Earnings call: Laser Photonics reports mixed Q2 2024 results amidst growth efforts

Laser Photonics (ticker not provided), a leading company in the laser technology industry, reported a decline in revenue for the second quarter of 2024 but remains optimistic about its future growth. The company attributes the revenue shortfall to approximately $1 million in sales deferred to the second half of the year due to customer delays in the capital expenditure review and approval processes.

Despite the revenue decline, Laser Photonics is actively investing in sales, marketing, and research and development, and has introduced new product lines with the expectation of enhancing future sales.

Key Takeaways

• Laser Photonics reported a 35.5% decrease in Q2 2024 revenue, amounting to $0.6 million.
• The company announced a recent partnership with Echelon 1 and the introduction of new sales roles to drive growth.
• Investments in research and development continue, with the introduction of the SaberTech line and an upgraded CleanTech product line.
• A change in accounting opinion has led to a reclassification of distributions, resulting in higher reported G&A expenses and a larger operating loss.
• The company completed a private placement to raise $2.6 million for future investments in key areas.

Company Outlook

• Laser Photonics has built an estimated pipeline of over $70 million, which is expected to prepare the company for improved results in 2024 and support medium to long-term growth prospects.

Bearish Highlights

• Revenue declined significantly by 35.5% compared to the previous year.
• The gross profit margin decreased to 51% from 71% the year prior.
• A reclassification of distributions to Fonon as G&A expense will lead to larger reported losses now and in the future.

Bullish Highlights

• The deferral of $1 million in revenue is seen as a temporary timing issue, not indicative of longer-term challenges.
• The company is expanding its product offerings and partnerships, which are expected to drive future sales growth.

Misses

• The company experienced an operating loss of $2.1 million in Q2 2024, a significant increase from the $0.7 million loss in the same period last year.
• Net loss increased by 67%, and loss per share deteriorated by 122% to negative $0.20 per share.

Q&A Highlights

• No specific questions and answers from the Q&A session were provided in the summary.

Laser Photonics’ CEO, Wayne Tupuola, emphasized the company’s commitment to growth through new product lines, technology partnerships, and increased sales and marketing efforts. The VP of Finance, Carlos Sardinas, detailed the financial setbacks, including the change in accounting treatment that led to a reported increase in general and administrative expenses. Despite these challenges, the company’s recent capital raise through a private placement signals a strategic push towards bolstering its sales and marketing capabilities and supporting new product development. Laser Photonics is positioning itself to capitalize on its robust pipeline and technological advancements to improve performance in the upcoming periods.

InvestingPro Insights

Laser Photonics, while facing a revenue decline in Q2 2024, shows promising signs of future growth backed by real-time data and expert analysis from InvestingPro. Here are some key insights:

• Revenue Growth Prospects: Despite a recent dip in revenue, analysts are optimistic about the company’s sales growth in the current year. This aligns with the company’s own expectations of recovering deferred sales and expanding its product lines. (InvestingPro Tip: Analysts anticipate sales growth in the current year)

– Financial Resilience**: The company holds a stronger cash position than debt, suggesting financial stability that could support its ongoing investments in sales and R&D efforts. (InvestingPro Tip: Holds more cash than debt on its balance sheet)

– **Market Performance**: The stock has seen significant returns over the last week, month, and three months, indicating a positive market response to the company’s strategic initiatives and potential growth trajectory. (InvestingPro Data: 1 Week Price Total Return: 54.61%; 1 Month Price Total Return: 153.69%; 3 Month Price Total Return: 124.74%)

– **Profitability Concerns: Despite these positive indicators, it’s important to note that the company has not been profitable over the last twelve months, which is reflected in a negative P/E ratio. Investors should be aware of this as they consider the company’s long-term earnings potential. (InvestingPro Data: P/E Ratio (Adjusted) last twelve months as of Q1 2024: -17.48)

– Valuation Metrics: The company is currently trading at a high revenue valuation multiple, which could suggest that the stock is priced optimistically relative to its sales. This is an important consideration for investors looking at the value of their investments. (InvestingPro Data: Price / Book last twelve months as of Q1 2024: 4.47)

For those interested in a deeper analysis, InvestingPro offers additional insights on Laser Photonics, with a total of 14 InvestingPro Tips available to help investors make more informed decisions. (Link to: https://www.investing.com/pro/LASE)

Full transcript – Laser Photonics Corp Unit (LASE) Q2 2024:

Brian Siegel: Thank you, operator. With me today are Wayne Tupuola, Laser Photonics’ CEO; and Carlos Sardinas, the Company’s VP of Finance. Any forward-looking statements made during this conference call, whether general or specific in nature, are subject to risks and uncertainties that may cause actual results to differ materially from those that the company anticipates. These risks and uncertainties include, but are not limited to, specific risks and uncertainties discussed in the reports the company periodically files with the SEC. Laser Photonics assumes no obligation to either update any forward-looking statements that is made or may make or to update the factors that may cause actual results to differ materially from those they forecast. I will now turn the call over to Wayne, Laser Photonics’ Chief Executive Officer.

Wayne Tupuola: Good morning, ladies and gentlemen. Thank you for joining us. This morning, we reported second quarter 2024 results. Regarding the lower revenue, we believe approximately $1 million was deferred into the second half of the year. This deferral was simply a timing issue with several customers whose capital expenditure review and approval processes were delayed. While this was disappointing, we haven’t seen any evidence that this is more than a delay in the future quarter. Moving to our growth and operational excellence initiatives, as we mentioned each quarter sales and marketing remain key areas of focus and investment for us. To this end, we recently announced a partnership with Echelon 1 to further our efforts to bring CleanTech systems to the Department of Defense. More recently, we announced the addition of four new roles to help grow our sales in laser systems, all licensed from Fonon. We believe we’ll help drive sales across our various verticals and product lines over time. As an innovation-driven company, we’ve also continued to invest in R&D and product development to stay ahead of the competition. We believe that the new features and industry-specific products we are developing and commercializing will help accelerate sales growth and continue to provide us with a technological advantage over the competition. As I mentioned on previous calls, our plan was to introduce several new product lines this year and the next generation of our CleanTech line. On that note, we announced our SaberTech line of laser cutting tools based on our Turbo Piercing technology. We also introduced our Laser Shield Anti-Drone or LSAD concept for laser-based defense against drone swarms and upgraded CleanTech products. To increase awareness of this concept, we initiated a successful ad campaign with a 30-second commercial on Fox Business and CNBC during key programs including Squawk Box, Mad Money, Opening and Closing Bells, Mornings with Maria and more. If you didn’t catch it on these shows, you can find it on our YouTube channels as well. Given our commitment to R&D, product development and expanding sales and marketing capabilities, we’re looking for opportunities to reduce costs to help offset or optimize these investments. For example, as part of our ongoing commitment to operational excellence, we have plans to continuously enhance our manufacturing operations to reduce COGS as we scale through process refinement and identify opportunities for cost efficiencies. In addition, we are focused on optimizing our marketing strategies, forming a task force comprised of key members from various departments to ensure a comprehensive and effective approach. This cross functional group will bring together expertise from finance, engineering, research and development and operations. The goal is to leverage diverse perspectives in developing a robust marketing plan aligned with our business goals and current market conditions. The task force will have specific objectives, analyzing existing marketing strategies, identifying areas for improvement and creating a comprehensive marketing plan that is innovative and targeted. By utilizing a cause and effect framework, we’ll assess past challenges and their impacts addressing vulnerabilities proactively while capitalizing on opportunities for growth and success. In summary, with our new products, distribution and technology partnerships and increased sales and marketing efforts, we have built an estimated pipeline of over $70 million. While this won’t all close this year, we believe it prepares us for improved results in 2024 and it bodes well for our medium to long-term growth prospects. I will now turn it over to Carlos to review our financials.

Carlos Sardinas: Thank you, Wayne. Revenue was down 35.5% to $0.6 million. CleanTech made up over 80% of our mix. Our gross profit was 51% compared to 71% last year. A change in accounting opinion from our new auditor resulted in us reporting previously disclosed distributions to Fonon in the cash flow statement, which will now be recognized as G&A expense in 2024 and moving forward. These higher operating expenses will result in larger losses now and moving forward compared to prior years. Overall, health of the company viewed through cash flow does not change. This change led to an operating loss year-over-year of negative $2.1 million in Q2, 2024 versus $0.7 million last year. Net loss decreased by 67% to $2.1 million again due to this change in accounting treatment and loss per share decreased by 122% to negative $0.20 per share. Our share count also increased significantly versus last year due to acquisitions of various licenses from Fonon. Finally, as you saw, we recently completed a private placement raising a net total of $2.6 million to increase our ability to invest in key areas including sales and marketing and new product development, which will increase our future shares outstanding. That concludes our remarks.

End of Q&A:

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