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nLIGHT, Inc. Announces Third Quarter 2020 Results

11/05/2020

Revenues of $61.7 million and gross margin of 27.8% for the third quarter of 2020

VANCOUVER, Wash.--(BUSINESS WIRE)-- 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 2020.

“We delivered record quarterly revenues and exceeded the high-end of our third quarter outlook due to strong performance in each of our end markets and geographies,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer. “Our third quarter results reflect the continued execution of our strategy to grow in aerospace and defense, which included new directed energy applications, and to increase sales to strategic industrial customers outside of China.

“Increased sales and a favorable mix resulted in higher gross margins and better overall profitability compared to the prior quarter,” continued Keeney. “While we remain concerned about the impact of the global COVID-19 pandemic and an uncertain macroeconomic environment, we continue to see strong demand from our customers globally in the fourth quarter.”

Third Quarter 2020 Financial Highlights

 

Three Months Ended September 30,

 

 

(In thousands, except percentages)

2020

 

2019

 

% Change

Revenues

$

61,732

 

 

 

$

43,814

 

 

 

40.9

 

%

Gross margin

27.8

 

%

 

29.6

 

%

 

 

Loss from operations

$

(3,976

)

 

 

$

(696

)

 

 

(471.3

)

%

Operating margin

(6.4

)

%

 

(1.6

)

%

 

 

Net loss

$

(2,110

)

 

 

$

(778

)

 

 

(171.2

)

%

Adjusted EBITDA(1)

$

6,211

 

 

 

$

2,696

 

 

 

130.4

 

%

Adjusted EBITDA, as percentage of revenues

10.1

 

%

 

6.2

 

%

 

 

(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 $61.7 million for the third quarter of 2020 were up 40.9% compared to $43.8 million for the third quarter of 2019. Gross margin was 27.8% for the third quarter of 2020 compared to 29.6% for the third quarter of 2019. GAAP net loss for the third quarter of 2020 was $(2.1) million, or net loss of $(0.05) per diluted share, compared to net loss of $(0.8) million, or net loss of $(0.02) per diluted share, for the third quarter of 2019. Non-GAAP net income for the third quarter of 2020 was $5.3 million, or non-GAAP net income of $0.12 per diluted share, compared to non-GAAP net income of $0.3 million, or non-GAAP net income of $0.01 per diluted share, for the third quarter of 2019. Reconciliations of the non-GAAP information provided here to the most directly comparable GAAP metric have been provided in the financial statement tables included in this release.

Outlook

For the fourth quarter of 2020, nLIGHT expects revenues to be in the range of $59 million to $65 million, gross margin to be in the range of 25% to 29%, and Adjusted EBITDA to be in the range of $3 million to $7 million.

Investor Conference Call at 2:00 p.m. Pacific Time, Wednesday, November 5, 2020

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 2020 Earnings. The call can also be accessed via the web by going to nLIGHT’s Investor Relations page at http://investors.nlight.net.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release contains non-GAAP financial results, including Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (loss) per share, basic and diluted. We use Adjusted EBITDA 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 they present an informative supplemental view of our results from period to period by removing the effect of stock-based compensation expense and other non-recurring items. However, the non-GAAP financial measures presented herein are specific to us and may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating them.

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, acquisition and integration-related costs 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, amortization of purchased intangibles, acquisition and integration-related costs, and other special items as determined by management, as applicable. We define non-GAAP net income (loss) per share, basic and diluted, as non-GAAP net income (loss) divided by 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 Adjusted EBITDA to net income (loss), as well as the reconciliation of non-GAAP net income (loss) and non-GAAP net income (loss) per share, basic and diluted, to net income (loss) and net income (loss) per share, basic and diluted, respectively, the two most directly comparable GAAP financial metrics, are included at the end of this press release.

We have not reconciled our outlook for 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Words such as “outlook,” “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 and our expectations regarding customer demand for our products, operating results, and financial position, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our 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) the impact on our sales and operations of public health crises in China, the United States or internationally, including the COVID-19 pandemic, (2) our ability to generate sufficient revenues to achieve or maintain profitability in the future, (3) fluctuations in our quarterly results of operations and other operating measures, (4) downturns in the markets we serve could materially adversely affect our revenues and profitability, (5) 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, (6) the competitiveness of the markets for our products, (7) our substantial sales and operations in China, which expose us to risks inherent in doing business there, (8) the effect of current and potential tariffs and global trade policies on the cost of our products, (9) our manufacturing capacity and operations may not be appropriate for future levels of demand, (10) our reliance on a small number of customers for a significant portion of our revenues, and (11) 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 (the “SEC”), including other risks, relevant factors and uncertainties identified in the “Risk Factors” section of nLIGHT's most recent Annual Report on Form 10-K or subsequent filings with the SEC. 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 1,200 people with operations in the U.S., China, Finland, Korea and Italy. 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,

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

Products

$

51,117

 

 

 

$

43,814

 

 

 

$

133,151

 

 

 

$

133,723

 

 

Development

10,615

 

 

 

 

 

 

23,934

 

 

 

 

 

Total revenue

61,732

 

 

 

43,814

 

 

 

157,085

 

 

 

133,723

 

 

Cost of revenue:

 

 

 

 

 

 

 

Products

34,645

 

 

 

30,852

 

 

 

95,142

 

 

 

91,376

 

 

Development

9,927

 

 

 

 

 

 

22,226

 

 

 

 

 

Total cost of revenue(1)

44,572

 

 

 

30,852

 

 

 

117,368

 

 

 

91,376

 

 

Gross profit

17,160

 

 

 

12,962

 

 

 

39,717

 

 

 

42,347

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development(1)

11,126

 

 

 

6,402

 

 

 

29,136

 

 

 

19,318

 

 

Sales, general, and administrative(1)

10,010

 

 

 

7,256

 

 

 

27,343

 

 

 

23,972

 

 

Total operating expenses

21,136

 

 

 

13,658

 

 

 

56,479

 

 

 

43,290

 

 

Loss from operations

(3,976

)

 

 

(696

)

 

 

(16,762

)

 

 

(943

)

 

Other income (expense):

 

 

 

 

 

 

 

Interest income (expense), net

(96

)

 

 

665

 

 

 

122

 

 

 

2,155

 

 

Other income, net

477

 

 

 

90

 

 

 

63

 

 

 

3

 

 

Income (loss) before income taxes

(3,595

)

 

 

59

 

 

 

(16,577

)

 

 

1,215

 

 

Income tax expense (benefit)

(1,485

)

 

 

837

 

 

 

(162

)

 

 

3,383

 

 

Net loss

$

(2,110

)

 

 

$

(778

)

 

 

$

(16,415

)

 

 

$

(2,168

)

 

Net loss per share, basic

$

(0.05

)

 

 

$

(0.02

)

 

 

$

(0.43

)

 

 

$

(0.06

)

 

Net loss per share, diluted

$

(0.05

)

 

 

$

(0.02

)

 

 

$

(0.43

)

 

 

$

(0.06

)

 

Shares used in per share calculations:

 

 

 

 

 

 

 

Basic

38,558

 

 

 

37,262

 

 

 

38,195

 

 

 

37,005

 

 

Diluted

38,558

 

 

 

37,262

 

 

 

38,195

 

 

 

37,005

 

 

 

 

 

 

 

 

 

 

(1)Includes stock-based compensation as follows:

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Cost of revenues

$

505

 

 

 

$

340

 

 

 

$

1,189

 

 

 

$

816

 

 

Research and development

2,545

 

 

 

424

 

 

 

6,602

 

 

 

1,693

 

 

Sales, general, and administrative

3,633

 

 

 

315

 

 

 

8,692

 

 

 

2,860

 

 

 

$

6,683

 

 

 

$

1,079

 

 

 

$

16,483

 

 

 

$

5,369

 

 

nLIGHT, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

As of

 

September 30, 2020

 

December 31, 2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

110,152

 

 

 

$

117,252

 

 

Accounts receivable, net

23,452

 

 

 

27,126

 

 

Inventory

53,432

 

 

 

46,131

 

 

Prepaid expenses and other current assets

12,996

 

 

 

8,084

 

 

Total current assets

200,032

 

 

 

198,593

 

 

Restricted cash

291

 

 

 

41

 

 

Lease right-of-use assets

11,428

 

 

 

 

 

Property and equipment, net

42,365

 

 

 

27,747

 

 

Intangible assets, net

9,088

 

 

 

10,006

 

 

Goodwill

12,503

 

 

 

9,872

 

 

Other assets, net

4,681

 

 

 

3,707

 

 

Total assets

$

280,388

 

 

 

$

249,966

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

24,403

 

 

 

$

12,700

 

 

Accrued liabilities

14,663

 

 

 

11,605

 

 

Deferred revenue

2,124

 

 

 

679

 

 

Lease liabilities

2,347

 

 

 

 

 

Current portion of long-term debt

142

 

 

 

51

 

 

Total current liabilities

43,679

 

 

 

25,035

 

 

Non-current income taxes payable

7,219

 

 

 

6,429

 

 

Long-term lease liabilities

9,397

 

 

 

 

 

Long-term debt

205

 

 

 

 

 

Other long-term liabilities

3,796

 

 

 

1,894

 

 

Total liabilities

64,296

 

 

 

33,358

 

 

Stockholders' equity:

 

 

 

Common stock - par value

15

 

 

 

15

 

 

Additional paid-in capital

351,703

 

 

 

336,732

 

 

Accumulated other comprehensive loss

(1,757

)

 

 

(2,685

)

 

Accumulated deficit

(133,869

)

 

 

(117,454

)

 

Total stockholders’ equity

216,092

 

 

 

216,608

 

 

Total liabilities and stockholders’ equity

$

280,388

 

 

 

$

249,966

 

 

nLIGHT, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Nine Months Ended September 30,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net loss

$

(16,415

)

 

 

$

(2,168

)

 

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Depreciation

5,614

 

 

 

4,859

 

 

Amortization

4,319

 

 

 

1,935

 

 

Reduction in carrying amount of right-of-use assets

2,162

 

 

 

 

 

Provision for losses on accounts receivable

84

 

 

 

58

 

 

Stock-based compensation

16,483

 

 

 

5,369

 

 

Gain on disposal of assets

 

 

 

(7

)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, net

4,094

 

 

 

(2,836

)

 

Inventory

(6,411

)

 

 

(11,055

)

 

Prepaid expenses and other current assets

(4,753

)

 

 

2,590

 

 

Other assets

(2,418

)

 

 

(2,670

)

 

Accounts payable

10,565

 

 

 

3,290

 

 

Accrued and other long-term liabilities

1,494

 

 

 

(1,337

)

 

Deferred revenues

1,405

 

 

 

(259

)

 

Lease liabilities

(2,120

)

 

 

 

 

Non-current income taxes payable

591

 

 

 

337

 

 

Net cash provided by (used in) operating activities

14,694

 

 

 

(1,894

)

 

Cash flows from investing activities:

 

 

 

Acquisition of business, net of cash acquired

(168

)

 

 

 

 

Purchases of property, plant and equipment

(19,395

)

 

 

(8,943

)

 

Capitalization of patents

(717

)

 

 

(1,064

)

 

Proceeds from sale of assets

 

 

 

19

 

 

Net cash used in investing activities

(20,280

)

 

 

(9,988

)

 

Cash flows from investing activities:

 

 

 

Proceeds from term loan

15,000

 

 

 

 

 

Principal payments on term loans and financing leases

(15,126

)

 

 

(67

)

 

Proceeds from employee stock plan purchases

685

 

 

 

762

 

 

Proceeds from stock option exercises

1,117

 

 

 

1,032

 

 

Tax payments related to stock award issuances

(3,314

)

 

 

(489

)

 

Net cash provided by (used in) financing activities

(1,638

)

 

 

1,238

 

 

Effect of exchange rate changes on cash

373

 

 

 

29

 

 

Net decrease in cash, cash equivalents and restricted cash

(6,851

)

 

 

(10,615

)

 

Cash, cash equivalents and restricted cash, beginning of period

117,294

 

 

 

149,520

 

 

Cash, cash equivalents and restricted cash, end of period

$

110,443

 

 

 

$

138,905

 

 

Supplemental disclosures:

 

 

 

Cash received for interest

$

312

 

 

 

$

2,265

 

 

Cash paid for income taxes

1,015

 

 

 

1,741

 

 

Accrued purchases of property, equipment and patents

1,294

 

 

 

1,275

 

 

Accrued acquisition consideration

1,390

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

Right-of-use assets obtained in exchange for lease liabilities

$

13,470

 

 

 

$

 

 

nLIGHT, Inc.

Reconciliation of GAAP Financial Metrics to Non-GAAP

(In thousands, except per share data)

(Unaudited)

Reconciliation of Net Loss to Adjusted EBITDA

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Net loss

$

(2,110

)

 

 

$

(778

)

 

 

$

(16,415

)

 

 

$

(2,168

)

 

Income tax expense (benefit)

(1,485

)

 

 

837

 

 

 

(162

)

 

 

3,383

 

 

Other income, net

(477

)

 

 

(90

)

 

 

(63

)

 

 

(3

)

 

Interest (income) expense, net

96

 

 

 

(665

)

 

 

(122

)

 

 

(2,155

)

 

Depreciation and amortization

3,504

 

 

 

2,313

 

 

 

9,933

 

 

 

6,794

 

 

Stock-based compensation

6,683

 

 

 

1,079

 

 

 

16,483

 

 

 

5,369

 

 

Acquisition and integration-related costs

 

 

 

 

 

 

50

 

 

 

 

 

Adjusted EBITDA

$

6,211

 

 

 

$

2,696

 

 

 

$

9,704

 

 

 

$

11,220

 

 

 

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,

 

2020

 

2019

 

2020

 

2019

Net loss

$

(2,110

)

 

 

$

(778

)

 

 

$

(16,415

)

 

 

$

(2,168

)

 

Add back:

 

 

 

 

 

 

 

Stock-based compensation(1)

6,683

 

 

 

1,079

 

 

 

16,483

 

 

 

5,369

 

 

Amortization of purchased intangibles

696

 

 

 

 

 

 

2,008

 

 

 

 

 

Acquisition and integration-related costs

 

 

 

 

 

 

50

 

 

 

 

 

Non-GAAP net income

5,269

 

 

 

301

 

 

 

2,126

 

 

 

3,201

 

 

 

 

 

 

 

 

 

 

GAAP weighted average shares outstanding

38,558

 

 

 

37,262

 

 

 

38,195

 

 

 

37,005

 

 

Participating securities

629

 

 

 

444

 

 

 

508

 

 

 

271

 

 

Non-GAAP weighted average number of shares, basic

39,187

 

 

 

37,706

 

 

 

38,703

 

 

 

37,276

 

 

Dilutive effect of common stock equivalents

4,290

 

 

 

4,016

 

 

 

4,112

 

 

 

4,358

 

 

Non-GAAP weighted average number of shares, diluted

43,477

 

 

 

41,722

 

 

 

42,815

 

 

 

41,634

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share, basic

$

0.13

 

 

 

$

0.01

 

 

 

$

0.05

 

 

 

$

0.09

 

 

Non-GAAP net income per share, diluted

$

0.12

 

 

 

$

0.01

 

 

 

$

0.05

 

 

 

$

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.

 

Joseph Corso
VP, Corporate Development and Investor Relations
nLIGHT, Inc.
(360) 566-4460
joe.corso@nlight.net

Source: nLIGHT, Inc.

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