Vancouver-based industrial laser manufacturer nLIGHT posted stronger-than-expected second quarter results Wednesday, marking two quarters in a row that the company has managed to avoid major negative impacts from the coronavirus pandemic.
nLIGHT has a large manufacturing and sales presence in China, and company executives cautioned investors in January that the pandemic would negatively impact upcoming financial results, forecasting a hit of up to $8 million. nLIGHT also announced in April that all of its executive officers would cut their salaries by varying degrees for six months.
But operations and product demand both proved to be resilient, according to CEO Scott Keeney, and nLIGHT’s first-quarter revenue was reported at $42.2 million, a 3.2 percent year-over-year increase.
Wednesday’s second-quarter results showed even stronger gains, with revenues of $52.1 million, an 8.5 percent gain over the $48.1 million reported in the second quarter of 2019. The reported gross margin was 25 percent.
Those figures align with the higher end of the company’s forecast; in May, Chief Financial Officer Ran Bareket told investors that the company expected revenue in the range of $41 million to $55 million and a gross margin of 21 percent to 25 percent.
“The key driver of the better-than-expected performance was our industrial end market,” Keeney said in a Wednesday afternoon conference call with investors and analysts.
Keeney also attributed the results to robust demand in Chinese markets and overall growth in the aerospace and defense end market. He also noted that the microfabrication end market grew for the first time in several quarters, although results in that market still saw a year-over-year decline.
Echoing comments following the release of nLIGHT’s first-quarter results, Keeney said he expected the build-out of 5G cellphone networks to be a major future driver for microfabrication.
Overall global demand has remained strong throughout the pandemic, he said, although the novel coronavirus has still caused operational challenges. On that front, Keeney said nLIGHT benefitted from its recent decision to move its local operations to Camas.
The company purchased a 21.4-acre corporate campus in Camas from Sharp Corporation in March with the intention of turning it into a new headquarters. nLIGHT has gotten one of its production lines up and running at new facility, Keeney said, and is in the process of building more manufacturing and office space.
nLIGHT chose the new facility with an eye toward accommodating future growth, and Keeney said the extra room has given the company more flexibility to physically space out its office workers and operations to help maintain health safety distances during the pandemic.
Looking to the third quarter, nLIGHT posted an expected revenue range of $54 million to $60 million with a gross margin of 22 percent to 26 percent.
Keeney said the uncertainty of the ongoing pandemic made it difficult to speculate about how things would look beyond the third quarter, although he did mention that he expected any impact from the outcome of this year’s election to be minimal.
The politics issue came up during the investor call due to nLIGHT’s growing presence in the aerospace and defense end market, but Keeney characterized the company as relatively insulated from defense budget changes. Directed energy technology is a high priority for the Department of Defense, he said, and typically receives support from lawmakers in both parties.
“Historically, I’d say that directed energy funding has been very strongly bipartisan,” he said.
Shares closed at $23.78 Wednesday on the Nasdaq exchange, up 21 cents.
