Laser Photonics (LASE) reported its fourth-quarter and full-year results for 2023, announcing a significant increase in revenue and outlining strategic plans for the upcoming year. The company, which specializes in CleanTech product lines, saw a 673% growth in quarterly revenue to $0.8 million compared to the restated $0.1 million in the previous year.
The increase was attributed to strong sales in CleanTech products, which accounted for 80% of unit sales. Despite the late filing and impending restatement for 2022, Laser Photonics is working towards enhancing transparency and financial reporting with the addition of Carlos Sardinas as VP of Finance. The company also anticipates a restructuring, with Laser Photonics becoming a publicly traded majority-owned subsidiary of Fonon Corporation.
Key Takeaways
- Laser Photonics reported a 673% increase in fourth-quarter revenue, growing to $0.8 million.
- The company introduced new CleanTech products and developed industry-specific lines, DefenseTech and MARLIN.
- A significant restructuring is expected, with Laser Photonics becoming a majority-owned subsidiary of Fonon Corporation.
- Strategic investments in sales and marketing are anticipated to positively impact growth throughout 2024.
- Operating losses have been reduced, with net losses decreasing from $3 million to $0.4 million, and loss per share improving from $0.38 to $0.05.
Company Outlook
- Laser Photonics has built an estimated $70 million pipeline of opportunities for the next 12 months.
- The company plans to introduce new products and upgrades, including next-generation CleanTech systems.
- There are expansions in distribution and technology partnerships, such as with Fastenal (NASDAQ:FAST) and Brokk.
- A sales and distribution agreement with ISL aims to accelerate sales of DefenseTech product lines.
Bearish Highlights
- The company had to address late filings and restatement for 2022 due to issues with financial reporting compliance.
- Certain revenue and accounts receivable were not recognized in accordance with ASC 606, leading to restatement.
Bullish Highlights
- Laser Photonics added 10 new customers from diverse industries, indicating growth in market penetration.
- Participation in a major trade show resulted in new orders and a substantial pipeline of opportunities.
- Strategic investments in marketing are expected to yield long-term growth and profitability.
Misses
- The company experienced turnover in finance leadership and made an auditor change, contributing to filing delays.
Q&A Highlights
- The company is in the process of changing standard operating procedures to accommodate new technology, which is a significant but rapid process.
- Fonon Corporation's readiness for the public market was a factor in Laser Photonics going public first.
Laser Photonics' fourth quarter showed robust growth and a promising future, with strategic plans aimed at expanding the company's reach and improving its product offerings. The company's restructuring and partnerships are expected to bolster its position in the market and contribute to sustainable growth. Despite the challenges faced with financial reporting compliance, Laser Photonics is taking steps to ensure better transparency and reliability in its financial statements moving forward.
InvestingPro Insights
Laser Photonics has been navigating a transformative period, as evidenced by their latest financial results and strategic initiatives. The company's commitment to CleanTech innovation and restructuring efforts are noteworthy, and InvestingPro data provides further context to their financial health and market position.
InvestingPro Data metrics indicate that the company holds a market capitalization of $17.08 million. Despite a challenging year with a revenue decline of 7.66% over the last twelve months as of Q3 2023, the company has managed to maintain an impressive gross profit margin of 68.72% in the same period. This suggests that while top-line growth has been under pressure, the firm's cost of goods sold is relatively low, which is a positive sign for its operational efficiency.
Moreover, the company's stock has experienced significant price volatility, as reflected by a 34.91% return over the last three months, yet it has seen a substantial decline of 65.12% over the last year. This volatility could be indicative of market sentiment and investor reactions to both the company's growth prospects and its financial reporting issues.
Two InvestingPro Tips that stand out for Laser Photonics are:
1. The company holds more cash than debt on its balance sheet, which is a healthy sign of financial stability and provides the flexibility needed for future investments and operations.
2. Analysts expect sales growth in the current year, which could signal a turnaround from the previous year's revenue decline and align with the company's positive outlook for its pipeline of opportunities.
For readers interested in a deeper analysis and more tips, InvestingPro offers additional insights, including a total of 11 InvestingPro Tips for Laser Photonics, which can be found at https://www.investing.com/pro/. To access these insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This promotion provides an excellent opportunity for investors to stay informed with comprehensive data and expert analysis as they monitor Laser Photonics' progress.
Full transcript - Laser Photonics Unt (LASE) Q4 2023:
Operator: Greetings, and welcome to Laser Photonics Fourth Quarter 2023 Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Brian Siegel from Hayden IR. Thank you. You may begin.
Brian Siegel: Thank you, Doug. 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 are made or may make or update the factors that may cause actual results to differ materially from those that they forecast. I will now turn the conference over to Wayne. Wayne, take it away.
Wayne Tupuola: Good morning, ladies and gentlemen. Thank you for joining us. This morning, we reported fourth quarter and full year 2023 results. As part of our press release, I wrote a letter to investors reviewing our 2023 highlights and provide a detailed commentary on what to expect for 2024. On today's call, I will review the quarter, our highlights from 2023 and then outline some of the exciting plans we have for 2024. Before I do this, however, I wanted to introduce Carlos Sardinas, who joined us as VP, Finance at the beginning of April. Carlos brings a wealth of relevant finance and accounting experience, having served in these roles at L3 Harris Technologies and its predecessors. Welcome, Carlos. We're excited to have you join us. Before reviewing our quarter, I wanted to address our late filings and impending restatement for 2022. As you know, we are a young public company. And since coming public, we had some turnover in our finance leadership and made an auditor change. These moves came from the lessons we gained throughout the year, concerning the auditor change as part of stating -- starting of engagement. Our new auditor did a thorough 2-year review of our financial reporting and asked us to make some changes. Upon reviewing and auditing our 2022 financial statements, our new auditors determined certain previously reported items required statement. Specifically, revenue and AR were not recognized in accordance with ASC 606, and there was a liability related to stock that we issued post-IPO, which was incorrectly recorded under cost of goods sold and needed to be reclassified. These classifications drove the restatement of our 2022 results and the delay in filing our 2023 10-K as we corrected these items as well as early quarters. We are working to hopefully file our 10-K today. Now that we're addressing these audit concerns and have brought on Carlos to oversee our finance and accounting, we hope to improve our transparency and financial reporting. We had a strong fourth quarter and revenue growing 673% to $0.8 million versus the restated $0.1 million last year. We saw strength in our CleanTech product lines, which made up 80% of the unit sales during the quarter. We also made significant progress on the customer front by adding 10 customers. These customers came from industrial aviation, energy, maritime and educational industries. Next, I'd like to remind you about the seasoning behind -- reasoning behind the noticeable shift in our operating expenses compared to last year. As we said at our IPO and repeated throughout the year, we expected to make significant strategic investments in sales and marketing activities to penetrate existing customers, further identify new potential customers and educate the market about the benefits of our CleanTech product line. One of these investments was participating in a major trade show that attracted more attention than we initially anticipated, the fact that the show helped us win several new orders while building a $70 million-plus pipeline of opportunities for us to pursue over the next 12 months. Based on these early returns, we are confident that the positive impact of these strategic investments will [Indiscernible] throughout the remainder of 2024, setting a strong foundation for sustainable growth and profitability in the near future. On the cost side, the higher revenue and improved gross margin helped reduce operating losses from $3 million last year to $1.9 million this year. While net losses decreased from $3 million to $0.4 million, our loss per share improved from $0.38 to $0.05. During 2023, we had numerous milestones, I believe, will set us up for future success. With respect to our CleanTech products, we introduced a 3,000-watt system, which will help further differentiate LPC from expanding our cleaning capabilities at the high end of the market. We also developed the CleanTech Robotic Cell Enclosures to reduce safety risk significantly. This programmable enclosure will have the ability to leverage AI to handle several important tasks simultaneously, providing significant efficiencies and reducing [Indiscernible] risk. We also launched two industry-specific product lines, DefenseTech and MARLIN. DefenseTech addresses laser cleaning and ingrained applications for the military and Department of Defense. It leverages both CleanTech and MarkStar products that has seen early success in the Army, Navy and Air Force. And we'll talk more in a little bit about our sales and marketing efforts for this market in conjunction with Fonon Technologies. MARLIN is targeted at the maritime industry, specifically smaller crowd vessels. We see this opportunity as having $0.5 million total addressable market, and our portable handheld system is ideal for the smaller cleaning surface treatment areas. Next, I'm going to discuss our relationship with Fonon Corporation. In 2023, ICT transferred the bulk of its LPC stock to Fonon, making the company our largest shareholder. Fonon has a portfolio of exciting IP for laser, semiconductor and additive manufacturing technologies, including CleanTech, that it plans to monetize to Laser Photonics Corp and its other subsidiaries. In the coming months, we expect to restructure both organizations with LPC becoming a publicly traded majority owned subsidiary of Fonon Corporation. Once the reorganization occurs, LPC will focus on sales, marketing and product development for industrial markets while also serving as Fonon's manufacturing arm. At the same time, our sister subsidiary Fonon Technologies, which is set up as a government military contractor, will continue to focus on sales and marketing of our DefenseTech line and those customers. An example of why we are doing this happened last October when we expanded our market opportunity into laser cutting with -- by licensing Fonon's high-power turbo piercing technology, which enables cold cutting of materials that would otherwise warp under the heat of a laser. This technology will serve as the basis for our SaberTech product line and as other -- another way for us to expand our total addressable market. In summary, we see our relationship with Fonon as a very synergistic relationship for the companies and shareholders, and we plan to keep you appraised of any developments as things move forward. As we look to 2024, I foresee an exciting year ahead. So far, we announced a significant expansion in our distribution and technology partnerships. During the first quarter, we linked the distribution agreement with Fastenal, a large industrial distributor, for our laser cleaning and protective -- personal protective equipment products for the industrial market. More recently, we announced a technology partnership with Brokk, the leading manufacturer of advanced remote-controlled demolition machines, where we will integrate our technology into the robots. This is a great deal for us as Brokk is one of two companies that provides these machines for nuclear decommissioning, which brings a large pipeline for repeated sales, as these robots become contaminated and need to be replaced frequently. On the government and military side, Fonon and LPC signed a sales and distribution agreement with Incredible Supply and Logistics, or ISL, a leading marketer and distributor to these bodies. We believe this will help expand and accelerate our sales of the DefenseTech product lines going forward. Moving to our product roadmap, we expect to release several exciting new products and next-generation upgrades this year. Starting with the latter, we plan to introduce the next-generation CleanTech systems. Some of the key new features include the ability to customize the power and frequency setting of the system, enable a wider range of materials that can be cleaned. Certain models will be also a reduction in form factor, lower power requirements and other upgrades. Higher-power systems will be IoT-ready and come with Ethernet and WiFi support. We believe this next-generation system will enhance the user experience while expanding our sales funnel. Returning to SaberTech. We will revamp the Titan FX, our large-format cutting system. The new system will come with automatic sheet metal loading and unloading systems that will load metal sheets into Titan, cut them and unload the pieces to a rack system. With this automation, customers can run the Titan 24/7 to have plenty of material ready for their production shifts. Finally, we will reinvigorate sales of our legacy laser engraving systems by introducing the MarkStar VIN. This initiated -- initiative directly responds to the recently passed California Senate Bill 55, which requires all motor vehicle catalytic converters to be marked with a VIN. This system will have specific capabilities and features targeted at complying with this new legislation, ensuring that automotive manufacturers and repair shops can easily adhere to the law. By incorporating this legal requirement into our product's capability, we aim to explore and capitalize on untapped potential within the automotive market. 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 sets us up for improved results in 2024 and beyond and bodes well for our medium- to long-term growth prospects. That concludes my prepared remarks for today. We can now move to questions.
Operator: [Operator Instructions] There are no questions in the queue at this time.
Brian Siegel: Okay. I've got an online question. Wayne, with sales to such key customers as GE, Emerson (NYSE:EMR), the U.S. military, when might we begin to see some repeat orders? It appears many of these sales are one and done test orders, and they haven't led to anything more substantial.
Wayne Tupuola: Yes. Thanks for the question, Brian. So these opportunities are developed in our pipeline as we acquire these interest levels from high-profile customers, and these customers are inquisitive of the technology and how to incorporate it into an environment. And these are sometimes long and drawn-out processes because, as you know, laser cleaning is a new technology to disrupt sand blasting, abrasive sand blasting. And therefore, there's a monumental task of developing standard operating procedures to replace the old and introduce the new. So with that being said, once we inquire interest from these high-profile customers, such as GE or Emerson, they basically decide at the high level to make these changes within their companies. Because it's just a monumental change throughout the entire organization, procedures need to be developed, and therefore, it takes time for the change to happen. But nonetheless, these changes happen rapidly. Once these systems are in place, procedures are drawn, and they can proceed with the purchase.
Brian Siegel: I've got one -- another question. This one is about Fonon. Fonon has existed for more than a decade under the control of ICT and its controlling shareholder. If Fonon has strategic advantages that Laser Photonics does not have, why was not -- why was Fonon not taken public in the first place rather than Laser?
Wayne Tupuola: What we've seen was a development of behind-the-scenes work that Fonon has done with Laser Photonics, and obviously, it was a success story with Laser Photonics going to market, which is the ultimate goal. When you're developing technology and you're commercializing it, it took a while for Fonon to position itself for entrance into the public market. So at the time, it wasn't ready. So now we're ready.
Brian Siegel: Okay. That appears to be all the questions we have today. Operator, you can close the call.
Operator: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.
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