LASR - Earnings call transcript Q1 2021

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Operator

Good afternoon, everyone, and welcome to the nLIGHT First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Joseph Corso, Vice President, Corporate Development and Investor Relations. Sir, please go ahead.

Joseph Corso

Thank you, and good afternoon, everyone. Scott Financial Chairman Officer. are Ran CEO; today Chief Bareket, us Keeney, and nLIGHT's and With Today's financial for projections will and discussion contain plans our forward-looking business. statements, including

are and Forward-looking uncertainties and time our many statements to in from control, risks time filings. are of the subject described which SEC beyond to risks our including uncertainties,

Our results undertake those except obligation update to from required no forward-looking as today's statement, on may projected differ by law. publicly materially we call, any and

measures. be will discussing we call, financial non-GAAP the During certain

have these financial the in can We of website. most now over directly Investor our which I to reconciliations financial measures our turn the the provided non-GAAP release, section on comparable measures be call of will Relations to GAAP found earnings Scott.

Scott Keeney

the X. history. the driven start by a quarter in approximately Slide provided first QX revenue at highest we growth We broad-based by year-over-year our which generated the in Thank was our year million nLIGHT. upper XX% each you, in to February of revenue, the end guidance $XX was of Starting markets. strong for increased of Joe. end revenue and and QX was on

laser and quarter into our remain global about driven for threats we key from and to Industrial, next-generation additive are technologies becoming the and critical We growth see XXXX We lasers, security. our to our fiber there networks. from enable that metal Microfabrication, strong a new secular manufacturing electronics multiple emerging to to our enable are and requirement Defense, trajectory. lasers advanced national electric customers In QX. trends drive continue have In production key address manufacturing. The a include confident our are strong and the long-term growth. vehicle continue directed-energy to themes saw prospects legacy and high-power demands continued to displace continued lasers Examples during processes. semiconductor In lasers

end revenue market. Turning X by discuss to Slide to

quarter. first was energy, vertically this patterns, order power strong and technologies with fiber growth business our our lasers products, XX% to In year-over-year expected, demand customer the Year world than and from revenues market. amplifiers, of progress QX improve we high-power strong revenue Performance of the had fiber our represented XX% we by integrated and total we Aerospace believe long-term in continue Industrial delivery another our and business technologies, core quarter across have and XX% grew driven our increased in this directed opportunity diodes, in performance continued our market, have long-term energy. the in quarter. Our directed continue to we customers defense for In segment their the In quarter, our Defense we base of by our the and by both year-over-year Chinese beam as better the meaningfully to but lasers of for from Lunar their the was continued programmable they revenue world New our an which customers. designed. products in ramp the customers meet was up typical highest are by saw which slowdown, We we of China, Driven increasing increase with the to increased and into ROW driven number several demand key saw year-over-year. increased our demand we rest forecasts. our rest customers in

our quality. received that of the infrastructure Multiple our we've and exceeded grew build companies laser manufacture required we positive. been handsets progress process In quarter improving our in the AFX-XXXX demand significantly XG from Revenue laser, our We our programmable geographies. excellent grew rate solutions compared are the make year-over-year to continued sales with call have revenue and in ROW is for improvements believe metal to demand through additive being customers single-mode all driven manufacturing. increased released our based also and first by which increased from advanced on XXXX. year-over-year the and qualifying newly lasers processing in additive manufacturing in We The XX%, We internal customers leading Microfabrication, across response part tool expectations. electronics. has

high-power best market in in lasers the component semiconductor pico, high-brightness, are leading today. many critical industry the Our and lasers enabling and the femtosecond offer of nano, the of available performance pulsed the

and to develop electronics, that markets. medical, microfabrication continue We other advanced solutions address innovative

quarter, revenues revenues year-over-year first Turning XX% In to in by geographies. discuss In Slide to our grew all geography. China, X, revenue to we QX the increased million. $XX.X

representing over China to turn quarter million, XX% quarter to discuss XX% Ran, of grew of revenue. year-over-year to First will financial total nLIGHT's to results. customers our $XX.X I now sales outside call the first

Ran Bareket

afternoon, Beginning and everyone. Slide Thank you, on X. good Scott,

was First range, end the $XX.X guidance upper million of of quarter revenue year-over-year. XX% up in our

QX revenue XXXX. above first First and development XXXX, first $XX.X quarter million, product was above quarter XXX% increase of of was an of XX% quarter $XX million, increase the an revenues

giving have as for integrated overall The mainly acquisition higher by development closed work than line the was separate and to in in an our a ago, become increase we revenue the development energy first driven project Nutronics US year has the Nutronics XXXX stopped of of Nutronics reporting government. that revenue revenue Although, a performed business. related direct part more quarter

of first versus into margin first comparable in quarter to XX.X% the XX.X% quarter more X was XXXX. detail gross margin. quarter, gross the Product Slide gross to in in to XX.X% compared Overall margin XX% in XXXX. period the Turning of was the first our provide

was improvement non-China industrial, higher margin year-over-year to Our global sales defense aerospace, result of and microfabrication, the customers.

the XXXX. with majority was related were year-over-year Turning increase the $XX.X compared of in The to spending. during to R&D higher quarter, first QX Non-GAAP X. $XX.X million expenses Slide operating million

R&D on our opportunities in discussed past, will to business. to to spending in we organic in the we've continue prioritize As various capitalize we see order continue the

the diluted Non-GAAP XXXX. Turning quarter during to the million, the in of loss first basis, compared for of was quarter first for during share Non-GAAP a XX. GAAP $X.XX quarter loss in first XXXX. EPS with income $X.XX EPS a $X.XX per of of million Slide of of quarter first $X.X compared with On first net first compared was was the $X quarter the the quarter of XXXX. $X.XX, loss loss a a a with per shares,

First compares $XXX,XXX EBITDA million approximately $X adjusted This in XXXX. was sales. with QX quarter for or XX%

Our generated year-over-year QX QX EBITDA in in cash use adjusted improvement In in and million a of $X.X was $X.X versus result first profit in discipline. XXXX. we of a operating million OpEx continued gross quarter, higher the approximately

the in $XX.X to related energy expansion expenditure Capital mainly was facility. in direct capital million to purchase capacity $X.X our QX of facility approximately million quarter for in and first increased $XX.X Camas quarter was million Our operation included the XXXX, our which XXXX automation. versus expenditure

million. the was increased million, we prior XX. the XXX Included related the our to total quarter is was with Slide support was the ended QX approximately to timing inventory, representing DSO days $XX trends. mainly was increased to $XX Inventory of of which slightly equity in first XX Turning We approximately equivalents DSO offering. to end cash inventory million cash in balance revenue follow-on customer as quarter demand raised days. of for invest and quarter. in The than QX we from March cash the ending continue quarter our at during $XXX higher

to to we XX%. million product on XX% sales. our mix, a a $XX margin on XX% XX%. current QX to is of of and includes The in midpoint for XX of be $XX of Based available the range implies gross revenue our of expectation million Product million. million to QX. guidance development approximately Page for million, midpoint range margin $XX approximately expected we outlook to for our in see information of $XX Based be product the Turning $XX for a QX At revenues sales this to in year-over-year growth today, expect of gross of XX%. range

development to expect approximately X.X%. be margin We gross

in EBITDA the we $X quarter, million of second range to adjusted the million. expect $X For be to

adjusted range assume amortization depreciation OpEx EBITDA and and slightly is QX million. that non-GAAP $X.X Our approximately increase

We will million with call turn the in million, which equity X.X questions. approximately shares for over the follow-on offering. approximately March to back With be includes XX.X basis expect QX I that, issue average conjunction our operator shares

Operator

Canaccord possible [Operator it Instructions] Mr. with Dorsheimer, on mute? question. question comes Genuity. Dorsheimer go our is first from from Jed phone is Please your your And ahead today

Jed Dorsheimer

yes. Oh,

hear Sorry. now? you Can me Perfect.

on of attribute you seem some space, guess, share look the whether wondering I exposure. I your I'm if stronger question in gains? above or quarter. I growth the you're be others what strong is competition in relative of at and market congrats or is, that - the first you some to executing not the results your to So, Or, do to be compared market-related competitors, that guess, of to seems terms the some

Scott Keeney

always been it's Yes. Jed, both. I suppose

rest we well in as quarter our to I about in And that what is the core think world energy. cutting, and that's high-level China part of our of had of were a way industrial expanding direct in that, general in in the outside and sales think and aerospace are had we positioned. market welding, is one think XX% things focused the defense, we addition, and attractive And on markets been in believe there, of I additives. sales we're the

in releases development well. product categories, to our those So, continues it and go

reflect we QX the I those markets. demonstrate sort see of that focus numbers that in the and indeed prospects So and think further

Jed Dorsheimer

in. I'll then That's more helpful, back question Scott. and I guess, and just one a follow-up jump

know move to toward to terms industrial as So, a queue. follow-up, - of VCSEL of be you perspective? And just traditional or I with much EV cutting just provide there. the a level in side from manufacturing, my that higher electric the internal And that was upstream from seeing I I'll have battery. any you the a in combustible things jump There particularly welding trend and of back of Thanks. issues perspective, on might terms an manufacturing from of update what around your vehicles. if side then of wondering capacity as respect seems to on manufacturing, in own you're engine-type and automation

Scott Keeney

Jed. good, Yes,

capacity, your it's more in again, position trend lasers battery that to light-weighting is fab lasers continue offer I again the in a processes, for and attractive So your good welding using the we're first with question on vehicles a toward to market question, through all expand the then one way because intensity around And and for the for secular growth that will our cutting, provides lasers. from opportunities. sort more an on provides of our capacity. the fab for EV of opportunities think the EV yes, second And broad opportunity

have the We the made front-end the few last investments that, capacity. CapEx over years in

and there. We the to continue to notably in back-end expand we expand in continue automation

we capacity that so, internal on constraints don't And front. see

Operator

comes Needham question. ahead your from question our Jim Ricchiuti & And with next from go Please Company.

James Ricchiuti

might that some talk the afternoon. Good I all or their you. solid all whatnot, this, but any know of the be about at some I'm removed know constraints to of laser some customers. from folks seeing you're market that might Thank and impact bit disruptions, that. component you that is, right. perhaps selling whether wondering concerned a you're of All be hearing Scott, sells are the the experiencing seeing probably from you're if don't in what it's some I state to or companies industrial with

Scott Keeney

of because you're Yes. one across topics on, we approaching various kinds I with it's chains, working a the question, way good more That's and our different time spending I've all very supply customers seeing of that gaps. like that Jim. been no, absolutely, are And the it,

to to hire are able example, gaps of certain people, industrial components. source for facing customers our so, in And able being being terms

notes detailed And strategies visiting do and our our to we these work yes, key out they're topics. customers that we've closely specific address I'll we But one customers. playing on and very with out see with do exchanging of be so, different been all examples.

as are we don't we do a that see but see of yes, facing, issue out gaps we're So, a number it there. fundamental that there

James Ricchiuti

just the additive, follow-up And respect have is for to it. have guys additive you Got been with question in a while. I

some market. think bit And probably bring happening unique the a a so, what's of I in you - to perspective

ago? Are customers. larger level activity you're Is you're that being you share this moving talked seeing gains? the what market a so, we some about seeing? of at the - qualified say, you seeing, there couple a newer than, versus years a to Are opportunity? And market of Do different

Scott Keeney

good. Yes,

have that higher additive. displace we're that customers In that for other on a certainly promise across push fulfilling to need included well quite the but for additive, there across is, from need us is technology, time, We using fulfilling is then development to we involved time of lasers are the served different wide very to the take and product are in performance you range very but and we I sintering some is of using that that, and using there. a lasers, of positioned that it of software power various seeing a applications, process. migration some lasers, and different that been positive processes, more very higher all using lasers approaches It that a progress ability volume think the them theme using beam additive higher customers laser, laser have and and quality seeing a unifying the tends will laser, that some we're what critical well. promise is the laser has but high-performance - the to you have mechanical lasers, part requirements And seeing programmable

James Ricchiuti

this size to this what how business? way might Any of Industrial represent - your

Scott Keeney

our see as there. we some be products out the of you but on now, information introduced. of on there. right the where we're what to And out work this forward to we'll new try looking that fall, will segments breaking not we going trade to business And to certainly, more see We're do get fastest-growing Yes. it shows all

Operator

go question. And from question from our next with ahead John your Stifel. Marchetti Please comes

John Marchetti

that saw very a could is of a the to maybe XX sort gaining the next talk year and the if function little obviously could think How Scott, things it and you of moment XX Thanks more up So products just a think this of a you've wondering, bit half about little the much success last and little playing overall traction? some rest take bit just was a that a and getting the that we much. environment of world. to talk post-pandemic quarter better you you of about maybe year dynamic over months? starting bit and if open in out introduced I versus over the about you how

Scott Keeney

well both. and I really demand them similarly, it's they with of are a me And and discussed effectively have John. think out bit and to by now we're large sold happy is, that doing to Yes, customers seeing of right What the struggling our they're see. meet how many

that we is overall see. that growth market there So

of make when takes we amplifying on We've key wins. into time, those some to in power And expectations to the that design addition In working kind succeeding, newer of design that, making adopt, world, and on notably been customers get is longer again, it continue we're our the progress we you get my they lasers the further rest as progress the wins. for most levels our with them and even that a few programmable offer. to

much And Again, So, take Chicago shows, the some that a both are about time hope in there'll working trade September. I some factors to are of these forward be FABTECH that will where that together. certainly, products be, information place will in think, more we're new there. out looking of

John Marchetti

customers follow-up, a maybe received, side, feedback where And that of see on laser terms as you the in that just curious just then Great. programmable outperforming.

out about because differentiates it we some bit others where it's a competition Some that's out really get a of question fair there. the versus there

perspective would your appreciate on So, that.

Scott Keeney

Yes, good.

the in markets again, of the can validated space, ways the and and concept there's products, that few in set the for one no think I hit process beam that that quite for think, whole a but that can that's And I in few across has of some can then all In be there hit that last got few the we product proposition a other a markets. specs for need material been time. that other space. validates similarly that in in seeing the for end But terms really over of around is a expanded I verified that know provide we're value distinct space. the the programmability, different in that, of cutting, additive examples to been again, really we've years we the out think And real are it there, that welding, that's in industrial space. that modified

have for additive particular our and with products at cutting were least greater today, So, us distinction. we

Operator

go your comes next from with Misra our And question. Please from Berenberg. ahead Paretosh question

Paretosh Misra

afternoon. comment parts of - I signs in because you. A laser the thank on you're the was there in if Hi, Good you on have And that. been market. industry. the trends of seeing industry could asking semiconductor inflation I'm the pricing that wondering question some in

So just signs curious as of if you're those seeing in well. some of lasers inflation

Scott Keeney

Yes, good question.

has and other generally, see of So, to legacy improve allowed continued the lasers the have improved dramatically, continuing. performance which technologies has and we that displacement performance price

We continue new better products, and to higher down our performance, yields. drive costs through

continuing. see we so that And

We in various of note signs in Certainly, in see So, we are lasers. could we there in see that we lasers. and but today for inflation directly other metal serve. I abound don't it don't prices see examples certainly it that where directly markets inflation, anything

Paretosh Misra

announced products either back Got of price months it. And hikes that? you your for haven't in recent on the

Scott Keeney

Correct.

Paretosh Misra

realizing Got industrial some there I it. out then, Laser just But have Industrial coming global. Got is business it's in recently. it. indicators China, China not of weakness And been your mean,

just So customer or macro much? that in wondering some you're patterns your of in level China if weakness order not seeing so

Scott Keeney

there, Well, And did PMI seeing in how outside as growth China. XX% for are hard in growth. our affect of those other you metrics but metrics continued sales said, opportunities China, of may We're to or we for see us the say. China, market

we it's continued are not see we focused opportunities the us. do set growth So for that on, core of and metrics

Operator

with Palm your Our Group. ahead from Craig-Hallum Please question. next from Greg question Capital go comes

Greg Palm

any either by seeing mean, or question. geography are the just end on here following mean, maybe in change trends market? in week in seen what Yes. May, Thanks. up everyone. I April Hey, by you've first and last guess, I you based demand the on I

Scott Keeney

it's to reflects terms in they be provided customers and our of traveling what and nice And are those seeing we picking seeing and is now had exceeding up see that, getting vaccinated customers that demand insights continued what of what we outlook even deeper and The growth. anticipated. certainly, I'm in Yes. many conversations that's

So, outside a stronger that of China, out is yes, support in growth. a demand there. coming of China always QX amount typically can see we pent-up COVID, we continued then for quarter. of fair And is out see there

Greg Palm

quarters, for and points, Make basis nicely hundred couple gross back-to-back on then be but revenue math at expected QX product a XX% gross to guide right. you're margins this it. margin if for Got sense. my product, guiding for of is quarters if past I look down And that is segment above

So, just that's I'm but confirm else there ask to was something guessing I was wanted mix-related, that or that if missing.

Ran Bareket

No, you anything. are not missing

the And You that's a when in we are be that we improvement. improve to the from the said just little DE. nice right talking the can talked of margin This now margin, can But margin, again, at and provided those comfortable will the that margin. mind margin, it I'm what I'm average you margin, are repeat that that believe see defense, slight going you is feeling keep guidance that us that looking are otherwise, All you few lower, industrial from in measurement; product improvement we you XX% can last between coming higher and aerospace when I outside the in the about the that reachable. will the mix need have we might about margin consider significant about, that that mainly bit improvement are on a margin. a see about margin, future right nice product it last but there definitely time get And product quarters, China. the talking we is to we product. coming talking with revenues mix. in why The will the product some coming in It's forward, help growth a that again is change will we development

Operator

from Our question. Please Mark go next ahead The with question Miller Company. comes from your Benchmark

Mark Miller

in with total of fiber above lasers what terms X-kilowatt were I'm just sales. wondering powers of percent

Scott Keeney

Let's see. Mark. Hold on,

sure make give was up number me right XX%. Let X-kilowatt QX I pull precisely above to here, in you it the

higher new trend. that migration continued products and we that to lasers from to release do see benefit we fiber power So, continue

Mark Miller

your they call on any during up I'm beam some comments just that. market. this of competitors picked One earnings their week in wondering said that had share ingestible

Scott Keeney

don't Boy, know I to. was what that referring

really that, is the industrial again, programmable I technology in call the markets. what think trend key we beam overarching

all And end the so, continuing markets. we see that to drive

So I'm referring they it those sure markets. to do But we what to. drive see continue all not were

Operator

of Q And next Diffely comes if Good our ahead space? time little world - question question. some from was sales way your the industrial hoping markets, that I you D.A. Please Yes. bit in cycle about the over us Davidson. tell Diffely go could for more afternoon. can Scott, the from and Tom track with rest Tom this maybe your a progress we

Scott Keeney

Yes.

sales a and in develop it's As be the then larger can the the relationships mentioned players on I multiple Europe - on some to portfolio. longer it it's really longer product Certainly, the country. and previously, Tom, cycle, players key years and have of the full depends to Japan side

can share. aren't you see our there great metrics as released that I so, But by products customers. the you can get insights certainly, And

Okay. As gross those margin there going do are the industrial we segments XXX is into making of range tools in this typically the there of examples good margin which front. And reason. have progress a in you visibility yes, cases, more the products. to It that guidance? some to hear. quarter fairly all Is see a But and a the point of last, Ran, causes on I'm key Q are Diffely lot curious, as then, what good - are we than companies. are just, shows a seems so ship like basis said, with made more much we'll OEMs trade of five that. - to across and we for I lot years of margin or your Tom we've the over wide fall expand the investments continue That's not

Ran Bareket

industrial, revenue between in markets, example, aerospace, QX, like again, that China be every those impacting defense, end will And, and industrial be mix world. the different the the and Year. be know mix. mix All of that between end to there revenue And only our Chinese etc., the It's the for margins. New used typically, mix. after we quarter rest China only could within it is It's markets, quarter in higher, a probably

So, trend what might going margin. help But the is are is will forward mix quarter-over-quarter. again, the margin the us therefore, and we important and growth the reduction in see the we slight improve long that to for going run, that seeing forward for Company a revenue

Operator

question ahead is next Our a with follow-up from your Paretosh go Misra. Please follow-up.

Paretosh Misra

for Thanks battery that go And the guys. in you of in on you're power or in of wavelengths? what or I lasers manufacturing earlier to color provide wanted Is Thanks you terms electric types welding? back on terms nLIGHT? opportunity that Where it for just taking of other any cutting selling my follow-up. the question manufacturing. see biggest vehicle battery do

Scott Keeney

themselves Yes. manufacturing I'm through cutting. battery and more happy the processes to it vehicles. comment. the It's from across I'd both ranges of welding emphasize and the welding probably

cutting applications. is The that levels a range of what industrial across tend range it pretty the And high-performance we'd critical lower in to once So, really here different see very fairly this beam power again wide than programmable universally wide applications. applications. is of be

to trend think support the lasers is strong category I vehicles. to the a EV very whole are the of in to move again, So, lasers - well-positioned

Operator

for ladies I'd any closing like call remarks. to showing gentlemen, Joseph And no turn Corso back I'm the to additional and questions. over conference

Joseph Corso

afternoon in next with participating thank Thank we continued be great during over Yes. to in wanted interest I look afternoon. and you. months, your We'll nLIGHT. their for everybody time to the for the quarter. and various of this a couple Have everybody speaking forward just events

Operator

attending. call. conclude gentlemen, you for does do today's conference and that We Ladies thank

You may disconnect your lines.

nLIGHT (LASR) 10 May 212021 Q1 Earnings call transcript