LightPath Technologies, Inc. (LPTH) on Q3 2021 Results - Earnings Call Transcript
Operator: Good afternoon and welcome to the LightPath Technologies Fiscal 2021 Third Quarter Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note, today's event is being recorded. I will now pass the call off to Don Retreage, Chief Financial Officer of LightPath Technologies. Donald Retreage: Good afternoon. Before we get started, I would like to remind you that during the course of this conference call, the company will be making a number of forward-looking statements that are based on current expectations and involve various risks and uncertainties, including the impact of COVID-19 pandemic that are discussed in this periodic SEC filings. Sam Rubin: Thank you and good afternoon. Welcome to LightPath Technologies fiscal 2021 third quarter financial results conference call. Our financial results press release was issued after the market closed today and posted to our corporate website. Following my remarks, our CFO Donald Retreage will further review our financial results and provide more perspective on key areas. We will then conduct a Q&A session. For those of you who have been following closely the company you know that the past nine months or more have been following closely the company hat the past nine months or more have been marked by changes designed to position LightPath for growth. I'm very pleased to report that our long term growth plans are beginning to yield their intended results, and seen the stronger results for the quarter, including the highest level of quarterly revenue in our history. This marks the second consecutive quarter, in which we set a new record for quarterly revenues, and we continue to deliver double digit growth rates on annual terms. In the nine months since the beginning of our fiscal year, we won over 15 new business contracts, including 16 from new design wins. This supports both our new strategic direction of being a partner for solutions, as well as our goals to diversify our customer base and reduce our customer concentration. With reflection I was appointed CEO of LightPath, a little more than a year ago. The onset, my initial focus was to assess the company's strengths, weaknesses, opportunities and leadership capabilities as they relate to our strategy forward. Once we completed the initial assessment, we began implementing our new strategy with an orientation towards becoming a valued and trusted photonics partner in the form of providing engineered solutions, which goes well beyond serving as a component manufacturer. Donald Retreage: Thank you Sam. First, I'd like to mention that much of the information we're discussing during this call is also included in a press release issued earlier today. And in our 10-Q filed with the SEC. I encourage you to visit our website at LightPath.com specifically the section titled Investor Relations. Now onto my remarks pertaining to the fiscal 20 21 third quarter and nine months ended March 31, 2021. Sam's remark covered the highlights of the changes that came in form of strategies designed to position LightPath for growth. I will be specifically discussing some of the key financial performance areas. Revenue for the third quarter of fiscal 2021 was 10.7 million of 8% sequentially from 9.9 million in the second quarter of 2021, and an increase of 23% as compared to 8.7 million in the second quarter of 2020. Revenue for the first nine months of fiscal 2021 was 30.1 million, an increase of 4.2 million, or 17% as compared to 25.9 million in the same period of prior fiscal year. Infrared products revenue was 6.5 million in the third quarter of fiscal 2021 or 60% of the total revenue. This is up from 4.4 million or 50% of the total in the third quarter of fiscal 2020. IR revenues grow sequentially from second quarter of 2021 by 35%. Visible precision molded optics or PMO. Product revenue in the third quarter of fiscal 2021 was 3.9 million, or 36% of the total up from 3.8 million, or 44% of the total in the third quarter fiscal 2020. PMO products revenues were down sequentially from the second quarter of this year by approximately 800,000 due primarily through a reduction in spending on a large telecom customers' long term supplier agreement following accelerated purchases during the first half of the year. The balance of our revenue for the third quarter was 334,000 from specialty products. Specialty products and non recurring engineering projects, which vary greatly from quarter to quarter, but are substantially smaller contributors to the consolidated revenue. Revenue from this group in the prior year was 561,000. Operator: Thank you. We will now begin the question and answer session. Today's first question comes from Brian Kinstlinger from Alliance Global Partners. Please go ahead. Unidentified Analyst: Hi, thanks for taking my questions. This is Jacob on for Brian. Can you talk about the slowdown in PMO orders related to inventory for 5G rollouts? Can you talk about what's causing this? And do you believe this is temporary and related to global supply chain shortages? Or do you think this will persist? Sam Rubin: Yes, first of all, hi, Jacob. And thanks for joining us. The slowdown that we're seeing is specific to one geographical area for customers in China itself. And the reasoning for that is two, first of all, this has been a significant overstocking on the behalf of that customer earlier on in 2020 and the second is some slowdown that they are seeing in the rollout of their equipment. We're pretty confident that this is a temporary thing. In fact, the customer is already discussing with us what will be the timeline for their future releases of orders. But right now, this customer typically releases orders on quarter by quarter basis that is affecting both our backlog number as well as sales for the coming two quarters to this customer. Unidentified Analyst: Okay and are there any industries that you sell to facing inventory shortages which will result in fewer numbers of lenses in the near term? And if so which ones? Sam Rubin: Yes, we've definitely seen our shares with customers mentioning shortage in certain chips or devices that are impacting the supply chain. We've had in a couple of occasions customers shuffle around schedule. I think a couple of quarters ago we talked about this that one of our larger customers was moving shipments around and was doing so at the short notice which impacted our inventory levels back then. But since then we haven't seen anything to a level of anyone canceling orders, not releasing new orders or delaying significantly our shipments because there's a shortage, shortage of other components. Unidentified Analyst: Thanks. And one more and I'll hop back in the queue if I have any more. Can you talk about how far along you are for correcting your to yield issues? You identify that the year end conference call both the coding issue at the end of the process and the problem in the middle of the process. I think you said before that you plan on having this address in the next couple of weeks. Sam Rubin: Yes, we're definitely very-very close to this. I think the results we're getting extremely encouraging. They're not yet statistically viable to the point of us saying definitely we resolved it. But the engineers are walking around with a smile on their face. So that's very encouraging. Unidentified Analyst: Alright, thanks so much. Operator: The next question comes from Scott . Please go ahead. Unidentified Analyst: Hey, good afternoon, guys. And Don, congrats on retirement. Donald Retreage: Thank you Scott. Unidentified Analyst: Of course. My first question on gross margin, is it possible to give us a percentage point impact some of these new product issues had on the quarter? I mean, was it 200 basis points, 300 basis points? Is that even something that you could do? Sam Rubin: Overall, it's between 1.5% to 2%, overall, normally would have been closer to a 40. Unidentified Analyst: Perfect, that's great. And second one for me on capacity. Could you give a little color around kind of your comfort level with where capacity is today? And maybe what that means for CapEx assumptions moving into your next fiscal year? Sam Rubin: Yes, definitely. Absolutely some of the growth, we're seeing now as a result of the capacity expansions that we have been doing over the last few quarters and especially in the PMO, and the molding area, which affects both some of the infrared that is molded with infrared and, of course, the PMO itself. I'd say that at this point, capacity wise, we're not seeing ourselves limited right now in any specific area. Most of our investments, this point is going towards efficiencies, is going towards technological advancements, investing in new technologies that allow us both to capture new business and to do existing business better. Unidentified Analyst: Okay, that's very helpful. And last one for me. I'm curious if you could tell us when you became aware of the issue in China and how quickly you were able to act on that? Unidentified Analyst: Yes, we became aware of it at the beginning of March and I'd say within four weeks of when the suspicion team up, we already completely handled it and dismissed those employees. Unidentified Analyst: Okay, great, guys. Thank you. Operator: The next question comes from FBR. Please go ahead. Unidentified Analyst: Yes, Hi, good afternoon. First question is regarding on backlog between IR and PMO. Just wondering what the mix looks like? Is that kind of comparable to your revenue mix? Sam Rubin: Well, because in the third quarter we increase sales by 60% in the IR, we reduced almost proportionately with our backlog. So we're a little more lower in the IR as of eight, but we have a lot more things in the pipeline with IR. Donald Retreage: is a place where we tend to get more longer term contracts compared to PMO. Unidentified Analyst: Sure. Regarding gross margin, just wondering how we should think about course margin for the rest of this calendar year. I mean did I hear you correctly that you expect IR to grow faster than PMOs so that then will gross margin be trending down because IR has, carries lower gross margin? Sam Rubin: Yes, in one way, as Sam said, though, the turnaround period is longer. So you're not going to see the effect of higher margins on the IR next quarter. Also, I mean, just remember that mix. You can do 50% of our total revenue in PMO at 50% gross margin, and pointed to 30% of IR, which is 50% of our revenue, the average won't come out, it'll come out in the 30s in the high 30s. So as time goes for cycle, the IR will sell more higher ASP and increase the margin but it won't be 20% from quarter to quarter. Unidentified Analyst: Got it. Thank you. Operator: The next question comes from Gene Inger from The Inger Letter.com. Please go ahead. Gene Inger: Hi, gentlemen, and Sam, congrats and Don congratulations on a good quarter and revenue with some problems continuing as you make what seems to be a grand transition. Sam Rubin: Thank you. Donald Retreage: Thank you, Jean. And it's good to hear your voice. Welcome backwards the living? Gene Inger: Yes, thank you sir. I went through hell, but glad that we're glad to be alive. In any event, and genuinely doesn't know, believe me COVID is no joke, and it is a horrible disease. But in any event, it looks like you're talking about shrinking gross margins. But not by virtue of net margins, and not by virtue of price cuts, which used to be what would happen to me competition. Is that correct? Sam Rubin: Yes, we're not, I'd say we're not seeing a significant price pressure that leads to cut in gross margin. As always, we have a product mix that can be very different we can have in PMO and another some lenses that are much higher margins and others that make shifts around sometimes. But I don't think there is anything that is leaving our gross margin on a long term view declining gross margins or anything like that. We're definitely facing our current yield issues which we talked at length about last quarter and still exists to some degree. But other than that, there's no downward trend. Unidentified Analyst: In your comment there is a lot of the financial questions have been asked in your comments you mentioned acquisitions are . And I wonder whether you could give us some ideas of where you would consider those to be fruitful, or whether you rather not, because as you've mentioned, before, you have the new direction but you don't necessarily want competitors to be totally aware of what you're planning. Sam Rubin: Yes. Yes, absolutely. I would say that it would not come as a surprise given that we're investing in technology and capabilities here that some of the acquisition opportunities that we're seeking are similar in nature, meaning companies that could bring along additional capabilities or technologies that would supplement ours and that would allow us to go to accelerate our path downs a new strategic direction, we're not likely going to look at this point acquisitions that solely bring over capacity, for example. we are not that interested in. Unidentified Analyst: When I look at the staff changes, I see the background of both Albert and Peter and welcome them to LightPath and what I see is also not only optics, but an industrial engineering background and I'm wondering if this personnel changes relate to the new direction they probably do. Maybe that I should assume that. But I'm just curious if you can expand on that at all. Sam Rubin: Yes. I mean, as you mentioned, we definitely look for people that fit our needs and in this case, I think we're lucky to have landed two exceptionally talented people that bring with them experience and skill sets that fit really well, the direction we want to go. And it would be would come as no surprise to people that as we want to grow more vertically and as we want to create more value we're looking in our leadership teams that people that have done similar things have been part of similar things before. Operator: We show no additional questions. I'd like to turn the conference back over to management for any closing remarks. Sam Rubin: Thank you for participating on today's conference call. Before we leave, I would like again extend my thank you and best wishes to our departing Chairman Bob Ripp. We look forward to speaking with you the next quarter for our year end results. As we have typically done we intend to issue preliminary fourth quarter results in August with the full results coming out in September. Until then our next public engagement would be at the Needham Virtual Technology and Media Conference on May 18. We hope our institutional investor followers will join us at the conference and that all of you continue to follow our progress. Thank you again. And good bye. Operator: The conference is not concluded. Thank you for attending today's presentation. You may now disconnect.
LightPath Technologies, Inc. (NASDAQ:LPTH) Sees Positive Analyst Sentiment and Strategic Growth Opportunities
- The consensus price target for NASDAQ:LPTH has increased from $3.83 to $5.50, indicating growing optimism among analysts.
- LightPath Technologies' strategic acquisition of G5 Infrared and growth in defense contracts highlight significant growth opportunities.
- The company has begun delivering infrared lens assemblies to a European defense customer, with the contract expected to generate $1 million to $2 million in revenue during 2025.
LightPath Technologies, Inc. (NASDAQ:LPTH) is a company that designs, develops, manufactures, and distributes optical components and assemblies. These products are used in various industries, such as defense, medical devices, automotive safety, and telecommunications. The company operates globally, selling directly to customers and through distributors, which allows it to reach a wide market.
The consensus price target for LPTH has shown a positive trend over the past year. A year ago, the average price target was $3.83, but it has increased to $5.50 in both the last month and last quarter. This suggests growing optimism among analysts about the company's stock performance, possibly due to strategic initiatives and positive industry developments.
LightPath Technologies recently held its Q2 2025 earnings conference call, where key figures like CEO Sam Rubin and CFO Albert Miranda discussed the company's financial performance and strategic outlook. The call included analysts from various firms, such as Jaeson Schmidt from Lake Street Capital Markets, who set a price target of $3 for LPTH, reflecting his expectations based on recent financial results and market conditions.
The company has announced a strategic acquisition of G5 Infrared, which is expected to enhance its capabilities in the infrared technology sector. This acquisition is likely to positively impact LightPath Technologies' market position. The company is also experiencing growth in defense contracts and high-value camera solutions, with potential contracts with Lockheed Martin, presenting compelling growth opportunities.
LightPath Technologies has commenced the delivery of infrared lens assemblies to a European defense customer, part of an agreement outlined in an October 2024 Letter of Intent. These assemblies are intended for FPV drone applications, and the contract is expected to generate between $1 million and $2 million in revenue during 2025. Despite some analysts setting a lower price target, the company's strategic moves and industry growth suggest potential for future success.
LightPath Technologies’ Price Target Raised to $4, Shares Gain 15%
LightPath Technologies (NASDAQ:LPTH) shares rose more than 15% intra-day today after Lake Street Capital Markets analysts increased the price target for the stock to $4 from $3 while maintaining a Buy rating. According to the analysts, the optics and photonics company is positioned for continued growth and stands out as a top investment idea for 2025, driven by its robust pipeline and strategic market opportunities.
After a remarkable performance this year, with shares surging 146% compared to the Russell 2000’s 12% gain, LightPath’s momentum is expected to carry into the next year. Recent years have seen revenue impacted by declines in business from China, but the company has successfully backfilled this gap, allowing its solid design wins to gain recognition.
Additionally, China’s ban on germanium exports to the U.S. is poised to benefit LightPath, as its proprietary Black Diamond materials offer a compelling alternative. This geopolitical shift could enhance the company’s market positioning, driving demand for its innovative solutions.
Key catalysts for LightPath include growing investor interest in its expanding pipeline and potential breakthroughs such as the transformational Lockheed missile program, which could provide a significant boost to revenue and market perception. The analysts also highlighted the potential for multiple expansion as these developments unfold.
While bullish on LightPath’s prospects, the firm acknowledged potential risks and challenges but remains confident in the company’s ability to capitalize on emerging opportunities.
LightPath Technologies’ Price Target Raised to $4, Shares Gain 15%
LightPath Technologies (NASDAQ:LPTH) shares rose more than 15% intra-day today after Lake Street Capital Markets analysts increased the price target for the stock to $4 from $3 while maintaining a Buy rating. According to the analysts, the optics and photonics company is positioned for continued growth and stands out as a top investment idea for 2025, driven by its robust pipeline and strategic market opportunities.
After a remarkable performance this year, with shares surging 146% compared to the Russell 2000’s 12% gain, LightPath’s momentum is expected to carry into the next year. Recent years have seen revenue impacted by declines in business from China, but the company has successfully backfilled this gap, allowing its solid design wins to gain recognition.
Additionally, China’s ban on germanium exports to the U.S. is poised to benefit LightPath, as its proprietary Black Diamond materials offer a compelling alternative. This geopolitical shift could enhance the company’s market positioning, driving demand for its innovative solutions.
Key catalysts for LightPath include growing investor interest in its expanding pipeline and potential breakthroughs such as the transformational Lockheed missile program, which could provide a significant boost to revenue and market perception. The analysts also highlighted the potential for multiple expansion as these developments unfold.
While bullish on LightPath’s prospects, the firm acknowledged potential risks and challenges but remains confident in the company’s ability to capitalize on emerging opportunities.
