Good day, ladies and gentlemen. Welcome to Nano Dimension’s Full Year 2023 Results Conference Call. My name is Scott, 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 Pinchas, CFO and COO; and Julien Lederman, Vice President of Corporate Development. Before we begin, may I remind our listeners is 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 a 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 Nano Dimension’s CEO and Member of the Board of Directors, Yoav Stern. Yoav, please go ahead.

Thank you, Scott. Good day, everybody. I hope everybody is watching this black and blue slide which is opening. We can move to the next slide discussing the forward-looking statement. I’m going to leave it on for a few minutes rather than read it for all of you like repeat reading. Just scan through it. I’m sure most of you understand what it says, and it protects all of us from sliding into issues or information that is confidential and/or not accurate. So we’ll go to the next slide and here we’ll start. I’m going to divide my presentation to a few chapters if you wish. First, I’ll speak about the results, of course. Second, I’ll speak about not our industry. I will call it our business domain, and you’ll understand why I’m separating between industry and business domain as I get to that chapter, a little bit about customers and analysis of our, again, business domain as it relates to it, plans forward a few words, and then the most important part will be Q&A in order for you to be able to express your areas of interest, which I will relate to as best as I can. So to start with, you see the highlights of 2023. Indeed a fantastic year for Nano Dimension. We grew 29%, 30% year-over-year where the year before we grew even faster. We are by now close to $60 million of revenue. More importantly or no less importantly, our gross margins are growing steadily; by now close to 50%. We are showing improvements in almost all variables of the financial reporting of a public company. I give a higher weight function to the fact that our gross margin is improving, because this is the key to the door where profits, positive EBITDA, and…

Thank you. [Operator Instructions] And our first question today comes from the line of Ashok Kumar with ThinkEquity. Please go ahead.

Alright, thank you for taking my questions. The first question is broadly in terms of your cash burn and reshaping Nano. So you have the $15 million quarterly run rate, 50% gross margins, $1 million burn per month. So what’s your path line to profitability? wo is capital allocation. I think you talked about $1 billion and cash generating about $4 million a month in interest income. And can you talk about strategy beyond cash buyback? The third question is, you talked about business domain. Specifically, you talked about material process on one hand and design software on the other. So do you have the capacity in-house at this point to be an industry leader where you forecast the industry to be some years from now? And the last question is on the industry, right, which is business domain versus industry, you make the distinction there. Clearly, you don’t want to be the last man standing. You talked about continued burn rate and lack of balance sheet support with your competitors. And industry is critical because it’s more than the sum of the parts. And so where do you see the industry also over the forecast horizon. Thank you.

Okay. I counted five questions. I frankly didn’t understand the fifth one, but let me answer the first four. And if after the first four, I didn’t answer the fifth in between, then, of course, I’ll let you ask it again. And thank you very much for your questions. First of all, if we burn $1 million a month, or between $1 million to $2 million a month, it will be the lowest cash burn this year that we had. It’s not going to be the target to stay on. Profit will come, and cash flow burn will go to zero or start to generate cash we believe in 2025, and it will be dependent on two variables that are complementary to each other. Either we increase our gross margins to around 60% with no acquisitions, then we’ll be profitable and cash flow generating, or we do the acquisitions we are planning and negotiating, as we speak, because the price will be right, use some cash from, of course, the cash we have for the acquisitions, and then being bigger will enable us, depends on the specific acquisitions, to be profitable even in less than 60% gross margin. That said, being profitable means while continuing to invest in R&D and continuing to develop both materials and process and the software that I mentioned before. First of all, I do want to be the – not the last man standing, but the first leader standing. And in order to do that, I have to have the profitability. Now, the profitability doesn’t only mean that there’s a positive EBITDA, earnings per share, profitability that comes from gross margin, means I have enough money to spend on R&D to stay ahead of my competitors. And at 60%, in around $100 million of revenue,…

Yes, you did. Again, thank you very much. And best wishes.

Thank you. Any more questions, please.

The next question comes from the line of Sol Zelman with Gericare. Please go ahead.

Good morning, Yoan. And thanks for the information shared on the call. Really great on the presentation. Great quarter results. I have two questions, one largely based on the press release shared this morning. Based on the forward-looking strategy of going the M&A strategy, I see that strategy of waiting to see what will happen has paid off, especially based on the valuations of the peers that you mentioned going down daily. The question is, based on that press release, and given those dynamics and even egos among those other 3D printing companies, would it be better placed to possibly wait and purchase them through bankruptcy proceedings, or is it a better idea to continue going through it? For example, I had seen that Stratasys deal was up in the air. I did see in the presentation. I see them dropping daily. I even see, for example, another one, DM currently, based on their Q4 cash numbers, coupled with the stress in the bond market, DM currently is trading at $0.50 on the dollar. It looks like you won’t have long to wait. Is the strategy to go for it now or, yes, to wait a little bit just to see if they go towards the bankruptcy proceedings, allowing that strategy to fully pay off?

Okay, that’s an excellent question. And both companies that you have mentioned indeed are burning cash. Stratasys has burned about $160 million to $180 million during ‘23. They started the year with above $300 million. They have left with $160 million. And if they keep burning at the same rate, they will probably need to raise money or take debt. I don’t think they’ll aim to go to Chapter 11. Stratasys is a serious company, and I think they have good prospects for the future if they do the right thing, which they’re not doing right now. But they are smart people, and we are the main shareholder of Stratasys, so I have a very serious interest. So these are not at the risk which you describe. The others do. Sorry, the others are at the risk, exactly what you describe. If they continue to play the game on their own, it’s like soccer. Or you want to play soccer with 11 against 11? That’s great. You want to play soccer where you’re alone in the field and running with the ball? Good luck. Because that’s what we’ll end up. You’ll end up with three or four players running on a soccer field with a ball each. And then what do you do? They do the Chapter 11 is not something I want to wait for. I’ve been myself a turnaround executive, and I’ve done Chapters 11 as a person who came from the outside to fix the situation. And I was successful in a couple of them. But it’s a very difficult process. We are dealing with the industry that, with customers like NASA and SpaceX, and we specifically have a lot of defense customers, and the other competitors have defense customers. Those customers will have serious issues to…

The next question comes from the line of Katherine Thompson with Edison. Please go ahead.

Hi there. I wanted to ask a question about your revenue growth in the year just gone and also the outlook for the coming year. So just to get a sense of how much business did you get from repeat purchases from existing customers? How much was new customer wins? How much is system sales versus consumables? And really just to get a sense of how much more you think you can grow in 2024? And then just a second question on consolidation, clearly, you’ve got the bid in for Stratasys at the moment, and we’re still waiting for the outcome on their strategic review. If that’s a no, what would your plans be?

What was my – sorry, the last sentence, what will be my – our what…?

What are your – what would your plan be if Stratasys says no, I am assuming you have got various other companies that you are considering for consolidation?

Okay. Got it. Very good questions. Okay. First question. You asked 3 questions. So the revenue growth in 2023 was, to be fair to ourselves, we’re very proud of 29% organic growth. But our budget was $60 million. We were 5% below our budget, which we debriefed, and we learned and studied, because as much as I am concerned, if we put a budget of $60 million and we reach $56.5 million or so, then obviously we’re 5% below budget. Yet, it was a great growth and fantastic year. But I would like to build an organization that stands by the budget. That leads us to 2024 if we assume no acquisitions, because if you assume acquisitions, our growth will be stratospheric. Our growth will be in multiples, not in percentages. That’s based on the acquisitions I’m talking with now. But if we’re assuming with no acquisition, our growth, as we expect, will be lower than 29%, but higher than 15%. And we are working that according to the budget today, our first quarter, which is usually the worst quarter of the year, first quarter this year is going to be not bad at all, because it’s growing. But you don’t know by the first quarter to say what will be in the end 3 quarters later. But we are starting the year on the right foot. Next question was about systems, consumables, repeat sales, et cetera. Our consumables is about 10% of our revenue. Depends on which area. I’m speaking about 7% to 10% of the machines that we do sell consumables to. There’s machines for additive electronics, for instance, that we don’t sell consumables because the consumables are components and semiconductors, and there we don’t sell the consumables. So there the consumables is zero. But in the areas…

Yes, our next question comes from the line of Ronni Rausch, Private Investor. Please go ahead.

Hi, can you hear me?

Yes Ronni.

Hi. Thank you all for the presentation. I have two questions. The first one is regarding the revenue. I wanted to get your view on the current dynamics of the – in the 3D printing industry. Do you see the gross margin improving? The second question is obviously the revenue is no longer the catalyst anymore. Sometimes it becomes a liability on low margin sales. Referring to the peers, in your opinion, did we hit the low-cycle by now? Thank you.

Okay. Let me start with the second question. This industry actually, again, let’s just say, business domain, call it, which is the group of companies that incorporate various technologies to print in three dimension products that are belong – that belong to many other industries. So, this business domain has been in a kind of traumatic process for years now, at least for the last 10 years of pushing and fighting each other by reducing margins, in order to fight your competitor or in order to convince the market that this new technology is good for them. That ends up with the company without naming names, for instance, that has been selling quite serious, serious, serious laser machines, laser 3D printing machines to very serious customers and industries and showing 6% gross margin. That means that every dollar they sell, they lose probably $0.30. And maybe they are trying to compensate it with quantities, but that actually doesn’t work, as you know, because if you sell more of what you lose with, you just lose more. And this is an epitome in this industry. Other companies don’t think that 6% is gross margins and exception, there is other companies, it is, the gross margins is between 15% and 25%, which is unacceptable. I am speaking about again, people who are on R&D, I am not talking about companies that manufacture using those machines to manufacture parts, that’s different. You can live with 30% to 35% because you don’t do R&D. So, the revenue being liability, you are right, this industry is or this business domain has been in this mentality, I am not, we are not. And I think the whole business domain is starting to wake up to listen, to hear the music. It’s a part of the maturity of the technology and the companies around us. And again, consolidation will help dramatically. That was your second question. Now, it goes back to your first question, which was the dynamics in this business domain in general and the gross margins, which is connected to the second question. I don’t think the dynamics has already drove the numbers up the way they should, but they are in the right direction. If you look at certain companies in our industry, again, without naming names, there is one public company that have like us 47%, 46% gross margin. Stratasys has 43%, 44% and it’s combined of mixture of products and materials when in certain areas they have much higher gross margin, which is good. Similar, maybe 3D, so some of the more senior executives, that are running companies in our industry are realizing what we are discussing here and I think they are going in the right direction. I think without consolidation it’s not going to hold for too long, because they are still busy focusing on the top line instead of focusing on the bottom line, but it’s in the right direction. Next question please.

[Operator Instructions] The next question comes from the line of Rami Reddy with – Private Investor. Please go ahead.

Thank you for taking my question. Are you expecting any analyst coverage in the near future?

I want to expect, I expect to expect and I am very, very busy creating a situation where my expectations will be fulfilled. I am doing it in many ways. It’s important, it’s important in order to attract institutional investors. It’s important even if all the analysts that I see in this industry, writing analyst reports with lacking real understanding of where the numbers are going and where the value of the shares are going and giving inflated expectations. But still it’s even if it’s the case, it’s important that this analyst or that analyst or few analysts will write the report because the important part of the report is not necessarily the projection of the price of the share is the understanding that’s inside the report of the business of the company and the business dynamics of this domain. And for that, analysts reports are extremely important to attract the right and the right investors and I am making an effort on a monthly basis to get them to write. And the problem is that usually an analyst start to write after their bank has been involved in the transaction of raising money. And we do not expect or we didn’t raise money over the last 2 years, 3 years. We have enough money, but it’s coming, it’s coming, the fact that analysts are starting to see us as a consolidator, they will start to follow us.

Thank you.

Next question please. Scott, any more questions?

Next question comes from the line of Moss. Sorry, apologize, we do not have any more questions in the queue. At this time, I would like to turn the conference back over to the company for any closing remarks.

Okay. Thank you very much, Scott. Thank you very much everybody that was on the line. I hope that the fact that we take it as a methodology not to have this conference call and read to you the user list because that one you can read by yourself. But rather run it as an open discussion when we speak to you about what we want to speak with you and we are mostly focused on talking to you about what you ask us. And I hope this format is good for you rather than just reading from a page, what is the user list. Any questions, any requests you have for me, you know my e-mail, you know our phone numbers, of course Julien, Tomer, Moshe and we will be happy to talk to you offline. Thank you very much.

The conference has now concluded. Thank you for attending Nano Dimension’s quarterly earnings conference call. You may now disconnect.