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 [25] - Gross profit increased 212% to $6 million, representing 37% of total revenues, up from 26% in the prior year [25] - Net loss for Q2 fiscal 2026 totaled $9.4 million, compared to $2.6 million in the same year-ago quarter [28] Business Line Data and Key Metrics Changes - Sales of infrared components were $5 million (31% of revenue), visible components were $3.4 million (21%), assemblies and modules were $7.2 million (44%), and engineering services were $0.7 million (4%) [25] - The increase in gross margin was primarily driven by higher revenue from assemblies and modules, which generally have higher margins [26] Market Data and Key Metrics Changes - Significant revenue growth attributed to NATO spending in defense in Europe and Israel, with some G5 shipments to Europe [37][38] - The backlog totaled $97.8 million, indicating strong future revenue potential [30] Company Strategy and Development Direction - The company has transitioned to a vertically integrated provider of high-value infrared optics and camera systems, focusing on proprietary materials and complete imaging solutions [3][4] - The acquisition of Amorphous Materials is expected to enhance production capabilities and capacity, allowing for larger diameter optics [6][8] - The company aims to capture significant market share within a three to four-year window, leveraging its unique technology and supply chain advantages [16][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position as a supplier of choice for mission-critical defense and aerospace applications, particularly in light of the NDAA requirements [4][19] - The company is focused on executing its growth plan, which includes investments in existing and new business opportunities [31][32] - Management noted that while there are significant opportunities, the development of satellite programs will take time, with government contracts expected to materialize in the next two years [12][13] Other Important Information - The company completed a secondary capital raise of $60 million, which will be used for strategic investments and growth initiatives [15] - The company is not burning cash in operations and is focused on revenue-generating activities [30] Q&A Session Summary Question: Was the increase in sales to Europe due to NATO spending? - Yes, the increase is attributed to NATO spending in defense in Europe and Israel, with some G5 shipments included [37][38] Question: Are there plans to build lenses for optical intersatellite links? - Yes, the company already has a good business in free space optical communication between satellites and is looking to increase capacity [41] Question: Can you elaborate on the three-year window for capturing market share? - The company has a unique position due to current differentiators and aims to capture significant market share before competitors catch up with germanium supply [49][50] Question: What are the main constraints in terms of resources? - The main constraints are in capacity and product development, particularly in glass production and assembly [51][52] Question: What is the timeline for converting cameras to Black Diamond? - The goal is to complete the conversion of all relevant cameras by autumn of this year [55]