Overview
The first thing that caught my attention on the NNDM website is the header “Disrupting and Reshaping Manufacturing with Intelligent 3D Technologies. NNDM, an abbreviation for Nano Dimension, is a provider of intelligent machines for the fabrication of Additively Manufactured Electronics (AME) and is well known for 3D printing machines. I am not an engineer, so I have no clue what it means, but I understand business and discuss the new technology’s advantages in the Juice section.
NNDM is a small company with just 75 full-time employees, founded in 2012 in Ness-Ziona, Israel.
The JUICE
Nano Dimension is most well-known for its cutting edge 3-D printing machines, especially the Dragonfly LDM machine, which comes equipped with the award-winning DragonFly Pro system with new proprietary, state-of-the-art technology that enables 24/7 uninterrupted 3D printing. The new system is equipped with real-time automatic material monitoring capabilities that ensure maximized runtime, optimization of Overall Equipment Effectiveness (OEE), and significantly improved workflow and production processes. So what? Users can now 3D print one-off prototypes as well as low-volume manufacturing of printed electronics.
Why is it a big deal?
The DragonFly LDM® system is being deployed in various industries, including academic and research institutions, defense, aerospace, autonomous automotive, robotics, and biotech. On December 19, 2020, NNDM sold the DragonFly LDM® system to an Academy of Engineering Physics in the Pacific Rim. This sale is one during the pandemic, where companies are trying their best to save dimes and nickels. So this is a conviction that cutting-edge technology will always be in demand even during tough times. Imagine the sales in an average or a thriving economy.
In the same press release, the CEO commented on two things that I believe to be essential for its growth in the foreseeable future;
1) Sales opportunities in Asia Pacific Region post-recovery from Covid-19. The Company is expanding its outreach to clients worldwide, which is
a positive sign of growing the customer base. Other regions may be on the lookout to get their hands on the Dragonfly machine.
2) Actively pursuing M&A opportunities, targeting companies that complement existing technology or strengthen the sales and distribution channels. Again, another conviction that the Company is looking for growth in the 3-D printing space.
Management team:
Since this is a machine company, I will look at the CEO’s experience in building smaller-sized companies and the technical officers for knowledge and expertise in this industry.
CEO – Mr. Stern has built several successful companies from humble beginnings of $8M in annual revenues to $330M in annual revenues through effective strategies and rigorous execution that resulted in impressive organic growth and generated attractive M&A opportunities for scale.
CTO 1 – 15 years in product division, drove the successful commercialization of one of Applied Materials’ semiconductor manufacturing products with an impressive market penetration of $1 billion in less than five years.
CTO2 – 25 years with responsibilities for technology development, production process failure analysis, yield improvements, and maintenance.
Technical Valuation
Nano Dimension’s market cap recently surpassed the $1.4 billion mark. NNDM generated $438,000 in revenue last quarter, falling short of its expected of $1.2 million for the third quarter of 2020. NNDM grew its annual revenue from $45,000 to $7 million between 2016 and 2019. Nano Dimension has an impressive balance sheet with relatively healthy cash and debt amounts. NNDM has $37.32 million in cash, and its total debt stands at a manageable $1.83 million.
Nano Dimension’s reported revenue and earnings per share (EPS) came in far below Wall Street’s expectations in the Company’s latest earnings report, but this had little effect on NNDM stock price as the Company is still in its early growth stage. Like any other company, the pandemic impacted their sales for the fiscal year 2020. The strong balance sheet position is holding them afloat and will drive them forward in 2021. NNDM
is still a speculative growth stock trading at less than $10 per share, and the risk to reward potential is very attractive in the next 3-5 years horizon. I will continue to build small positions over the next couple of months to give myself some exposure in the 3-D printing industry. If I can have one mini 3-D printer at home, that would be cool!
As usual, I am not a financial advisor, and this is not advisable for you to start dwelling on stock trading. The thought process above is solely to validate my understanding before purchasing any equity. I am still learning the process of evaluating and identifying opportunities in the stock market. By doing this, I am creating a structure for my brain to follow and not be an impulsive buyer or act emotionally when the market is against me. It is a journey I thought of worth sharing with any interested audience.