- Revenue: $50.5 million, up 13% sequentially, down 5% year-over-year.
- Products Revenue: $34.5 million, up 17% sequentially, down 13% year-over-year.
- Development Revenue: $16.1 million, up 6% sequentially, up 17% year-over-year.
- Aerospace and Defense Revenue: $27.4 million, up 26% sequentially, up 12% year-over-year.
- Industrial Revenue: $12.9 million, up 8% sequentially, down 22% year-over-year.
- Microfabrication Revenue: $10.2 million, down 5% sequentially, down 16% year-over-year.
- Gross Margin: 24%, up from 17% in the prior quarter, up from 23% year-over-year.
- Products Gross Margin: 30%, up from 21% in the prior quarter, up from 29% year-over-year.
- Development Gross Margin: 9%, unchanged sequentially, up from 6% year-over-year.
- Non-GAAP Operating Expenses: $18 million, up from $17.2 million in the prior quarter, up from $16.6 million year-over-year.
- Adjusted EBITDA: Loss of $1.6 million, improved from a loss of $4.9 million in the prior quarter.
- Net Loss (GAAP): $11.7 million or $0.25 per diluted share.
- Net Loss (Non-GAAP): $4.6 million or $0.10 per diluted share.
- Cash Equivalents and Investments: $115 million, no debt.
- Cash Provided by Operating Activities: $7.1 million year-to-date.
- Capital Expenditures: $3.7 million year-to-date.
- Inventory: Approximately $53 million, 123 days of inventory.
- Accounts Receivable: $32.2 million, 53 days sales outstanding.
- Guidance for Q3 2024 Revenue: $53 million to $58 million.
- Guidance for Q3 2024 Gross Margin: 22% to 26%.
- Guidance for Q3 2024 Adjusted EBITDA: Negative $2 million to positive $1 million.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second-quarter revenue of $50.5 million was at the upper end of guidance and grew 13% compared to the first quarter.
- Aerospace and defense revenue increased 26% sequentially, highlighting strong performance in this segment.
- Gross margins improved to approximately 24%, with product gross margin expanding to 30%, slightly above the top end of guidance.
- The company ended the quarter with $115 million in cash equivalents and investments, with no debt.
- New $25 million contract signed for a long-running missile program, indicating strong demand and long-term customer relationships.
Negative Points
- Total revenue was down 5% compared to the second quarter of 2023.
- Industrial revenue decreased 22% compared to the second quarter of 2023, indicating challenges in this segment.
- Microfabrication revenue decreased 5% sequentially and 16% compared to the second quarter of 2023.
- Adjusted EBITDA for the second quarter was a loss of $1.6 million, indicating ongoing profitability challenges.
- Net loss on a GAAP basis was $11.7 million, or $0.25 per diluted share, compared to a net loss of $8.8 million in the second quarter of 2023.
Q & A Highlights
Q: Can you provide a high-level overview of how you're seeing the lay of the land by segment, and was the upside towards the high end of the guidance range driven by Aerospace & Defense (A&D)?
A: Yes, A&D was a significant driver, up 26%, with strong traction in new applications in directed energy and existing programs of records.
Q: Do you still feel comfortable with the year-over-year revenue growth target for fiscal '24, and what are your thoughts on sequential progress in the second half?
A: Yes, we still expect the second half to be higher than the first half, with business momentum picking up, particularly on the defense side, and stabilization on the commercial side.
Q: Why is gross margin expected to be flat or slightly down in Q3 despite higher revenue from laser products?
A: In Q2, we had better mix and a couple of deals that contributed to higher-than-expected margins. Excluding these one-time benefits, the flow-through to Q3 guidance is more normalized.
Q: Can you provide more context around the EOS announcement and its expected contribution?
A: EOS is a leader in laser additive manufacturing, and our collaboration reflects the strength of our Corona AFX technology. We expect this relationship to be additive to our business and are working on integrating our lasers into their roadmap.
Q: Is there something unique to your success in China this quarter compared to competitors?
A: Overall revenue in China is a small part of our business. We saw slightly better ordering patterns and delivery in the microfabrication market, but it's not a significant read-through.
Q: What does the margin profile of your existing backlog look like?
A: On the commercial side, we are skewing towards higher power sales, particularly programmable fiber lasers, which is positive for gross margins. We also see better demand in microfabrication, which will benefit overall margins.
Q: Can you elaborate on the visibility in microfabrication and its impact on the quarter?
A: We began to see signs of renewed demand in microfabrication, which had been down due to inventory build-up during COVID. This stabilization is contributing positively to our outlook.
Q: What are the key drivers for the expected sequential revenue growth in Q3?
A: Continued strong performance in A&D, particularly in directed energy and laser sensing, along with stabilization in commercial markets, are the main drivers for expected sequential growth.
Q: How are you positioned for growth in 2025 and beyond?
A: We are well-positioned for profitable growth with strong momentum in defense and stabilization in commercial markets. Our vertically integrated approach and new product introductions are key enablers.
Q: Can you discuss the impact of new product introductions in welding on your business?
A: Our new products, such as APT, WELDform, and ProcessGuard, address key customer pain points in the EV and battery markets. These introductions have been well received and are expected to contribute positively to our business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
