Financial Data and Key Metrics Changes - Second quarter revenue increased by 10% sequentially and 2% year over year, marking the first year-over-year revenue increase since 2022, driven by modest demand improvement across multiple markets [5][18] - Revenue for the quarter was $251 million, with a gross margin of 37.3%, remaining flat year over year [22][23] - Adjusted earnings per diluted share were $0.30, exceeding guidance [24][27] Business Line Data and Key Metrics Changes - Revenue from materials processing decreased by 6% year over year due to divestitures and lower sales in cutting, welding, and additive manufacturing, partially offset by higher revenue in micromachining and the Clean Laser acquisition [18][19] - Medical and advanced applications revenue increased by 21%, driven by higher sales in these segments [18] - Emerging growth products accounted for 54% of sales, indicating strong performance in various laser sources and systems [20] Market Data and Key Metrics Changes - North America sales increased by 31% sequentially but were down 4% year over year, primarily due to higher sales in medical and advanced applications [20] - European sales were stable with less than a 1% sequential decline and down 11% year over year, impacted by lower cutting and welding sales [20] - Asia saw a 4% sequential increase and a 14% year-over-year increase, benefiting from higher sales in welding and cutting, as well as advanced applications [21] Company Strategy and Development Direction - The company is targeting a $5 billion total addressable market (TAM) with strategic initiatives aimed at driving profitable growth [5] - Focus on developing innovative lasers and photonic solutions for medical, micromachining, and advanced applications, with significant progress reported in these areas [9][11] - Capital allocation strategy emphasizes organic growth investments and strategic M&A, with plans to spend approximately $100 million on CapEx in 2025 [12][25] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding demand stabilization, noting improvements in industrial production and inventory normalization among customers [16][46] - The company is adapting to tariff-related challenges by leveraging supply chain flexibility and has successfully mitigated potential delays in customer orders [15][17] - Future guidance anticipates revenue between $225 million and $255 million for 2025, with adjusted gross margins between 36% and 38% [26][27] Other Important Information - The company repurchased $30 million of its stock during the quarter, continuing a trend of returning cash to shareholders [12][25] - The Crossbow laser counter UAV solution has been delivered to Lockheed Martin, showcasing the company's capabilities in directed energy systems [9][10] Q&A Session Summary Question: Can you provide any color on book to bill by region? - Management indicated that the book to bill ratio was approximately one across all regions, which is a positive sign [30][32] Question: How do you view the opportunity for directed energy over the next few years? - Management highlighted the directed energy market as a significant growth area, particularly addressing threats from smaller drones, with ongoing partnerships and extensive testing [34][37] Question: Can you walk us through the Q3 guidance? - Management noted that they were able to ship a significant portion of anticipated orders due to effective tariff mitigation strategies and observed broad-based improvements in demand [42][46] Question: What is the outlook for the systems business? - Management expressed excitement about the Clean Laser acquisition and noted improvements in other systems areas, including micro machining and robotic systems [63][65] Question: How is the competitive environment in the medical business changing? - Management reported strong positioning in the urology market and continued growth with new customer acquisitions [66][68]

Financial Data and Key Metrics Changes - Second quarter revenue increased by 10% sequentially and 2% year over year, marking the first year-over-year revenue increase since 2022, driven by modest demand improvement across multiple markets [5][17] - Revenue came in at $251 million, up 10% sequentially but down 3% year over year, with foreign currency contributing approximately $4 million or 1% to revenue [21][24] - Gross margin was 37.3%, flat year over year, while adjusted gross margin was 37.8%, driven by improved manufacturing cost absorption [21][22] Business Line Data and Key Metrics Changes - Revenue from materials processing decreased by 6% year over year due to divestitures and lower sales in cutting, welding, and additive manufacturing, partially offset by higher revenue in micromachining and the Clean Laser acquisition [17] - Medical and advanced applications revenue increased by 21%, driven by higher sales in these segments [17] - Emerging growth products accounted for 54% of sales, indicating strong performance across various laser sources and systems [18] Market Data and Key Metrics Changes - North America sales increased by 31% sequentially but were down 4% year over year, primarily driven by higher sales in medical and advanced applications [19] - Europe saw stable performance with less than a 1% sequential decline and an 11% year-over-year decrease, while Asia experienced a 4% sequential increase and a 14% year-over-year increase, benefiting from higher sales in welding and cutting [20] Company Strategy and Development Direction - The company is focusing on strategic initiatives targeting a $5 billion total addressable market (TAM) with hundreds of millions in revenue growth opportunities [5] - Continued investment in innovative lasers and photonic solutions is aimed at expanding into medical, micromachining, and advanced applications [8][11] - The capital allocation strategy emphasizes organic growth investments and strategic M&A, with an expected CapEx of approximately $100 million in 2025 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding demand stabilization, noting improvements in industrial production and normalized inventories among cutting OEM customers [15][44] - The company is adapting to the dynamic operating environment by leveraging its global manufacturing supply chain to minimize tariff impacts [14] - Future guidance indicates expected revenue of $225 million to $255 million for 2025, with adjusted gross margin between 36% and 38% [24] Other Important Information - The company repurchased $30 million of its stock during the quarter, building on $1 billion in share repurchases over the past three years [12] - The appointment of five key leaders aims to strengthen the organization and support continued global growth [13] Q&A Session Summary Question: Can you provide any color on book to bill by region? - Management indicated that the book to bill ratio was approximately one across all regions, which was a positive sign [28][30] Question: How is the opportunity for directed energy over the next few years? - Management highlighted that directed energy is a growing market, particularly addressing threats from smaller drones, with significant potential in both defense and civilian sectors [31][34] Question: Can you walk us through the Q3 guidance? - Management noted that they were able to ship $10 million of the anticipated $15 million in Q2, and they see broad-based improvement in demand across various applications [39][42] Question: How did the order book look as the quarter progressed? - Management reported a significant improvement in bookings compared to the previous year, with April being a strong month for bookings [58] Question: Can you comment on the systems business and its recent performance? - Management expressed excitement about the Clean Laser acquisition and noted increases in other areas of systems, including micro machining and welding [60][62] Question: What is the competitive environment in the medical business? - Management stated that they have a strong position in the urology market and are continuing to grow their share with new customer acquisitions [64][66]