Nlight ((LASR)) has held its Q4 earnings call. Read on for the main highlights of the call.
nLIGHT’s Earnings Call: Mixed Sentiments Amid Aerospace Growth and Commercial Challenges
The recent earnings call from nLIGHT painted a picture of mixed sentiments. While the company celebrated strong growth and opportunities in the aerospace and defense sectors, it also faced challenges in the commercial market. The call revealed significant backlog and contract wins, yet financial metrics showed declines in revenue and gross margins, contributing to a mixed outlook for the company.
Aerospace and Defense Revenue Growth
The aerospace and defense segment emerged as a bright spot for nLIGHT, with revenue from this sector growing to more than 60% of total sales by the end of 2024. This represents a 20% year-over-year increase, reaching a record $110 million. This growth underscores the company’s strategic focus on these markets.
Backlog Increase
In a testament to its robust pipeline, nLIGHT’s backlog increased by more than 50% year-over-year in 2024, reaching a record $167 million. This increase highlights the company’s strong order book and potential for future revenue.
Development of High-Energy Laser Systems
Significant progress was made on the Healthy 2 program, aimed at developing a one-megawatt high-energy laser. Components for this ambitious project are expected to ship in the second half of 2024, marking a milestone in nLIGHT’s technological advancements.
New Contract Achievements
The announcement of a new $25 million contract for an existing missile program was a key highlight. This contract is expected to contribute significantly to revenue growth in the laser sensing markets, reinforcing nLIGHT’s position in the defense sector.
Iron Dome Initiative
The U.S. President’s executive order for a next-generation missile defense shield could potentially benefit nLIGHT’s directed energy systems. This initiative aligns with nLIGHT’s capabilities and could open new avenues for growth.
Commercial Market Challenges
The commercial market posed challenges, with revenue declining by 25% year-over-year. This decline was attributed to competition from China and muted global manufacturing demand, highlighting the headwinds faced in this segment.
Fourth Quarter Revenue Decline
The fourth quarter saw a total revenue of $47.4 million, marking a 9% decrease compared to the previous year’s fourth quarter. This decline reflects the broader challenges faced by nLIGHT in the commercial sector.
Gross Margin Impact
Total gross margin in the fourth quarter was 2%, impacted by non-routine charges of approximately $6 million related to inventory reserves. However, the adjusted gross margin would have been approximately 15%, indicating underlying operational efficiency.
Adjusted EBITDA Loss
nLIGHT reported an adjusted EBITDA loss of $11.3 million for the fourth quarter, a significant increase from the $3.3 million loss in the previous year’s fourth quarter. This highlights the financial pressures the company is under.
Cash Position Decline
The company’s cash position declined to $100.9 million from $113.1 million at the end of 2023. Despite this decrease, nLIGHT maintains a strong cash position with no debt.
Forward-Looking Guidance
Looking ahead, nLIGHT is optimistic about its strategic positioning within the Department of Defense’s priorities. The company anticipates further growth in 2025, expecting a 25% increase in aerospace and defense revenue. Despite challenges in the commercial markets, nLIGHT expects first-quarter 2025 revenue to range from $45 million to $51 million, with a gross margin between 13% and 17%.
In summary, nLIGHT’s earnings call reflected a mixed sentiment, with strong growth in aerospace and defense counterbalanced by challenges in the commercial market. The company’s strategic focus on defense markets and technological advancements position it well for future growth, despite current financial pressures.