nLIGHT(US:LASR)2025-05-08 22:02Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $51.7 million, a 16% increase from $44.5 million in Q1 2024 [14] - Aerospace and Defense (A&D) revenue was $32.7 million, up 50.4% year over year and 8.6% sequentially [14] - Gross margin for Q1 2025 was 26.7%, compared to 16.8% in Q1 2024, with a benefit of approximately $1.9 million related to duty reclaim [17] - GAAP net loss for Q1 2025 was $8.1 million or $0.16 per share, improved from a net loss of $13.8 million or $0.29 per share in the same quarter a year ago [19] Business Line Data and Key Metrics Changes - Defense product sales grew more than 150% year over year, primarily due to increased deliveries for the Healthy II direct energy laser program [14][15] - Commercial markets revenue, including industrial and microfabrication, was $19 million, a decrease of 16.8% year over year but up 9.9% sequentially [16] - Product revenue for Q1 was $35.7 million, a 21.5% increase compared to $29.4 million in Q1 2024 [16] Market Data and Key Metrics Changes - The defense sector represented over 63% of total sales in Q1 2025, up from 49% in the same quarter a year ago [4] - The company expects A&D revenue to grow at least 25% year over year in 2025, driven by a strong pipeline of opportunities [10][14] Company Strategy and Development Direction - The company is focused on vertical integration in the directed energy market to deliver high-performing and cost-effective high energy lasers [7] - There is an ongoing effort to respond to RFPs and RFQs related to nonkinetic missile defense capabilities, positioning the company to benefit from U.S. government initiatives [8] - Long-term growth opportunities are anticipated in metal additive manufacturing, particularly in aerospace and defense markets [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of A&D revenue, citing a strong start to 2025 and a growing pipeline of opportunities [10][13] - The company is navigating uncertainties related to tariffs, with expectations of some margin variability in defense products due to increased material costs [12][22] - Management remains optimistic about the long-term growth potential in A&D, despite challenges in commercial markets [10][11] Other Important Information - The company ended Q1 2025 with total cash and investments of $117 million, having drawn down $20 million from its $40 million line of credit [19][20] - Inventory increased to $43.8 million, primarily to support the forecasted ramp in directed energy products [20] Q&A Session Summary Question: Visibility on A&D product sales beyond Q2 - Management indicated strong visibility on the Healthy II program and increasing orders contributing to the outlook for A&D product revenue [26] Question: Impact of tariffs on different business segments - The CFO noted that the industrial fiber laser business would be most affected by tariffs, particularly those related to input costs from China [28] Question: Changes in A&D outlook and conditions for increasing guidance - Management highlighted traction in both U.S. and international markets for directed energy applications, but noted tariffs add uncertainty to the global environment [35] Question: Update on commercial markets and full-year outlook - The CFO confirmed no significant changes in the commercial markets outlook, with expectations of a decline of 15% to 20% [49] Question: Ability to pass through costs due to tariffs - Management acknowledged some areas where costs could be passed on, but emphasized the complexity of the situation and potential long-term impacts on margins [51][53] Question: Update on funded and unfunded backlog - The CFO stated that there were no major updates on backlog progression, but activity around responding to proposals remains healthy [56]