Q3 2022 Laser Photonics Corporation Earnings Call
To turn the conference over to your host Bryan Segal.
Managing director of Hayden IR. Please go ahead.
Thank you operator with me today are Wayne to Paulo, laser Photonics, CEO and Tim Shake CFO Wayne will spend most of todays call introducing the company and its opportunity to disrupt the market for corrosion control and other applications and then Tim will review the financial results for the three month pier.
<unk> ended September 32022, please.
Please note that the third quarter closed prior to the Companys IPO, where it raised $12 million net of growth capital on October 4th.
After todays presentation management will answer any questions that have been submitted ahead of time.
During the call.
Any forward looking statements made during this conference call, whether general or specific in nature are subject to risks and uncertainties that may cause actual results to differ materially from those which the company anticipates.
These risks and uncertainties include but are not limited to specific risks and uncertainties discussed in the reports that we filed periodically with the SEC.
Laser photonics assumes no obligation to either update any forward looking statements that we have made or may make or to update the factors that may cause actual results to differ materially from those that they forecast during their remarks management may make reference to adjusted EBITDA a non-GAAP measure.
Management believes that its measure of adjusted EBITDA provides useful information to both management and investors that supplement our core operating results.
Our earnings release, which is posted on the IR page includes a reconciliation of EBITDA to its nearest comparable GAAP measure net income for all periods presented.
I will now turn the conference call over to Wayne Wayne take it away.
Thank you Brian welcome to our third quarter 2022 earnings call and our first.
Public company.
I'm going to introduce you to laser photonics and the considerable opportunity ahead to disrupt the market for corrosion control and other materials applications. This will Thomas as a clean Tech company that utilizes proprietary laser systems for cleaning and removing corrosion and other materials for metal.
Other substances, we estimate the total market size for corrosion controlled is greater than one truly <unk>.
In North America.
We believe our opportunity is around less than 1% of the market or roughly 46 billion.
And the example, we like to use to illustrate the size of the problem related to the use of <unk>. It is.
Is that the United States Navy systems $22 billion annually on corrosion control.
With our products they could likely reduced debt costs, but also reduce the health and safety risks that come with other corrosion control methods.
Today, we are in the first inning of this multibillion dollar opportunity to replace existing methods for removing corrosion and other materials. Historically this work has been done using dangerous.
<unk> and toxic abrasives, such as Sandblasting to obtain these goals, while putting workers at risk from both safety and health issues, such as silicosis alone disease that is common and people that work with abrasives. Fortunately the market is shifting as both government regulators and labor.
Unions are influencing the move away from these older methods to safer nontoxic methods like laser treatment earlier.
<unk> laser cleaning systems are sold under the clean Tech brands that come in a number of different laser strengths from 51 to 4001 ladies.
Laser power is important based on the base substance for woods corrosion or materials are being removed.
Our systems also come at different form factors, ranging from handheld systems to full sized cabinets to robotic systems and in terms of competition, we only see one major company out there with which is based in Germany. They do have a distributor in the United States, but we believe that they will be.
In the United States of America made.
Positions us favorably with commercial and government customers.
The industries, where our technology is viable or verse today, our technology is used in the maritime and shipbuilding aerospace automotive space exploration nuclear in energy manufacturing and military and defense industries.
<unk> sold our cleantech products through organizations and companies, including Coca Cola Detroit Diesel a division of Diamond in North America.
The United States Army.
Navy and Air Force Telecom.
And the veterans administration to name a few.
Most of these initial sales were for these.
Organizations to develop their standard operating procedures and processes for laser <unk>.
We believe that.
Ah represents.
Can flow opportunity with these customers as well as opportunity to penetrate other parts.
These organizations.
As most of you know we came public after the close of our third quarter. We raised net proceeds of over $12 million most of the poor growth capital our priorities are as follows.
First we need to build our sales and marketing team and infrastructure today.
Today, we are seeing significant demand from inbound calls however, we believe to take advantage of this demand as well as create additional demand we need to bring on a senior sales executive executive to oversee the building out.
Our imbalanced sales force as well as bringing on key account managers next.
Next we need to build out our operations and administrative staff.
To be able to handle our anticipated growth.
This includes engineering accounting and finance procurement and other areas necessary to support our anticipated growth.
And finally, we believe there are potential acquisitions that we can make to enhance our product portfolio entered new markets or vertical.
<unk> integrated.
<unk> manufacturing.
But we believe that with these investments we can double revenue annually over the next several years.
In summary, we have a tremendous opportunity to ahead of US are one in which we are still in the <unk>.
We believe we have the products and technology to capture this opportunity and create significant long term value for shareholders.
Now I'll turn the call over to Tim for his discussion of our Q3 financial results Tim.
Thank you Lynn and welcome everybody.
Third quarter revenue increased by 11% to $1 2 million for the first three quarters revenue increased by 27% to $3 8 million as compared to prior year.
For the third quarter gross profit increased by 10% to zero point $7 million and gross margin declined 60 basis points to 58, 1% as compared to prior year.
For the first three quarters gross profit increased by 29% to $2 3 million and gross margin increased 100 basis points to 63% as compared to prior year for.
For the third quarter operating income was down 14% from <unk> 2 million and operating margin declined to 18, 7% as compared to prior year. The decline in operating margin was largely due to administrative expenses associated with the IPO process.
For the first three quarters operating income was up 37% of <unk> 9 million and operating margin increased to 24, 7% as compared to prior year for.
For the quarter and year to date other expenses decreased by approximately <unk> $1 million and we paid 14000 taxes versus none last year. These items enabled third quarter net income to increase by 29% to <unk> 2 million and net profit margin to increase 230 basis points to 16, 7% as compared to prior year.
For the first three quarters net income increased by 67% to <unk> 9 million and net profit margin increased by 580 basis points to 23, 9% as compared to prior year.
Fully diluted earnings per share were up 29% to <unk> a share in the third quarter and were up 67% to <unk> 19, a share for the first three quarters as compared to prior year for the third quarter EBITDA increased by 17% to <unk> 3 million and for the first three quarters EBITDA increased by 36% to $1 2 million.
As compared to prior year.
Now I'll turn to our full year guidance, we expect full year revenue to be between $5 $65 8 million.
Representing a 34% to 38% increase over prior year revenue of $4 2 million.
Given the dilutive impact of our share issuance in the fourth quarter. We believe our full year earnings per share will be modestly higher than that in the first nine months. So.
That concludes the prepared remarks for todays webcast, Brian are there any questions.
Yes, Tim there are two related to gross margin.
The first is what is driving the gross margin variation from quarter to quarter basis.
During 2022.
I'll, let you answer that one.
It's small volume, it's the law of large numbers in reverse.
Year over year, we we sold 29 units as compared to 20 units in the prior year and these units have a wide range and applicability.
When our volume starts to increase we're going to start seeing more consistent movements in the gross margin.
Okay, great and along those lines.
Can you share a long term gross margin target.
We think our long term gross margins will actually increase because of scale.
Scale and the plans and scale in purchasing we expect our gross margins to be in the neighborhood of the mid 60% 65% to 66%.
Okay, Great. That's all the questions. We have operator, you can close the call.
Thank you very much sir.
Ladies and gentlemen that concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Okay.
Sure.
Yes.