nLIGHT’s Earnings Call: Defense Drives Growth Amid Challenges

Nlight ((LASR)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for nLIGHT, Inc. painted a picture of robust performance, particularly in the defense segment, which has significantly contributed to the company’s revenue growth and improved gross margins. While the defense sector shines, challenges persist in the commercial markets, and uncertainties surrounding tariffs pose potential risks to future performance.

Record Defense Revenue

Defense revenue was a standout performer, representing more than 63% of total sales in the quarter, a substantial increase from 49% in the same quarter last year. Defense product sales grew over 50% year over year, highlighting the strength of this segment.

Significant Growth in A&D Segment

The aerospace and defense (A&D) segment saw remarkable growth, with revenue reaching $32.7 million in the quarter, marking a 50.4% year-over-year increase and an 8.6% sequential rise. This growth underscores the strategic focus and success in this sector.

Improved Gross Margin

The company’s gross margin improved significantly, reaching 26.7% in the first quarter compared to 16.8% in the same period last year. This improvement was driven by higher product volumes, a favorable mix, and a duty reclaim.

Positive Adjusted EBITDA

nLIGHT reported a positive adjusted EBITDA of $116,000 for the first quarter, a notable turnaround from a loss of $4.9 million in the first quarter of 2024, indicating improved operational efficiency.

Strong Financial Position

The company ended the first quarter with a solid financial position, holding $117 million in total cash, cash equivalents, restricted cash, and investments, showcasing its strong liquidity.

Decline in Commercial Revenue

Despite the successes in defense, the commercial markets faced difficulties. Revenue from commercial markets, including industrial and microfabrication, was $19 million, a decrease of 16.8% year over year, reflecting ongoing challenges.

Tariff-Related Uncertainty

The company expressed significant uncertainty regarding the impact of high tariffs on the economy, customer demand, and material costs, which could affect future performance.

Ongoing Challenges in Industrial Markets

The industrial and microfabrication markets continue to face challenges, with demand expected to remain weak throughout the year, posing a hurdle for growth in these sectors.

Forward-Looking Guidance

Looking ahead, nLIGHT provided optimistic guidance, projecting revenue between $53 million and $59 million for the second quarter, with expectations of continued growth in the A&D sector. The company anticipates at least a 25% revenue increase in the A&D sector for the full year, despite the challenges in industrial markets. The robust financial results in the first quarter, which surpassed the high end of its guidance, set a positive tone for the future.

In summary, nLIGHT’s earnings call highlighted a strong performance in the defense segment, driving overall revenue growth and improved margins. While the company faces challenges in the commercial markets and tariff-related uncertainties, its strategic focus on the defense sector and solid financial position provide a positive outlook for the future.