Company Overview - nLIGHT, Inc. is a leading manufacturer of high-power semiconductor and fiber lasers globally, serving over 300 customers across various sectors including industrial, microfabrication, aerospace, and defense [1] Strategic Focus - The company is currently shifting most of its efforts towards enhancing its product offerings and market presence in the technology and infrastructure sectors [1] Analyst Background - The analysis is conducted by a financial analyst with a strong foundation in financial modeling, valuation, and data analysis, holding certifications from the Corporate Finance Institute [1] Investment Philosophy - The focus remains on identifying companies with strong fundamentals and growth potential, particularly in technology, infrastructure, and internet services [1]

Financial Performance - The company has experienced recurring net losses since its inception in 2000, highlighting ongoing financial challenges [61]. - Net loss for 2024 was $60.792 million, compared to a net loss of $41.670 million in 2023, reflecting a 45.9% increase in losses [234]. - Net loss per share for 2024 was $1.27, compared to $0.90 in 2023 [231]. - Comprehensive loss for 2024 was $61.647 million, an increase from $41.399 million in 2023 [234]. - Total revenue for 2024 was $198.548 million, a decrease of 5.5% from $209.921 million in 2023 [231]. - Product revenue declined to $136.659 million in 2024, down 12.8% from $156.666 million in 2023 [231]. - Gross profit for 2024 was $33.019 million, representing a gross margin of 16.6%, compared to $46.113 million and 22.0% in 2023 [231]. - Operating expenses increased to $98.655 million in 2024, up 6.5% from $92.879 million in 2023 [231]. - Cash flows from operating activities resulted in a net cash used of $2.36 million in 2024, a significant decrease from net cash provided of $10.09 million in 2023 [239]. - The company reported a loss before income taxes of $60.87 million in 2024, compared to a loss of $42.65 million in 2023, indicating a worsening of approximately 42.6% [305]. Revenue and Sales - Industrial sales decreased to $45.6 million in 2024 from $71.0 million in 2023, a decline of 35.8% [273]. - Aerospace and Defense sales increased to $109.5 million in 2024, up 19.9% from $91.4 million in 2023 [273]. - The U.S. Government accounted for 19% of total revenues in 2024, up from 18% in 2023 [276]. - North America sales were $132.8 million in 2024, slightly up from $129.3 million in 2023 [273]. Assets and Liabilities - Total assets decreased to $270.2 million in 2024 from $306.8 million in 2023, reflecting a decline of about 11.9% [229]. - Total liabilities increased slightly to $53.8 million in 2024 from $52.4 million in 2023, representing a rise of approximately 2.7% [229]. - The accumulated deficit grew to $325.1 million in 2024, up from $264.3 million in 2023, indicating an increase of about 23% [229]. - The company reported inventory of $40.8 million as of December 31, 2024, down from $52.2 million in 2023, indicating a reduction of approximately 21.2% [223]. - Contract assets increased by 99% to $14.5 million in 2024 from $7.3 million in 2023 [273]. - Contract liabilities increased by 7% to $6.8 million in 2024 from $6.4 million in 2023 [273]. Cash and Investments - As of December 31, 2024, cash and cash equivalents totaled $65.8 million, while marketable securities amounted to $34.9 million [207]. - The company had a net cash provided by investing activities of $16.69 million in 2024, contrasting with a net cash used of $14.10 million in 2023 [239]. - Realized gains from marketable securities were $3.4 million for the year ended December 31, 2024, compared to $2.4 million in 2023 [279]. Research and Development - Research and development expenses were $45.107 million in 2024, slightly down from $46.163 million in 2023 [231]. - Research and development costs are expensed as incurred, reflecting the company's commitment to innovation and product development [257]. Employment and Workforce - Approximately 650 out of nearly 800 full-time employees are based in the United States, indicating a strong domestic workforce [51]. - Labor shortages and turnover can impact operational efficiency and increase labor costs, affecting overall business performance [83]. Market and Competition - The laser industry is facing declining average selling prices, necessitating increased volumes and cost reductions to maintain profitability [60]. - Competition in the industry is intense, with larger competitors having greater resources, which may pressure pricing and market share [42]. - The markets served are characterized by rapid technological change, requiring significant research and development expenditures [57]. Risks and Compliance - The company is subject to risks related to U.S. government contracts, including potential termination and changes in government spending, which could impact financial results [90]. - The company faces risks from international operations, including macroeconomic conditions, regulatory changes, and political instability, particularly in China [93]. - The company is exposed to foreign currency risk, which may adversely affect revenues and operating margins due to fluctuations in exchange rates [95]. - The company must comply with U.S. export controls, and failure to obtain necessary export licenses could harm international revenues [99]. - The company faces significant compliance costs related to privacy, data protection, and information security laws, which could adversely affect its financial condition [111]. Tax and Deferred Tax Assets - The company has estimated U.S. federal net operating loss carryforwards (NOLs) of $169.6 million and state NOLs of $52.9 million as of December 31, 2024 [120]. - The company reported U.S. research and development credit carryforwards of $9.9 million, which will also expire between 2025 and 2044 if not utilized [308]. - The total gross deferred tax assets amounted to $84.403 million, an increase from $75.037 million in 2023, reflecting a growth of 12.4% year-over-year [306]. - The net deferred tax assets increased to $710 thousand in 2024, compared to $89 thousand in 2023, indicating significant improvement in tax asset realizability [306]. - The valuation allowance for deferred tax assets saw increases of $9.0 million in 2024, highlighting ongoing uncertainty regarding the realizability of these assets [307]. Inventory and Fixed Costs - The company has high levels of fixed costs and inventory, which may adversely affect gross profits if product demand declines [65]. - The company recorded an adjustment to inventory values due to excess and obsolete inventory, which was assessed at $40.8 million as of December 31, 2024 [223]. - The product warranty liability decreased from $4.47 million in 2023 to $3.47 million in 2024, a decline of about 22.4% [294]. Other Financial Metrics - The company recorded an adjustment to inventory values due to excess and obsolete inventory, which was assessed at $40.8 million as of December 31, 2024 [223]. - The company performed a quantitative test for goodwill impairment in 2024, concluding that the fair value of reporting units significantly exceeded their carrying values, indicating no impairment [247]. - The total restructuring charges for 2024 amounted to $4.29 million, significantly higher than the $0.82 million recorded in 2023 [303].

nLIGHT, Inc. (NASDAQ:LASR) Q4 2024 Earnings Call Transcript February 27, 2025 5:00 PM ET Company Participants John Marchetti - Vice President of Corporate Development and Head of Investor Relations Scott Keeney - Co Founder and Chief Executive Officer Joe Corso - Chief Financial Officer Conference Call Participants Jim Ricchiuti - Needham & Company Greg Palm - Craig Hallum Capital Group Troy Jensen - Cantor Fitzgerald Rodney McFall - North Coast Research Mark Miller - Benchmark Operator Good afternoon, ladi ...

Earnings Presentation Q4 & Fiscal Year 2024 February 27, 2025 This presentation contains nLIGHT, Inc. proprietary information. No part of it may be circulated, quoted, or reproduced for distribution without prior written approval from nLIGHT, Inc. Safe Harbor Statement Certain statements in this presentation are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities L ...

NLight (LASR) came out with a quarterly loss of $0.30 per share versus the Zacks Consensus Estimate of a loss of $0.21. This compares to loss of $0.13 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -42.86%. A quarter ago, it was expected that this laser maker would post a loss of $0.08 per share when it actually produced a loss of $0.08, delivering no surprise.Over the last four quarters, the company has surpassed consensus E ...

Financial Results - nLIGHT, Inc. announced preliminary results for Q4 2024, with actual results still being finalized, indicating potential material differences from management's expectations[5] - The press release regarding the preliminary results was issued on January 14, 2025, and is included as Exhibit 99.1[5] Regulatory Compliance - The company is subject to the reporting requirements of the Securities Exchange Act of 1934, ensuring compliance with financial disclosure regulations[9]

Company Overview - nLight (LASR) shares increased by 5.9% to close at $10.46, supported by strong trading volume, contrasting with a 2.3% loss over the past four weeks [1] - The company is experiencing growth in its aerospace and defense sector, driven by rising demand for directed energy systems and laser sensing products [1] Financial Performance - nLight is projected to report a quarterly loss of $0.14 per share, reflecting a year-over-year decline of 7.7% [2] - Expected revenues for the upcoming quarter are $51.15 million, which is a decrease of 1.4% compared to the same quarter last year [2] Earnings Estimates and Stock Movement - The consensus EPS estimate for nLight has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Comparison - nLight is part of the Zacks Electronics - Semiconductors industry, where another company, Ambarella (AMBA), saw a 2.7% increase in its stock price, closing at $78.18, with a 9.2% return over the past month [3] - Ambarella's consensus EPS estimate for its upcoming report is -$0.01, which represents a significant year-over-year change of +95.8% [4]

Financial Data and Key Metrics - Q3 2024 revenue was $56.1 million, an 11% increase both sequentially and year-over-year, above the midpoint of guidance [4] - Aerospace and defense (A&D) revenue grew 59% year-over-year to a record $30.3 million, driven by record A&D product revenue of $15.3 million, up 135% year-over-year [4][22] - Microfabrication revenue grew 19% year-over-year to $14.3 million, while industrial revenue declined 41% year-over-year to $11.6 million [23] - Products gross margin improved to 28.8%, and overall gross margin was 22.4%, within guidance range [4] - Net loss on a non-GAAP basis was $3.7 million or $0.08 per share, compared to a net loss of $4.9 million or $0.10 per share in Q3 2023 [29] - Adjusted EBITDA was negative $1 million, compared to negative $1.9 million in Q3 2023 [30] - Cash and investments totaled $107 million with no debt, and average DSO improved to 58 days from 65 days at the end of 2023 [31] Business Line Performance - Aerospace and defense (A&D) business grew 59% year-over-year, driven by record A&D product revenue and strong performance in directed energy and laser sensing programs [4][22] - Microfabrication revenue grew 40% sequentially to $14 million, driven by orders from a long-term customer, though volatility in demand is expected to continue [14][42] - Industrial revenue declined 41% year-over-year, with weak demand in cutting and welding markets, particularly due to competition from Chinese suppliers [23][24] - Additive manufacturing saw progress with the launch of the Corona AFX-2000 laser, which achieved 3x faster print speeds in validation with a leading customer [19] Market Performance - A&D market remains a key growth driver, with strong demand for directed energy systems and laser sensing products, particularly in the U.S. and Israel [5][9][10] - Commercial markets, including microfabrication and industrial, face headwinds due to weak demand and competition from Chinese suppliers, with challenges expected to persist into 2025 [15][16][48] Strategy and Industry Competition - The company is leveraging its vertical integration strategy in the directed energy market, with revenue generated at nearly every level of integration, making it an ideal supplier for U.S. government and foreign allies [10] - Manufacturing operations in Shanghai have been fully transitioned to Thailand and the U.S., with the company expecting normalized production levels in a few quarters [13] - The company continues to innovate in industrial markets, introducing new products like the nfinity laser for precision thick metal cutting and the Corona AFX-2000 for additive manufacturing [15][19] Management Commentary on Operating Environment and Future Outlook - Management expects continued growth in the A&D business, with strong visibility into backlog and design wins, though timing of revenue recognition for new technologies remains uncertain [38][52] - Commercial markets are expected to remain challenging into 2025, with no significant rebound anticipated in industrial or microfabrication revenue [48][49] - The company is focused on maintaining a strong balance sheet and managing working capital to support long-term growth objectives [33] Other Important Information - The company expects Q4 2024 revenue to be in the range of $49 million to $54 million, with A&D product revenue expected to grow sequentially [34][35] - Q4 gross margin is expected to be in the range of 17% to 21%, with adjusted EBITDA projected to be between negative $5 million and negative $2 million [36] Q&A Session Summary Question: Visibility into A&D product revenue beyond Q4 - The company has strong visibility into continued growth in A&D product revenue, supported by a robust backlog and design wins in directed energy and sensing programs [38][39] Question: Engagement with Israeli defense primes, including IRON BEAM - The company is deeply engaged with Israeli defense primes and is a supplier for the IRON BEAM project, with solid funding and future development opportunities [40][41] Question: Decline in commercial business revenue - The decline in commercial revenue is attributed to weak demand and competition from Chinese suppliers, with no significant rebound expected in 2025 [45][46][48] Question: Impact of Chinese suppliers in the U.S. market - Chinese suppliers are impacting the U.S. market through excess capacity and competition, though higher tariffs could provide some relief [50][51] Question: Growth outlook for A&D in 2025 - The company expects continued growth in A&D in 2025, supported by backlog and design wins, though timing of revenue recognition remains uncertain [52][53] Question: Backlog progression and commercial business outlook - Backlog is progressing, with growth in orders and design wins for critical programs in directed energy and sensing [56][57] - Commercial business is expected to remain weak, with microfabrication revenue returning to normalized levels and continued pressure in industrial markets [60][61] Question: Manufacturing transition from Shanghai - The transition of manufacturing from Shanghai to Thailand and the U.S. is complete, with a ramp-up period still ongoing [62] Question: Size of the directed energy opportunity - The directed energy market is significant, with U.S. and Israeli spending in the multi-hundred million dollar range annually, and the company participates at various levels of integration [65][66] Question: Maximum power laser for directed energy - The company produces the highest power laser in the world at over 350 kilowatts, with ongoing development to scale up to a megawatt [68] Question: 10% customers in the quarter - The company had a couple of customers at the 10% level in the quarter, primarily U.S. government or prime contractors, with similar expectations for the future [69] Question: Weakness in low-power lasers - Weakness in low-power lasers is largely related to the additive manufacturing market, with most demand at 1 kilowatt or below [72] Question: Margin profile of backlog - The margin profile of backlog is better than recent results, though fixed cost absorption remains a challenge at lower revenue levels [73] Question: Linearity of backlog - Backlog is not linear, with variability in development work and material integration across quarters [74]

Financial Performance - Revenues decreased to $151.2 million for the nine months ended September 30, 2024, compared to $158.0 million for the same period in 2023, primarily due to decreased sales in the Laser Products segment [77]. - The net loss for the nine months ended September 30, 2024, was $35.8 million, compared to a net loss of $28.4 million for the same period in 2023 [77]. - Revenue from the Industrial market decreased by 40.9% to $11.6 million for the three months ended September 30, 2024, compared to $19.6 million in the same period of 2023 [85]. - Revenue from the Aerospace and Defense market increased by 59.1% to $30.3 million for the three months ended September 30, 2024, compared to $19.0 million in the same period of 2023 [85]. - The overall revenue for the three months ended September 30, 2024, was $56,129, reflecting a 10.9% increase compared to the same period in 2023 [88]. Profitability and Margins - The gross profit margin improved to 22.4% for the three months ended September 30, 2024, compared to 19.6% for the same period in 2023 [84]. - The gross profit for Laser Products in the three months ended September 30, 2024, was $12,475, resulting in a gross margin of 30.3% [96]. - The Advanced Development segment's gross profit varies with contract types and successful project execution, impacting overall profitability [82]. Research and Development - Research and development expenses were 20.2% of total revenue for the three months ended September 30, 2024, compared to 21.2% for the same period in 2023 [84]. - The company anticipates continued investment in research and development to achieve its technology and product roadmap [80]. - Research and Development expenses for the three months ended September 30, 2024, increased by 5.4% to $11,328 compared to the same period in 2023 [100]. Expenses - Sales, General and Administrative expenses for the three months ended September 30, 2024, increased by 11.1% to $13,021 compared to the same period in 2023 [101]. - Income tax expense for the three months ended September 30, 2024, was $261 thousand, an increase of $74 thousand, or 39.6%, from $187 thousand in the same period of 2023 [105]. - For the nine months ended September 30, 2024, income tax expense was $525 thousand, a significant increase of $1,530 thousand compared to a benefit of $(1,005) thousand in 2023, reflecting a 152.2% change [105]. Cash Flow and Liquidity - As of September 30, 2024, the company had cash and cash equivalents of $41.7 million, down from $53.5 million as of December 31, 2023, a decrease of $11.8 million [108]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $1.5 million, despite a net loss of $35.8 million [111]. - Net cash used in investing activities during the nine months ended September 30, 2024, was $10.9 million, primarily due to the net purchase of marketable securities and capital expenditures [112]. - The company believes existing sources of liquidity will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months [109]. Segment Performance - The company operates in two reportable segments: Laser Products and Advanced Development, serving three primary end markets: Industrial, Microfabrication, and Aerospace and Defense [76]. - Laser Products revenue for the three months ended September 30, 2024, increased by 7.9% to $41,132, while Advanced Development revenue rose by 19.7% to $14,997 compared to the same period in 2023 [88]. - For the nine months ended September 30, 2024, Laser Products revenue decreased by 11.7% to $104,960, while Advanced Development revenue increased by 17.8% to $46,207 compared to the same period in 2023 [88]. Market Insights - North America accounted for 64.7% of total revenue in the three months ended September 30, 2024, with revenue increasing by 16.0% to $36,332 compared to the same period in 2023 [90]. - The decrease in China revenue for the three months ended September 30, 2024, was driven by a decline in the Microfabrication and Industrial markets [92]. - The increase in Advanced Development revenue was primarily due to development contracts awarded in the second half of 2023, all included in the Aerospace and Defense market [89]. Other Income - Other income, net for the three months ended September 30, 2024, increased by $795 thousand, or 148.3%, compared to the same period in 2023, totaling $1,331 thousand [104]. - For the nine months ended September 30, 2024, other income, net rose by $597 thousand, or 29.9%, reaching $2,594 thousand compared to $1,997 thousand in 2023 [104]. Credit Facilities - The company had a $40.0 million revolving line of credit, which was amended to extend the maturity date to September 24, 2027 [114]. - No amounts were outstanding under the line of credit as of September 30, 2024, and the company was in compliance with all covenants [115].

Core Viewpoint - nLight reported a quarterly loss of $0.08 per share, which aligns with the Zacks Consensus Estimate and shows improvement from a loss of $0.10 per share a year ago [1] - The company achieved revenues of $56.13 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 0.75% and up from $50.63 million year-over-year [2] Financial Performance - nLight has surpassed consensus EPS estimates three out of the last four quarters, with a surprise of 16.67% in the previous quarter [1] - The company has also topped consensus revenue estimates four times over the last four quarters [2] Market Performance - nLight shares have increased approximately 4.2% since the beginning of the year, while the S&P 500 has gained 24.3% [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at -$0.05 for the coming quarter and -$0.42 for the current fiscal year [4][7] - The estimate revisions trend for nLight is currently mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Electronics - Semiconductors industry, to which nLight belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, suggesting potential challenges ahead [8] - QuickLogic, another company in the same industry, is expected to report a quarterly loss of $0.05 per share, reflecting a significant year-over-year decline [9]