nLIGHT Inc. Q1 2023 Earnings Call
Good afternoon, and welcome to the NN light first quarter 2023 earnings conference call.
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I would now like to turn the conference over to Joseph Corso Chief Financial Officer. Please go ahead.
Thank you and good afternoon, everyone I'm, Joe Corso Enlighten Chief Financial Officer with me today is Scott Keeney, Enlighten Chairman and CEO today's discussion will contain forward looking statements, including financial projections and plans for our business forward looking statements are subject to risks and uncertainties many of which are beyond our control, including the risks and.
Certainties described from time to time in our SEC filings.
Our results may differ materially from those projected on today's call and we undertake no obligation to update publicly any forward looking statement, except as required by law. During the call. We will be discussing certain non-GAAP financial measures. 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 will now turn the call over to Scott.
Thank you Joe Q1 was a good start to the year for enlighten.
Financial results were better than our expectations revenue of $54 1 million was above the midpoint of the guidance range.
Product gross margin of 33% and adjusted EBITDA of $1 $3 million were both above our guidance range.
Finally, we generated positive cash flow and ended the quarter with over $108 million of cash with no debt.
In addition to strong financial results, we made significant progress in three areas critical to our strategic growth objectives.
In aerospace and defense, we made excellent progress in programs and applications.
In industrial we continue to position ourselves well in key applications outside of China and.
And operationally, we executed on a range of key initiatives that will enable us to generate profitable revenue growth.
I will provide a brief update on each of these three initiatives and then turn the call over to Joe for a more detailed financial review of the quarter.
In aerospace and defense I'm pleased to report that we've made significant progress in directed energy.
Earlier. This afternoon, we announced that we have been awarded a new $86 million contract to produce a high energy laser prototype in support of the department of Defense High energy lasers scaling initiatives healthy.
Today's award as a follow on to the $48 million Award. We received in 2019 to produce a 300 kilowatt class high energy laser as part of the first phase of LLC.
In late 2022, we demonstrated power exceeding healthy program objectives, and the scalability of our coherent beam combining architecture.
We believe our technology is capable of both scaling to higher powers and providing higher performance.
Today's award as part of a multiyear development program that is expected to commence late in the third quarter of 2023.
Now turning to the first quarter Aerospace and defense revenue declined 9% year over year to $21 1 million representing.
Representing 39% of total revenue.
First quarter development revenue was $13 million and defense products revenue was approximately $8 $1 million.
We continue to remain excited about the opportunities we see in directed energy and we continue to invest in this market.
We believe that we are uniquely positioned to directed energy our broad portfolio of products for the directed energy market includes diodes fiber amplifiers beam combined lasers and beam control solutions.
And this enables us to engage strategically with domestic and international partners across the entire directed energy ecosystem.
Although it's difficult to predict the ultimate timing of this market. It remains a high modernization priority for the U S government and our foreign allies as we continue to see increased demand for each of our products.
In defence outside of directed energy, we are increasingly optimistic about the work we're doing on a number of new programs.
<unk> revenue from these programs began to ramp in the first quarter and is expected to contribute development revenue over the next several quarters.
Moreover, these programs are expected to offer long term revenue opportunities when they transferred to production, which we currently expect to be in calendar 'twenty 'twenty four.
As we've mentioned in the past the timing of all of our development programs can be uncertain and have a significant impact on quarterly revenue.
Yes.
Turning to the industrial end market.
Industrial revenue in the first quarter declined 17% year over year to $19 $9 million representing.
Representing 37% of total revenue.
Outside of China, industrial revenue decreased 9% year over year to $18 9 million.
On a percentage basis industrial revenue from customers outside of China increased to 95% of revenue in the first quarter compared to 86% in the first quarter of 2022 and 54% in the first quarter of 2021.
In cutting we continue to leverage our all programmable fiber lasers deliver innovative high power solutions to our customers.
Our customers are continually increasing in average laser power purchase, which enables higher productivity and better processing thicker metals.
In the first quarter, we received a record number of orders for 15 kilowatts, and 20 kilowatt lasers.
In welding, we continue to focus on the E mobility market.
Our portfolio of beam shaping lasers single mode lasers, and process monitoring systems and provide solutions for our customers at both the welding cell level and directly with electric vehicle Oems.
We will be exhibiting at the battery show in Stuttgart may 23rd through 'twenty, five and in a law in Detroit June 14th or 15th showcasing our EV battery welding solutions, which feature feature a programmable beam shaping laser and process monitoring system.
Yeah.
Additive continues to be a bright spot for enlighten.
Over the last several years, we've introduced multiple programmable lasers for this market, including a higher power one five kilowatt Kronos single mode FX laser in the fourth quarter of 2022.
As the market continues to shift towards multi laser tools, we remain uniquely positioned to enable our customers to design tools that reduced overall per part build cost.
This week at the rapid trade show in Chicago, DMG, Morea announced the release of a new powder bed fusion machine with adaptive beam control exclusively using enlighten single mode programmable laser.
In micro fabrication revenue in the first quarter of 2023 declined 25% year over year to $13 $1 million of revenue, which represented approximately 24% of total revenue.
In micro fabrication, we offer high power high brightness semiconductor lasers to many of the world's leading short pulse and UV solid state lasers and systems companies.
There are wide range of applications that are enabled by our semiconductor lasers, including electronics manufacturing processes, such as drilling flexible circuits laser marking to cutting glass or sapphire.
In addition, we also enable medical applications, where lasers are used for applications ranging from therapeutic surgical just Fedex dermatological procedures.
We continue to believe that we are leader in this market and current revenue performance is largely a function of the broader demand environment, which remains muted as customers across the globe continue to work through their higher than typical inventories.
However, we are seeing some signs of recovery revenue from customers outside of China grew 17% quarter over quarter.
In medical applications, which are reported as part of our micro fabrication end market. We continue to experience strong adoption of our newly released lasers targeted your logical applications.
We are currently generating revenue from multiple customers and we are actively engaged with several others. We remain on track to generate growth from this product in 2023 and beyond.
Turning to operations, we continue to make excellent progress on the automation of our manufacturing facilities in the U S. During the first quarter.
As we've discussed in the past greater automation in the U S will enhance our position as a key strategic supplier to both defense and industrial markets in the U S.
Enable us to exert more control over our manufacturing output and reduce overall supply chain risk.
Over the last several quarters, we've been focused on installing and increasing the yield of our automated equipment and we currently are at greater than 80% utilization rate of our installed automated equipment in the U S. We expect to make further yield and efficiency improvements over the coming quarters.
Last quarter, we announced that we executed a plan to better align our spending with our most important near and long term revenue opportunities.
By refocusing, our engineering teams and reducing project material spending we were able to reduce overall non-GAAP operating expenses for the first quarter of 2023 by approximately $2 million compared to the fourth quarter of 2022.
In summary, we remain highly optimistic about our long term growth prospects. Our continued focus on two core strategic growth initiatives industrial outside of China, and aerospace and defense make us well positioned to take advantage of strong secular growth trends for lasers in both the industrial and defense markets.
In the immediate term we are very excited to be entering the next phase of healthy development and what it means to our growth trajectory as we move to the second half of the year and into 2024.
I will now turn the call over to Joe.
Thank you Scott and light drove solid business and financial execution during the first quarter with revenue and profitability above the midpoint and high end of our guidance respectively. We continue to invest in the programs and products that are most important for growth. While also carefully managing operating expenses and capital expenditures in what continues to be a challenging.
Macroeconomic environment.
The operational improvements we've made over the past several quarters have enabled us to reduce our overall cost structure without sacrificing the opportunity to drive profitable long term growth.
Total revenue for the first quarter of 2023 was $54 $1 million above the midpoint of guidance compared to $64 $5 million for the first quarter of 2022.
Product revenue for the first quarter of 2023 was $41 1 million also above the midpoint of guidance compared to $51.1 million for the first quarter of 2022.
Revenue decreased year over year across all end markets due primarily to lower demand and the timing of development projects.
Those two customers in China represented less than 7% of total revenue for the first quarter of 2023.
Gross margin for the first quarter of 2023 was 26, 4% above the guidance range compared to 25, 1% for the first quarter of 2022.
Product gross margin for the first quarter of 2023 was 33% compared to 30% for the comparable period of 2022.
Product gross margin in the first quarter was positively impacted by favorable product sales mix decreased sales of lower margin industrial products and lower overall manufacturing costs.
non-GAAP operating expenses were $17 $2 million for the first quarter of 2023, a decrease of $1 million compared to $18 $2 million for the first quarter of 2022, and a decrease of $2 $2 million compared to the fourth quarter of 2020 to the.
The decrease in operating expenses were driven by reductions in R&D project spending and lower head count both of which were result of the business restructuring executed in the fourth quarter of 2022 on a GAAP basis operating expenses were $22 $5 million for the first quarter of 2023, a decrease of $2 million compared to 20.
$4 $5 million for the first quarter of 2022.
Net loss on a non-GAAP basis for the first quarter of 2023 was $1 8 million or four cents per diluted share compared with a net loss of $1 6 million or four cents per diluted share for the first quarter of 2022.
Net loss on a GAAP basis for the first quarter of 2023 was $7 7 million or <unk> 17 per share compared to a net loss of $8 $6 million or <unk> 20 per share for the first quarter of 2022.
Adjusted EBITDA for the first quarter of 2023 was $1 3 million compared.
Compared to $2 million for the first quarter of 2022 and negative $9 $5 million of adjusted EBITDA last quarter.
Improvements to adjusted EBITDA in the first quarter were driven by higher gross margins and reductions to our overall cost structure.
Cash flows from operations for the first quarter were $600000 compared to cash used for operations of $7 million for the first quarter of 2022.
Capital expenditures for the first quarter were $700000 compared to $5 million for the first quarter of 2022.
Capital expenditures will increase in subsequent quarters, we expect overall capex during 2023 to be significantly below 2022 levels.
Turning to the balance sheet.
Our balance sheet remains strong as we ended the first quarter of 2023 with cash cash equivalents restricted cash and investments of $108 6 million and no debt, which represents an increase of $200000 compared to the end of 2022.
Our DSO for the quarter was 62 days in inventory at the end of the first quarter was $67 1 million, representing a 152 days of inventory.
Turning to guidance.
We continue to see demand signals that are relatively consistent with the first quarter of the year.
While our Q2 revenue forecast remains subject to a number of uncertainties. Both externally in terms of the macroeconomic environment as well as internally as it relates to continued execution todays healthy announcement several other exciting revenue opportunities and continued operational improvements make us optimistic for growth and better profitability in the second.
Half of the year.
Based on the information available today, we expect revenue for the second quarter of 2023 to be in the range of $49 million to $55 million.
The midpoint of $52 million includes approximately $40 million of product revenue and approximately $12 million of development revenue.
Turning to gross margin.
Second quarter product gross margin is expected to be in the range of 27% to 31% and development gross margin to be approximately 7%, resulting in an overall gross margin range of 22% to 26%.
Finally, we expect adjusted EBITDA for the second quarter of 2023 to be in the range of approximately negative $2 million to positive $1 million with that I will turn the call over to the operator for questions.
We will now begin the question and answer session.
Ask a question you May press Star then one on your telephone keypad.
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To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble the roster.
And our first question comes from Ruben Roy of Stifel. Please go ahead.
Hi, Thank you.
Thanks for letting me ask a couple of questions here, Scott and Joe Congrats on the new contract I guess, we could start there and to the extent that you can talk a little bit more about it Scott just wondering you know.
Where that sits on the roadmap of the AR directed energy programs in terms of if you give us any idea of what the milestones might look like or the power ratings et cetera, and I imagine this is running in conjunction with the existing program and any any other detail again to the extent that we could talk a little bit more about how are you.
See this playing out over the next couple of years would be would be helpful. Thank you.
Absolutely Reuben so yes, it's an exciting award is the largest contract that we've ever received and so real highlights and.
Great validation of the hard work that we've done as we've said.
In the healthy contract thus far we have.
Ceded the program objectives for that 300 kilowatt class laser.
And this new contract extends the work that we're doing to continue to both scale power and improve the performance of high power lasers, and so it is an exciting.
<unk> an extension of the work that we've been hard at work on for the last few years.
Actually the last many years.
And.
You know at this stage, we're not able to provide a whole lot more detail, but it is fair to say that we are continuing to scale power.
Building on what we've done thus far.
That's helpful and understood. Thanks, Scott for that and Yeah, it's great to see I guess, the next area I wanted to delve into a bit either Scott or Joe was on the guidance understood that the macro is a little tough to gauge first half of the year. We're hearing that from a lot of companies, but can you give us a little bit of a breakdown of how youre seeing.
You know sort of.
The the various segments industrial micro fab.
Et cetera in terms of how you see that playing out for Q2.
Would be helpful. Thank you.
Yes, sure Reuben so.
I would high level of described the demand environment that we are in right now for both micro and industrial to be relatively similar to what we saw in Q1 and we continue to do good work with with customers certainly as we think about opportunities longer term in.
All of that work and the design wins that.
We're getting today, we don't think that that trajectory has changed.
But right now as we just look at the forecast from from customers.
Holding but it's kind of holding at plus or minus levels that where we are today.
In the micro business I think you've got to look at that a little bit.
By geography.
Outside.
Outside of China, I would say that the business again is sort of where it's been in the first quarter of first quarter of the year, we have far less visibility into sort of end customer demand.
Because of where we sit in the value chain.
On a positive note we did see some improvement in.
In China, China was way below where we thought where we've been historically in micro so.
That has been improving somewhat and then on the defense side again, you've got to sort of look at that in two ways. You've got to look at that from a product perspective, and a development perspective on the product side. We've got a few great program right that we continue to execute on you can see that the take rate might change quarter over quarter.
And then on the development side.
We're obviously encouraged by.
The new directed Energy award that that we've seen and so we think theres opportunity probably not as much in the in the second quarter. You saw we gave a specific guide number in development, but as we move through the year, but we expect that.
To be biased more towards the positive in growth in the back half of the year.
That's great. Thanks for all that detail Joe very helpful. If I could sneak one more high level question for Scott on the industrial side thinking about cutting and the.
Data point, you gave us around record number of orders, but then also thinking about welding one of your competitors starting to see some very strong numbers out of welding and clearly the numbers are a little smaller here, but it seems like theres a lot going on in welding, maybe you could just give us your high level perspective on those two markets and how you're thinking about them in terms of investments.
Opportunity, maybe a little bit longer term as welding is something that we look forward to is kind of driving the faster longer term growth in cutting and industrial if we again think about this from a longer term perspective.
Yeah, absolutely ribbon and frankly, let me cover all three of the segments in industrial to answer your question in a more fulsome way.
So first cutting is the single largest market today in the industrial laser segment.
Albeit more mature and not growing as fast as the other segments, but there remain opportunities to continue to expand in that market and certainly the Corona technology has served us well and we do see opportunities there to continue to expand.
But welding as you've noted is certainly a faster growing segment with the.
<unk>.
Battery and OEM supply chain, certainly is an attractive segment.
And we do see opportunities for growth there.
But it's that third segment, which is additive which is the smallest of the three segments today.
But clearly the fastest growing and one that we're.
Very well positioned to grow just back from.
The rapid conference in Chicago.
Our lasers are in.
Some of the leading technology in that space.
<unk> three D printing metal.
Is an area that is that is growing rapidly and is poised for further growth.
And again, the Corona FX technology that we have there is highly differentiated and we are really pleased to see the announcement from DMG.
And other information about our lasers being used to drive that market forward. So.
We do see all three segments is important.
In that order in terms of growth and attractiveness for us.
Got it thanks guys.
Thank you.
The next question comes from Jim Ricchiuti of Needham <unk> Co. Please go ahead hi.
Thank you good afternoon, congratulations by the way.
Well.
The award.
I'm wondering.
Scott if you could talk a little bit about what this might do.
Where are you in the international markets with our allies that your focus you've talked about it in the past I'm just wondering yeah.
Does this have the potential to be a catalyst for that part of the business.
Yes.
Yeah in the international market for the directed energy applications, Jim That's where that's correct. That's right. That's right yeah. Good. So yes, it's something we didn't talk a lot about but we are we're.
We're doing well and deeply engaged with our allies on a number of different countries and this work that we've done where we have the highest power laser in history.
Has not only.
Demonstrated what this technology can do but it's certainly.
<unk>.
Complete stack of technology that we have.
And as a result of that we're well positioned to.
Participate not only in the U S. But abroad also whether it be at the integrated laser level or at the component level and so yes, we have.
Made very good progress with key allies based upon that leadership.
In the performance that we have.
And then further I think that this technology, which is a coherent beam combining approach is one that.
Is viewed as likely the path forward in other countries also so.
So yes, we see this not only as a.
U S D O D opportunity, but also we see opportunities internationally.
Okay.
The award the healthy award.
Again, it's a little tricky for us too.
Judge how this could scale multi year is somewhat vague.
Revenues beginning in calendar 'twenty three.
Third quarter, but how should we be thinking about this.
And to what extent does this.
Joe maybe just a question for you I'm wondering.
This is going to be in line with the development margins that you'd normally generate correct.
Yeah on the second part Jim Yes, it's a it's a cost plus fixed fee contract so margins will be.
Our typical development type margins Thats correct, yes, and just to build on that Jim look.
$86 million contract biggest contract we have ever received that's that's fantastic.
It's good but I think the financial side of this is while that's very important the core of this is validation of our position in the market leadership and continued support to drive that that forward.
This area as you know is a mission critical top priority.
Not only for the U S, but for allies, and we are well positioned to continue to lead in this space and I think that's what I'd take away from from this announcement is.
Further validation of that there's a lot of more work to do.
And certainly this contract will support some very exciting things we have in the works to take the technology forward.
Okay, just switching gears on the industrial side.
You mentioned.
<unk>.
Momentum that you're seeing in additive.
In the current environment, though there is also some concern about.
Tighter capital budgets and I'm wondering.
If you guys are seeing that in.
Some of the order trends in this part of the business or for that matter.
With some of your current customers as well are you seeing signs of that.
Its interesting Jim certainly looking for those signs.
Reading the sort of macro reports that all of us read and looking for Cigna.
Signals there to be honest, we're not seen that.
A material way.
That's directly affecting the work that we're doing.
And then in particular when you look at say.
Welding and additive.
What we see is technology that is continuing to improve faster than people expected and therefore, displacing legacy legacy technologies and so as companies look to improve their supply chains to improve their manufacturing.
I think that is definitely.
A tailwind that's helping us in these markets and.
I think you were at the rapid show there is a lot of exciting news going on in additive in particular.
Yes, there is.
Joe with final question for me is is directed for you just with respect.
Respect to.
The margin improvement that you saw on the laser product side.
How much of that is a function.
What you've been doing with.
With the automation lines and to what extent are you.
Where are you.
Realigning.
Your position in China, as well what I'm getting to is is trying to understand.
How we should think about additional leverage as you refine some of the manufacturing processes that you've been doing.
Yes, Jim I think the opportunity for us to drive better gross margins at this point comes largely through.
Growth in our larger revenue base that we can leverage further leverage the reductions that we've already made.
Call it broad broadly manufacturing expenses, right, which is <unk>.
Automation here in the U S right lower spending better utilization there is still some more to do to.
To optimize in in Shanghai, but I think the big driver going forward is going to be.
Two to leverage that fixed cost base. What you saw last quarter I think was part of that Rick as you look at sequentially, putting aside some of the charges. The onetime charges that we took last last quarter on the inventory side, but we had a really nice mix of a better mix of business in.
The first quarter of the year end.
We lowered our overall overall spending as part of plan I think.
Really though we expect to be able to drive better gross margin profitability as we leverage the fixed cost base that we have today.
Got it thanks very much.
Thank you.
The next question comes from Greg Palm of Craig Hallum Capital Group. Please go ahead.
Yeah. Thanks for taking the questions. Congrats on the improved results and more importantly, the the healthy win.
Okay.
If I could maybe start there and I guess, where I'm going with this is it's kind of a two part question, but what other programs are out there maybe not necessarily have the same sort of size or importance, but what other programs and director energy are out.
There and does.
For instance, this specific win can that help you in terms of going after other programs as well.
Yeah, absolutely Greg.
So there is.
Some information out there.
Not limited, but let me try to provide the best information we can.
I think first of all to answer your second question absolutely.
The healthy program to date has been just absolutely critical in taking the.
The technology, we had which is leading in taking it much further forward.
Over 300 kilowatt level and continuing on that journey with with <unk>.
Ongoing new contract will enable us to be that much better positioned, especially for the applications that require higher powers.
Which of the strategic applications.
In terms of the other.
Work out there well.
The healthy program is the large program from the office of Secretary of Defense.
Certainly the army and the Navy have have other programs that are large also.
And I think we are seeing.
More data that supports the future roadmap there.
The current President's budget for FY 'twenty four provides more information about.
Further growth.
In those programs and it offers a glimpse into how those programs will ramp over the coming years.
There is also a G. O report that came out last month, it's worth taking a look at that.
That highlights this transition that the technology is going through and notably focused on both the army and the Navy. So yes. There is more than just the healthy program, but the healthy program is really the critical program to develop the core technology.
And develop the industrial base in the U S. For this and we are absolutely committed to providing that strong industrial base here in the U S.
Yeah makes sense, if I could shift gears to more on the.
The industrial market the demand trends that you're seeing Joe you talked about kind of a relatively.
I guess stable market I think is what.
It's what you characterize it at.
I'm trying to tie that back to the guide because you know normally you know.
Q2 is up quite a bit.
Versus Q1, and so tying back the stable to a guy that was quite a bit below what normal seasonality is doesn't make a whole lot of sense.
Messing something.
I'm not sure you're missing anything Greg, but I think you've got to factor in China right. If you look at sequentially.
Even going back to 2000 22020 really.
Until 2023 rate we saw.
Pretty good pick up in revenue from China sequentially from Q1 to Q2, so now that the business in China represents seven ish percent of our overall revenue. We just don't see that level of of seasonality like we used to just highlight that Gregg remember.
You know when we went public China represented over 40% of our revenue and so it is material and recall that the reason for that seasonality was because the Chinese new year Q1 soft when companies were shut down for on the order of a month. During Q1. So you had this Q2 seasonality.
And that was unique to China does that help you Greg Yeah, no that makes sense.
That's a good reminder.
In terms of the gross margin maybe you can just dig in a little bit more on the upside relative to what your expectations were coming out of out of Q4, and I guess, what what's most surprising and im not sure how much of it is gross margin versus lower operating expenses, but I think Joe last quarter.
You talked about a sort of a breakeven point around 55 to 60 million dependent on mix and you're sitting here a guidance for what 52 at the midpoint and essentially breakeven EBITDA, which is quite a bit of an improvement versus what we were thinking just a few months ago.
Yes, so I think it's a combination of really a couple of things Greg as you think about where we guided and where we ended up.
We did have a slightly better mix than than we forecasted our in the in the industrial segment.
Our sales in industrial were slightly higher than we had modeled and then inside of the industrial segment, we had a better or more favorable mix of business even inside industrial we've talked about this historically that it depends on the geography, the customer the product the application.
The features it can have a bit of a swing on the on the overall margin profile. The other piece of it was I think both lower manufacturing expenses, but just better utilization of those manufacturing expenses. So there was a pickup that we had from just.
Better utilization and then the third piece of it is we did see some lower costs in the in the quarter as well we did see some lower shipping costs I already talked a little bit about the overhead spending and then the other thing is I think.
We're doing a better job manufacturing our products. So as we look at the.
Kind of inside the quarter scrap.
Scrap and other type of excursions that you can have when your manufacturing both high tech products and Youre using.
New line.
We did we did a little bit better than we thought so when you.
Add those three those.
Those three things up that's really what drove the better the better performance and then to your point.
That can flow down to the adjusted EBITDA line right. So there may be quarters, where we're a little bit the other way, but we feel pretty good about.
Where we are in terms of driving to a breakeven adjusted EBITDA and as I answered a question earlier, right really where youre going to start to see the leverage in our operating model as we continue to grow the revenue because we don't believe that we're going to need to add on the on the either the manufacturing side or the opex.
Syed.
To support pretty meaningful revenue growth going forward.
Makes sense Alright best of luck. Thank you further questions. Thank.
Thank you Sir.
Once again, if you would like to ask a question. Please press Star then one.
And our next question will come from Mark Miller of the Benchmark Company. Please go ahead.
Congratulations on your directed energy contract win and also the record orders for 15 and 20 kilowatt lasers.
Of the directed energy program as that ramps it looks like it'll be an appreciable increase in your development revenue, even though we don't know how many years it's over.
Do you expect the development margins to significantly increase this program ramps.
No I don't I don't think were going to see development margins increased I think by nature of this by nature of the contract. There is a fixed fee associated with it. So we expect that to be relatively consistent.
Throughout the throughout the period on the development side.
Yeah.
The fees, you're getting from the program.
Linear throughout the length of the program or is it back end loaded front end loaded.
No.
In.
Planning it should be it should be linear.
Alright.
In terms of.
I noted you had a good.
Record orders 15, 20 kilowatts can you at least give us a feeling for is that have you seen an appreciable increase in your backlog, excluding the directed energy contract.
I'm not sure I would say.
We'd say, we've seen an appreciable increase in.
Firm backlog, Mark, but what I think we have seen is we've seen an increase in the forecast for <unk>.
Higher power and programmable lasers from our from our customers. So as we're looking at where the growth is coming from particularly on the cutting side. It continues.
Continues to I would just say skew towards programmable and skew towards higher higher powers right in and address the question earlier, just sort of talking about talking about the.
The mix and so to the extent that that happens inside of a quarter right the margins can be better.
And finally I was just wondering if you could break out sales percentages for.
Our fiber lasers for greater than six kilowatt power and also for less than two kilowatt power sales.
Sure. So so greater than six kilowatt was 60%.
Two to five was 28% and low power was 12% this quarter Mark.
Thank you.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Joe Corso for any closing remarks.
Yes. Thank you everyone for joining today and for your interest in <unk>, We look forward to speaking with you over the course of the quarter. Thanks.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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