Semiconductor and Fiber Lasers

nLIGHT, INC. ANNOUNCES THIRD QUARTER 2018 RESULTS

nLIGHT, INC. ANNOUNCES THIRD QUARTER 2018 RESULTS

Revenues of $51.0 million and Gross Margin of 35.4%

 

 

VANCOUVER, Wash., November 5, 2018 - 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 third quarter of 2018. These results included:

        Revenues of $51.0 million, up 39.6% compared to $36.5 million for the third quarter of 2017

        Gross margin of 35.4% compared to 33.8% for the third quarter of 2017

        Income from operations of $5.1 million, or 10.0% of revenues, compared to $4.6 million, or 12.6% of revenues, for the third quarter of 2017

 

GAAP net income for the third quarter of 2018 was $4.0 million, or net income of $0.10 per diluted common share, compared to $2.2 million, or net income of $0.00 per diluted common share, for the third 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 third quarter of 2018 was $5.9 million, or non-GAAP net income of $0.15 per diluted common share, compared to non-GAAP net income of $2.4 million, or non-GAAP net income of $0.08 per diluted common share, for the third quarter of 2017.

“We are pleased with our execution in the quarter despite challenges in the industrial end market in China,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer. “Our strong third quarter results are a testament to the value proposition customers find in our products and the diverse nature of the end markets we serve. With the recent introduction of our 10kW fiber laser and Corona, the industry’s first programmable fiber laser, we have further enhanced our competitive differentiation and are well positioned to continue to grow faster than the overall high-power laser market.”

 

  

Third Quarter 2018 Financial Highlights

 

Three Months Ended September 30,

 

 

(In thousands, except percentages)

2018

 

2017

 

% Change

Revenues

$

51,025

 

 

$

36,547

 

 

39.6

%

Gross margin

35.4

%

 

33.8

%

 

 

Income from operations

$

5,087

 

 

$

4,599

 

 

10.6

%

Operating margin

10.0

%

 

12.6

%

 

 

Net income

$

4,009

 

 

$

2,244

 

 

78.7

%

Adjusted EBITDA(1)

$

9,184

 

 

$

6,598

 

 

39.2

%

Adjusted EBITDA, as percentage of revenues

18.0

%

 

18.1

%

 

 

(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 fourth quarter of 2018, nLIGHT expects revenues to be in the range of $45.0 million to $49.0 million, gross margin to be in the range of 32.0% to 35.0%, and Adjusted EBITDA in the range of $5.0 million to $7.0 million.

 

 

Investor Conference Call at 2:00 p.m. Pacific Time, Monday, November 5, 2018

 

Parties interested in listening to nLIGHT’s quarterly conference call may do so by dialing 1-833-535-2198 (U.S., toll-free) or +1-412-902-6775 (international and toll), with the conference title: nLIGHT Third 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 and non-GAAP net income 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 and non-GAAP net income 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 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 as GAAP net income adjusted for stock-based compensation. We define non-GAAP net income per share, basic and diluted, as non-GAAP net income 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 to Adjusted EBITDA, as well as the reconciliation of net income and net income per share, basic and diluted to non-GAAP net income and non-GAAP net income 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 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, and Adjusted EBITDA, our expectations to grow faster than the overall high-power laser market, 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 for industrial, microfabrication, aerospace and defense applications. Our lasers are changing not only the way things are made but also the things that can be made. Headquartered in Vancouver, Wash., nLIGHT employs over 1,000 people with operations in the U.S., China and Finland. For more information, please visit www.nlight.net.


 

nLIGHT, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

2018

 

2017

Revenues

$

51,025

 

 

$

36,547

 

 

$

145,197

 

 

$

101,098

 

Cost of revenues(1)

32,978

 

 

24,202

 

 

94,742

 

 

69,106

 

Gross profit

18,047

 

 

12,345

 

 

50,455

 

 

31,992

 

Operating expenses:

 

 

 

 

 

 

 

Research and development(1)

5,475

 

 

3,849

 

 

14,656

 

 

11,585

 

Sales, general, and administrative(1)

7,485

 

 

3,897

 

 

20,955

 

 

13,300

 

Total operating expenses

12,960

 

 

7,746

 

 

35,611

 

 

24,885

 

Income from operations

5,087

 

 

4,599

 

 

14,844

 

 

7,107

 

Other expense:

 

 

 

 

 

 

 

Interest income (expense), net

298

 

 

(76

)

 

73

 

 

(1,047

)

Other expense

(537

)

 

(1,043

)

 

(503

)

 

(1,840

)

Income before income taxes

4,848

 

 

3,480

 

 

14,414

 

 

4,220

 

Income tax expense

839

 

 

1,236

 

 

2,836

 

 

3,476

 

Net income

$

4,009

 

 

$

2,244

 

 

$

11,578

 

 

$

744

 

Less: Income allocated to participating securities

$

 

 

$

(2,244

)

 

$

(4,415

)

 

$

(744

)

Net income attributable to common stockholders

$

4,009

 

 

$

 

 

$

7,163

 

 

$

 

Net income per share, basic

$

0.11

 

 

$

 

 

$

0.34

 

 

$

 

Net income per share, diluted

$

0.10

 

 

$

 

 

$

0.27

 

 

$

 

Shares used in per share calculations:

 

 

 

 

 

 

 

Basic

35,007

 

 

2,751

 

 

20,946

 

 

2,660

 

Diluted

40,332

 

 

2,751

 

 

26,138

 

 

2,660

 

 

(1)Includes stock-based compensation as follows:

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

2018

 

2017

Cost of revenues

$

183

 

 

$

15

 

 

$

267

 

 

$

30

 

Research and development

513

 

 

18

 

 

738

 

 

46

 

Sales, general, and administrative

1,207

 

 

76

 

 

1,866

 

 

181

 

 

$

1,903

 

 

$

109

 

 

$

2,871

 

 

$

257

 

 

 

 

nLIGHT, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

September 30,

 

December 31,

 

2018

 

2017

Assets

 

 

 

Current assets:

 

 

 

     Cash and cash equivalents

$

168,182

 

 

$

36,687

 

     Accounts receivable, net

21,264

 

 

13,353

 

     Inventory

36,242

 

 

29,570

 

     Prepaid expenses and other current assets

7,844

 

 

4,973

 

          Total current assets

233,532

 

 

84,583

 

Property and equipment, net

20,311

 

 

17,968

 

Intangible assets, net

2,581

 

 

1,836

 

Goodwill

1,387

 

 

1,387

 

Other assets

4,184

 

 

4,374

 

          Total assets

$

261,995

 

 

$

110,148

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

     Accounts payable

$

13,779

 

 

$

12,920

 

     Accrued liabilities

11,077

 

 

12,650

 

     Customer advances

510

 

 

575

 

     Deferred revenue

133

 

 

386

 

     Current portion of long-term debt

102

 

 

2,363

 

          Total current liabilities

25,601

 

 

28,894

 

Non-current income taxes payable

4,732

 

 

3,930

 

Long-term debt

16,123

 

 

15,108

 

Other long-term liabilities

2,119

 

 

933

 

Total liabilities

48,575

 

 

48,865

 

Stockholders' equity:

 

 

 

Convertible preferred stock - par value

 

 

12

 

Preferred stock - par value

 

 

 

Common stock - par value

15

 

 

2

 

     Additional paid-in capital

322,478

 

 

180,657

 

     Accumulated other comprehensive loss

(1,982

)

 

(719

)

     Accumulated deficit

(107,091

)

 

(118,669

)

          Total stockholders’ equity

213,420

 

 

61,283

 

          Total liabilities and stockholders’ equity

$

261,995

 

 

$

110,148

 

 

 

 

 

 

nLIGHT, Inc.

Select Statements of Cash Flows Data

(In thousands)

(Unaudited)

 

 

Nine Months Ended September 30,

 

2018

 

2017

Cash flows from operating activities:

 

 

 

Net income

$

11,578

 

 

$

744

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

6,312

 

 

5,799

 

Provision for losses on accounts receivable

(34

)

 

175

 

Stock-based compensation

2,871

 

 

257

 

Loss on disposal of property and equipment

11

 

 

7

 

Loss on debt extinguishment

12

 

 

911

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(8,382

)

 

(3,972

)

Inventory

(7,071

)

 

(7,044

)

Prepaid expenses and other current assets

(3,076

)

 

188

 

Other assets

(1,405

)

 

(390

)

Accounts payable

1,517

 

 

1,636

 

Other changes

(191

)

 

1,882

 

Net cash provided by operating activities

2,142

 

 

193

 

Cash flows from investing activities:

 

 

 

Purchases of property, equipment and intangibles

(8,654

)

 

(3,023

)

Proceeds from sale of property and equipment

8

 

 

6

 

Net cash used in investing activities

(8,646

)

 

(3,017

)

Cash flows from financing activities:

 

 

 

Principal payments on debt and capital leases

(17,300

)

 

(15,291

)

Net proceeds from debt financing

16,053

 

 

12,500

 

Cash paid on debt extinguishment

 

 

(388

)

Proceeds from public offerings, net of offering costs

139,089

 

 

 

Net proceeds from issuance of convertible preferred stock

 

 

27,481

 

Payments of deferred offering costs

 

 

(6

)

Proceeds from stock option exercises

161

 

 

278

 

Net cash provided by financing activities

138,003

 

 

24,574

 

Effect of exchange rate changes on cash

(4

)

 

821

 

Net increase in cash and cash equivalents

131,495

 

 

22,571

 

Cash and cash equivalents, beginning of period

36,687

 

 

13,500

 

Cash and cash equivalents, end of period

$

168,182

 

 

$

36,071

 

 

 

 

 

 

 

 

 

nLIGHT, Inc.

Reconciliation of GAAP Financial Metrics to Non-GAAP

(In thousands, except per share data)

(Unaudited)

 

Reconciliation of Net Income to Adjusted EBITDA

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

2018

 

2017

Net income

$

4,009

 

 

$

2,244

 

 

$

11,578

 

 

$

744

 

Income tax expense

839

 

 

1,236

 

 

2,836

 

 

3,476

 

Other expense

537

 

 

1,043

 

 

503

 

 

1,840

 

Interest (income) expense, net

(298

)

 

76

 

 

(73

)

 

1,047

 

Depreciation and amortization

2,194

 

 

1,890

 

 

6,312

 

 

5,799

 

Stock-based compensation

1,903

 

 

109

 

 

2,871

 

 

257

 

Adjusted EBITDA

$

9,184

 

 

$

6,598

 

 

$

24,027

 

 

$

13,163

 

 

 

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

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2018

 

2017

 

2018

 

2017

Net income

$

4,009

 

 

$

2,244

 

 

$

11,578

 

 

$

744

 

Add back:

 

 

 

 

 

 

 

Stock-based compensation

1,903

 

 

109

 

 

2,871

 

 

257

 

Non-GAAP net income

5,912

 

 

2,353

 

 

14,449

 

 

1,001

 

 

 

 

 

 

 

 

 

GAAP weighted average shares outstanding

35,007

 

 

2,751

 

 

20,946

 

 

2,660

 

Assumed conversion of convertible preferred stock to common stock

 

 

24,642

 

 

10,781

 

 

22,543

 

Non-GAAP weighted average number of shares, basic

35,007

 

 

27,393

 

 

31,727

 

 

25,203

 

Dilutive effect of common stock options and warrants

5,325

 

 

3,115

 

 

5,192

 

 

1,661

 

Non-GAAP weighted average number of shares, diluted

40,332

 

 

30,508

 

 

36,919

 

 

26,864

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share, basic

$

0.17

 

 

$

0.09

 

 

$

0.46

 

 

$

0.04

 

Non-GAAP net income per share, diluted

$

0.15

 

 

$

0.08

 

 

$

0.39

 

 

$

0.04

 

 

 

 


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