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nLight tempers 2024 growth expectations

23 Feb 2024

High-power fiber and diode laser firm has won more than $200 million in recent defense-related business.

nLight, the US-based maker of high-power fiber and semiconductor lasers, has posted sales of $51.9 million for the closing quarter of 2024 - down on the prior year, but a little higher than it had forecast three months ago.

That was largely the result of a “pulled-in” shipment to an earlier than expected date, and lifted the firm’s full-year revenues for 2023 to $210 million.

The annual figure was 13 per cent lower than the 2022 total, although thanks partly to its investment in automated production at its Camas, Washington, facility nLight’s operating loss shrank from $55.1 million to $46.8 million over the same period.

CEO Scott Keeney told an investor conference call that thanks to the Camas facility and contract manufacturing in Thailand, the company’s operations were now far less reliant on its site in China.

“Prior to 2023 we relied on our Shanghai facility to assemble the vast majority of our semiconductor lasers and a substantial proportion of our fiber lasers,” he said. “Today we’ve reduced this exposure to below 10 per cent.”

Additive hiccup
Although those operational improvements and more streamlined capacity should provide major benefits in the longer term, the relatively under-used Camas site will drag on nLight’s margins in the opening quarter of 2024, for which Keeney and his team anticipate revenues to drop to between $42 million and $46 million.

And while the company now boasts a firm purchase order backlog of $108 million and nearly $220 million in contracts largely related to directed energy laser weapons development, 2024 is likely to see a slower rate of growth than had been expected until recently.

That appears largely due to weaker demand from the industrial side of the business, and additive manufacturing in particular after nLight customer Velo3D announced a strategic review towards the end of last year.

“That’s not the plan we had hoped for,” admitted Keeney on the Velo3D development. Further challenges in the industrial laser market include the continued price competition from Chinese fiber laser companies, although the CEO said that nLight’s programmable “Corona” lasers were still able to deliver an advantage over cheaper rivals.

Laser weapon activity
Turning to the laser weapons sector, Keeney said that demand was growing, and not just from the US Department of Defense. “We are finally seeing high-energy lasers moving out of the lab and into the field,” he commented, pointing out that defense-related sales had risen year-on-year in 2023 despite the impact of supply-chain issues.

Highlighting nLight’s 20-year involvement in directed energy weapons development, Keeney said that although the technology remained challenging there was a strong desire by the US and its allies to field systems in the next 18-24 months.

“In the past quarter we’ve seen a desire to deploy,” he told investors, citing attacks on ships in the Red Sea as one evident location where the ability to disrupt drone and missile attacks with a laser would be desirable.

Keeney added that the level of directed energy weapons activity outside the US was “significant”, with broad engagement around the world and “fairly advanced” developments in Israel.

• Following the firm’s latest update, nLight’s stock price dropped in value by around 6 per cent in pre-market trading as investors reacted to tempered expectations for 2024. Trading at around $13 on the Nasdaq, the current price equates to a market capitalization in the region of $600 million.

LASEROPTIK GmbHABTechMad City Labs, Inc.Universe Kogaku America Inc.HÜBNER PhotonicsIridian Spectral TechnologiesCHROMA TECHNOLOGY CORP.
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