Q2 2023 Nuburu Inc Earnings Call
Okay.
Good afternoon. Thank you for attending.
Inc. Second quarter 2023 financial results call.
All lines will be muted during the presentation portion of the call with an opportunity for question and answers at the end.
I would now like to turn the conference over to your host Ralph Esper external director of Investor Relations at Gateway Group.
Thank you you May proceed Mr. Jesper.
Thank you operator, and thanks to everyone for joining us on the second quarter of 2020 earnings Conference call.
Joining the call today are Mark Baker.
<unk>, Chief Executive Officer, and co founder and Bryan can Alley, Chief financial officer to discuss our second quarter results.
During this call certain statements, we make will be forward looking these.
Statements are subject to risks and uncertainties, including those set forth in our safe Harbor provision for forward looking statements can be found at the end of our earnings press release and also in our Form 10-Q.
<unk> filed today and provide further detail about the risks related to our business. Additionally, except as required by law, we undertake no obligation to update any forward looking statements.
<unk> also provides non-GAAP information regarding certain of our historical and targeted result to supplement the results provided in accordance with GAAP.
This information should not be considered superior to or as a substitute for the comparable GAAP measures. A reconciliation of historical non-GAAP measures can be found in our second quarter earnings release published this afternoon and posted on the Investor Relations section.
Our web site at <unk>.
I R Dot Nomura Dot net.
I will now turn the call over to Mark.
Eric.
Thank you Ralph and thanks to everyone for joining us today for our second quarter 2023 earnings call as some of you who might be new to our story I'd like to kick off today's discussion with a brief introduction to new brew highlighting our core technologies and the comprehensive range of solutions.
We offer to our customers across various industries thereafter, I will proceed with a review of our financial performance during the second quarter and elaborate on significant corporate milestones before I provide our financial outlook for our third quarter and full year 2023 results.
At new Brew, we pioneered the ever evolving landscape of manufacturing solutions and positions ourselves to meet the surging market demand for sustainable and energy efficient cutting edge production processes are transformational core technology, the blue laser and bodies to principles of performance.
And efficiency.
Through our groundbreaking blue laser technology, which is protected with a plethora of patents we have paved the way for a transformative shift displacing conventional laser metal machining and additive manufacturing methods by delivering unprecedented advancements in speed and quality.
Our products address various market challenges as we leverage the capabilities of the blue laser for welding three D printing and a growing list of further applications.
At its core our Blue laser technology remains one of the best solutions to generate cost and performance benefits in manufacturing across multiple large high growth markets with several serviceable addressable market growing to a total of approximately $33 billion in the next 10 years.
And on top of that we enabled countless new applications that previously were thought of as impossible more on that in a bit our systems give manufacturers to flexibility and performance necessary to produce more sustainable and durable and products with.
With our current $2 50 that is in production, we continue to target customers using the outgoing <unk> systems, while also targeting new applications that demand, even higher brightness and performance.
Production line phase out as the planned evolution of numerous blue laser technology to increase power and performance.
But our innovation doesn't stop here as announced in June we introduced our latest next generation BLS, one kilowatt system, enabling even higher speed deep penetration spatter free and repeatable high quality wells all of which are critical attributes could end.
Needs of large commercial applications, including EV battery welding and three D printing.
<unk> 1000 apps ability to harness the higher absorption of battles the blue light combined with this compatibility with the scanner provides crucial benefits that improves the overall manufacturing capabilities for our customers.
We look forward to further developing our product portfolio, including the new Bruce single mode laser, which we are aiming to deploy commercially by 2025.
Market opportunities for this technology are countless due to its unmatched product characteristics.
Transitioning now to our recent highlights a little over a month ago, we announced that we have secured private placement at $9 2 million.
From existing and new investors.
The additional capital will help us execute our product development roadmap and continue our commercialization and we have already made significant progress in converting our technology development efforts into contract awards with multiple blue chip customers across welding and additive manufacturing and we continue to execute against our long term.
Gross strategy.
As such we are pleased to report another period of strong financial growth with total sales of $1 $1 million, a total topline improvement of over 2000% on a year over year basis.
Let me dive a little deeper.
During the second quarter, we continued to delivered units to essentially him as part of a multi year partnership. This strategic collaboration aims to further enhance <unk> product deliveries by integrating our cutting edge blue laser technology into their high speed extrusion additive manufacturing platform.
The integration of our technology into their platform aims to expand use of additive manufacturing of metal parts for automotive aerospace and defense applications unlocking new possibilities in these industries.
Furthermore, we've entered into a joint development agreement with GE additives explore commercial opportunities using <unk> proprietary blue laser technology, and GE additives machine and system expertise with the goal of continuing to improve speed and accuracy for laser based additive manufacturing.
This joint development agreement and his addition to our previously announced agreement with GE additive to support our efforts small business innovative research contract, where it's India grew in 2022.
Pleased to inform you that we delivered the first blue area printing had as part of that contract GE additive for testing.
And most recently, we've just this week announced the contract with NASA. We are incredibly excited about this opportunity as it is for an application only enabled by our blue laser technology together.
Together with NASA, we are seeking to demonstrate the feasibility of power beaming user blue laser suitable for deployment on the Moon Mars for upcoming emissions.
Need for our system is driven by the high cost of lifting wire in the necessary equipment into space and transport it to the moon our bars.
Power Beaming system provides a unique solution that dramatically reduces the size and weight of the equipment needed.
As the system will be deployed within minutes to bring power to critical areas. We expect other government entities like the D. O D. R. <unk> be interested in this application for our blue laser as well and.
In addition, numerous visible laser would provide visual guidance Citi habitats due to scatter up defined regulus powder suspended above the moon surface or the Raleigh scattering off the Martian atmosphere, thus, creating a guided highway across these surfaces.
Our contract with NASA as well as our selection by the U S Department of defense for the fabrication and delivery of prototypes and equipment in support of solid state high energy laser weapons, which we announced at the beginning of the quarter, our testimonials to the potential of our blue laser technology and its wide range of applications.
As we look forward to the remainder of the year, we are cognizant of supply chain conditions that present bottlenecks in the procurement process for scanner components in particular, the scanner and lens related components, respectively associated with our <unk> product line.
However, with alternative sourcing initiatives in place, we believe such material constraints will abate towards the end of the second half of this year.
As part of our top down approach to boost gross margins and revenue expansion our team consistently assesses opportunities for implementing operational efficiencies and cost saving measures where possible.
We will provide updates on the success of these initiatives as they are implemented across our operational strategy.
Given this difficult supply chain backdrop, we anticipate third quarter sales to compress, but rebound towards the end of the second half of the year with the majority of the revenue recognition pulling through during the fourth quarter of 2023.
Our confidence in this cadence is supported by the additional time in the market for our new <unk> hundred 50 products and additional contract awards, we continue to develop as commercial activities across all our charter markets evolve.
Yeah.
In summary, due to our execution product deliveries to our commercial customers in conjunction with the strong market adoption of our blue laser technology, we remain confident in achieving our full year sales target in excess of $3 million.
I will now turn the call over to Brian to discuss the financial details of the second quarter of 2023. Thanks, Mark I'm pleased to review our second quarter results further details of which can be found in the 10-Q that will be on file with the SEC.
As well as speak to the private placement in greater detail.
Let me begin with our results for the second quarter.
Our second quarter sales were $1 1 million.
Which is a 2125% increase compared to the second quarter of 2022.
Primarily attributable to an increase in the number of laser systems sales and the product and customer mix of laser systems sales during the period.
Our gross profit was a negative one $4 million compared to a loss of $1 $2 million in the second quarter of 2022, primarily attributable to a one time write off of approximately $600000 related to the excess and obsolete.
<unk> product line inventory.
Our gross margin was a negative 136% compared to a gross margin of a negative 2574% in the second quarter up 2022.
Primarily driven by increasing revenue, partially offset by the onetime impact of the auto product line inventory write off.
Total operating expenses in the second quarter, 2023, or $5 million compared to $2 7 million in the second quarter of 2022.
The increase is primarily attributable to one time professional fees associated with legal compliance and accounting matters. Following the business combination and the transitioning to being a public company.
Further contributors to the increase were the regular general and administrative costs associated with the company's status as a public company and increased cost of research and development of tooling and supplies related to the development of the <unk> product line.
We expect parts of the Opex spending to normalize.
As such decrease during the second part of the year.
Our net operating loss in the second quarter of 2023 was $6 4 million compared to an operating loss of $3 9 million in the second quarter of 2022.
Our net loss was $6 $1 million or <unk> 18 per share compared to a net loss of $3 9 million or <unk> 71 per share in the second quarter of 2022. This is primarily related to the mentioned one time expenses detailed previously.
Our EBITDA was a negative $6 million compared to a negative three 8 million in the second quarter of 2022.
In the quarter, we had a free cash flow usage of $5 1 million compared to a free cash flow usage of $2 $9 million in 2022, primarily attributable to the increase in total operating expenses.
I'll now turn to the private placement and its effect on our balance sheet.
As Mark mentioned, we are extremely appreciative of the capital commitment and the support shown by both existing as well as new investors.
And the initial round as well as the subsequent placement.
Both rounds consist of an offering of convertible promissory notes and warrants to purchase shares of the company's common stock.
The shares underlying the convertible notes and the warrants are subject to a one year lockup and the total amount of the cash infusion raise from these two purchase agreements prior to deducting transaction issuance costs is approximately $9 2 million.
As a result.
As of June 32023.
The company had cash and cash equivalents up $6 6 million.
We intend to deploy this capital in a careful efficient manner with the aim of accruing long term benefits for all of our stockholders.
Finally based on our strong sales performance and product deliveries in the second quarter of 2023, we are reiterating our full year 2023 outlook of total revenue in excess of $3 million EBIT.
EBITDA in the range of negative $21 million and negative $23 million and free cash flow to be in the range of negative $24 million and negative $26 million.
This concludes my summary, I will now turn the call back over to Mark Thanks, Brian and.
In closing we are more than ever excited about the growth opportunity ahead of us with growing commercial interest for our technology driven solutions, our market outlook remains robust with momentum in revenue generation accelerating towards 2024 and beyond as we rollout our BL and SMS systems.
Finally, we would like to thank our employees and our customers for their continued efforts and dedication to the company, which ultimately has driven our success as an organization.
Together, we are focused on driving innovation supporting the global transition to sustainable solutions and delivering strong profitable growth for our shareholders.
I will now turn the call back over to the operator, who will assist us in taking your questions.
Thank you ladies and gentlemen, we will now begin the question and answer session.
You have a question. Please press star followed by the one on your tax Counsel you will hear three comp acknowledging every question your questions with deep holes in the order they are received.
Wish to decline from the polling process. Please press star followed by the Q.
You are using a speaker phone please lift the handset before pressing any please your first question comes from Amanda <unk>.
With loop capital. Please go ahead.
Yes. Thanks, Thanks, guys I appreciate it Brian .
Brian .
Yes, it was good to see it.
During the quarter as well.
Please I guess just a few for me if I could.
You know David in the <unk>.
Really yes.
Increased interest in products, we ship customers.
In 19 expected from the asset, but I also wanted to see if there's any other additional context as well.
With your guidance.
Additional blue chip customers and.
And I have a couple of follow ups.
Yes, Great question. This is mark.
We have been talking to a range of government customers and a range of commercial customers.
There is tremendous interest in this technology and we've been enjoying.
Developing those relationships.
In particular, you would take a lot of the work into our application center to validate to performance and we've been getting great results with the latest VL $2 50, and 1000 products. So we're very excited by what we're seeing there go.
Go ahead.
Sure.
Yeah, that's great I guess that was been asked yet.
Hi, guys.
You have any notable technical milestones.
I guess in that.
The deal one thousands out.
Do you have any technical milestones.
We'll keep an eye out for.
That you feel are yesterday.
Important <unk> to achieve.
Again this is mark.
We are currently validating and our application center the BL one thousands capabilities.
While we had a large amount of.
Pre test with the earlier Oh series, we're trying to verify that those tests are still accurate and meet the needs of the battery manufacturer and to date, it's looking very very good there.
Most likely be some papers released in the future talking about the technical results that we've achieved there.
Furthermore, with the VL $2 50, again, we had a 150 product that we used in the past and the application center and we're validating that that laser can work well with a scanner and in <unk>, which is a common mode of manufacturing a lot of different things such as soldering and welding piece.
Seaboard components and connector assemblies for <unk> type markets, and we're seeing a great correlation with our previous results as well.
The other area that we believe we will be able to.
Worked closely with his medical manufacturing were Rowhouse compliance is very important and they'd like to see welding versus soldering and many other products.
Your next question comes from Ivan <unk> with Tigress financial Please go ahead.
Hi, Thanks for taking my questions and congratulations on the great results and progress can you go into a little more detail about some of the drivers of the year over year revenue growth.
Yeah.
Ivan This is mark again, great question. So real driver here is the release of the new products.
Had been anticipating that the old product.
Product, which got released last June will drive revenue growth because last June it was just being opened up and offered.
And in particular, we were able to secure a contract with ascension.
And we've been delivering against that against that contract. In addition to that we've been doing a fair amount of work in the three D printing area with our partner GE additive and the <unk> contract and so that also added to the revenue growth.
Okay, and then any more detail on some of the product engagements in some of the functionality that is driving the interest in <unk>.
And how you are being.
Because of this.
Great question, Great question I have and again this is mark so as we test these lasers in the application centers for our Blue chip customers, we're able to prove and validate prior results with our <unk> product line. However, our <unk> product line was limited to being used with a gantry style system. So that was a very slow moving.
Motion system and now we're proving that we can use to scanners, which is what's really driving the interest in this new product series and it's what we had targeted when we plan to releasing this product. This year. It's also what we had experienced.
We were in the market talking to people and they were like this blue lasers, great, but you really need to bearing with a scanner in order for this to be at.
Work in our manufacturing operation and so we're really seeing the market pool because of that capability.
Ladies and gentlemen.
A reminder, should you have a question. Please press star followed by the one your next question comes from Gus Richard with Northland. Please go ahead.
Yes.
Yes, thanks for taking the question.
Can you give us a little color on the revenue mix in the quarter how much were.
100 <unk>.
<unk>.
The other components of revenue.
Sure.
Great to see earlier in the quarter and thanks for the question.
Predominantly this was a again of $6 50 quarter hour 650 quarter, we had a we had.
Three sales of the VL $2 50 in the quarter, but predominantly a cylinder sales quarter.
Obviously as we move forward, that's going to change the mix will change substantially to the <unk> hundred 50, and that'll be all one kilowatt.
Got it and then.
You talked a little bit about some.
Supply constraints can you just hit that again.
And then talk about your ability to produce the axles and how that's coming along.
Great question Gus This is mark again.
So the supply constraint that we're referring to was delivery of scanners. So it does not really affect the production of the lasers themselves, but it's because of the long lead time on scanners. It does affect some of our customers.
<unk> purchased schedules so they can buy the lasers and buy the scanners separately, but we also provide scanners to customers as well in the event that they can't get their scheduled and so that's the main supply constraint we're talking about.
Sure.
Okay got it and then in terms of the <unk> production.
How is that.
Sort of progressing how you're doing on the capacity.
Yes, the ramp up is going according to plan.
We anticipate being able to produce up to a module a day by the end of the year.
And I believe the last.
Set of equipment will arrive in the next month or so is that right correct.
Once we get that online will have the capacity, we need going forward into 2024.
Ladies and.
Gentlemen, This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Okay.
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