Financial Data and Key Metrics - Q3 2024 revenue was 30.3 million, driven by record A&D product revenue of 14.3 million, while industrial revenue declined 41% year-over-year to 3.7 million or 4.9 million or 1 million, compared to negative 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 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]
nLIGHT(LASR) - 2024 Q3 - Earnings Call Transcript