ORLANDO, FL / ACCESSWIRE / February 9, 2023 / LightPath Technologies, Inc. (Nasdaq: LPTH) (“LightPath”, “the Company” or “we”), a global leader in optics, photonics and infrared, and a vertically integrated solution provider for the industrial, commercial, defense, telecommunications and medical industries, today announced its financial results for the second quarter of fiscal year 2023 ended 31 December 2022.
“Our fiscal second quarter results reflect a consistent improvement in revenue and gross margin compared to the first quarter of fiscal 2023,” said Sam Rubin, president and chief executive officer of LightPath. — In the second quarter, we began to show significant growth in revenues from the defense industry. offsetting the economic hurdles we are facing in China by increasing the production of visible and infrared molded products for US customers.”
“The second quarter of LightPath’s fiscal year has also been an eventful and critical one in our evolution from a component manufacturer to a total solutions provider. The material, as well as several new awards for the defense infrared program, are the result of our focus on new strategic directions. In November, we announced that our BD6 material had been qualified for use in space by the European Space Agency (“ESA”). Qualified, LightPath is at the forefront of optics for extreme environments. In addition to the obvious benefits of space qualification, we also see this as an encouraging sign as ESA has funded us to specifically characterize our germanium replacement material. LightPath Black DiamondTM glasses also meet the requirements of a major international military program , so in December we received an initial order of $2.5 million from a related client, indicating a significant expansion of business with the company. This and other new orders in the US and Europe resulted in backlogs reaching $31 million in mid-December. which is the highest in recent years and a strong indication of our expectations for growth in the coming quarters. Also in December, LightPath is introducing Mantis, a self-contained infrared camera, infra-red wavelengths. Mantis represents a leap forward for our company as our first integrated uncooled camera that captures images in infrared wavelengths represents a leap forward for the industry.”
“At the end of the quarter, we raised almost $10 million (net of fees and expenses) through a secondary offering. The funds will be used to expand the company’s manufacturing capabilities and capacity, as well as to drive three main areas of growth: imaging solutions. , such as Mantis, our growing defense business, and a large number of thermal imaging applications such as automotive. We also intend to use part of the funds to pay off and restructure our debt. This will further strengthen our financial position and reduce our quarterly interest costs and lay the groundwork for growth.”
The total order book as of December 31, 2022 was $29.4 million, the highest quarter-end order in many years.
Revenue for the second quarter of fiscal year 2023 was approximately $8.5 million, down approximately $0.8 million, or 8%, from approximately $9.2 million in the same period of the previous fiscal year, mainly due to declining sales of infrared products. our product groups are as follows:
Revenue from infrared products in the second quarter of fiscal 2023 was approximately $4.0 million, down approximately $1.1 million, or 21%, from approximately $5.1 million in the same fiscal period. of the year. The decrease in revenue was mainly due to sales of infrared products under large annual contracts, which were completed in the second quarter of FY 2023, while shipments under the renewed contract signed in November 2022 will only begin in the third quarter of FY 2023. The extended contract represents a 20% increase over the previous contract.
In the second quarter of fiscal year 2023, revenue generated from PMO products was approximately $3.9 million, an increase of approximately $114,000 or 3% from approximately $3.8 million in the same period in the previous financial year. The increase in revenue was due to increased sales to defense, industrial and medical customers, which was more than offset by lower sales to customers in the telecommunications industry. Across the industries we serve, sales of PMO products to Chinese customers continued to be weak due to unfavorable economic conditions in the region.
Revenue generated from our specialty products was approximately $571,000 in the second quarter of fiscal year 2023, an increase of approximately $166,000, or 41%, from $406,000 in the same period in the previous fiscal year. The increase was mainly due to an increase in demand for collimator components.
Gross profit for the second quarter of fiscal year 2023 was approximately $3.2 million, up 15% from approximately $2.8 million in the same period last fiscal year. Total cost of sales in the second quarter of fiscal year 2023 was approximately $5.2 million compared to approximately $6.4 million in the same period last fiscal year. Gross margin as a percentage of revenue was 38% in the second quarter of fiscal year 2023, compared to 30% in the same period of the previous fiscal year. The increase in gross margin as a percentage of revenue was due in part to the range of products sold in each period. PMO products, which typically have higher margins than our infrared products, generated 46% of revenue in the second quarter of FY 2023 compared to 41% of revenue in the second quarter of FY 2022. In addition, in our infrared products group, sales in the second quarter of fiscal 2023 were more focused on molded infrared products compared to the same period in the previous fiscal year. Molded infrared products generally have higher margins than unshaped infrared products. In the second quarter of fiscal year 2022, infrared product margins were also negatively impacted by higher costs associated with the completion of coating work at our Riga plant, which have improved as the plant is now entering series production.
Selling, general and administrative expenses (“SG&A”) for the second quarter of fiscal year 2023 was approximately $3.0 million, an increase of approximately $84,000, or 3%, from approximately $2.9 million for the the same period in the previous financial year. The increase in general and administrative expenses was primarily attributable to an increase in share-based compensation, due in part to the retirement of directors during the quarter and an increase in other personnel-related expenses. Utility and administrative expenses in the second quarter of fiscal 2023 also include BankUnited’s expenses of approximately $45,000 pursuant to our renegotiated loan agreement as we did not prepay our term loan by December 31, 2022. This increase was partially offset by a reduction in VAT and related taxes of $248,000 against prior year charges accrued by one of our subsidiaries in China in the second quarter of fiscal year 2022 and a reduction in expenses related to previously disclosed events, by our subsidiary in China by about US$150,000. , including legal and advisory services.
Net loss for the second quarter of fiscal year 2023 was approximately $694,000, or $0.03 basic and diluted, compared to $1.1 million, or $0.04, basic and diluted, for the same period in the previous financial year. The lower net loss in the second quarter of fiscal year 2023 compared to the same period in the previous fiscal year was mainly due to higher gross profit despite lower revenue.
Our EBITDA for the quarter ended December 31, 2022 was approximately $207,000 compared to a loss of $41,000 for the same period last fiscal year. The increase in EBITDA in the second quarter of fiscal 2023 is mainly due to higher gross margin.
Revenue for the first half of fiscal year 2023 was approximately $15.8 million, down approximately $2.5 million, or 14%, from approximately $18.3 million in the same period of the previous fiscal year. Revenue by product group for the first half of fiscal year 2023 is as follows:
Infrared revenue for the first half of fiscal 2023 was approximately $7.7 million, down approximately $2.3 million, or 23%, from approximately $9.9 million in the same fiscal period. of the year. The decline in revenue was primarily due to sales of diamond-cut infrared products, primarily driven by customers in the defense and industrial markets, including the timing of sales of infrared products on large annual contracts. Deliveries under the previous contract were completed in the second quarter of FY 2023, while deliveries under the renewed contract, signed in November 2022, will only begin in the third quarter of FY 2023. The extended contract represents a 20% increase over the previous contract. Sales of molded infrared products made from our proprietary BD6 material also declined, especially to customers in the Chinese industrial market.
In the first half of fiscal year 2023, revenue generated from PMO products was approximately $7.1 million, down approximately $426,000 or 6% from approximately $7.6 million in the same period previous financial year. The decrease in revenue was mainly due to lower sales to customers in the telecommunications and commercial industries. Across the industries we serve, sales of PMO products to Chinese customers continued to be weak due to unfavorable economic conditions in the region.
Revenue from our specialty products in the first half of fiscal year 2023 was about $1 million, up about $218,000 or 27% from $808,000 in the same period of the previous fiscal year. This increase was primarily due to higher demand for collimator components and accruals to customers for work in progress when orders were canceled in the first quarter of fiscal 2023.
Gross profit for the first half of fiscal year 2023 was approximately $5.4 million, down 9% from approximately $6.0 million for the same period in the previous fiscal year. Total cost of sales for the first half of fiscal year 2023 was approximately $10.4 million compared to approximately $12.4 million for the same period last fiscal year. Gross margin as a percentage of revenue in the first half of fiscal year 2023 was 34% compared to 33% in the same period of the previous fiscal year. Lower revenue levels in the first half of fiscal year 2023 compared to the same period in the previous fiscal year resulted in a lower share of fixed production costs, but the more favorable mix of products shipped in the first half of fiscal year 2023 also reflects our ongoing operations. benefit from some of the operational and cost structure improvements that have been implemented.
General and administrative expenses for the first half of fiscal year 2023 were approximately $5.7 million, down approximately $147,000 or 3% from approximately $5.8 million in the same period last year. financial year. The decrease in general general and administrative expenses reflects a decrease in VAT and related taxes assessed by one of our subsidiaries in China in the second quarter of fiscal 2022 by approximately $248,000 compared to prior years, as well as a decrease in related expenses by approximately $480. 000 USD previously disclosed by our subsidiary in China. Events in the company, including payment for legal and consulting services. This decrease was partially offset by an increase in share-based compensation, partly due to directors’ retirement during the quarter, and an increase in other personnel-related costs. Utility and administrative expenses for the second quarter of fiscal 2023 also include approximately $45,000 in fees paid to BankUnited pursuant to our renegotiated loan agreement because we did not prepay our term loan by December 31, 2022.
Net loss for the first half of fiscal year 2023 was approximately $2.1 million, or $0.08 per basic and diluted share, compared to $1.7 million, or $0.06 per basic and diluted share, for the same period in the previous financial year. The increase in net loss in the first half of fiscal year 2023 compared to the same period in the previous fiscal year was mainly due to lower revenue and gross margin, which was partially offset by lower operating expenses.
Our EBITDA loss for the six months ended December 31, 2022 was approximately $185,000 compared to a profit of $413,000 for the same period of the previous financial year. The decrease in EBITDA in 1H 2023 was mainly due to a decrease in revenue and gross margin, which was partially offset by a decrease in operating expenses.
Cash used in transactions in the first half of fiscal year 2023 was approximately $752,000 compared to approximately $157,000 for the same period in the previous fiscal year. Cash used in operations in the first half of fiscal year 2023 was primarily attributable to a decrease in accounts payable and accrued liabilities, including termination payments, related to previously disclosed employee layoffs at our subsidiary in China, which have decreased since June. , 2021. The first half of fiscal year 2023 also reflects the final payment of payroll taxes deferred in fiscal year 2020 under the CARES Act. Cash used in operations in the first half of fiscal year 2022 also reflects a decrease in accounts payable and accrued liabilities for the period due to the payment of certain other expenses related to previously disclosed events at our subsidiary in China, which were as of 30 June 2022. The accrual for 2021 was partially offset by a reduction in inventories.
Capital expenditure in the first half of fiscal year 2023 was approximately $412,000, compared to approximately $1.3 million in the same period in the previous fiscal year. The first half of FY 2023 consisted primarily of maintenance capital expenditures, while most of our capital expenditures in the first half of FY 2022 were related to continued expansion of our infrared coating facilities and an increase in our diamond lens turning capacity. to meet current and projected demand. . We are building additional tenant improvements at our Orlando facility pursuant to our permanent lease, under which the landlord has agreed to provide the tenant with a $2.4 million improvement allowance. We will finance the remainder of tenant improvement costs, estimated at approximately $2.5 million, most of which will be spent in the second half of FY23.
Our total backlog as of December 31, 2022 was approximately $29.4 million, up 34% from the $21.9 million as of December 31, 2021. Our total order book increased by 66% in the first half of FY 2023 compared to the end of FY 2022. The increase in work in progress in the first half of fiscal 2023 is due to several large customer orders. One such order is a $4 million supply agreement with a longtime European buyer of precision motion control systems and OEM components. The new supply agreement will come into effect in the fourth quarter of fiscal year 2023 and is expected to last approximately 12-18 months. In the second quarter of fiscal 2023, we also received a one-year large contract renewal for infrared products, and the contract amount increased by 20% compared to the previous renewal. We expect to begin shipments on the new contract in the third quarter of fiscal 2023 after the completion of shipments on the previous contract. In the third quarter of fiscal year 2023, we qualified to supply advanced infrared optics to a major international military program and received an initial $2.5 million order from a related client. This order represents a significant increase in this client’s business with us. In addition, we have received orders for several other important long-term projects from existing clients in the US and Europe.
Renewal times for multi-year contracts are not always constant, so backorder rates can increase significantly when annual and multi-year orders are received and decrease as they are shipped. We believe we are well positioned to renew our existing annual and multi-year contracts in the coming quarters.
LightPath will host an audio conference call and webcast on Thursday, February 9, 2023 at 5:00 pm ET to discuss its financial and operating results for the second quarter of fiscal year 2023.
Date: Thursday, February 9, 2023 Time: 5:00 PM ET Phone: 1-877-317-2514 International: 1-412-317-2514 Webcast: Second Quarter Earnings Webcast
Participants are encouraged to call or log in approximately 10 minutes prior to the event. Call snooze will be available approximately one hour after the end of the call until February 23, 2023. To listen to the replay, dial 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and enter conference ID #1951507.
To provide investors with additional information on financial performance, this press release refers to EBITDA, a non-GAAP financial measure. To reconcile this non-GAAP financial measure with the most comparable financial measure calculated in accordance with GAAP, please refer to the tables provided in this press release.
“Non-GAAP Financial Measures” are generally defined as the numbers of a company’s historical or future performance, excluding or including amounts, or adjusted to differ from them in accordance with generally accepted accounting principles. The Company’s management believes that this non-GAAP financial measure, when read in conjunction with GAAP financial measures, provides information that helps investors understand the results of operations for the same period that could or could have had a disproportionately positive effect on results at any given time. period or negative impact. Management also believes that this non-GAAP financial measure enhances investors’ ability to analyze underlying business operations and understand results. In addition, management may use this non-GAAP financial measure as guidance for forecasting, budgeting, and planning. Non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, and not as a substitute for or superior to them.
The Company calculates EBITDA by adjusting net income, excluding net interest expense, income tax expense or income, depreciation and amortization.
LightPath Technologies, Inc. (NASDAQ: LPTH) is the world’s leading vertically integrated provider of optical, photonic and infrared solutions for the industrial, commercial, defense, telecommunications and medical industries. LightPath designs and manufactures proprietary optical and infrared components, including aspherical and molded glass lenses, custom molded glass lenses, infrared lenses and thermal imaging components, fused fiber collimators, and proprietary Black Diamond™ chalcogenide glass lenses ( “BD6″). LightPath also offers custom optical assemblies, including full technical support. The company is headquartered in Orlando, Florida, with production and sales offices in Latvia and China.
ISP Optics Corporation, a subsidiary of LightPath, manufactures a complete line of infrared products using high performance MWIR and LWIR lenses and lens assemblies. The ISP range of infrared lens kits includes athermal lens systems for cooled and uncooled thermal imaging cameras. Manufactured in-house to provide precision optics including spherical, aspherical and diffractive coated infrared lenses. ISP’s optical processes allow its products to be manufactured using all important types of infrared materials and crystals. Manufacturing processes include CNC grinding and CNC polishing, diamond turning, continuous and conventional polishing, optical contact, and advanced coating technologies.
This press release contains statements that are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “forecast”, “guidance”, “plan”, “estimate”, “will”, “will”, “project”, “support”, “intend”, “foresee,” foresee “,” perspective, “strategy”, “future”, “may”, “could”, “should”, “believe”, “continue”, “opportunity”, “potential” and other similar terms predict or indicate future events or trends or are not statements of historical events, including, for example, statements related to the expected impact of the COVID-19 pandemic on the Company’s business. These forward-looking statements are based on information available at the time the statements are made and/or management’s current good faith assumptions about future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements Factors that could cause or contribute to such differences include, in addition to why, the duration and extent of the COVID-19 pandemic and its impact on demand for the Company’s products; the Company’s ability to obtain the raw materials and components it needs from its suppliers; actions taken by governments, businesses and individuals. in response to the pandemic, including restrictions on local business interactions; the pandemic’s impact and response on the global and regional economies and economic activities; the pace of recovery from the easing of the COVID-19 pandemic; general economic uncertainty in major global markets and the global economy Deteriorating conditions or low levels of economic growth; the impact of measures the company can take to reduce operating costs; a company’s inability to maintain profitable sales growth, turn inventory into cash, or reduce costs to maintain a competitive price for its products; possible conditions or events that prevent the Company from realizing or realizing expected benefits or that may increase the costs of its current and planned business plans; as well as factors that LightPath Technologies, Inc. The Securities and Exchange Commission, including its Form 10-K Annual Report and Form 10-Q Quarterly Reports. If one or more of these risks, uncertainties or facts materialize, or if underlying assumptions prove incorrect, actual results may differ from those contained herein. The results indicated or expected in forward-looking statements could differ materially. Therefore, we caution you not to place undue reliance on these forward-looking statements, which only speak for the date they are made. Forward-looking statements should not be construed as predictions of future results or guarantees of results and are not necessarily an accurate indication of when or when such results or results will be achieved. we disclaim any intention or obligation to publicly update any forward-looking statement, whether due to new information, future events or otherwise.
LIGHTPATH ​​TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE PROFIT (LOSS) (UNAUDITED)
LIGHTPATH ​​TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
In addition to our US GAAP consolidated financial statements, we present additional non-US GAAP financial statements. Our management believes that these non-GAAP financial measures, when viewed in conjunction with the GAAP financial measures, provide investors with information useful in understanding operating results for the same period, except that they may or may not be disproportionately positive. or negative for results. in any given period Influence. Our management also believes that these non-GAAP financials enhance the ability of investors to analyze our underlying business operations and understand our results. In addition, our management may use these non-GAAP financial measures as guidance for forecasting, budgeting, and planning. Any analysis of non-GAAP financial measures should be used in conjunction with results presented in accordance with GAAP. The following table provides a reconciliation of these non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP.
LIGHTPATH ​​TECHNOLOGIES, INC. RECONCILIATION OF NON-GAAP FINANCIAL INDICATORS WITH RULE G DISCLOSURES
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