Q4 2023 Nano Dimension Ltd Earnings Call
[music].
Good day, ladies and gentlemen, welcome to the inner dimension full year 2023 results conference call.
Unknown Attendee: Good day, ladies and gentlemen. Welcome to Nano Dimension's full year 2023 results conference.
Scott: My name is Scott, and I'm your operator for today. On the call with us today are Yoav Stern, CEO and member of the Board of Directors; Tomer Pinchas, CFO and COO, and Julien Lederman, Vice President of Corporate. Before we begin, may I remind our listeners that certain information provided on this call may contain forward-looking statements. The Safe Harbor Statement outlined in today's earnings press release also pertains to statements made on this call.
Scott: My name is Scott and I'm your operator for today's event.
Yoav Stern: On the call with us today, our Regulus stern.
Yoav Stern: Oh and member of the board of Directors to American Chess CFO and C O N E.
Yoav Stern: Yeah, and Julien Letterman, Vice President of corporate development.
Yoav Stern: Before we begin may I remind our listeners that certain information provided on this call may contain forward looking statements.
Yoav Stern: And the Safe Harbor statement outlined in today's earnings press release also pertains to the statements made on this call.
Scott: If you have not received a copy of the press release, please view it in the investor relations section of the company's website. The replay of today's call will also be available on the investor relations section of the company's website. Yoav will begin the call with a business update followed by a question and answer session, at which time the management team will answer questions. I would now like to turn the call over to Nano Dimension's CEO and member of the board of directors, Yoav Stern. Yoav, please go ahead.
Yoav Stern: If you have not received a copy of the press release. Please do it in the Investor Relations section of the company's website.
Yoav Stern: A replay of today's call will also be available on the Investor Relations section of the company's website.
Yoav Stern: The last one will begin the call with a business update followed by a question and answer session at.
Speaker Change: At which time the management team will answer your questions I would now like to turn the call over to end up dimensions, CEO and member of Board of Directors see illustrated Yours. Please go ahead.
Scott: Thank you Scott.
Yoav Stern: Thank you, Scott. Good day, everybody. I hope everybody is watching this black and blue Slide, which is opening. We can move to the next slide discussing the forward-looking statement. I'm going to leave it on for a few minutes rather than read it for all of you. Repeat reading. Just scan through it.
Enda Dimensions: Good day everybody.
Enda Dimensions: Hum.
Enda Dimensions: I hope everybody is watching the split.
Speaker Change: Lewis Slide which is the opening.
Speaker Change: The next slide.
Speaker Change: Discussing the forward looking statement I'm going to leave it on a few minutes rather than we did all of you like.
Speaker Change: Or reading just can't read I'm sure most of you understand.
Yoav Stern: I'm sure most of you understand what it says and it protects all of us from sliding into issues or information that is confidential or not that great. So we'll go to the next slide, and here we'll stop. I'm going to divide my presentation into a few kind of chapters, if you wish. First, I'll speak about the results, of course. Second, I'll speak about not our industry. I will call it our business domain, and you'll understand why I'm separating between industry and business domain as I get to that chapter. A little bit about customers and analysis of our, again, business domain as it relates to it. Plans Forward, a few words, and then the most important part will be Q&A in order for you to be able to express your areas of interest, which I will relate to as best as I can.
Speaker Change: What it says.
Speaker Change:
All of us.
Speaker Change: Uh huh.
Speaker Change: Slide two issues or inflammation that is confidential.
Speaker Change: And all.
Speaker Change: That's right.
Speaker Change: So we'll go to the next slide and here, we will stop and go.
Speaker Change: Going to divide my presentation to you.
Speaker Change: You kind of a chapter if you wish.
Speaker Change: First I'll speak about our results of course.
Speaker Change: I'll speak about not our industry I will call it our business domain and you'll understand why I'm separating between industry and business demand and they get to that chapter.
Speaker Change: Little bit about the customers.
Speaker Change: And our analysis, so far again, because the demand as it relates to it.
Speaker Change: Plans for two words and then.
Speaker Change: The most important part will be Q&A in order for you.
Speaker Change: To be able to express your areas of interest, which I will relate to as best as I can.
Speaker Change: So to start with.
Yoav Stern: So to start with, you see the highlights of 2023, indeed a fantastic year for Nano Dimension. We grew 29-30% year over year, and the other two. We are by now close to $60 million in revenue. More importantly, or less importantly, our gross margins are growing steadily. By now, they are close to 50%.
Speaker Change: You can see the highlights I'll.
Speaker Change: 2023, indeed, a fantastic year Vornado dimension.
Speaker Change: We grew 29, 30% year over year.
Or the year before we go.
Speaker Change: Foster.
Speaker Change: We have by now close to.
Speaker Change: $60 million of revenue.
Speaker Change: More important though not less importantly, our gross margin as a growing steadily by now close to 50.
Speaker Change:
Yoav Stern: We are showing, and many more. Variables, of the Financial Reporting of Public Companies. Um, I give him a higher weight and many more, basically tired of companies that are just growing on the top line. Now, it's important to grow on the top line, and we will continue to do so, because, in a funny way, if you don't have a top line, you don't have a middle line, and you don't have a bottom line. Actually, a middle line is more expensive.
Speaker Change: We are showing.
Speaker Change: Our improvements in almost all.
Speaker Change: Wearables.
Speaker Change: All the financial reporting of <unk>.
Speaker Change: Public company.
Speaker Change:
Speaker Change: I give them.
Speaker Change: Oh wait.
Functions that affect that gross margin is improving because this is the key to the door, where profits positive EBITDA and earnings per share people have to remember I believe.
Speaker Change: Well the public markets are.
Speaker Change: Basically tired from companies that are just growing the topline.
Speaker Change: It's important to grow on the top line and we will continue to do so because in a funny way. If you don't have the top line you don't have a midline it already but I'm not actually a midline is expenses, but we will focus through internal efforts as we do them till now and draw acquisitions too.
Yoav Stern: But we will focus through internal efforts, as we did until now, and through acquisitions to improve, deliver dollars to the bottom line. Before we go into just numbers, just a few slides, about You know, break the, Thank you for joining us. The attention from the fact that the numbers and the financial reporting are what's important in this call. Rather than having 25 slides of products, I'm just moving through slides, going back to the next one about the branch of the U.S. Department of Defense. I'm showing those slides just to give you a little bit of a taste of what kind of customers we have and what kind of, and the other products we have, and Buck. It's not to divert your attention from the fact that this is all about studying the numbers. The next slide will show the Fraunhofer Institute, which is, I'm sorry.
Speaker Change: Delivered the dollars to the bottom line.
Speaker Change: Before we go into just numbers just a few slides.
About.
Speaker Change: No break there.
Speaker Change: Break the routine of Blaine just two numbers about success is our success stories of case studies with customers. The first one is NASA, which is not the first time, we're doing business with them.
Speaker Change: I'm showing just be just not in order to divert the attention from the fact that the numbers and the financials are boating is very important in these calls.
Speaker Change: Rather than having 25 slides.
Speaker Change: Well, that's I'm, just moving through slides going back to the next one.
Speaker Change: But our branch of the US Department of defense.
I'm showing those slides just to give you a little bit of a taste of what kind of customers and what kind of.
Speaker Change: The products we have.
Speaker Change: But.
Speaker Change: Not to divert their attention from the fact that this is all about studying the numbers.
Speaker Change: The next slide will show a final hold for instance Institute.
Which is.
Sorry.
Yoav Stern: Thank you, which is a very, very famous worldwide institute originating from Germany that is using our machines, and they have also, in a way, tried to compete with our editing manufacturing electronics by developing their own machine, but they realized that our machine is much ahead, which is kind of a reinforcement when such an institute tries to do AME and eventually buys our machine. The next slide will tell you about an unnamed industry leader. Again, we have issues with giving the names of companies that we are, Thank you for watching, and we have a successful combined sales to them. The next slide speaks about a very large Western computer manufacturer and hardware manufacturer. All of you know the names.
Speaker Change: Okay.
Speaker Change: Which is a very very famous worldwide and suggest originated from Germany.
Speaker Change: That is using our machines and therefore also in the way try to compete with our manufacturing extraordinary by developing their own machine, but do you realize that a machine is much ahead.
Speaker Change: Which is kind of a reinforcement when such an institute tried to do at Ami and eventually buy as our machine.
Speaker Change: The next slide I will tell you about an unnamed industry leader again, we have issues with giving the names of companies that we already have them.
Speaker Change: Selling them, especially when it's a very large transactions in this case. This is a industry player in the space area.
Speaker Change: And Oh, we have a successful combined sales to them. The next slide speaks about.
Speaker Change: Very large western computer manufacturer hardware manufacturer, although as you know all of you know the names also.
Speaker Change: The multiple machines.
Yoav Stern: Multiple Machines The next slide is the Western Nuclear Research Group. The next slide is... Starting with a description to you about how and what we achieved that made these customers excited enough to buy machines and multiple machines. So this speaks to product and R&D development. I kind of broke it down, while there were many more achievements this year, I broke it down to what is, and is highly important for you to realize. First of all is DeepCube, of course, which is an advancement in deep learning, machine learning, and applying all what you're hearing in this field in the general world to industrial applications. It's a very specific use of AI, and the AI has to be very, very advanced. Thank you. So it's more complicated, the language, because it doesn't have the rules that English has.
Speaker Change: So then the next slide is the Western nuclear research group.
Speaker Change: Next slide is.
Speaker Change:
Speaker Change: Starting with the script to you about how and what we reached that made these customers excited enough to buy machines at multiples of machines, So and it speaks to the product and R&D development.
Speaker Change: You I kind of broke it down.
Speaker Change: And while there's many more achievements this year.
Speaker Change: A broken down to what is.
Speaker Change: Finally important for you to realize festival is deep cube of course.
Speaker Change: Which is advancement in the deep learning machine learning.
Speaker Change: And flying or what you're hearing in the field and the general the world into industrial applications. It's been very specific use of AI and had the AI is to be very very advanced.
Speaker Change: Because it does interpretation not only of our own data, which is not language, that's more complicated and languages, but he doesn't interpretation of alphanumeric, which is not language.
Speaker Change: So it's more complicated the language because he doesn't have the rules. This language has and we are able to do it in.
Yoav Stern: And we are able to do it and install it in machines and improve machines dramatically in so much as maintenance, accuracy, repetitiveness, and eventually throughput. We have new machines from Fabrica. We have made some very serious developments in our Flight Hub, which is the software that really drives everything. Thank you. Developing Story, you write the story in your word processor, and then you convert it into a PDF, be it a story or a document, a legal document, and then you send it to your lawyer or you send it to the publisher because you wrote the book. You don't really know and don't really care, frankly, what it's printed on. It's printed on the printer that happened to be at your lawyer's place or at your company's other location or at your publisher.
Speaker Change: Installing the machines and improve machines dramatically so much as the maintenance accuracy repetitiveness and eventually throughput.
Speaker Change: We have new machines in public.
Speaker Change: We have a very serious development enough lighthouse, which is the software that really drives everything.
Speaker Change: So you have just exact example into bust when you think about.
Developing.
Speaker Change: Story you write the story on your word and then word processor and then you convert it into a P. D F.
Speaker Change: And I read the story or document a legal document and then you send it to your lawyer or you are sending to the publisher cause he wrote the book.
Speaker Change: You don't really know and don't don't really care frankly, what is it printed on it is printed on the printer that happened to be at their lowest place or at your companies. The other location at your publisher.
Yoav Stern: What you're exposed to is the software with which you're using in order to design the document. The same thing we identify in the editing manufacturing. Everybody will talk to you about robotics.
Speaker Change: What you're exposed to ease the sulfur with which you are using.
Speaker Change: In order.
Speaker Change: To design the document.
Speaker Change: Same thing we identify in the editing manufacturing.
Speaker Change: Everybody, we'll talk to you about robotics, everybody, we'll talk to you about machines that they're doing this and doing that at the end of the day.
Yoav Stern: Everybody will talk to you about machines that are doing this or doing that. But at the end of the day, this industry will be led by the applications of software that enables people to design, redesign, prototype, negotiate a transaction, see the transaction happening, and eventually, it will be printed. So this business domain, the way I call it, and again, I'm getting close to explaining to you what I mean by business domain, is led by two variables, two forces. One is material and process, because without the right materials and process, there's no printing, and not Proper Printing of Products in Mass Manufacturing, and the second is the design software for those printers. Not design; we're not going to replace electronic design software or mechanical design software. We are adding software that enables designers to use advanced printers.
Speaker Change: Industry will be led by the applications of software that enables people to design.
Speaker Change: Redesigned prototype negotiate the transaction.
Speaker Change: See the transaction happening and eventually it'll be print that's that one.
Speaker Change: So this business demand away call. It then again I'm getting close to explain to you what I mean by business domain.
Speaker Change: It is led by tool.
Speaker Change: Variables two forces one.
His material and process because without the right materials and process, there's no printing.
Speaker Change: And the broker printing of products and mass manufacturing.
Speaker Change: And the second is this design software for those printers not design win I'm going to replace electronic design software or mechanical design, a cellphone we are adding the software that enables that.
Speaker Change: Designers to use advanced brings us, but eventually once they do that that software is what they'll be in front of them.
Yoav Stern: But eventually, once they do that, the software is what will be in front of them. The next slide. By the way, Additive Flow is another company we bought, which is part of this sophisticated software that enables the design and the analysis, finite element analysis, of every design.
Speaker Change: The next slide.
Oh by the way additive flow is another company, we bought which is part of the sophisticated software that enables the design and analysis finite element analysis of every design next slide is the growth. This is back to numbers.
Yoav Stern: Next slide is growth. This is back to numbers. This slide shows every column is the last 12 months for that date. So if you look on the left, its first column is Q4 2020, which means it shows the full year 2020 results. It was the year I joined, and Corona joined us as well in the same year.
Speaker Change: And this slide shows every column is the last 12 months for that date. So if you look on the left it's.
Speaker Change: Q4 first column as Q4, 2020, which means it shows the full year 2020 results. That's the it was the year I joined and the Corona joined us as well in the same year.
Yoav Stern: And if you look at the column on the total right side, on the extreme right side, it shows Q4 2023, which means it's the result of the last 12 months until that date, which means full year 2023, which we were reporting today. And you see the growth; it speaks for itself. It's a very unique situation.
Speaker Change: And if you look at the column in the total right side on the extreme right side. It shows Q4 2023, which means is the result of the last 12 months until that date.
Speaker Change: Which means full year 2023, and wish you were reporting today and you'll see the growth speaks for itself.
Speaker Change: It's a very unique situation, there's no company in our business domain that is showing these over the last four years.
Yoav Stern: There's no company in our business domain that is showing this growth over the last four years. Next slide is, finally, the chapter that we'll speak about or quote unquote in the. What you see in this slide is the Nano's growth compared to four peers here. Five beers.
Speaker Change:
Speaker Change: Next slide is finally, we get to that jumped out there will speak about our quote unquote industry.
Speaker Change: What do you see in this slide.
Speaker Change: None of those growth.
Speaker Change: Bearing to we chose for peers here.
Speaker Change: Five pairs actually.
Yoav Stern: You see that during 2003, every one of our peers has lost weight. Thank you. We're the only ones that are not only growing but growing leaps and bounds.
You said that during 2003 every one of our peers.
Speaker Change: Has the last.
Speaker Change: Revenue comparing to the year before.
Speaker Change: We're the only want us to not only growing but growing leaps and bounds.
Speaker Change: Bonds.
Yoav Stern: Now, why is it not an industry? This is not an industry player. Let me explain to you a very, very important point here that I think our compatriots are missing. Mark Forge, Test of Metal 3D Systems. Actually, it is four comparators and one average, not five.
Speaker Change: No.
Speaker Change: Why is it not an industry. This is not industry players and let me explain to you a very very important points here that I think are battery, it's I'm missing.
Speaker Change: The smartphone. So this is just a metal trading systems or damage actually it is for competitors and one average not five I'm sorry.
Yoav Stern: I'm sorry, but it's worth probably five, six more public competitors. They're not really competitors. They're participants in a business domain. We don't see them in front of customers.
Speaker Change: But it was probably five six more public competitors not really competitors that participants in that business domain and we don't see them in front of customers, we don't see them competing with us.
Yoav Stern: We don't see them competing with us, and the reason is it's not really an industry. This is a business domain of companies that use similar technologies to manufacture or produce parts or items. Similar technologies, not the same. Some use additive manufacturing in three-dimensional polymers, FDM, as an example.
Speaker Change: And the reason is it's not really an industry.
Speaker Change: This is a business domain of companies that use similar technologies to manufacture.
Speaker Change: Oh produce call it sports or items.
Speaker Change: Similar technology is not the same some use.
Speaker Change: Additive manufacturing in three dimensional polymers F. D. M. As example, some use DLP is some uses like us use additive manufacturing electronics by inkjet for.
Yoav Stern: Some use DLPs. Some, like us, use additive manufacturing electronics by inkjet for PCBs. But the reason it's not an industry is because an industry is set by who we sell to, and we fall into vertical markets. Thank you, and others. Electronic cars or just automobiles or the energy industry. Those are industries. We are in the business of selling machines to different industries. So you cannot say there's a headwind in our industry because, for instance, the defense industry didn't have headwinds this year. So all the competitors are saying they're shrinking because there are headwinds. But there are no headwinds.
Speaker Change: The Pcbs.
Speaker Change: But the reason I have thought that the industry is because the industry is set by who do we sell to them and.
Speaker Change: And we sell to vertical markets.
Speaker Change: This defense some overlap, but an industry for instance, the space industry or the industries Aviation industries medical.
Speaker Change: Yeah.
Speaker Change: And others.
Speaker Change: Electronic costs or just auto.
Speaker Change: Automobiles.
Speaker Change: The energy industry those are industries.
Speaker Change: We are in the business of selling machines.
Speaker Change: Two different industries. So you cannot say it is a headwind in our industry.
Speaker Change: It does.
Speaker Change: For instance, the defense industry didn't have headwinds this year. So all our competitors are saying, they're shrinking because those headwinds don't know and the wins.
Yoav Stern: It's just For one reason or another, their revenue from selling into different industries shrank, either because the industry is not big enough or the market is not big enough, or because there were some issues with the sales and marketing, or the product was not fit as a market fit. But there's no industry hindrance when you speak about manufacturing. Edwin Manufacturing is a bunch of technologies that are all operating in the same business domain, and the business domain is where we develop and manufacture the materials and the machines.
Speaker Change: Just.
Speaker Change: Well, one reason or another or their revenue in selling into different industries.
Speaker Change: Drunk either because the industry is not big enough, where the market is not big enough.
Speaker Change: Or because there were some issues with the sales and marketing or the product is not a fit.
Speaker Change: Fifth is the product market fit, but there's no industry headwinds when you speak about the manufacturing.
Speaker Change: And even many fixed thing is a bunch of technologies that are all acting in the same business domain and the business domain is where we develop and manufacture the materials and the machines, we sell at a different industries and in certain situations. The defense industry may have a headwind and our sales in defense will shrink.
Yoav Stern: We sell it to different industries. In a certain situation, the defense industry may have a headwind, and our sales in defense will shrink. Not the case today. It's actually the opposite.
Speaker Change: Not the case today, it's actually the opposite.
Yoav Stern: In our case, we are saying the electronic industry. Electronics also is a domain because electronics exists in computers, electronics exists in space, electronics exists in medicine, electronics exists in everything. It's not an industry, it's a business domain. So I over spoke about this, and I hope people understood it. And that's the justification for my claim. There's no headwind.
Speaker Change: Okay, So you're saying the electronic industry electronic also as a domain because of their electronic exists in computing around the corner because this space in a chronic existing medical electronic exist everything it's not an industry that business domain.
Speaker Change: So I over spoke about this and I hope people understood it and it's.
Speaker Change: Justification for my claim there's no headwinds.
Yoav Stern: People who sell like competitors and the Dental Industry may have headwinds in the dental industry, may not. But what does that have to do with defense?
Speaker Change: Yeah people, who sell like our competitors.
To the dental industry, which is an industry.
Speaker Change: May have headwinds in the dental industry may not but what is that to do with defense. Okay. Next slide reshaping that Nepal is paid off in spite of us or our growth, we decided to reshape nano and that's to do with expensive expenses.
Yoav Stern: Okay, next slide is the reshaping nano program. In spite of us or our growth, we decided to reshape nano, and that's to do with expenses. Cut expenses, in a very dramatic manner. We did it in the second part of Q4 2023, which means only one quarter ago, and we reduced and many more.
Speaker Change: <unk> expenses in a very dramatic manner, we did it in the second part of Q4, 2023, which means the only one.
Speaker Change: One quarter ago.
Speaker Change: And we reduced.
Speaker Change: Between $25 million to $30 million in annual cost.
Speaker Change: Our cash burn look at it in the last three years.
Yoav Stern: Our cash burn, look at it in the last three years. It's going down from where we were in the midst of developing everything we're doing today into 2023, which went down almost by 50%. And it goes down now into 2024 by almost 80%. And I'm talking now about Q1, which is already at the pace that we're discussing.
Speaker Change: It's going down from where we are.
Speaker Change: Yeah, we're in the midst of a development of everything we're doing today into 2023, which was went down almost by 50%.
Speaker Change: And it goes down now into 'twenty four.
Speaker Change: By almost 80% and I'm talking now about Q1, which is already in the pace that we're discussing I mean, obviously the rest of the years ahead of us, but we expect to be between 12 to 20.
Yoav Stern: I mean, obviously, the rest of the year is ahead of us, but we expect to be between 12 to 20, $54 million in, and the last one is the worst case cash burn, considering the fact that we have a billion dollars in cash. It's not even a variable in so much as our survivability or ability to grow, our ability to deliver value to shareholders, because we are very well financed. If we end up with a $10-12 million cash burn per year, with a billion dollars in cash, which is going to be used for acquisitions and for R&D, we're in excellent, excellent shape. Having said that, I don't want to go back to the slides, but every company and many more in this business domain that I described to you is losing cash and Not Having Care, to lose more. So let's speak again a little bit about the environment of our business domain. There are about 10-12 public companies in this business domain. Some of them are large institutions, large organizations like HP and General Electric.
Speaker Change: 4 million daus in.
The worst case cash burn and that's considering the fact that we have a billion dollars in cash it's not the end of it and are variable and so much as our.
Speaker Change: Somebody's ability our ability to grow our ability to deliver value to the shareholders. Because we are very well financed we have.
Speaker Change: If we end up with $10 million to $12 million cash about a year with $9 billion in cash which is going to be used for acquisitions and for R&D. We are in an excellent excellent shape.
Having said that I don't want to go back on the slides, but every.
Speaker Change: Person so every entity.
Speaker Change: In this business demand that I described to you.
Speaker Change: Is losing cash.
And not having cash.
Speaker Change: To lose them all.
So lets speak again, a little bit, but the environment of our business. The man, there's about 10 12 public companies in this business domain.
Speaker Change: Some of them are large institutions like large organization like H b.
Speaker Change: General electric but if you summarize this industry. The claim of all this analysts is the industry is $15 billion give or take growing to $30 billion.
Yoav Stern: But if you summarize this industry, the claim of all these analysts is that the industry is $15 billion, give or take, growing to $30 billion today and in 2030. Well, first of all, it's not an industry again because it's combined from 10 different industries that are growing or not growing. Does our business domain grow? Well, let's speak about which business domain we really are. We are manufacturing machines and materials.
Speaker Change: In 2013, well first of all it's not an industry again cause it combined from 10 different industries.
Speaker Change: Growing or not growing.
Speaker Change: That's our business domain grows.
Speaker Change: Well, let's speak about what should be is in the main we really are we are manufacturing machines and materials.
Speaker Change: Out of this $15 billion is no more than two and a half a billion dollars.
Speaker Change: Of companies like us.
Speaker Change: And it is growing.
Speaker Change: But all of them are losing money.
Speaker Change: Maybe other than one or two which I brought which are private so I don't know the exact numbers.
Speaker Change: But you have an estimate based on talking to them.
Yoav Stern: Out of these $15 billion, there's no more than $2.5 billion of companies like us, and it's growing, but all of them are losing money, maybe other than one or two which are private, so I don't know the exact numbers. But I have an estimate based on talking to them, and all the public companies are losing money, and all the public companies will have no more cash for more than, at best, a year and a quarter. In one case, and all the other cases are less than half a year old.
Speaker Change: And all the publics are losing money and all the public companies have no more cash for more than at the best case here in the quarter.
Speaker Change: In one case and all the other cancers I lived in half a year.
Speaker Change: So there's no surprise, where the shares are treated only surprises why are we traded below our cash, but it's a different story.
Speaker Change: Next slide speaks about the replenishing and.
The stewardship of the stewardship I would like prefer to call it corporate governance replenishing, our corporate governance and capital allocation corporate governance is as we grow will be coming more and more serious company rather than a small public company like a biotech that is mostly focusing on the technology was.
Yoav Stern: So there's no surprise where the shares are traded. The only surprise is why we are traded below our cash, but that's a different story. The next slide speaks about the replenishing and the stewardship of the stewardship, I would prefer to call it corporate governance, replenishing our corporate governance and capital allocation. Corporate governance, as we grew, became more and more a serious company rather than a small public company like a biotech that is and many more. Me being the CEO and the chairman, which was not something I liked anyhow because there was no choice when we were smaller in the Corona days.
Speaker Change: I have to focus on corporate governance on the fact that we have to.
Speaker Change: The corporate governance to decide to go grow the company, we split the rolls off.
Speaker Change: Me being the CEO and the chairman, which was not something I liked anyhow, because there was no choice when we were smaller in the Corona days.
We brought doctor you off and there's some corn.
Speaker Change: <unk> background in the semiconductor industry and the X C E O style semiconductors.
Speaker Change: We refreshed our board membership by reducing it by two people that we.
Speaker Change: Requested to leave because they were not feeding a serious professional organizer.
Yoav Stern: We brought Dr. Yoav Nissen-Cohen, a great background in the semiconductor industry and the ex-CEO of Tower Semiconductors. We refreshed our board membership by reducing it by two people that we, and many more. Garrett, the ex-commander of the US Army Command, and a lot of experience in a very large organization.
Speaker Change: Organizationally and North American market, but we had to replace them with the four star General there.
Speaker Change: Alright, the ex commander of the U S.
Speaker Change: Army command.
Speaker Change: And with a lot of experience and a very logical amortization on the capital allocation side.
We did not buy large M&A large co.
Speaker Change: Companies not because we didnt negotiate we do we did that because the prices or not right.
Yoav Stern: On the capital allocation side, we did not buy large M&A, large companies, not because we didn't negotiate, we did, but because the prices were not right. So we got to the point today where the prices are becoming right because of what I told you today. All our competitors are basically having..., and many others. While we had the cash and didn't spend it, we decided to buy, and many more.
So we get we got to the point today, where the prices are becoming right.
Speaker Change: Because of what I told you today all of our competitors are basically having.
Speaker Change: Reduce time and very strictly defined time to leave if they'll continue to lose cash and have no cash and if they will raise money they will dilute the existing shareholders. So.
Speaker Change: While we had the cash and didn't spend it we decided to.
Speaker Change: Spend 100 close to $100 million to purchase our own shares at below the cash value, which improves the company's balance sheet in enterprise value.
Yoav Stern: Cash Value, which improves the company's balance sheet and enterprise value, and we approved for ourselves another above the 96 million which we have already spent another 200 million dollars of potential buyback, which if we use it, It will be when the shares trade below cash value, at this point, about 25% below cash value. We will balance, the board will balance its decisions, the use of capital between acquisitions. Buyback shares, and Investment in R&D and Go-to-Market in order at the end of the day to have enough cash to bring value and many more. That's our plan for the next year. At this point,
Speaker Change: And we approved for ourselves another above the 96 men, which we already spend another 200 million daus.
Speaker Change: Yeah.
Speaker Change: Of potential buyback, which if we use it.
Speaker Change: It will be when the company shares traded below cash value.
Speaker Change: At this point about 25% below cash value.
Speaker Change: And.
We will balance the board will balance the its decisions.
They are about the use of capital.
Speaker Change: Between acquisitions.
Buy back shares.
Speaker Change: And the investment in R&D and go to market in order at the end of the day to have enough cash to bring value to.
Speaker Change: Two the share is expressed in share price and as delivered today.
Scott: Thank you. Give the baton and the microphone back to Scott to manage the Q&A session. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.
Sure.
Speaker Change: That's our plan for the next year.
Speaker Change: At this point.
Speaker Change: I spoke enough 2025 minutes I would like to.
Speaker Change: You bet.
Speaker Change: But tony back to Scotts to manage the Q&A session.
Scott: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Ashok Kumar: If you are using a speakerphone, please pick up your handset before pressing, For all your questions, please press star, then two. At this time, we will pause momentarily to assemble our questions. And our first question today comes from the line of Ashok Kumar with Think Equity. Please go ahead. Ashok Kumar Thank you for taking my question. The first question is broadly in terms of your cash burn and Reshaping Nano. So you have the 15 million quarterly run rate, 50% gross margins, and a million burned per month. What's your path line to profitability? Two is in capital allocation. I think you talked about a billion in cash and generating about $4 million a month in interest income. Can you talk about... and a strategy beyond cash buyback?
Scott: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: It was draw your question. Please press Star then two.
Speaker Change: At this time, a little pause momentarily to assemble our roster.
Speaker Change: And our first question today comes from the line of Ashok Kumar with think equity. Please go ahead alright. Thank you for taking my question. The first question.
Ashok Kumar: Is and a broadening in terms of your cash burn.
Ashok Kumar: And reshaping and nano alright.
Ashok Kumar: So you did 15 million quarterly run rate, 50% gross margins a million burn per month.
So what's your pathway to profitability.
Ashok Kumar: Too is.
Ashok Kumar: Capital allocation.
Ashok Kumar: You know I think you talked about 1 billion in cash.
Ashok Kumar: You're generating about 4 million a month and interest income.
Ashok Kumar: And can you talk about.
Ashok Kumar: And our strategy beyond a cash.
Ashok Kumar: Cash buyback or the third question is you talked about business domain.
Ashok Kumar: The third question is you talked about the business domain and Tomer Pinchas, Ashok Kumar, Nano Dimension, The industry, right, which is business domain versus industry, you know, you make the distinction there. Clearly, you don't want to be the last man standing. You talked about continued burn rate and lack of balance sheet support with your competitors, and an industry is critical because it's more than the sum of the parts, so where do you see the industry also over the forecast horizon? Thank you. Okay, I counted five questions. Frankly, I didn't answer the fifth one, but let me answer the first four.
Oh, specifically you talked about material process on one hand, and design software and all of those have you have.
Ashok Kumar: The capacity in house at this point to be an industry leader when you forecast the industry to be something you have now and the last question is on B B.
Ashok Kumar: The industry, you're right with your business domain.
Ashok Kumar: This industry to make the distinction there.
Ashok Kumar: Clearly you don't want to be the last man standing and talked about our continued bond rate and lack of balance sheets support with your competitors.
Ashok Kumar: And and industry is critical.
Ashok Kumar: Because more than to some of the box.
Ashok Kumar: So where do you see the.
Ashok Kumar: Industry Okay.
Okay. So all right. Thank you.
Ashok Kumar: Okay.
Speaker Change: I counted five questions I, frankly, I didn't understand the first one but let me answer the first for us.
Yoav Stern: And if after the first four, I didn't answer the fifth question between them, then, of course, I'll let you ask it again. And thank you very much for your questions. First of all, if we burn $1 million a month or between $1 to $2 million a month, it will be the lowest cash burn this year that we have had. It's not going to be the target to stay on.
Speaker Change: And if after the first four I didn't answer the 50 in between then of course I'll, let you ask it again and thank you very much for your questions.
Speaker Change: First of all.
Speaker Change: If we burn $1 million, a month or between $1 million to $2 million a month it'll be the lowest cash brown.
Speaker Change: This year that we had it.
Speaker Change: It's not going to be though the target to stay on.
Yoav Stern: Profit will come, and cash flow burn will go to zero or start to generate cash. We believe in 2025, and it will be dependent on two variables that are complementary to each other. Either we increase our gross margin to around 60% with no acquisitions? Then we'll be profitable, and Keshla Generating, or we do the acquisitions we're planning and negotiating as we speak because the price will be right. Use some cash, from, of course, the cash we have for the acquisitions, and then being bigger will enable us to do many more things and many more. That said, being profitable means continuing to invest in R&D and continuing to develop both materials and processes and the software that I mentioned before. Of course you don't. First of all, I do want to be the last, not the last man standing, but the first leader standing.
Speaker Change: Profit.
Speaker Change: It will come and cash flow then we will go to zero or start to generate cash we believe.
Speaker Change: In 2025.
Speaker Change: And then it'll be dependent on two variables.
Speaker Change: That are complementary to each other.
Speaker Change: Either we increased our gross margin to around 60%.
Speaker Change: With no acquisitions.
Speaker Change: Then it will be profitable and.
Speaker Change: And cash flow generating.
Speaker Change: Or we do the acquisitions, we are planning in negotiating as we speak because the price will be right used some cash.
Speaker Change: Well of course, the cash we have for the acquisitions.
Speaker Change: And then being bigger when enable us it depends on the specific of musicians to be profitable even in less than 60% gross margin that said being profitable means while continuing to invest in R&D and continued continuing to develop.
Speaker Change: Both materials and process and the software that I mentioned before of course you don't.
Speaker Change: First of all I do want to be just the last not the last man standing, but the last the first leader of spending and in order to do that I have to have the profitability now the profitability. It doesn't only mean that isn't both positive EBITDA and earnings per share of profitability that comes from gross margin Miss I have enough money to spend on R&D.
Yoav Stern: And in order to do that, I have to have profitability. Now, profitability doesn't only mean that there is a positive EBITDA earnings per share. Profitability that comes from gross margin means I have enough money to spend on R&D to stay ahead of Michael Pedros, and at 60% of around $100 million of revenue, between 70 to 100, we can be profitable and invest in R&D and grow because of the competitive edge we're creating. At more than $100 million, if we do the acquisition, it will be much more. You can actually do it with gross margins a bit lower because you have synergies between the businesses, and you continue with these gross margins to be able to deliver both profits to investors and enhance value, and to continue R&D to enhance competitiveness, and that's much beyond buyback. The cash buyback is as temporary as it may be, and I am not for cash buybacks in principle. I am in cash buyback only in very unique cases; I'm against cash buybacks for a company that's growing the way we are growing, and we will grow. When do you do cash buybacks? Probably only one or two cases.
To stay ahead of.
Speaker Change: My competitors.
Speaker Change: And at 60%.
Speaker Change: In around 100 million also for revenue between 70 to 100, we can be profitable and invest in R&D and grow because of the competitive edge we are creating.
Speaker Change: And.
Speaker Change: It's more than 100 men to us if we do an acquisition it would be much more.
Speaker Change: You can actually do it with gross margins a bit lower because you have synergies because between the businesses and you continue with these gross margins too.
Speaker Change: Two of them to be able to both deliver both profits to investors and value enhance value and to continue R&D to enhance both to enhance our competitiveness.
Speaker Change: And that's much beyond buyback the cash buyback is temporary as it may be and I am not for cash buyback in principle, I mean cash buyback only in very unique cases.
Speaker Change: I'm against cash buyback.
Speaker Change: And for a company that's growing the way we are growing and we will grow when do you do cash buyback.
Speaker Change: Probably one or two cases, one like this just like US is it for some reason the shares trade below the cash value.
Yoav Stern: One, like cases like us, for some reason, the share is traded below the cash value, and the second is you have so much cash on the balance sheet, and you're profitable, and the cash is growing, i.e., companies like the gentleman from Omaha or companies like Apple that have $1.160 billion, if I remember right, something like that. I don't remember the exact number.
Speaker Change: And the second is you have so much cash on the balance sheet and you're profitable in the country is growing I E companies like the gentleman from Omaha or like companies like Apple.
That have 160 billion, if I remember right.
Speaker Change: Something like that I don't remember the exact number and then when you have so much cash.
Speaker Change: And you don't use it.
Speaker Change: Buying your shares depends on its rice from your profit is something that makes sense, because you're improving the value on a per share basis by reducing the amount of shows that trade it.
Yoav Stern: And then, when you have so much cash, and you don't use it, buying your shares depends on their price from your profits. It's something that makes sense because you're improving the value on a per share basis by reducing the amount of shares that are traded, and your fourth question is our capacity to stay as an industry leader or to become an industry leader. Our capacity to do that will come through smart, very smart acquisitions. And in order to be smart in acquisitions, I should say by now. The other side that is selling has to be smart enough to realize that they have to put egos aside.
Speaker Change: And your fourth question as they are our capacity to stay as an industry leader up to become an industry leader.
Speaker Change: Possibly to do that will come through smart.
Speaker Change: Smart acquisitions.
Speaker Change: And in order to be smart and acquisition work.
Speaker Change: Acquisitions, I should say by now.
Speaker Change: The other side that you're selling is to be smart enough to realize.
Speaker Change: They have to put egos aside.
Speaker Change: If they want to be the right stewards for the shareholders and this business domain.
Yoav Stern: If they want to be the right stewards for their shareholders, and this business domain is so full of egos that, through the SPAC mania of last year and the years before, companies got to the point where all of them went down from $10 a share to less than a dollar. All the public companies came from SPAC, and they stayed still doing it and continue to do the same thing. That's not smart when you have six months to live and many more, and Get Together, and Yael Sandler.
Speaker Change: So full of egos.
Speaker Change: Debt through the the spec man you know for the last year and two years before.
Speaker Change: The company has got to the point where.
Speaker Change: All of them went down from $10 a share to less than a dollar all the public companies is came from specs.
Speaker Change: Yes, and they stayed still doing it and continue to doing the same thing.
Speaker Change: That's not small, but when you have six months to live.
Speaker Change: Based on cash burn.
Speaker Change: And in order to be an industry leader, we need to consolidate we need to put their egos aside.
Speaker Change: And get together.
Speaker Change: Either in nickel petition mad men or combination of cooperation and competition ultra merger and consolidation, which is much more effective.
Yoav Stern: That's what will create a situation where this industry will move forward. Because without being profitable, having a $15 billion industry, and again, taking it down to the manufacturers and the development of the technology, which is $2.5 to $3 billion, if it's not profitable, it's not going to last for too long. But because it's such an enabling technology, it will hold because there's no replacement for this technology or technologies, I should say. We just need people to wake up in the morning and start to think about working together. Fifth question: I don't remember, but I hope I answered through my long answer to the fourth. Yes, you did.
That's what will create the situation where does the industry will move forward because without being profitable, having a $15 billion industry and again, taking it down to the many fixtures and development of the technology, which is two and a half to 3 billion. If it's not profitable is not going to hold for too long.
Speaker Change: But because it's such an enabling technology it will hold because there's no replacement for this technology.
Speaker Change: Technology is I should say, we just need the people to wake up in the morning and start to think about working together.
Speaker Change: First question I don't remember, but I hope I understood drove my long answer to default.
Yes, yes. He did again, thank you very much and best wishes.
Speaker Change: Thank you.
Speaker Change: Any more questions. Please.
Speaker Change: The next question comes from the line of Oh.
Oh Zelman: Zelman with Gerry.
Zelman: Go ahead.
Oh. Zelman: Good morning, and thanks for the information shared on the call really great in the presentation on a great quarter to quarter results.
Ashok Kumar: Again, thank you very much and best wishes. Thank you. Any more questions, please? The next question comes from the line of Sol. Zellman with CherryCare.
Oh. Zelman: I have two questions one largely based on the press release shared this morning based on the forward looking strategy of going towards our new strategy.
Sol. Zellman: Please go ahead. Good morning, Yoav, and thanks for the information shared on the call. Really great on the presentation. Great quarterly results. I have two questions, one largely based on the press release shared this morning. Based on the forward-looking strategy of going towards the NA strategy, I see that the strategy of waiting to see what will happen has paid off, especially based on the valuations of the peers that you mentioned going down daily. The question is, based on that press release and given the dynamics and even egos among those other 3D printing companies, will it be and many more? It looks like you won't have long to wait.
Oh. Zelman: I see that that strategy of waiting to see what will happen has paid off especially based on the valuation of our.
Oh. Zelman: It appears that you mentioned going down daily.
Oh. Zelman: <unk> is based on that press release, and given those dynamics and even eagle's among those other three D printing companies would have.
Oh. Zelman: What is it the.
Oh. Zelman: Better place to possibly wait and purchase them through bankruptcy proceedings.
Oh. Zelman: Or is it a better idea to go continue going through it.
Oh. Zelman: For example, I had seen that that Stratasys deal was up and in the ear I did at the end of the presentation and I see them dropping daily I, even see for example, another one D. M. Currently based on their their Q4, our cash numbers coupled with their stress in the bond market. The M. Currently is trading at.
Oh. Zelman: 50 cents on the dollar it doesn't it looks like you wont have long to wait is the strategy to go for it now or yes, the week a little bit just to see if those they go towards the bankruptcy proceedings, allowing that strategy to fully pay off.
Yoav Stern: Is the strategy to go for it now or wait a little bit just to see if they go towards bankruptcy proceedings, allowing that strategy to fully pay off? Okay, that's an excellent question. Both companies that you have mentioned are indeed burning cash. Stratasys burned about $160 to $180 million during 2023. They started the year with above $300.
Speaker Change: Okay, that's excellent question and.
Speaker Change: Most companies that you've mentioned indeed.
Speaker Change: Cash status is burned about $160 million to $180 million. During 2023. They started the year with above 300, they have left with 160 <unk>.
Yoav Stern: They are left with $160 million, and if they keep burning at the same rate, they will probably need to raise money or take debt. I don't think they'll aim to go to Chapter 11. Strasse is a serious company, and I think they have, Good. Good, and many more. And we are the main shareholder of Stratasys, so I have a very serious interest. So these are not at the risk which you described. The others, however, are.
Speaker Change: And if they keep burning at the same rate.
Speaker Change: They will.
Speaker Change: Probably need to raise money or take depth I don't think they will.
Speaker Change: Aim to build a chapter living strategies as a serious company.
And I think they have.
Speaker Change: Good.
Speaker Change: Good <unk>.
Speaker Change: Aspects for the future if they do the right thing, which they are not doing right now, but the smart people. So.
Speaker Change: And we are the main shareholder Stratasys. So I have a very serious interests. So these are not the risk, which you described the others do Oh, sorry, the others are there risks exactly what you described if they continue to play the game on their own you know, it's like a soccer or are you know you want to play soccer.
Yoav Stern: Sorry, the others are at risk, exactly what you described. If they continue to play the game on their own, you know, it's like soccer or, you know, you want to play soccer with 11 against 11? That's great. You want to play soccer where you're alone on the field and running with the ball?
We're delivering against 11, that's great you want to play soccer, we are alone in the field and running with the ball. Good luck because that's what will end up you'll end up with.
Speaker Change: Three or four players running on a soccer field with the ball to each and then what did you do you do.
Yoav Stern: Good luck, because that's what we'll end up with. You'll end up with... Three or four players running on a soccer field with a ball for each, and then what do you do? Chapter 11 is not something I want to wait for. Chapter 11, I've been myself a turnaround executive, and I've done Chapter 11 as a person who came from the outside to fix the situation, and I was successful in a couple of them, but it's a very difficult process. We are dealing with an industry that has customers like NASA and SpaceX, and we specifically have a lot of defense customers, and other competitors have defense customers. Those customers will have serious issues with continuing to buy from a company that's in Chapter 11. Chapter 11 is a process that takes, at best, Thanks for watching!
Speaker Change: The chapter 11 is not something that we want to wait for.
Speaker Change: Chapter I've I've done I've been in myself as a tone on executive I've done chapters of living is the person that came from the outside to fix the situation.
Speaker Change: And I was successful in a couple of them, but it's a very difficult process, we're dealing with the industry that with customers like NASA and Spacex and ER.
Speaker Change: And we specifically you have a lot of defense our customers and the other competitors have defense customers those customers.
Speaker Change: Well have serious issues to continue and buy from a company that was in chapter 11, or chapter 11 is a process that takes at best.
Speaker Change: Six months, it's worth more than a year and I expect that in sensitive equipment like this.
And sensitive industries that we're selling to.
Speaker Change: The what do you gain by maybe buying what's left.
Speaker Change: Is lost by what's left is far from what is before they go into chapter 11, one of our comprehensive industry called fast dredges.
Yoav Stern: and sensitive industries that we're selling to. What you gain by maybe buying what's left is lost because what's left is far from what it was before they go to Chapter 11. One of the companies in the industry called Fast Reducing already went to Chapter 11, and it immediately turned into Chapter 7, which is liquidation.
Speaker Change: Went already to chapter 11 in anything made it down into chapter seven liquidation. This company we were the last one.
To do the diligence and to consider buying them we.
Speaker Change: He did a very serious due diligence.
Speaker Change: And it ended up that we said there's nothing here that's worthwhile paying what they wanted to do again Ngos issues.
Yoav Stern: This company, we were the last one to do the diligence and consider buying them. We did a very serious due diligence, and it ended up that we said there's nothing here that's worthwhile paying what they wanted to. Again, ego's issues.
Speaker Change: And they made we said no they weren't doing chapter 11.
Speaker Change: And I was sorry for them, but from chapter 11 in some coffee and bought their assets to this 2030 machines that they had.
Speaker Change: And the company disappeared and everything they had and technologists disappear.
Yoav Stern: And the minute we said no, they went into Chapter 11. I was sorry for them, but from Chapter 11, some company bought their assets, like the 20 or 30 machines that they had, and the company disappeared, and everything they had in technology disappeared. So, no, I don't think waiting for Chapter 11, even if I have to pay 10% more.
Speaker Change: No I don't think waiting for chapter 11.
Speaker Change: Even if I have to pay 10% more.
Speaker Change: You will gain much more than having to deal with the break the breakage and and.
Speaker Change: And loss of business that you will have to deal with after chapter 11.
Speaker Change: The next and last question is the line of Kathryn Thompson with Edison. Please go ahead.
Hi, there I wanted to ask a question about your revenue growth in the year, just gone and to say the outlook for the coming year. So yeah, just to get a sense of how much business did you get some in repeat.
Yoav Stern: I will gain much more than having to deal with the breakage and loss of business that you will have to deal with after Chapter 11. The next question comes from the line between Katherine Thompson and Edison. Please go ahead.
Katherine Elizabeth Thompson: Purchases from existing customers, how much was new customer wins, you know how much its system sales, that's just consumables and really just to get a sense of how much more you think you can grow in 2024.
Katherine Elizabeth Thompson: Hi there. I wanted to ask you a question about your revenue growth in the year just gone and also the outlook for the coming year. So, you know, just to get a sense of how much business you got from repeat purchases from existing customers and how much new customer wins.
And then just a second question on consolidation and clearly you've got the better infrastructure sits at the moment and we're still waiting for the.
Speaker Change: Yeah, no strategic need.
So now what would your plans be.
Speaker Change: What what was my sorry, the last sentence, what we'll be mindful of what our what what do you. What do you still plan the Stratasys doesn't I'm, assuming you've got various other companies that you are considering for consolidation yeah. Okay. Okay got it got it very good questions. Thank you very much.
Katherine Elizabeth Thompson: You know, how much are system sales versus consumables? And really just to get a sense of how much more you think you can grow in 2024. And then just the second question on consolidation. Clearly, you've got the bid in for Stratasys at the moment, and we're still waiting for The Outcome and their strategic review. If that's a no, what would your plans be?
Speaker Change: Okay. The revenue growth for the first question you asked three questions. So so.
Speaker Change: The revenue growth on a 2000 and.
Speaker Change: 2023.
Yoav Stern: What was my, sorry, the last sentence, what will be my what, our what? What would your plan be if Stratasys says no? I'm assuming you've got various other companies that you're considering for consolidation. Yeah, okay, okay, got it, got it. Very good questions. Thank you very much.
Speaker Change: It was a.
Speaker Change: Yeah.
Speaker Change: To be fair to ourselves, we are very proud of the 29% percent organic growth what our budget was 16th we were 5% below our budget.
Speaker Change: Which we debriefed and we learned and studied because as much as I am concerned.
Speaker Change: If we put a budget of 60, and we reached 56 and a half or so.
Speaker Change: Then obviously, we are 5% below budget, yet it was a great growth and fantastic year, but I would like to build up organization that stand by the budget.
Yoav Stern: Okay, the revenue growth for the first question. You have three questions or so. The revenue growth in 2023 was, To be fair to ourselves, we're very proud of 29% organic growth, but our budget was 60. We were 5% below our budget, which we debriefed, and we learned and studied because, as far as I'm concerned, if we put a budget of 60 and we reach 56 and a half or so, then obviously, we're 5% below budget. Yet, it was a great growth and fantastic year, but I would like to build organizations that stand by their budgets. 2024. If we assume no acquisitions, because if we assume acquisitions, our growth will be stratospheric. Our growth will be in multiples, not in percentages. That's based on the acquisition I'm talking about now. But if we assume with no acquisition growth, as we expect, it will be lower than 29% but higher than 15%, and we are working that according to the budget today. Our first quarter, which is usually the worst quarter of the year.
Speaker Change: That leads us to 2024.
Speaker Change: And if we assume no acquisitions, because if you assume acquisitions our growth will be.
Stratospheric.
Speaker Change: Growth will be in multiples not in percentages.
Speaker Change: That's based on just on the acquisition I am talking with now.
Speaker Change: But if we're assuming with no with no acquisition.
Speaker Change: Growth.
Speaker Change: Yeah.
Speaker Change: And as we expect will be lower than 29%.
Speaker Change: Higher than 15%.
Speaker Change: And we are working.
Speaker Change: That according to the budget today.
Speaker Change: First quarter, which is usually the.
Speaker Change: The worst quarter of the year.
Speaker Change: Our first quarter. This year is going to be not bad at all because it's growing but.
Speaker Change: You don't know by the first quarter to see what will be the end three quarters later, but we are starting the year on the right foot.
Speaker Change: Next question was about systems consumables, a bit repeat sales et cetera.
Speaker Change: Oh consumables is about 10% of our revenue.
Speaker Change: It depends in which area.
Speaker Change: Speaking about five 7% to 10% off.
Speaker Change: The machines that we do sell consumables to those machines for editing of electronics for instance.
We don't sell consumables because the consumables are.
Speaker Change: Components in our semiconductors and there we don't sell the consumables.
Speaker Change: So there are the consumables is zero, but in the areas that we do sell consumables is 5% to 10% and that number usually girls up and higher once our machines are going into production rather than being in prototyping in Italy.
Yoav Stern: First quarter of this year is going to be not bad at all because it's growing, but, You don't know by the first quarter what will be at the end three quarters later, but we're starting the year on the right foot. The next question was about systems, consumables, repeat sales, etc. Our consumables are about 10% of our revenue. It depends on which area.
Production production testing, so but for now it's about that percentages as much as repeat sales. This year. We have we had most more repeat says that we ever had in alright in the history of the company.
Speaker Change: And I can tell you as I mentioned, a few of the repeat sales during the presentation I don't remember offline off of.
Yoav Stern: I'm speaking about 7% to 10% of the total. Thank you very much. Thank you very much. But for now, it's about that percentage. As far as repeat sales are concerned, this year we had more repeat sales than we ever had in the history of the company. I can't tell you how many repeat sales I mentioned during the presentation. I don't remember offline, kind of without looking at it, how many repeat sales there were.
Speaker Change: Kind of without looking at it how many repeat sales.
Speaker Change: Therapy itself is edited cells, because you don't repeat the same sale. Some companies. We have for instance, both our editing manufacturing of Tronox and afterwards border iterative electronics machine. So it's repeat as much as the same customer base not necessarily a repeat of the same company the same way.
Speaker Change: Machine and other companies and defense it bought our dragonfly Amy machine bought more dragonfly machines. So.
Yoav Stern: And it's not repeat sales; it's additive sales because you don't repeat the same sale. Some companies we have, for instance, bought our additive manufacturing electronics and then bought our additive electronics machine. So it's repeat as much as the same customer, but it's not necessarily a repeat of the same company, of the same machine. And other companies in defense that bought our Dragonfly AMA machine have bought more Dragonfly machines. So, um..., those exist across the board.
That exist across the board.
Speaker Change: The.
Speaker Change: The last question.
Speaker Change: You discussed the consolidation and you use this as an example.
Speaker Change: We are in discussion with Stratasys.
Speaker Change: Friendly discussions.
Speaker Change: Yeah, we.
Speaker Change: Plan and we hope.
Speaker Change: To be able to come back to you to the investors to the market with some news, but something that we would definitely plan to do.
Speaker Change: It's a bit early the discussions are ongoing for the last three months and serious.
Speaker Change: Yeah, but you know strategies have.
Speaker Change: They're all stood out to us and I have my alternatives and my alternatives, which was your last question.
Speaker Change: A very attractive comparing to start us is.
Yoav Stern: The last question is, You discuss consolidation, and you use strategies as an example. We are in discussion with strategists. Friendly discussions. We, Thank you. To be able to come back to you, to the investors, to the market with some news about something that we would definitely plan to do. It's a bit early.
Speaker Change: Because those are companies.
Speaker Change: That are in more.
Speaker Change: Yeah.
Closer to the corner call. It this way then stratasys.
Speaker Change: With technologies that are more exciting than start does this to me to us at least.
Speaker Change: Ah, Yes, I must admit with less go to market and distribution and network with their waste starts as it has which is excellent.
Speaker Change: But with a much more exciting technologies. These technologies are.
Yoav Stern: The discussions have been ongoing for the last three months and serious, but strategies have changed. There are alternatives, and I have my own. And my alternatives, which was your last question, are very attractive compared to strategists because those are companies that are closer to the corner, call it this way, than Stratasys, with technologies that are more exciting than strategies, to me, to us at least. Yet, I must admit, with less go-to-market and distribution and network the way Stratasys has, which is excellent, but with much more exciting technologies, their strategies are It is a little bit outdated to my taste.
A little bit outdated to my taste. So we have alternatives and we are pretty advanced in negotiations with Delta.
Speaker Change: Yeah.
Speaker Change: Thank you very much for your questions and more questions. Please.
Speaker Change: Yes. Our next question comes from the line of Romney Roush a private investor. Please go ahead.
Romney Roush: Hi can you hear me.
Romney Roush: Thanks Rami.
Romney Roush: Hi, Thank you for the presentation I have two questions. The first one is regarding your revenue.
Romney Roush: Wanted to get your view on the current dynamics in the three D printing industry do you see gross margin improving the second question is.
Rami Roush: So we have alternatives, and we are pretty advanced in negotiations with alternative providers. Thank you very much for your questions. More questions, please? Yes, our next question comes from the line: Rami Roush, Private Investor. Please go ahead. Hi, can you hear me?
Romney Roush: Obviously, the revenue is no longer a catalyst anymore, sometimes it becomes a liability on low margin sales.
Romney Roush: I'm, referring to the peers in your opinion did we hit the low cycle right now thank you.
Romney Roush: Okay.
Romney Roush:
Speaker Change: Let me start with the second question.
Speaker Change: This industry.
Speaker Change: Actually again.
Speaker Change: Business domain.
Speaker Change: Call It which is the group of companies that incorporate various technologies to print in three dimensions.
Rami Roush: Thank you for the presentation. I have two questions. The first one is regarding revenue. I wanted to get your view on the current dynamics in the 3D printing industry. Do you see gross margin improving? The second question is: obviously, revenue is no longer the catalyst anymore. Sometimes, it becomes a liability on low-margin sales. I'm referring to peers. In your opinion, have we hit the low cycle by now?
Speaker Change: Products that are below that belonged to many other industries.
Speaker Change: So this business domain.
Speaker Change: It has been.
Speaker Change:
Speaker Change: In it and it kind of a dramatic process for four years now at least for the last 10 years.
Speaker Change: Of pushing and fighting each other by reducing margins.
Speaker Change: In order to fight your competitor or in order to convince the market that this new technology is good for them yet.
Yoav Stern: Okay. Let me start with a second question. This industry, Actually, again, this is... Business Domain, which is the group of companies that incorporate various technologies to print in three dimensions. Products that belong to many other industries. So this business domain has been going through a kind of traumatic process for years now, at least for the last 10 years, of pushing and fighting each other by reducing margins in order to fight your competitor or in order to convince the market that this new technology is good for them. That ends up with the company, without naming names, for instance, that has been selling quite serious, serious, serious laser machines, laser 3D printing machines, to very serious customers and industries That means that every dollar they sell, they lose probably 30 cents, and maybe they're trying to compensate for it with quantities, but that actually doesn't work, as you know, because if you sell more of what you lose, you just lose more.
Speaker Change: That ends up with the company without naming names for instance that has been selling quite serious serious serious laser machines laser a three D printing machines.
Speaker Change: Two very serious customers and industries.
Speaker Change: And showing 6% gross margin.
Speaker Change: That means that every dollar they still they lose probably 30 cents.
Speaker Change: And maybe they're trying to compensate it with quantities, but it's actually it doesn't work as you know because if you sell more of what you lose.
Speaker Change: If you just lose more and this is an epitome in this industry.
Speaker Change: Other companies don't think that 6% is gross margins and exceptions as other comprehensive citizens at a gross margins is between 15, and 25%, which is unacceptable and I'm speaking about again people door, Andy I'm not talking about companies that manufacture using those machines.
Speaker Change: Fixture.
Speaker Change: Oh, that's different you can live with 35% because you don't do R&D.
Speaker Change: So.
Speaker Change: The revenue being liability Youre right. This industry is Oh this business demand has been in this mentality.
Yoav Stern: And this is an epitome in this industry. Other companies don't think that 6% is gross margins and exceptions. There are other companies that gross margins are between 15 and 25%, which is unacceptable. I'm speaking about, again, people who do R&D. I'm not talking about companies that use those machines to manufacture parts.
I'm not we are not and I think.
Speaker Change: The whole business demand is starting to wake up to listen to hear the music. It's a part of the maturity of the technology and ER and the companies around us and again consolidation will help dramatically.
That was your second question.
Speaker Change: Now it goes back to your first question, which was the dynamics in.
Speaker Change: And these are business domain, and a job general and gross margins, which is connected to the second question.
Speaker Change: I don't think the dynamics has already.
Speaker Change: Yeah.
The roll the numbers up the way they should but they're in the right direction.
Yoav Stern: That's different. You can live with 35% because you don't do R&D. So, revenue being liability, you're right. This industry or this business domain has been in this mentality. I'm not. We are not.
If you look at certain companies in our industry exempt again without naming names. There is couple one one public company that have like US 47, 46% gross margin.
Speaker Change: So I wouldn't say it says 43 or 44 and its combined of mixture of product and materials when a certain areas that have much higher gross margin, which is good.
Yoav Stern: And I think... The whole business domain is starting to wake up and listen to hear the music. It's a part of the maturity of the technology and the companies around us. And again, consolidation will help dramatically. That was your second question. Now it goes back to your first question, which was the dynamics in this domain and gross margins, which is connected to the second question. I don't think the dynamics have already changed. And many more. If you look at certain companies in our industry, again, without naming names, there's one public company that has, like us, 47, 46% gross margin. Stratasys says 43-44, and it's a combination of products and materials when in certain areas they have a much higher gross margin, which is good, and similar, maybe 3D.
Speaker Change: Similar maybe three D. So some of the more senior executives.
Speaker Change: With Iran and companies in our industry are realizing what we are discussing here and I think that going in the right direction.
Speaker Change: Yeah, I think without consolidation is not going to hold for too long.
Speaker Change: Because there still.
Speaker Change: The busy.
Speaker Change: Focusing on the topline and so focusing on the bottom line, but it's in the right direction.
Speaker Change: Next question please.
Speaker Change: Again, if you have a question. Please press Star then one.
Around Me: The next question comes from the line of around me ready with a private investor. Please go ahead.
Armin Reddy: Thank you for taking my question Oh are you expecting any I'll just a couple of days in the near future.
Armin Reddy: Yeah.
Around Me: I want to expect I.
Around Me: I expect to expect.
Speaker Change: And I'm very very busy, creating a situation where I'm expectations my expectation will be fulfilled.
Speaker Change: And I'm doing it in many ways.
Speaker Change: It's important.
Speaker Change: It is important in order to attract institutional investors.
Yoav Stern: So some of the more senior executives that are running companies in our industry are realizing what we're discussing here, and I think they're going in the right direction. I think without consolidation, it's not going to hold for too long because they're still busy focusing on the top line instead of focusing on the bottom line. But it's in the right direction.
Speaker Change: Hey, it's important even if all of the analysts that I see in this industry.
Speaker Change: Writing analysts reports with lacking real understanding of.
Speaker Change: Where the numbers are going and where.
Speaker Change: The value of the shares are growing and giving.
Inflated.
Speaker Change: Expectations.
Speaker Change: But still it's even if it's the case, it's important at this analyst or debt analyst, though.
Rami Reddy: Next question, please. Again, if you have a question, please press star. The next question comes from the line of Rami Reddy with private. Thank you for taking my question. Are you expecting any analyst coverage in the near future? Uh...
Speaker Change: Analyst will ride the report because the important part of the report is not necessarily the projection of the.
Speaker Change: The price of the share is the understanding that's inside the report of the business of the company and the.
Speaker Change: Business dynamics of this domain.
Yoav Stern: I want to expect, I expect to expect, and I'm very, very busy creating a situation where my expectations will be fulfilled. I do it in many ways. It's important. It's important in order to attract institutional investors. It's important even if all the analysts that I see in this industry are writing analyst reports with a lack of real understanding of where the numbers are going and where the value of the shares is going and giving to the rest of the world. Tomer Pinchas.
Speaker Change: And for that analyst reports are extremely important to attract the right.
Speaker Change: Alright.
Speaker Change: Investors and.
Speaker Change: I'm, making an effort on a monthly basis too to get them to right and the problem is that you usually only start right. After the bank has been involved in a transaction of raising money and we do not expect or we didn't we didn't raise money over the last two or three years, we have enough money, but it's.
Speaker Change: I mean, it's coming the fact that analysts are starting to see us as a consolidator they will start to fall off.
Yoav Stern: But still, even if that's the case, it's important that this analyst or that analyst or a few analysts will write the report because the important part of the report is not necessarily the projection of the price of the share. It's the understanding that's inside the report of the business of the company and the business dynamics of this domain. And for that reason, analyst reports are extremely important to attract the right investors and investors. I'm making an effort on a monthly basis to get them to write. And the problem is that, usually, analysts start to write after their bank has been involved in a transaction of raising money.
Speaker Change: Thank you next question please.
Speaker Change: Scott any more questions come from the line of mush them.
Speaker Change: I apologize.
Speaker Change: Do not have any more questions in the queue.
At this time I would like to turn the conference back over to the company for any closing remarks.
Speaker Change: Okay. Thank you very much Scott. Thank you very much everybody who was on the line I hope.
Speaker Change: The fact that we take it as a methodology not to have these conference calls and read to you. The news release because that one you can read by yourself.
Speaker Change: But the rather run it as an open discussion when we speak to you about what we want to speak with you and we are mostly focused on talking to you about what you ask us.
Yoav Stern: And we do not expect, or we didn't raise money over the last two or three years. We have enough money. But it's coming. The fact that analysts are starting to see us as a consolidator. They will start to follow us. Thank you. Next question, please. Scott, any more questions? The question comes from the line of Mosh.
I hope this format is it good for you rather than just reading from a page what did the news release.
Any questions any requests you have for me you know my email and phone numbers schools, Julien Tamara Moshe and we'd be happy to talk to you offline. Thank you very much.
Speaker Change: Yeah.
Speaker Change: The conference has now concluded. Thank you for attending nano dimensions quarterly earnings Conference call you may now disconnect.
Scott: Sorry, I apologize. We do not have any more questions in the queue. At this time, I would like to turn the conference back over to the company for any closing. Okay, thank you very much, Scott. Thank you very much, everybody that was on the line. The fact that we take it as a methodology not to have this conference call and read you the news release because that one you can read by yourself.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yes.
Yoav Stern: But rather run it as an open discussion when we speak to you about what we want to talk about, and we are mostly focused on talking to you about what you ask us, and I hope this format is good for you rather than just reading from a page what the user list is. Any questions, any requests you have for me, you know my email address, and you know my phone number is, of course, Julien, Tomer, and Moshe, and we'd be happy to talk to you offline. Thank you very much. The conference has now concluded. Thank you for attending Nano Dimension's quarterly earnings conference call.
Speaker Change: [music].
Unknown Attendee: Thank you for watching! Thank you for watching! Thank you, and the rest. Thank you for watching! and the rest, and the rest of the crew. Thank you. Thank you for watching! and John, Thank you for watching! and the rest of the cast. Thank you.