Good day, ladies and gentlemen. Welcome to today’s conference to discuss Nano Dimension’s Fourth Quarter and Full Year 2022 Conference Call. My name is Nick and I am your operator for today’s event. On the call with us today are Yoav Stern, Chairman and CEO; Yael Sandler, CFO; and Julien Lederman, Head of Corporate Development.

Before we begin, I remind 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 did not receive a copy of the press release, please view it 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 Yael will answer questions. I’d now like to turn the call over to Nano Dimension’s CEO, Chairman, Yoav Stern. Yoav, please go ahead..

one, increasing revenue without increasing operational expenses because we built an infrastructure guys, we have a run-rate of 50 – last year, $44 million this year, projected to grow dramatically. So in a run-rate of above $50 million, company within operating expenses that I believe will feed the next acquisition.

So we will have a huge saving in operating expenses once we do the next acquisition. Next slide, relates to a subject that, again, some of the small shareholders that eyeing the cash and don’t care about all you shareholders that are looking for an upside take it as a negative, we see it as a positive.

The positive thing is – here, the positive item here is that we have, theoretically, of course, 12.5 years on the run rate – cash run rate we have today. Of course, we’re not going to continue the cash run rate negative for the next 12.5 years. We’re going to be profitable very soon.

At least by cash flow, I can tell you that the – our cash flow improvement from 2022 to 2023 is going to be huge. We’re going to be much less in cash burn out. And again, the profitability will follow. It depends on the acquisitions as well.

And if you compare ourselves to three other companies, it was based on the last year results, I know Markforged, Desktop Metal and Velo very, very well. They don’t have 2.3 years. Markforged and Desktop Metal don’t have 1 year and Velo maybe have 0.5 year.

But those guys have less than a year to survive unless they go and raise’s money, and their share price is lower than us both in numbers and is also lower than us in so much as losing value over the last 1.5 years.

So, the strength of our business is, we don’t need to raise money, and they – I don’t know what they’ll do, but you obviously can guess behind the scene. If I tell you know them, what is happening. Next slide, we will speak about our intention to become a market leader. We are the best positioned company to become the market leader.

This market is $16 billion going according to industry reports to $205 billion in 5, 6 years. So forget 5, 6 years, let’s say, $16 billion today, let’s say, it’s going to $20 billion in a year or 2. And there is no 800-pound gorilla. There is no large company.

The largest companies are two, which is Stratasys and 3D, and they are not too large for a market that’s $16 billion. They are only $0.5 million, $600 million each, give or take and they are not doing the right things in order to consolidate the market plus they are not capitalized properly.

We do, and we are, and we intend to do it based on synergies and based on technologies and based on running a business that is focused on the bottom line, not on the top line. We’re not looking to be – it’s $1.5 billion business that’s losing $200 million a year. We prefer to be $0.5 billion business that’s making $100 million a year.

And that’s our aim. Our aim is EBITDA or eventually profit per share. And we’re going to do it both by growing organically, as you saw, and by acquisition. And Stratasys in so much as saying no to the first proposal and now the second proposal since yesterday or so is out.

They better hurry because we have three others that we’re looking at and talking at different stages. And we are not committed to buy services at any price, but we will – at the price we’re offering, we’re going to go all the way to get them. And if eventually the shareholders will say, no, of course, shareholders are shareholders.

We will probably in parallel, you will hear other news about acquisitions. So that was my presentation or kind of points I want to speak about. I took my 15 minutes of your time, and I’ll be happy to answer your questions. Thank you..

Thank you. [Operator Instructions] First question comes from Anne Margaret Crow, Edison Group. Please go ahead..

Hello. Thank you for taking my questions. I’ve got three. The first is, could you please restate your target gross margin? Thank you. Then the second one is, can you provide a little bit more detail on what you’re doing with respect to merging the technologies you acquire? You mentioned Fabrica in that context.

So it would be really helpful to hear a bit more about that. And then the third question was about the impairment. And my question is, is this purely to bring down the value of the balance sheet. So it’s closer to the market cap.

Does it – have you looked at the underlying cash generative nature of the businesses that you’ve acquired to get to that reduction? Or is it simply to get the balance sheet in the right? Thank you..

That’s great questions. Thank you very much. I’ll start with the first two. And if I’ll be able to hold myself, I’ll let Yael answer the third one..

Thank you..

Target gross margin. Our target gross margin for new machines in Additive Manufacturing and Additive Manufacturing & Electronics is above 60%. When it’s totally new, it should be 65%, 68% when it’s a little bit older, tend to slide down to 60%.

Our target for systems and electronics that go into the machine and we sell them as subsystems is about 55% to 60%, and our target gross margin for additive electronics is 40%, give or take because this is a more mature market.

And while we’re using a lot of division intelligence, the robotics the competition is a bit stronger in that area and therefore is for.

So the combination, as we expect the AM, AME to grow faster and to take more portion of our revenue, the combined gross margin will tilt above the 40% into the 60% depends on the combination of the product sales – product line sales and revenue. Second question, emerging technologies, that’s a very, very interesting question. Let me start.

We acquired – you saw the technologies we acquired, we acquired a company called Global Ink Systems, for instance, which has the software and hardware, they are managing the injections and the – sorry, the ink injection has extremely important technology. We started by already using those technologies because they were suppliers to our machines.

Now we’re integrating their technologies into our other machines that were acquired, for instance, in Netherlands, the additive manufacturing machines, so we are integrating those technologies and the software.

Secondly, we’re integrating our software and artificial intelligence, deep learning with the Atlas software package that is made and developed by GIS to make it a software – combined software, both for user experience and designers and software that operates the printing heads together and there is a connection between the two.

So we’re combining it across the world in all the company departments. Another example, we have a company called – used to call Fabrica, they are now with a name of a product line that’s using DLP technology, direct light processing or the direct light projections better.

We acquired another company in Netherlands called Admatec, which has also have DLP technology. The Fabrica machines are using DLP technologies for very, very high accuracy polymer – specialty polymer products. The Fabrica machines in Netherlands are using DLP, similar technology for very high-precision ceramic and metal products.

Now we are combining the two technologies, which are using different factors and different form factors and different sub-technologies, and we are applying certain technologies from Fabrica in the ceramic machines and the metal machines coming out of our Netherlands facilities and vice versa.

Well, we are actually always merging the two R&D teams because the technologies are very similar and complementing each other. Another example, of course, is the technology we purchased 2.5 years ago, Deep Learning.

The Deep Learning is going into almost all our machines in order to improve the performance of the machine in as much as throughput and yield.

Now, we are speaking about even using it for predictive maintenance, the artificial intelligence and you can take it across the board in both additive manufacturing, additive electronics and additive manufacturing electronics, the Deep Learning, DeepCube technology is now going into each one of the product lines.

Last but not least, the impairment?.

Yes. Thank you. So, regarding the impairment, because as of the end of the year, our market cap compared to our book value of the assets less the liabilities, there was a difference there, obviously, because our market cap was lower. And because we have intangibles on our book, we needed to check for impairment for the intangibles.

So, we did the impairment test is not based on a specific value of any acquisition that we did. It is placed on the total company as a combined. And because of this difference, basically, we had no choice, but to do the impairment. So, we wrote down approximately $40 million, some intangibles and also some fixed assets.

So, it’s important to note that it’s not related to any specific acquisitions or it’s not any indication that the goodwill or technology from any specific acquisition is not good, quite the opposite. It’s a very technically accounting issue. I hope it answers your question, Anne..

Yes, it does. Thank you very much..

Next question please..

[Operator Instructions] Next question will be from Eric Weiss [ph], private investor. Go ahead Mr. Weiss. Alright. He is no longer on the line with us. Next question will be Eric Marcus, private investor. Please go ahead sir..

Thank you very much.

Can you hear me?.

Yes, please..

Okay. First, Mr. Stern, thank you very much for taking our questions and thank you for your presentation. In your recent videos and communications, you have said that you believe that the direction that you are taking the company represents the majority of shareholders.

As a shareholder who respectfully disagrees with that assessment, I am asking, why will you not call a shareholders’ meeting and put your chairmanship through a vote of confidence, letting those of us who own the company weigh in? Thank you..

First of all, I didn’t say that I believe I present the majority of the shareholders. I only said that I propose to the shareholders what I think is the right direction. Secondly, in the next shareholders meeting, the shareholders can make a decision and vote me down, and I will leave the Board or leave the company or whatever the shareholders.

I work for the shareholders. So, no problem, I agree with you..

When will that shareholders meeting be held to have that vote?.

As we usually have a shareholders meeting after we published the F ‘20 – we have annual shareholders a couple of months later once we finish preparing all the paperwork. So, I don’t expect more than a couple of months from now. As we look at the time we did it last year, we will do it this year again and you will be more than welcome to vote me out.

And if most of you will, then I will step down. It’s not a problem at all..

Thank you..

Thank you. Our next question will be from Ram Reddy [ph], private investor. Please go ahead..

Hello..

Yes. Please, Ram..

Yes. I have a couple of questions. The first one is, last year, you said you are going to get analyst coverage within the next couple of quarters. It’s more than a year. I don’t see any analyst coverage.

Second one is, what was the interest you had in the last quarter, Q4 up to 2022 and how much interest you are expecting for this 2023?.

Sorry, the second question again?.

What is the interest you got for the quarter, 2022 last quarter? I mean you have more than $1 billion sitting on the bank account…?.

Okay. I understand..

Yes. Please..

First question, I will answer. And the second question, I will let Yael answer. You are right. I was speaking to at least one analyst from a small outfit in Midwest that is following other companies in this industry.

He promised and said that he is very interested to write a research report about us, which I spoke about it was exactly, it was the third quarter of 2022. And the guy didn’t do it. And I don’t understand why, and you are right, it’s my failure. I am still, of course doing the same thing.

But as much as I am looking at myself, the fact that we don’t have analysts writing about us is disappointing to me, and I am disappointed to myself, but I can tell you one thing. And what the two, three acquisitions we are looking at will cause the analysts to start to write report about us. That’s for sure, I already spoke with them.

And the fact that we are employing two banks now, both Greenhill and Lazar is in a roundabout way, and people who work in Wall Street know it because they are going to become part of the upside of closing a deal is going to cause analysts, I hope and that’s the way it works to write reports..

And in terms of the interest revenue, so in 2022, we had interest revenues of around $18.5 million. Obviously, most of it is towards the second half and very heavily even in the fourth quarter because of the rising interest rates.

And in this quarter, the first quarter of 2023, we are at a run rate of more than $11 million a quarter from interest revenue. So, assuming the interest will continue to be as much as they are today, you can multiply it by four and see where we project our interest revenues will be.

And as Yoav mentioned earlier in the call, it is expected to influence our total cash burn significantly this year..

Thank you very much..

Thank you, Ram..

You’re welcome..

Thank you. This concludes our question-and-answer session. Now, I would like to turn the call back over to management for any closing remarks..

Okay. I will say a few more words in case other people want to ask. I want to relate back to the question that the person before the last person asked and he said, and I want to reemphasize my answer to him. He said, Mr. Stern, you claim in your videos that most of the shareholders support your business plan for the company.

I never claimed it in the videos. I don’t know if most of the shareholders support what I propose to lead the company towards. The only thing I know that 90% of the shareholders don’t include these two entities on the lake of – on the shore of Lake Ontario, I don’t remember exactly the names.

So, other than those two, 90% of the shareholders don’t support their way of wanting to dismantle the company and pay for those shares. That’s the only thing I said. The other side of it is, I am trying to convince shareholders in the sense of moving along the businesses we are proceeding with. And I am clearly at the mercy of shareholders.

This is business democracy. I am voting that. If they vote me out, I have many, many things to do with my life other than working 18 hours a day. The only thing I won’t be happy if I will stand down is to be able to help you make money. But I will definitely respect any directive that I will get from shareholders.

So, that was just to reemphasize this point, and to gain some time to let you guys maybe have more questions, but I see that you don’t. So, as we always do, by now, I am much more involved with the shareholders, they are writing me and I am writing back, and it’s actually a pleasure.

So and it’s a pleasure to speak with you today, and I thank you very much for the opportunity..

Thank you. Conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..

Thank you..