Q4 2025 nLight Inc Earnings Call

February 26, 2026

Speaker #1: Jonathan.

John Marchetti: ... right now, move,

Speaker #2: So right now, move

Speaker #3: Hello, everyone. Thank you for joining us, and welcome to the nLIGHT, Inc. fourth quarter and year-end 2025 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to the nLIGHT, Inc. Q4 and year-end 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to John Marchetti, Vice President of Corporate Development and Head of Investor Relations. Please go ahead.

Speaker #3: If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. I will now hand the call over to John Marchetti, Vice President of Corporate Development and Head of Investor Relations.

Speaker #3: Please go ahead.

Speaker #4: Good afternoon, everyone. Thank you for joining us today to discuss NLIGHT's fourth quarter and full-year 2025 financial results. I'm John Marchetti, NLIGHT's VP of Corporate Development and the Head of Investor Relations.

John Marchetti: Good afternoon, everyone. Thank you for joining us today to discuss nLIGHT's Q4 and full year 2025 financial results. I'm John Marchetti, nLIGHT's VP of Corporate Development and the Head of Investor Relations. With me on the call today are Scott Keeney, nLIGHT's Chairman and CEO, and Joe Corso, nLIGHT's CFO. Today's discussion will contain forward-looking statements, including financial projections and plans for our business, some 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, 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.

Speaker #4: With me on the call today are Scott Keeney, NLIGHT's Chairman and CEO, and Joe Corso, NLIGHT's CFO. Today's discussion will contain forward-looking statements, including financial projections and plans for our business, some of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings.

Speaker #4: 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.

Speaker #4: 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, and our earnings release and in our earnings presentation both of which can be found on the Investor Relations section of our website.

John Marchetti: We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings release and in our earnings presentation, both of which can be found on the investor relations section of our website. I will now turn the call over to nLIGHT's Chairman and CEO, Scott Keeney.

Speaker #4: I will now turn the call over to NLIGHT's Chairman and CEO, Scott Keeney.

Speaker #5: Thank you, John. 2025 was an exceptional year for NLIGHT, with strong growth driven by continued outperformance in our A&D markets, which had a record fourth quarter.

Scott Keeney: Thank you, John. 2025 was an exceptional year for nLIGHT, with strong growth driven by continued outperformance in our A&D markets, which had a record Q4. Our accelerated revenue growth also drove significant year-over-year improvements in our gross margins, Adjusted EBITDA, and cash flow, demonstrating the leverage that is inherent in our model. Revenues for the full year of 2025 were $261 million, up 32% year-over-year. Record A&D revenue of $175 million grew 60% year-over-year, as we successfully executed against a number of existing programs, ramped the production of our new fiber amplifiers, and secured new contract awards that provide us with visibility into continued growth in A&D.

Speaker #5: Our accelerated revenue growth also drove significant year-over-year improvements in our gross margins, adjusted EBITDA, and cash flow. Demonstrating the leverage that is inherent in our model.

Speaker #5: Revenues for the full year of 2025 were $261 million, up 32% year-over-year. Record A&D revenue of $175 million grew 60% year-over-year as we successfully executed and as some existing programs ramped the production of our new fiber amplifiers, and secured new contract awards that provide us with visibility into continued growth in A&D.

Speaker #5: Importantly, we believe a number of new prototypes will be awarded in directed energy over the coming months across different power levels and configurations that will position us for meaningful growth in our A&D markets over the next several years.

Scott Keeney: Importantly, we believe a number of new prototypes will be awarded in directed energy over the coming months, across different power levels and configurations, that will position us for meaningful growth in our A&D markets over the next several years. In aerospace and defense, we are focused on two key markets: directed energy and laser sensing, and both markets experienced accelerated growth in 2025. In directed energy, we are uniquely positioned with our vertically integrated and industry-leading high-power laser technology, developed over the past two decades, and spanning the entire technology stack, from chips to components, to high-energy beam combined lasers, to full laser weapon modules that include beam directors and atmospheric correction.

Speaker #5: In aerospace and defense, we are focused on two key markets: directed energy and laser sensing. And both markets experience accelerated growth in 2025. In directed energy, we are uniquely positioned with our vertically integrated and industry-leading high-power laser technology developed over the past two decades.

Speaker #5: And spanning the entire technology stack from chips to components to high-energy beam combined lasers to full laser weapon modules that include beam directors and atmospheric correction.

Speaker #5: We have generated revenue at nearly every level of vertical integration in the directed energy market, and we have established ourselves as one of the most comprehensive suppliers of the US government, other prime contractors, and foreign allies.

Scott Keeney: We have generated revenue at nearly every level of vertical integration in the directed energy market, and we have established ourselves as one of the most comprehensive suppliers to the US government, other prime contractors, and foreign allies. During 2025, we had several key successes in the directed energy market. Throughout the year, we continued to make solid progress on our HELSI-2 program. As a reminder, this is a $171 million program to develop a 1-megawatt high-energy laser, with an expected completion date in late 2026. The shipment of critical components towards the HELSI-2 program was a significant driver of our record defense product revenue in the year, and is expected to be a substantial contributor in 2026.

Speaker #5: During 2025, we had several key successes in the directed energy market. Throughout the year, we continue to make solid progress on our healthy tube program.

Speaker #5: As a reminder, this is 171 million program to develop a 1-megawatt high-energy laser with an expected completion date in late 2026. The shipment of critical components towards the healthy tube program was a significant driver of our record defense product revenue in the year, and is expected to be a substantial contributor in 2026.

Speaker #5: In the fourth quarter, we substantially completed our work for the Army's DEM SHORA defense program, which was to deliver a 50-kilowatt CBC high-energy laser and beam director for integration into a Stryker vehicle.

Scott Keeney: In Q4, we substantially completed our work for the Army's DE M-SHORAD defense program, which was to deliver a 50-kilowatt CBC high energy laser and beam director for integration into a Stryker vehicle. We are pleased to report that we successfully delivered our laser weapon module to our partner for integration and test. The successful delivery of this laser weapons module was an important milestone for our company, and we believe there is significant interest from the Department of War and the US military in developing these medium-power solutions in the coming years. Interest in US-directed energy programs is increasing, particularly for counter-UAS applications, and we expect new contracts to be awarded in the coming quarters from different agencies, and as part of the President's Golden Dome executive order, which specifically highlights non-kinetic missile defense capabilities as an area for development.

Speaker #5: We are pleased to report that we successfully delivered our laser weapon module to our partner for integration and test. The successful delivery of this laser weapon module was an important milestone for our company.

Speaker #5: And we believe there is significant interest from the Department of War and the US military in developing these medium-power solutions in the coming years.

Speaker #5: Interest in US directed energy programs is increasing, particularly for counter-UAS applications, and we expect new contracts to be awarded in the coming quarters from different agencies, and as part of the President's Golden Dome Executive Order, which specifically highlights non-kinetic missile defense capabilities as an area for development.

Speaker #5: With a mandate to build these systems in the United States, we believe we are well positioned to benefit from these efforts over the coming years.

Scott Keeney: With a mandate to build these systems in the United States, we believe we are well positioned to benefit from these efforts over the coming years. We are hopeful that in the coming quarters, we will be able to provide additional details on the scope and timing of these initiatives. We also continue to have success in the international markets for directed energy. We began shipping to several new international customers during 2025, and we have a growing pipeline of new global opportunities as allies look to accelerate directed energy programs for cost-effective counter-UAS and other threats. Our laser sensing markets also performed well in 2025. Our laser sensing products include missile guidance, proximity detection, range finding, and countermeasures, and have been incorporated into several significant and long-running defense programs, which we believe will continue to grow well into the future.

Speaker #5: And we are hopeful that in the coming quarters, we will be able to provide additional details on the scope and timing of these initiatives.

Speaker #5: We also continue to have success in the international markets for directed energy. We began shipping to several new international customers during 2025, and we have a growing pipeline of new global opportunities as allies look to accelerate direct energy programs for cost-effective counter-UAS and other threats.

Speaker #5: Our laser sensing markets also performed well in 2025. Our laser sensing products include missile guidance, proximity detection, range finding, and countermeasures. And have been incorporated into several significant and long-running defense programs, which we believe will continue to grow well into the future.

Speaker #5: During the third quarter of 2025, we signed a new $50 million contract for an existing long-running missile program that incorporates one of our laser sensing products.

Scott Keeney: During Q3 2025, we signed a new $50 million contract for an existing long-running missile program that incorporates one of our laser sensing products. nLIGHT has been a long-term supplier into this program with missile guidance, proximity detection, range finding, and countermeasures, and have been incorporated into several significant and long-running defense programs, which we believe will continue to grow well into the future. During Q3 2025, we signed a new $50 million contract for an existing long-running missile program that incorporates one of our laser sensing products. nLIGHT has been a long-term supplier into this program, which our customer expects to remain a key priority associated with the nation's munitions restocking efforts. In Q4, we began the initial stages of low-rate initial production on a new classified sensing program.

Speaker #5: NLIGHT has been a long-term supplier into this program, with missile guidance, proximity detection, range finding, and countermeasures. And have been incorporated into several significant and long-running defense programs, which we believe will continue to grow well into the future.

Speaker #5: During the third quarter of 2025, we signed a new $50 million contract for an existing long-running missile program that incorporates one of our laser sensing products.

Speaker #5: NLIGHT has been a long-term supplier into this program, which our customer expects to remain a key priority associated with the nation's munitions restocking efforts.

Speaker #5: And in the fourth quarter, we began the initial stages of low-rate initial production on a new classified sensing program. Our historical performance on these programs and early success on multiple classified programs has increased both the number of prospects and the size of our sensing pipeline.

Scott Keeney: Our historical performance on these programs and early success on multiple classified programs has increased both the number of prospects and the size of our sensing pipeline. In addition, further opportunities under the Golden Dome initiative have emerged and could also become significant contributors to our growth in the future. The growing pipeline of opportunities in both our directed energy and laser sensing markets were the primary driver behind our decision to raise additional capital through a follow-on equity offering earlier this month. We raised over $190 million after expenses, which, combined with our existing cash, leaves us more than a quarter billion dollars on our balance sheet.

Speaker #5: In addition, further opportunities under the Golden Dome Initiative have emerged and could also become significant contributors to our growth in the future. The growing pipeline of opportunities in both our directed energy and laser sensing markets was a primary driver behind our decision to raise additional capital through a follow-on equity offering earlier this month.

Speaker #5: We raised over $190 million after expenses, which, combined with our existing cash, leaves us with more than a quarter billion dollars on our balance sheet.

Speaker #5: We intend to use a portion of these proceeds to build out and equip our new 50,000 square foot manufacturing facility in Longmont, Colorado, and to invest ahead of our demand in our supply chain and staffing to begin work on accelerating new product development.

Scott Keeney: We intend to use a portion of these proceeds to build out and equip our new 50,000 square foot manufacturing facility in Longmont, Colorado, and to invest ahead of our demand in our supply chain and staffing to begin work on accelerating new product development. Our commercial markets performed in line with our expectations in 2025, with increases in microfabrication and advanced manufacturing revenue, offset by continued declines in our cutting and welding markets. Given the continued structural weakness in these industrial markets, during the Q4, we made the decision to exit cutting and welding. This decision, while challenging, is a continuation of our resource alignment efforts as we focus on accelerating growth in our A&D markets.

Speaker #5: Our commercial markets performed in line with our expectations in 2025. With increases in microfabrication and advanced manufacturing revenue offset by continued declines in our cutting and welding markets, given the continued structural weakness in these industrial markets, during the fourth quarter, we made the decision to exit cutting and welding.

Speaker #5: This decision, while challenging, is a continuation of our resource alignment efforts as we focus on accelerating growth in our A&D markets. With industrial, we will continue to focus on opportunities in advanced manufacturing, specifically metal 3D printing.

Scott Keeney: With industrial, we will continue to focus on opportunities in advanced manufacturing, specifically metal 3D printing, where we have been encouraged by the early growth and adoption of our products among customers that are aligned with our A&D focus and where our technology is most differentiated. As I look forward to 2026, I'm confident that our growth will continue and that we are well-positioned for new contract wins in our key markets of directed energy, laser sensing, and advanced manufacturing. Let me now turn the call over to Joe to discuss our financial results in more detail.

Speaker #5: Where we have been encouraged by the early growth and adoption of our products among customers that are aligned with our A&D focus and where our technology is most differentiated.

Speaker #5: As I look forward to 2026, I'm confident that our growth will continue and that we are well positioned for new contract wins in our key markets of directed energy, laser sensing, and advanced manufacturing.

Speaker #5: Let me now turn the call over to Joe to discuss our financial results in more detail.

Speaker #6: Thank you, Scott. 2025 was a year of exceptional financial and operational execution for NLIGHT. We delivered revenue growth of more than 30% year over year, driven by a 60% increase in revenue from A&D.

Joe Corso: Thank you, Scott. 2025 was a year of exceptional financial and operational execution for nLIGHT. We delivered revenue growth of more than 30% year-over-year, driven by a 60% increase in revenue from A&D. Strong revenue growth, a favorable mix of business, and excellent execution from our manufacturing and operations team, drove meaningful expansion to our gross margins, which increased to approximately 30% in 2025, up from 17% in 2024. At the same time, we managed to reduce our non-GAAP operating expenses, which enabled our incremental gross margins to flow through to Adjusted EBITDA, which was a record $23.5 million for 2025. Significantly improved Adjusted EBITDA, coupled with working capital discipline, resulted in cash flow from operations of more than $21 million for the full year.

Speaker #6: Strong revenue growth, a favorable mix of business, and excellent execution from our manufacturing and operations team drove meaningful expansion to our gross margins, which increased to approximately 30% in 2025, up from 17% in 2024.

Speaker #6: At the same time, we managed to reduce our non-gap operating expenses, which enabled our incremental gross margins to flow through to adjust EBITDA, which was a record 23.5 million dollars for 2025.

Speaker #6: Significantly improved adjusted EBITDA, coupled with working capital discipline, resulted in cash flow from operations of more than $21 million for the full year. Our full-year results demonstrate the leverage that is inherent in our business model.

Joe Corso: Our full-year results demonstrate the leverage that is inherent in our business model. Let me now review our Q4 results. Total revenue in Q4 was a record $81.2 million, an increase of 71% compared to $47.4 million in Q4 2024, and up 22% compared to Q3 2025. Aerospace and Defense revenue was a record $56.3 million in the quarter, up 87% year-over-year and 24% sequentially. A&D growth was driven by product revenue of $30.2 million, which grew 109% year-over-year and 14% compared to last quarter. Development revenue of $26.1 million represents an increase of 66% year-over-year as we continue to execute on multiple directed energy programs.

Speaker #6: Let me now review our fourth quarter results. Total revenue in the fourth quarter was a record 81.2 million dollars, an increase of 71% compared to 47.4 million dollars in the fourth quarter of 2024, and up 22% compared to the third quarter of 2025.

Speaker #6: Aerospace and defense revenue was a record 56.3 million dollars in the quarter, up 87% year over year in 24% sequentially. A&D growth was driven by product revenue of 30.2 million dollars, which grew 109% year over year, and 14% compared to last quarter.

Speaker #6: Development revenue of 26.1 million dollars represents an increase of 66% year over year, as we continue to execute on multiple directed energy programs. The quarter-over-quarter increase in development revenue of 36% was primarily the result of the successful delivery of our 50-kilowatt CDC laser to our partner in support of the DEM Shoread program.

Joe Corso: The quarter-over-quarter increase in development revenue of 36% was primarily the result of the successful delivery of our 50-kilowatt CBC laser to our partner in support of the DE M-SHORAD program. We expect development revenue to decline sequentially in Q1 2026, given the successful delivery of our 50-kilowatt laser weapon module. Q4 revenue from our commercial markets, which includes our industrial and microfabrication markets, was $24.9 million, an increase of 44% year-over-year and 17% compared to last quarter. Revenue from our microfabrication markets was $14.2 million, and revenue from our industrial markets was $10.7 million, as an increase in demand for our additive manufacturing products offset continued declines in cutting and welding. As Scott mentioned, during Q4, we made the decision to exit the cutting and welding markets.

Speaker #6: We expect development revenue to decline sequentially in the first quarter of 2026, given the successful delivery of our 50-kilowatt laser weapons module. Fourth quarter revenue from our commercial markets, which includes our industrial and microfabrication markets, was $24.9 million, an increase of 44% year over year, and 17% compared to last quarter.

Speaker #6: Revenue from our microfabrication markets was 14.2 million dollars, and revenue from our industrial markets was 10.7 million dollars. As an increase in demand for our additive manufacturing products offset continued declines in cutting and welding.

Speaker #6: As Scott mentioned, during the fourth quarter, we made the decision to exit the cutting and welding markets. We have informed our key customers of this decision, and we are working through last-time buys and other wind-down actions.

Joe Corso: We have informed our key customers of this decision, and we are working through last-time buys and other wind-down actions. We expect modest revenue contribution from cutting and welding to continue in the first half of 2026, but we expect a full-year revenue headwind of approximately $25 to 30 million associated with this decision. Further, we expect to continue to support our existing customers and are transitioning internal resources that have been focused on cutting and welding to support our A&D and advanced manufacturing efforts. Working our way down the P&L, total gross margin in Q4 was 30.7%, compared to 2.4% in Q4 2024, and 31.1% Q3.

Speaker #6: We expect modest revenue contribution from cutting and welding to continue in the first half of 2026, but we expect a full-year revenue headwind of approximately 25 to 30 million dollars associated with this decision.

Speaker #6: Further, we expect to continue to support our existing customers and our transitioning internal resources that had been focused on cutting and welding to support our A&D and advanced manufacturing efforts.

Speaker #6: Working our way down the P&L, total gross margin in the fourth quarter was 30.7%, compared to 2.4% in the fourth quarter of 2024 and 31.1% last quarter.

Speaker #6: Product gross margin in the fourth quarter was in line with our expectations at 37.3%, compared to 0.7% in the fourth quarter of 2024 and 41% last quarter.

Joe Corso: Product gross margin in Q4 was in line with our expectations at 37.3%, compared to 0.7% in Q4 2024, and 41% last quarter. The sequential quarterly decline in product gross margin was driven primarily by slightly less favorable mix, lower factory utilization, and higher inventory charges related to the exit of the cutting and welding markets. Development gross margin was ahead of expectations at 16.8%, compared to 5.8% in the same quarter a year ago, and 6.4% last quarter. The sequential increase in development gross margin was largely the result of the successful delivery of the DE M-SHORAD high-energy laser and continued execution in other ongoing programs.

Speaker #6: The sequential quarterly decline in product gross margin was driven primarily by slightly less favorable mixed, lower factory utilization, and higher inventory charges related to the exit of the cutting and welding markets.

Speaker #6: Development gross margin was ahead of expectations at 16.8%, compared to 5.8% in the same quarter a year ago, and 6.4% last quarter. The sequential increase in development gross margin was largely the result of the successful delivery of the DEM Shoread high-energy laser and continued execution in other ongoing programs.

Speaker #6: Gap operating expenses were 30.4 million dollars in the fourth quarter, compared to 27.6 million dollars in the fourth quarter of 2024 and 28.1 million dollars in the third quarter of 2025.

Joe Corso: GAAP operating expenses were $30.4 million in Q4, compared to $27.6 million in Q4 2024, and $28.1 million in Q3 2025. Included in our Q4 GAAP operating expenses were higher stock-based compensation expenses associated with the previously announced performance shares, and a restructuring charge of approximately $615,000 associated with our decision to exit cutting and welding. Non-GAAP operating expenses were $18.4 million in the quarter, up from $17.7 million in Q4 2024, and up from $17.5 million last quarter. We expect quarterly non-GAAP OpEx to remain in the $17 million to $19 million range throughout 2026.

Speaker #6: Included in our fourth quarter gap operating expenses were higher stock-based compensation expenses associated with the previously announced performance shares, and a restructuring charge of approximately $615,000 associated with our decision to exit cutting and welding.

Speaker #6: Non-gap operating expenses were 18.4 million dollars in the quarter, up from 17.7 million dollars in the fourth quarter of 2024, and up from 17.5 million dollars last quarter.

Speaker #6: We expect quarterly non-gap OPEX to remain in the 17 million to 19 million dollar range throughout 2026. Gap net loss for the fourth quarter was 4.9 million dollars, or 10 cents per share.

Joe Corso: GAAP net loss for Q4 was $4.9 million, or $0.10 per share, compared to a net loss of $25 million, or $0.51 per share in the same quarter a year ago, and a loss of $6.9 million, or $0.14 per share in Q3 2025. On a non-GAAP basis, net income from Q4 was a positive $7.8 million, or $0.14 per diluted share, compared to a non-GAAP net loss of $14.5 million, or $0.30 per share in Q4 2024, and non-GAAP net income of $4.3 million, or $0.08 per diluted share in Q3 2025.

Speaker #6: Compared to a net loss of 25 million dollars, or 51 cents per share in the same quarter a year ago, and a loss of 6.9 million dollars, or 14 cents per share in the third quarter of 2025.

Speaker #6: On a non-gap basis, net income from the fourth quarter was a positive 7.8 million dollars, or 14 cents per diluted share compared to a non-gap net loss of 14.5 million dollars, or 30 cents per share in the fourth quarter of 2024, and non-gap net income of 4.3 million dollars, or 8 cents per diluted share last quarter.

Speaker #6: Adjusted EBITDA for the fourth quarter was a positive 10.7 million dollars, compared to a loss of 11.3 million dollars in the same quarter last year, and a positive 7.1 million dollars in the third quarter of 2025.

Joe Corso: Adjusted EBITDA for Q4 was a positive $10.7 million, compared to a loss of $11.3 million in the same quarter last year, and a positive $7.1 million in Q3 of 2025. We ended 2025 with total cash equivalents, restricted cash and investments of $134 million, up from $101 million at the end of 2024, and $116 million last quarter. We generated $17.4 million in cash from operations in Q4 of 2025, despite continuing to invest in working capital ahead of expected growth, and we were free cash flow positive in the quarter.

Speaker #6: We ended 2025 with total cash, cash equivalents, restricted cash, and investments of 134 million dollars. Up from 101 million dollars at the end of 2024 and 116 million dollars last quarter.

Speaker #6: We generated 17.4 million dollars in cash from operations in the fourth quarter of 2025, despite continuing to invest in working capital ahead of expected growth, and we were free cash flow positive in the quarter.

Speaker #6: With the recently completed follow-on equity offering, our balance sheet boasts more than a quarter billion dollars of cash, enabling us to accelerate our investments in our own manufacturing capabilities and capacity, while working with our supply chain partners to provide them with increased long-term visibility to support our growing demand pipeline.

Joe Corso: With the recently completed follow-on equity offering, our balance sheet boasts more than a quarter billion dollars of cash, enabling us to accelerate our investments in our own manufacturing capabilities and capacity while working with our supply chain partners to provide them with increased long-term visibility to support our growing demand pipeline. Before discussing Q1 guidance, I'd like to reiterate that nLIGHT is planning for total revenue growth in 2026. Supporting our growth expectations is approximately $162 million of funded backlog as of 31 December 2025, essentially flat compared to funded backlog of $167 million at the end of 2024. Although execution challenge remains, given the highly technical nature of our defense work, and we can't control the specific timing of government programs, we are exceptionally well aligned with many of the DoW's highest priority areas.

Speaker #6: Before discussing Q1 guidance, I'd like to reiterate that NLIGHT is planning for total revenue growth in 2026. Supporting our growth expectations is approximately 162 million dollars of funded backlog as of December 31st, 2025.

Speaker #6: Essentially flat compared to funded backlog of 167 million dollars at the end of 2024. Although execution challenge remained given the highly technical nature of our defense work, and we can't control the specific timing of government programs, we are exceptionally well aligned with many of the DOW's highest priority areas.

Speaker #6: Based on the information available today, we expect revenue for the first quarter of 2026 to be in the range of 70 million to 76 million dollars.

Joe Corso: Based on the information available today, we expect revenue for Q1 2026 to be in the range of $70 million to $76 million. The midpoint of $73 million includes approximately $54 million of product revenue and $19 million of development revenue. Overall, gross margin in Q1 is expected to be in the range of 27% to 32%, with product gross margin in the range of 34% to 39%, and development gross margin of approximately 8%. As we've mentioned previously, as a vertically integrated manufacturing business, gross margin is largely dependent on production volumes and absorption of fixed manufacturing costs. Finally, we expect Adjusted EBITDA for Q1 2026 to be in the range of $5 million to $10 million. Let me now turn the call over to the operator for questions.

Speaker #6: The midpoint of 73 million dollars includes approximately 54 million dollars of product revenue, and 19 million dollars of development revenue. Overall gross margin in the first quarter is expected to be in the range of 27 to 32 percent.

Speaker #6: With product gross margins in the range of 34 percent to 39 percent. And development gross margin of approximately 8 percent. As we've mentioned previously, as a vertically integrated manufacturing business, gross margin is largely dependent on production volumes and absorption of fixed manufacturing costs.

Speaker #6: Finally, we expect adjusted EBITDA for the first quarter of 2026 to be in the range of 5 million to 10 million dollars. Let me now turn the call over to the operator for questions.

Speaker #1: We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jonathan Siegmann with Stifel. Your line is now open. Please go ahead.

Speaker #1: To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of Jonathan Siegman with To stifle your line is now open .

Speaker #1: Please go ahead .

Speaker #2: Good afternoon . Scott . Joe and John , thanks for taking my question Thanks , John Congratulations on the strong end of the year .

Jonathan Siegmann: Good afternoon, Scott, Joe, and John. Thanks for taking my question.

Joe Corso: Thanks, John.

Jonathan Siegmann: Congratulations on the strong end of the year. You mentioned expecting orders in the next few months, just on the directed energy side. Can you give a sense of whether this would be more development for new programs, continuing of your existing development programs, or how soon are we to actual some production orders? Thank you.

Speaker #2: And you mentioned expecting orders in the next few months . Just on the directed energy side , can you give a sense of whether this would be more development for new programs , continuing of your existing development programs , or how soon are we to actual some production orders ?

Speaker #2: Thank you John .

Joe Corso: John, it's actually all of the above. There are certainly examples of continuation. There's examples of new programs that, you know, certainly build on things we've done. There are orders for, you know, the low-rate production program. Really all three.

Speaker #3: It's actually all of the above . There are certainly examples of continuation There's examples of new programs that , you know , certainly build on .

Speaker #3: Things we've done . And there are orders for , you know , the the low rate production program . So really all three .

Speaker #2: Fantastic . And then maybe on the , on the sensing side , you highlighted both opportunities on new programs as well as existing missile programs .

Jonathan Siegmann: Fantastic. Maybe on the sensing side, you highlighted both opportunities on new programs as well as existing missile programs, and the demand signals are really exceptional across both. Which is greater for the company in terms of near-term prospects for you guys? Thank you.

Speaker #2: And the demand signals are really , really exceptional across both . Can you just which is greater for for the company in terms of , of near-term prospects for you guys ?

Speaker #2: Thank you

Speaker #3: Yeah , we see both maybe Joe , you want to take the near-term specifically . Yeah . Near-term . The existing the existing laser sensing programs that we're working on are in full production .

Joe Corso: Yeah, we see both. Maybe, Joe, you want to take the near term specifically? Yeah, near term, the existing laser sensing programs that we're working on are in full rate production, John, those will tend to drive more revenue in the near term. As we think about the new programs that we're working on, as they move into LRIP, they will start to contribute more, You know, a year or two will be a much larger proportion of our overall sensing business. To Scott's point, both are actually growing quite nicely right now.

Joe Corso: Yeah, we see both.

John Marchetti: Maybe, Joe, you want to take the near term specifically?

Joe Corso: Yeah, near term, the existing laser sensing programs that we're working on are in full rate production, John, those will tend to drive more revenue in the near term. As we think about the new programs that we're working on, as they move into LRIP, they will start to contribute more, You know, a year or two will be a much larger proportion of our overall sensing business. To Scott's point, both are actually growing quite nicely right now.

Speaker #3: John . So those will tend to drive more revenue in the near term , as we think about the new programs that we're working on as they move into LRP , they will start to contribute more .

Speaker #3: And then over the next year or two, it will be a much larger proportion of our overall sensing business. But to Scott's point, both are actually growing quite nicely right now.

Speaker #2: Thank you

Jonathan Siegmann: Thank you.

Speaker #1: Your next question comes from Greg Palm with Craig-hallum Your line is now open . Please go ahead

Operator: Your next question comes from Greg Palm with Craig-Hallum. Your line is now open. Please go ahead.

Speaker #4: Thanks Congrats on a on another really successful year here . I wanted to start with the decision to exit cutting and welding . I guess why now ?

Greg Palm: Thanks. Congrats on another really successful year here. I wanted to start with the decision to exit cutting and welding. I guess, why now? You sort of position that business as maybe, you know, a melting ice cube, but, you know, revenue with a positive contribution margin. Why exit now? As we think about sort of the longer term P&L impacts from a margin standpoint, what should we be expecting?

Scott Keeney: Yeah. Thanks, Greg. It's a good question. Yeah, we've been talking about the challenges in the broader industrial market due to the, you know, excess capacity, evolution, et cetera, those themes. I think the short answer to your question is focus. I'll let Joe comment on the particulars of the near-term financials. The opportunities that we're addressing in directed energy, in sensing, and in the advanced manufacturing, notably additive manufacturing, are very large. We have an outstanding team that we've built over the years, and we are transitioning people to focus on those core growth opportunities as opposed to some legacy opportunities that are far less attractive. The short answer is focus. Now, in terms of the near-term financials, I'll let Joe comment a little further on that.

Speaker #3: Broader

Speaker #5: Industrial market due to the , you know , excess capacity , evolution , etc. those themes I think the short answer to your question is focus .

Speaker #5: I'll let Joe comment on the particulars of the near-term financials , but the opportunities that we're addressing in direct energy , in sensing and in the advanced manufacturing , notably additive manufacturing , are are very large .

Speaker #5: And we have an outstanding team that we've built over the years . And we are transitioning people to focus on those core growth opportunities as opposed to some legacy opportunities that have that are far less attractive .

Speaker #5: So the short answer is focus . Now , in terms of the near-term financials , I'll let Joe comment a little further on that .

Speaker #3: Yeah . Thanks , Greg Reality is that we are going to transition most of overhead . That was allocated or being used by the cutting and welding business to the defense business .

Joe Corso: Yeah. Thanks, Greg. Reality is that we are going to transition most of overhead that was allocated or being used by the cutting and welding business to the defense business. We have lots of talented engineers and other professionals inside of the company that are being repurposed from cutting and welding into defense. In the near term, might there be a little bit of margin headwind as we are going to lose some revenue with positive incremental margin? Yes, but really not all that much. We don't expect it to have a material impact on the way that we're thinking about margin and cash flow going forward.

Speaker #3: We have lots of talented engineers and other professionals inside of the company that are being repurposed from cutting and welding into into defense .

Speaker #3: So, in the near term, might there be a little bit of margin headwind as we're going to lose some revenue with positive incremental margin?

Speaker #3: Yes . But but really not all that much . So we don't expect it to have a material impact on the way that we're thinking about margin and cash flow going forward .

Speaker #4: Okay Understood . Thanks for the color . And in terms of the the revenue headwind , can you just maybe unpack that a little bit more ?

Greg Palm: Okay. Understood. That's. Thanks for the color. In terms of the revenue headwind, can you just maybe unpack that a little bit more? I think you said a $25 to 30 million headwind. I just wanna be clear, that's on an absolute basis, you know, year-over-year, specific to industrial. You know, do you see that, you know, starting this quarter to be, you know, impacted in a pretty sizable way? Does that start more like in Q2, and then it basically is full run rate headwind in the second half?

Speaker #4: I think you said a 25 to $30 million headwind . So I just want to be clear . That's not an absolute basis year over year specific to industrial .

Speaker #4: And you know , do you see that you know , starting this quarter to be , you know , impacted in a pretty sizable way ?

Speaker #4: Or does that start more like in Q2 ? And then it basically is full run rate headwind in the second half

Speaker #3: Yeah . Thanks , Greg . It's not totally digital , but if you think about the industrial end market in full year 2025 , a good way to think about the modeling is just take $25 million off of that as a starting point for where we would be in industrial , as we're moving into 2026 .

Joe Corso: Yeah. Thanks, Greg. It's not totally digital, but if you think about the industrial end market in full year 2025, a good way to think about the modeling is just take $25 million off of that as a starting point for where we would be in industrial as we're moving into 2026. There will certainly be some revenue contribution over the first two quarters and, you know, potentially a little bit into the third. By the time we're in the second half of the year, those revenue streams are effectively at zero. The other side of it, what we are still focused on is the advanced manufacturing and metal 3D printing side of the business. You know, there's opportunities for us to continue to grow there.

Speaker #3: There will certainly be some contribution over the revenue contribution over the first two quarters . And , you potentially a little bit into the into the third .

Speaker #3: But by the time we're in the second half of the year that those revenue streams are effectively at , at zero , and then the other side of it , what we are still focused on is the advanced manufacturing and metal 3D printing side of the business .

Speaker #3: And so there's opportunities for us to continue to grow there . And so as we said in the prepared remarks that we think that even with that headwind , our overall revenue , as we think about full year 2025 and then 2026 can grow , we're still confident in in the ability to grow the total revenue

Joe Corso: As we said in the prepared remarks, that we think that even with that headwind, our overall revenue, as we think about full year 2025 and then 2026, can grow. We're still confident in the ability to grow the total revenue.

Speaker #4: Okay . And I think by that math , it's still implies that you can have , you know , double digit plus growth in the aerospace and defense segment .

Greg Palm: Okay. I think by that math, it still implies that you can have, you know, double-digit plus growth in the aerospace and defense segment if you're still expecting to grow overall, maybe you can confirm that. A bigger question is that based on your current backlog and does some of these, you know, new contracts and awards, Scott, that you alluded to, do you need to win some or any of those and have those contribute to revenue to get to that growth number?

Speaker #4: If you're still expecting to grow overall , maybe you can confirm that . But a bigger question is , is that based on your current backlog and does some of these new contracts and awards got that .

Speaker #4: You alluded to ? Do you need to win some or any of those and have those contribute to revenue to get to that growth number ?

Speaker #3: Greg . So the answer is , I think to the first part of your question is yes , the and business certainly can grow double digits in 2026 .

Joe Corso: Greg, the short answer is, I think to the first part of your question is yes. The A&D business certainly can grow double digits in 2026. I think the second part of your question was, is that all in backlog today? The answer to that question is yes as well. I think when you talk about overall growth in 2026, certainly we do need to convert some of what we are working on, some of what Scott talked about earlier, we need to convert that into funded backlog and drive revenue from that as well.

Speaker #3: I think the second part of your question was , is that all in backlog today ? The answer to that question is yes as well .

Speaker #3: And then I think when you talk about overall growth in 2026 , certainly we do need to convert some of what we are working on , some of what Scott talked about earlier , we need to convert that into funded backlog .

Speaker #3: And drive and drive revenue from that as well Yeah , Greg , this is John . I just one of the things that we've been talking about , you know , for the last couple of quarters too , is , you know , we are and Scott mentioned this in his prepared remarks .

Scott Keeney: Yeah. Greg, this is John. You know, one of the things that we've been talking about, you know, for the last couple of quarters too is, you know, we are, and Scott mentioned this in his prepared remarks.

John Marchetti: Yeah. Greg, this is John. You know, one of the things that we've been talking about, you know, for the last couple of quarters too is, you know, we are, and Scott mentioned this in his prepared remarks.

Speaker #3: We are expecting some fairly meaningful new awards in 2026 . That's not really reflected in what we're talking about here in terms of , you know , being able to grow 2026 if if those new prototypes that that we're expecting come through , you know , in the first half of the year , then those will contribute above and beyond kind of what we're talking about right now .

John Marchetti: ... We are expecting some, you know, fairly meaningful new awards in 2026. That's not really reflected in what we're talking about here in terms of, you know, being able to grow 2026. If those new prototypes that we're expecting come through, you know, in the first half of the year, then those will contribute above and beyond kind of what we're talking about right now. If those come in a little bit later in the year, then it sets us up obviously for a very good 2027. A lot of the timing around those contracts is ultimately gonna determine how much we grow this year. You know, at the end of the day, we are expecting that 2026 is a growth year.

Speaker #3: If those come in a little bit later in the year , then it sets us up obviously for a very good 27 . So a lot of the timing around those contracts is is ultimately going to determine how much we grow this year .

Speaker #3: But but you know , at the end of the day we are expecting that 2026 is a growth year

Speaker #4: Okay . Perfect . All right . I'll leave it there . Thanks

Jonathan Siegmann: Okay, perfect. All right, I'll leave it there. Thanks.

Speaker #3: Thanks , Greg

Joe Corso: Thanks, Greg.

Speaker #1: Your next question comes from Jim Rickard with Needham and Company Your line is now open . Please go ahead

Operator: Your next question comes from Jim Ricchiuti with Needham & Company. Your line is now open. Please go ahead.

Speaker #2: Thanks . I just wanted to follow up on the last line of questioning . You guys had a reasonably decent year in Microfabrication .

Jim Ricchiuti: Thanks. I just wanted to follow up on the last line of questioning. You guys had a reasonably decent year in microfabrication. I'm assuming you'd probably guess that portion of the business would be flat to down, because if that's the case, for reasonably good growth in the A&D business.

Speaker #2: I'm assuming you probably guess that that portion of the business would be flat to down , because if that's the case You know , reasonably good growth in the AMD business

Speaker #3: Jim , I'm sorry you broke up on our end . Can you repeat the question again ?

Joe Corso: Jim, I'm sorry, you broke up on our end. Can you repeat the question again, please?

Speaker #2: Yeah , sure . Joe . I'm sorry So I wanted to go back to that comment about about the growth for 2026 . And , and we can back out the welding and cutting exit .

Jim Ricchiuti: Yeah, sure. Joe, I'm sorry.

Joe Corso: That's okay.

Jim Ricchiuti: I wanted to go back to that comment about the growth for 2026, and we can back out the welding and cutting exit. It also seems to imply, and you know, want to get some clarification on how you're thinking about the microfabrication business, because you had a reasonably decent year there. It sounds like, just given the tone, that could be flat to down, in which case, the aerospace and defense business, you know, sounds like it's gonna be reasonably strong growth as opposed to just double digit. I'm just trying to get a little color. Last year at this time, I think you guys said you thought you'd grow the A&D business 25%.

Speaker #2: But it also seems to imply and I , want to get some clarification on how you're thinking about the Microfabrication business , because you had a reasonably decent year there .

Speaker #2: would I would it sounds like just given the tone that could be flat to down , in which case the aerospace and defense business , you know , sounds like it's going to be reasonably strong growth as opposed to just double digit .

Speaker #2: And I'm just trying to get a little color. Yeah. Last year at this time, I think you guys said you thought you'd grow the AMD business 25%.

Speaker #2: Obviously grew it a lot faster than that . And there were some real drivers that resulted in that . But you know , as we're looking at 26 now and the fact that you're going to you're anticipate having a growth year , it does seem to suggest that the growth could be along those lines that you indicated last year at this time in a and that am I interpreting it correctly ?

Jim Ricchiuti: You obviously grew it a lot faster than that, and there were some real drivers that resulted in that. You know, as we're looking at 26 now, and the fact that you anticipate having a growth year, it does seem to suggest that the growth could be along those lines that you indicated last year at this time in A&D. Am I interpreting it correctly?

Speaker #3: Jim , I think you're interpretation is is spot on . Let me touch on Microfabrication first . Microfabrication is the market in which we have the least amount of visibility , but also if you just go back over the recent past , that business tends to be somewhere between 8 and $12 million a quarter .

Joe Corso: Jim, I think your interpretation is spot on. Let me touch on microfabrication first. Microfabrication is the market in which we have the least amount of visibility, but also if you just go back over the recent past, that business tends to be somewhere between $8 and $12 million a quarter. Depending on what the order patterns look like, I think we're seeing the same thing as we're heading into 2026. The biggest delta between where we are today in microfab and where we had been in the past, is that the contribution from the China geography has gone down precipitously. That is really no longer in, you know, a meaningful part of the overall revenue.

Speaker #3: And so depending on what the order patterns look like , I think we're seeing the same thing as we're heading into 2026 . The biggest delta between where we are today in Micro Fab and where we have been in the past , is that the contribution from the China geography has , has , has gone down precipitously .

Speaker #3: And so that is really no longer in , you know , a meaningful part of the of the overall revenue . And so then if you think about whether you believe micro fab is flat or micro fab is down a little bit , then that will have an implication on how fast the A and business can grow .

Joe Corso: If you think about whether you believe microfab is flat or microfab is down a little bit, then that will have an implication on how fast the A&D business can grow to keep that overall fiscal 2026 revenue positive. What I would tell you, the difference between where we are today versus where we were in 2025, is that in 2025, it really was a year of execution, right? We had very little go get in 2025 to hit that 25% number, and then we outperformed from an execution perspective, and then it enabled us to grow faster than the 25%.

Speaker #3: To keep that overall fiscal 26 revenue positive , what I would tell you the difference between where we are today versus where we were in 2025 is that in 2025 , it really was a year of execution , right ?

Speaker #3: We had very little go get in 2025 to , you know , hit that 25% number and then we outperformed from from an exit from an execution perspective .

Speaker #3: And then it us to grow faster than the 25% as we're here in 2026 . Looking into 2026 , there is still a fair bit of execution .

Joe Corso: As we're here in 2026, looking into 2026, there is still a fair bit of execution, but there is a little bit more go get. I wouldn't want to suggest that, you know, you should think about us growing even faster as we move through the year. As John just said, there are certainly opportunities, depending on timing, where we could grow faster. Again, the error bars are fairly wide on that.

Speaker #3: But there is a little bit more to go get. So I wouldn't want to suggest that you should think about us growing even faster as we move through the year.

Speaker #3: As John just said , there are certainly opportunities depending on timing where we could where we could grow faster . But again , the error bars are fairly wide on that .

Speaker #2: That's helpful . I wanted to follow up question just as it relates to the capacity additions in Longmont . The doubling of manufacturing capacity , is there a way to to translate that to revenue potential ?

Jim Ricchiuti: That's helpful. wanted a follow-up question, just as it relates to the capacity addition in Longmont, the doubling of manufacturing capacity. Is there a way to translate that to revenue potential, and what's the timing on it? Is that decision geared towards an intermediate-term opportunity, or is it more a reflection of what you see a few years out in terms of making the decision to expand that facility?

Speaker #2: And what's the timing on it ? And is that decision geared toward a an intermediate term opportunity , or is it more a reflection of what you see a few years out in terms of making the decision to expand that facility ?

Speaker #3: Yeah , that is a decision that is really driven by our anticipation that this is a market that is going to be quite strong over the next couple of years .

Joe Corso: Yeah, that is a decision that is really driven by our anticipation that this is a market that is going to be quite strong over the next couple of years. As you know, Jim, there are no production lines to build, you know, multiple copies of beam combined lasers simultaneously, and so we want to be in a position that we can do that. In order to do that, we wanted to be out in front, and we wanted to be able to put that, you know, capacity in place in order to do that. That was one of the reasons that we went out and we raised equity earlier this month.

Speaker #3: As you know , Jim , there are no production lines to build . You know , multiple copies of beam combined lasers simultaneously .

Speaker #3: And so we want to be in a position that we can do that . And so in order to do that , we wanted to be out in front and we wanted to be able to put that , you know , capacity in place in order to do that .

Speaker #3: That was one of the reasons that we went out and we raised equity earlier this month . And so it's a little bit difficult to give you a specific number to say That capacity directly translates into , you know , x dollars of revenue , but it certainly positions us very well to be able to deliver , you know , multiple copies of of beam combined lasers

Joe Corso: It's a little bit difficult to give you a specific number to say that capacity directly translates into, you know, X dollars of revenue, but it certainly positions us very well to be able to deliver, you know, multiple copies of beam combined lasers.

Speaker #2: And the timing .

John Marchetti: The timing?

Speaker #3: Yeah , we're starting that . You know , we're starting that work right now . We've signed the lease . We're starting to build clean rooms .

Joe Corso: Yeah, we're starting that, you know, we're starting that work right now. We've signed the lease. We're starting to build clean rooms. We're starting to facilitize it. We're starting to staff it. You know, we're trying to be out ahead of when that demand actually materializes.

Speaker #3: We're starting to facilitate it . We're starting to to staff it . So , you know , we're we're trying to be out ahead of of when that demand actually materializes .

Scott Keeney: Jim, just to add a little color there, you know, with the approach that the DoW is pursuing, we have, you know, good insights into the key priorities. Those are explicit, right? There's the 6 key priorities, and we're absolutely focused on 3 of those. Then underneath that, there's more detail around the specific, you know, requirements. That's what we're investing in. You know, key people from DoW have visited the new site, and we're actively, you know, building it out right now, and let's just say it's very well received.

Speaker #5: Jim , just to add a little color there , you know , with the the approach that the DFW is pursuing , we have , you know , good insights into the key priorities .

Speaker #5: Those are explicit . Right . There's the six key priorities . And we're absolutely focused on three of those . And then underneath that there's there's more detail around the specific requirements .

Speaker #5: That's what we're investing in . And you know key people from DFW have have visited the new site . And we're actively , you know , building it out right now .

Speaker #5: And let's just say it's very well received

John Marchetti: Thank you.

Speaker #2: Thank you

Joe Corso: Thanks, Jim.

Speaker #3: Jim

Speaker #1: A quick reminder that if you would like to ask a question, please do so by pressing star one on your telephone keypad.

Operator: A kind reminder that if you would like to ask a question, please do so by pressing star one on your telephone keypad. You may withdraw your question by pressing star one again. Your next question comes from Keith Housum with Northcoast Research. Your line is now open. Please go ahead.

Speaker #1: You may withdraw your question by pressing star one again . Your next question comes from Keith Howsam with Northcoast Research . Your line is now open .

Speaker #1: Please go ahead .

Speaker #6: Great . Thanks , guys . Appreciate it . And congratulations again on the quarter . Everybody's thoughts here Joe , in terms of the cash raise you guys did during quarter .

Keith Housum: Great. Thanks, guys. Appreciate it, and congratulations again on the quarter. I'll echo everybody's thoughts here. Joe, in terms of the cash raise you guys did during quarter, this might be the first, you know, public comps call that we might be able to hear. I guess, what are your thoughts in terms of how you plan on using that? I'm sure some of that will go to your facility build in Colorado, but any other thoughts or priorities with the extra cash that you guys have now? It sure looks like hopefully you guys are on a path here to free cash flow generation to continue going forward as well.

Speaker #6: This might be the first public conference call that we might be able to hear I guess . What are your thoughts in terms of how you plan on using that ?

Speaker #6: I'm sure that will go to your facility build in Colorado , but any other thoughts or priorities with the extra cash you guys have now and certainly looks like hopefully you guys are on a path here to free cash flow generation to continue going forward as well .

Speaker #3: Yeah , Keith , thanks for the question . I think the first piece is we raised the capital because we want to be in a position to accelerate growth and having this capital will give us the flexibility to pursue multiple opportunities simultaneously .

Joe Corso: Yeah, Keith, thanks for the question. I think the first piece is, we raised the capital because we want to be in a position to accelerate growth, and having this capital will give us the flexibility to pursue multiple opportunities simultaneously. I think as you kind of unpack that, there's really a couple of more specific use cases. One is, as we just talked about on the last question, we wanna invest ahead of demand, right? We have a really good pipeline of opportunities in both directed energy and in laser sensing that are growing, and we don't want to sit back and wait for firm contracts to be in hand before we really start to build.

Speaker #3: I think as you kind of unpack that , there's there's really a couple of more specific use cases . One is , as we just talked about on the last question , we want to invest ahead of demand , right ?

Speaker #3: We have a really good pipeline of opportunities in both directed energy and in laser sensing that are growing . And we don't want to sit back and wait for firm contracts to be in hand before we really start to build .

Speaker #3: We talked about the additional CapEx that we will need to use to , you know , build out our facility in in Colorado and be in a position to deliver , develop and deliver multiple copies of high energy lasers and laser weapon modules .

Joe Corso: We talked about the additional CapEx that we will need to use to, you know, build out our facility in Colorado and be in a position to develop and deliver multiple copies of high-energy lasers and laser weapon modules. Another piece of it is, supply chain is really critical, and so we need to invest alongside with our supply chain partners, whether that's providing them better visibility into our long-term demand applications or, you know, help shorten times for critical inputs that we can reduce the takt time that it takes to deliver these lasers. We want to invest in people. We want to invest in new product development. Last but not least, is we want the flexibility to be at least opportunistic from an M&A perspective.

Speaker #3: And another piece of it is supply chain is really critical . And so we need to invest alongside with our supply chain partners , whether that's providing them better visibility into our long term demand applications or help shorten times for critical inputs that we can reduce the time that it takes to to deliver these lasers .

Speaker #3: We want to invest in people . We want to invest in new product development . And then and then last but not least is we want the flexibility to be at least opportunistic from an M&A perspective .

Speaker #3: While there's nothing imminent today , we've been successful with M&A in the past , and we want to be able to use capital for M&A if it makes strategic sense for us , great .

Joe Corso: While there's nothing imminent today, we've been successful with M&A in the past, and we wanna be able to use capital for M&A if it makes strategic sense for us.

Keith Housum: Great. Appreciate it. Hey, Scott, it's been obviously a banner year for you guys. I'm sure as CEO, you know, you're never gonna rest on your laurels. What's keeping you up at night, or what concerns you as you look out into 2026 and 2027? Concern may be a strong word. I guess what could go wrong? What worries you?

Speaker #6: Appreciate it. Hey, Scott, it's obviously been a banner year for you guys, but I'm sure as CEO you know you're never going to rest on your laurels.

Speaker #6: What's keeping you up at night or what concerns you as you look out into 2026 and 2027 concern ? Maybe a strong word , but I guess what could go wrong ?

Speaker #6: What worries you ?

Speaker #5: Well , internally , my my team calls me Eeyore frequently , so I have no trouble worrying about things . And I think it's a it's an important point .

Scott Keeney: Well, internally, my team calls me Eeyore frequently, so I have no trouble worrying about things. I think it's an important point. I think actually when things are going well, you have to be that more vigilant. I think arrogance is what kills companies. Yeah, we are working harder than we have ever worked to stay on top of execution, to stay on top of what's going on in this market. As I alluded to in my comments to Jim, that means you need to be very close to what is going on in the Department of War and all the services and around the world, and really making sure that you're responsive to the, you know, specific requirements there.

Speaker #5: I think actually , when things are going well , you have to be that much more vigilant . And I think arrogance is what kills companies .

Speaker #5: So yeah , we are working harder than we have ever worked to stay on top of execution , to stay on top of what's going on in this market .

Speaker #5: And as I alluded to in my comments to Jim , that means you need to be very close to what is going on in the Department of War and all the services and around the world , and really making sure that your responsive to the , you know , specific requirements .

Speaker #5: There . So I think it's those topics that , you know , require intense focus , I guess . And yeah , there's you should be worried about all that stuff and you should sweat the details there .

Scott Keeney: I think it's those topics that, you know, require intense focus, I guess. Yeah, you should be worried about all that stuff, and you should sweat the details there. Yeah, those are some of the topics. I've never been more encouraged with the position that we have with these, the opportunities and the technology, where it is today. You know, lasers are hard, right? Implementing these new applications takes a lot of work, and the devil is always in the details. Working hard and concerned about a lot of topics there to make sure that we execute.

Speaker #5: So yeah that is those are some of the topics I've never been more encouraged with the position that we have with these , these the opportunities and , and the technology where it is today .

Speaker #5: But you know , lasers are hard , right ? And implementing these new applications takes a lot of work . And the devil's always in the details .

Speaker #5: So, working hard and concerned about a lot of topics there to make sure that we execute.

Speaker #6: Great . Thanks guys . Appreciate it .

Keith Housum: Great. Thanks, guys. Appreciate it.

Speaker #5: Yeah

Scott Keeney: You bet.

Speaker #1: Your next question comes from Troy Jensen with Cantor Fitzgerald . Your line is now open . Please go ahead .

Operator: Your next question comes from Troy Jensen with Cantor Fitzgerald. Your line is now open. Please go ahead.

Speaker #7: Congrats gentlemen . Maybe a couple easier questions for Joe here . Have you quantified the CapEx that's needed for this capacity expansion ?

Troy Jensen: Congrats, gentlemen. Maybe a couple easier questions for Joe here. Have you quantified the CapEx that's needed for this capacity expansion?

Speaker #3: No , we haven't we haven't quantified it specifically . Troy . But you're it'll be expected to be higher than where we were in .

Joe Corso: No, we haven't, we haven't quantified it, specifically, Troy, but it'll be expected to be higher than where we were in, you know, fiscal 2025, but we're not talking about needing, you know, 2 or 3x the amount that we had in 2025, at least, you know, in 2026. You know, beyond that-

Speaker #3: Fiscal 2025 . But we're not talking about needing , you know , 2 or 3 x , the amount that we had in 2025 , at least , you know , in 2026 , you know , beyond that , if we're spending capital , it's largely because we've had lots of success around the opportunities that we have in both the direct energy and laser sensing .

Troy Jensen: Okay.

Joe Corso: If we're spending capital, it's largely because we've had lots of success around the opportunities that we have in both directed energy and laser sensing.

Troy Jensen: Yes, understood. Okay, Joe, did you say earlier in the call that you expected OpEx to be between $17 million and $19 million every quarter this year?

Speaker #7: You said , Joe , did you say earlier in the call that you expect opex to be between 17 and 19 million every quarter this year ?

Speaker #3: Yeah , we were just trying to give you a sense for what our non-GAAP opex would look like as we move through 2026 .

Joe Corso: Yeah, we were just trying to give you a sense for what our non-GAAP OpEx would look like as we moved through 2026. That $17 to $19 million is a good range from a quarterly perspective. It, you know, goes up and down a little bit, depending on project spends and things like that, but generally, that's a good range to use.

Speaker #3: So, that $17 to $19 million is a good range from a quarterly perspective. You know, it goes up and down a little bit depending on projects and things like that.

Speaker #3: But generally, that's a good range to use.

Speaker #7: Okay . And then just the last one , do you think share count is going to be here for Q1 with the new capital raise ?

Troy Jensen: Okay. Just the last one, what do you think share count is gonna be here for Q1 with the new capital raise?

Speaker #3: Yeah . Q1 Q1 share count probably be in the 55 ish million range from a diluted EPs for purposes of diluted EPs is probably a decent number to use .

Joe Corso: Yeah, Q1, you know, Q1 share count probably be in the $55 million range for, you know, purposes of diluted EPS is probably a decent number to use.

Speaker #7: Okay , keep up the good work , Dylan .

Troy Jensen: Okay. Keep up the good work, gentlemen.

Speaker #3: Thank you sir

Joe Corso: Thank you, sir.

Speaker #1: There are no further questions at this time . I will now turn the call back to John Marchetti for closing remarks .

Operator: There are no further questions at this time. I will now turn the call back to John Marchetti for closing remarks.

Speaker #3: Thank you , everyone for joining us this afternoon and for your continued interest in Enlight . We will be participating in several investor conferences over the next few weeks , and we look forward to speaking with you during those events and throughout the quarter .

John Marchetti: Thank you, everyone, for joining us this afternoon and for your continued interest in nLIGHT. We will be participating in several investor conferences over the next few weeks, and we look forward to speaking with you during those events and throughout the quarter. Have a great afternoon.

Speaker #3: Have a great afternoon .

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q4 2025 nLight Inc Earnings Call

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