Semiconductor and Fiber Lasers

nLIGHT, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2018 RESULTS

 

nLIGHT, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2018 RESULTS

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., February 20, 2019 - 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.

 

 

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