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Defense demand to drive nLight recovery

07 May 2024

Additional $1.2BN funding for Israel's laser-based ‘Iron Beam’ system adds to momentum in directed energy weapons.

Fiber and semiconductor laser developer nLight has reported sales of $44.5 million for the opening quarter of 2024 - down nearly 20 per cent on the same period last year, but in line with the firm’s February forecast.

That drop in sales largely reflects ongoing challenges in the industrial laser sector, and particularly in additive manufacturing applications, although CEO Scott Keeney indicated that the opening three months of this year likely represented the bottom of the current trough.

Keeney and his colleagues are expecting applications of nLight’s lasers in aerospace and defense to drive a recovery as this year progresses, thanks in part to deployments of directed energy weapons in active war zones.

$1.2BN for Iron Beam
The CEO pointed out that aerospace and defense accounted for almost exactly half of nLight’s sales revenues in the latest quarter - a proportion that has grown steadily higher in recent years.

“We expect sequential revenue growth in the second quarter, and for the second half of the year to be stronger than the first half of 2024, with increasing visibility for continued growth next year primarily driven by our aerospace and defense business,” the CEO told an investor call, an outlook that prompted a 10 per cent rise in the company’s stock price.

“With the majority of our operational initiatives behind us and our revenue pipeline continuing to strengthen, I remain optimistic for growth in 2024 and for our renewed momentum to carry into the next year and beyond.”

Part of the reason for that optimism is the anticipated use of laser weapons in Israel and Ukraine, with Keeney adding:

“We can see continued opportunities for growth, both in directed energy and in our sensing space. And I think one example of that is the supplemental bill that passed Congress.”

The CEO was referring to the recent US legislation including tens of billions in aid for Ukraine - much of which will actually be spent on US providers of military equipment - that also included an additional $1.2 billion specifically for Israel’s “Iron Beam” project.

Defense catalyst
The idea behind Iron Beam is to use 100 kW-plus fiber lasers instead of conventional kinetic munitions to destroy short-range rockets aimed at Israel - something that should result in much faster targeting of threats, and a much-reduced cost per intervention once the system is up and running.

Keeney described the $1.2 billion supplement as a “very, very big catalyst” in the developing international market for laser weapons, and also pointed to related advances in the UK as evidence of the progress being made towards active deployments.

“Aerospace and defense has emerged as the most significant growth opportunity we have in front of us today,” added the CEO, pointing to upwards of $300 million in future revenues from either laser sales or development funding.

“Geopolitical unrest and ongoing military conflicts in the Middle East, Ukraine, and elsewhere, are driving the need for more sophisticated, cost-effective defense solutions built upon semiconductor and fiber laser technology.”

• Keeney and his executive team said that nLight’s sales should rise to around $49 million in the June quarter, implying that revenues in the second half of this year will need to exceed $117 million if the 2024 total is to beat last year’s.

That outlook helped to send the firm’s Nasdaq-listed stock price up nearly 10 per cent in value following the latest update, with nLight’s market capitalization standing close to $600 million.

CeNing Optics Co LtdBerkeley Nucleonics CorporationABTechIridian Spectral TechnologiesLASEROPTIK GmbHCHROMA TECHNOLOGY CORP.LaCroix Precision Optics
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