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spk01: Good afternoon, ladies and gentlemen, and welcome to the Nuburu Q1 2023 Earnings Conference Call. At this time, online journalism only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, we require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 11, 2023. And I would now like to turn the conference over to Barry Hutton. Please go ahead.
spk04: Good afternoon, and thank you for joining us for NUBERU's first quarter 2023 earnings call. Joining me on the call today are Mark Zetiker, CEO and co-founder of NUBERU, along with Brian Canale, Chief Financial Officer. Full details of our results and additional management commentary are available on our earnings release, which can be found in the investor relations section of NUBERU's website at ir.nuberu.net. Please note that this call is being simultaneously webcast on the IR section of the website. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding Nuberu's future financial results, management's expectations and plans for the business, and the company's partnerships with third parties. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call, including the general economic environment, difficulties related to raising additional financing, and challenges with the company's partnerships. as well as those described in our risk factors set forth in more detail in our most recent periodic reports filed with the Securities and Exchange Commission, as well as the current uncertainty in the financial markets and the economy more generally. Such reports are accessible on the SEC's website at www.sec.gov and also available on NUBERU's website at ir.nuberu.net. Any forward-looking statements made in this conference call, including responses to your questions, are based on current expectations as of today, and NUBERU assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following discussion contains non-GAAP financial measures. NUBERU uses these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our earnings press release, which is available at the IR section on our website at ir.newberu.net. Now, I will turn the call over to Mark, co-founder and chief executive officer of Newberu.
spk06: Thank you, Barry. Good afternoon, everyone, and welcome Welcome to our first quarter 2023 earnings call. The first quarter was an especially active time for Newbrew as we achieved several company milestones and laid a foundation for the rest of 2023 which we expect to generate momentum towards 2024. On January 31st we completed our business combination with Tailwind Acquisition Corp which resulted in Newbrew becoming a publicly listed company and our stock being traded on the NYSE American on February 1st. I am pleased to share that our team generated strong Q1 revenue results of $470,000, representing year-over-year growth of approximately 422%. Since this is our first earnings call as a public company, I'd like to provide a brief overview of our business and why we believe that our next generation blue laser welding technology is the best solution to generate cost and performance benefits across multiple large, high-growth markets, including additive manufacturing, computers, consumer electronics, and electric vehicles. Newbrew was founded in 2015. As the blue laser technology started to mature and it became apparent that this would be the next-generation solution to transition to industrial applications, we immediately recognized the greenfield nature of the industrial markets around blue laser technology, because at the time, no one had yet invented a blue industrial laser. Our early start in technology enabled us to file numerous patent applications covering the use of blue lasers in additive manufacturing, welding copper, welding foils, welding batteries, and other materials. Since these initial filings, we have received over 80 patents on technology and processes for using a blue laser. We have successfully deployed a number of lasers at key customers, and we are recognized by the many awards from the laser industry as a leading innovator in industrial laser technology. We are now shipping two different models of blue lasers. One that is compatible with a scanning system, which is used for many welding and 3D printing applications, and a second that uses a welding head with a motion system. The unique absorption characteristics of the blue laser has enabled us to displace older technology and to enable manufacturing of parts that would otherwise be difficult to manufacture. We now have multiple laser products qualified for production processes and have more undergoing customer evaluations. As customers complete their evaluation of the laser technology, they have begun to have discussions with us about longer-term supply agreements. in which we would provide multiple lasers into a customer's manufacturing line. Our customers adopt our lasers to displace older technology, which has either low manufacturing yields or where there is simply no other technology available other than the new brew laser that can provide the results they need. In addition, we have recently completed a comparison of the blue laser technology efficiency in three base applications, metal 3D printing, cell phone battery welding, and electric vehicle battery manufacturing. Importantly to both us and our customers, the superior performance metrics of our blue laser technology provides the potential to save significant amounts in terms of energy cost compared to its infrared laser counterpart when welding aluminum and copper. This can equate to saving hundreds of tons of CO2 emissions, which is yet another compelling set of reasons for using our blue lasers. The key advantage of the NeuroBlue laser to an infrared laser is that nearly all metals are less reflective to the blue laser light, enabling a much more efficient coupling of the energy from the laser into the parts to be welded. For industrial welding applications, these physics advantages translate into speed and efficiency in the manufacturing process. In electric vehicle and battery manufacturing, this fundamental physics advantage means that our blue lasers can complete the tens of thousands of welds needed for each electric vehicle faster than incumbent infrared lasers, and thereby can reduce hundreds of tons of CO2 emissions annually, depending on the source of electricity. In consumer electronics, the advantage of blue lasers means that we can weld cell phone components, specifically vapor chambers. significantly faster than using traditional methods, which entail welding with a diffusion process in an oven requiring batch processing and maintaining the material at near its melting point for 24 hours. By using the blue laser to weld the parts significantly faster and with higher yield rates, we can enable a significant reduction in CO2 emissions from the manufacturing process. The same physics advantages that enable better welding also enable better results when 3D printing metal parts. Our lasers, when integrated into a 3D printer, can print at much higher speeds than incumbent infrared lasers, resulting in a lower per part cost. Ultimately, the manufacturing performance improvements that the blue laser technology delivers translates to a lower manufacturing cost, higher return on investment, and more competitive pricing for end products to customers. We and our customers are excited that these benefits have real sustainability advantages. In the case of printing stainless steel, we estimate that the blue laser can reduce CO2 emissions by a factor of 275% for each kilogram of material being printed compared to printing with an IR laser. These advantages will translate to more rapid adoption of these 3D printers for manufacturing and drive our revenue growth in 2023 as we look to 2024 and beyond. In the first quarter, we had several notable achievements related to the commercialization of our technology, which crossed multiple applications. In the area of additive manufacturing, we completed our first delivery of units to Essentium as part of what is potentially a multi-million dollar, multi-year agreement. Through this relationship, Essentium is integrating our blue laser technology into their high-speed extrusion additive manufacturing platform for metal parts in automotive, aerospace, and defense applications. This high-speed printing platform, when combined with the efficiency of the blue laser, will enable breakthrough build rates for most materials compared to an IR-based 3D printer. In the area of industrial welding, we launched and began taking orders for our new brew BL series at the industry's premier event, Photonics West. This is another first in the industry where the BL series laser can now be combined with a laser scanner to directly address the needs of several markets, which include welding cell phones, welding electric vehicle batteries, and additive manufacturing. We are very excited to see this technology now moving from the development stage to full production. In Area of Defense, we were selected as one of seven companies by the U.S. Department of Defense for a position on its contract for the fabrication and delivery of prototypes and equipment in support of solid-state, high-energy laser weapon systems. We are eligible to participate in the multiple award contract with a maximum ceiling of $75 million. In addition to our commercial progress, we also strengthen our intellectual property portfolio. which consists of over 190 patents and patent applications comprising more than 7,500 claims relating to our technology. In March of 2023, we were awarded a patent for methods and systems for welding copper and other metals using blue lasers. The group of metals included in this patent include copper, aluminum, stainless steel, and their alloys. These materials are essential to electric vehicle production because of the large amount of copper and aluminum used in battery packs. The last material included is stainless steel, which is used in hydrogen fuel cells, another important technology for reducing greenhouse gases. We are very excited to have received this patent, which further shows that Newbrew is a leader in this industry. In April 2023, the European Patent Office granted us a patent for multi-kilowatt class blue laser system. which describes the basic technology being used in our BL series lasers. This is an important patent coverage for NUBRU because of the unique architecture being used to achieve the industry's first high brightness source that can be used directly with a scanning system. Now I would like to explain our product development philosophy and outline our current roadmap to develop and launch several new technologies in the next few years. Our product journey prioritizes developing progressively more powerful blue lasers, which can be focused on smaller and smaller spot sizes. This is important because it enables us to weld thicker materials, which broadens the applications we can address and consequently our customer base. We were pleased that we recently made the transition to implement higher performance laser diodes in our lasers across all our product lines. And we achieved this transition well ahead of our internal schedule. This transition has enabled us to streamline our roadmap, which leads to savings on inventory and working capital because of our ability to use the higher power laser diodes in all of our products, thus eliminating the need to maintain separate BOM structures. We believe that the core products in our roadmap will have higher revenue and gross margin potential because the products are actively aligned with our customer needs and the higher power laser diodes provide for higher brightness and fewer components in each of the products. Our current product, the AO650, is a 650 watt blue laser product that started shipping in June of 2022, with a number of units delivered into 3D printing and vapor chamber welding applications. While the AO650 is not of the same brightness level as the BL series It played an important role in establishing multiple beachheads for NUBRU in additive manufacturing and welding cell phone components. Consequently, a North American 3D printing partner has integrated multiple laser systems into their large-scale, high-speed 3D printer and is currently finalizing the processes necessary to produce high-quality parts using wire feed additive processes. The high efficiency of the wire feed process with the blue lasers gives this 3D printing partner a competitive advantage in this printing space. The ILO 650 systems are also currently integrated into multiple production lines producing copper vapor chambers for cell phones and are being evaluated for additional welding applications. This laser system is also the light engine for our proprietary area-based 3D printing technology, which uses a commercial spatial light modulator to print an image in the metal rather than just a spot, as is the case with a conventional metal 3D printer. The AO650 laser will be phased out of production later this year when the BL650 becomes available. This is a drop-in replacement for the AO production and provides the users an even higher brightness and performance while enabling higher margins for NUBERU. In January of 2023, we began taking bookings for our latest product, the NUBERU BL250, which we announced at the Photonics West show. Importantly, this product is already compatible with the scanner technology being used in all powder bed 3D printers, battery welding applications, and cell phone welding applications. The first shipments are for applications such as cell phone battery welding, electronic component welding, 3D printing, and non-metal material processing. Some of the units shipping this quarter and next quarter are going into manufacturing testing, and assuming the laser qualify for production, We expect to see quantity orders beginning in 2024. The next release of the new brew BL series is planned for June at the Laser World of Photonics show in Munich, Germany. This release will be approximately one kilowatt with sufficient brightness to be compatible with a scanner. This is the laser configuration requested by all of the electric vehicle customers. And with this power level has the potential to maneuver from thin material processing to the large electric vehicle battery and components market. We are also working on the next generation of blue laser technology, the NUBRU single mode, which will produce a beam at the limits of physics, or the ultimate brightness laser source. This laser will be the ideal choice for 3D printing and remote welding applications. In addition, since a laser of this performance has never been offered to the commercial marketplace, There are likely many unforeseen applications that will provide us with great market opportunity. We anticipate releasing the first laser in this product line in the 2025 timeframe. This technology is heavily protected by Newbrew's substantial IP portfolio, which gives us a unique advantage in the industrial marketplace. I want to touch on a few other topics that have me excited. We have made a number of changes to our leadership over the last 12 to 18 months, which we believe will help us accelerate our growth while improving our operational efficiency. We hired Brian Faircloth as our Chief Operations Officer in late 2021. Brian has brought much needed experience in laser diode technology, Six Sigma, and lean manufacturing. This experience will continue to help drive our operations to achieve our product roadmap and single product flow, which will be required to capture the commercial growth. We hired Brian Connelly as our chief financial officer in the beginning of 2022. Brian brings the experience of a multi-time public company CFO and has extensive background in manufacturing and capital equipment. This experience was significant as we transitioned to a public company. Most recently, we appointed Dr. Matthew Philpott, as our Chief Marketing and Sales Officer, and his background, including 20 years of laser industry experience with Coherent Corp, focused on battery and EV production. This will help us further accelerate market penetration across all segments. In February 2023, Newbrew appointed several new board members, who each bring significant expertise in the industrial sectors and corporate governance. Elizabeth Mora is the Chair of our Audit Committee. She currently serves on several other public boards, which includes serving as the Audit Chair for MKS Instruments. Elizabeth was formerly the Chief Financial Officer of Harvard University and the Chief Administrative Officer of Charles Stark Draper Laboratory. Lily Van Hughes is the Chair of our Nominating and Corporate Governance Committee. She previously served as the Chief Legal Counsel and Corporate Secretary for Aeroelectronics and Public Storage, and is currently the Assistant Dean for the Syracuse University College of Law. Christy Hummel is the Chair of our Compensation Committee. Ms. Hummel is the Chief Talent Officer at United Health Group, and she was previously Chief People Officer for Skillsoft. Dan Hirsch has also joined the Board as a Director representing Anzu Partners. and brings experience from two successful Go public transactions involving SPACs, Playa Hotels and Resort and Broadmark Realty Capital, where he served on the board for both companies over a number of years. We are grateful for Ron Nickell for serving as chair of our board through the transition from private to public company, along with his continued support as we execute our plans going forward. Now that we are public, we are expanding our engagement with the financial community. I recently had the honor of presenting at the Virtual Growth Series hosted by Maxim Group, where I was able to talk about Newbrew's latest high-power blue laser series while highlighting emerging sector trends and some of our opportunities driven by new technology. Apart from the financial community, we continue to actively engage with a broad range of customers and industry players. These interactions help us stay current on the customer needs and technology trends, along with identifying potential partners for future efforts. In March, we participated in the International Battery Seminar, Orlando, Florida. And in June, Nubu will participate in two key industry events. First, the 30th Advanced Laser Application Workshop, which focuses on the e-mobility market, will take place in June in Novi, Michigan. Second, the Laser World of Photonics exhibition in Munich will be in late June, one of the largest photonics exhibits with over 30,000 attendees, which will enable us to showcase the new BL product line to a global audience. These opportunities will give us another valuable opportunity to interact with industry, thought leaders, and potential customers. Before I hand it over to Brian, I really do want to emphasize the excitement that I and our entire management team have for the potential of our cutting edge additive technology portfolio. It is clearly being recognized by market participants and commercial partners. We see a tremendous opportunity to accelerate the performance and growth of multiple large markets, and we are all heads down focused on delivering on these opportunities. Now, I'll ask Brian to provide insight to our financial performance.
spk05: Thanks, Mark. As Mark indicated, This year has started with both significant transition and excitement as Nibiru became a public company, launched our new BL series laser, and completed deliveries under several different agreements. By establishing this foundation now, we are well positioned to build additional momentum towards 2024 and beyond. I will start the financial review by commenting on several income statement items. Revenue for the quarter ended March 31st was approximately $470,000. This revenue amount represents 422% growth on a year-over-year basis. As we are still in the early stages of growing the company, our gross margin remains negative. However, it improved substantially during the quarter, coming in at a negative 158% compared to a negative 517% for the same period in the prior year, or an improvement of 359 percentage points. We continued to shift early units. and we are confident that as we scale the company, our gross profit margins will improve substantially. In the quarter, our operating expenses were $4.6 million, up from $1.8 million in the year-ago period. The significant increase in operating expenses were primarily attributable to $1.2 million in one-time costs associated with the closing of the business combination that occurred in the first quarter. In addition, our research and development spending increased by approximately $0.7 million as we finalized our BL series design and increased our headcount to support our future product offerings. And finally, we incurred approximately $0.7 million in ongoing public company costs that we did not have in the prior year. Given the above factors, our first quarter of 2023 operating loss was $5.3 million. This compares to an operating loss of $2.3 million in the first quarter of 2022. In the quarter, we had $0.5 million in other income driven by the fair value of our public warrants. Please keep in mind that this is a non-cash item, which may continue to be volatile quarter to quarter. Net loss in the first quarter of 2023 was $4.8 million. This compares to a net loss of $2.3 million in the first quarter of 2022 or an increase of 104%. Reflecting certain business and accounting adjustments, our EBITDA loss was $4.7 million compared to a loss of $2.2 million a year ago. Turning to our balance sheet and cash flow, as of March 31st, 2023, our cash and cash equivalents were $1.5 million compared to $1.6 million the prior year. In the quarter, we had a free cash flow usage of $4.4 million, reflecting an operating cash flow use of $4.1 million and a $0.3 million in capital expenditures. In the prior year, our free cash flow usage was $2 million, reflecting operating activities and CapEx of $1.9 million and $0.1 million, respectively. Finally, We have received approximately $3.1 million in net proceeds after paying deal-related expenses from the closing of our business combination in late January. As that completes my comments about the Q1 results, I will share our thoughts about our financial expectations for the rest of 2023. Mark discussed our innovative technology and growing commercial activity. As we look forward to 2023 and beyond, we are excited about our plans to continue executing our commercial agreements, while also progressing on the product development roadmap that Mark outlined. Today, we reiterate the full year 2023 guidance we provided in late February, including our expectation to earn total revenue greater than $3 million, representing a year-over-year growth rate in excess of 100%, an EBITDA loss in the range of $21 million to $23 million, and a free cash flow usage in the rain of $24 million to $26 million. Reiterating this guidance today reflects our competence and our ability to raise the appropriate level of capital within the next six to nine months. We are actively engaged in several conversations related to additional sources of funding. These conversations include both current NBURU investors and potential new investors. However, It would be premature for me to talk about specific field sizes or structures at this time. The leadership team will continue this effort and we will update you at a later date. Now, I'd like to turn the call over to the operator for questions.
spk02: Thank you. Ladies and gentlemen, we will now begin the question and answer session.
spk01: Should you have a question, please press the star followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the two. If you're using a speakerphone, please leave the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Ananda Barwa from Luke Capital. Please go ahead.
spk03: Hey, guys. Good afternoon. Yeah, congrats on coming public, and thanks for taking the questions. Really appreciate it. I guess just to start, is there any context you can share with us with regards to the annual guidance here, what we could expect in terms of cadence as you see certain milestones coming up with regards to I guess, to the top line. And then I just have a quick follow-up. Thanks a lot.
spk05: Sure, another great to hear from you. You know, cadence as far as, you know, guidance, you know, we'll take a view of that each time that we have quarterly earnings. And so, you know, we'll update as we go forward. As we said, we reiterated guidance at this point that we shared with everyone back in February. I think you're thinking about things right that one of our KPIs will be revenue, and that's certainly how we're looking at, if you will, our scorecard as we move forward in 2023.
spk03: Okay, great. That's helpful. And then just a quick follow-up on a couple of the business highlights that you had in the press release. You know, with the DOD multi-party award contract, maximum ceiling of $75 million. Can you provide us some context on that? And then I guess also, you know, sort of the Air Force, the technical, sort of the Air Force contract as well. You know, context on that. That'd be great. Thanks.
spk06: Great. Thank you for the question. So I'll start with the Air Force contacts. We continue to make great progress on the program, and we will be giving an update on it in the weeks to come. We're very, very excited by the progress we're making on that program. Now, with respect to... Sorry, there's a background. With respect to the DOD contract, that is a multi-company contract. award and basically our participation is that we will receive requests for bids in that program but at this time our role in the contract has not yet been fully defined so we will probably update everyone as soon as we know more there okay that's helpful and let me just ask one more quick follow-up off of that the ceiling of 75 million
spk03: What does that refer to specifically?
spk06: That is the ceiling across all seven contractors. So it's an open contract to $75 million. Appreciate it. Thanks so much.
spk02: Thank you once again. Should you have a question, please press star followed by the one on your telephone keypad. There are no further questions at this time. Please proceed.
spk05: Thank you everybody for attending our conference call and we look forward to updating you in the future and speaking to you next quarter. Thank you everyone.
spk01: Thank you ladies and gentlemen. That does conclude our conference for today. Thank you all for participating. You may all disconnect.
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