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nLIGHT, Inc. Announces Second Quarter 2018 Results

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VANCOUVER, Wash., Aug. 08, 2018 (GLOBE NEWSWIRE) -- nLIGHT, Inc. (NASDAQ:LASR), a leading provider of high-power semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets, today reported financial results for the second quarter of 2018. These results included:

  • Revenues of $51.7 million, up 49.2% compared to $34.7 million for the second quarter of 2017
  • Gross margin of 34.2% compared to 30.8% for the second quarter of 2017
  • Income from operations of $5.5 million, or 10.7% of revenues, compared to $1.9 million, or 5.5% of revenues, for the second quarter of 2017

GAAP net income for the second quarter of 2018 was $4.7 million, or net income of $0.11 per diluted common share, compared to a loss of $0.3 million, or a net loss of $0.11 per diluted common share, for the second quarter of 2017. Excluding the impact of stock-based compensation and assuming the conversion of all outstanding convertible preferred stock in the period to common stock, non-GAAP net income for the second quarter of 2018 was $5.5 million, or non-GAAP net income of $0.14 per diluted common share, compared to non-GAAP net loss of $0.2 million, or non-GAAP net loss of $0.01 per diluted common share, for the second quarter of 2017.

"We delivered strong revenue growth and gross profit in the second quarter, driven by meaningful expansion in all three of our end markets," commented Scott Keeney, nLIGHT's President and Chief Executive Officer. "Industrial and microfabrication business was particularly strong in China in the quarter, with the region growing almost 60% year-over-year.  We are excited by the momentum across the business and the pipeline of new products we will introduce over the next several quarters. We remain focused on working closely with our customers to ensure our products enable them to bring differentiated solutions to market."

Second Quarter 2018 Financial Highlights

  Three Months Ended
 June 30,
   
(In thousands, except percentages) 2018   2017   % Change
Revenues $ 51,705     $ 34,664     49.2 %
Gross margin 34.2 %   30.8 %    
Income from operations $ 5,549     $ 1,896     192.7 %
Operating margin 10.7 %   5.5 %    
Net income (loss) $ 4,653     $ (287 )   NM  
Adjusted EBITDA(1) $ 8,527     $ 3,930     117.0 %
Adjusted EBITDA, as percentage of revenues 16.5 %   11.3 %    
(1) A reconciliation of the non-GAAP information provided here to the most directly comparable GAAP metric has been provided in the financial statement tables included in this release.
 

Outlook

For the third quarter of 2018, nLIGHT expects revenues to be in the range of $48.0 million to $52.0 million, gross margin to be in the range of 33.0% to 36.0%, income from operations in the range of $3.0 million to $5.0 million, and Adjusted EBITDA in the range of $7.0 million to $9.0 million.

Investor Conference Call at 2:00 p.m. Pacific Time, Wednesday, August 8, 2018

Parties interested in listening to nLIGHT's quarterly conference call may do so by dialing 1-877-270-2148 (U.S., toll-free) or +1-412-902-6510 (international and toll), with the conference title: nLIGHT Second Quarter 2018 Earnings. The call can also be accessed via the web by going to nLIGHT's Investor Relations page at http://nlight.net/company/investors.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release also contains non-GAAP financial results, including Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share, basic and diluted. Adjusted EBITDA, a non-GAAP financial metric, is used to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA is a meaningful measure of performance as it is commonly utilized by us and the investment community to analyze operating performance in our industry. Similarly, we believe that providing non-GAAP net income (loss) and non-GAAP net income (loss) per share, basic and diluted, is useful to our investors as it gives effect to both the conversion of all outstanding preferred stock to common stock, which occurred immediately prior to the closing of nLIGHT's initial public offering on April 30, 2018, as well as removing the effect of stock-based compensation expense, which we believe to be an informative view of our results during the period.

We define Adjusted EBITDA as net income (loss) adjusted for income tax expense, other non-operating expense or income, net interest expense, depreciation and amortization, stock-based compensation and other special items as determined by management, as applicable. We define non-GAAP net income (loss) as GAAP net income (loss) adjusted for stock-based compensation. We define non-GAAP net income (loss) per share, basic and diluted, as non-GAAP net income (loss) divided by preferred and common weighted-average shares outstanding during the respective period plus the dilutive effect of any outstanding options or warrants during the period, if applicable.

Tables presenting the reconciliation of net income (loss) to Adjusted EBITDA, as well as the reconciliation of net income (loss) and net income (loss) per share, basic and diluted to non-GAAP net income (loss) and non-GAAP net income (loss) per share, basic and diluted, the two most directly comparable GAAP financial metrics, are included at the end of this press release.

We have not reconciled expectations of net income (loss) to Adjusted EBITDA because unrealized and realized foreign exchange gains and losses cannot be reasonably calculated or predicted nor can the probable significance be determined at this time. Accordingly, a reconciliation is not available without unreasonable effort.

Safe Harbor Statement

Certain statements in this release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as "guidance," "expects," "intends," "projects," "plans," "believes," "estimates," "targets," "anticipates," and similar expressions may identify these forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding expected revenues, gross margin, income from operations and Adjusted EBITDA, the expanding global opportunity for high-power lasers, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements, including but not limited to: (1) our ability to generate sufficient revenues to achieve or maintain profitability in the future as our operating costs increase, (2) the risk that our revenue growth rate in recent periods may not be indicative of our future performance, (3) downturns in the markets we serve could materially adversely affect our revenues and profitability, (4) our high levels of fixed costs and inventory levels may harm our gross profits and results of operations in the event that demand for our products declines or we maintain excess inventory levels, (5) the competitiveness of the markets for our products, (6) our substantial sales and operations in China, which expose us to risks inherent in doing business there, (7) our manufacturing capacity and operations may not be appropriate for future levels of demand, (8) our reliance on a small number of customers for a significant portion of our revenues and (9) the risk that we may be unable to protect our proprietary technology and intellectual property rights. Additional information concerning these and other factors can be found in nLIGHT's filings with the Securities and Exchange Commission, including other risks, relevant factors and uncertainties identified in the "Risk Factors" section of nLIGHT's Registration Statement on Form S-1 or subsequent filings with the Securities and Exchange Commission. nLIGHT undertakes no obligation to update publicly or revise any forward-looking statements contained herein to reflect future events or developments, except as required by law.

The nLIGHT logo and "nLIGHT," are registered trademarks or trademarks of nLIGHT, Inc. in various jurisdictions.

About nLIGHT

nLIGHT, Inc. is a leading provider of high‑power semiconductor and fiber lasers used in a variety of end applications in the industrial, microfabrication, and aerospace and defense markets. For more information, please visit www.nlight.net.

nLIGHT, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

  Three Months Ended June 30,   Six Months Ended June 30,
  2018   2017   2018   2017
Revenues $ 51,705     $ 34,664     $ 94,172     $ 64,551  
Cost of revenues(1) 34,026     23,984     61,764     44,904  
Gross profit 17,679     10,680     32,408     19,647  
Operating expenses:              
Research and development(1) 4,898     4,010     9,181     7,736  
Sales, general, and administrative(1) 7,232     4,774     13,470     9,403  
Total operating expenses 12,130     8,784     22,651     17,139  
Income from operations 5,549     1,896     9,757     2,508  
Other expense:              
Interest expense, net (6 )   (469 )   (225 )   (971 )
Other income (expense) (42 )   (630 )   34     (797 )
Income before income taxes 5,501     797     9,566     740  
Income tax expense 848     1,084     1,997     2,240  
Net income (loss) $ 4,653     $ (287 )   $ 7,569     $ (1,500 )
Less: Income allocated to participating securities $ (1,499 )   $     $ (4,415 )   $  
Net income (loss) attributable to common stockholders $ 3,154     $ (287 )   $ 3,154     $ (1,500 )
Net income (loss) per share, basic $ 0.13     $ (0.11 )   $ 0.23     $ (0.57 )
Net income (loss) per share, diluted $ 0.11     $ (0.11 )   $ 0.17     $ (0.57 )
Shares used in per share calculations:              
Basic 24,491     2,626     13,761     2,613  
Diluted 29,756     2,626     18,797     2,613  
                       

(1)Includes stock-based compensation as follows:

               
  Three Months Ended June 30,   Six Months Ended June 30,
  2018   2017   2018   2017
Cost of revenues $ 62     $ 6     $ 84     $ 15  
Research and development 200     14     225     28  
Sales, general, and administrative 544     55     659     105  
  $ 806     $ 75     $ 968     $ 148  
                               

nLIGHT, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)

  June 30,   December 31,
  2018   2017
Assets      
Current assets:      
Cash and cash equivalents $ 129,725     $ 36,687  
Accounts receivable, net 21,664     13,353  
Inventory 35,269     29,570  
Prepaid expenses and other current assets 8,363     4,973  
Total current assets 195,021     84,583  
Property and equipment, net 19,528     17,968  
Intangible assets, net 2,440     1,836  
Goodwill 1,387     1,387  
Other assets 4,644     4,374  
Total assets $ 223,020     $ 110,148  
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable $ 16,064     $ 12,920  
Accrued liabilities 11,918     12,650  
Customer advances 674     575  
Deferred revenue 778     386  
Current portion of long-term debt 4,597     2,363  
Total current liabilities 34,031     28,894  
Non-current income taxes payable 4,470     3,930  
Long-term debt 12,797     15,108  
Other long-term liabilities 1,486     933  
Total liabilities 52,784     48,865  
Stockholders' equity:      
Convertible preferred stock - par value     12  
Preferred stock - par value      
Common stock - par value 15     2  
Additional paid-in capital 282,678     180,657  
Accumulated other comprehensive loss (1,357 )   (719 )
Accumulated deficit (111,100 )   (118,669 )
Total stockholders' equity 170,236     61,283  
Total liabilities and stockholders' equity $ 223,020     $ 110,148  
               

nLIGHT, Inc.
Select Statements of Cash Flows Data
(In thousands)
(Unaudited)

  Six Months Ended June 30,
  2018   2017
Cash flows from operating activities:      
Net income (loss) $ 7,569     $ (1,500 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Depreciation and amortization 4,118     3,909  
Provision for losses on accounts receivable 183     143  
Stock-based compensation 968     148  
Loss on disposal of property and equipment 11     7  
Changes in operating assets and liabilities:      
Accounts receivable (8,711 )   (602 )
Inventory (5,644 )   (3,402 )
Prepaid expenses and other current assets (3,458 )   (579 )
Other assets (1,226 )   (486 )
Accounts payable 3,539     1,723  
Other changes 306     1,954  
Net cash provided by (used in) operating activities (2,345 )   1,315  
Cash flows from investing activities:      
Purchases of property, equipment and intangibles (5,789 )   (1,767 )
Proceeds from sale of property and equipment 8     6  
Net cash used in investing activities (5,781 )   (1,761 )
Cash flows from financing activities:      
Principal payments on debt and capital leases (74 )   (2,652 )
Proceeds from public offering, net of offering costs 101,486      
Net proceeds from issuance of convertible preferred stock     27,582  
Proceeds from stock option exercises 123     66  
Net cash provided by financing activities 101,535     24,996  
Effect of exchange rate changes on cash (371 )   757  
Net increase in cash and cash equivalents 93,038     25,307  
Cash and cash equivalents, beginning of period 36,687     13,500  
Cash and cash equivalents, end of period $ 129,725     $ 38,807  
Supplemental disclosures:      
Cash paid for interest $ 506     $ 914  
Cash paid for income taxes 2,119     901  
Accrued purchases of property, equipment and intangibles 675     86  
Accrued deferred offering costs 1,087     105  
           

nLIGHT, Inc.
Reconciliation of GAAP Financial Metrics to Non-GAAP
(In thousands, except per share data)
(Unaudited)

Reconciliation of Net Income (Loss) to Adjusted EBITDA

  Three Months Ended June 30,   Six Months Ended June 30,
  2018   2017   2018   2017
Net income (loss) $ 4,653     $ (287 )   $ 7,569     $ (1,500 )
Income tax expense 848     1,084     1,997     2,240  
Other (income) expense 42     630     (34 )   797  
Interest expense, net 6     469     225     971  
Depreciation and amortization 2,172     1,959     4,118     3,909  
Stock-based compensation 806     75     968     148  
Adjusted EBITDA $ 8,527     $ 3,930     $ 14,843     $ 6,565  
                               

Reconciliation of GAAP to Non-GAAP Net Income (Loss), and GAAP to Non-GAAP Net Income (Loss) per Share, Basic and Diluted

  Three Months Ended June 30,   Six Months Ended June 30,
  2018   2017   2018   2017
Net income (loss) $ 4,653     $ (287 )   $ 7,569     $ (1,500 )
Add back:              
Stock-based compensation 806     75     968     148  
Non-GAAP income (loss) 5,459     (212 )   8,537     (1,352 )
               
GAAP weighted average shares outstanding 24,491     2,626     13,761     2,613  
Assumed conversion of convertible preferred stock to common stock 7,940     23,044     16,291     21,441  
Non-GAAP weighted average number of shares, basic 32,431     25,670     30,052     24,054  
Dilutive effect of common stock options and warrants 5,265         5,036      
Non-GAAP weighted average number of shares, diluted 37,696     25,670     35,088     24,054  
               
Non-GAAP net income (loss) per share, basic $ 0.17     $ (0.01 )   $ 0.28     $ (0.06 )
Non-GAAP net income (loss) per share, diluted $ 0.14     $ (0.01 )   $ 0.24     $ (0.06 )
                               

For more information contact:

Jason Willey
Investor Relations and Corporate Development
nLIGHT, Inc.
(360) 567-4890
jason.willey@nlight.net

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