We have most often spoken about capital allocation through two channels. The first is organic investment, namely R&D and go-to-market. The second is inorganic, specifically mergers & acquisitions (“M&A”). But there is a third option: return capital to shareholders, while improving Nano’s enterprise value. We have done just that to a notable extent with a share buyback program, for approximately $96 million in 2023. Furthermore, we currently have another $200 million repurchase plan approved and underway.

Time for CONSOLIDATION

M&A has long been part of our strategy as evident by our seven acquisitions since April 2021. But more than being acquirors, we have been prudent buyers – unwilling to pay unreasonable valuations. Why? We believe you don’t make money when you sell, you make money when you buy. In other words, the acquisition price must be right.

In another deviation from the financial reports of all AM industry public companies – we do not see systemic reduced demands for our products. What we do identify are too many AM companies without the gross margins that fit the required R&D, machine building, and marketing budgets. The systemic lack of profitability is a result of overcrowded domain which was over-financed and over-valued by the 2021 SPAC-and-micro-cap-markets-and-small-AM-companies-MANIA. None of them are selling in a synergistic manner, none of them have focused on solving well defined and large yet coherent applications domains and vertical markets. The results are companies that sell, by a single corporation as an example, to the following markets: dental, defense, aerospace, medical body parts, medical instruments, consumer product and more. And those are pretty much all the companies that are large enough in AM and all burning cash annually while being left with ever shrinking reserves.

The solution for zero profits of the more than dozens of AM companies over the last few years is only one: consolidation. This general realignment will in turn increase our competitive advantage, increase gross margins, and focus on synergetic business lines rather than “We sell everything to everyone as long as it is 3D printing machine and/or material.”

The market is prime for consolidation, and we are positioned to be one of its main leaders.

It isn’t just about acquisitions because we have the capital, but also at compelling valuations that will drive an ROI for our shareholders, and proper merger and amalgamation of the management teams and rationalizing the product lines and go-to-market networks.

There are many great, albeit imperfect, companies in the AM industry. Great in that they have cutting edge technologies and meaningful customer relationships with our own customers and industry verticals. Imperfect in that for any number of reasons they have, poor business models that drive high costs, which have consumed the lion’s share of the capital that many of them raised. This is a unique and tremendous opportunity for Nano Dimension and its shareholders.

With close to $56.3 million of revenue, Nano Dimension is the fastest growing of the cohort of publicly traded AM / 3D printing companies (approximately 10-12). Contrary to reports by all other 3D printing public companies, and inconsistently with the reduction in the revenues of all during 2023, we do not feel “Industry headwinds”. This is not even one “industry”; medical equipment, defense, organic parts, prosthetics, 3D food printing, aerospace, aviation, energy, automotive, dental – are not “AM Industries” and do not necessarily see supposed headwinds together. Just as an example, the defense, aerospace and dental and electric/electronic transportation, as much as we know, did not have slowdowns in 2023.

Bottom line: Nano is the only company that grew, and substantially so; this year 29% organically vs. 2022 when we generated $43.7 million in revenue. And we are not shy to say that we were short from our original goal of $60 million. It is not because of headwinds; it is because we performed to an extend of 95% of our 2023 revenue goal.

We aim for go-to-market led consolidation AM/3D Printing and materials companies. This is the only way to accelerate toward profitability as fast as possible. If we can complete this M&A strategy as soon as we can at reasonable prices, we shall see a Nano Dimension that is well in the hundreds of millions of revenue and in a position to deliver to the bottom-line magnitudes more with greater scale and efficacy as practically the one of very few AM companies that is not only well managed and innovative, but also properly financed and positioned to deliver value to shareholders.

Thank you for your support.

Yoav Stern,
Chief Executive Officer and Member of the Board of Directors

FINANCIAL RESULTS:

Fourth Quarter 2023 Financial Results

• Total revenues for the fourth quarter of 2023 were $14,454,000, compared to $12,158,000 in the third quarter of 2023, and $12,104,000 in the fourth quarter of 2022. The increase is attributed mostly to increased and more effective sales efforts across the Company’s product lines.
  
• Cost of revenues excluding write-down of inventories and amortization of assets recognized in business combination and technology for the fourth quarter of 2023 was $7,358,000, compared to $6,739,000 in the third quarter of 2023, and $3,784,000 in the fourth quarter of 2022. The increase resulted primarily from the above-mentioned increase in revenues.
  
• Research and development (R&D) expenses for the fourth quarter of 2023 were $13,580,000, compared to $12,788,000 in the third quarter of 2023, and $20,993,000 in the fourth quarter of 2022. The increase compared to the third quarter of 2023 is mainly attributed to an increase in payroll and subcontractors expenses. The decrease compared to the fourth quarter of 2022 is mainly attributed to a decrease in materials, share-based payments, payroll expenses and subcontractors expenses.
  
• Sales and marketing (S&M) expenses for the fourth quarter of 2023 were $8,289,000, compared to $7,715,000 in the third quarter of 2023, and $9,758,000 in the fourth quarter of 2022. The increase compared to the third quarter of 2023 is mainly attributed to an increase in marketing and other expenses, partially offset by a decrease in share-based payments. The decrease compared to the fourth quarter of 2022 is mainly attributed to a decrease in share-based payments expenses.
  
• General and administrative (G&A) expenses for the fourth quarter of 2023 were $14,051,000, compared to $20,848,000 in the third quarter of 2023, and $9,091,000 in the fourth quarter of 2022. The decrease compared to the third quarter of 2023 is mainly attributed to a decrease in professional services expenses, mainly from proxy contest related expenses, including the matters relating to activist shareholders and ADS holders, such as proxy advisory, voting, and litigation. The increase compared to the third quarter of 2022 is mainly attributed to an increase in professional services, from the same aforementioned reasons and share-based payments expenses.
  
  Other income, net for the fourth quarter of 2023 was $1,627,000, compared to $0 for third quarter of 2023, same as for the third quarter of 2023. The increase was attributed to additional compensation from government authorities for damaged inventory, less reorganization costs which we incurred during 2023.

• Impartment losses for the fourth quarter of 2022, were $40,523,000. In 2023, no impairment losses were recognized.
  
• Net loss attributed to owners for the fourth quarter of 2023 was $1,049,000, or $0.01 loss per share, compared to net loss of $66,604,000, or $0.26 loss per share, in the third quarter of 2023, and net loss of $87,667,000, or $0.34 loss per share, in the fourth quarter of 2022.

Year Ended December 31, 2023 Financial Results

• Total revenues for the year ended December 31, 2023, were $56,314,000, compared to $43,633,000 in the year ended December 31, 2022. The increase is attributed mostly to increased and more effective sales efforts across our product lines.
• Cost of revenues excluding write-down of inventories and amortization of assets recognized in business combination and technology for the year ended December 31, 2023, was $30,759,000, compared to $24,943,000 in the year ended December 31, 2022. The increase resulted primarily from the above-mentioned increase in revenues.
  
• R&D expenses for the year ended December 31, 2023, were $62,004,000, compared to $75,763,000 for the year ended December 31, 2022. The decrease is attributed to a decrease of $9,702,000 in share-based payments expenses, as well as a decrease of $3,627,000 in subcontractors’ expenses and a decrease of $2,176,000 in payroll and related expenses.
• S&M expenses for the year ended December 31, 2023, were $31,707,000, compared to $38,833,000 for the year ended December 31, 2022. The decrease resulted primarily from a decrease of $6,126,000 in share-based payments expenses and a decrease of $982,000 in payroll and related expenses.
• G&A expenses for the year ended December 31, 2023, were $58,254,000, compared to $30,457,000 for the year ended December 31, 2022. The increase resulted primarily from an increase of $19,421,000 in professional services, mainly from proxy contest related expenses, including the matters relating to activist shareholders and ADS holders, such as proxy advisory, voting, and litigation, as well as an increase of $4,711,000 in payroll and related expenses and an increase of $3,508,000 in share-based payments expenses.
• Other income, net for the year ended December 31, 2023, was $1,627,000 compared to $0 for the year ended December 31, 2022. The increase was attributed to additional compensation from government authorities for damaged inventory, less reorganization costs which we incurred during 2023.
  
• Impairment losses for the year ended December 31, 2022, were $40,523,000. In 2023, no impairment losses were recognized.
  
• Net loss attributed to the owners for the year ended December 31, 2023, was $54,550,000, or $0.22 per share, compared to loss of $227,423,000, or $0.88 per share, for the year ended December 31, 2022.
  

Balance Sheet Highlights