Greetings, and welcome to the Markforged Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded.

I would now turn the conference over to our host, Stephen Karp, General Counsel. Thank you, you may begin..

Good afternoon. I am Stephen Karp, General Counsel of Markforged Holding Corporation. Welcome to our fourth quarter and fiscal year 2021 results conference call. We will be discussing the results announced in our earnings press release issued after market close today. With me on a call is our President and CEO, Shai Terem and our CFO, Mark Schwartz.

Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that are not statements of historical facts, should be deemed to be forward-looking statements.

All forward-looking statements, including without limitation, statements regarding our business strategy and future financial and operating performance, projected revenue and gross profit for the current year, expected growth, our new product introduction and market opportunity are based upon current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

For a description of the risks and uncertainties associated with our business, please see our most periodic and other filings with the SEC. The information provided in this conference call speaks only as of the date hereof. Markforged disclaims any intention or obligation, except as required by law, to update or revise forward-looking statements.

Also, during the course of today's call, we refer to certain non-GAAP financial measures. There is a reconciliation schedule showing the GAAP versus non-GAAP results currently available in our press release issued after market close today, which can be found on our investor website at investors.markforged.com.

I'll now turn the call over to Shai Terem, President and CEO of Markforged..

Thank you, Steve. I would like to thank everyone for joining us today. This has been a tremendous growth year for Markforged. We are proud to share that we executed on the plan we shared a year ago and beat our targets for 2021. Markforged is of the fastest organically growing additive manufacturing companies with industry leading gross margin.

In particular, in the fourth quarter, we delivered $26.6 million in revenue, which brings total revenue for 2021 to $91.2 million. We exceeded our guidance for both the quarter and the full year resulting in 27% annual organic growth with 58% gross margins.

Markforged was founded on the premise that additive technologies can create a paradigm shift on how we as humans manufacture products. Markforged is building the largest network of connected digital factories to lead the future of distributed manufacturing.

Our technology helps customers overcome global supply chain challenges and move from physical to digital inventory.

The Digital Forge, our integrated metal and carbon fiber additive manufacturing platform powered by cloud native [indiscernible], point of need production, which also helps reduce the negative carbon emission impact of logistics and transportation on our planet. The Digital Forge is designed to solve for high-value, mission critical applications.

Our customers rely on the Digital Forge for demanding rigorous end use parts, which cannot break between maintenance cycles. The Digital Forge provides a reliable and repeatable manufacturing solution that accelerates deeper adoption of our technology.

With over 12,000 active printers, which have printed over 11 million parts, the Digital Forge solve for these applications directly on the manufacturing floor. Our Continuous Fiber Reinforcement is a unique differentiator for Markforged.

It enables our customers to utilize advanced composites in the production of parts that are stronger and lighter than metal. We understand the critical importance of strength in creating end use parts.

We have been leaders in this field with our proprietary material since our founding, and we have seen the transition and increased demand for continuous fiber technology and advanced composites further highlighting a significant market opportunity where customers need to produce stronger certified parts in a shorter timeframe.

Markforged is primed for scalable growth in large view to our AI-driven cloud software platform, which connects our global fleet of printers. Each printer is a standalone digital factory, secure, remotely controlled, collecting data at all times and using our proprietary Blacksmith software to complete its own quality assurance testing.

The data generated from every single print is used to improve the printers on the entire network, increasing part accuracy and therefore increasing demand for our solution. With our approach, Markforged customers are using better solution tomorrow from the learnings of today.

In 2021, we saw approximately 50% year-over-year increase in sales of our industrial solution. This growth is especially noticed in the aerospace and automotive industries.

Global supply chain challenges are creating shortage everywhere, validating the need for printing end use parts at the point of need and accelerating our vision of distributed manufacturing.

Our customers are facing compounding pressures across their operations and are quickly realizing the high value of the digital portability to produce what you need when you need it, where you need it.

We are able to the Digital Forge on our own manufacturing line, in our development cycles and even for end use parts that go into building the Digital Forge itself. Navigating these challenges accelerated by the complicated nature of a global pandemic is no easy task.

Our ability to meet customer demand for products, it’s an accomplishment that our team is very proud of and is reflected in our performance. Speaking of our team, we ended the year with approximately 400 employees, nearly doubling its size.

We're focusing our hiring efforts on our go-to market and engineering teams to develop multiple products at the same time to expand our addressable market. We also built out our executive leadership team in 2021 and now the team capable of scaling Markforged to the next stage of maturity.

Most recently, we appointed Andrew Hally as our Chief Marketing Officer. With deep technology experience, Andrew is helping us refine our strategies around the Digital Forge and help us accelerate our growth.

As we look forward, we feel confident in our ability to execute on our plans for 2022, just as we did in 2021, increasing the addressable market for the introduction of new capabilities to the Digital Forge is our top priority. And we are already executing on that plan.

As you recall, we announced the release of the FX20 printer and ULTEM 9085 Filament with Continuous Fiber Reinforcement in November of last year. Since that announcement, we are seeing robust demand from our customers for this solution and building a strong backlog all over the world.

The early excitement for the FX20 and ULTEM Filament validates our view, the need for high strength heat resistant and higher performance parts in demanding industries, such as aerospace, defense and automotive.

FX20 is the biggest, fastest, and smartest 3D printer our team has ever produced and grows the Digital Forge platform for an accessible industrial grid solution to high volume, robust production of mission critical application at the point of need. We expect to see a significant increase in the volume of FX20 shipping in the second half of the year.

We see accelerated adoption within our enterprise accounts, which continue to certify more and more applications with the Digital Forge.

For example, one of the world’s leading automotive manufacturers who use the full offering of the Digital Forge across its operation, almost doubled their connected fleet to over 40 printers last quarter, including an FX20 with over 700 hours of printing time [indiscernible] This is a strong example of our customers extending its usage of our printer and application they’re solving.

They are even overcoming supply chain destruction by printing as needed and use parts that goes directly into the cars, the manufacturer.

As the customers increase their use of the Digital Forge, we are expanding our addressable market and tapping new applications from accessible product design with our new precise PLA to higher and robust production with the FX20 and ULTEM 9085 filament with continuous fiber reinforcement.

As I reflect on 2021, I look at what fueled our success, the growth of our customer base, the expansion of the Digital Force capabilities for our hardware, software, and materials, our ability to solve for mission critical applications in the face of supply chain challenges and our talented team.

These same elements give me a great confidence in our ability to deliver strong performance in 2022. And now turn the call over to Mark to offer a more detailed overview of our financial performance..

Thanks, Shai. Let’s turn to our financial results for the fourth quarter and the full fiscal year for 2021, as well as our guidance for fiscal year 2022. For the year, our revenue increased 27% to $91.2 million compared with revenue of $71.9 million for the year ended December 31, 2020.

We experienced growth across all products and services and across all geographic regions. For the fourth quarter 2021 revenue increased 9.5% year-over-year to $26.6 million compared with revenue of $24.3 million for the quarter ended December 31, 2020.

Notable for the comparison is the impact of Automation Alley, an $8 million transaction that remains the single largest sale in our history. Removing the impact of Automation Alley representing $4.4 million in revenues recognized in the fourth quarter of 2020. Fourth quarter 2021 revenue increased 33% as compared to the fourth quarter of 2020.

For the year, gross profit increased to $52.9 million compared to $41.9 million for the year ended December 31, 2020. As a result, we achieved a 57.9% gross profit margin for the year compared to 58.4% in 2020.

Our gross margin was strong despite the challenges presented by global supply chain pressures, which we expect will continue through calendar year 2022. Nonetheless, our long-term view remains unchanged.

We believe we will continue to maintain industry leading gross margins attributable to our focus on serving mission critical needs of industrial automation and the broader manufacturing industry. Moving on, we maintained strong controls over our operating expenses in 2021, spending less than our target for the year.

We incurred $113.9 million in operating expenses during the year, which when adjusted for stock based compensation charges of $18.4 million and one time transaction expenses of $2 million related to our public merger was $93.5 million compared with $57.7 million the previous year.

Our full year operating expenses also included $5.3 million of public company expenses that were noted, but deliberately excluded from our 2021 forecast published in our S-4 document. This was due to the uncertainty of the timing and magnitude of those public expenses.

Our research and development expenses for the year increased 87.2% to $32.2 million compared with $17.2 million in the previous year. The result of our commitment to accelerate new product time to market. For the fourth quarter, operating expenses were $34 million compared to $18.9 million for the quarter ended December 31, 2020.

Adjusted for stock based compensation charges of $7.2 million. Operating expenses for the fourth quarter were $26.8 million compared with $18.1 million for the fourth quarter of 2020. Research and development expenses in the fourth quarter increased to $10.7 million compared with $4.3 million in the fourth quarter of 2020.

We remain committed to our strategy of increasing our addressable market through innovation with every software development, system release or additional material, thus increasing the value of our Digital Forge platform to our customers.

For the year, adjusted EBITDA was a loss of $38.7 million or $0.21 per share based on 186 million shares outstanding as of December 31, 2021 or a loss of $0.36 per share, based on the weighted average outstanding share count of 108 million as of the end of the year.

Adjusted EBITDA excludes stock based compensation expense of 18.9 million, non-recurring audit, legal and other expenses associated with the SPAC transaction of $2 million and other income of $65.2 million. As a reminder, the other income line item represents the mark-to-market adjustment of derivative liabilities related to our SPAC merger.

For the fourth quarter, adjusted EBITDA was a loss of $11 million or $0.06 per share based on our weighted average outstanding share count of 186 million. Adjusted EBITDA excludes stock based compensation expense for the quarter of $7.5 million and other income of $22.3 million.

Again, related to the mark-to-market adjustment of derivative liabilities. Before we get to guidance, I want to highlight some reporting changes. On a go forward basis, we intend to supplement the reporting of our GAAP results with certain non-GAAP results intended to provide broader insight into how we manage our business.

Non-GAAP reporting will exclude share based compensation, other income and other non-recurring unusual and infrequent charges from our GAAP results. We will provide this supplemental non-GAAP reporting for gross profit, operating profit and earnings per share.

And believe this will provide a more meaningful set of data points for comparison purposes than our prior non-GAAP reporting of adjusted EBITDA. Now onto our guidance. We anticipate full year 2022 revenues to be within the range of $114 million to $123 million representing year-over-year growth of 30% at the midpoint of that range.

With the expected commercial availability of the FX20 the second half of this year, we continue to expect 60% to 65% of our revenues in 2022 will be recognized during the second half of the year.

We expect to continue to generate industry leading gross margins, even factoring in the challenges of the global supply chain with full year non-GAAP gross margin expected to be in the range of 55% to 57%. Our accelerating top line growth combined with the control we exert over our operating expenses will begin to show operating leverage in 2022.

We expect operating expenses to decline as a percentage of our revenue resulting in a non-GAAP operating loss in the range of $52 million to $57 million for the year. Finally, we expect non-GAAP EPS results for the full year to be a loss in the range of $0.28 to $0.31 per share. That concludes our prepared remarks today.

Operator, please open up the phone call for questions..

Thank you. [Operator Instructions] Our first question comes from Brian Drab with William Blair. Please state your question..

Hey, Shai. Hey, Mark. Thanks for taking my questions here..

Thank you, Brian..

Hi, Brian..

I just wanted to – hey, on the gross margin I’ve discussed this with you a little bit, but can you just talk about some of the challenges that you’re seeing? I mean, obviously I understand supply chain, but maybe with a little more granularity, some of the specific challenges, so we can get a sense for how and when you’ll move past those and is this like, it looks like it’s like a 200 or 300 basis point headwind that you’re experiencing at the moment and see the break that down at all like, which challenges contributing, how many basis points or something like that.

That’d be great..

Yes. Thank you, Brian. So without getting too granular, I can give you a couple of examples perhaps to highlight maybe extreme examples of highlighting some of the challenges we’re facing.

So we’re seeing mechanical components with a 10 to 14 week lead time in – what we would consider to be sort of business as usual times having lead times extended out to over a 100 weeks. We’re also seeing I can think of an example for a specific microchip controller. That was a $10 item, which is now approximately a $100 item.

Now that is short term and it’s because of air freight and other things that are impacting the ability for the supplier to get that chip into the U.S. But these are two extreme examples of what we’re seeing. In both cases, there is the increased cost from labor and materials.

But there's the increased cost from accelerating freight from a ship to air, for example, to make certain that we continue to meet our growth targets. We’ve said this before Brian and we’ve chatted about it a bit. We have prioritized our growth.

And as a result, we’ve made proactive measures that have in some cases impacted negatively our gross margin and we’ve done so because of the importance that we believe in capturing the market with our innovative products.

So in terms of where that basis where the – how do you break down that 200 to 300 basis points? It’s a really a combination of longer lead time items that are getting pulled in. It is obviously increased labor costs and inflation that we’re seeing across the board.

And then it’s also attributable to our new product introduction of the FX20 and the FX20 itself as it becomes commercially available, we’ve got a couple of units out as Shai mentioned. And we’re expecting that to be in commercial ramp by the second half of this year and contribute meaningfully to our revenue the second half of the year.

But that’s at a price tag. We’ll be building early numbers of these units. Small numbers of units mean higher per unit component costs. And that will start to level out later in the year and into next year. And that’s having a meaningful impact on our gross margin as well..

Thanks for all of that detail. And I’ll just ask one follow-up then for now.

How do you feel – how confident do you feel about the ability to get all the parts that you need given that you have some that have a 100-week lead time to build the FX20 and the other printers that you want to hit the revenue target for the year?.

Yes, I’ll touch on that and then maybe Shai can add something to it, but we’re not alone in these challenges. I think lots of companies are facing these shortages and push outs of lead times, et cetera. We fight these battles every day and we have very good confidence in our ability to overcome them.

We did a lot of work last year, as we talked about in terms of buying ahead and securing parts that impacted our balance sheet, but gave us certainty and comfort that we would have part availability through 2022. So we work these problems every day, but today there is nothing that causes us a concern that would impact our revenue expectations..

Yes. Maybe I will add Brian, as you know, I’m very proud of our team here, and I think that’s one of our key differentiators and our team was able to be very agile, very flexible, very creative in finding the right solutions over all of last year and we’re able to deliver on every order that we had.

So I believe that we didn’t see a lot of confidence into 2022 as well..

Okay. Thanks very much both of you..

Thanks, Brian..

Thank you..

Our next question comes from Rod Hall with Goldman Sachs. Please state your question..

Yes. Hi guys. Thanks for the question. I picked up the – I guess the positive commentary on the FX20, but I wonder if there’s anything you guys could say about that order pipeline given kind of where we stand today. I know that things probably moved on since the point of this back.

And just curious if you could tell us is that pipeline on track the way you thought it would be at the point that you came public, has it improved, not improved, just kind of help us understand more quantitatively, not qualitatively if you can, where that FX20 pipeline sets, and then I’ve got a follow up..

Sure. So we are very pleased. I think the demand is robust. I would say we are working by now on over 100 opportunities in the field. Some of them in more, I would say progress stages, some of them is less. But we are very pleased with the current demand that we see in the market.

But more importantly, we are very happy to hear the feedback from the customers. So we have customers that are continuing with the solution. They love it. They’re printing hundreds of hours. You need to understand that these hours are later on being converted into usage of a lot of materials as well. They’re very happy with the solution.

They feel the difference from very accessible to solution to robust production. So a part that used to take six hours now take one hour, so they can move into high volume production with this solution. And we are very happy about it..

What I would add to that Rod is there are not a lot of units in the field and we were able in the middle of COVID last November to share the FX20 at Formnext in Germany.

But outside of that, and outside of what folks are able to see on our website, or occasionally having an opportunity to see a part produced from the FX20 customers haven’t been able to touch or feel it for the most part. And the fact that we have the opportunities that are lining up as they are, has even surprised us positively.

And we’re excited about the future of that product..

So when you just to clarify that when you guys say opportunities, are those, is that a 100 people who are just speaking to you about, I mean, have any of these people actually placed orders for the product it gives some ideas, what the order book looks like? Do you have any orders at this stage? Are you still in the process of just talking to people? And like you say, it’s been hard to get machines into people’s hands.

You have to do that. And just kind of trying to understand what the actual order book looks like for that product..

Yes. We will not be able to go to this level of details, but I can share with you that we do have more than a couple dozens of read orders. So now we are trying to build the printers and ship them out and continue to increase the pipeline..

Okay. That’s great. And then I appreciate that. And then I just wanted to double check the share comp is a bit higher than we had anticipated. I’m just curious, kind of what you guys are thinking, for share comp in 2022.

I mean, we have our ideas and we talked a little bit about it with you guys as well, but just kind of, can you elaborate on thoughts there and then what your general philosophy on share based compensation is? Thanks..

Yes, sure. So just a general philosophy. Equity is a meaningful component of the compensation for just about all of our employees and we want our employees to participate in the success of the company and they want to be able to participate in that success. So it is something that will continue to be important for us in incentivizing our teams.

And I think that in terms of how you model that, I think fiscal 2021 is not an outlier in terms of share based comp on a go forward basis..

Okay. Thanks a lot, guys. Appreciate the chance to ask a question there..

Yes. Thanks Rod. Thanks for calling in..

Thank you..

Our next question comes from Troy Jensen with Lake Street Capital. Please state your question..

Hey gentlemen. First of all, congrats on the great quarter and great year..

Thanks Troy..

Thank you..

Okay.

How about Shai, I guess for you, I’d like to ask a few on the FX20 and I guess I’m curious if there’s more interest in producing ULTEM parts? Or is it just larger OnyX or is the answer probably all of the above?.

It’s all of the above. So as you know, we have a lot of customers that love the X7 and today need to print multiple parts and then assemble them later. But with the FX20, they can do it all in one build and they like the speed of the printer that can really move to high volume of robust production.

On the other hand, we see new customers that especially on the aerospace and automotive, which are extremely excited about ULTEM and especially ULTEM with continuous fiber, which is for the first time in kind of in our world can be printed and can really replace aluminum parts that can go into the aircraft. So it’s definitely all of the above..

Yes. Totally understand. Quick thoughts on like maybe next materials here.

Just curious if medical is kind of in the pipeline and it says some stuff like peak and pack and others?.

So, I didn’t know the Digital Forge has a three main component around hardware, software, and materials, and we continue to develop and push the envelope on all three in parallel. And in time we’re going to share about the new materials, but we always continue to work and develop new materials..

Perfect. All right.

How about the, maybe just last one for you Shai, just the thoughts on the percentage of your parts that are being used in production applications, maybe how that's changed this year versus last year?.

Yeah. We did not do the survey again yet. We probably should. But with that, we did see significant increase in our industrial printers, meaning the X7. And I shared it in the comments before. It's about 50%, which means more and more of our customers printing with the X7 and versus our desktop solution.

So I would say intuition wise, it's probably the same or higher because we are going to higher grade materials and higher grade platform, but we definitely need to do this survey again. Yeah.

And just to be clear last time that we looked at that Troy, 72% of our customers had indicated to us that they were replacing metal parts, steel, and aluminum parts with our advanced composites..

Great. Exactly, love to see that survey again. I'll just throw out one more, just and then see the floor, but just thoughts on open material opportunities for Markforged.

Is that something you would ever pursue Shai or think you always kind of keep it locked up and proprietary?.

I think it goes back to the biggest differentiator for Markforged. We're not a prototype company. We're helping a customer to solve mission critical applications and for mission critical applications, they cannot break between making it cycles, but they must withheld the most rigorous requirements.

And as such, it must come as a full solution and our customers want it as a full solution. They don't want to take pieces and bites from different places and then if something goes wrong, you don't know what's your problem.

We are certifying a full solution, a part that goes into an aircraft, into a car, into the manufacturing line, and it just cannot break. And I think as such, we will continue to provide the full solution and certify the full solution with our customers.

Some of them in automotive, for example, before they put it on the manufacturing line, they do over 100,000 tests. How can you do 100,000 tests each time you want to change material? You have to – you must have the full solution..

Well stated. Right guys, keep up the good work..

Thank you, Troy..

Thank you, Troy..

Thank you. [Operator Instructions] Our next question comes from Greg Palm with Craig-Hallum Capital Group. Please state your question..

Yeah, thanks for taking the questions.

Starting off, kind of a follow-up on an earlier question, but clearly a lot it's happened in terms of global events over the last few weeks, so, a, are you seeing any change in demand or supply chains ability to procure parts? And I guess, secondly, I know you gave some color on first half versus second half revenue, but any more color on what you're seeing specifically here in Q1?.

Yeah. I would say that we definitely see a bigger need to overcome supply chain challenges.

And I can tell you, I visited a very large automotive customer of ours and they have dozens and dozens of our solution all over the manufacturing line and you see they're using it a again and again in more and more applications, by now, they have over 3,000 digital files over 3,000 parts printed with our solution across the manufacturing line.

And the majority of it is because they cannot find the parts any other way or it's more efficient to do it with the Markforged. To the level that sometimes they actually put a part in the car if they cannot get in regular ways. So I think the supply chain is a huge I would say driver for increasing demand for our solution.

For the second question, as you know, we usually it's a cyclical industry, so we do see anyhow second half, which is bigger from the first half. I think this year it's going to be a little bit more magnified because of the FX20 shipments..

Got it.

And should we also take that as Q2 at some amount larger than Q1 as well, just based on normal seasonality trends?.

I think that's right, Greg, you have a good sense of the industry. It's fair to think that, historically it's been the case and we don't see any change to that..

Got it.

And have you made any changes to pricing given what's happened to input costs or are you really just kind of taking the brunt of the ahead of everything going on here?.

We have a little bit, especially on the industrial series on the metal series, but just minor changes to try to overcome the increasing prices or the increasing costs on our side. But we try to play with where we can. There are some areas we see less flexibility..

Okay. And then last one on FX20, you made some, I guess some broad comments on material consumption patterns.

I know it's really early, there's only a handful of units out in the field, but how are you seeing material consumption patterns versus your initial expectations and can you just give us any sense on how that compares to X7, maybe?.

Sure. I would say it's as you said, it's a little bit too early to understand it because there's just a few systems out there. Usually by the way, it takes about a year until we see a normalized level of consumption in each printer. But compared to the X7, we are talking about multiples. The spools are much bigger.

The pace of the system, the speed is much faster. The size of the build is much bigger. So we're going to see a significant increase of normalized consumption of the FX20 but really significant compared to the X7 there's no doubt about that.

We can already see it now, with the size of the parts that some of the customer print and the speed just a few months over 800 like hours of print by now, probably. And it keeps on going. There's a lot of consumption of materials with this system. And it's rightfully so it's a production system..

Makes sense. All right, I'll leave it there. Thanks and best of luck going forward..

Thank you..

Thanks Greg..

Thank you. Our next question comes from Jim Suva with Citigroup. Please state your question..

Thank you so much. And I want to express my appreciation for the seasonality information that you gave us, which is very helpful, especially since we have been a long time since a world of normal seasonality. So thank you for that.

On your comments regarding gross margins, you mentioned that there's a lot of moving parts there and you gave us some gross margin detailed guidance, which is appreciated.

Is it fair for me to assume correctly and investors that you've kind of built in current oil prices into that gross margin full year? I believe you said 55% to 57%? The reason why I ask is, it's just literally within the past week it's moved tremendously, which probably impacts shipping costs, materials, resins, consumables.

So I just wanted to kind of check in on that?.

Yes. Thank you, Jim, because you give me an opportunity to play that up a little bit, but I would tell you that, that we've done our best to factor it in. Even over the last few days, we've now seen oil moving in the other direction.

So this information we've given you takes into account the very most recent and best information we have to-date and obviously not having a crystal ball to be really difficult to speculate otherwise, but we've tried to take into account all of those inputs..

Great. And as my follow-up, you mentioned that you implemented a little bit of price increases to your customers.

Was that on the machine side or the consumable side, or like a shipping line surcharge item at the bottom of the invoice, I was just kind of curious how you went about that, because it can be pretty sensitive with customers?.

Right? We went only on the machine side and just with a few of them. As you said, it could be very, very sensitive. We have by now over 12,000 customers that are using our solution and they are counting on us for their profitability as well. It's a long-term journey. So it's a very sensitive situation..

And then lastly, the reason not to increase consumables based upon oil and resin prices is that you just want to maintain a more consistent market out there and not have it move around a lot and then have stocking, restocking, destocking, buffer inventories and all that, is that the logic behind not changing material prices?.

These data points are coming at us all fast and furiously Jim, as you can imagine. So we're not precluding from making any adjustments, but to-date we haven't seen that it's – that we have a real need to do that. And we are focused on an adjustment in the fourth quarter of 2021 on the machines themselves..

Maybe I add Jim..

Go ahead..

We need to remember again, the key differentiator. We are not a prototype company. We are certifying a solution. And this solution is based on a lot of testing and eventually goes down to a cost per part. So we understand that we understand what our customers are doing in order to certify solution.

And once it's in, it's going to be there for the next 10 years, as long as we will be able to help them keep the same levels of our ride, they need, it's going to be there for a long time. So this is why it's a very sensitive area for us. We are helping to solve mission critical applications.

We're helping to overcome, kind of precision manufacturing cost per part cost. So there's an area there that we need to be very, very careful and help our customers be very successful..

Great. Thank you, Shai and Mark. Thank you so much for the details..

Thank you..

Thanks Jim..

Thank you. There are no further questions at this time. I'll turn the floor back to Shai Terem for closing remarks..

Thank you very much, everyone for joining us. We had a great year in 2021 and looking forward for having a better year in 2022..

Thank you. This concludes today's call. All parties may disconnect. Have a great day..