nLIGHT (LASR) The Stifel 2024 Cross Sector Insight Conference summary

Business evolution and market focus

• Shifted from heavy China exposure (47% of sales in 2018) to only 7% last quarter, reducing geopolitical risk and focusing on growth outside China.

• Defense now represents over 50% of revenue, up from 20% at IPO, reflecting a strategic pivot toward aerospace and defense markets.

• Maintains a dual-use technology strategy, leveraging synergies between industrial and defense applications for R&D and manufacturing scale.

• Industrial markets, especially additive manufacturing, remain important for growth and provide volume to support defense business.

• Macro uncertainty persists, with industrial markets facing headwinds, but optimism remains for new applications and long-term growth.

Technology and competitive differentiation

• Proprietary vertical technology stack from semiconductor chip to high-power fiber lasers, with in-house fabrication near Portland, Oregon.

• Achieved record-setting single-mode laser power (over 300 kW), with dynamic beam shaping capabilities protected by a strong patent portfolio.

• Dynamic beam adjustment is a key differentiator, critical for both industrial (e.g., additive manufacturing) and defense (e.g., atmospheric compensation) markets.

• Technology advances in China contributed to defense applications, notably in directed energy and space-qualified lasers.

• Additive manufacturing is highlighted as a major growth area, with technology enabling higher throughput and cost reduction for metal parts.

Financials, contracts, and operational strategy

• Backlog exceeds $300 million, with $100 million in firm purchase orders for execution over 24 months and $200+ million in additional expected defense contracts.

• Defense contracts span directed energy and laser sensing, with most programs having a three-year performance period and strong conversion expectations.

• Margin improvements are driven by increased volume, new manufacturing facilities in the US and Thailand, and a shift toward higher-margin defense products.

• Manufacturing footprint has shifted from reliance on Shanghai to onshoring and outsourcing, improving long-term positioning.

• Venture capital and Silicon Valley interest in defense tech and space applications is increasing, with the company recognized as a leader in the field.