LightPath Technologies(LPTH) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 fiscal 2022 was $8.3 million, down from $10.7 million in the same period last year [28] - Gross margin was approximately $3 million, compared to $3.9 million in the prior year, with a gross margin percentage of 37% for Q3 fiscal 2022, slightly up from 36% [34] - Net loss for Q3 fiscal 2022 was approximately $495,000, or $0.02 per share, compared to a loss of $223,000, or $0.01 per share, in Q3 fiscal 2021 [37] - EBITDA for Q3 fiscal 2022 was approximately $647,000, down from $1.1 million in the same period last year [38] Business Line Data and Key Metrics Changes - Sales of infrared products were $3.7 million, accounting for 45% of consolidated revenue, while PMO products generated $4 million, or 48% of revenue [28] - Revenue from specialty products was $547,000, or 7% of total revenue [28] - PMO sales increased by 3% compared to the same quarter last year, driven by improvements in China and other telecommunications customers [29] Market Data and Key Metrics Changes - Revenue from China for the first three quarters has been recovering, but year-to-date revenue in China is down by $5.1 million compared to last year [30] - Outside of China, primarily in the U.S. and Europe, sales increased by 8% or $1.6 million [30] Company Strategy and Development Direction - The company is transitioning from being a component provider to focusing on engineered optical solutions, integrating optics, mechanics, electronics, and software [11] - The strategy emphasizes owning critical technologies to capture value in growing markets, particularly in infrared imaging and engineered solutions [15] - The company is positioning itself as a leading OEM globally, leveraging its design and manufacturing expertise [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in China and the potential for growth in engineered solutions and infrared imaging [30][31] - The geopolitical situation has reinforced the company's strategy and highlighted the importance of developing a resilient supply chain in the U.S. [15] - Management noted that the adoption of photonics is accelerating across various industries, providing diversification opportunities [9] Other Important Information - The company has renegotiated its term loan with Bank United, extending it until April 2024, which strengthens its refinancing capabilities [40] - Total backlog as of March 31, 2022, was approximately $19.7 million, a slight increase from the previous year [40] Q&A Session Summary Question: Did unit profits drop for both PMO and infrared? - Management confirmed that unit profits fluctuate based on product mix, with larger customers in China returning, which tend to have lower unit prices [44] Question: Is the company undervalued based on growth potential? - Management agreed that the company is undervalued and attractive for investment, noting that they are not actively shopping the company but are open to options [47] Question: Will the company focus more on domestic operations rather than China? - Management indicated a shift in investment focus away from China, while still recognizing its importance as a cash generator [49] Question: What is the timeline for new licenses with the Navy and free form optics? - Management anticipates that the first materials from Navy licensing may be released in the next few months, while free form optics are already being adopted by customers [51][53] Question: Is the company involved in low orbiting satellites and laser interception systems? - Management confirmed involvement in multiple projects related to low orbiting satellites and noted significant growth in business with Israel [55][58]