Q2 2023 Laser Photonics Corp Earnings Call
Greetings and welcome to the Laser Photonics second quarter call and webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Siegel, Investor Relations. Thank you, sir. You may begin. Thank you, Maria. With me today are Wayne Topola, Laser Photonics CEO , and Jade Barnwell, who just joined the company as CFO . 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, the specific risks and uncertainties discussed in the reports that we file periodically with the FCC. 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. I will now turn the conference call over to Wayne. Take it away, Wayne. Thank you, Brian , and good morning, everyone.
We began increasing R&D investments to maintain our technological superiority. We equipped our application center with state-of-the-art, robotic laser blasters, and developed new complementary technologies. Moving forward, we intend to make further investments in R&D to innovate and guarantee company's longterm future, and I will touch on one of these platforms in a minute. Now I'd like to introduce our latest product developments. The Titan FX platform for the aerospace industry. This new large platform was designed for laser cutting applications, but we also integrated it into our clean-tech product line to enhance that offering.
The platform is designed to provide increased safety as it has fully enclosed frame that meets classroom product enclosure standards for the laser industry. This significance of this is twofold. First, we developed this new platform in response to conversations with an existing large aerospace customer. The aerospace industry has held off using laser cutting capabilities for decades due to safety concerns related to creating stress cracks caused by the heat generator from laser applications. To this day, laser cutting is limited to rough cutting and later the first two downstream CNC machining capabilities.
The Titan FX platform will combine two essential elements for our clean tech products. Unmatched laser blast-team power and enhanced laser safety. With our advanced laser technology, we already offer precision and efficiency that sets us apart from the competition. Now, by incorporating laser safety into our product enclosure, we provide our customers with a comprehensive solution that addresses their needs for both performance and safety.
In today's manufacturing work environment, most of our customers are safety conscious. Therefore, laser photonics is stepping up to the plate and providing solutions to modern day problems for the modern day workforce. Automation is also key to running a smooth and efficient manufacturing facility. So laser photonics focuses on helping its customers achieve this. Looking ahead, we are confident that the Titan FX performance will further strengthen our position as a leader in laser technologies. We anticipate strong demand for industry seeking advance laser solutions that combine performance, precision and safety.
By spending our product offering to cater to the needs of clean tech and other sectors, we are well positioned for growth and new market opportunities. In conclusion, Ladies and gentlemen, the TANI's Corps' Titanetics platform for Clean Tech Class 1 product closures represents a groundbreaking development as we continue to push the boundaries of innovation in the industry. We are excited about the prospects and the positive impact this new development will have on our customers' operations and overall safety. Our second quarter revenue decreased from the same period last year by 28% to $1 million. Our growth margin on those second quarter revenue increased by 600 basis points over year to approximately 71%. As our mix was more heavily weighted towards our higher margin, clean tech systems. Our operating income was breakeven this quarter, but benefited from a $700,000 market from non-cashestug issuance cost related to our IPO, which is mentioned on last quarter's call.
what's set in April and therefore needed to be marked market upon delivery. Beyond this non-cash cost, the most significant change in our operating cost structure was the increasing sales and marketing resources, our Indian investments, NASDAQ and SEC compliance costs and went for our new facility. Gap net income and earnings per share were break even, down from last year is $0.3 million and 7 cents respectively. From balance sheet and cash per perspective, we've finished the quarter with $9.9 million in cash and no debt. This balance represents $0.9 million declined during second quarter resulting from our operating activities. Now I'd like to provide some kind of support for the financial support. We're going to comment about the full year 2023. Looking at our operating expenses and given our continued growth investments in R&D, sales and marketing and expanding our distribution channel, we expect these cost to rise further throughout the rest of the calendar year. That concludes my prepared remarks for today. We can now move to questions. At this time, we will be conducting a question and answer. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. We ask that you limit yourself to one question and a follow-up so that others may have an opportunity to ask.
in months. Could you give us why we should have a lot of hope going forward? Yeah, thank you. That's a myth, Nick. Yeah, thanks for your question, Chuck. And I think if we reviewed from the starting of the company back in 2020, where we showed the initial start and a lot of R&D went into the products and aggressive move to try to gain confidence in adapting this particular technology, because that's the first phase of our gain-in-scale model, which is for the customers to adapt the technology and adopt many of these organizations have received the beta units, and they've formed protocols and procedures into the manufacturing process, which takes some time. Now, we've gained some attractions in the initial start with the first three years the company has been in business, and we've put a lot of investments for our parent, founder, ICT investments, which have put a lot of investments, and unfortunately we could take the company as far as we could, then they've decided to take it to market. And once that happened,
We spent quite some time doing so and it sort of delayed, you know, the momentum that we had going. So with this being said, most of the growth that you've been seeing from the end of or mid-stage of 2022 into the first quarter of 2023 was a result of prior to investments into the company moving forward. So now that we're fully funded, we need to continue the progress, continue getting the good news out through, you know, a strategic marketing plan which we've incorporated. We've grown the marketing department and we have a phenomenal group down there that's going to basically get the news out. With that being said, you know, it takes about six months to get the message out and then you have the sales cycle that will take another six months. So you know, this is an investment year, obviously after the fundraising, and we expect to see good results in the near future. You know, I hope that this has answered your question as far as what we experienced and, you know, we see a lot of positive traction. We have a very good...
sales group that's making monumental leaps and growth in acquiring the new interest in this disruptive technology. We took it to market addressing a $46 billion opportunity and I think it's greater than that globally because most people are trying to transition out of the hazardous abrasive sandblasting and I think it takes time for them to exit that particular type of process and develop new protocols and procedures. Most of the characteristics of this technology has just been sanctioned by most coating companies that were given directions on how abrasive blasting works and now they need to develop laser blasting criteria for government agencies and the private sector as well. Go ahead. It's all well and good but last year we had like I think it was the Navy, we had the Emerson, we had GE. I take it they all had beta platforms for our product. Have we heard back from them? Have we made any progress in getting real orders? Yeah absolutely. The one unit is being infectious to the entire organization but internal protocols and procedures take time.
Okay, we've got some questions to the webcast. The first is the company has made comments in its SEC filings regarding actions to improve control weaknesses. Can you provide updates on the control environment? Yeah, Jade, I think you can take that one. Can you repeat that question one more time, please? Yes, the company in its SEC filings has identified weaknesses and controls. And it says taking actions, can you talk about the actions that the company has taken to improve its controls? Well, first of all, the obvious control we placed is having the CFO . So I joined just 15 days ago, so that is my to-do list, on my to-do list. I can't provide you details at this moment, but I am reviewing the procedures and process that we have in place.
We're not in the business to make in major manufacturing products that is not our expertise. So we'll have to pull from United States companies or global companies to the group that whatever's available for us to use, that's what we use. But we've definitely pressed the components threshold to whatever available, the latest technology that's in our products. And we have this capability and I don't think anyone else competing with us doesn't seem to think so. Hopefully that answers your question. Okay, great. Next question. You've been issuing press releases at the rate of three per week plus or minus most of which are simply reviewing use cases for clean tech. What is the annual cost of this program? Does management actually conclude these releases are meaningful and worthwhile and if so, why?
to deliver that just allows people to understand that there's a lot of exciting things going on in our company and we're just excited to share that. I think the matrix on this, we've been getting some phenomenal feedback.
on the open rates and people are giving us great responses on this. On the other hand, some may view it as, you know, mundane and not effective, but again, we're the company that's running the marketing strategy and I think it's working, it's doing its job, and hopefully, you know, it'll gain traction in the near term to come.
Okay, great. Second is related to SEC filings. There's been no disclosure of executive comp since you've gone public. What are key insiders and directors being compensated right now? Yeah, I think that emerging growth companies exercise that right as mentioned to be transparent in that area. We have mentioned as executives are hired through the 8K what the compensation is. I think we're already doing that, Brian . Thank you. A couple of business questions here. Are you seeing an increase in competition and in general who are the competitors and what is the competitive environment like currently? I think it's quite the opposite. We're not seeing a competition of relevance to the technology that we have pressing the components threshold exceeding customers' expectation. I think we've done enough to set ourselves apart from the competition that...
such as nuclear decommissioning of the nuclear facilities, because it does require open beam systems to decontaminate some of the materials that they're trying to clean out there. But the major manufacturing processes involve the assembly, the calibration of the optics, on the delivery systems, placing the optics in assemblies, and also software implementation. We also have communications between hardware and software that needs to be dialed in as well. So, and a host of other processes that kind of help bring the Cleantech product line to fruition. Okay. Great.
positive feedback from the customers, saying that there's a possibility that these purchase orders will be released soon, procedures are being written and completed, other departments within these organizations are starting to inquire about new systems, and all of these take time, so.
I think third quarter looks bright for us and hopefully we'll be able to surpass first and second quarter results. Okay, and then one more question just came in. How many people have you added to the company so far this year?
We've added 21 employees. So last year we ended 2022 with 19 employees, so now we've added 21. And still looking to fill positions as well. Quite challenging for us at the executive level to find people that are strategic and understand how to move the company forward. So this becomes a challenge for us in finding the executives that can help us grow the company as well. Okay, I think that's it. Okay, thank you, Brian . Okay, we've reached the end of our question and answer session and this concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.