other company means other acquisition targets that we mentioned coming and visiting us. So with this excitement and looking forward to this excitement translating to numbers, I'll start by describing a little bit on the slide of the numbers mentioned that $15 million of revenue is the best third quarter ever and one of the best quarters ever we had. is 22% over last year, same period. Gross margin is 48%, which is up from 44. And adjusted gross margin, which is without non-cash expenses, is 51, up from 48. This is, gentlemen and ladies, extremely important because the business model of all companies in our industry suffer from gross margins and therefore from lack of profits. When we get to 55% gross margins, we start to show profits and substantial. And this is very, very exciting. And no less exciting is the net cash burn. Gentlemen and ladies, we turned around nano dimension from $16 million burning per quarter last year to $3 million net cash burn. And we're close to break even in cash burn. And this is only nano without the two acquisitions. smaller nano, which we cut expenses by reducing headcount dramatically and still not harming the revenue and the growth, which comes to show you that the direction to profitability, which we are committed to, is well ahead. Some business updates. Yes, we announced and close to closing desktop metal acquisition. And right after that, Mark Forge Acquisition, two of the main companies of this industry. In parallel, we have notable sales, first time to Applied Materials, University of Dayton, and the leading very well-known aerospace and defense company, which we can't mention its name for obvious reasons. In parallel to all this, we are in front of our annual general meeting, It will be held in December 6th. And, yes, we are fighting descendant shareholders from, I think, Toronto, which is trying to dismantle the company. And we, as a board, recommend to everybody, don't vote. The company is growing and will bring return much more than just taking it now, selling it in pieces, and trying to get pennies on the doors. The vote cutoff for this... General meeting is December 1st. The next slide will show you a little bit of the graphic presentation of the numbers. Slide number five is showing the revenue, the way it grew from last year, the gross margin growth, and the reduction in net cash burn from the same period last year. The three new Customers are not the only three new customers that we had this quarter, but we're just highlighting those for you because it means a lot for our growth of, again, I'm talking about right now, original Nano before Test of Metal and before Mark Forge, which is a whole new story, which I hope you'll hear about it in detail in the next conference calls. So those are not included here. If you would want to have a snapshot in slide number seven, you will see what we did with Nano over the years since you gave us the cash about three and a half years ago. And we were a steward of the cash and promised you we are not going to spend it until we get into large acquisitions. So we did spend it on smaller acquisitions. and for about two and a half years, and as a result of that, got attacked by a kind of activist or whatever you call them, shareholders that were practically interested in the cash that the company has. But we got to the point where we did use the large cash that we raised from you, and we used it for the good reason at the right prices. And we acquired two large companies, and if you look, how we moved from left side of the slide to the right side of the slide from one technology and one type of machine in additive manufacturing electronics into technologies with dozens of types of machines, more than 1,000 patents. We have the largest amount of patents which is spread all over the industry and that by itself in the future may create a profit center for us. We have technologies nowadays that include inkjet, binderjet, DLP, FDM, ceramics, composites, electronics, metal, metal casting, polymer, and micropolymer. We have only one technology that exists in this industry that we're still in look for, and we have plans how to reach it, and that's a technology that has to deal with not a technology for metals. We do believe very strongly in the metal business. The next slide, slide number eight, shows you these two large acquisitions, why we waited for so long. Look, ladies and gentlemen, since September 21, when we had the money and raised it, those companies that we now acquired were traded at between 15 to 35 times their revenue. 15 to 35 times revenue. And in this whole period, September 21 to May 22 to January 23, as the outliers from the different countries here tried to attack us for not spending the cash and for trying to distribute the cash to themselves, we waited. We waited as those last transactions started to lose value and lost it steadily over two years until we got to the NR24 and we bought them both at less than one time, at average one time multiple, one time sales multiple. And we believe we paid the right price and we bought them at the right time because if they were to proceed forward, they would be in trouble, which we believe they wouldn't be able to withstand by saying, standalone independent. Now that we brought them together, all three of us together are creating an industry leader, which you see in the next slide, number nine. On the left, you see how we build ourselves. The $56 million is the old nano, which is built from six, seven small acquisitions and 29% organic growth. I'm emphasizing the 56 from 22 to 23 grew 29%, not from acquisitions, from organic growth. And if you read different numbers in the material that this foreign company from Canada, I think, is publishing, it's all coming from somewhere that is not the numbers of the company. So we grew organically. Then we added and we're adding $190 million. All numbers here are based on 2023 performer numbers. That's desktop metal. And we're adding $94 million of Mark Forge together to create a new $340 million business based on 2023. And I'm telling you right now, we're not going to emphasize the high revenue. We may even reduce the revenue on account of being profitable. If need be, the $340 million will be reduced to numbers where the gross margins will be higher and the profits will come and appear, and multiples of profits will get the share up. In the right side of the slide, you see kind of analysis of five, six companies in the industry. In the left, the small VoxelJet, Velo, Prodways, which are smaller companies that were public. Two of them, VoxelJet by now is not public anymore. It's squeezed down to off NASDAQ. Velo is on its way from $77 million of revenue per year to $3 million revenue per year. and Broadway is going down from closer to 100 to less than what it shows here, and traded, by the way, in Paris Stock Exchange. In parallel, you see the three biggest companies in the industry on the right side, Stratasys, 3D System, and yes, us, with $240 million. But look at the difference in the amount of cash that each one of us has. We will be $340 million with $470 million of cash on the balance sheet, and the other two, you can see the numbers. That means we have the dry powder to turn the $340 million into a profitable and growing $340 million, not into just revenue, revenue growing by acquisition or otherwise, but no profits. The focus of this company moving forward into 2025 and forward is going to be Gross margin and profits in the bottom line. And the cash that we have will be used as less as possible to cover losses and as more as possible to create and generate even more profits. Last slide, which is slide number 10. Summarize everything. One, promises we made, promises we delivered. Two, we're executing a focused value creation strategy. Value creation, not value destruction. Value creation above what we have today, not liquidation. We're not going to close the company if it's up to us and distribute $2 a share, which is what's left to the shareholders. Three, nano-leadership and the board of directors are driving our progress. It is not an amateurish group from somewhere outside the border that is trying to liquidate, to find companies that can liquidate. This is a very serious board and a very serious management, which is now combined from three companies' management soon. And last but not least, Merchantson. Ah, Merchantson is the name of these Canadians, has no strategy and seeks to deprive shareholders of long-term value creation opportunity. Those Melchinson are the guys that during the two years that we were stewards of the cash, our share was traded lower. I agree, like the rest of the industry. So they bought for $2.50 a share, their shares, and they think that now they'll receive the cash and make money. But most of you shareholders, including myself, we bought for more than $2.50 a share. So the only way for us to make money is to grow the company and multiple the value of the share to numbers that will have a return on what our cost. And the cost of a lot of our retail shareholders, $150,000 in numbers, is not $2,500 like Melchison. It's $4,000 like mine, for instance, $4,500, $5,000, $6,000. We need to create higher value than that, and we shall. Last but not least, we remind you to vote, please. Vote for what our board recommends for you to vote, and we're not recommending extreme decisions. We're just recommending enabling us to continue what we're doing for you and for ourselves. I am a shareholder like all of you. My upset personally is in drawing the share to the numbers we spoke, not to the merchant's numbers of $2.50 a share. And we are hoping that you will join us in this important vote. Thank you very much. And I'm very happy if we can open this up for questions now.

We'll now begin the question and answer session. To ask a question, you may press star, then 1. on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. And our first question comes from Catherine Thompson with Edison. Please go ahead.