Ladies and gentlemen, thank you for standing by. All participants are at present in listen-only mode. Welcome to today's conference call to discuss Nano Dimension's Second Quarter 2021 Financial Results. On the call with us today are Yoav Stern, CEO and Chairman; 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 Web site. 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 second quarter 2021 financial results.

As a reminder, this conference is being recorded, August 18, 2021. I would now like to hand over the call to Mr. Yoav Stern. Mr.

Stern, would you like to begin?.

Sure. Thanks, Michelle. Hi, everybody. Welcome to the call, and good morning, I assume North America, good afternoon in Israel and Europe, and good evening in the West -- in the East, where we have shareholders all over. So, I will not refer to the numbers other than mentioning it.

I will basically go along the message to the shareholder, which I wrote, which is long. But I recommend to everybody, other than if they are going to listen today, which will be great, to read it very carefully.

I incorporated there a lot of information and read, which is all, by the way, subject, of course, to all the regulations of what can be published and whatnot. So, read the lines and read between the lines. There's a lot of information there, and it's very, very important. I will try to summarize it, but I don't want to take too much of your time.

The market is opening soon, and it's morning. So - and I want to let you ask questions, so I will refer the things that are of interest for you. So, I will go along this letter or message to shareholders. Start with mentioning numbers, can't go around without it.

Yes, our revenue did grow 68% comparing to the first-half of last year, and our gross margins went up 40% compared to the same period in 2020. But it’s - this is not necessarily a comprehensive indication, a, because 2021 was a very weird – sorry, 2020 was a very weird year with the corona, and the numbers there were low.

And even if it wasn't, 68% growth in revenue and 40% for numbers that are small are not impressive enough, at least, not for me. I am not impressed. I am looking for exponential growth, which I see happening. So, this quarter was good or this half was good.

Better do it this way than go the other direction, better go up 70% and 40% rather than down or flat, not the focus.

The focus is what are we doing beyond or under the numbers that you are, our loyal shareholders, should know, understand hopefully, and support, because what we are busy doing right now is spending a lot of money, not on ourselves, which means none of the management here, as I told you last few times I spoke, got any bonuses for raising that money or for performing along the line those goals we have set in the last year-and-a-half.

But we did have and we do have $1.4 billion, which we are now spending and trying to accelerate it, because our success in moving forward fast and creating value is based on how smart we're spending, and we will be spending that money. And that's what one could see soon in the numbers.

Of course, the numbers of spending the dollars is only an indication, it depends how you're spending and what you're spending it is on. And I can tell you that most of what we're spending it on is in two directions. One, and first of all, is in R&D and product development.

We increased our manpower by 100% in the last six to eight months from 70 people to 130 people. And the second thing we spent is in go-to-market, which we are building toward the phasing out of the corona, which is not phasing out.

But notwithstanding that, we are investing now very heavily, which I wanted to do, frankly, the end of last year, but my organization here was basically holding back, feeling that the corona will -- time will just make this spending a waste.

So, by now, we believe that spending on go-to-market, besides spending on the R&D is exactly what we need to do to create the value. And it's very exciting to see it's happening. And we also doubled our sales and marketing organization beside the R&D. The company, Nano Dimension is - it's a unique business.

It's a startup with an outstanding and unprecedented disruptive status. And it comes out from three factors, which I described in the news release. And it's important to understand those three factors, with each one of them stand by itself, but in three of them combined together, they have an exponential ability to inflate value over time.

So, the first is, of course, our technologies, which are, by now, a combination of the brain - - the robotic brain with self-learning, self-correcting high-yield - higher yield and enabling higher-yield printing for 3D printing printers, both in electronics and otherwise.

And we are in the process already of implementing it in our new acquisitions of NanoFabrica, which will also have the robotic brain soon.

So, we will be probably within the first few, if not less than few companies, that in the industry of additive manufacturing, which is being – which is estimated at $30 billion industry in size and growing, that will have machines that are totally intelligent with deep learning and machine learning.

When you ask yourself what is this technology going to do, either and both for the electronic industry, which is more complicated, and for other industries which are a bit less complicated. Take into consideration the metaphor of the PDF files, which I'm sure all of you are very familiar.

The PDF files compared to the printing, printing houses, small printing shops of 20, 30 years ago, which were printing brochures, which were printing documents, which were printing your contracts and sending it to your lawyers through FedEx; everything disappears -- everything disappeared, I'm sorry. There's PDF file.

The PDF file is the design file of an electronic component or it's the design file of a non-electronic three-dimensional other component or part. It is now flying all over the world through the cloud, of the cloud, in the cloud. You don't move things around. You just print them when you need them, where you need them.

Who would have thought about that 20, 30 years ago. Some of you 20, 30 years ago were in kindergarten, but the people who were in business, like us, it didn't exist.

I'm not speaking only about inventory on the cloud, but the ability to convert inventory so fast from the digital format into the analog format, which is the paper, the books, the newspapers, whatever it is.

This is what our combination of material technology and process technology in electronics, and printing technologies in additive manufacturing in general, both together, controlled by a robotic brain, which we acquired through the acquisition of DeepCube, is going to deliver to the industries that are incorporated in what I described to you earlier.

A revolution like this did happen. And as I mentioned, the printing industry, it took this revolution, which started in 1970s in Israel, with a company called Scitex. It’s one of the first company to do digital printing, and it took 30 years. So by now it's 2020, is 40 years after the 70s-80s, and digital printing is all over the world.

And this is where we are today with our technologies. I don't think it's going to take 30 years to turn on the industry; we're already much ahead of that. The world learned from the printing industry. And I think we are within years of this revolution occurring, very exciting.

That's point number one, we are there ahead of, probably, everybody else I've seen, in a material way because of the robotic brain and because of the process and the printing technology. Now, the second point, point B, and a few factors that makes us unique, while being a startup really, is we have $1.4 billion of financial reserves.

You will see and you will hear a lot, especially on last year-and-a-half, where the market is so high, and money is chasing deals about unicorns in the private market, when people announced that they just raise money for a private company with a valuation of $2 billion or $3 billion. That is not us.

Those people raise $100 million or $200 million or $300 million, it's very high valuation. That's not what we've done over the last year with your help. We raised $1.4 billion, we didn't raise $100 million or $200 million.

We are in a position today that we have enough fuel to fly all the way to the target, be it two or four years or even more, we have the ability to do it without raising more money, without needing to dilute shareholders anymore, and with the ability to spend as much as we need without focusing necessarily on quarterly results and advancement, and [indiscernible] is actually the way to measure one indication of our success as if we're able to spend more in the areas of R&D and go-to-market.

And believe me it's not easy because bringing the people in and we insist on bringing in mostly stars, PhDs, scientists, et cetera.

A baby to grow from 70 scientists to 130 is not simple, notwithstanding the money, that we obviously are not paying millions of dollars to people who join us, we have to be in control, or under control, but we need to get them and there's competition on manpower, and especially the manpower and the sophistication areas of the deep learning, machine learning as well in the process and materials.

So, this is our success for now. And of course, behind that numbers, the achievements we have in our R&D and the product as we develop, and we're very close to releasing, very close to releasing the next product in our DragonFly line. By the way, we are late by about two months. But it's not material.

And it will be much better performance than the DragonFly LDM. And we're very excited about and this is an indication of course, that what we spend, and what we're doing is right and this again, this one step, still only one step for Nano, huge step for the industry, just to use Neil Armstrong's statement, and I'm using it with all the respect.

The last point is, actually a point I mentioned three or four times already, is the people we have, the ability to grow them in numbers, but without compromising the quality.

And it goes forward being them convinced -- being able to perform our mission, vision and mission which is to transform the electronic and adjacent 3D printing industries into environmentally friendly, economically efficient, additive manufacturing industry and are immensely friendly for people who understand what it is.

And I have one person at least that wrote me that she does understand what is it environmentally friendly, it means that we're replacing industries that are full with chemicals, with environmental pollution, with ground pollution, not to speak about, of course, carbon signature with a digital industry that is very clean.

Sorry, the chemicals are totally contained inside boxes, or call it like the HP cartridges. And an ability to build the factory, like what we produced in the West, where we're very, very sensitive to environment is much more attractive. And that's a part of our mission is exactly that.

We intend to enable this by building an eco friendly, intelligent distributed network of AM machines. We'll enable to have another question that a lady asked, "What is material on the cloud?" Well, digital inventory on the cloud means, if you have a PDF file, this is your product. It's on the cloud.

Yes, the PDF is on the cloud, your product and your material is on the cloud. You print it when you need it. It's exactly what we're trying to do with other products, not paper, but rather electronics and other products. So, this is the kind of summarizing our position and our uniqueness.

And please repeat myself, read between the lines as you read the news release. In summary, the three business development axes, which I described in the last news release three months ago are synergetic -- M&A, sorry, accelerated R&D, and revolution in the go-to-market. So, I already spoke with R&D and go-to-market.

On the M&A side, M&A is a binary activity, I shouldn't say binary activity, M&A is an ongoing daily activity, is binary results. And we have a lot of M&A in progress. For obvious reasons of SEC regulations in the merger disclosure, we cannot disclose it until it happens, and then it becomes binary, before it's zero, after it happens it's one.

And as you may remember, we had two acquisitions in April this quarter. Now, we did not make this acquisition starting in the first of April. We made this -- we organized acquisition half year before, but we couldn't talk about it.

So, all these factors that I've mentioned, ABC factors, did not exist eight months ago, you are shareholders of a company that based on investment bankers, that some of them are on our board, did their research, and they didn't see a parallel to something that happened in the foreseeable past, which means an exciting technology with a promise, yet in an early stage company that is so well equipped to fulfill a very ambitious vision, because it has your support as shareholders, which we are thinking for it very much.

I've used this metaphor many times before. It's like a biotech investment there. It's much more acceptable when companies are working for years with hundreds of million dollars of investments before they show financial results.

This is their very understandable, this is where we are, and when people mistakenly thought that when I said it compared to biotech, our downside is protected to understand that the downside -- protection of the downside is the price of the share. That's not the case.

Biotech downside is not protected, because if the FDA does not improve the third grade, or the third testing or the third level of testing, then investment of $1.5 billion goes down in the drain.

We are not subject to any approval of regulatory authorities, there is a reason the downside is protected, because if we don't reach our goals on time, if we are delayed, we can always sell what we developed to this point and get a certain return obviously not as higher return as we are planning of three, four times your investment if not more, but the downside and so much as compared to biotech where the downside is zero.

There is no downside of zero here, there is a business to be solved. And it will grow through an inflection point, which I've mentioned before, business disruptive inflection points are a binary phenomenon. Before it happens, you expect, you expect and you feel that nothing has happened. And then once it's happened, its overnight and its there.

And to summarize and to close, maybe I mentioned the elephant in the room, because it is connected to this last subject. The elephant in the room is the price of the share. Yes, the share went down, and the share went up half a year ago, two or eight months ago in the same speed as it went down.

We have very, very loyal shareholders, which I respect a lot, a lot of institutions and dozens of thousands of retail shareholders. And if you pay attention on the volume of the share is the share went up. They've also fought for the 10 times the volume of the share traded when the stock went down.

What it means is the certain people that are impatient, not impatient as a negative on a patient. Impatient is short-term investors, traders.

And as they sell the share went it goes down, and if there's not enough people to buy, then the share goes down on small volumes, that is what happens not is the volumes of the last few months very low volumes, which means very few people affect the price of the share, most of the people are holding the shares, and I have 16 institutions that I know of the holding shares and very, very loyal and many, many others.

So take this in consideration. Yes, there are short sellers. People tell me that they're upset with the short sales and not upset with the short sellers.

Short sellers are players in the market like everybody else, I respect them, they gamble, order, they do things based on looking at the market and then a share in the share as a commodity, which is on a supply and demand curve, the more demand it goes up, the more supply it goes down, and the short sellers create the driver for supply.

So, the share goes down, the connection between the share price and the performance of the company in the case of Nano Dimension, which I have described laboriously until now, and this bidding the last 20 minutes is negligible.

The share price is a reflection of supply and demand, not of the status or the state of how advance we are and what we're doing. And on the long-term investors or the short-term investors that are trying to be long-term, so let me warn you one thing.

Everybody that's investing in public market knows it's written in all the textbooks, be very careful from trying to time the market. Don't try to time Nano Dimension's business development, it will be very surprising.

It will go through inflection points, and it's not a grown, mature business with $500 million of revenue on a quarterly basis with $0.02 up or $0.02 down in the earnings per share. So, there will be inflection point when we will announce achievements that will cause things to jump up, and you will be late to come into the share.

So, my recommendation is don't try to time it. Make a decision, if you're long-term investors, hold, buy, be in, and when the inflection point will arrive you will be riding up with us.

The people who are trying to get out now and to get in when the inflection point happens, go back to the textbook; you cannot time the market, and you cannot time a binary event, either it's M&A or great achievements in R&D, or both, or a combination of both which is probably going to be the case in any case, and it is the end result.

So, I'll stop right here. I spoke for 25 minutes, and I would like to let you have the opportunity to direct me into items that are of interest, please..

Thank you, sir. Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] The first question is from [indiscernible]. Please go ahead..

Hi, good morning. This is Puneet [Ph] here. And first of all, congratulations on building a strong team and setting up for the long-term success. I am a shareholder - an individual shareholder from last 18 months, and I have a couple of questions.

Like other 3D printing companies, if you can update us on the material development on number of material qualifiers and just -- and what your progress -- on different materials, what is your progress? And what we are -- and broad applications or key applications of those materials, that will be really helpful in understanding what are the broad applications and total addressable market for us.

And another question I have is like, last call, you were -- you mentioned like you were very close to a big acquisition where the due diligence is almost over. So what happened to that? Was it because of price negotiation or something else? Thank you..

Okay. First question - two very good questions. On the first one, material development, we are totally focused and have certain achievements in material development. I will give you some indication on the material development on the side of the electronics, which is dielectric and conductive.

When we spoke last, material was still only operating between 0 to 50 degrees, 45 degrees Celsius. We then expanded it, we reached -- we will reach a milestone of 0 to 70 degrees Celsius, it's extremely important because one of the biggest guidelines for material is at how hot environments can it operate and once it's in the product.

We are by now better than that. We are, by now, getting close to minus 30 or 40 degrees Celsius up to 80, 85 degrees Celsius. So even one step further, the mill spec just to give you an indication, is minus 40, if I remember right, don't catch my word, I may be missing by a few percent to plus 135 or 145.

Commercial spec and industrial specs are lower than that, so we see advancement in that. We see advancements in the quality of the dielectric material as it's printed in maintaining sizes and measurements much more accurately and steadily.

All this will be projected, described, and announced once we come up with the next product which, as I told you, is coming up within the next 60 to 70 days. So, I gave you just a little bit. It's not formal, but I mentioned you the direction. It will be formal once it will be announced, as I just told you. The second question, the acquisition.

Yes, all the acquisitions we've been looking at are too expensive. The price in the market is completely -- prices are unreasonable. We have looked at five acquisitions of large companies, large. Some of them are not too large, between $34 million, $40 million to $150 million. And we walked away from all of them other than one, because of price.

From everything we walked away, only one company was sold, all of the rest weren't sold yet. So, the one that was sold was a PCB company, very small. I'll give you an example, $35 million, which had two, three customers that were 50% of their revenue, which is horrible.

And they were sold at a valuation of more than $100 million and more than 12 times EBITDA. We would not pay prices like that. The price is completely unreasonable. This is businesses that have 30% gross margin and are struggling on a daily basis on their profitability, and specifically the PCB. And we're just not going to buy. It's not right.

We will wait. And I believe in half-a-year to a year, prices will go down, because you can't pay 12 times EBITDA for a manufacturing business like this. The right price is somewhere between six to seven, seven-and-a-half times EBITDA. And I want to remind you the acquisition is concerned, that two-thirds of acquisitions in United States are failing.

Actually, it's a bit more than that, probably 70%. This is well-known number. And the acquisitions are failing in the process not of the acquisition, but in the process of the merger.

And what happens is overpaying is one of the key reasons for a failure of an acquisition, because a failure means you can never have any return on investment, and the thing just ends up folding down after acquisition. I've done acquisitions all my life, I'm not going to fall into this trap.

And as much as some people in the short-term investors on the market would like to see announcements. An announcement is a very short-term upside when you talk about acquisitions. You pay high. You announce. It's exciting. Half-year later, you're losing money, ain’t going to happen here. So, yes, we're walking away from acquisitions nowadays.

Yes, next question..

[Operator Instructions] The next question is from [Rich Brun] [Ph]. Please go ahead..

Hello. Good morning, Yoav..

Hi..

Hi. I want to thank you first of all, for taking your time for the acquisitions and making sure you do your due diligence. I just want to know if we can have any updates on the potential number of target acquisitions..

No..

No..

The range is dozens..

Okay. And also just a final question. I know on the previous call we talked about your satisfaction.

Based on the product development and on the R&D, are you satisfied with the progress so far?.

Sorry, I'm really -- I apologize.

Am I satisfied with what?.

Are you satisfied with the product development in the R&D so far?.

No. Oh, thank you. Well, I was not happy because the existing release was postponed from where it was originally planned for a better product in June -- June/July, and now it's postponed by two months, so I'm not happy with that.

But this is the nature of the beast, especially when you're at the forefront of technology, both in materials and in the printing side of two materials at once to produce high-performance electronic device that works with electricity. So, yes, we're on the forefront, and it was delayed.

But a delay of two months for a product that was developed over a year is not unreasonable. And this happens to software product, and we're not developing software, we're developing both software and firmware and hardware, and what do you call it, process and integration with processes and materials.

So, bottom line, today, with the team that we have built over the last half-a-year, which actually took this product development to where it's going to manifest itself in a couple of months, I'm very satisfied. .

Okay, Yoav. And just one additional question, if you don't mind..

Sure..

Okay.

So, when we talk about the inflection point, how important is it that we get to that inflection point through acquisition, or can we reach there organically?.

Well, by definition, inflection point organically, if it's gradual, it's not an inflection point. Yet, it can happen organically as well, if you are releasing a product that is a total revolution. So, my answer to that is the natural inflection points are going to happen in acquisitions. That's very natural. It's inflection because it's binary.

You work, you work, you work, and overnight, suddenly you have the acquisition. Now you have to start with integration and merger, but it's an inflection point.

And we are planning two new generations of products that are already on the drawing boards and in the R&D facilities, that each one of them when it comes out, it's such an unique and advanced, we'll have an inflection -- will be an inflection point, but we'll get there when we'll get there..

All right. Thank you for your time, Yoav..

Thank you very much..

The next question is from [Gil Greenwald] [Ph]. Please go ahead..

Hi, all. Thank you for the update. You said that you have enough money to make acquisitions, but at the same time, the share price is very low.

Will you consider raising more money from institutions to get an even larger purchase, to have a larger inflection point, right? So, is that option on the table?.

At this point, no..

Okay. Thank you..

There are no further questions at this time. Mr.

Stern, would you like to make your concluding statement?.

I'll just give our friends or investors another 30 seconds, maybe somebody will come up, and I don't want to take away the opportunity to speak. So, just 30 to 40 seconds and then….

[Operator Instructions] Please stand by while we pull for more questions..

Okay, well, it seems there's some person there..

The next question is from Bob [Severino] [Ph], please go ahead..

Do you have any plans for getting certified for military SPEC materials?.

We are already..

Okay, thank you..

Thank you. And I'll add to that, 50% of our customers in the United States are defense industry. Many of them need military SPEC, military certification. And we have -- it's already announced I can speak about it; military defense manufacturer, large one in Germany that is a main customer of ours.

Not only that, he invested with us million dollars in a joint venture, where we are 50-50 in a new company called James, which is just an additive manufacturing electronic sources. It's in Munich.

And it's a defense industry joining none of them mentioned in investment in companies that will change the industry on the side of design to manufacturing and design to 3D additive manufacturing. So, we're very, very involved with the defense industry, as much as we are involved with the academic and research institutions as well. Okay.

It seems like we have no more questions. So, at this point it's 40 minutes, and the market is already open, so I want to let all of you guys start your day, and wish you a happy and successful day in the market, and a healthy -- next foreseeable future until we meet again. Wear your mask, and keep your social distance, guys.

Look forward to speaking again..

Thank you. This concludes the Nano Dimension's second quarter 2021 financial results call. Thank you for your participation. You may go ahead and disconnect..