Okay, clock has gotten to zero, so here we go. Thank you everybody for sticking around. We're getting towards the latter part of the afternoon. I know there was ice cream out, so really, really glad to see the room so full. And I'm even more glad to have nLIGHT with us today. Scott Keeney, Co-Founder and CEO of the company, to my immediate right, and Joe Corso, CFO. I think this is a really just interesting time, Scott, for your business, but for folks here that might not be as familiar, maybe we'll spend just a few minutes with a brief background and, you know, sort of how you started, where we are, and then we can get, you know, deep dive into the questions. Super. Well, thank you all for showing up, and just a quick overview, first of all. So we started nLIGHT a little over two decades ago to focus on high-power lasers, and our fundamental thesis was that as we improved the technology and increased performance, reduced cost, we would displace legacy technologies in a wide range of different vertical markets, in both industrial and in defense. That thesis remains intact today. We have done that, we have grown, and we see continuing opportunities for growth. As we have improved the technology, the markets have evolved. We went public in 2018, and I think the, probably the first thing I'd highlight is just the transition in the business since then. We've continued to drive the technology forward, and I'll talk a little bit more about the particulars in a minute. But I suppose the big thing, to just give you a sense of that transition, was around the geopolitics of, you know, global markets. 2018, we went public. Q2, I think 47% of our sales were in China. So China was a very rapidly growing industrial market, and by the way, we were one of the early companies to enter the market there. I actually started operations in China in 2003, and with the hypothesis that the market would evolve. It did. But in 2018, after we went public, we also had a deeper review of what was going on in China, and we were fortunate that one of our board members is Gary Locke, who's a former ambassador to China. We made a call that we wanted to reduce our exposure and grow our revenue outside of China. We've done that, and then last quarter, our revenue was about 7% in China, so dramatically de-risked the business. As we've done that, the end markets have evolved also. We've always been a dual-use company, and we can talk a little bit more about that later. Our defense portion of the business was something like 20% of the revenue when we went public. Last quarter, it was north of 50%, and we'll talk about those markets. So we continue to drive the technology. We'll talk about some of the, our Corona technology, the beam shaping, and how it's enabled these markets. But fundamentally, we remain focused on, driving the highest performance lasers that then, enable new market applications, largely in industrial and defense. I think it's interesting, Scott, that, you know, China really kind of drove the adoption- Right. - of industrial lasers, right? Right. Given how important China is to global manufacturing, and really, unlike, you know, some other parts of the world, Europe comes to mind, or Japan- Right F aster adopters of technology, right? Right. So as you, you know, think about your exposure to China today, and now you're seeing defense move way up, I mean, is that a causal effect of leaving China or, you know, kind of maybe you could talk about the near-term environment in some of these other markets. Are the broader industrial markets as, I guess, interesting to you longer term in, you know, kind of these ex-China geographies? Or- Yeah S hould investors really think about you, about nLIGHT longer term as really a defense, aerospace and defense-focused company? Yeah, good. I think the, the first part of your question, I think, is, is pretty interesting and, and quite insightful too, actually, that, that China was when I literally carried a booth over myself in 2003 and set up, you know, we set up our own operations in China with the, the theory that China would adopt lasers faster than other countries. And to be clear, people thought I was crazy at the time. China was not thought of as an as a place where tech was really, it was a big play. And we were early, by the way. It, it was a good, more than five years, probably closer to 10 years before the adoption occurred. But by God, it really happened, and China moved very, very quickly. And, and to be honest, you know, I really miss that. There's an incredibly well-educated, very entrepreneurial, you know, culture in China that led to the adoption of lasers in markets like metal cutting and other markets, too. And so for us, it was actually, you know, a vital part of the growth of our company, and it served its purpose, and frankly, I really miss that aspect of China. But you know, things changed dramatically there from a broader geopolitical standpoint, and so things are very different now. And yes, that is one of the factors that have, you know, driven our the interest in lasers in defense, but not really, not the only reason. I mean, fundamentally, one of the applications in defense for us is something called directed energy. That's been under development for years, and frankly, it took the development of the technology to enable that application. And so maybe very ironically, the growth in China enabled the technology to get there, to be used in defense, too. It's. Yeah, I think that's really interesting. Maybe we'll take a few minutes to drill into the technology itself at this point- Good B ecause I think it's really important to understand how you guys are differentiating yourselves from, you know, some of the larger competitors out there. You know, I think a lot of investors think of the Chinese competitors as being, you know, sort of positioned in China and clearly in aerospace and defense- Yeah in other areas of the world Yeah They probably wouldn't have much traction, so that's one way of thinking about it. But there are other competitors, right? Sure. Maybe we can talk about the, you know- Yeah as it relates to aerospace and defense first, and then get into some of the broader markets. Okay. But maybe you could just touch on the technology itself. Yeah. So broadly, so we're a laser company, but we start with a semiconductor chip. It's a semiconductor laser. And so my Co-Founder was one of the early employees at a company called SDL. Anybody remember SDL? Tom does. Actually, I think, Tom, the highest valued hardware technology transaction in history, $42 billion in 2000, was this company called SDL. It's a high-power semiconductor laser company. It was telecom at that point in time that drove that. And my Co-Founder was one of the I think he was employee 10 or something at SDL, early guy there. Anyways, so we started from a perspective that the semiconductor chip is essential to what we do, and it remains that way today. We have our own fab. We're located just outside of Portland, Oregon, in the Silicon Forest, so Intel is across the river. TSMC is just down the street from us, so near other fabs. So we have our own fab. We do our own chips. Those chips then get put together to scale up power. So the N in nLIGHT stands for adding integer, multiple chips together to get higher power. Those chips then go into fiber. That fiber goes into another specialty fiber that we manufacture, and then those modules get put together again to scale up power further. That's kind of the fundamental stack of technology that we have, and over time, we've built out that stack from the chip forward. In 2019, we made an acquisition of a small company outside of Denver that does the combination of those fiber lasers for defense. We've grown that nicely, and we've also continued to advance the technology, and we now have the highest power, highest brightness laser in history. It's 300-over 300 kilowatts of a single mode laser, and that's based upon that technology. That stack of technology is where we focus, and it applies, as I said, to the defense market there, and then also in the industrial market. I think another thing I'd want to highlight, though, too, is there's a whole host of different performance metrics that we lead on across that. One that I would highlight is our ability to then dynamically adjust that laser source. This is really hard without PowerPoint right now. Mm. Imagine! Anyways, we take these beams, and we can adjust them from a very focused Gaussian beam to a ring mode beam, and we can do that very rapidly. And we have quite a patent portfolio that locks up that approach. And that ability to adjust that beam is critical for both markets. In the industrial market, you change that beam to optimize what you're doing, whether it be cutting metal or 3D printing a metal part. So as you're building up a metal part, say, in additive manufacturing, and you're running a laser over a bed of powder, if you're gonna optimize that, you want to adjust that beam really on the fly. So we have a proprietary approach to doing that. In a similar way, in the defense application, we also dynamically adjust the beam to compensate for atmospheric effects on that beam. And so it's a vital part of the stack of technology that we have pursued and a critical differentiator for us. That's so without using PowerPoint, that's our stack of technology. We're gonna get you some slides next year- Yeah E specially if it's this late in the afternoon again. So thank you for that overview, and I think if we could bring it now to- Yeah A topic that I think a lot of people in this room are interested in, which is dollars and cents. Yeah. You've gotten to a very, very solid position of backlog and, and longer-term contract value- Right - which on the last conference call you mentioned was over $300 million now. Yeah. So maybe you could just walk us through the evolution of signing up, you know, some of these contracts and how you see, you know, sort of that, those contracts and, and backlog converting into revenue for nLIGHT. Yeah, good. I think I'll hand it over to Joe for the particulars. Yeah B ut at a high level, we have a very strong w e are a unique company. We're the only company that has this vertical stack of technology in the US focused on the defense market, and, and these applications in defense are absolutely top priority, not only in the US, but actually for our allies, too. So as a result of that, there are a number of very big contracts, and we've been successful winning it, and we did announce total of $300 million, and maybe, Joe, take it away on disaggregating that. Yeah, sure. So we have segregated our backlog, if you will, into sort of two components. The first component, as Ruben mentioned, was $100 million as of December 31st. That is firm purchase orders that are going to be executed over the next 24 months, so truly, a firm backlog. On top of that, a little bit more than $100 million is another $200+ million dollars of other contracts that we have won, that have not yet been fully funded, but for which we expect the funding to come. And so, you know, we feel very good about both the number of programs that we've won, as well as the diversity of those programs in terms of the defense business. So those are contracts that we are executing in our def, directed energy business, as well as what we're calling our laser sensing business. And one of the things that we are measuring internally, we're not gonna provide the data every quarter, but we are working to increase both the number of contracts that we are, that we are winning, that we are bidding against, so that, it gives us the confidence in the long-term visibility of our aerospace and defense business. Thanks, Joe. I guess a quick follow-up on that, maybe for you, Scott, and we're gonna come back to you, Joe, on just sort of how to think about other, you know, drivers of the model, you know, based off of, you know, all the success you've had with those contracts and backlog. But Scott, as that's building up, you do have this other part of the business, industrial- Right. - markets, microfabrication markets, which, you know, clearly in the current macro, have been under pressure. Can you talk about how you're thinking about, you know, those markets, both from maybe a near-term perspective, macro, headwinds, et cetera, and what you've done, you know, you know, kind of with your strategy on investing? Yeah I n those technologies and areas, versus longer term, as defense, you know, these are big numbers, is defense going from, you know, 50% or so to a larger percentage of your revenues, how important are some of those other, you know, kind of broader industrial markets? Yeah, good. Maybe to start with, I'll describe our strategy a little bit further, that we have a dual-use technology strategy. So literally today, half of our revenue is industrial, commercial, and half is aerospace defense. And those two markets are they have different dynamics, but the core technology is the same across both those markets, and there's a lot of synergy between those end applications. So notably, there's a lot of good R&D funding on the aerospace defense side, so we've won important DARPA contracts are the things where we've innovated and tried some things that were kind of crazy, and some of them worked, and then we applied them to the industrial markets. And then conversely, that volume on the industrial side, and indeed, the capabilities to build lasers is critical for the defense side. Frankly, we've seen that problem where there have been some labs or some companies that aren't really manufacturers of lasers, that they've developed a one-off laser, and then they've tried to take it out to the field, and it's failed because you really don't tease out both cost and quality without volume. So the two markets are essential to our strategy. And, you know, there's also a portfolio going on here, too, right? You know, in the distant past, we had a very strong defense business for a while, and then sequestration hit, if anybody would remember that, right? Then our industrial markets took off. So right now, the industrial markets are more challenging due to macro effects. And then also just this transition that's going on from this big market in China to the rest of the world. And probably we can talk a little bit about additive manufacturing. That's a big market for us. Maybe I'll hold and come back to that. That's a market that we have a very strong position in. We see strong growth there, but it's still in the early stages of growth there. So, you know, sitting here today, the industrial business has a number of growth options embedded in it. Additive is probably the one I'd highlight, but it also provides the volume, which then supports the defense part of the business. Yeah, and that's an area that I wanted to talk to you about, because, you know, a lot of your peers talk about welding- Yep. other, you know, sort of emerging markets, whether it's medical- Yeah D evice applications. We're starting to see industrial, you know, lasers used or fiber lasers used in drying applications- Right C oating applications. So it seems like the scope of use cases is expanding. It sounds like you've got technology- Yeah that can address a lot of those expansions. Right. So am I right in assuming that near term, you're thinking additive manufacturing is likely maybe one of the key areas that we're gonna see, you know, growth over the next several years? Or, you know, do you think that, you know, some of these other areas are going to be growth drivers as well for nLIGHT? Yeah, it's good. So we do have diversity of end applications. So we do have some very interesting applications in welding. Electric vehicle type applications, battery applications are pretty interesting. We have medical applications, some really good ones, and some nice growth there. But we're not highlighting that, and it's not an area that we're emphasizing as much, because in additive manufacturing, 3D printing metal parts, that's where we, our differentiation is much greater. We have a very strong technology, allows us to, again, dynamically adjust these beams, and you need to adjust the beams in these other markets, but let's just say, generally, you don't need to do it as fast and as dynamically as we do. In additive, you do. Literally, as you're running the laser across the powder bed, you're gonna make these changes. Our differentiation, differentiation is greater there, and what that does, by the way, is it increases the throughput to build these parts. So additive manufacturing, metal parts, laser powder bed applications are real. Jet engines, if you fly on a GE 737, an engine for a 737, it probably has additive manufactured parts in it. Rocket engines, SpaceX, Blue Origin, others, right? They're all using laser additive manufacturing to make these parts. And so for those applications, they're good examples of real applications today. But to get the broad adoption, we need to improve the productivity of building these parts. It's a pretty incredible process. You can build parts that you simply can't make any other way. It is a slow process, and therefore, expensive, and what we're able to do is increase the throughput, and thereby, you know, bring the cost of these parts down, and that's why we're excited about the applications there. Great. Thanks, Scott. That's, that's very helpful. And I guess to kind of close out the discussion on these broader markets, we touched on the macro. I think most investors sitting in the room understand that you know, macro challenges- Yeah H ave been persistent. What are you hearing from your customers in terms of, you know, sort of how they're thinking about, you know, the world, you know, today? Or maybe if you take a little bit of a longer-term perspective, you know, are things opening up again in some of these areas, or is it too soon? I think it's too soon on, from a macro standpoint. Right. You know, I try to go out, and, and I'm always, pushing, well, myself and my team to go not only talk to our customers, but to tease out what are our customers' customers saying, and what's really going on out there. And I think it's too early to say that there's I think there's so much uncertainty in the world right now. Sure T hat it's just really hard to call it from a macro standpoint. Where we're excited is the details that we see on the adoption of, you know, our lasers that are enabling new applications like additive manufacturing. In fact, in a few weeks, there'll be the RAPID Trade Show in L.A. If anybody is interested in additive, I recommend, you know, seeing what's going on there. Some really exciting things going on in that space, and that's what gives us the insights to, you know, talk about where we're gonna grow. Right. I guess, Joe, then, with that in mind, on the macro, maybe we'll turn to, to you. You guys have done a, I think, a great job, you know, sort of executing around the macro. So, again, for those maybe a little less familiar with the margin structure of the company operationally, you know, kind of that China discussion, having a lot of exposure to China, including manufacturing in China, which is now- Mm-hmm Y ou know, kind of onshored back. So I think it'd be helpful just to kind of go through the model as it stands today, how you're feeling about the model in light of kind of where we are in this, you know, sort of challenging macro. Yeah. So I think maybe even before doing that, just sort of, set the context of- Yeah T oday's manufacturing footprint looks like. If you go back to 2018 when the company went public, and you isolate out the defense business, nearly all of our revenue needed to run through our facility in Shanghai in some form or fashion, where we were building the semiconductor laser. You know, fast-forward to today, and we've done two things since then that position us well for the long term but have created some near-term and recent past pressure on the margin. The first thing we did is we stood up an automated packaging facility in our facility in Southwest Washington, and we outsourced a portion, we built a relationship with a third-party contract manufacturer in Thailand to also provide redundancy to build those semiconductor lasers in Thailand. So today, you know, our margin structure is quite different because we will build parts either in the U.S., or we outsource them to our contract manufacturer in Thailand. When you think about where we are going to get gross margin improvements, you've got to remember that we are a vertically integrated manufacturing business, so we have a gallium arsenide-based wafer fab, and we go all the way through the packaging and the sale of our fiber laser. So the number one driver of improved margin is volume. Even if you look from our guidance into the second quarter, nearly all of the improvement in products gross margin will come due to the fact that we will just run more product through our facility. So that's the first piece of it. The second piece of it is, these are still relatively new manufacturing facilities for us, so, we don't have our finger on the pulse yet on some of the material and the variances and things like that, that will happen quarter-over-quarter. All of those things are improving. And then the third piece of it is, as the mix of the business continues to shift, more towards the defense business and the defense product business, that will give us another uplift in terms of, our ability to drive improved gross margins. Got it. Thank you. Before I continue, I wanted to make sure this is interactive. We've got a few, six minutes or so left. Question? I had a question for you, Joe, on the $200 million defense backlog that, you know, is still not open to you. What's the timing of that, and what are some of the milestones that you're looking for to unlocking that? And, and when it does unlock, would it have a similar timeline as your $100 million, meaning 24 months? Yeah, no, it's a great question, Troy. So most of the work that we have under contract has a, you know, three year period of performance. So as you sort of project out from today, most of that is realizable within the next 2-2.5 years. It varies based on contract. The other thing is that most of it we expect to get, right? It's not fully funded today, but when we, when we engage with the government and work through what the- P rogram looks like, it assumes that we are getting incremental funding on these cost-plus fixed-fee programs. So of course, we need to make sure that we are demonstrating progress, and we have, you know, predetermined milestones that we're working on with the government. So we expect to actually get that funding. In terms of a margin profile, I think there's two things to think about. One, it will be the typical sort of high single-digit gross margin that we have today on the development side of our business. But all of those costs are effectively in the cost of sales line, so that really does sort of drop right down, and you can almost think about it as EBIT margin. The other thing that those contracts do for us is, we manufacture much of the hardware that goes into those development programs, so we will run product through our fab, and on that business, we get more traditional, you know, product gross margin. So both of those things should be an uplift to the overall margin profile of the company, and certainly the fall-through profit to operating income and EBITDA. Question. Yeah. Sometimes said about future wars in front of space and satellites. Mm. Lasers and everything like that. They mentioned your name, but I'm just curious if that's what a lot of what you do is involved in one or two. We all know that development contracts otherwise become production contracts, so if you can comment on that as well. Absolutely. Let me just repeat that because- Right I just want to make sure it gets caught on the webcast. But the first part is Wall Street Journal talking about future wars, and, you know, some actually articles, given all the unfortunate, you know, happenings in the world today, but in satellite, et cetera- Yeah Are you involved in some of those areas? And then the second part of the question was just around contracts and, you know, kind of long-term contract value. You know, I, I guess if I'm phrasing this right, conversion rate probabilities and that type of thing. Yeah. Thank you. Yeah. So let's see, on the first question on space, it's a difficult question to answer because everything in space is classified, more or less. I will say we have lasers that are qualified for space, and it is a whole set of different capabilities that are required to qualify lasers for space. And we have—I can say we have lasers in space that have been very successful, actually. Beyond that, I will agree with the fundamental, you know, idea of that article that, yeah, this is a big, big topic, and I'll leave it for the Pentagon to communicate more about what's going on there. The second part on development programs and conversion, you know, in some sense, they're the ones we're working on, well, there's a mix, but the biggest one we're working on, I'll just highlight, is something called the HELSI Program. It's scaling lasers. We scaled it to over 300 kilowatts, and then we won the second phase, and we're scaling to 1 megawatt. That is not a program that is designed to then transition directly to a program of record. It's to demonstrate a technology, and we're already, you know, taking technology from that first phase and implementing it in other programs that are, you know, product-based programs. So it's kind of running parallel to that, and many of them are that are like that, actually, right? So I hope that answers the question. Tom? Told by many of the VCs that they're really focusing on this, you know, laser and space area. You've been I mean, you know, you were venture-backed, and so, you know, you already got a pretty good pipeline into these guys. But, but it seems like it's much broader now and, and an area besides AI that they're really interested in. Have you been approached by a bunch of these guys, since you're kind of one of the leaders in that area? Approached by the VCs? VCs. Yeah. You know, invest in a lot of the new technologies. Right. And repeat the question, sir, or? Yeah, yeah. All right. I'll answer it, and I'll- I think, yeah, I'll hold it in there. So, yeah, I think what we see going on in Silicon Valley now with defense tech is something that is pretty new, right? We've seen it. It is. It really is. Yeah. I mean, in the past, there was sort of, Hey, Silicon Valley came from defense, but then it left and, and went on its own, right? It's coming back. And, you know, everything from, I don't know if you guys are tracking, Silicon Valley Defense Group and others, or, DIU is an interesting, new, agency under the Pentagon. Actually, a good friend of mine, Doug Beck, is running it, a former Apple guy, and it's working on, on this nexus. And so, yes, we've been approached by many of the players on the private side that are doing work in this area, because we've been doing this for a long time, and, and it is a pretty rich space. You know, there's always some hype. You have to be careful about that, 'cause it always takes, you know, longer than people expect, especially when you're working with, you know, defense applications. But it is an area where there are a lot it's a much broader set of applications and ones in which they're pretty big applications that I see out there. So we have to work on how we can communicate that better to public investors, and we'll endeavor to continue to do that, but it is an interesting time. Thank you. Look at that. This is the first time I hit the nail on the head, timing-wise. We just did it. So thank you, everybody, for joining us. Thank you, Scott and Joe. Yeah, thank you, Ruben.