LightPath Technologies(LPTH) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2026 increased 120% to $16.4 million compared to $7.4 million in the same year-ago quarter [24] - Gross profit increased 212% to $6 million, representing 37% of total revenues, up from 26% in the prior year [24] - Net loss for Q2 fiscal 2026 totaled $9.4 million or $0.20 per share, compared to a net loss of $2.6 million or $0.07 per share in the same year-ago quarter [26] Business Line Data and Key Metrics Changes - Revenue from infrared components was $5 million (31%), visible components $3.4 million (21%), assemblies and modules $7.2 million (44%), and engineering services $0.7 million (4%) [24] - G5 Infrared contributed significantly to revenue growth, with over $80 million in new orders since acquisition, compared to $15 million in the prior year [5] Market Data and Key Metrics Changes - The company is positioned to benefit from increased NATO spending in Europe, particularly in defense [33] - The U.S. government is expected to launch numerous satellites for missile tracking, creating significant opportunities for the company [11][12] Company Strategy and Development Direction - The company has transitioned to a vertically integrated provider of high-value infrared optics and camera systems, focusing on higher revenue and gross margins [3] - The acquisition of Amorphous Materials is expected to enhance production capabilities and capacity, allowing for larger optics production [9][14] - The company aims to capture significant market share within a 3-4 year window, leveraging unique technologies and strategic investments [16][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet NDAA compliance and capitalize on domestic manufacturing opportunities [19] - The company anticipates gradual financial improvement and has set internal targets for gross margin and EBITDA positivity [28][29] - Management highlighted the importance of executing on existing contracts and converting backlog into revenue [31] Other Important Information - The company completed a secondary capital raise of $60 million to support growth initiatives [15] - Backlog totaled $97.8 million, with a significant portion being higher-margin systems and subsystems [28] Q&A Session Summary Question: Was the increase in sales to Europe due to a specific customer or NATO spending? - The increase was attributed to NATO spending in defense in Europe and Israel, with some G5 shipments included [33] Question: Are there plans for building lenses for optical intersatellite links? - The company already has a strong position in free space optical communication between satellites and is in discussions to increase capacity [34] Question: Can you elaborate on the three-year window for capturing market share? - The company has a unique opportunity to capture market share while competitors struggle with germanium supply, with a focus on long-term relationships in defense [37] Question: What are the main constraints in terms of capacity and product development? - The primary constraints are in glass production capacity and product development, with ongoing efforts to address these through acquisitions and investments [38] Question: What is the timeline for converting cameras to Black Diamond? - The goal is to complete the conversion of all relevant cameras to Black Diamond by autumn of this year [39] Question: What is the cost difference for customers between different lens sizes? - The cost difference is influenced by material costs and the number of lenses that can fit in a coating chamber, affecting overall production costs [42]