Q4 2020 nLIGHT Inc Earnings Call
[music].
Good day and welcome to the NN life fourth quarter 2020 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions to ask a quest.
You May press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Joseph Corso, Vice President Corporate development and Investor Relations. Please go ahead Sir.
Thank you and good afternoon, everyone as the operator said I am Joe Corso and lights, Vice President of corporate development and Investor Relations, Scott Keeney, Chief Executive Officer of NN life, and ran bracket Chief financial Officer will be the speakers on today's call. If you have any questions. After the call. Please direct them to me at Joe Dock Corso at and like Dot net.
A copy of today's earnings press release and earnings Slide presentation are available on the Investor Relations section of our website at investors Dark and light Dot net in addition, you can access an archived version of today's call from our website.
In today's call our discussion will contain forward looking statements, including statements about the potential impact of ongoing COVID-19, pandemic financial projections future business growth trends and related factors prospects for expanding and penetrating addressable markets and our strategic focus and objectives forward looking statements are subject to risks and.
Certainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today's call. We undertake no obligation to update publicly any forward looking statement, except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call.
We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings release, which can be found on the Investor Relations section of our website.
I'll now turn the call over to Scott, who will provide an update on the current environment and the markets we serve.
Ron will then go through our financials and outlook. We will then be glad to take your questions.
Thank you Joe starting on slide three.
2020 was a year I will not forget.
We started the year with a hope of a global manufacturing recovery after a difficult 2019.
But early in the year, we faced the profound uncertainty of the COVID-19 pandemic.
Throughout the year, our global team met the unprecedented challenges of this crisis and we not only were able to operate safely but.
But we also ended the year with record revenue.
In 2020, we generated $223 million of revenue, which was an increase of 26% over 2019 and in line with our long term historical companion will the growth rate of 23 per cent.
We exited Q4 with 50% growth over Q4 2019.
And well our future growth will be subject to global macroeconomic factors, we believe over the long run that our strategy will enable us to meet or exceed our historical long term revenue compound annual growth rate of greater than 20 per cent.
Turning to slide four.
Breaking down revenue by end market I will begin with aerospace and defense.
'twenty marked the fourth consecutive year of annual growth in our aerospace and defense business. We grew 2020 revenue is 36% on an organic basis, and we grew 102% year over year, when including the $31 8 million contribution from neutron ex.
We have been serving the aerospace and defense markets. Since we founded in late two decades ago, and we view ourselves as a dual use technology company.
We have a long history of supplying mission critical lasers into long running programs and our work in directed energy represents an important long term opportunity.
November marked the one year anniversary other enter other acquisition of neutron ex and I'm happy to report that the integration of enlighten Endotronics has gone well confirming our fundamental thesis that being vertically integrated from the semiconductor laser through beam control is critical to developing high power cost effective lasers required for directed energy applications.
Today, we believe we are the only laser company with this level of vertical integration, which offers us a competitive advantage as directed energy applications are expected to move to programs of record.
Turning to the industrial end market, our business grew 10% year over year in 2020.
We saw continued demand growth in China, beginning in mid 2020 that continues today, particularly as our customers continue their migration towards higher powered laser solutions.
In contrast, our global industrial customers generally operate at lower power levels and value our differentiated programmable laser technology.
The sales cycle for many of these global industrial customers is quite long and the design wins, we have secured.
Offer significant long term growth potential.
We're also excited about the opportunities we have in metal additive manufacturing with our newly introduced FX 1000 single mode programmable laser.
Turning to micro fabrication.
In 2020.
Our micro fabrication sales declined by 10% year over year.
However, after bottoming in Q1, we saw a rebound in our micro fabrication business beginning in the second quarter that continued throughout the year.
And in Q4, our micro fabrication revenues increased by 15% versus the comparable period in 2019.
We continue to improve performance and reduce cost for high power high brightness semiconductor lasers, which we believe will enable us to meet the growing demand from a broad base of electronics manufacturing applications that required the use of lasers.
We expect that the micro fabrication market will be driven by continued improvements in next generation applications and <unk> networks and handsets as well as the increased use of flexible printed circuits and consumer electronics devices medical applications displays and other advanced electronics applications.
Turning to slide five in.
In 2020, we increased our revenue in all geographies in China. Our 2020 revenue grew 10% year over year to $70 9 million.
Full year 2020 sales to customers outside of China grew 35% year over year to $151 9 million, representing 68% of our total revenue versus 64% in 2019.
Turning to slide six.
In the fourth quarter, we had record quarterly revenue of $66 million and we grew 53% year over year with growth in all of our end markets beginning.
Beginning with aerospace and defense. We grew revenue is 57% year over year on an organic basis, and 122%, including the $12 5 million contribution from neutron ex <unk>.
<unk> revenue in the quarter was driven by executing against long term contracts with their core aerospace and defense customers and ongoing directed energy development work.
Our industrial business grew 29% year over year in the fourth quarter growth in our industrial business was driven across all geographies as demand for both high power and programmable fiber laser has continued to increase.
Finally within.
Within micro fabrication, our sales increased 15% compared with the fourth quarter of 2019.
During the quarter, we saw positive demand trends from multiple customers across a wide range from micro fabrication applications.
Moving to slide seven to discuss our quarterly revenue by geography.
In China, our revenue grew 22% year over year to $18 2 million.
Fourth quarter sales to customers outside of China grew 70% year over year to <unk> $47 5 million, representing 72% of total revenue versus 65% in Q4 2019.
I will now turn the call over to Ron to discuss <unk> full year and Q4 financial results.
Thank you Scott and good afternoon, everyone.
Beginning on slide nine.
And light deliver record organic and inorganic revenue for both full year 2020 and in the fourth quarter.
Full year 2020 revenue of 222 8 million was up 26% year over to you.
And up 10% when adjusting for the day 71 8 million contribution from the <unk>.
Total revenue includes $184 $8 million of product revenue and $77 9 million of development revenue.
Fourth quarter revenue of $65 seven was above the high end of our outlook up 53% to your overview and up 72% on an organic basis when adjusting for the $12 5 million contribution from the <unk>.
Total revenue includes $51 7 million of product revenue and 14 million of development revenue.
Full year 2020, gross margin was 26, 6% compared with 29, 6% in the full year of 2019.
Product gross margin was 36% for full year 2020, compared to 29, 9% in the full year 2019.
<unk> margin was 29, 9% in the first quarter compared with 23, 3% in the comparable period of 2019.
For the gross margin was 35, 9% in debt in the fourth quarter compared to 24% in the first quarter of 2019.
Turning to slide 10 to provide more detail into our gross margins.
It is important to remember that enlighten reported revenue and gross margin in two segments products and development.
Our development gross margins of associated preliminary we advanced technology development projects for.
For the U S government, including the work we performed at <unk>.
While for the acquisition of from the Tweaks in November 2019, we reported our business and gross margin in a single segment.
While we have always walked on advanced technology development programs revenues from those program was not material.
Therefore, when evaluating our gross margin trends over the time it is important to compare.
What we classified as product gross margin today with our overall gross margin.
Prior to the acquisition of from a <unk> in Q4 2019.
In the first quarter, we generated product gross margin of approximately 76%, which were approximately 200 basis points higher than our product gross margin in Q4 last year.
While some of those improvements in our product gross margin is associated with higher revenue level. The two primary drivers for our product gross margin expansion is increased product sales to strategic industrial and aerospace customers outside of China and continued.
Cost performance improvement of our semiconductor lasers.
As we look forward to the future. We believe that we can expand our product gross margin above 40%.
This improvement will not be linear and <unk>.
Experienced fluctuation quarter over quarter.
We believe that our focus on strategic growth with our commercial customers outside of China.
Proportion of sales to the high power segments of the market in China and continued success in our defense business will enable us to further improve our gross margin overtime.
Turning to slide 11.
Operating expenses without stock based compensation for.
$15 4 million during the fourth quarter compared with 15 million in Q4 2019.
While we remain focused on controlling our operating expenses, we continue to invest in research and development to capitalize on an.
Expanding set of organic growth opportunities.
Turning to slide 12.
Non-GAAP net income for full year, 2020 was $7 3 million compared with $1 1 million during 2019.
Non-GAAP EPS for full year 2020 for the 17th for the.
Looted shows compared with <unk> <unk> per diluted shows in 2019 on.
On a GAAP basis EPS for full year 2020 was a loss of <unk> 55, compared with a loss of 35 <unk>.
During 2019.
Non-GAAP net income for the fourth quarter was $5 2 million compared with a loss of $2 1 million during the fourth quarter of 2019.
Non-GAAP EPS for the first quarter was 12 cents per diluted share compared with a loss of <unk> <unk>.
Co share in the fourth quarter of 2019 on a GAAP basis EPS for the fourth quarter was a loss of 12 comp.
Compared with a loss of 29 during the fourth quarter of 2019.
For 2020, adjusted EBITDA was $18 2 million or eight 1% of revenues. This compares to $9 9 million or five 6% of sales during 2019.
Fourth quarter, adjusted EBITDA was $8 4 million or 12, 9% of sales this compared with a loss of $1 4 million in Q4 2019.
Our improvement in adjusted EBITDA in both the full U and in Q4 was a result of higher gross margin and strong operating expenses control. It's also demonstrates the operating leverage we generate from incremental product sales.
During 2020, we generated approximately 13 million of operating cash versus a use of $4 3 million in 2019.
While our operating cash flow will fluctuate on a quarterly basis as it did in the fourth quarter. When we consumed $1 7 million of operating cash we continue to focus on maintaining the appropriate amount of working capital on our balance sheet to support our flow.
<unk> growth.
Our capital expenditures for the full use of 2020 with $23 4 million.
Included in this number is approximately $12 5 million debt, we used to purchase our commerce facility in early 2020.
Excluding our expenditure on our commerce facility Capex as a percentage of sales was approximately 5%.
We expect to continue to invest in Capex related mainly to two facility automation infrastructure and manufacturing capacity.
Turning to slide 13, we ended Q4 with total cash and cash equivalents of $102 million.
DSO for the first quarter was 38 days inventory at the end of the quarter was $55 million, representing 106 days in inventory, our DSO and days of inventory remained relatively consistent with prior quarter.
Turning to page 14 for the outlook for Q1.
Based on the information available today, we expect Q1 of 2021 revenues to be in a range of 56 million to $62 million.
At the midpoint of $59 million. This includes approximately $47 million of product sales and approximately $12 million of development sales.
The midpoint of our revenue guidance implied year over the unit growth of 37%.
Based on our current expectation for product mix, we see gross margin for Q1 2021 in a range of 25% to 29% per.
Product gross margin is expected to be in a range of 30% to 34%.
We expect development gross margin to be approximately six 5%.
For the first for the first quarter, we expect adjusted EBITDA to be in a range of 3 million to $6 million.
Our Q1, adjusted EBITDA range assume debt opex without stock based compensation.
We will increase slightly.
Depreciation and amortization is approximately $3 8 million.
We expect Q1 average basis share to be approximately $39 9 million.
With that I will turn back the call to Scott.
Thank you Ron.
We continue to believe in the long term growth opportunities for semiconductor and fiber lasers and that we are well positioned to outgrow the broader market.
We believe that the market growth will be driven by two key factors first technology will continue to improve in a Moore's law like cadence, which will enable lasers to continue to displace legacy technologies.
Second there are a broad range of end market catalysts that will drive demand, including long term secular drivers from electric vehicles additive manufacturing used for series production adoption of next generation <unk> infrastructure, and handsets and new aerospace aerospace and defense applications.
Our core strategy positions us well to increase our share of this growing market.
Enlighten is solely focused on providing high power semiconductor and fiber lasers, and we believe that our vertically integrated business model is a critical differentiator.
We continue to focus on the global industrial and aerospace and defense markets, which are the two key areas that we believe will try or drive our growth going forward.
The combination of our technology and product portfolio customer traction new product introductions and our commitment to these markets offers attractive growth opportunities.
Over the past 20 years, we've remained tenaciously focused on the promise of high power lasers in the last year marks an important year in our history.
I'd like to thank all of our employees for their exceptional performance in what shaped up to be a very challenging year.
And which to safely operate and grow our global business.
With that I will turn the call back over to the operator for questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we'll pause momentarily to assemble our roster.
And the first question will come from John Marchetti with Stifel. Please go ahead.
Thanks very much.
You could take a moment and just talk through maybe.
The deck you gave the breakdown by the different power levels and it looked like high power was a little bit weaker where the strength really came through at the low power and then if you could just provide a little bit of color around some of the dynamics there I would appreciate that.
Sure John It's Scott no problem.
So yes, we didn't emphasize the power here because it gets a little more complex bottomed.
Bottom line is our growth outside of China.
With swamping the growth in the high power so as you recall.
In China, there is a tendency to use relatively high higher power fiber lasers for cutting whereas in the global industrial customers outside of China.
There is less focus on the extreme high powers and more focus on the high performance.
Notably the Programmability that we provide so as we grow outside of China that brings that that average down we continue to see.
Nevertheless.
General expansion in high power.
Both in China, and the rest of the world. It's just that the relative levels between the two are different today.
Got it Okay and then just on.
On the margin side, Brian if I can when I think about your guidance for next quarter coming off of the 36 or so that you did not.
Non-GAAP product gross margin in this last quarter.
Is that largely a function of mix, how do I think about that that step down from the 36 in this most quarter sort of a midpoint of 32, given the outlook is it volume driven.
And is it mixed driven just curious for for some color there. Thank you.
Sure. It is both it is volume driven and it's a mix driven.
Got it okay. Thank you.
Sure.
The next question will come from Greg Palm with Craig Hallum Capital. Please go ahead.
Yeah, Thanks for taking the questions here and nice results.
Maybe just starting off would love to get your kind of thoughts on an order commentary thus far for Q1, I mean any areas of strength either by segment or geography that you want to call out.
Yes, Thanks, Greg Scott here, yes.
Nothing really calling out right now.
Continued to see.
Improvements in micro fab, we've really seen improvements throughout 2020 in all areas.
As we said.
The growth through the year.
For us accelerating through the year.
So we've seen that continue always have Q1, the Chinese new year.
Uncertainty I think.
Underneath that as you may know.
This year in China, there is far less travel.
Which probably will shorten and reduce the impact of Chinese new year. This year, but you never know until youre on the other side of that so in general throughout 2020, we saw acceleration in all of our markets.
And certainly heading into this year with the promise of the vaccine.
Certainly anticipating continued strength.
Okay, maybe if I could.
Spanned upon that last answer I mean, I know you don't typically get for your guidance, but just in terms of the cadence of how the year might shake out I mean going back a few years I recall sorry.
Sorry, Q1, starting off as the low point building throughout the year. The last two I think I've been a little bit unique with all the puts and takes maybe just remind us kind of how you're thinking about seasonal trends this year.
Yes, let me remind you typically.
Q1 in the industrial market is the softest, because Chinese new year, and then Conversely, Q2 tends to be.
One.
More dramatic growth quarters, as we come out of Chinese new year, and you pulled in some other cycles around micro fabrication and upgrades and whatnot. It gets a little more complex there but.
But that's to the extent there is a cadence that's typically what we've seen.
You layer in each segment has different dynamics in aerospace and defense. We are working on the government budget cycles, So theres a little bit there, but the first order I think it's that Q1 softer Q2 stronger because of industrial is probably the most pronounced sort of trend we typically see.
<unk>.
Perfect Okay, great I'll leave it there thanks and best of luck going forward.
Greg.
The next question will come from Jim Ricchiuti with Needham <unk> Company. Please go ahead.
Hi, Good afternoon, I was just wondering if you could expand a little bit about the strength you're seeing.
In industrial outside of China.
For some of.
The programmable lasers, where is that maybe you could talk a little bit Scott about the the key applications, where you're getting traction.
Absolutely, Jim let's see a few things.
All three segments are important I will start with cutting.
In cutting.
It's a market that.
We had.
Smaller share to date, it's up.
It's a market where the design ins, it's a long process to get designed in and we've worked through that over the last really five years.
And the introduction of our programmable fiber lasers, I think has been instrumental in our design wins. There. So we've continued to make progress.
In that market with key larger customers I think as we look ahead this year, Jim I think.
The Big trade show there at least in the U S would be fab tech.
And then Europe will follow thereafter, so there'll be there'll be more information later this year, but we continue to make traction because of our program ability.
Really in the welding market.
It is a it's a very different set of markets much more fragmented.
But I'd say at a high level there is to think about the EV for.
Battery through new Oems and we've got some good design wins, there, but much more fragmented markets there aren't as big design wins tend not to be as large and then finally.
In additive manufacturing in Q4, we launched our FX.
Product, which is our programmable.
Fiber laser for that market.
And we've been working on estimates for for many years now I think.
That product launch has exceeded our expectations and I think we're really demonstrating some really pretty fundamental advantages in that market. It's the smallest of the three markets.
But it is one that is.
Starting to inflect, where the productivity that we're seeing is such that.
Attitude is going beyond that really niche applications and into some really important higher volume applications. So continue to make traction there. So it really all of those markets.
Short summary of what we see going on.
That's helpful Scott and just on the micro fabrication business.
Let me backup a second and again not looking for guidance necessarily beyond Q1, but can you characterize the visibility in the industrial business and micro fabrication business.
Looking out beyond the quarter, just to give us a sense as to what Youre seeing for instance are you seeing any pick up.
As a result of the stronger smartphone cycle and micro fabrication or is that still a relatively small part of the business.
Yes, Jim so in terms of visibility just kind of high level again in <unk>.
Defense, we have the best visibility that longest term sort of outlook, probably industrial is second although it is much more limited and then finally micro fabrication is probably the least visibility we have indications of where things are going.
But because that market is so fragmented and we're also back in the channel we focus on the semiconductor laser that goes into other lasers that go into the system is going to that market.
It's more difficult to get a very clear read on what we see having said that.
We are seeing pick up.
And yes, we believe that part of that is driven by <unk>.
New consumer electronics that are that are using lasers in new ways.
But again, it's a broad based market and.
We've talked a little bit about medical in the past, that's an area where we see.
Some continued expansion in that space and then going forward.
We continue to see that market.
Proliferating and opening up.
Quite a large number of new applications.
What was that growth that you saw in Q4 that 15% in the micro fabrication was that more or less in line with your expectations.
Oh boy.
You know.
I think.
In Q4, I think it was a bit better than <unk>.
We were expecting certainly for Q4, but not out of line with our expectations.
Okay. Thanks very much.
You bet.
The next question will come from debt Deutsche Hymer with Canaccord Genuity. Please go ahead.
Hi, Thanks for taking my questions.
And congrats on the quarter.
First one just on the upstream I'm curious on that.
Manufacturing what the wavelength range is.
Across share your product offering.
From a materials perspective, not frequency doubling.
Yes, good chin.
So we.
Go down to it's pretty niche yet 600 odd nanometers.
Really itchy.
And then.
At the opposite extreme again really itchy would be nice.
And just.
Just under two micron wafer.
Wavelengths, who do have a very broad range of wavelengths that we cover.
We do a little bit in the blue actually, but again really pretty niche today. The vast majority of what we do is well around one micron for most of the applications.
Got it and do you think the reason that I'm asking is.
Just with.
For the.
Aerospace and defense business kind of being a focus area in particular around <unk>.
Directed energy do you see that as being the area.
In terms of potential expansion on the upstream or do you think.
Or or from a wavelength perspective.
It will be tight around that.
That range debt.
That you have.
Yeah, good so in.
Generally in defense and particularly in defense in directed energy its generally around one micron.
There are applications for longer wavelengths.
The.
Quote I safe wavelengths.
500 nanometers or so.
So there are some applications there.
But by and large the directed energy applications are.
Around one micron.
You do get to other wavelengths for for other applications and you quickly get into some some classified applications, but the volume.
Today and likely in the futures around one micron.
Got it and so in the I save that would require indium phosphide, if youre not using it.
A doubling or or is.
Are you able to to achieve that with some other material.
Yes, there is at least two ways to get there Jed.
One is with indium phosphide semiconductor lasers, and we have been a leader in that space for quite a long time.
So we do that directly with our own.
Semiconductor lasers, the other way one other way to get there is through.
Well through fiber lasers with.
Different railroad. So thulium is one example of that urban would be another.
And so you can pump those fiber lasers at let's call it more typical semi.
Semiconductor laser.
Links to get those longer wavelengths for.
For those applications.
Got it. Thank you one last question around here.
With some of the changes.
Going on from an industry perspective.
And the discussion around sort of the benefit of the vertical integration that you have.
Do you think that theres going to be that there is.
A greater need from pull from the end application.
Further downstream or Rob.
Or not.
Yes.
Well, let's see.
Obviously, a lot going on.
Hard to speculate on what outcomes will be but I think philosophically. What we believe is that there is there are two things that matter at the fundamental level one is.
That debt focus matters, a lot and no pun intended with lasers.
We are solely focused on high power.
While semiconductor base lasers directly semiconductor lasers, and fiber lasers pump either semiconductor lasers, we are solely focused on that high power market and that means there are a whole set of technologies.
And indeed for business systems that are associated with that focus that's all we do.
That's 0.1 0.2 is that we do think that that vertical integration to do that is important and that was.
Our thesis for why we acquired neutron ex was that we believe that the vertical integration was was required really to optimize from the chip through the beam combination being controlling its case.
And to really make sure that there were no sort of breaks in that value chain to optimize across that and we do believe firmly in really both those principles.
And so we'll see how the.
The industry evolves with.
What's going on but that's really that's core to what we believe is critical.
Got it I'll jump back in the queue. Thank you.
Okay.
The next question will come from Tom <unk> with D. A Davidson. Please go ahead.
Hi, Yes, good afternoon, and thanks for the question first ran with regards to your guidance.
The advanced developments part of the business being down as well as our normal seasonality in the defense business or is that just kind of quarterly lumpiness that we're looking at each quarter. Its quarterly Lumpiness. There is no seasonality with a defense in general.
Okay, Great and then Scott.
Similar to what Jim was asking earlier when you look at your semi laser business versus your fiber laser business, which one do you think is a bigger component of growth in 2021.
For 'twenty, one and really beyond what we're focused on is the industrial market for those global players.
And the vast majority of that is going to be driven by fiber lasers. Similarly.
The directed energy application and defense will also be driven by fiber lasers.
Important to remember that the semiconductor lasers critical technology in there. So there's really important product development that we're working on that supports that but the.
The end product for those two key growth areas our fiber lasers.
Thanks for that and the final question then related to that.
Margin structure for you between fiber lasers, and <unk> lasers come down.
Boy.
I don't want to Dodge the crushing because but it is very complex, we don't break out.
On the margin across there there are.
There are certain fiber laser categories that have.
Sure.
Much higher margins and Theres, some debt, where it's more commoditized in lower margin. So theres dispersion across really both of those.
And we're showing continued improvement in our margins.
Over the past few quarters, and we anticipate to continue to make improvements in product margins.
Having said that our primary focus is on continued growth and adoption in those key markets we're talking about.
And as we've talked about before that that product margin is a little less meaningful when it comes to especially the.
The R&D revenue associated with direct energy right now.
Okay, well, thanks, I should ask any impact from the unexpected snowstorm in your area.
Yes.
Yeah, a little bit.
We had fun.
Snow and ice here in the Portland region, Luckily, we have power on the Washington side, but a few of our employees on the Portland side.
Struggling a little bit but.
Yes, we're getting by thanks, Scott Thank you.
The next question will come from <unk> Misra with Bahrenburg capital markets. Please go ahead.
Thanks for that great.
So just curious if you could provide any color on your order book.
What youre, saying.
Is it true where since this time last year.
Yes, we don't really.
We do not break out.
Our bookings.
I will say that we did see.
Continued acceleration in our markets throughout the year.
Across all of the markets and we're getting good visibility.
But it's always difficult in Q1 with Chinese new year as I've said before.
To have much long longer term visibility, but I will say debt if theres a strong funnel.
Opportunities across all of the markets that we serve and we continue to make traction in all of them.
Got it thanks, Scott and then maybe if Tom.
If I could ask one more any sense you could do you have there how big is the automotive business for you.
I'm guessing it's all within the industrial.
And.
Within that any any thoughts on the electric battery business.
They get that for you right now.
Yes, good on a relative basis, our exposure to automotive is relatively modest.
We are relatively less penetrated into the automotive exposure.
But we do have.
Some exposure, obviously theres, some through cutting but probably theres more through the welding set.
Set of applications and indeed as you alluded to.
It's really the EV space that has opened up.
For more opportunities for us and it goes from.
The battery manufacturers.
Notably and in Korea Asia, China.
To the new Oems around the world that are developing.
New cars, new car parks that are using our lasers.
For both cutting and for welding and again as I mentioned, it's a pretty fragmented market I think we have.
Significant room to continue to grow in that space. It's a market that debt is expanding it is opening up a number of new.
Applications for lasers, and it's a market that our products are.
Well positioned for a number of those key markets and we have room to continue to grow.
Alright, thanks, so much interest Inc.
Thank you.
Again, if you have a question. Please press Star then one our next question will come from Mark Miller with the Benchmark Company. Please go ahead, yes.
Yes.
Just wondering in terms of the breakout from fiber laser sales.
How did that do above 60 Gigawatts was.
Stronger this quarter are weaker.
Yeah.
Yes, we did breakout mark the detail you can find it out there in this quarter.
On a relative basis.
The above six kilowatt was a little lower.
<unk>.
Yes, sorry.
Ron you might jump in numbers.
Mark It was 47 for this quarter of 58.
Q3, 50 forward into Q2.
So as I said and we saw that really across the industry to its interesting. We can note that and as I mentioned before mark.
As we grow.
In the global in China, There is.
Tendencies higher power.
Fiber lasers on a relative basis over the rest of the world as we go into the rest of the world that average.
Would it be dampened a bit but we do see the continued trend of higher power across the globe.
In terms of the Chinese market at the lower end.
How is that situation stabilize in terms of pricing.
We don't see dramatic changes there I think we have seen.
Some of the lower power.
Players in that space.
Struggle and.
Hard to know when a few of them have gone.
So.
The level of a number of competitors there.
Certainly we don't see that expanding.
And we don't see dramatic changes in that market.
Just a couple of housekeeping issues.
Ex rate's been jumping around what would should we estimate for 2021.
So on a quarterly basis issued estimates roughly 200 to $300000 expense a quarter.
Okay. Thanks, Scott.
<unk> based compensation, that's going to be around.
For this quarter, it's going to be around five or $6 million is that a good estimate.
No this quarter it was around $9 million.
Net debt estimate should be remain for 'twenty.
2021, as well so it will be $9 million in the first quarter of this year also.
Our fleet.
Thank you.
Youre welcome.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Joseph Corso for any closing remarks. Please go ahead Sir.
Yes wed like to thank everybody for joining the call today and the interest in Enlink and we look forward to speaking with you all during the quarter have a great afternoon.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Yes.
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