Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LightPath Technologies Inc (LPTH, Financial) reported a 4% increase in revenue for the first quarter of fiscal 2025, reaching $8.4 million compared to $8.1 million in the same quarter last year.
- The company's transformation strategy from a component supplier to a system provider has been successful, with 30% of revenue now coming from these new activities.
- LightPath Technologies Inc (LPTH) has secured phase two funding from the Defense Logistics Agency to support the qualification of new black diamond glasses as a substitute for germanium, indicating strong government and defense sector engagement.
- The company has made significant progress in the European defense market, obtaining a European defense license and receiving orders from European defense customers, which could potentially become 10% customers.
- LightPath Technologies Inc (LPTH) has developed a portfolio of unique thermal cameras, including the Mantis camera, which has opened doors with high-profile customers and is positioned as an industry leader from a cost-to-performance perspective.
Negative Points
- Operating expenses increased by 23% to $3.3 million for the first quarter of fiscal 2025, primarily due to higher legal and consulting fees related to business development initiatives.
- The company reported a net loss of $1.6 million for the first quarter of fiscal 2025, compared to a net loss of $1.3 million in the same quarter last year.
- Despite the revenue increase, the backlog remained relatively flat year over year, which may indicate challenges in securing long-term contracts.
- The company's exposure to germanium has been proactively reduced, but geopolitical factors such as sanctions on Russia and trade tensions with China could still impact material sourcing.
- The timeline for significant revenue from large defense contracts, such as the Lockheed Martin missile program, remains uncertain and dependent on competitive outcomes.
Q & A Highlights
Q: Can you clarify your comments on European customers potentially eclipsing the 10% revenue threshold?
A: Shmuel Rubin, CEO: European defense market timelines are similar to the US, often taking up to two years from initial development to production. However, some projects like the FPB drone can generate revenue faster due to less stringent qualification requirements.
Q: Is the sales team in the European market fully built out?
A: Shmuel Rubin, CEO: We have a strong sales team, but in certain countries, especially outside the EU, we may need local partners or distributors to facilitate defense sales.
Q: Any update on the timeline for the Lockheed Martin decision?
A: Shmuel Rubin, CEO: We have achieved airworthy qualification and are building flightworthy units. We hope to receive indications around September-October next year.
Q: How is the sales funnel for the camera business developing?
A: Shmuel Rubin, CEO: The camera business can translate into revenue faster, especially in industrial and commercial sectors. We expect orders and deliveries to pick up significantly from January to June next year.
Q: Can you provide an update on the helicopter defense program?
A: Shmuel Rubin, CEO: We are working on initial prototypes with minor delays, but there are no significant updates at this time.
Q: How should we think about gross margins on larger potential wins like Lockheed?
A: Albert Miranda, CFO: Government programs dictate gross margins, typically around 25%, but including management fees and G&A, we estimate margins could be between 30% to 40%.
Q: What is the expected timeline for phase two of the DLA testing?
A: Shmuel Rubin, CEO: The project is defined to last up to 24 months, but it could be completed sooner. Production starts as soon as a material is qualified.
Q: How does the flat backlog reconcile with expected revenue growth?
A: Shmuel Rubin, CEO: Many camera orders are book-and-turn, not reflected in backlog. Despite a flat backlog, excluding a previous large customer, we see growth in other business areas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
