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nLight, Inc. Announces Fourth Quarter and Full Year 2018 Results
[February 20, 2019]

nLight, Inc. Announces Fourth Quarter and Full Year 2018 Results


Revenues of $191.4 million and gross margin of 35.0% for the full year 2018
Revenues of $46.2 million and gross margin of 35.8% for the fourth quarter of 2018

VANCOUVER, Wash., Feb. 20, 2019 (GLOBE NEWSWIRE) -- 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 2018.

“2018 was a year of significant accomplishments for nLIGHT,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer. “We successfully completed an initial public offering in April, introduced a number of innovative products to the market, and delivered revenue growth of 38% with significant profitability expansion.

“Our financial performance in the fourth quarter and throughout 2018 demonstrates the diverse reach of our products from both an end market and geographic perspective. While conditions in the Chinese industrial market remain challenging, we see expanding opportunities with fiber laser customers in other Asian markets, North America, and Europe. With the rollout of higher power and differentiated fiber lasers, and our progress driving power and efficiency leadership in semiconductor lasers, we are well positioned to continue to grow at a faster rate than the overall high-power laser market.”

Full Year 2018 Financial Results

 Full Year Ended December 31,  
(In thousands, except percentages)2018 2017 % Change
Revenues$191,359  $138,580  38.1%
Gross margin35.0% 31.9%  
Income from operations$17,063  $9,798  74.1%
Operating margin8.9% 7.1%  
Net income$13,938  $1,837  658.7%
Adjusted EBITDA(1)$30,156  $18,089  66.7%
Adjusted EBITDA, as percentage of revenues15.8% 13.1%  
(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 of $191.4 million for the full year 2018, up 38.1% compared to $138.6 million for the full year 2017. Gross margin of 35.0% for the full year 2018 compared to 31.9% for the full year 2017. GAAP net income was $13.9 million for the full year 2018, or net income of $0.32 per diluted share, compared to $1.8 million, or net income of $0.00 per diluted share, for the full year 2017. Excluding the impact of stock-based compensation and assuming the conversion of all outstanding convertible preferred stock in the period to common stock, non-GAAP net income for the full year 2018 was $18.7 million, or non-GAAP net income of $0.49 per diluted share, compared to non-GAAP net income of $2.2 million, or non-GAAP net income of $0.08 per diluted share, for the full year of 2017.

Fourth Quarter 2018 Financial Results

 Three Months Ended December 31,  
(In thousands, except percentages)2018 2017 % Change
Revenues$46,162  $37,482  23.2%
Gross margin35.8% 32.8%  
Income from operations$2,219  $2,691  (17.5)%
Operating margin4.8% 7.2%  
Net income$2,360  $1,093  115.9%
Adjusted EBITDA(1)$6,129  $4,926  24.4%
Adjusted EBITDA, as percentage of revenues13.3% 13.1%  
(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 of $46.2 million for the fourth quarter of 2018, up 23.2% compared to $37.5 million for the fourth quarter of 2017. Gross margin of 35.8% for the fourth quarter of 2018 compared to 32.8% for the fourth quarter of 2017. GAAP net income for the fourth quarter of 2018 was $2.4 million, or net income of $0.06 per diluted share, compared to $1.1 million, or net income of $0.00 per diluted share, for the fourth quarter of 2017. Excluding the impact of stock-based compensation and assuming the conversion of all outstanding convertible preferred stock in the period to common stock, non-GAAP net income for the fourth quarter of 2018 was $4.3 million, or non-GAAP net income of $0.10 per diluted share, compared to non-GAAP net income of $1.2 million, or non-GAAP net income of $0.04 per diluted share, for the fourth quarter of 2017.

Outlook

For the first quarter of 2019, nLIGHT expects revenues to be in the range of $40.0 million to $44.0 million, gross margin to be in the range of 30.0% to 33.0%, and Adjusted EBITDA in the range of $2.0 million to $4.0 million.

Investor Conference Call at 2:00 p.m. Pacific Time, Wednesday, February 20, 2019

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 2018 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 also contains non-GAAP financial results, including Adjusted EBITDA, non-GAAP net income and non-GAAP net income per share, basic and diluted. Adjusted EBITDA, a non-GAAP financial metric, is used 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 it gives effect to both the conversion of all outstanding preferred stock to common stock, which occurred immediately prior to the closing of nLIGHT’s initial public offering on April 30, 2018, as well as removing the effect of stock-based compensation expense, which we believe to be an informative view of our results during the period.

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 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. 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 net income to Adjusted EBITDA, as well as the reconciliation of net income and net income per share, basic and diluted to non-GAAP net income and non-GAAP net income per share, basic and diluted, the two most directly comparable GAAP financial metrics, are included at the end of this press release.

We have not reconciled expectations of net income to 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 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as “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, our expectations to grow faster than the overall high-power laser market, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on 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 as our operating costs increase, (2) the risk that our revenue growth rate in recent periods may not be indicative of our future performance, (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) our manufacturing capacity and operations may not be appropriate for future levels of demand, (8) our reliance on a small number of customers for a significant portion of our revenues and (9) the risk that we may be unable to protect our proprietary technology and intellectual property rights. Additional information concerning these and other factors can be found in nLIGHT's filings with the Securities and Exchange Commission, including other risks, relevant factors and uncertainties identified in the “Risk Factors” section of nLIGHT's Registration Statement on Form S-1 or subsequent filings with the Securities and Exchange Commission. 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.

nLIGHT, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

 Three Months Ended December 31, Year Ended December 31,
 2018 2017 2018 2017
Revenues$46,162  $37,482  $191,359  $138,580 
Cost of revenues(1)29,656  25,200  124,398  94,306 
Gross profit16,506  12,282  66,961  44,274 
Operating expenses:       
Research and development(1)6,398  3,538  21,054  15,123 
Sales, general, and administrative(1)7,889  6,053  28,844  19,353 
Total operating expenses14,287  9,591  49,898  34,476 
Income from operations2,219  2,691  17,063  9,798 
Other income (expense):       
Interest income (expense), net655  (222) 728  (1,269)
Other income (expense)250  6  (253) (1,834)
Income before income taxes3,124  2,475  17,538  6,695 
Income tax expense764  1,382  3,600  4,858 
Net income$2,360  $1,093  $13,938  $1,837 
Less: Income allocated to participating securities  (1,093) (4,415) (1,837)
Net income attributable to common stockholders$2,360  $  $9,523  $ 
Net income per share, basic$0.06  $0.00  $0.38  $0.00 
Net income per share, diluted$0.06  $0.00  $0.32  $0.00 
Shares used in per share calculations:       
Basic36,441  2,954  24,862  2,735 
Diluted41,239  2,954  29,959  2,735 




(1)Includes stock-based compensation as follows:       
 Three Months Ended December 31, Year Ended December 31,
 2018 2017 2018 2017
Cost of revenues$189  $16  $456  $46 
Research and development555  20  1,293  66 
Sales, general, and administrative1,190  76  3,056  257 
 $1,934  $112  $4,805  $369 

nLIGHT, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)


 December 31, December 31,
 2018 2017
Assets   
Current assets:   
  Cash and cash equivalents$149,478  $36,687 
  Accounts receivable, net26,528  13,353 
  Inventory35,329  29,570 
  Prepaid expenses and other current assets7,286  4,973 
  Total current assets218,621  84,583 
Property and equipment, net21,462  17,968 
Intangible assets, net2,686  1,836 
Goodwill1,387  1,387 
Other assets5,974  4,374 
  Total assets$250,130  $110,148 
    
Liabilities and Stockholders’ Equity   
Current liabilities:   
  Accounts payable$12,068  $12,920 
  Accrued liabilities10,708  12,650 
  Customer advances493  575 
  Deferred revenue227  386 
  Current portion of long-term debt91  2,363 
  Total current liabilities23,587  28,894 
Non-current income taxes payable6,472  3,930 
Long-term debt18  15,108 
Other long-term liabilities2,270  933 
Total liabilities32,347  48,865 
Stockholders' equity:   
Convertible preferred stock - par value  12 
Preferred stock - par value   
Common stock - par value15  2 
  Additional paid-in capital324,656  180,657 
  Accumulated other comprehensive loss(2,157) (719)
  Accumulated deficit(104,731) (118,669)
  Total stockholders’ equity217,783  61,283 
  Total liabilities and stockholders’ equity$250,130  $110,148 

nLIGHT, Inc.
Select Statements of Cash Flows Data
(In thousands)
(Unaudited)

 Year Ended December 31,
 2018 2017
Cash flows from operating activities:   
Net income$13,938  $1,837 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization8,288  7,922 
Provision for losses on accounts receivable22  232 
Stock-based compensation4,805  369 
Deferred income taxes(1,307) (424)
Loss on disposal of property and equipment12  9 
Loss on debt extinguishment12  911 
Changes in operating assets and liabilities:   
Accounts receivable(13,734) (3,523)
Inventory(6,145) (9,875)
Prepaid expenses and other current assets(2,483) (639)
Other assets(2,262) (1,148)
Accounts payable172  2,491 
Other changes2,017  5,249 
Net cash provided by operating activities3,335  3,411 
Cash flows from investing activities:   
Purchases of property, equipment and intangibles(11,714) (5,483)
Proceeds from sale of property and equipment35  6 
Net cash used in investing activities(11,679) (5,477)
Cash flows from financing activities:   
Principal payments on debt and capital leases(33,417) (15,318)
Net proceeds from debt financing16,053  12,499 
Cash paid on debt extinguishment  (388)
Proceeds from public offerings, net of offering costs138,303   
Net proceeds from issuance of convertible preferred stock  27,481 
Payments of other financing costs  (191)
Proceeds from stock option exercises362  336 
Net cash provided by financing activities121,301  24,419 
Effect of exchange rate changes on cash(166) 834 
Net increase in cash and cash equivalents112,791  23,187 
Cash and cash equivalents, beginning of period36,687  13,500 
Cash and cash equivalents, end of period$149,478  $36,687 

nLIGHT, Inc.
Reconciliation of GAAP Financial Metrics to Non-GAAP
(In thousands, except per share data)
(Unaudited)

Reconciliation of Net Income to Adjusted EBITDA

 Three Months Ended December 31, Year Ended December 31,
 2018 2017 2018 2017
Net income$2,360  $1,093  $13,938  $1,837 
Income tax expense764  1,382  3,600  4,858 
Other (income) expense(250) (6) 253  1,834 
Interest (income) expense, net(655) 222  (728) 1,269 
Depreciation and amortization1,976  2,123  8,288  7,922 
Stock-based compensation1,934  112  4,805  369 
Adjusted EBITDA$6,129  $4,926  $30,156  $18,089 

Reconciliation of GAAP to Non-GAAP Net Income, and GAAP to Non-GAAP Net Income per Share, Basic and Diluted

 Three Months Ended December 31, Year Ended December 31,
 2018 2017 2018 2017
Net income$2,360  $1,093  $13,938  $1,837 
Add back:       
Stock-based compensation(1)1,934  112  4,805  369 
Non-GAAP net income4,294  1,205  18,743  2,206 
        
GAAP weighted average shares outstanding36,441  2,954  24,862  2,735 
Assumed conversion of convertible preferred stock to common stock  24,642  8,056  23,095 
Non-GAAP weighted average number of shares, basic36,441  27,596  32,918  25,830 
Dilutive effect of common stock equivalents4,798  4,285  5,097  3,294 
Non-GAAP weighted average number of shares, diluted41,239  31,881  38,015  29,124 
        
Non-GAAP net income per share, basic$0.12  $0.04  $0.57  $0.09 
Non-GAAP net income per share, diluted$0.10  $0.04  $0.49  $0.08 

(1) There is no income tax effect related to the stock-based compensation adjustment due to the full valuation allowance in the U.S.

For more information contact:
Jason Willey
Investor Relations and Corporate Development
nLIGHT, Inc.
(360) 567-4890
[email protected] 

nLIGHT Logo - JPEG.jpg


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