LightPath Technologies, Inc. Q4 FY2025 earnings call

• The company has undergone a strategic transformation, shifting from a component manufacturer to focusing on subsystems and systems using proprietary Black Diamond Glass. - Acquired G5 Infrared in February, and recently redesigned two of their cameras using Black Diamond materials, positioning the company as a reliable provider with supply chain resiliency. - Backlog is at $90 million, with over two-thirds in systems and subsystems. - Announced $40 million in orders for infrared cameras for border surveillance and counter UAS, with growth expected in areas like the Navy Sphere program. - Received a $8 million strategic investment from Ondas Holdings and Unusual Machines. - Migrated global IT infrastructure to meet defense industry security requirements and successfully integrated G5 ahead of plan and below budget.

In fiscal 2025, revenue breakdown by segment: Infrared components were $4.9 million, accounting for 40% of consolidated revenue; visible components were $2.8 million, 23.2%; assemblies and modules were $4.2 million, 34.1%; engineering services were $300,000, 2.1%. Gross profit increased to $2.7 million or 22% of total revenues, but was affected by approximately $500,000 in inventory reserve charges related to the visible component business. Operating expenses increased to $7.2 million due to integration of G5, increased sales/marketing spend, material spend for new products, and fair value increase of acquisition liabilities.

• Focus for fiscal 2026 is on supporting growth opportunities described by Sam, with a detailed go-to-market strategy. - Expect margin expansion in the next year as prior manufacturing investments bear fruit. - Continue to focus on adjusted EBITDA as a measure of financial success. - Subsequent to the quarter close, received an $8 million investment from Ondas Holdings and Unusual Machines, which is a strategic fit.

Q: How much did G5 contribute to revenue in the June quarter and how much of the $90 million backlog does it comprise?

A: G5 contributed $4.2 million to revenue in the June quarter. Sam stated two-thirds of the backlog is cameras and assemblies, but it's not broken down by G5 or other parts of LightPath specifically.

Q: Glenn Mattson asked about expanding capacity in Visomed and the signal it sends, and about gross margin and operating expenses.

A: Visomed was a small engineering firm, and the new facility in Texas will be used for NGSRI and other products. Al mentioned adjusting for a $500,000 inventory write-off, and OpEx had one-time expenses like G5 integration, marketing, and IT costs.

Q: Richard Shannon asked about backlog measurement and pipeline.

A: Backlog is real orders, with about 57% shipping in fiscal 2026 and the rest in 2027. Sam noted counter UAS and other opportunities are just beginning to translate to backlog.

Q: Scott Buck asked about G5 product redesign and customer revenue.

A: G5 product redesign is ongoing, and customers are placing orders before production. The leading global technology customer was expected to be around $9 million run rate, but is now more than double that, with prior revenue from G5 being about $4 million.

Q: Brian Kinstlinger asked about adjusted EBITDA and earn-out targets.

A: Al mentioned consensus on revenue would need to be raised, and G5 has earn-out targets of $21 million with 20% EBITDA, with the backlog indicating they'll hit the first mark, but EBITDA at 20% is a key consideration.