nLIGHT, Inc.

Good day and welcome to the NLITE first quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Joe Corso, Enlight's Chief Financial Officer. Please go ahead, sir.

Thank you, and good afternoon, everyone. I'm Joe Corso, Enlight's Chief Financial Officer. With me today is Scott Keeney, Enlight's Chairman and CEO. Today's discussion will contain forward-looking statements, including financial projections and plans for our business. Forward-looking statements are subject to risks and uncertainties, many 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 of 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 section of our website. I will now turn the call over to Scott.

Thank you, Joe. Starting on slide three, Q1 was a good start to the year for Enlight. Despite a highly dynamic global manufacturing environment that was exacerbated by the start of the COVID lockdown in Shanghai, we met or exceeded guidance and made important progress in all of our key growth opportunities. Turning to slide four, we generated $64.5 million of revenue, which was above the midpoint of our guidance range. First quarter revenue reflects the continued transition in the geographic focus of our business. Revenue from customers outside of China grew by 25% year-over-year to approximately 57 million, or approximately 89% of total revenue. Overall revenue increased 5% year-over-year. Each of our top 10 customers during the quarter were from regions outside of China, and a favorable mix of business enabled us to exceed the high end of our gross margin and adjust to EBITDA guidance. Operationally, we continue to navigate a highly challenging global manufacturing environment. While our global supply chain and manufacturing team has done an outstanding job satisfying our customers' demand, we continue to see significant constraints in the supply chain, elevated material prices, component shortages, and increasing freight and logistics costs. These issues were significantly exacerbated by the unexpected COVID lockdowns in Shanghai and other cities in China. In Q1, the impact of these lockdowns to our business was relatively minimal, although it did preclude us from shipping and receiving material, and we were unable to recognize several million dollars of revenue during the quarter. The inventory investments we have been making have enabled us to support our customers during these lockdowns, but fulfillment of current and projected near-term customer demand requires productive capacity from our facility in Shanghai. As we've discussed in prior quarters, we continue to add automated capacity to our U.S. facilities. In Q1, we completed the installation of the equipment required for the first phase of our automated manufacturing ramp and remain on track for our internal automation goals. Turning to slides five and six, where I will discuss revenue by end market. In microfabrication, we had a strong first quarter. Revenue increased 14% year-over-year to $17.3 million, representing approximately 27% of total revenue. Demand during the quarter was stable and our continued strong performance in this market demonstrates the importance of our high power, high brightness semiconductor lasers to our customers. We continue to develop and release innovative products that enable our customers to differentiate their solutions. For example, this quarter we released an update to our element family of semiconductor lasers that provides up to 30% improvement in output power in the same package, enabling our customers to rapidly scale power and reduce system costs. We also continue to expand our product portfolio and access new markets. In April, we launched a new fiber laser that leverages our core semiconductor laser technology and fiber laser manufacturing scale to produce a two micron wavelength laser. This technology has important applications in all of our end markets with initial focus on the medical market. We have won several design wins and our lasers are being used to dramatically improve outcomes in the treatment of kidney stones and other urology applications. In aerospace and defense, first quarter revenue declined 6% year-over-year to $23.1 million, representing 36% of total sales. Despite lower revenue, we made significant progress in this market as we continue to demonstrate the performance and scalability of our high-energy laser technology. Our leading performance at every level of vertical integration and directed energy offers us multiple opportunities for both near and long-term revenue growth. Our low-swap diodes and fiber amplifiers deliver high power, brightness, reliability in small, lightweight packages. In addition to our leadership position in diode technology, we have also developed fiber amplifiers that we believe offer the most compelling power-to-weight ratio available today. Our vertical integration with U.S. manufacturing enables us to engage with customers at multiple product levels, including diodes, fiber amplifiers, and beam combined lasers, thereby significantly increasing our overall market opportunity in direct energy. As an example, during the quarter, our fiber amplifiers were designed in at a key Department of Defense prime contractor. We've been successful in engaging with customers in the U.S. and abroad, and our full technology stack enables us to develop high-power lasers that are effective against a wide range of threats. During Q1, we also saw continued news that reinforces the importance of this technology in a changing global landscape. there were several important directed energy demonstrations that further validate the importance of directed energy, and the newly released DoD budget contemplates continued growth in directed energy laser spending in the coming year. Finally, turning to the industrial line market, Revenue grew 12% year over year in the first quarter to $24 million, representing 37% of total sales. More importantly, industrial revenues from customers outside of China increased 77% year over year to a record $20.7 million. On a percentage of revenue basis, Q1 industrial revenue from customers outside of China increased to 86% versus 54% in the same period in 2021. Industrial growth outside of China has come from strategic customers where we continue to increase our share of spend. In several cases, we have been selected as our customers' exclusive laser provider. We view our customers as partners and we focus on supporting them with innovative solutions that enable them to differentiate their products. We continue to see opportunities to expand based on our differentiated programmable beam shaping technologies in additive manufacturing, cutting and welding. I will now turn the call over to Joe to discuss Enlight's first quarter financial results.