Good day and welcome to the nLIGHT Inc. third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. Following the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at that time, please press star one on your telephone keypad. You may remove yourself at any time by pressing star two. Please note today's call will be recorded. Lastly, if you should require operator assistance during today's call, please press star zero. I will now turn the call over to John Marchetti. Please go ahead, sir. Thank you and good afternoon, everyone. 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. We have provided reconciliations to these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings release, which can be found on the investor relations sections of our website. I will now turn the call over to nLIGHT's Chairman and CEO, Scott Keeney. Scott. Thank you, John. Third quarter revenue of $56.1 million was above the midpoint of our guidance range and grew 11% both sequentially and year-over-year. Our aerospace and defense business grew 59% year-over-year, driven by record A&D product revenue. Our commercial business, which includes our industrial and microfabrication end markets, increased 12% sequentially. Product gross margin of 28.8% and overall gross margins of 22.4% were both within our guidance range. Our balance sheet remained strong, and we entered the third quarter with cash and investments of $107 million and no debt. Let me start with the review of our aerospace and defense business, which delivered another strong quarter of results and remains a key growth driver for our overall business. In directed energy, interest in our components and full solutions continues to grow. Ongoing military operations in the Middle East and Ukraine highlight the increasing need for advanced, cost-effective defensive weapon technology. To update you on our programs we have discussed in the past, we continue to make good progress in our HELSI 2 program, which is a multi-year DOD-funded $171 million program to develop a one MW laser, with a completion date still expected sometime in 2026. Another critical program for nLIGHT is the Army's DE M-SHORAD effort, which is to develop a 50 KW high-energy laser for short-range air defense. On this program, nLIGHT is responsible for delivering a 50 KW high-energy laser to a prime contractor, and during the third quarter, we finalized the design and began delivering some of the most critical hardware components of this beam-combined laser. The successful delivery of these components once again highlights the importance of our vertical integration strategy in the directed energy market, where these enabling components have been specifically designed to optimize the performance of the high-energy laser. And it's not just the U.S. military which sees the potential benefits of directed energy systems. Just last week, Israel's Ministry of Defense announced that it would spend over $500 million towards Iron Beam, an Israeli ground-based laser system for defense against aerial threats, including rockets, mortars, drones, and missiles, with a target delivery date during 2025. Israel's announcement is another example of how directed energy is increasingly being viewed as a critical part of a layered defense strategy. Directed energy lasers offer a significant operating cost advantage compared to traditional kinetic weapons and a deep magazine. nLIGHT continues to leverage its vertical integration from semiconductor chips through beam-combined lasers to address customers in the U.S. and overseas. We have generated revenue at nearly every level of vertical integration in the directed energy market, which makes us an ideal supplier to the U.S. government, other prime contractors, and foreign allies. Our laser sensing business was also a strong contributor to our record revenue quarter in A&D. As a reminder, laser sensing products use lasers to detect and measure objects and are used in a wide range of land, sea, air, and space applications. 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. Last quarter, we announced a new $25 million contract for an existing long-running missile program, and we began shipping against this award in the third quarter. We've also continued to make excellent progress on a handful of classified programs. In one of these programs, we shipped our first EMD, or Engineering and Manufacturing Development Unit. The EMD phase is focused on building, testing, and qualifying the solution to ensure it meets all operational requirements. Our customers' forecast suggests that the low-rate initial production should start for this program in the latter half of 2025. Before turning to a review of our commercial markets, I'd like to provide an update on our manufacturing activities in China. Several years ago, we embarked upon a process to reduce our overall reliance on our Shanghai manufacturing facility. While we continue to maintain a presence in China, by the beginning of the fourth quarter, we formally ceased all manufacturing operations in Shanghai. Manufacturing that has been performed in this region is now being performed at a contract manufacturer in Thailand or at our automated facility in the U.S. While it will still take a few quarters to ramp back to normalized production levels, we are pleased with the transition to date, and we believe this represents the last significant operational transition from China. Let me now spend a few minutes on our commercial markets. In microfabrication, we provide high-brightness, high-power semiconductor lasers to many of the world's leading diode pulse solid-state laser vendors, which are used across a wide range of applications. Third quarter microfabrication revenue grew 40% sequentially to $14 million. While we are pleased with our revenue in the quarter, we expect volatility in this business to continue as overall demand remains choppy. In industrial, growth challenges remain. In cutting, which remains the largest portion of our industrial business, overall demand remains weak, and we expect this to remain the case through the end of the calendar year and into 2025. Our cutting revenue is now driven almost exclusively by our proprietary high-power programmable lasers. And while Chinese laser suppliers continue to gain market share in standard lasers, we continue to innovate to meet our customers' most demanding needs. For example, in the third quarter, we introduced our new Infinity product, which is optimized for complex, precision, thick metal cutting applications. Demand for welding solutions remains muted, as much of the advanced battery and fuel cell manufacturing capacity that is expected to be installed over the coming years continues to be delayed on softer overall EV demand. We are receiving positive feedback from existing and potential customers on the new welding products released last quarter, namely APT, WELDForm, and ProcessGUARD In additive manufacturing, we are committed to working with many strategic customers and partners that are focused on driving broad adoption of metal 3D printing technologies across multiple end markets. We believe that one of the most critical challenges facing the additive manufacturing industry is to reduce the overall build time and overall cost per part. To address this industry-wide pain point, nLIGHT continues to introduce new products that increase the printing speed and flexibility of additive manufacturing tools. Our AFX Dynamic Beam Shaping Technology allows for high-resolution printing for fine detail features while also offering faster build rates utilizing stable ring mode power, making it the most versatile and efficient laser available for the additive manufacturing market. Powerful lasers drive more productivity in laser powder bed fusion. However, the lasers available for additive manufacturing today do not allow for powers higher than one kilowatt without introducing untenable amounts of instability in the melt pool. Our Corona AFX family of lasers distribute the energy into ring shape, making it possible to move to higher power processes with the stability required to produce high-quality parts. Earlier this week, we announced the launch of our new Corona AFX 2000, a specialized two-kilowatt laser proven to produce productivity in laser powder bed fusion for metal additive manufacturing. The AFX 2000 has undergone successful commercial validation with a leading customer servicing the aerospace and defense, and automotive markets. Using aluminum alloys, this customer is now achieving print speeds up to three times faster when compared to today's leading large-format printers. In summary, in the industrial market, we remain enthusiastic about our long-term opportunities in metal 3D printing. However, we continue to experience significant headwinds in our commercial markets, which we expect to persist well into 2025. In aerospace and defense, we expect the excellent progress we made in the third quarter to continue, and it positions us well for both near and long-term growth in this strategic market. With that, I'll turn the call over to Joe to discuss third quarter financial results. Thank you, Scott. Turning to the third quarter results, total revenue in the third quarter was $56.1 million, an increase of 11% compared to the $50.6 million for the third quarter of 2023, and above the midpoint of guidance. Product revenue was $41.1 million, an increase of 8% compared to the $38.1 million for the third quarter of 2023. Development revenue was $15 million, an increase of 20% compared to the $12.5 million in the third quarter of 2023. Aerospace and defense revenue for the third quarter was a record $30.3 million, 54% of total revenue, and an increase of 59% compared to the third quarter of 2023. A&D product revenue in the third quarter was also a record high at $15.3 million, growing 135% year-over-year and 35% sequentially. Our strong performance in A&D was driven by an initial ramp of product sales into a key directed energy program and the continued execution of a long-running laser sensing program. Microfabrication revenue for the third quarter was $14.3 million, 25% of total revenue, and an increase of 19% compared to the same quarter a year ago. Although Q3 was a more typical quarter for us, most of our revenue in microfabrication has very short lead times, and visibility beyond a quarter remains limited. Industrial revenue for the third quarter was $11.6 million, 21% of total revenue, and a decrease of 41% compared to the third quarter of 2023. While we continue to serve several key strategic customers with our differentiated programmable lasers, overall market demand in each of our three segments is muted. Moreover, in the cutting market, continued competition from domestic Chinese laser manufacturers has had and is expected to continue to have a significant impact on our sales of standard fiber lasers. Turning to gross margin, total gross margin in the third quarter was 22%, within our guidance range and up 2 percentage points compared to 20% in the same period a year ago. Product gross margin for the third quarter increased to 29% compared to 24% in the third quarter of 2023. The increase in product gross margin was driven by a favorable sales mix, pricing, and an overall increase in product volumes, which resulted in better absorption of fixed costs. These improvements were partially offset by an inventory write-off of approximately $900,000 or 200 basis points for a specific customer in our industrial market. Development gross margin in the third quarter decreased to 5% compared to 7% in the same period a year ago. The lower development gross margin was driven by an increase in the estimated cost of completion on a significant fixed-price contract in the third quarter of 2024. Despite the lower-than-expected development gross margin in the quarter, we continue to expect our development margin to remain in the high single-digit range over the intermediate term. Turning to OpEx, non-GAAP operating expenses were $18.3 million, an increase of $2.3 million compared to the third quarter of 2023. The increase in operating expenses was driven by an increase in employee costs and project-related spending in research and development, as well as a bad debt charge in the quarter of approximately $1 million related to a specific customer in our industrial market. On a GAAP basis, operating expenses were $24.3 million, an increase of $1.9 million compared to the third quarter of 2023. Net loss on a non-GAAP basis was $3.7 million or $0.08 per share, compared with a net loss of $4.9 million or $0.10 per share for the third quarter of 2023. Net loss on a GAAP basis was $10.3 million or $0.21 per share, compared to a net loss of $11.9 million or $0.26 per share for the third quarter of 2023. Adjusted EBITDA was a negative $1 million compared to a negative $1.9 million for the third quarter of 2023. Adjusted EBITDA for the third quarter of 2024 includes the bad debt charge and inventory write-off related to a specific customer, as previously discussed. Turning now to the balance sheet, we ended the third quarter with total cash, cash equivalents, restricted cash, and investments of approximately $107 million and no debt. We continue to improve our management of working capital during the quarter. Average DSO improved to 58 days compared to 65 days at the end of 2023. Inventory at the end of the third quarter was $48.8 million, representing 104 days of inventory compared to 122 days at the end of 2023. Cash used in operations was $5.6 million for the third quarter. Year-to-date, cash flow provided by operations is a positive $1.5 million. CapEx was $1.6 million in the quarter compared to $2.7 million in the third quarter of 2023. As noted in prior quarters, maintaining a strong balance sheet remains a key focus of the company. Tight spending controls coupled with working capital management and sound CapEx investment have enabled us to maintain a balance sheet that we believe will enable us to achieve our long-term growth objectives. Turning now to guidance. Based on the information available today, we expect revenue for the fourth quarter to be in the range of $49 million -$54 million. The midpoint of approximately $51.5 million includes approximately $36.5 million of product revenue and $15 million of development revenue. Included in our fourth quarter guidance is our expectation for continued sequential growth in our A&D products. It's important to keep in mind that 100% of our fourth quarter A&D revenue is already in backlog, but the timing of the delivery of that backlog can be uncertain, particularly as we are dealing with new and innovative directed energy-related products. Fourth quarter product gross margin is expected to be in the range of 21%-25%, and development gross margin is expected to be approximately 8%, resulting in an overall gross margin range of 17%-21%. Finally, we expect Adjusted EBITDA for the fourth quarter of 2024 to be in the range of -$5 million to -$2 million. We continue to estimate break-even Adjusted EBITDA with quarterly revenue in the $55 million-$60 million range. With that, I will turn the call over to the operator for questions. Thank you. The floor is now open for your questions. If you have a question or comment at this time, please press star one on your telephone keypad. You may remove yourself at any time by pressing star two. Once again, if you would like to ask a question, please press star one at this time. Our first question will come from Jim Ricchiuti with Needham & Company. Please go ahead. Hi, thank you. I was wondering if you could talk to us about your line of sight to product revenue in the A&D business looking beyond Q4. Scott, you highlighted several areas that it sounds like potentially could begin scaling, but is there any way to give us a better understanding as we look out beyond Q4 how some of that product revenue could begin to develop? Yeah, absolutely, Jim. Thanks for your question. I think you're getting at a key topic. I think certainly one of the highlights in Q3 was the record revenue that we saw in defense overall, but in particular in the products for defense, and the growth there is a key driver for our business. As Joe mentioned, we do have a very strong backlog, and so we've got good visibility into continued growth in the products for defense, and they are in all of our key segments in both directed energy and in sensing. And in terms of our guidance, as Joe mentioned, we certainly have the backlog. The deliveries are related to important programs where it's new technology, so the timing of that revenue can be an issue, but we have very strong visibility into continued growth there. And maybe I'll hand it to Joe. Anything you want to add to that, Joe, with particular topics for Jim? No, I think you captured that well, Scott. Thank you. Scott, because it's been in the news so much, are you able to talk to us a little bit about the level of engagement you have with some of the defense primes in Israel, including those that are working on the Iron Beam project? Yeah, I think it's fair to say that our engagement is very deep. I think we've talked about that a bit in the past, and we are a supplier into Iron Beam, and we are deeply engaged with not only the current products but the future development there. Beyond that, it gets a little bit more difficult. Certainly, there's the news about the $500 million award. You'll recall, in addition to that, there's a $1.2 billion supplemental bill that was passed, so the funding for Iron Beam is very solid, and yes, we are deeply engaged with the key players supporting that new technology. I had one final quick question just on the commercial business. You highlighted some improvement in the microfabrication market, and I know it's going to be uneven, but I'm just curious, where was that coming from? Yeah, that was coming from an existing customer, existing long-term customer was probably the biggest source of that. But yeah, as we said in the prepared remarks, that is not a signal we want to overly highlight. That was orders in the quarter for that long-term customer. Okay. Thank you. Bet. Thank you. Our next question will come from Greg Palm with Craig-Hallum Capital Group. Please go ahead. Yeah, good afternoon. Thanks for taking the questions. Starting with the commercial business, I think the implied guide suggests a pretty significant both sequential and year-over-year decline in revenue. And I know, Joe, last quarter, you sort of directionally guided towards $210 million for the year. So the Q4 guide puts you well below that. So I guess the question is, what's happened in such a short amount of time where you're seeing such a shortfall relative to not that guide per se, but that sort of target that you had out there? Yeah, Greg, it's pretty simple, right? I think we talked about the volatility in the commercial business and the lack of visibility that we have on a quarter-over-quarter basis, right? If we go back to how we thought that the year would shape up, defense has been a very good year for us. Scott talked about the timing of our defense business can be somewhat uncertain, so we've made great progress from an overall business perspective in defense. So there was a little bit less than what we had hoped for, but we're pretty happy with our trajectory. And then really, as we've talked about in the past, right, we have one quarter of guidance and lack of visibility beyond that in the commercial business. We talked last quarter about seeing some better signs of life in the micro business. We had a very good Q3. We don't expect that level of Q3 to repeat in Q4, and we've seen continued pressure in the industrial business, particularly on the non-programmable side of the product portfolio. Yeah, that makes sense, and Scott, your comments about commercial remaining challenged in the near term throughout into fiscal 2025, does that mean expect it to get worse compared to Q4 levels, or is your thought just staying at these sort of low levels that the guide implies for Q4? Yeah, I mean, it's hard to say given all the news out there, and it ranges from, as we've talked about, one of the underlying headwinds here is just massive excess capacity in China across every sector I can see beyond just lasers. That's a bit of a headwind. On the opposite side, there were a number of customers in the industrial market that were waiting for the election results, and who knows what that means in terms of the orders that may flow from that. But I think we are certainly not guiding to that being the growth driver for us. The growth driver is A and D, and I just want to be clear about that. Yeah, and Greg, let me just add a little bit of color to what Scott just said. So our commercial business, as is implied by the Q4 guide, will be down, and we really don't expect any significant rebound from those levels in 2025. Now, keep in mind, we don't have great visibility into a full-year basis, is why we don't provide any formal annual guidance. And then we are still seeing good progress in the additive business, but that's not going to be enough to offset our expected decline in some of the other areas of our commercial business. Okay. And I'm curious, in terms of the Chinese suppliers specifically, how impactful or competitive are they here in the U.S. at this point? And I ask in light of potential tariffs that could be put on and whether you think that could impact that business or not. Yeah, I guess the way I'd look at it, Greg, is it's broader than just our visibility into specific customers, say, in the U.S., because our customers are affected by competition in capacity that there's excess capacity that's going into other markets and their customers shifting from, say, the U.S. to Mexico or elsewhere, right? So the dynamics are quite complex. I think the underlying theme is one that is ultimately driven by massive excess capacity in China. And certainly, on the margin, higher tariffs certainly could help with some of our customers in the U.S., but I think it's more complex than just that. Okay, fair enough. Last one, aerospace and defense. Really nice bright spot again. Based on your backlog levels, knowing you've got a lot better visibility in this business, but also cognizant of the timing, the guide assumes at least 20% growth in that segment for the year on a year-over-year basis. Is that repeatable in 2025? Yeah, let me take that one. So Greg, the short answer is our aerospace and defense business as we go into 2025 is either covered by backlog or in our build plan that we fully expect to be building. What is not as certain is that, as Scott alluded to earlier in the call, right, some of these products that we are building, particularly on the product side, are really pushing the edge of technology, right? And it's really difficult to pinpoint exactly what quarter they are going to come in. And then the other piece, even though we have, I'll just call them the design wins, when that's actually going, the customer is going to take it, or when exactly we are going to build it, that's what creates the level of uncertainty in being able to give you a direct answer of whether it's 20% up in 2025. That all being said, we do expect growth to continue throughout the 2025 period and beyond. And as we think about how we've outlined, I'll call them the long-term bets of the company, right, the A& D piece of our business is going quite well. Yeah, it seems to be. Okay, I will leave it there. Thanks. Thank you. Thank you. Our next question will come from Ruben Roy with Stifel. Please go ahead. Yeah, thanks, Scott, and Joe. Scott, I was wondering if we can go back to the backlog a little bit and if you could just maybe talk about directionally kind of how backlog has progressed, and especially in light of sort of what you said with some of the data points coming out now. Are you seeing that show up in backlog yet? I know you started off the year very strong with some backlog growth and just kind of wondering how that's progressed, I guess. Yeah, I mean, in summary, it's progressing. And I think to specifically answer your question, are we seeing some of the news we're talking about manifest in our backlog? The short answer there is yes. And so we are seeing expansion in orders, expansion in the design wins for critical programs, both in directed energy and in the sensing business. And in terms of the specific metrics, I'll let Joe highlight those for you. But directionally, yes, we're seeing growth in both those sectors. Yeah, and Ruben, the way that we think about backlog really is sort of broken down into a couple of different components, right? We've got, when you think about the contract vehicles that we are working on, we have a lot of ceiling, and we have a lot of opportunity to deliver value against those contracts. That's sort of one piece of it. Then inside those contract vehicles, we do have fully funded firm backlog that we are executing against. We have firm POs, obviously some in the commercial side, others in the defense side. And then we have design wins, right, that maybe today in the form of an RFQ, right, that we believe we've got really good chances of winning, and we've been executing on, and it's a follow-on to what we've been doing. So when we measure our business and our progress along those dimensions, things are progressing quite nicely. That's very helpful. Yeah, that's what I was getting at. Thank you for that. And just a quick follow-up on the commercial business. Just thinking through the guidance for Q4 again, and perhaps a step down after sort of the customer-specific revenue you saw in September, is that kind of the way to think about it? Is that back down to sort of that, let's call it $10 million level or so as a normalized run rate? And that's what we're thinking through. And I'm asking that because I'm just trying to figure out, Joe, on sort of the comments about next year and sort of potentially flatlining. Are we back to that type of normalized level for both industrial and microfab, or are you seeing other types of weakness we should think about and maybe a different sort of baseline run rate for next year? Yeah, no, it's a great question, Ruben, and you're thinking about it exactly right, right? Our microfabrication business, we talked about the fact that it has been lumpy, and if you look back over the last couple of quarters, right, it's been sort of in that $10-$11 million range. We had a nice bump that we enjoyed in Q3 at $14 million, but what we expect in the fourth quarter is that it's going to get back down to those levels where we were in the early part of the year, right? The industrial business, again, we don't guide specifically by end market, but again, we are seeing pressure in that business, right, and so in light of an uncertain macroeconomic environment, many of our customers and frankly, our competitors' customers, right, are also suffering. We do see continued pressure on that business in Q4 and as we move into 2025. Okay. Thanks, Joe. Yeah, I had one last one on the manufacturing comments. You guys had talked about Fabrinet a while back. Is this just part of that, or did something accelerate to kind of now formally cease everything over in Shanghai and move to the U.S. and Thailand? No, it was part of that, Ruben. It was just part of the plan, right, to move certain SKUs. You obviously can't do it all at one time. And so we moved the bulk of the work over, let's just call it for argument's sake, the last 12 months. And this was really the last piece of that puzzle from a true components rolling off the line in Shanghai. That is now complete. We have exited the manufacturing of components and the assembly of components in our Shanghai facility. That is all now done either in the U.S. or at Fabrinet. Now, it will still take some time, right, as you're establishing a new manufacturing facility, whether that's migrating it to a CM like Fabrinet in Thailand or bringing it back to the U.S., right? There's a little bit of a ramp period that we're still going through with that last bit, but that was all part of the plan. Got it. Thanks, guys. Thank you. Thank you. Our next question will come from Troy Jensen with Cantor Fitzgerald. Please go ahead. Hey, gentlemen. Congrats on the nice results. Thanks Hey, so a couple of quick questions back on just directed energy. Is there any way, Scott, you could size the opportunity for us? And I guess what I'm looking for, hoping to get out of you guys, is at the low end, if you just win a couple of components in a directed energy platform to the high end, you win as much as you can. Can you give us a range of the dollar content in a system, or any help would be great? Yeah, I'll try my best. Look, the biggest markets for directed energy are obviously the U.S. has been number one, but Israel has grown dramatically and supported by the U.S. Historically, the U.S. spend in directed energy has been around $1 billion a year. And now with Israel coming online with funding from Israel and supplemental funding from the U.S., it's certainly in the multi-hundred-million-dollar-a-year sort of spend. And then our ability to participate in that depends on what level. So at the lowest level, it's a single-digit% of that at the component level. And we participate across the board really at that level. We have the leading components that go into directed energy systems. But we have a stack of technology that goes all the way up to a very high level of integration. And so we have programs at that level too that capture effectively the full amount of whatever the program is. So there's a range there, and there's quite a broad range. But certainly, it's more than single-digit, low single-digit%, and you get into double-digit% depending on the adoption of the technology. So as we move forward, Troy, we will be putting out more information to disclose specific programs because the programs are still in the development phase. I think Israel will be the first out with an implemented system, as they've said, in 2025. And so there will be more information as it is available. Okay, perfect. Can you let us know what is the maximum power laser you guys currently produce for directed energy? Absolutely. Yeah, we're very proud of the fact that we have the highest power laser in the world, and it's over 350 KW. That was part of the HELSI program. And then we won the contract to scale that to a megawatt power. And as we noted, we're on track on that program, but we will continue to scale up the power. The typical programs are going to be a fraction of that, but those programs allow us to develop the technology, which enhances even the lower power applications. Okay. Last question. Was there a 10% customer in the quarter, and do you expect to have any next year? Yeah, we've had a couple of customers in the quarter that have been around the 10% level. I mean, U.S. government, right, or prime contractors that are effectively serving the U.S. government have typically been the ones that are in the 10% range, Troy, and we do expect that to continue as we move forward. Okay, gotcha. All right, guys. Keep up the good work. Thank you. Thank you. As a reminder, if you would like to ask a question, please press star one at this time. Our next question will come from Mark Miller with Benchmark. Please go ahead. Thank you for the question. Your low power as a% of total sales, that's been fairly soft for several quarters. What is driving the weakness in low power? Yeah, the low power is largely related to the additive manufacturing lasers, Mark. Most of the market for additive manufacturing is really at a KW or below. If you go all the way back to the 2016, 2017 timeframe, a lot of those low power lasers were used for cutting. You can see that as that really tailed off in 2019. It's because most of the revenue was cutting related, and it was moving up the power curve for cutting. And then as you saw the low power, the percentage of the industrial revenue that was low power is a pretty good read-through to the additive manufacturing business. I'm just wondering about the margin profile, your backlog. Is that better, the same, or less than what you've been recently reporting? It's a great question, Mark. When we look at the margin profile of the revenue that we've got in backlog or in forecast or we are expecting to generate, it's better than what we've generated in the past. The challenge for us right now is in the fact that at these lower revenue levels, we are not absorbing our fixed costs all that well. So if we look at the same products sold to either the same customers or different customers year-over-year, the margins are doing well. And the new products that we're introducing, whether it's in defense or in the commercial portion of our business, tend to be higher margin products. It's just about absorption at this point for us until we start to see that gross margin profit dollar fall through. Just the last question for me is, is the backlog front-end, back-end loaded? Is it going to be linear how it comes out of backlog into revenues? No, it really depends. It's hard to say. It's certainly not linear, Mark, because if you think about, let's just talk about what the biggest contributors are to backlog. We announced a $171 million contract for the HELSI 2 program. That is not linear because you're doing, in some quarters, more development work than in other quarters as you've got folks that are working on other programs. There are certain quarters where you're receiving and integrating more material than in certain other quarters. So it's difficult to really talk about that from a linear basis. Now, when you look at the portfolio effect of all of those programs, the way that we expect them to roll off does give us confidence that the defense business should grow sequentially, but just a little bit difficult to pin it to the linearity of any particular program, if you will. Thank you. Thank you. Thank you. At this time, I'm showing no further questions in queue. I would now like to turn the call back to Joe Corso for any additional or closing remarks. Yeah, thanks everybody for joining us today, and we look forward to speaking to you over the coming quarter. Have a great afternoon. Thank you. This does conclude the nLIGHT, Inc. Third Quarter 2024 earnings call. You may disconnect your line at this time and have a wonderful day.