good day ladies and gentlemen welcome to Nano Dimensions third quarter 2024 conference call my name is Wyatt and I'm your operator for today's event on the call with us today are yav Stern CEO and member of the board of directors Tomar pinchez CFO and coo and Julian Letterman VP corporate development before we begin may I remind our listeners that certain information provided on this call may may contain forward-looking statements and the Safe Harbor statement outlin 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 yoab will begin the call with the business update followed by a question and answer session at which time the management team will answer questions I would now like to turn the call over to NAD Dimension CEO and member of the board of directors yo abstern you may please go ahead thank you very much R uh ladies and gentlemen thank you for participating this morning and this afternoon I I I want to preempt and tell you that uh I'm talking to you today from Frankfurt which is the main one of the main annual event of form which is the industry EDI manufacturing industry uh trade show and it's the most successful one that n have ever seen I've never seen so much interest in our booth and what we're doing both in the existing Nano and the excitement around the two Acquisitions some of which are already having uh people from other companies coming and visiting other comp other company means other acquisition targets that we mentioned coming and visiting us uh so with this excitement and uh looking forward to uh this excitement translate into numbers uh I'll start by uh describing a little bit on the slide of the numbers uh mentioned that $15 million of Revenue is the best third quarter ever and one of the best quarters ever we had is 22% over last year same period gross Mar is 48% which is up from 44 and adjusted gross margin which which is without non-cash expenses is 51 up from 48 this is gentlemen and ladies extremely important because the business model of all companies in our industry suffer from gross margins and therefore from lack of profits when we get to 55% gross margins we start to show profits and substantial and this is very very exciting and no less exciting in is the net cash burn gentlemen and Ladies we turned around n Dimension from $16 million burning per quarter last year to3 million cash burn and we're close to break even in cash burn and this is only Nano without the two Acquisitions small Nano which we cut expenses by reducing head counts dramatically and still not harming the revenue and the growth uh which comes to show you that the direction to profitability which we are committed to is well ahead uh some business updates yes we announc and close to closing desktop metal acquisition and right after that mark forge acquisition two of the main companies of this industry in parallel we have notable sales first time to Applied Materials University of Dayton and the leading very well-known Aerospace and defense company which we can't mention its name for all this reasons in parall to all this we are in front of our annual Jour meeting will be held in the December 6 and yes we are fighting descendant shareholders from uh I think Toronto which is trying to dismantle the company and we as a board recommend to everybody don't vote the company is growing and will bring return much more than just taking it now selling it in pieces and trying to get Pennies on the dollars the vote cut off for this general meeting is December 1st the next slide will show you a little bit of the graphic presentation of the numbers slide number five is showing that the revenue the way it grew from last year the gross margin growth and the reduction in net cash burn from the same period last year the three new customers are not the only three new customers that we had this quarter but we just highlighting those for you because it means a lot for our growth of again I'm talking about right now original Nano before T of metal and before mark forge which is a whole new story which I hope will be you'll be hear you'll hear about it in details in the next conference calls so those are not included here if you would want have a snapshot in slide number seven you will see what we did with Nano over the years that you gave since you gave us the cash about three and a half years ago and we were a steward of the cash and promised you we are not going to spend it until we get into large Acquisitions so we did spend it on smaller Acquisitions and for about two and a half years and as a result of that got attacked by a kind of uh activist or whatever you call them shareholders that were practically interested in a the company has but we got to the point where we did use the large cash that we raised from you and we used it for the good reason at the right prices and we acquired two large companies and if you look how we moved from left side of the slide to the right side of the slide from one technology and one type of machine in Ed manufacturing Electronics into Technologies with dozens of types of machines more than a thousand patents we have the largest amount of patents which is spread all over the industry and that by itself in the future may create a profit Center for us we have Technologies nowadays that include inkjet binder jet DLP fdm ceramic com Composites Electronics metal metal casting polymer and micro polymer we have only one technology that exists in this industry that we're still in luk for and we have plans how to reach it and uh that's a technology that has to deal with another technology for Metals we do believe very strongly in the metal business the next slide slide number eight shows you these two large Acquisitions why we waited for so long look ladies and gentlemen since September 21 when we had the money and raised it those companies that we now acquire were traded at between 15 to 35 times their revenue 15 to 35 times revenue and in this whole period May September 21 to May 22 through January 23 as the outliers from the different countries here try to attack us for not spending the cash and for trying to to dist to distribute the cash to themselves we waited we waited as those large transactions started to lose value and lost it steadily over two years until we got to the end of 24 and we bought them both at less than one time one Le average one time multiple one time sales multiple and we believe we paid the right price and we bought them at the right time because if they were to proceed forward they would be in trouble which we believe they wouldn't be able to withstand by saying stand alone independent now that we brought them together all three of us together are creating an industry leader which you see in the next slide number nine on the left you see how we build ourselves the $56 million is the old Nano which is built from six small six seven small Acquisitions and 29% organic growth I'm emphasizing the 56 from 22 to 23 grew 29% not from Acquisitions from organic growth and if you read different numbers in the material that the that this foreign foreign company from uh Canada I think is publishing uh it's all coming from somewhere that is not the indust it's not the numbers of the company so we grew organically then we added and we're adding $190 million all numbers here are based on 20 2023 performer numbers that's desktop metal and we adding 94 million of mark forge together to create a new $340 million business based in 2023 and I'm telling you right now we not going to emphasize the high the high Revenue we may even reduce the revenue on account of being profitable if need be the $340 million will be reduced to numbers where the gross margins will be higher and the profits will come and appear and multiples of profits will get the share up in this right side of the slide you see kind of analysis of five five six companies in industry public and the left the small voxel jet V Broadways which are uh smaller companies that were public uh two of them vet by now is not public anymore it's squeezed down to uh off B off uh off off NASDAQ V is on its way from $77 million of Revenue per year to $3 million Revenue per year and uh prodways is going down from closer 200 to less than what what it shows here and traded by the way in the Paris Stock Exchange in parallel you see the three biggest company in the industry on the right side strates 3D system and yes us with 340 million dollars but look at the difference in the amount of cash that each one of us is we will be $40 million with $470 million of cash on the balance sheet and the other two you can see the numbers that means we have the dry powder to turn the 340 into a profitable and growing 340 not into just revenue revenue growing by acquisition or otherwise but no profits the focus of this company moving forward from into 25 and forward is going to be gross margin and profits in the top in the bottom line and the cash that we have will be used as less as possible to cover losses and as more as POS possible to create profit to create and generate even more profits last slide which is slide number 10 summarize everything one promises we made promises we delivered two we executing a focused value creation strategy value creation not value destruction value creation above what we have today not liquidation we are not going to close the company if it's up to us and distribute $2 a share which is what's left to the shareholders three Nano leadership and the board of directors is are driving our progress it is not an amateurish group from somewhere outside the border that is trying to liquidate to find companies they can liquidate this is a very serious board and a very serious management which is now combined from three companies management soon and last but not least merchon ah merchon is the name has of this Canadians has no strategy and seek to deprive shareholders of long-term value creation opport those meron are the guys that during the two years that we were stewards of the cash our share was traded lower I agree like the rest of the industry so they bought for $2 and half dollar a share their shares and they think that now they'll distribute the cash and make money but most of your shareholders including myself we bought for more than $2 half a share so the only way for us to make money is to grow the company and multiple the value of the share to numbers that will have a return on what our cost and the cost of a lot of our retail shareholders 150,000 in numbers is not two and a half like meron it's four like mine for instance four and a half five six we need to create higher value than that and we shall last but not least we remind you to vote please vote for what our board recommend for you to vote and we're not recommending extreme decisions we're just recommending enabling us to continue what we're doing for you and for ourselves I am a shareholder like all of you my upset personally is in growing the share to the numbers we spoke not to the Marin on numbers of $2 and half dollar a share and we are hoping that you will join us in this important vote thank you very much and uh I'm very happy if we can open this up for questions now we now begin the question and answer session to ask a question you may press star then one on your telephone keypad if you're using a speaker phone please pick up your handset before pressing the keys to withdraw your question please press star then two at this time we will pause momentarily to assemble our roster and our first question comes from Katherine Thompson with Edison please go ahead all good afternoon um I've just got a I've got three questions um first question is um could you give give us a bit of detail on the reaction you've had from your customers to the news about your two proposed Acquisitions um secondly just a quick update from a regulatory perspective of where you are with both of the Acquisitions and just to confirm that you still expect to complete desktop metal in Q4 and Mark forg in q1 of next year and then thirdly just to also confirm it sounds as if what you're saying is that to get to break even ebit D which I think you've referenced being in Q4 of 2026 that that's going to be more through a process of cost synergies rather than Revenue synergies that's the three questions yes uh first question reaction of customers is and you asking me as I said earlier in the right time because I'm in the Frankfurt for formex show so I'm meeting a lot of customers is extremely excited I'm speaking not only of customers of Nano existing customer that are happy to have an ability to have an expanded the product line but I'm not talking to customers of mark forge and desktop mattera which are coming to me to discuss the future of their product llies and uh excitement is all over you feel the vibration in our boost and I know it when I'm saying what I'm telling you now because I've been in all the trade shows of the last of most of the thresholds of the last three years this is the most exciting one secondly regulatory yes we're finishing the regulatory work we pretty much finished with the hardc toino we finished with um the vote the proxy and the vote of dust of metal which all voted for the deal we have finishing the work with um um cus and expect the transaction with desk of metal to close before the end of the year uh and hope and um and so much as um mark forge we are bit behind on on that because we started later the the the transaction but KBR sorry out Cino HSR is pretty much done uh cus is a parallel process to what we went through so we hope it's going to be much shorter and um the shareholder vote of of um Mark forges supposed to occur in the beginning of sorry in the beginning of um December hence we're still hoping to close the deal with them in the first quarter of 2025 and so much as profitability uh I expect that the first few quarters you will see profitability that profitability especially cash flow that's improving the best the worst cash flow obviously will be in the month sorry or in the quarter when we will merge the three companies together because we Nano itself we already in a very very good cash cash flow position but the other two companies are still burning cash so the first quarter will be combined cash burn but the minute we get control over the companies and we are already in plan and discussion with their management we intend to start to cut expenses dramatically so uh when you get to the first of uh the beginning of of 2026 we to either show profitability or show cash cash flow uh positive uh or both right thank you thank you and the next question comes from uh next question comes from Soul zelman with Jerry care please go ahead good morning thank you operators thank you y all um you you spoke about the various aspects that uh you know closing the desktop metal merger the uh the um the next step with mark forge with with again the elephants in the room is the fact that uh there's an AGM right now and you speak about it asking everybody to vote but there the question the big question is is if with this uh the activists right now if they're successful installing two new directors into the board is there any concern of them derailing killing these transactions uh obviously this is a big consideration for every shareholder in this AGM I'd love to hear your feedback on that and you also mentioned the aspect of the CPS what is that process what does it mean for us as as shareholders and where is that process going to take us I will start with a second question the cus is a typical process by regulatory agency in the United States we went through cus uh already answered most of the questions we expect they told us they don't have more questions so I'm speaking about the cus with d of metal so we expect this to finish in days and we hoping that uh we don't see any any issue that will stop it unless uh there's something we don't know but basically the question and answer uh processes uh came to an end as much as the cus reported to us in the last few days which is good which means they got answers for all the questions uh then we have to go to cus with mark forge and I expect that c of mark forge would be shorter because it's basically it relates to mark forge and to to metal so they have to do the C has to do the checks on mark forge but in the checks on N of Dimension they already have done it so it's a typical processes all the companies that are forign are going through that it may take between a month and a half to 6 months uh we are hoping that it will be closer to two mon to three months and rather than to six months and uh we it seems like it's moving in the right direction as much as the elephant in the room the elephant in the room is not an elephant it's a it's a it's a cat the elephant in the room is a cat that wants to invest wants to dismantle the compy company but all what de is a demanding in this um in this AGM is to insert two directors which are uh directors if you look at their background and I know one of them very well from the past have very very checkered past and issues in the past and they hope these directors will make some impact I guess as I told you I know this uh one of these directors while his Checker past is an honest person I don't see these directors coming in and destroying the company uh first of all uh there will be other six directors that will be a majority and the whole company is eight directors I hope that they don't get into this uh this board but even if they will get in the board it's a minority minority cannot affect decisions of the board by vote because of there are minority plus once they get into the board I believe that they will be thinking and worrying about the company not about the elephant or the cats that got them into the board so uh this is about the railing this is about how decisions are going to be made how can you derail these deals I don't even understand the deals was signed and a committed of the a commitment of the company legal Commitment if you derail these deals as assuming you could by having majority of the board which they won't have then it's tortous interference in contracts that was signed by the company already committed by the company so I don't see this being the rent at all they don't feel with the the uh severe accid approach that they're taking that they'll they'll try to find some way of derailing SL killing it I that shouldn't be a concern they can also say that they plan to attack Iran and solve the problem of the Middle East they can they can claim lots of things and you're at the helm we're we're following that guidance and we'd like to understand that that's that's not a concern when we're making our decisions so I appreciate that feedback I'm I'm I'll tell you that the truth and the fairness I am um a warrior not from Warrior from um being a fighter I'm a warrior for being worried I'm always worried from The Unexpected I'm always getting up in the morning after not sleeping half a night because I'm thinking what could have happened that I didn't take into consideration I'm worried about ER events that are happening in the business and if some some activist like this is claiming that they will derail then it makes me worry so I worry and I go to lawyers and I go to advisors and I check and everybody's telling me you off you don't have to worry they can't do it so that is the message I'm delivering to you great thank you thank you and the next question comes from Felix zegler with Felix Investments please go ahead hi thank you for taking the question um wanted to get a better understanding of the m&a rationale here uh the past five Acquisitions for deep Cube Nano Fabrica uh asentech uh Global inket and formatech they don't seem to have been integrated very well given their revenue growth has really deteriorated under Nano's leadership all those companies had gross margins of between I believe it was 55 to 60% as rep reped by Nano uh but Nano just reported a gross margin of 48. 2% this quarter so the synergies didn't seem to really materialize there either um so for Mark forged and dustop metal um I think right now they're experiencing negative Revenue growth and they have a gross margin profile that is actually below what Nano currently has and they continue to burn astronomical amounts of investor cash and are therefore on the verge of bankruptcy so how does it make any sense to be acquiring these businesses with investor cash I think in your presentation you said the rationale seems to be the low sales multiple but if we look at a company like Spirit Airlines which had billions of dollars in revenue and just filed for bankruptcy it's clear that that method doesn't work very well a low multiple doesn't seem to be enough to justify buying a cash burning business um in addition to that I think you're defining uh net cash as sir sir sir sir sir sir sir sir sir what's the question yeah so uh the question here is um you know uh how is nano doing what's best for shareholders the stock hasn't provided any return for shareholders and it continues to trade below cash um at a negative Enterprise Value so there's so there's the so there's the question so why do you continue employing a strategy that isn't working well for shareholders and why are you defining your net cash burn in a way that makes it look better than it actually is in an effort to almost confuse shareholders okay so I'll answer you first of all everything you said about the F the six Acquisitions of Nano in the beginning was wrong false lack information not understanding financial statement not being able to be sophisticated investor those those companies had lower gross margins when we bought them had lower Revenue when we bought them all the companies other than um um deep Cube which we never intended to grow its Revenue because it didn't have Revenue we bought it we bought it only as a technology grew the revenue and the combined revenue I said 10 times we grew 29% in organic growth on the first seven six7 acquisition so that's first point where you don't know what you're talking about Point number two the two companies we're acquiring now is true that they are not performing well but the business of mares and acquisition which is my personal business for the last 30 years is knowing what really you acquiring and can you create synergies and acquisitions by that improving the performance of the company you're acquiring and you're acquiring a set of of more than thousand customers of the two companies your crying set of more than 10 Technologies which are very Advanced not existing in other places in the industry and you're acquiring them and reinforcing and changing the management to focus on profitability and by the fact that you have three companies now focused in their headquarters in Boston and headquarters in Europe in one place getting rid of a lot of facilities getting rid of many not I shouldn't say getting G reducing certain businesses that are not profitable enough and adjusting the number of employees to a number that is Justified to a size of a company combining the three companies is the way you create value for shareholders because by now you in spite of the fact that you paid low price for each company you're creating High return for each low price you paid by merging the together proper so this is the second point where you demonstrated lack of knowledge and principles and the fact that you give me an example of Spirit Airlines I'll tell you something else first of all before I tell you this the gross margins you mentioned of the company do not fit the gross margin of of Nano a minute before you said the gross margin of Nano didn't grow now you said the gross margin is nano is higher than those companies this is no not true either mark for is a gross margin which is close to 50% which is exactly like the gross margin of Nano and we're going to take it higher it is true the Des of metal with the average gross margin that they have is lower because they have different kind of businesses some of them with twoo low gross margins those are the businesses that were going to stop either if we don't improve the ghost margins we'll get out of those businesses and continue with the businesses that fit gross margins as it goes beyond and above 50% last example you gave me Spirit Airlines was losing or whatever I don't even know how you get to an airline from him industrial business let me tell you something Continental Airlines were not performing so well Continental Airlines you remember them they merge with United after the merger the combin performed very well the reason is when you combine company change the management change the change the change the strategy you justify the merger both to yourself as a company and to your shareholders thank you very much next question again if you have a question please press star then one with no further questions this concludes our question and answer session I would like to turn the conference back over to the company for any closing remarks in closing I want to thank you again for participating in uh the conference today thank you for your questions very interesting uh questions some of them gave me especially the last month an opportunity to go to a business school and uh um basic business principles of how measures and Acquisitions can add value to shareholders so thank you very much for the last question this was very helpful for me and I promise you shareholders that I have been working for the last year without a salary actually it's a year and a quarter because my salary was not approved by the people North some some of this nor of the Border activists that uh refus to approve my uh salary so I work with no salary my upside is holding shares and being a shareholders like all of you and I trust and convinced that the right to work on acquisitions by taking companies that have have assets and values but they're not performing well necessarily because of performance of management together and doing the right thing will add value to you as shareholders more than what you or somebody think the Share value or the cash under the share which is by now $2 and half dollars while the share is traded at 2. 1 2.
2 so we actually have a business coming into being $340 million business which will be valued based on its performance and the share will be valued much more than a 2. 1 2.
