Good day, ladies and gentlemen. Welcome to Nano Dimension’s First Quarter 2024 Conference Call. My name is Betsy, and I'm your operator for today's event. 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, VP of Corporate Development. Before we begin, may I remind our listeners that certain information provided on this call may contain forward-looking statements, and the Safe Harbor Statement outlined in today's earnings press release also pertains to statements made on this call. If you have not received a copy of the press release, please view it at 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. 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. Please go ahead.

Thank you very much, Betsy and good day to everybody. Good morning, good afternoon, good middle of the day. We are going to speak today about the first quarter of 2024 and some reflections from before and after. I will not read you the news release; you hopefully read it or you will be able to read it later. I'm going to speak into the presentation and give as much time as possible for your questions, so we can lead it toward what's more interesting for you. To start with, we had a great quarter with total fitting, which was totally fitting the reshaping Nano initiative, which we started last quarter. This was a very important initiative, because it basically embarked us on a direction of emphasizing profits and adjusting the business model toward profitability, eventually becoming EBITDA positive, rather than just focusing on internal growth, organic growth, or acquisitions. Of course, the top line is first. By the way, the top line here was affected by a technical difficulty. I apologize for that. We had an amazing quarter of improving profitability according to our reshaping Nano initiative. New customers partnering with us is another important factor in this order. RF, for everyone that doesn't know, is radio frequency. This is one of the major applications for AME, Additive Manufacturing Electronics. We have a proof-of-concept that new customers are wanting to use it. A lot of it is in defense. We have repeat sales to Western Defense Agency, and we have new customers in advanced electronics. Some of the names you can guess include leaders in the new space industry, and we have repeat sales to a defense contractor. This is just a small part of the achievements of this quarter. Innovation and securing the competitive advantage relate to how we develop our products and what achievements we reached while developing and investing in R&D. AI services is a starting business where DeepCube is actually starting to make money by itself. Not that we ever intended for our AI technology for an industry to be a profit center, but enough customers requested us to potentially do business with them using our AI capability, as long as they're not competing with us, we're moving forward. On the robotics side, we increased the speed of our robotics additive electronics by a factor of 300%, and this is a very important competitive edge compared to our competition. Our digital solution in software has recently combined with Esko and Fiery to become a one-stop shop for digital printing solutions. The reshaping Nano that I mentioned before is all about numbers. If you look back and reflect on our growth, since 2021, we had 150% compounded annual growth. Since 2022, we have a 36% expansion of our gross margins, growing from 10% to 46%. Our gross margin grew by 4.6 times, and our operating expenses in 2023 and ahead were reduced by about a third compared to Q1 of 2023. The most crucial point we are proud of is that our cash burn was reduced from $27 million a quarter to $7 million a quarter, and we're still moving ahead reducing that to the point that by year-end, on a quarterly basis, we will be close to break-even, assuming the company remains as is, without acquisitions. The industry situation is well reflected by a graph showing the combined revenue of the four industry leaders in 2012 and their profits. The combined revenue grew from $650 million to over $1.5 billion, with profits that shrunk from positive to deeply negative. This is indicative of a growing market but poor business strategies that destroyed otherwise good businesses. The demand for additive manufacturing exists in the market because all service providers using multiple additive machines from different suppliers are making money supplying parts. We intend to change this situation for two reasons: we have the theory and analysis of what to do, and we have the practical ability and capital to effectuate industry consolidation. Lastly, the buyback program has proven to be successful—we bought shares much below the cash value of the share, reducing our share count by 15%. The bottom line is that buying a share of Nano at $2.7 today represents a significant opportunity. Certain people see problems in every opportunity, but those who look closely see opportunity where our shares are currently valued below cash. I don't think many companies reflect such performance yet have a share price below cash. So, this is my bottom line. At this point, Betsy, I would like to open the session for questions.

We will now begin the question-and-answer session. The first question today comes from Troy Jensen with Cantor Fitzgerald. Please go ahead.

Hey, gentlemen. Thanks for taking my question. Good morning, good afternoon. Quick question for you, Yoav: if you look at your Q1 2023 revenues, could you break it down a bit between additive and robotics or the other sectors you're in? I'd love to get a bigger picture of your total additive exposure.

It was about half from additive, a bit less than half than additive manufacturing—sorry, additive electronics—and half from additive manufacturing of all kinds, including electronics, micro-mechanical polymers, and special polymers.

All right, perfect, thank you for that, I appreciate it. Also, Yoav, regarding the announcement for Stratasys on 12/28, if I remember correctly, you guys have been extremely quiet ever since. Any update you can provide on the status of when you think this validation cycle could start? And then I have one more question for Tomer.

I remember. Of course, remind me that when my kids were quiet in the room, I would get very nervous. Yes, we were quiet. The reason we're quiet is not that we're doing bad things; rather, this year we have friendly discussions with Stratasys. We're continuing discussions about what we believe is a good solution for the industry. We are strategic partners, as we are the largest shareholders of Stratasys with 15%. We're not competing with each other, and we're discussing how to proceed, which is done on a friendly basis.

Okay, yes, that's great to know. Lastly, Tomer, could you provide a sense of the revenue level you think you need to hit breakeven with all the restrictions you have planned?

Our plan is to reach breakeven towards the end of 2025, in the second half of 2025. Assuming we grow our business as planned, similar to this year, but at 25% to 30%, we will achieve breakeven in that second half.

Okay, awesome. Well, thanks, guys. Congrats and good luck.

Thank you, Troy.

Thank you.

The next question comes from Katherine Thompson with Edison. Please go ahead.

Hi, good morning everyone. Just wanted to ask three questions. First, could you characterize customer demand at the moment and how that might have changed over the last quarter? Second, regarding the cost base for Q1 ‘24 after the reshaping Nano program, is that now the steady-state level of cost, or is there more to cut? And thirdly, should we expect to see you doing more share buybacks at a similar pace to what you've done over the last six months, depending on share price?

Excellent questions, thank you. Let me start with customer demand compared to Q4. We sell to about six or seven verticals, so the customer demand is typical of each vertical. For instance, on the defense side, the market is very active, obviously due to the conflicts in Israel and Europe. Mostly in Europe, but we do see activity in the U.S. Customer demand in other areas has shown slight weakness, particularly in the German market, which may be influenced by the war; however, this is marginal and does not affect our core business. We don't see a change in demand from sectors like medical, academics, or research institutions. Regarding cost basis for Q1, we will improve and see a reduction in our cost basis definitely. You will notice this in the next two to three quarters. For share buybacks, our approach considers asset allocation. We believe that investing in R&D and acquisitions offers a much higher long-term return than buying shares, although share buybacks provide quick returns. We will decide quarterly based on alternatives available to us. Currently, the acquisition pipeline is very active, and we will manage our capital allocation accordingly.

Great. Okay, thank you.

Thank you.

The next question comes from Sol Zelman with Gericare. Please go ahead.

Thank you, Betsy. Good morning, Yoav, and thank you for the excellent presentation. It’s great to see that the quarter is starting strong and may continue that way considering everything going on in Israel. I will praise you for that. The gentleman from Cantor Fitzgerald recently touched on my question, so I would like to elaborate a bit more. When assessing your investment thesis with respect to performance and underperformance, when do you reassess that thesis to decide when to reverse or cut an underperforming trade in your portfolio? Specifically, regarding the Stratasys offer back in late 2023, given their recent results, it looks like they're underperforming. Are you looking to continue your offer, or are you considering cutting losses?

We are not looking to cut our losses. To be a bit cynical, we haven't lost anything as long as we don't sell. This investment is strategic, not a market trade. I've mentioned this before. Owning 15% of a market leader without direct competition is definitely a strategic position. While it’s true our previous offer may now seem high, we don't intend to divest from this at this point. We believe Stratasys has a promising future and we continue to engage in discussions about potential cooperation.

Thank you. Just a quick question: do you feel that maintaining that position has any negative overhang for Nano?

No, the only thing maintaining this position affects is accounting rules. For instance, if Stratasys shares rise significantly at the end of a quarter, I will report a huge profit; if they drop, I will report a huge loss. Both are merely reflections of one day’s trading and don’t represent our business or cash flow. It doesn't affect our operations or our strategy.

Great. I look forward to seeing how this plays out. Thank you for sharing that strategic viewpoint.

Thank you very much.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Yoav Stern for any closing remarks.

Thank you very much, everyone. Thank you for your questions. I'll summarize by saying that our industry is experiencing a peculiar situation and position. Reflect on how this situation relates to the strategy and intentions of Nano Dimension as I described over the last two years, and you'll reach your own conclusions. Thank you for considering us and being our partners. Goodbye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.