News Release

nLight, Inc. Announces Fourth Quarter and Full Year 2018 Results

February 20, 2019 at 4:05 PM EST

Revenues of $191.4 million and gross margin of 35.0% for the full year 2018
Revenues of $46.2 million and gross margin of 35.8% for the fourth quarter of 2018

VANCOUVER, Wash., Feb. 20, 2019 (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 fourth quarter and full year 2018.

“2018 was a year of significant accomplishments for nLIGHT,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer. “We successfully completed an initial public offering in April, introduced a number of innovative products to the market, and delivered revenue growth of 38% with significant profitability expansion.

“Our financial performance in the fourth quarter and throughout 2018 demonstrates the diverse reach of our products from both an end market and geographic perspective. While conditions in the Chinese industrial market remain challenging, we see expanding opportunities with fiber laser customers in other Asian markets, North America, and Europe. With the rollout of higher power and differentiated fiber lasers, and our progress driving power and efficiency leadership in semiconductor lasers, we are well positioned to continue to grow at a faster rate than the overall high-power laser market.”

Full Year 2018 Financial Results

  Full Year Ended December 31,    
(In thousands, except percentages) 2018   2017   % Change
Revenues $ 191,359     $ 138,580     38.1 %
Gross margin 35.0 %   31.9 %    
Income from operations $ 17,063     $ 9,798     74.1 %
Operating margin 8.9 %   7.1 %    
Net income $ 13,938     $ 1,837     658.7 %
Adjusted EBITDA(1) $ 30,156     $ 18,089     66.7 %
Adjusted EBITDA, as percentage of revenues 15.8 %   13.1 %    
(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.

Revenues of $191.4 million for the full year 2018, up 38.1% compared to $138.6 million for the full year 2017. Gross margin of 35.0% for the full year 2018 compared to 31.9% for the full year 2017. GAAP net income was $13.9 million for the full year 2018, or net income of $0.32 per diluted share, compared to $1.8 million, or net income of $0.00 per diluted share, for the full year 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 full year 2018 was $18.7 million, or non-GAAP net income of $0.49 per diluted share, compared to non-GAAP net income of $2.2 million, or non-GAAP net income of $0.08 per diluted share, for the full year of 2017.

Fourth Quarter 2018 Financial Results

  Three Months Ended December 31,    
(In thousands, except percentages) 2018   2017   % Change
Revenues $ 46,162     $ 37,482     23.2 %
Gross margin 35.8 %   32.8 %    
Income from operations $ 2,219     $ 2,691     (17.5) %
Operating margin 4.8 %   7.2 %    
Net income $ 2,360     $ 1,093     115.9 %
Adjusted EBITDA(1) $ 6,129     $ 4,926     24.4 %
Adjusted EBITDA, as percentage of revenues 13.3 %   13.1 %    
(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.

Revenues of $46.2 million for the fourth quarter of 2018, up 23.2% compared to $37.5 million for the fourth quarter of 2017. Gross margin of 35.8% for the fourth quarter of 2018 compared to 32.8% for the fourth quarter of 2017. GAAP net income for the fourth quarter of 2018 was $2.4 million, or net income of $0.06 per diluted share, compared to $1.1 million, or net income of $0.00 per diluted share, for the fourth 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 fourth quarter of 2018 was $4.3 million, or non-GAAP net income of $0.10 per diluted share, compared to non-GAAP net income of $1.2 million, or non-GAAP net income of $0.04 per diluted share, for the fourth quarter of 2017.

Outlook

For the first quarter of 2019, nLIGHT expects revenues to be in the range of $40.0 million to $44.0 million, gross margin to be in the range of 30.0% to 33.0%, and Adjusted EBITDA in the range of $2.0 million to $4.0 million.

Investor Conference Call at 2:00 p.m. Pacific Time, Wednesday, February 20, 2019

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 Fourth 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, interest expense or income, 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 common stock equivalents 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, Washington, 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 December 31,   Year Ended December 31,
  2018   2017   2018   2017
Revenues $ 46,162     $ 37,482     $ 191,359     $ 138,580  
Cost of revenues(1) 29,656     25,200     124,398     94,306  
Gross profit 16,506     12,282     66,961     44,274  
Operating expenses:              
Research and development(1) 6,398     3,538     21,054     15,123  
Sales, general, and administrative(1) 7,889     6,053     28,844     19,353  
Total operating expenses 14,287     9,591     49,898     34,476  
Income from operations 2,219     2,691     17,063     9,798  
Other income (expense):              
Interest income (expense), net 655     (222 )   728     (1,269 )
Other income (expense) 250     6     (253 )   (1,834 )
Income before income taxes 3,124     2,475     17,538     6,695  
Income tax expense 764     1,382     3,600     4,858  
Net income $ 2,360     $ 1,093     $ 13,938     $ 1,837  
Less: Income allocated to participating securities     (1,093 )   (4,415 )   (1,837 )
Net income attributable to common stockholders $ 2,360     $     $ 9,523     $  
Net income per share, basic $ 0.06     $ 0.00     $ 0.38     $ 0.00  
Net income per share, diluted $ 0.06     $ 0.00     $ 0.32     $ 0.00  
Shares used in per share calculations:              
Basic 36,441     2,954     24,862     2,735  
Diluted 41,239     2,954     29,959     2,735  


(1)Includes stock-based compensation as follows:              
  Three Months Ended December 31,   Year Ended December 31,
  2018   2017   2018   2017
Cost of revenues $ 189     $ 16     $ 456     $ 46  
Research and development 555     20     1,293     66  
Sales, general, and administrative 1,190     76     3,056     257  
  $ 1,934     $ 112     $ 4,805     $ 369  

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

  December 31,   December 31,
  2018   2017
Assets      
Current assets:      
  Cash and cash equivalents $ 149,478     $ 36,687  
  Accounts receivable, net 26,528     13,353  
  Inventory 35,329     29,570  
  Prepaid expenses and other current assets 7,286     4,973  
  Total current assets 218,621     84,583  
Property and equipment, net 21,462     17,968  
Intangible assets, net 2,686     1,836  
Goodwill 1,387     1,387  
Other assets 5,974     4,374  
  Total assets $ 250,130     $ 110,148  
       
Liabilities and Stockholders’ Equity      
Current liabilities:      
  Accounts payable $ 12,068     $ 12,920  
  Accrued liabilities 10,708     12,650  
  Customer advances 493     575  
  Deferred revenue 227     386  
  Current portion of long-term debt 91     2,363  
  Total current liabilities 23,587     28,894  
Non-current income taxes payable 6,472     3,930  
Long-term debt 18     15,108  
Other long-term liabilities 2,270     933  
Total liabilities 32,347     48,865  
Stockholders' equity:      
Convertible preferred stock - par value     12  
Preferred stock - par value      
Common stock - par value 15     2  
  Additional paid-in capital 324,656     180,657  
  Accumulated other comprehensive loss (2,157 )   (719 )
  Accumulated deficit (104,731 )   (118,669 )
  Total stockholders’ equity 217,783     61,283  
  Total liabilities and stockholders’ equity $ 250,130     $ 110,148  

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

  Year Ended December 31,
  2018   2017
Cash flows from operating activities:      
Net income $ 13,938     $ 1,837  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 8,288     7,922  
Provision for losses on accounts receivable 22     232  
Stock-based compensation 4,805     369  
Deferred income taxes (1,307 )   (424 )
Loss on disposal of property and equipment 12     9  
Loss on debt extinguishment 12     911  
Changes in operating assets and liabilities:      
Accounts receivable (13,734 )   (3,523 )
Inventory (6,145 )   (9,875 )
Prepaid expenses and other current assets (2,483 )   (639 )
Other assets (2,262 )   (1,148 )
Accounts payable 172     2,491  
Other changes 2,017     5,249  
Net cash provided by operating activities 3,335     3,411  
Cash flows from investing activities:      
Purchases of property, equipment and intangibles (11,714 )   (5,483 )
Proceeds from sale of property and equipment 35     6  
Net cash used in investing activities (11,679 )   (5,477 )
Cash flows from financing activities:      
Principal payments on debt and capital leases (33,417 )   (15,318 )
Net proceeds from debt financing 16,053     12,499  
Cash paid on debt extinguishment     (388 )
Proceeds from public offerings, net of offering costs 138,303      
Net proceeds from issuance of convertible preferred stock     27,481  
Payments of other financing costs     (191 )
Proceeds from stock option exercises 362     336  
Net cash provided by financing activities 121,301     24,419  
Effect of exchange rate changes on cash (166 )   834  
Net increase in cash and cash equivalents 112,791     23,187  
Cash and cash equivalents, beginning of period 36,687     13,500  
Cash and cash equivalents, end of period $ 149,478     $ 36,687  

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 December 31,   Year Ended December 31,
  2018   2017   2018   2017
Net income $ 2,360     $ 1,093     $ 13,938     $ 1,837  
Income tax expense 764     1,382     3,600     4,858  
Other (income) expense (250 )   (6 )   253     1,834  
Interest (income) expense, net (655 )   222     (728 )   1,269  
Depreciation and amortization 1,976     2,123     8,288     7,922  
Stock-based compensation 1,934     112     4,805     369  
Adjusted EBITDA $ 6,129     $ 4,926     $ 30,156     $ 18,089  

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

  Three Months Ended December 31,   Year Ended December 31,
  2018   2017   2018   2017
Net income $ 2,360     $ 1,093     $ 13,938     $ 1,837  
Add back:              
Stock-based compensation(1) 1,934     112     4,805     369  
Non-GAAP net income 4,294     1,205     18,743     2,206  
               
GAAP weighted average shares outstanding 36,441     2,954     24,862     2,735  
Assumed conversion of convertible preferred stock to common stock     24,642     8,056     23,095  
Non-GAAP weighted average number of shares, basic 36,441     27,596     32,918     25,830  
Dilutive effect of common stock equivalents 4,798     4,285     5,097     3,294  
Non-GAAP weighted average number of shares, diluted 41,239     31,881     38,015     29,124  
               
Non-GAAP net income per share, basic $ 0.12     $ 0.04     $ 0.57     $ 0.09  
Non-GAAP net income per share, diluted $ 0.10     $ 0.04     $ 0.49     $ 0.08  

(1) There is no income tax effect related to the stock-based compensation adjustment due to the full valuation allowance in the U.S.

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

nLIGHT Logo - JPEG.jpg

Source: nLIGHT, Inc.