Exchange: NASDAQ | Sector: Technology | Industry: Hardware Equipment Parts
Q4 2024
Published: Sep 19, 2024
Earnings Highlights
Revenue of $8.63M down 10.9% year-over-year
EPS of $-0.06 decreased by 179.3% from previous year
Gross margin of 29.2%
Net income of -2.35M
""the first answer is that, if you -- we would take the low end of double-digit growth is our expectation for growth, for the next fiscal year."" - Sam Rubin
LightPath Technologies Inc (LPTH) QQ4 2024 Results – Infrared Imaging Transformation Drives Early Signatures of Growth with Defense Programs, MANTIS Camera Rollout, and AI-enabled Edge Solutions
Executive Summary
LightPath Technologies (LPTH) completed a challenging Q4 2024, consistent with a year of strategic transformation from a component supplier to a system-level solutions provider. Revenue for the quarter was $8.63 million, down modestly year-over-year and up modestly sequentially on a gross margin basis, with a GAAP net loss of approximately $2.35 million and an EBITDA loss of about $1.30 million. The quarterly mix shows tangible progress in high-margin engineering services driven by Visimid’s Lockheed Martin program and the company’s camera ecosystem, offset by continued weakness in traditional infrared component sales tied to Germanium-based optics and legacy PMO volumes. For the full year ended June 30, 2024, LightPath reported revenue of $31.7 million, a decline from $32.9 million in the prior year, and a net loss of about $8.0 million. Management underscored a deliberate shift away from Germanium optics to Black Diamond materials and an expansion of infrared imaging capabilities, including the Visimid acquisition, to position LightPath as a system-level supplier with a broad opportunity set in defense, industrial, and automotive markets.
Management guidance points to a pathway toward growth in fiscal 2025, with a low-end double-digit revenue uplift expected, supported by new programs and the ramp in defense-related activity in Europe and the U.S. The upcoming accelerations hinge on execution of several key catalysts: (i) LRIP readiness and potential production for Lockheed Martin’s missile program; (ii) the broader rollout of MANTIS and AI-enabled camera solutions in gas-detection, furnace optimization, and process monitoring; (iii) continued deployment of Black Diamond optics with select customers and conversion from Germanium, and (iv) an automotive thermal-imaging opportunity that management expects to ramp meaningfully in fiscal 2027. While the company has been investing in growth initiatives, it also announced its intention to markedly reduce CapEx in 2025 relative to the prior two years, and to prioritize business development, sales, and product development funding.
Investors should monitor the execution cadence of defense programs (Lockheed Martin and related international opportunities), the pace of camera system adoption (including MANTIS and Visimid-enabled products), the ramp in engineering services, and the management of working capital and funding of capex and growth initiatives as the company targets a turn to positive cash flow from operations in the coming year.
Key Performance Indicators
Revenue
8.63M
QoQ: 12.14% | YoY:-10.85%
Gross Profit
2.53M
29.24% margin
QoQ: 57.21% | YoY:-18.05%
Operating Income
-2.21M
QoQ: 14.47% | YoY:-175.35%
Net Income
-2.35M
QoQ: 9.38% | YoY:-191.01%
EPS
-0.06
QoQ: 11.40% | YoY:-179.26%
Revenue Trend
Margin Analysis
Key Insights
Revenue (Q4 2024): $8.63 million; YoY decline -10.85%, QoQ rise +12.14%. - Gross margin: $2.53 million; gross margin rate 29.0% (vs 32.0% prior-year quarter). - Operating income: -$2.21 million; operating margin -25.6%. - Net income: -$2.35 million; net margin -27.3%; EPS (diluted): -$0.0606. - Full-year 2024: Revenue $31.7 million; Infrared components $14.1 million (44% of sales); Visible components $11.2 million (35%); Assemblies $4.5 million (14%); Engineering services $2.0 million (6%); SG&A ~$12.3 million; Net loss ~$8.0 million; EBITDA ~$-3.7 million.
Backlog: $19.3 million as of 2024-06-30, down ~11% YoY from $21.7 million. - Cash flow: Net cash provided by operating activities $64,694 for Q4; full-year 2024 cash flow from operations ~$0.5 million vs $(2.8) million prior year; capex of $2.2 million for 2024; acquisition of Visimid cash outlay ~$0.9 million net of cash acquired; cash at year-end ~$3.48 million; net debt ~$6.88 million (Total debt $10.36 million; cash-lean balance sheet). - Balance sheet health: Total assets $48.1 million; total liabilities $17.89 million; stockholders’ equity ~$30.20 million; current ratio ~1.93x; debt to capitalization ~25.5%; interest coverage negative due to net losses. - Backdrop: Infrared imaging represented 44% of revenue for the year, with a strategic shift toward Black Diamond optics; Visimid acquired in 2023; spearheading next-gen camera systems and defense-based opportunities. - Outlook/Guidance: Management signals a low-end double-digit growth for fiscal 2025; potential Lockheed LRIP/production in 2025-2026; expansion of AI-ready cameras, and automotive thermal imaging ramp in fiscal 2027.
Financial Highlights
- Revenue (Q4 2024): $8.63 million; YoY decline -10.85%, QoQ rise +12.14%. - Gross margin: $2.53 million; gross margin rate 29.0% (vs 32.0% prior-year quarter). - Operating income: -$2.21 million; operating margin -25.6%. - Net income: -$2.35 million; net margin -27.3%; EPS (diluted): -$0.0606. - Full-year 2024: Revenue $31.7 million; Infrared components $14.1 million (44% of sales); Visible components $11.2 million (35%); Assemblies $4.5 million (14%); Engineering services $2.0 million (6%); SG&A ~$12.3 million; Net loss ~$8.0 million; EBITDA ~$-3.7 million.
- Backlog: $19.3 million as of 2024-06-30, down ~11% YoY from $21.7 million. - Cash flow: Net cash provided by operating activities $64,694 for Q4; full-year 2024 cash flow from operations ~$0.5 million vs $(2.8) million prior year; capex of $2.2 million for 2024; acquisition of Visimid cash outlay ~$0.9 million net of cash acquired; cash at year-end ~$3.48 million; net debt ~$6.88 million (Total debt $10.36 million; cash-lean balance sheet). - Balance sheet health: Total assets $48.1 million; total liabilities $17.89 million; stockholders’ equity ~$30.20 million; current ratio ~1.93x; debt to capitalization ~25.5%; interest coverage negative due to net losses. - Backdrop: Infrared imaging represented 44% of revenue for the year, with a strategic shift toward Black Diamond optics; Visimid acquired in 2023; spearheading next-gen camera systems and defense-based opportunities. - Outlook/Guidance: Management signals a low-end double-digit growth for fiscal 2025; potential Lockheed LRIP/production in 2025-2026; expansion of AI-ready cameras, and automotive thermal imaging ramp in fiscal 2027.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
8.63M
-10.85%
12.14%
Gross Profit
2.53M
-18.05%
57.21%
Operating Income
-2.21M
-175.35%
14.47%
Net Income
-2.35M
-191.01%
9.38%
EPS
-0.06
-179.26%
11.40%
Key Financial Ratios
currentRatio
1.93
grossProfitMargin
29.2%
operatingProfitMargin
-25.6%
netProfitMargin
-27.3%
returnOnAssets
-4.89%
returnOnEquity
-7.79%
debtEquityRatio
0.34
operatingCashFlowPerShare
$0
freeCashFlowPerShare
$-0.01
priceToBookRatio
1.65
priceEarningsRatio
-5.28
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and growth pillars: Sam Rubin describes a transformation from components to systems, with infrared imaging growth now 44% of revenue and a 20% contribution from system-level activities in the latest fiscal year. - Defense emphasis and sole-source opportunities: The company highlighted exclusive materials and sole-source programs (e.g., Lockheed Martin, DoD, NRL materials) that could yield tens of millions in annual revenue once in full production. - MANTIS and AI at the edge: The introduction of MANTIS and the integration of an AI accelerator (Hailo) into cameras to deliver edge AI with 26 TOPS of performance. - LRIP and production readiness: Management indicates the Orlando facility has the infrastructure in place for potential LRIP production next year, with a three-month window to ship after a decision. - Automotive opportunity: The team discussed a potential ramp in automotive thermal-imaging adoption, with volumes starting modestly and ramping to larger volumes by fiscal 2027. - Backlog and Germanium-to-Black Diamond conversion: Backlog declined, driven by Germanium opto production reductions and customer migration to Black Diamond optics; management expects continued conversion and new contract renewals in defense programs. - Financial discipline and CapEx: LightPath stated it would not invest CapEx at prior levels in 2025 and intends to reallocate some structural-cost savings toward growth initiatives, while maintaining a focus on reducing risk and expanding high-margin engineering services.
"the first answer is that, if you -- we would take the low end of double-digit growth is our expectation for growth, for the next fiscal year."
— Sam Rubin
"revenues between $50 million to $100 million a year once in full production."
— Sam Rubin
Forward Guidance
- Revenue outlook: LightPath targets a low-end double-digit percentage growth in fiscal 2025, supported by a mix shift toward high-margin assemblies and engineering services, as well as new programs (e.g., Visimid-driven engagements and Lockheed Martin). - Margin trajectory: Expect improved gross margins as product mix shifts toward assemblies and engineering services (gross margins north of 40% in assemblies per management commentary), though near-term quarterly margins will depend on program mix and ramp. - Capex and spending: The company plans to reduce CapEx intensity relative to the 2023-2024 period and reallocate funds to business development, marketing, product development, and IR activities; non-recurring items may temporarily elevate SG&A. - Key catalysts to monitor: (1) LRIP decision and production ramp with Lockheed Martin (potential $50-100 million annually at full production); (2) adoption and scaling of MANTIS and AI-enabled cameras (gas-detection, furnace optimization, security applications); (3) continued conversion of Germanium-based optics to Black Diamond optics; (4) automotive thermal-imaging adoption by 2027-2029 with potential windshield-integrated solutions. - Risks to monitor: execution risk on defense programs, competition from Raytheon and other incumbents, customer concentration risk, cadence of backlog renewals, and macro/defense budget appropriations.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
LPTH Focus
29.24%
-25.60%
-7.79%
-5.28%
BELFA
36.60%
14.50%
3.53%
17.71%
CETX
-1.46%
5.93%
94.10%
9.66%
CTS
33.70%
13.90%
2.91%
22.14%
HOLO
23.00%
-42.60%
-18.70%
-1.42%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
LightPath exhibits a high-risk, high-reward profile centered on a strategic pivot from components to system-level infrared imaging and defense-enabled camera solutions. The most compelling upside is the potential Lockheed Martin missile program, which management has framed as transformative if won, with anticipated revenue ranges of $50–$100 million per year at full production. The company also benefits from the MANTIS platform, Visimid integration, and edge AI cameras that can address growing demand for AI-enabled, low-latency imaging in defense, industrial, and automotive applications. However, near-term financials remain strained: Q4 2024 posted a net loss of $2.35 million on $8.63 million revenue, with gross margin around 29% and EBITDA negative, and a cautious cash position (~$3.48 million) with a delinquent cash flow cadence risk. The outlook hinges on successful program execution, favorable defense funding cycles, and rapid monetization of AI-enabled and gas-detection camera products.
If LightPath can convert multiple defense opportunities into production, sustain double-digit revenue growth in fiscal 2025, and manage working capital while reducing CapEx, the stock could re-rate given improved margins from higher-margin assemblies/services and a favorable mix shift. Key monitoring points for investors include: (1) timing and outcome of LRIP/production decisions with Lockheed Martin; (2) adoption rate and backlog progression for MANTIS and associated AI-ready cameras; (3) streamlining of SG&A in 2025 with structural-cost savings reinvested in growth; (4) the pace of Germanium-to-Black Diamond conversions and associated backlog impact; and (5) the trajectory of the automotive thermal-imaging opportunity toward 2027–2029.
Key Investment Factors
Growth Potential
- Infrared imaging leadership and exclusive material licenses position LightPath to capture larger TAM (IR imaging market TAM estimated around $9B). The MANTIS platform and Visimid’s Lockheed Martin program are potential multi-year growth engines; potential $50–$100 million/year in full production from the missile program if awarded. The automotive thermal-imaging opportunity, while ramping later, could meaningfully expand addressable markets by 2027-2029.
Profitability Risk
- Dependence on a limited set of defense-facing programs and customers; backlog concentration risk as Germanium-related contracts wind down and Black Diamond conversions proceed. - Near-term margin pressure due to lower revenue base and non-recurring SG&A items; execution risk around LRIP entry, ramp to production, and integration of Visimid. - Cash flow volatility and liquidity concerns given net losses, negative EBITDA, and modest cash balance; reliance on external financing for capex and working capital needs. - Competitive risk from Raytheon and other defense contractors; geopolitical and budgetary shifts could impact program funding.
Financial Position
- Balance sheet shows modest liquidity with cash and equivalents of ~$3.48 million and total debt of ~$10.36 million; net debt ~ $6.88 million. - Current ratio ~1.93x, indicating adequate short-term liquidity but a modest cushion given ongoing losses. - Gross margin ~29% in Q4 2024; EBITDA negative; operating margin negative; leverage moderate (debt-to-capitalization ~25.5%). - Long-term structural cost reductions (about $1.2 million annualized) have been identified, with capex expected to decline in 2025, enabling more spending on growth initiatives.
SWOT Analysis
Strengths
Strong pivot to infrared imaging and system-level solutions, expanding beyond legacy optics.
Infrared-focused IP and exclusive licensing (NRL materials) plus DoD/Defense Logistics Agency partnerships.
Acquisition of Visimid Technologies and the Lockheed Martin program position LightPath for higher-margin, mission-critical systems.
AI-enabled camera capabilities (Hailo AI accelerator) enabling edge AI with low latency and power.
MANTIS camera platform driving higher ASPs and new customer engagements; diversifying revenue mix toward assemblies and engineering services.
Weaknesses
Small company with sustained net losses and negative EBITDA in Q4 2024.
Backlog concentration and dependence on a few defense-related programs; renewal risk and schedule sensitivity.
Diluted profitability due to ramp in SG&A and non-recurring items; limited cash runway and modest liquidity.
Capex intensity in prior years and ongoing restructuring costs; potential mismatch with near-term revenue cadence.
Opportunities
Lockheed Martin missile program could transform revenue with potential $50–$100 million/year at full production.
Gas-detection, furnace optimization, and security markets for AI-enabled infrared cameras; potential OEM partnerships with Motorola and others.
Auto OEMs’ adoption of thermal imaging for ADAS as part of 2029 NHTSA requirements; windshield integration could create a large TAM.
Expansion of Latvia facility for ITAR defense work and enhanced NATO/EU authorized work; capacity expansion in low-cost regions to win defense work.
Threats
Competitive risk from Raytheon and incumbents in missile systems; down-select outcomes are uncertain and highly strategic.
Geopolitical and budgetary shifts could pressure defense spending cycles and program funding.
Technology execution risk in scaling from prototype to production (LRIP) and in integrating Visimid capabilities across programs.
Customer concentration in defense and risk of delayed renewals or cancellations impacting backlog and revenue.
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