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Nano Dimension Ltd., an industry leader in Additively Manufactured Electronics (AME) and Micro Additive Manufacturing (Micro-AM), announced financial results for the first quarter ended March 31st, 2022.
Nano Dimension reported revenues of $10,430,000 for the first quarter of 2022, an increase of 1,186% over the same quarter in 2021, and an increase of 38% over the fourth quarter of 2021.
Moreover, the first quarter of 2022 revenue run-rate indicates the potential for growth of approximately 300% in full year 2022 over 2021. If this occurs, the Company will perform ahead of its own expectations, by growing revenue over 10 times from 2020 to 2022, assuming no critical changes in world economy resulting from current international affairs and/or other factors.
The Company ended the quarter with a cash and deposits balance of $1.311 Billion (including short and long-term unrestricted bank deposits), while net loss for the first quarter was $33.3 million and EBITDA was negative $29.3 million.
Excluding $13.7 million of adjustments for share-based payments and depreciation and amortization expenses:
- Adjusted net loss was $19.6 million.
- Gross margin (excluding amortization of intangible assets, also recognized in business combination) was 37%.
- Adjusted EBITDA was negative $19.2 million.
- Adjusted EBITDA net of $11.7 million of R&D cash expenses was negative $7.5 million.
Net cash used in operations during the first quarter of 2022 was $21.4 million.
Details regarding EBITDA and Adjusted EBITDA can be found later in this press release under “Non-IFRS measures”.
CEO MESSAGE TO SHAREHOLDERS:
Few observations should be noted as our revenue grows and we endeavor to supplement it, over time, with improved profitability:
- Gross Margin (“GM”): GM is affected by changing mixture of our products: over 60% GM for the new and disruptive Additive Manufacturing (AM) systems, similar and higher GM for materials, and 35%-50% GM for our other products such as surface mounting and ink printing machines and subsystems.
- Net Cash Burn: The majority ($11.7 million) of the $21.4 million net cash used in operations in the first quarter of 2022, was our investment in the research and development (R&D) efforts.
- R&D Expense: We have spent approximately 23% less in R&D in comparison to our budget. Our expenses in sales and marketing are below budget as well. These are indications of the difficulties we have in recruiting the quality scientists and engineers that we need, especially in the USA and Israel, and specifically in the fields of software, data science, algorithm design and material science as well as high level technical sales and application engineers. This phenomenon affects our ability to accelerate our business plans. If it was up to us, the R&D figure would have been higher, in order to shorten the return on investment (ROI) timeline.
- Cost of Labor: We are hoping that the current trends in employment and salaries will reduce the intensity of the point above, and support our need for increased recruitment pace, specifically of high-quality research and sales personnel.
- ROI: As we have declared many times over the last few quarters, as we increase our revenue and invest in R&D, the profitability that will lead to ROI on the cash investment in R&D is not going to be demonstrated on an immediate quarterly basis, but it is rather expected to take at least 8-12 quarters until it will hopefully be manifested as return on capital invested, in the EBITDA and profits lines.
The vision of the Company was expanded based on the conclusion we have reached from analyzing the following data points:
- Nano Dimension’s successful current growth, through expansion of revenues in Additive Manufacturing Electronics.
- The emerging results of growth originated by acquisitions and the organic growth thereof under Nano Dimension’ Go-To-Market and technology development umbrellas.
- The obvious contraction of multiples in the public and private market which justify our previous thesis of not burning our cash by buying at overly inflated values.
- Ample opportunities emerging in Additive Manufacturing, as well as in adjacent technologies in need of AI, Deep Learning and digital conversions.
Our vision continues to evolve as we look to transform AM & AM Electronics & adjacent industrial non-yet-fully-digitalized sectors into an environmentally friendly & economically efficient additive manufacturing Industry 4.0 – enabling a one production-step-conversion of digital designs into functioning mechanical & electronic devices, On demand, anytime, anywhere.
The business plan aimed at reaching the above is heading in a similar direction as before but with a wider field of view, in order to cover the new opportunities arising from the dramatic changes in the markets. We hope that if contraction of multiples and valuation is sustainable, acquisitions will continue to be at more reasonable prices, which were not available over the last two years.
On a related matter, as a high-tech growth company, buyers of our shares at the current price, as it trades below its cash value, actually imitate an investment in a “value company.” In practical terms it means that Nano Dimension’s share price represents a potential valuation upside of a high growth business but with lower downside, more similar to a value-model investment profile. Hence, we changed our previous intention with respect to a Share (ADS) Buy-Back program and initiated a process to facilitate such plan which is conditioned on receipt of Israeli court approval (as needed for all programs as such, according to Israeli Corporate Law). We will provide an update once such approval is received.
First Quarter 2022 Financial Results
● Total revenues for the first quarter of 2022 were $10,430,000, compared to $7,531,000 in the fourth quarter of 2021, and $811,000 in the first quarter of 2021. The increase is attributed to increased sales of the Company’s product lines.
● Cost of revenues (excluding amortization of intangibles) for the first quarter of 2022 were $6,580,000, compared to $4,350,000 in the fourth quarter of 2021, and $352,000 in the first quarter of 2021. The increase is attributed mostly to the increased sales of the Company’s product lines.
● Research and development expenses for the first quarter of 2022 were $17,870,000, compared to $15,099,000 in the fourth quarter of 2021, and $3,732,000 in the first quarter of 2021. The increase is attributed to an increase in payroll expenses and share-based payment expenses, as a result of the Company’s increased R&D efforts.
o The R&D expenses net of depreciation and share-based payments expenses were $11,723,000.
● Sales and marketing (S&M) expenses for the first quarter of 2022 were $9,308,000, compared to $7,690,000 in the fourth quarter of 2021, and $2,713,000 in the first quarter of 2021. The increase compared to the fourth quarter of 2021 is attributed to an increase in payroll expenses as a result of our growing sales and marketing team. The increase compared to the first quarter of 2021 is attributed to an increase in payroll expenses as well as an increase in share-based payment expenses.
o The S&M expenses net of depreciation and share-based payments expenses were $6,393,000.
● General and administrative (G&A) expenses for the first quarter of 2022 were $6,742,000, compared to $6,470,000 in the fourth quarter of 2021, and $3,425,000 in the first quarter of 2021. The increase compared to the fourth quarter of 2021 is attributed to an increase in payroll expenses. The increase compared to the first quarter of 2021 is attributed to an increase in payroll expenses and share-based payment expenses, as well as an increase in professional services expenses.
o The G&A expenses net of depreciation and share-based payments expenses were $5,219,000.
● Net loss for the first quarter of 2022 attributed to the owners was $33,093,000, or $0.13 per share, compared to $159,624,000, or $0.62 per share, in the fourth quarter of 2021, and $9,314,000, or $0.05 per share, in the first quarter of 2021.