13 May 2019
Revenues, income and margins slide against previous year’s same quarter due to “seasonal softness and aggressive competition” in China.nLight, a developer of high-power semiconductor and fiber lasers used in the industrial, microfabrication, and aerospace and defense markets, has reported financial results for the first quarter of 2019.
First quarter revenues of $41.9 million were down 1.4% compared to $42.5 million for Q1, 2018. Gross margin of 32.3% for Q1, 2019, was also down compared to 34.7% for Q1, 2018. Non-GAAP net income for the first quarter of 2019 was $0.7 million, compared to non-GAAP net income of $3.1 million, for Q1, 2018.
Scott Keeney, nLight's President and CEO commented, “In the industrial end market, we saw increased activity outside of China driven by interest in our Corona lasers and a focus on customer support and serviceability. Within China, normal seasonal softness was amplified by aggressive competition in the lower-power segment.
“We are excited by the initial customer response to our recently-introduced 12kW fiber laser, which enhances our ability to address the growing ultra high-power market in China.
nLight’s Corona lasers, which offer multi-kilowatt outputs for industrial materials processing, feature programmable beam quality that is enabled by the company’s all-fiber technology. Rapid tuning of the laser spot size optimizes machine tool performance across all metals and thicknesses.
During the associated analyst conference, Keeney was asked by David Ryzhik of Susquehanna Financial Group to elaborate on the interest nLight was seeing in its 12 kilowatt laser: “Should we expect 12 kilowatt to be a bigger driver, over the next few quarters, than the 10 kilowatt?”
Keeney replied, “For the ultra-high power, the area where there's significant growth today is in China. Likewise, we see very limited competition on companies that can produce that 12 kilowatt.
“What's going on in this space is, as you go up in power for key end-users, their productivity goes up, they get paid based upon how many pieces they cut and doing it faster means that they get paid more. There are limited companies that can do it and there are limited companies that obviously can provide the lasers. So we do see it as an attractive market that will continue to expand over time.”
Keeney then continued, “The aerospace and defense end market delivered another strong quarter with increased contribution from several long-standing programs. Our innovative semiconductor laser technology and long track record of executing on government engagements positions us well for continued growth in this market.”
For the second quarter of 2019, nLight expects revenues to be in the range of $46 million to $50 million, gross margin to be in the range of 32.0% to 35.0%, and adjusted EBITDA in the range of $4.0 million to $6.0 million.
Ran Bareket, nLight’s CFO, told the analysts’ conference: “Looking at the full year [forecast] for of 2019, we continue to believe we can deliver a moderate amount of revenue growth compared to 2018. This reflects our expectation for increased revenue from new product as the year progress, improve contribution for the microfabrication end market to the first quarter and continue the strength in aerospace and defense.”