All right, thanks everybody for making it. Bright and early here. On Wednesday, I'm fortunate enough to have the CEO—excuse me, CFO. I didn't mean to give you a promotion here. Joe Corso, from nLIGHT, and John Marchetti, IR. More than just IR, John? Treasurer or other things, or just? Treasurer and Corporate Development. Oh, awesome. All right, perfect. You guys, thanks for making it. Yeah. Let's just start with a quick introduction of yourself and nLIGHT. Yeah, so I'm Joe Corso. I'm the company CFO. I've been with nLIGHT for about five years. Prior to that, I actually worked as an investment banker. Perfect. All right, quick background on nLIGHT. Yeah, so let me talk a little bit about nLIGHT. nLIGHT today is about a 25-year-old publicly traded company. The company went public in 2018. We are focused exclusively on lasers that go into a wide range of end markets. When the company went public in 2018, the end market exposure was about 80% to what we call commercial markets and 20% in defense. China was a big piece of it. Fast forward five or six years, and today that really has flipped. Today we are much more of a defense technology-oriented company. We still do all of that commercial work, but we leverage the same amount of vertical integration that we apply to the commercial markets, to the defense markets as well. About $200 million of revenue headquartered in the Pacific Northwest and a few other areas in the U.S. Perfect. All right, I just got a quick question for John. I got a shootout here. So the Jets, the Giants, and Chick-fil-A employees, what do they have in common? I don't know. None of them work on Sunday. Thank you very much. All right, quick. I want to start with the defense business. Obviously, that's the exciting part of your business. A couple of big programs that we know of, a lot that we don't. I want to start with the HELSI-2 program. Yeah. Maybe I'll take one quick step back. Today, as we ended our Q4, we did north of 60% of our revenue was in defense. That grew throughout the year. We think in 2025, the defense portion, that A&D portion of our business, should grow 25% year over year. That is really supported by very good visibility by backlog. We've got about $399 million of backlog. Just under $170 million of that is funded. The point is we are working under contracts that support that type of a number. You mentioned one of the big programs that we are working on is what we call the HELSI-2 initiative, which is High Energy Laser Scaling Initiative. That is a $171 million program that was awarded to nLIGHT. That $171 million is all nLIGHT. The aim of that program is to deliver a one-megawatt laser for the directed energy market. nLIGHT in the past had been awarded a prior incarnation of that program where we delivered a 300 kW class high-energy laser for the directed energy market, which exceeded the program's objectives. In addition, that program was a $48 million award to nLIGHT. A few other primes were awarded that, one of whom was awarded $100 million to develop effectively the same laser. I bring that up because part of what we are doing here is not just trying to push the technology and the capabilities in that laser, but also understanding how to develop and build these lasers at cost so at some point they can be integrated into the battlefield. All right, okay. Of that $171 million, how much have you guys recognized? Have you reported that? We haven't reported specifically how much we've recognized, but I will tell you that we are still in the, to use a baseball analogy, the early innings of that. Awesome. The other thing that's important about that is nLIGHT develops our own proprietary technology that we can use in those programs. In 2025, a lot of the growth that you'll see in the A&D side of our business, and at some point we'll probably get to it, the product revenue that we drive and grow in 2025 will be due to the nLIGHT-developed hardware that is selling into this development program. Right, got it. Okay. I think the 1 MW laser is deliverable in 2026. I think you guys have stated publicly that the second half, shipments in the second half of 2024 are expected to accelerate. Or excuse me, started shipping in the second half of 2024, expected to accelerate in the second half. Correct. That 25% revenue growth in A&D, a good bit of that will be as we continue to ramp the production and the delivery of the nLIGHT hardware that's being delivered into that particular program. That's exactly right. All right, okay, perfect. Another one that we know about, I'm probably going to mispronounce it, but the DE M-SHORAD. Yeah, yeah, no, perfect. DE M-SHORAD. DE is for directed energy, and the M-SHORAD is for the mobile short-range air defense. There's been a lot in the press recently about the need globally, not just in the U.S., but elsewhere, of short-range air defense. That particular program was a $35 million award that nLIGHT received to build a 50 kW high-energy laser that was going to be integrated into a Stryker vehicle. That is a program that today we've recognized not all, but most of the revenue on that particular program. So far, it's gone quite well. We're really pleased with, one, winning that award, and two, being able to deliver our technology into that program. We have a different way of combining laser beams, and we expect good things out of that particular laser. The other thing that I will highlight, I talked before about a one-megawatt class laser versus a 50 kW class laser, right? The 1 MW is 20x more powerful than the 50, but both have a place. Actually, you can go even lower power and be effective in the overall directed energy laser market. nLIGHT is able to leverage what we can do to address all three; we talk about it as low, medium, and high. You can think about low power as 10 kW, medium power, 50 kW, 100 kW class, and then really the high power is 300 kW class and above. We have products and technologies in each of those domains today, and we think that they all have an area to play in directed energy. What is a Stryker vehicle? A Stryker vehicle is a maneuverable eight by eight. How would you describe it? Let the Marine answer this. Yeah, let the Marine answer. He's an armored personnel carrier. Armored personnel carrier. Okay. All right, perfect. It's mainly for short range. That's more of a shooting down, just smaller. Yeah, good. If you think about the threats that are out there today, right, you can think about low-power lasers being effective against drones, right? If you think about the mid-power, now you're talking about rockets, artillery, mortar. When you go to the highest powers, now you're talking about what are called strategic threats. You're talking about cruise missiles, hypersonics, et cetera. Okay. All right, perfect. All right, I think the first maybe commercial application for the DE product might have been Israel's Iron Beam application. I know when that was announced, you guys' stock had a nice move on that. I think you guys have confirmed that you're designed into that. Can you just talk about shipments and which components are you using? Or maybe try to size the opportunity for us. Yeah, first what I would say is that Israel has done a great job of driving and developing and getting directed energy lasers into theater, right? They are arguably the furthest along, at least publicly, around doing that. They call their program, the directed energy portion of their program, Iron Beam. I think Iron Beam complements what a lot of people understand as Iron Dome, which is the kinetic way of short-range air defense. What was announced was that there was $500 million that was delivered to Israeli primes to deliver a single system in 2025. In addition to that $500 million, the prior administration authorized $1.2 billion of supplemental aid for the procurement of directed energy laser, I'll just call them components for now, to help the Israelis continue to sort of field those directed energy laser systems. For nLIGHT, today, when you think about what that could mean from a revenue perspective for us, that's kind of mid-single digits based on where as a percentage of the overall high-energy laser system. If we move further up the stack, right, that goes into the mid-teens. At some point, and you're developing a high-energy laser, that's more like 40% of the BOM would be the HEL, which would be nLIGHT revenue. Now, again, that's hypothetical, right? In terms of what we are doing today is we are supplying on the component level. Okay. Can you go over that again? You said $500 million for one system? $500 million was delivered to two primes, right, to develop and publicly stated to deliver and field one system in 2025. One system. Okay. One system. Okay. Now, not all of that $500 million is expected to be into a single system. There will be more than one system that is developed with that $500 million. To get into the specifics of system costs, I can't do that. The idea is that in 2025, you're going to have a fielded 100 kW class directed energy laser in Israel. For some reason, I thought that they planned to have the whole Iron Beam up and running by the end of this year, but you're just. No, no. Okay. This is the first stage. First one. The first stage. Okay. All right, perfect. How about I know the U.S. now is talking about doing an Iron Dome type of application. What do you know about Trump's plans for? I think from an Iron Dome perspective, right, it's still very early stages. What ultimately is going to be required, I think, is still very much up in the air. I will say we've seen a ton of requests for information, proposals. We've been spending a lot of time with a number of different agencies and a number of different primes on a whole host of programs that are coming to market. I think ultimately, non-kinetic weapons were called out within that mission statement. I think that's very, very important for us on the directed energy side. I think even more so than that, a piece of our defense business that probably doesn't get as much attention is on the laser sensing side, right? The vast majority of what we do is classified, but you can think of it as really doing, we like to say that within our defense business, we use lasers to either disable and destroy something or detect and identify something, right? On that sensing side, that's really what we're doing. There are a lot of programs that are being evaluated right now under the Golden Dome Initiative around long-range sensing, identification, ways to complement radar to get much more sophisticated detail back on identifying objects. There is a lot of work that we'll be doing on that side of the business as well. Okay. If I just kind of go back to the Iron Beam and Iron Dome in Israel, I think what I learned is that the Iron Dome did not work for smaller objects like mortar and drones flying in, right, like that. They needed to complement Iron Dome with Iron Beam. I think about the U.S., I guess I am not worried about Mexico and Canada shooting mortars and other stuff. Maybe at least soon. Right? I mean, does the U.S. need the laser base or is it going to be more of a rocket-based like the Israeli application? I think if you think about it, right, what we've always talked about in directed energy is that it is a complement to kinetic systems. You talk about Iron Dome. Iron Dome has worked remarkably well for Israel, right? It's less about, oh, it isn't successful against some of those smaller threats, if you will, as much as there's a real economic mismatch, right, in defense versus offense today. You look at what's been going on in the Red Sea, the cost to launch a drone attack or an unmanned aerial attack against shipping is in the thousands, and yet the cost to defend against that is in the millions, right? If I have to shoot a missile to defend against a drone, I'm spending $1 million or $2 million to defend against a $10,000 or $100,000 threat. The Iron Dome, it's not so much a situation where it can't shoot out some of those things. Quite frankly, it's a math problem, right? If I've got a limited arsenal, there are certain things that I do know I have to defend against, and there's others that maybe if I'm tracking them and they're going to fall into unpopulated areas or things like that, I let those fall so I don't waste my arsenal. That's where directed energy ultimately can be a really good complement to kinetic weapons, right, as part of a whole layered defense strategy. I can now hopefully match my response to the appropriate threat level. Sure. That makes sense. Yeah. I think what I read too about the Iron Dome is when they launch a missile to shoot something down, they launch two, right, in case one misses, but they're like $50,000 each. So it's like $100,000 kind of per kind of threat coming in, so. Yeah. I mean, the cost that we've seen is over that period was about a $2 billion cost for Israel to defend against millions of dollars to attack. Crazy. It's a tenfold sort of mismatch there. That's driving, I think, a lot of interest in this globally. As Joe was mentioning, at the low end of the directed energy market, that 10 kW and below, I mean, you're defending against quadcopters, things like that, very small threats, but that can be launched for $1,000 if that. Exactly. Right? As you scale up, that gives you that opportunity to try to match that defense against that appropriate target. The other element to think about is what's called the magazine, right? I mean, at this point, right, I mean, if you're Israel or you're anyone and you have a limited number of these kinetic weapons and they're not built, right, you can't build these counter rockets in a matter of days, right? With lasers, one of the things you get is effectively an unlimited magazine, right? As long as you have power, you have the ability to disable something. The idea is that as you integrate this lower cost, right, very deep magazine into the layered defense strategy, you can be both more effective, right, in terms of neutralizing threats and do it at a far lower cost than if it were kinetic only. Lasers will never replace all of the air defense kinetic weapons out there. They will be a complement to them and used quite strategically. Okay. I just want to go back to some comments you made about just kind of the opportunity, kind of sizing it. I think you said low- single- digits or maybe high- single- digits if it's just a component or two, up to 40% if you're kind of fully integrated. What would be a full, like a system cost? Are they $2 million? Are they $5 million? If I just kind of say 40% of what number? Yeah, sure. Maybe what I'll do is I'll just use a real-world example. I'll use the DE M-SHORAD program that we are on right now. That's a $35 million program that nLIGHT is going to develop a 50 kW laser for $35 million, right? Certainly, as programs like that go into production, it's not going to be $35 million a copy for the laser, but it's not going to be one or two or three million dollars either, right? You're talking about lasers that are measured in the tens of million dollars most likely, right? When you think about just now, that's just the high-energy laser. That's not the overall weapon system. That high-energy laser is a piece of what gets integrated into an overall laser weapon system. There are a few other sort of critical components. One of the components is called a beam director. Now you have this laser beam and there's an optical chain that it needs to go through and then it needs to be directed on target. We don't talk a lot about that, but that is another capability that nLIGHT has. We have the ability not only to do the components, right, that go into the high-energy laser, we can do the high-energy laser itself, and then we can extend even further and do the beam directors as well. Okay. Just go over all the components that you'd sell. It's amplifiers, it's beam directors, it's combiners, it's the lasers. It actually starts one level before that, right? We can sell what we call, I'll call them semiconductor lasers, right? These semiconductor lasers, for lack of a better word, you gang them up and you can put them into a fiber amplifier, right? In addition, we have our own fiber, right, that we use as well. You take those fiber amplifiers, right, and you combine them, and we have a proprietary technique to combine those fiber amplifiers into that high-energy laser. We then can take that high-energy laser and integrate it into a beam director, and we have some software that we can wrap around the whole thing that helps with target identification, and we do something called adaptive optics, which enables us to measure the impact that the atmosphere will have when the laser is fired. We are really trying to surround this market and go to market at all levels of that vertical integration, right? All of that is built upon the same fundamental technologies that the business was started with many years ago. Okay. Perfect. All right. I want to talk about margin profile. Directed energy lasers in the government versus government development revenues. Sure. I mean, to my knowledge, I think government development revenues have what, 8%-9% gross margins, but there's no OpEx, so it's 8%-9% operating margins. But what is? That's absolutely the way to think about it, Troy. We report our business in two segments. We report laser products and we report advanced development. Almost all of, actually all of the advanced development work is A&D. In that work, you've got it exactly right, right? The gross margin that we report is effectively our EBIT margin, right? Anything else that would be what would look like OpEx on a P&L would just be costs that are just unallowable by the government, some T&E things and things like that. On the product side, that's no different when we're selling a defense product. That's no different than when we sell a product into the commercial market. We are selling that and we are recognizing the gross margin and all of the OpEx that was required to sort of support that. Awesome. Justin, I think you had a question. Yeah. Why wouldn't the Israeli laser system that they have, why wouldn't it be a very quick template for the U.S.? Like, why wouldn't it be somewhere you can say like, "Hey, they have this. We know this. These are the timelines." Just because that's the way they're going to manage it to you if you weren't, it just takes forever or they actually say, "Within three months, we can get something done faster than we have a template or literally a key ally in a hostile fight? [audio distortion] I mean, I think the question in terms of the U.S., I think where it's fallen down a bit in this is I don't think they've adequately really identified where they want these weapons and what they want these weapons for. Israel has a very clear sort of use case, if you will, for these weapon systems, right? We're going to put them out on the edge of the border and they're going to be used to complement the Iron Dome. I think in the U.S., you take the DE M-SHORAD example that Joe was referencing, a 50 kW laser. The U.S. Army decided to immediately put that on a mobile platform. That caused earlier iterations of it to run into a whole host of issues that have nothing to do with the laser itself, right? I think the U.S. is a little bit further behind in really identifying where they want these weapons and what they want these weapons to do. Navy's got a very clear use case. They're looking at some of the most high-powered systems to be able to do defense for battle groups and things along those lines. Whether we ultimately want stationary systems, mobile systems, things along those lines, I think are still being evaluated. To your point, could we turn these into weapon systems relatively quickly? I think we could, but I think that we need a clear mandate as to where those weapon systems are going to be and what they want them for. Right. I want to make sure that I clarify an earlier comment that I made in John's as well. From a technology perspective and the stack, the U.S. is not behind, right? Where the term behind would simply be how and where do we integrate this technology for the threats that the U.S. is facing or that our allies are facing that the U.S. is supporting. That is where, when I said Israel was sort of furthest ahead, it is they have defined a very clear use case for where they want to use directed energy lasers. Very good point. Isn't the current theater of war in Eastern Europe a prime example of what types of systems to do that? Because we have 500 drones being shipped away, costing millions of dollars to protect the U.S. from 5,000 troops on an battalion scale? 100 miles away. That's right there. [audio distortion] Yes. Jonathan, go ahead. Could you flesh out your DE M-SHORAD program? Because the press reports basically had an incumbent, the folks at AeroVironment are spending $4 billion to buy it. For you to get the contract must mean that they failed in some way. Can you sort of flesh out how much were they given? When will you do field trials? What has the Army said about how many? They want a battalion or two of these? There's all sorts. They haven't said specifically, but there's a lot of different potentials for how many they want and how they actually want to integrate that laser, whether it should be on a Stryker or should it palletize where. It is not clear yet on the last part of your question. First part of your question though, in terms of the history of it, the DE M-SHORAD program, Raytheon has built four of these. Raytheon is using a different way to combine the beams than nLIGHT. Raytheon does their beam combination in this particular laser with something called a spectral beam combination. I think there are some press reports out there that talk about those being in the field, and there have been responses by the user community. They probably have not all been glowing. That being said, these are really new defensive weapons that there's a reason that they're run out of RCCTO, right? Because it's the first time any of these things have really been put in the field. One of the big distinctions around what Raytheon's laser and the nLIGHT laser is nLIGHT uses a different way to combine the beams. Our version of the DE M-SHORAD laser is using what we call coherent beam combination, where we effectively can drop more channels of laser power and combine it slightly differently. The way that I think about it is spectral beam combining, if you think about a prism or a reverse prism, you've got many different colors of light that are coming in and they're combined into a single color out versus the way that nLIGHT is combining their beams, where you have individual lasers that are going through a complex set of optics and are being focused on a spot at some distance away. The theory is, and we've proven in modeling and we did it with our 300 kW HELSI-1 program, is that we can add more channels into that optical head and we can scale up the power further. I think you also asked about what's going to happen with that program. What we need to deliver is we're not the prime on that contract. We are delivering a high-energy laser to the prime that is going to do the integration of that laser into the weapon system and into the Stryker vehicle. From there, the idea is that that is going to be moved out to the test range at some point in 2025. How about, U.S. defense is likely going to want U.S. supply chain, right? To my knowledge, industrial lasers or high-energy lasers are either Russian or Chinese-made. Who else did you guys compete against that are kind of U.S.-based? Yeah, I mean, we compete against all of the primes in some form or fashion. There's some folks, BlueHalo, which was just acquired by AeroVironment, has a low-power laser. We compete against some of the other laser vendors on the component level is kind of the competitive set. I mean, I think one of the unique characteristics of nLIGHT is that we are vertically integrated. We are not aware of another company that goes from building their own laser diodes and then can integrate through every key component up and through the high-energy laser and beam director. Part of the development of our technology stack and the success that we've had in this space is due to that vertically integrated strategy simply because of the learning cycles, right? I mean, it takes the cycle of building a semiconductor laser and getting it integrated into an amp and understanding how that is tested and performing so that we can make design changes on the packaging or on the chip. Then starting design on the system level is a reason that we are bullish about our approach to this market. Right. Okay. All right. Just changing topics here. You'd mentioned a backlog, $330 million. I think the funded backlog was $167 million, it was up 50% year over year. How much of that is shippable in the next 12 months? Yeah. I mean, all that 167 is shippable in the next two years. A good bit of that is going to come out in the next 12 months. It's one of the reasons that we felt that we had enough visibility to, at the end of our last earnings call, say that our A&D business is going to be up 25%. Okay. All right. Perfect. Okay. All right. Perfect. Okay. All right. Perfect. What that does not include that I think is important is it does not include any of the business that we are bidding on today. That top of the funnel, if you will. There are a lot of programs out there that are in the, I'll just call it $10 million, $20 million, $50 million, $100 million opportunities for us that are not included in that $399 million number. We are excited about both on the directed energy side and as John talked a little bit about our laser sensing side. Okay. I know you guys can't talk about specific RFPs and RFQs that you guys are working on because it's government business, but can you just quantify the number that you're in? Yeah. I mean, it's start adding up those numbers that I just gave you and that's really the way that we are thinking about the opportunity set. They're big numbers, right? I don't want to be hyperbolic and say that we've got $2 billion of pipeline that we're working on, but when we think about our revenue base today, last year we did $100 million plus or minus of A&D revenue. The work that we are doing today, the things that are in backlog and that we think can get extended as they move into programs of record and things like that, as well as what we're seeing in terms of the funnel is we're starting to measure our defense business in terms of how many multiples of 100 can it be over the next three to five years. That is the thrust of nLIGHT right now. Okay. Last couple of minutes, let's just talk about the less sexy side of nLIGHT here, maybe the industrial side. Just give us an update on what you're seeing. Yeah. I think the industrial business for us, let me just maybe parse out industrial versus commercial. When we talk about the commercial business, we add two of our reported end markets, microfabrication and industrial fiber lasers. Both of those businesses are important for us today, not because they carry the same level of growth opportunities as the defense side do, but the incremental dollar of revenue in each of those segments is accretive to our margins. The delta between the margins that we get in those markets versus the defense markets is actually not all that significant. It is important to remember that for us to be successful in the defense market, we are leveraging the vertical integration all the way back to the chip. Those commercial businesses use the exact same infrastructure. As we look at it, we say, "Look, if we can generate more revenue on the commercial side and it's contributing positive contribution margin, it's a good business to be in for us." What we've done over the last couple of years is we've been much more thoughtful about our, I'll just call it discretionary spend on OpEx in terms of R&D and sales and marketing to make sure that we've matched that OpEx level investment with where we think the commercial business, what it requires and where it can grow. Today, we used to talk about ourselves as a dual-use technology company. I don't think that's the perfect term for us, but I think it's important to say, "Look, we've got this defense business, we've got this fixed infrastructure. If we can sell another dollar's worth of industrial fiber lasers, that is margin accretive to nLIGHT's bottom line. That makes sense. It's important to the defense business. I mean, part of the reason I think we've been very successful in directed energy is because we know how to make lasers that work in real-world environments. Joe mentioned some of the competition that we see, particularly with respect to the primes. They're not laser manufacturers, right? They don't have hundreds of thousands of systems deployed and they don't know how to deploy them in real-world working environments where you're dealing with sand and it's easy to make a laser that fires in a clean room, right? It's hard to make a fire. Yeah. Good point. Yeah. How about just the last minute on just tariffs? Implications for you guys? I think tariffs, I mean, will have an impact. It's not going to be first order for us. I mean, what we're seeing in some of our markets is the, particularly our markets that are most exposed to China is that the impact of the level of a tariff that we're talking about is not going to have a meaningful impact on our ability to sort of grow the business or be more profitable. I mean, there are puts and takes kind of each way, right? We do still source some things from China and we still source some things from Mexico and Canada. But it's not first order. We don't think about tariffs as first order impact on our business. Awesome, guys. With that, we're out of time. I want to thank you for the time, guys. Yeah. Good. Thanks, Joe. Appreciate it.