LASR 8-K
Nlight, Inc. (LASR)
8-K
2020-02-19
For: 2020-02-19
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________
FORM 8-K
________________________________________________________
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 19, 2020
________________________________________________________
NLIGHT, INC.
(Exact name of Registrant as specified in its charter)
________________________________________________________
Delaware | 001-38462 | 91-2066376 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
5408 NE 88th Street, Building E Vancouver, Washington 98665 | ||
(Address of principal executive offices, and zip code) | ||
(360) 566-4460 | ||
(Registrant’s telephone number, including area code) | ||
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Exchange on which Registered |
Common Stock, par value $0.0001 per share | LASR | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company þ
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition
On February 19, 2020, nLIGHT, Inc. (the "Company") announced its financial results for the full year ended December 31, 2019. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Also on February 19, 2020, the Company published earnings presentation slides related to the 2019 results for use in investor discussions. The presentation slides are furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information on this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NLIGHT, INC. | ||||
(Registrant) | ||||
Date: | February 19, 2020 | |||
By: | /s/ RAN BAREKET | |||
Ran Bareket | ||||
Chief Financial Officer | ||||
Exhibit 99.1
nLIGHT, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2019 RESULTS
Revenues of $176.6 million and gross margin of 29.6% for the full year 2019
Revenues of $42.9 million and gross margin of 23.3% for the fourth quarter of 2019
VANCOUVER, Wash., February 19, 2020 - 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 2019.
“We closed 2019 with new product and customer momentum that positions us well for 2020 and beyond,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer. “The overall industrial market showed signs of recovery in the fourth quarter and our differentiated offerings enabled us to increase customer penetration across the globe. Within China, our mix of high-power fiber laser sales continued to grow, and we see areas of long-term opportunity in this market.”
“We saw continued strength in aerospace and defense during the fourth quarter, concluding a record year for this end market. Our integration of Nutronics is progressing to plan and we are pleased with the initial response from customers and potential partners within the directed energy community. We are focused on ramping up Nutronics' capabilities to deliver on several key contracts and on fostering collaboration between their team and the complementary efforts underway at nLIGHT.”
“We are closely monitoring the evolving global impact from the COVID-19 outbreak. Our priority is the safety and wellbeing of our employees. The fluid nature of the situation has added significant short-term uncertainty to the Chinese market and our ability to fully meet current global market demand.”
Full Year 2019 Financial Results
Year Ended December 31, | ||||||||||
(In thousands, except percentages) | 2019 | 2018 | % Change | |||||||
Revenues | $ | 176,619 | $ | 191,359 | (7.7 | )% | ||||
Gross margin | 29.6 | % | 35.0 | % | ||||||
Income (loss) from operations | $ | (9,909 | ) | $ | 17,063 | (158.1 | )% | |||
Operating margin | (5.6 | )% | 8.9 | % | ||||||
Net income (loss) | $ | (12,884 | ) | $ | 13,938 | (192.4 | )% | |||
Adjusted EBITDA(1) | $ | 9,855 | $ | 30,156 | (67.3 | )% | ||||
Adjusted EBITDA, as percentage of revenues | 5.6 | % | 15.8 | % | ||||||
(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 were $176.6 million for the full year 2019, down 7.7% compared to $191.4 million for the full year 2018. Gross margin was 29.6% for the full year 2019 compared to 35.0% for the full year 2018. GAAP net loss was $12.9 million for the full year 2019, or net loss of $0.35 per diluted share, compared to net income of $13.9 million, or net income of $0.32 per diluted share, for the full year 2018. Non-GAAP net income for the full year 2019 was $1.1 million, or non-GAAP net income of $0.03 per diluted share, compared to non-GAAP net income of $18.7 million, or non-GAAP net income of $0.49 per diluted share, for the full year of 2018. Reconciliations 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.
Fourth Quarter 2019 Financial Results
Three Months Ended December 31, | ||||||||||
(In thousands, except percentages) | 2019 | 2018 | % Change | |||||||
Revenues | $ | 42,896 | $ | 46,162 | (7.1 | )% | ||||
Gross margin | 23.3 | % | 35.8 | % | ||||||
Income (loss) from operations | $ | (8,966 | ) | $ | 2,219 | (504.1 | )% | |||
Operating margin | (20.9 | )% | 4.8 | % | ||||||
Net income (loss) | $ | (10,716 | ) | $ | 2,360 | (554.1 | )% | |||
Adjusted EBITDA(1) | $ | (1,365 | ) | $ | 6,129 | (122.3 | )% | |||
Adjusted EBITDA, as percentage of revenues | (3.2 | )% | 13.3 | % | ||||||
(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 were $42.9 million for the fourth quarter of 2019, down 7.1% compared to $46.2 million for the fourth quarter of 2018. Gross margin was 23.3% for the fourth quarter of 2019 compared to 35.8% for the fourth quarter of 2018. GAAP net loss for the fourth quarter of 2019 was $10.7 million, or net loss of $0.29 per diluted share, compared to net income of $2.4 million, or net income of $0.06 per diluted share, for the fourth quarter of 2018. Non-GAAP net loss for the fourth quarter of 2019 was $2.1 million, or non-GAAP net loss of $0.06 per diluted share, compared to non-GAAP net income of $4.3 million, or non-GAAP net income of $0.10 per diluted share, for the fourth quarter of 2018. Reconciliations 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.
Outlook
For the first quarter of 2020, nLIGHT expects revenues to be in the range of $37.0 million to $43.0 million, gross margin to be in the range of 17.0% to 21.0%, and Adjusted EBITDA to be in the range of a loss of $5.0 million to a loss of $2.0 million. This outlook assumes approximately $8.0 million of reduced revenue and an approximate 500 basis point reduction in gross margin related to impacts from the COVID-19 virus outbreak.
Investor Conference Call at 2:00 p.m. Pacific Time, Wednesday, February 19, 2020
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 2019 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 contains non-GAAP financial results, including Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, basic and diluted. We use Adjusted EBITDA 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 they present informative supplemental view of our results from period to period by giving effect to both the conversion of all outstanding preferred stock to common stock, which occurred immediately prior to the closing of our initial public offering on April 30, 2018, as well as removing the effect of stock-based compensation expense. However, the non-GAAP financial measures presented herein are specific to us and may not be comparable to similar measures disclosed by other companies because of differing methods used by other companies in calculating them.
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, acquisition and integration-related costs 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, acquisition and integration-related costs, and other special items as determined by management, as applicable. Prior to the fourth quarter of 2019, when we acquired Nutronics, we did not incur acquisition or integration-related costs. For the fourth quarter of 2019 and in subsequent periods, we are incurring such costs and adjusting non-GAAP net income
and Adjusted EBITDA accordingly. 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 Adjusted EBITDA to net income, as well as the reconciliation of non-GAAP net income and non-GAAP net income per share, basic and diluted, to net income and net income per share, basic and diluted, respectively, the two most directly comparable GAAP financial metrics, are included at the end of this press release.
We have not reconciled our outlook for 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Words such as “outlook,” “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, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our 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, (2) fluctuations in our quarterly results of operations and other operating measures, (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) the effect of current and potential tariffs and global trade policies on the cost of our products, (8) our manufacturing capacity and operations may not be appropriate for future levels of demand, (9) our reliance on a small number of customers for a significant portion of our revenues, (10) the risk that we may be unable to protect our proprietary technology and intellectual property rights, and (11) the impact on our sales and operations of public health crises in China, the United States or internationally, including the current COVID-19 outbreak. Additional information concerning these and other factors can be found in nLIGHT's filings with the Securities and Exchange Commission (the “SEC”), including other risks, relevant factors and uncertainties identified in the “Risk Factors” section of nLIGHT's Annual Report on Form 10-K or subsequent filings with the SEC. 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.
For more information, contact:
Jason Willey
Investor Relations and Corporate Development
nLIGHT, Inc.
(360) 567-4890
nLIGHT, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | $ | 42,896 | $ | 46,162 | $ | 176,619 | $ | 191,359 | |||||||
Cost of revenues(1) | 32,904 | 29,656 | 124,280 | 124,398 | |||||||||||
Gross profit | 9,992 | 16,506 | 52,339 | 66,961 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development(1) | 8,819 | 6,398 | 28,137 | 21,054 | |||||||||||
Sales, general, and administrative(1) | 10,139 | 7,889 | 34,111 | 28,844 | |||||||||||
Total operating expenses | 18,958 | 14,287 | 62,248 | 49,898 | |||||||||||
Income (loss) from operations | (8,966 | ) | 2,219 | (9,909 | ) | 17,063 | |||||||||
Other income (expense): | |||||||||||||||
Interest income, net | 454 | 655 | 2,609 | 728 | |||||||||||
Other income (expense) | 532 | 250 | 535 | (253 | ) | ||||||||||
Income (loss) before income taxes | (7,980 | ) | 3,124 | (6,765 | ) | 17,538 | |||||||||
Income tax expense | 2,736 | 764 | 6,119 | 3,600 | |||||||||||
Net income (loss) | $ | (10,716 | ) | $ | 2,360 | $ | (12,884 | ) | $ | 13,938 | |||||
Less: Income allocated to participating securities | — | — | — | (4,415 | ) | ||||||||||
Net income (loss) attributable to common stockholders | $ | (10,716 | ) | $ | 2,360 | $ | (12,884 | ) | $ | 9,523 | |||||
Net income (loss) per share, basic | $ | (0.29 | ) | $ | 0.06 | $ | (0.35 | ) | $ | 0.38 | |||||
Net income (loss) per share, diluted | $ | (0.29 | ) | $ | 0.06 | $ | (0.35 | ) | $ | 0.32 | |||||
Shares used in per share calculations: | |||||||||||||||
Basic | 37,463 | 36,441 | 37,119 | 24,862 | |||||||||||
Diluted | 37,463 | 41,239 | 37,119 | 29,959 | |||||||||||
(1)Includes stock-based compensation as follows: | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Cost of revenues | $ | 385 | $ | 189 | $ | 1,201 | $ | 456 | |||||||
Research and development | 1,606 | 555 | 3,299 | 1,293 | |||||||||||
Sales, general, and administrative | 2,370 | 1,190 | 5,230 | 3,056 | |||||||||||
$ | 4,361 | $ | 1,934 | $ | 9,730 | $ | 4,805 | ||||||||
nLIGHT, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 117,252 | $ | 149,478 | |||
Accounts receivable, net | 27,126 | 26,528 | |||||
Inventory | 46,131 | 35,329 | |||||
Prepaid expenses and other current assets | 8,084 | 7,286 | |||||
Total current assets | 198,593 | 218,621 | |||||
Property and equipment, net | 27,747 | 21,462 | |||||
Intangible assets, net | 10,006 | 2,686 | |||||
Goodwill | 9,872 | 1,387 | |||||
Other assets, net | 3,748 | 5,974 | |||||
Total assets | $ | 249,966 | $ | 250,130 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 12,700 | $ | 12,068 | |||
Accrued liabilities | 11,605 | 10,708 | |||||
Deferred revenue | 679 | 720 | |||||
Current portion of long-term debt | 51 | 91 | |||||
Total current liabilities | 25,035 | 23,587 | |||||
Non-current income taxes payable | 6,429 | 6,472 | |||||
Long-term debt | — | 18 | |||||
Other long-term liabilities | 1,894 | 2,270 | |||||
Total liabilities | 33,358 | 32,347 | |||||
Stockholders' equity: | |||||||
Preferred stock - par value | — | — | |||||
Common stock - par value | 15 | 15 | |||||
Additional paid-in capital | 336,732 | 324,656 | |||||
Accumulated other comprehensive loss | (2,685 | ) | (2,157 | ) | |||
Accumulated deficit | (117,454 | ) | (104,731 | ) | |||
Total stockholders’ equity | 216,608 | 217,783 | |||||
Total liabilities and stockholders’ equity | $ | 249,966 | $ | 250,130 | |||
nLIGHT, Inc.
Select Statements of Cash Flows Data
(In thousands)
(Unaudited)
Year Ended December 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (12,884 | ) | $ | 13,938 | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation | 6,583 | 5,867 | |||||
Amortization | 2,981 | 2,421 | |||||
Provision for losses on accounts receivable | 83 | 22 | |||||
Stock-based compensation | 9,730 | 4,805 | |||||
Deferred income taxes | 3,041 | (1,307 | ) | ||||
Loss (gain) on disposal of assets | (483 | ) | 12 | ||||
Loss on debt extinguishment | — | 12 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (395 | ) | (13,734 | ) | |||
Inventory | (10,670 | ) | (6,145 | ) | |||
Prepaid expenses and other current assets | (111 | ) | (2,483 | ) | |||
Other assets | (2,669 | ) | (2,262 | ) | |||
Accounts payable | 844 | 172 | |||||
Other changes | (291 | ) | 2,017 | ||||
Net cash provided by (used in) operating activities | (4,241 | ) | 3,335 | ||||
Cash flows from investing activities: | |||||||
Acquisition of business, net of cash acquired | (17,400 | ) | — | ||||
Purchases of property, equipment and patents | (13,632 | ) | (11,714 | ) | |||
Proceeds from sale of assets | 628 | 35 | |||||
Net cash used in investing activities | (30,404 | ) | (11,679 | ) | |||
Cash flows from financing activities: | |||||||
Principal payments on debt and capital leases | (55 | ) | (33,417 | ) | |||
Net proceeds from debt financing | — | 16,053 | |||||
Proceeds from public offerings, net of offering costs | — | 138,303 | |||||
Proceeds from employee stock plan purchases | 1,471 | — | |||||
Proceeds from stock option exercises | 1,560 | 362 | |||||
Tax payments related to stock award issuances | (524 | ) | — | ||||
Net cash provided by financing activities | 2,452 | 121,301 | |||||
Effect of exchange rate changes on cash | (33 | ) | (166 | ) | |||
Net increase (decrease) in cash and cash equivalents | (32,226 | ) | 112,791 | ||||
Cash and cash equivalents, beginning of period | 149,478 | 36,687 | |||||
Cash and cash equivalents, end of period | $ | 117,252 | $ | 149,478 | |||
nLIGHT, Inc.
Reconciliation of GAAP Financial Metrics to Non-GAAP
(In thousands, except per share data)
(Unaudited)
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | (10,716 | ) | $ | 2,360 | $ | (12,884 | ) | $ | 13,938 | |||||
Income tax expense | 2,736 | 764 | 6,119 | 3,600 | |||||||||||
Other (income) expense | (532 | ) | (250 | ) | (535 | ) | 253 | ||||||||
Interest income, net | (454 | ) | (655 | ) | (2,609 | ) | (728 | ) | |||||||
Depreciation and amortization | 2,770 | 1,976 | 9,564 | 8,288 | |||||||||||
Stock-based compensation | 4,361 | 1,934 | 9,730 | 4,805 | |||||||||||
Acquisition and integration-related costs | 470 | — | 470 | — | |||||||||||
Adjusted EBITDA | $ | (1,365 | ) | $ | 6,129 | $ | 9,855 | $ | 30,156 | ||||||
Reconciliation of GAAP to Non-GAAP Net Income (Loss), and GAAP to Non-GAAP Net Income (Loss) per Share, Basic and Diluted
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | (10,716 | ) | $ | 2,360 | $ | (12,884 | ) | $ | 13,938 | |||||
Add back: | |||||||||||||||
Stock-based compensation(1) | 4,361 | 1,934 | 9,730 | 4,805 | |||||||||||
Valuation allowance on foreign deferred tax assets | 3,423 | — | 3,423 | — | |||||||||||
Acquisition and integration-related costs | 470 | — | 470 | — | |||||||||||
Amortization of purchased intangibles | 328 | — | 328 | — | |||||||||||
Non-GAAP net income (loss) | (2,134 | ) | 4,294 | 1,067 | 18,743 | ||||||||||
GAAP weighted average shares outstanding | 37,463 | 36,441 | 37,119 | 24,862 | |||||||||||
Assumed conversion of convertible preferred stock to common stock | — | — | — | 8,056 | |||||||||||
Participating securities | — | — | 319 | — | |||||||||||
Non-GAAP weighted average number of shares, basic | 37,463 | 36,441 | 37,438 | 32,918 | |||||||||||
Dilutive effect of common stock equivalents | — | 4,798 | 4,360 | 5,097 | |||||||||||
Non-GAAP weighted average number of shares, diluted | 37,463 | 41,239 | 41,798 | 38,015 | |||||||||||
Non-GAAP net income (loss) per share, basic | $ | (0.06 | ) | $ | 0.12 | $ | 0.03 | $ | 0.57 | ||||||
Non-GAAP net income (loss) per share, diluted | $ | (0.06 | ) | $ | 0.10 | $ | 0.03 | $ | 0.49 | ||||||
(1) There is no income tax effect related to the stock-based compensation adjustment due to the full valuation allowance in the U.S.
Earnings Presentation | Q4 2019
Safe Harbor Statement Certain statements in this presentation are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Words such as “outlook,” “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, expected demand for our products and our ability to meet such demand, the expected growth rate and addressable opportunity of our end markets, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our 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, (2) fluctuations in our quarterly results of operations and other operating measures, (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) the effect of current and potential tariffs and global trade policies on the cost of our products, (8) our manufacturing capacity and operations may not be appropriate for future levels of demand, (9) our reliance on a small number of customers for a significant portion of our revenues, (10) the risk that we may be unable to protect our proprietary technology and intellectual property rights, and (11) the impact on our sales and operations of public health crises in China, the United States or internationally, including the current COVID-19 outbreak. Additional information concerning these and other factors can be found in nLIGHT's filings with the Securities and Exchange Commission (the “SEC”), including other risks, relevant factors and uncertainties identified in the “Risk Factors” section of nLIGHT's Annual Report on Form 10- K or subsequent filings with the SEC. 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. This presentation includes certain non-GAAP financial measures as defined by the SEC rules, including Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share (diluted). These non-GAAP financial measures are provided in addition to, and not as a substitute for or superior to measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measure to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As required by Regulation G, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the appendix. This presentation also contains estimates, projections and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry and our business. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the accuracy and completeness of the information obtained by third parties included in this presentation. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products, solutions and services of nLIGHT, Inc. 2
Well Positioned for Future Growth Market Growing market driven by improvement in laser technology Vertically integrated with leading technology focused on rest of Strategy world industrial and aerospace and defense markets Financials Track record of growth and strong operating leverage 3
Revenue | 2019 revenue decline of 7.7%; multi-year CAGR of +20% nLIGHT Revenue by End Market $ Millions CAGR 23% Revenue by Market 2019 vs. 2018 Change $200 $191 $177 37% Microfabrication $150 $139 32% -23% $101 44% $100 $87 Industrial 43% 47% 45% -7% $63 45% $50 41% 58% 32% 34% Aerospace/Defense 14% 24% 18% +24% 28% 22% 19% 15% $0 2014 2015 2016 2017 2018 2019 4
nLIGHT Addressable Opportunity | Growth from defense and industrial outside China Semiconductor and Fiber Laser Market $ Millions $4,000 Aerospace / Defense $3,500 • Future growth >20% / year • Driven by Directed Energy $3,000 $2,500 Industrial / Microfabrication • Future growth ~10% / year $2,000 • Driven by automation and new applications in $1,500 industrial outside of China and microfabrication $1,000 $500 $0 2015 2020 2025 Source: nLIGHT estimates, Optech, Strategies Unlimited 5
Microfabrication | Focused on semiconductor lasers for broad range of applications Key Applications • Consumer Electronics • Automotive • Medical Semiconductor Semiconductor Wafer Laser • Scientific 6
Semiconductor Lasers | Driving dramatic improvements over the past 20 years High-Power Semiconductor Laser Brilliance Brilliance Normalized (Watt / cm2 -sr) 20,000 18,000 16,000 14,000 12,000 10,000 >350W 8,000 6,000 4,000 2,000 <1W 0 1985 1990 1995 2000 2005 2010 2015 2020 Source: Management’s estimates based on publicly available industry data – power coupled into 105 um fiber 7
Industrial | Vertically integrated from semiconductor to fiber laser Key Applications • Metal Cutting • Welding • Additive Manufacturing Semiconductor SemiconductorSemiconductor Fiber Fiber Wafer LaserLaser Laser 8
Power | Sales shifting to higher power fiber lasers Fiber Laser Revenue by Power - Quarterly Percent of total fiber laser sales 100% Low Power 17% 14% 90% 22% 19% 20% < 2kW 27% 34% 32% 80% 43% 51% 49% 70% 60% 59% 61% 58% 64% 39% Medium Power 2kW – 5kW 60% 48% 39% 51% 57% 50% 43% 44% 40% 49% 43% 30% 39% 45% 47% High Power 20% 40% 41% 40% 40% >6kW 36% 39% 35% 30% 24% 27% 24% 10% 17% 13% 14% 2% 4% 0% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 9
Differentiated Programmable Fiber Lasers Optimized beam profiles Applications • Cutting • Welding • Additive Manufacturing 10
Industrial | Growing sales outside China driven by Corona design wins Industrial End Market Revenue by Geography $ Millions Industrial Revenue $90 by Geography 2019 vs. 2018 Change $80 $70 $60 60% 52% China 19% Decline $50 $40 72% $30 $20 Rest of World 40% 48% 9% Growth $10 28% $0 2017 2018 2019 11
Aerospace and Defense | Vertically integrated from semiconductor to fiber lasers Key Applications Semiconductor SemiconductorSemiconductor Fiber Fiber • Directed Energy Wafer LaserLaser Amplifier Laser • Countermeasures • Navigation Beam Combination Beam Control 12
Financial Update
Revenue | By end market Annual Revenue $ Millions $200 $191 Revenue by Market $177 2019 vs. 2018 Change 37% $150 $139 32% Microfabrication -23% $101 44% $100 $87 43% 47% 45% $63 Industrial 45% -7% $50 41% 58% 32% 34% Aerospace/Defense 14% 24% 18% +24% 28% 22% 19% 15% $0 2014 2015 2016 2017 2018 2019 14
Revenue | By geography Quarterly Revenue $ Millions $60 $52 $51 $50 $48 $46 $44 $42 $42 $43 33% 46% $40 $37 $37 32% 38% $35 36% 33% 40% 35% China $30 $29 37% $30 40% $25 $26 43% $22 40% 40% 40% $20 29% 41% 67% 68% 62% 64% 54% 67% 60% 65% ROW 60% 63% $10 57% 60% 60% 71% 59% 60% $0 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 15
Revenue | By end market Quarterly Revenue $ Millions $60 $51 $51 Revenue by Market $50 $48 Q4 19 vs. Q4 18 Change $46 $44 $43 $42 $43 37% 39% Microfabrication $40 $37 38% $36 30% -41% $35 41% 26% 37% 36% $29 $29 $30 41% $26 44% $25 46% $22 41% 45% 43% 43% Industrial 41% $20 44% 50% 49% 44% +7% 37% 44% 43% 50% 43% 42% 38% 40% 38% $10 36% 35% 32% Aerospace/Defense 27% 30% 20% 22% +35% 19% 21% 19% 21% 16% 14% 18% 20% 15% 17% 14% 14% $0 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 16
Gross Margin Q4 19 vs. Q4 18 | Margin lower on reduced volume and unfavorable mix 17
Operating Expenses OPEX Trend Excluding Stock-based Compensation Expense $ Millions $16 15.0 $14 13.0 12.5 12.9 12.9 $12 11.4 11.2 10.4 7.8 $10 6.7 7.0 7.2 6.9 SG&A $8 6.7 6.3 6.1 $6 R&D $4 7.2 5.8 5.9 5.8 6.0 5.0 $2 4.3 4.7 $0 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 * See Appendix for additional stock-based compensation information 18
Profitability Summary $ Millions, except per share data Q4 2019 Q4 2018 2019 2018 Net Income (10.7) 2.4 (12.9) 13.9 Non-GAAP Net Income* (2.1) 4.3 1.1 18.7 EPS (diluted) (0.29) 0.06 (0.35) 0.32 Non-GAAP EPS (diluted)* (0.06) 0.10 0.03 0.49 Adjusted EBITDA (non-GAAP)* (1.4) 6.1 9.9 30.2 Cash Flow from Operations (2.3) 1.2 (4.2) 3.3 Capital Expenditure (3.6) (3.1) (13.6) (11.7) * See Appendix for reconciliation to most directly comparable GAAP measure 19
Strong Balance Sheet and Working Capital Management Cash and Debt Position ($M) Inventory ($M) and Accounts Receivable ($M) and Days of Inventory (DOI) Days Sales Outstanding (DSO) $200 $60 140 $50 70 128 $175 $168 126 121 $45 61 61 60 116 120 57 60 $149 $50 109 $46 $46 $150 $142 $143 $139 $40 98 $42 $41 100 $35 47 50 $125 $117 $40 $36 $35 $30 $31 $30 $29 80 38 $27 $27 40 $100 $30 $25 $21 60 30 $75 $20 $20 $50 40 $15 20 $10 $10 $25 $16 20 10 $5 $0 $0 $0 $0 $0 $0 $0 0 $0 0 Q318 Q418 Q119 Q219 Q319 Q419 Q318 Q418 Q119 Q219 Q319 Q419 Q318 Q418 Q119 Q219 Q319 Q419 Cash Debt Inventory DOI Accounts Receivable DSO 20
Outlook • Q1 2020 Revenues: – $37 million to $43 million; midpoint of $40 million • Laser Products: approximately $34 million at midpoint • Advanced Development: approximately $6 million at midpoint – Includes estimated COVID-19 impact of approximately $8 million • Q1 2020 Gross Margin: – 17.0% to 21.0% • Laser Products: 19.0% to 23.0% • Advanced Development: approximately 7.5% – Includes trade war tariff impact of approximately $1 million – Includes estimated COVID-19 impact of approximately 500 basis points • Q1 2020 Adjusted EBITDA* of a loss of ($5) million to a loss of ($2) million • For 2020, Nutronics is expected to contribute $25 million to $40 million of revenues * We have not reconciled our outlook for 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. 21
Well Positioned for Future Growth Market Growing market driven by improvement in laser technology Vertically integrated with leading technology focused on ROW Strategy industrial and aerospace and defense markets Financials Track record of growth and strong operating leverage 22
simply brilliant®
GAAP to Non-GAAP Reconciliation (unaudited, in thousands, except per share data) FY 2016 Q117 Q217 Q317 Q417 FY 2017 Q118 Q218 Q318 Q418 FY 2018 Q119 Q219 Q319 Q419 FY 2019 Stock-based compensation included in following: Cost of revenues 9 6 15 16 46 22 62 183 189 456 209 267 340 385 1,201 Research and development 14 14 18 20 66 25 200 513 555 1,293 558 711 424 1,606 3,299 Sales, general, and administrative 50 55 76 76 257 115 544 1,207 1,190 3,056 1,142 1,403 315 2,370 5,230 Total stock-based compensation 308 73 75 109 112 369 162 806 1,903 1,934 4,805 1,909 2,381 1,079 4,361 9,730 Net income (loss) (14,202) (1,213) (287) 2,244 1,093 1,837 2,916 4,653 4,009 2,360 13,938 (1,235) (155) (778) (10,716) (12,884) Income tax expense 1,882 1,156 1,084 1,236 1,382 4,858 1,149 848 839 764 3,600 1,753 793 837 2,736 6,119 Other (income) expense 753 167 630 1,043 (6) 1,834 (76) 42 537 (250) 253 (820) 907 (90) (532) (535) Interest expense, net 2,229 502 469 76 222 1,269 219 6 (298) (655) (728) (750) (740) (665) (454) (2,609) Depreciation and amortization 8,099 1,950 1,959 1,890 2,123 7,922 1,946 2,172 2,194 1,976 8,288 2,212 2,269 2,313 2,770 9,564 Stock-based compensation 308 73 75 109 112 369 162 806 1,903 1,934 4,805 1,909 2,381 1,079 4,361 9,730 Acquisition and integration-related costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 470 470 Adjusted EBITDA (931) 2,635 3,930 6,598 4,926 18,089 6,316 8,527 9,184 6,129 30,156 3,069 5,455 2,696 (1,365) 9,855 Net income (loss) (1,213) (287) 2,244 1,093 1,837 2,916 4,653 4,009 2,360 13,938 (1,235) (155) (778) (10,716) (12,884) Add back Stock-based compensation (1) 73 75 109 112 369 162 806 1,903 1,934 4,805 1,909 2,381 1,079 4,361 9,730 Valuation allowance on foreign deferred tax assets 0 0 0 0 0 0 0 0 0 0 0 0 0 3,423 3,423 Acquisition and integration-related costs 0 0 0 0 0 0 0 0 0 0 0 0 0 470 470 Amortization of purchased intangibles 0 0 0 0 0 0 0 0 0 0 0 0 0 328 328 Non-GAAP net income (1,140) (212) 2,353 1,205 2,206 3,078 5,459 5,912 4,294 18,743 674 2,226 301 (2,134) 1,067 GAAP weighted average shares outstanding 2,600 2,626 2,751 2,954 2,735 3,031 24,491 35,007 36,441 24,862 36,694 37,065 37,262 37,463 37,119 Assumed conversion of convertible preferred stock to common stock 19,837 23,044 24,642 24,642 23,095 24,642 7,940 0 0 8,056 0 0 0 0 0 Participating securities 0 0 0 0 0 0 0 0 0 0 0 0 444 0 319 Non-GAAP weighted average number of shares, basic 22,437 25,670 27,393 27,596 25,830 27,673 32,431 35,007 36,441 32,918 36,694 37,065 37,706 37,463 37,438 Dilutive effect of common stock equivalents 0 0 3,115 4,285 3,294 4,492 5,265 5,325 4,798 5,097 4,585 4,391 4,016 0 4,360 Non-GAAP weighted average number of shares, diluted 22,437 25,670 30,508 31,881 29,124 32,165 37,696 40,332 41,239 38,015 41,279 41,456 41,722 37,463 41,798 Non-GAAP net income per share, basic (0.05) (0.01) 0.09 0.04 0.09 0.11 0.17 0.17 0.12 0.57 0.02 0.06 0.01 (0.06) 0.03 Non-GAAP net income per share, diluted (0.05) (0.01) 0.08 0.04 0.08 0.10 0.14 0.15 0.10 0.49 0.02 0.05 0.01 (0.06) 0.03 (1) There is no income tax effect related to the stock-based compensation adjustment due to the full valuation allowance in the U.S. 24