Good day, and welcome to the nLIGHT Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joseph Corso, Vice President, Corporate Development and Investor Relations. Please go ahead, sir..

Thank you, and good afternoon, everyone. As the operator said, I am Joe Corso, nLIGHT’s Vice President of Corporate Development and Investor Relations. Scott Keeney, Chief Executive Officer of nLIGHT; and Ran Bareket, Chief Financial Officer, will be the speakers on today’s call.

If you have any questions after the call, please direct them to me at joe.corso@nlight.net. A copy of today’s earnings press release and earnings slide presentation are available on the Investor Relations section of our website at investors.nlight.net. In addition, you can access an archived version of today’s call from our website.

In today’s call, our discussion will contain forward-looking statements, including statements about the potential impact of ongoing COVID-19 pandemic, financial projections, future business growth trends and related factors, prospects for expanding and penetrating addressable markets and our strategic focus and objectives.

Forward-looking statements are subject to risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today’s call.

We undertake no obligation to update publicly any forward-looking statement except as required by law. Additionally, certain non-GAAP financial measures will be discussed on this call.

We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings release, which can be found on the investor Relations section of our website. I will now turn the call over to Scott, who will provide an update on the current environment and the markets we serve.

Ran will then go through our financials and outlook. We will then be glad to take your questions..

Thank you, Joe. Starting on Slide 3. 2020 was a year, I will not forget. We started the year with the hope of a global manufacturing recovery after a difficult 2019. But early in the year, we faced the profound uncertainty of the COVID-19 pandemic.

Throughout the year, our global team met the unprecedented challenges of this crisis, and we not only were able to operate safely, but we also ended the year with record revenue. In 2020, we generated $223 million of revenue, which was an increase of 26% over 2019 and in line with our long-term historical compound annual growth rate of 23%.

We exited Q4 with 50% growth over Q4 2019. And while our future growth will be subject to global macroeconomic factors, we believe over the long run, that our strategy will enable us to meet or exceed our historical long-term revenue compound annual growth rate of greater than 20%. Turning to Slide 4.

Breaking down revenue by end market, I will begin with aerospace and defense. 2020 marked the fourth consecutive year of annual growth in our aerospace and defense business. We grew 2020 revenues 36% on an organic basis, and we grew 102% year-over-year when including the $31.8 million contribution from Nutronics.

We have been serving the aerospace and defense market since we founded nLIGHT 2 decades ago, and we view ourselves as a dual-use technology company. We have a long history of supplying mission-critical lasers into long-running programs and our work in directed energy represents an important long-term opportunity.

November marked the 1-year anniversary of our acquisition of Nutronics, and I’m happy to report that the integration of nLIGHT and Nutronics has gone well.

Confirming our fundamental thesis, that being vertically integrated from the semiconductor laser through being control is critical to developing high-power cost-effective lasers required for directed energy applications.

Today, we believe we are the only laser company with this level of vertical integration, which offers us a competitive advantage as directed energy applications are expected to move to programs of record. Turning to the industrial end market. Our business grew 10% year-over-year in 2020.

We saw continued demand growth in China beginning in mid-2020 that continues today, particularly as our customers continue their migration towards higher power laser solutions. In contrast, our global industrial customers generally operate at lower power levels and value our differentiated programmable laser technology.

The sales cycle for many of these global industrial customers is quite long and the design wins we’ve secured offer significant long-term growth potential. We’re also excited about the opportunities we have in metal additive manufacturing with our newly introduced AFX 1000 single-mode programmable laser. Turning to microfabrication.

In 2020, our microfabrication sales declined by 10% year-over-year. However, after bottoming in Q1, we saw a rebound in our microfabrication business beginning in the second quarter that continued throughout the year. And in Q4, our market fabrication revenues increased by 15% versus the comparable period in 2019.

We continue to improve performance and reduce costs of our high power, high-brightness semiconductor lasers, which we believe will enable us to meet the growing demand from a broad base of electronics manufacturing applications that require the use of lasers.

We expect that the microfabrication market will be driven by continued improvements in next-generation applications in 5G networks and handsets as well as the increased use of flexible printed circuits in consumer electronics devices, medical applications, displays and other advanced electronics applications. Turning to Slide 5.

In 2020, we increased our revenue in all geographies. In China, our 2020 revenue grew 10% year-over-year to $70.9 million. Full year 2020 sales to customers outside of China grew 35% year-over-year to $151.9 million, representing 68% of our total revenue versus 64% in 2019. Turning to Slide 6.

In the fourth quarter, we had record quarterly revenue of $66 million, and we grew 53% year-over-year with growth in all of our end markets. Beginning with aerospace and defense, we grew revenues 57% year-over-year on an organic basis and 122%, including the $12.5 million contribution from Nutronics.

A&D revenue in the quarter was driven by executing against long-term contracts with our core aerospace and defense customers and ongoing direct energy development work. Our industrial business grew 29% year-over-year in the fourth quarter.

Growth in our industrial business was driven across all geographies as demand for both high-power and programmable fiber lasers continue to increase. Finally, within microfabrication, our sales increased 15% compared with the fourth quarter of 2019.

During the quarter, we saw positive demand trends from multiple customers across a wide range of microfabrication applications. Moving to Slide 7, to discuss our quarterly revenue by geography. In China, our revenue grew 22% year-over-year to $18.2 million.

Fourth quarter sales to customers outside of China grew 70% year-over-year to $47.5 million, representing 72% of total revenue versus 65% in Q4 2019. I will now turn the call over to Ran to discuss nLIGHT’s full year and Q4 financial results..

product and development. Our development gross margins are associated preliminary with advanced technology development projects for the U.S. government, including the work we performed at Nutronics. Prior to the acquisition of Nutronics in November 2019, we reported our business and gross margin in a single segment.

While we have always worked on advanced technology development programs, revenues from those programs were not material. Therefore, when evaluating our gross margin trends over time, it is important to compare what we classified as product gross margin today with our overall gross margin prior to the acquisition of Nutronics in Q4 2019.

In the fourth quarter, we generated product gross margin of approximately 36%, which were approximately 1,200 basis points higher than our product gross margin in Q4 last year.

While some of those improvement in our product gross margin is associated with higher revenue level, the 2 primary drivers for our product gross margin expansion is increased product sales to strategic industrial and aerospace customer outside of China and continued cost performance improvement of our semiconductor lasers.

As we look forward to the future, we believe that we can expand our product gross margin above 40%. This improvement will not be linear and will experience fluctuation quarter-over-quarter.

We believe that our focus on strategic growth with our commercial customer outside of China, a growing proportion of sales to the high-power segments of the market in China, and continued success in our core defense business will enable us to further improve our gross margin over time. Turning to Slide 11.

Operating expenses without stock-based compensation were $15.4 million during the fourth quarter compared with $15 million in Q4 2019. While we remain focused on controlling our operating expenses, we continue to invest in research and development to capitalize on an expanding set of organic growth opportunities. Turning to Slide 12.

Non-GAAP net income for full year 2020 was $7.3 million compared with $1.1 million during 2019. Non-GAAP EPS for full year 2020 was $0.17 per diluted share compared with $0.03 per diluted shares in 2019. On a GAAP basis, EPS for full year 2020 was a loss of $0.55 compared with a loss of $0.35 during 2019.

Non-GAAP net income for the fourth quarter was $5.2 million compared with a loss of $2.1 million during the fourth quarter of 2019. Non-GAAP EPS for the fourth quarter was $0.12 per diluted share compared with a loss of $0.06 per share in the fourth quarter of 2019.

On a GAAP basis, EPS for the fourth quarter was a loss of $0.12 compared with a loss of $0.29 during the fourth quarter of 2019. Full year 2020 adjusted EBITDA was $18.2 million or 8.1% of revenues. This compares to $9.9 million or 5.6% of sales during 2019. Fourth quarter adjusted EBITDA was $8.4 million or 12.9% of sales.

This compared with a loss of $1.4 million in Q4 2019. Our improvement in adjusted EBITDA in both the full year and in Q4 was a result of higher gross margin and strong operating expenses control. It also demonstrates the operating leverage we generate from incremental product sales.

During 2020, we generated approximately $13 million of operating cash versus a use of $4.3 million in 2019.

While our operating cash flow will fluctuate on a quarterly basis, as it did in the fourth quarter, when we consumed $1.7 million of operating cash, we continue to focus on maintaining the appropriate amount of working capital on our balance sheet to support our strong growth. Our capital expenditures for the full year of 2020 were $23.4 million.

Included in this number is approximately $12.5 million that we used to purchase our Camas facility in early 2020. Excluding our expenditure on our Camas facility, CapEx as a percentage of sales was approximately 5%. We expect to continue to invest in CapEx related mainly to facility automation, infrastructure and manufacturing capacity.

Turning to Slide 13. We ended Q4 with total cash and cash equivalents of $102 million. DSO for the fourth quarter was 38 days. Inventory at the end of the quarter was $55 million, representing 106 days in inventory. Our DSO and days of inventory remained relatively consistent with prior quarter. Turning to Page 14 for the outlook for Q1.

Based on the information available today, we expect Q1 of 2021 revenues to be in the range of $56 million to $62 million. At the midpoint of $59 million, this includes approximately $47 million of product sales and approximately $12 million of development sales. The midpoint of our revenue guidance implied year-over-year growth of 37%.

Based on our current expectation for product mix, we see gross margin for Q1 2021 in a range of 25% to 29%. Product gross margin is expected to be in the range of 30% to 34%. We expect development gross margin to be approximately 6.5%. For the first quarter, we expect adjusted EBITDA to be in the range of $3 million to $6 million.

Our Q1 adjusted EBITDA range assume that OpEx without stock-based compensation will increase slightly, and depreciation and amortization is approximately $3.8 million. We expect Q1 average basis share to be approximately 39.9 million. With that, I will turn back the call to Scott..

first, technology will continue to improve in a Moore’s Law like cadence, which will enable lasers to continue to displace legacy technologies.

Second, there are a broad range of end market catalysts that will drive demand, including long-term secular drivers from electric vehicles, additive manufacturing use for series production, adoption of next-generation 5G infrastructure and handsets and new aerospace and defense applications.

Our core strategy positions us well to increase our share of this growing market. nLIGHT is solely focused on provided high-power semiconductor and fiber lasers, and we believe that our vertically integrated business model is a critical differentiator.

We continue to focus on the global industrial and aerospace and defense markets, which are the 2 key areas that we believe will drive our growth going forward. The combination of our technology and product portfolio, customer traction, new product introductions and a commitment to these markets offers attractive growth opportunities.

Over the past 20 years, we have remained tenaciously focused on the promise of high-power lasers, and the last year marks an important year in our history. I’d like to thank all of our employees for their exceptional performance and what shaped up to be a very challenging year in which to safely operate and grow a global business.

With that, I will turn the call back over to the operator for questions..

[Operator Instructions] And the first question will come from John Marchetti with Stifel..

Scott [indiscernible] take a moment and just talk through maybe -- in the deck, you gave the breakdown by the different power levels. And it looked like high-power was a little bit weaker, where the strength really came through at the low-power end.

And if you could just provide a little bit of color around some of the dynamics there, I would appreciate that..

Sure, John, it’s Scott. No problem. So yes, we didn’t emphasize the power here because it gets a little more complex. The bottom line is our growth outside of China was swamping the growth in the high power.

So as you recall, in China, there’s a tendency to use relatively higher power fiber lasers for cutting; whereas in the global industrial customers outside of China, there’s less focus on the extreme high powers and more focus on the high-performance and notably the programmability that we provide.

So as we grow outside of China, that brings that average down. We continue to see, nevertheless, a general expansion in high-power both in China and the rest of the world. It’s just that the relative levels between the 2 are different today..

Got it. Okay. And then just on the margin side, Ran, if I can. When I think about your guidance for next quarter coming off of the 36% or so that you did non-GAAP and product gross margin in this last quarter.

Is that largely a function of mix? How do I think about that step down from the 36% in this most quarter to sort of a midpoint of 32%, given the outlook.

Is it volume driven? Is it mix driven? Just curious for some color there?.

It is -- sure. It is both. It is volume-driven, and it’s a mix driven..

The next question will come from Greg Palm with Craig-Hallum Capital..

Nice results. Maybe just starting off, would love to get your kind of thoughts on an order commentary thus far for Q1.

I mean, any areas of strength, either by segment or geography that you want to call out?.

Yes. Thanks, Greg. Scott here. Yes, nothing really calling out right now. We’ve continued to see improvements in microfab. We’ve really seen improvements throughout 2020 in all areas. As we said, the growth through the year, it was accelerating through the year. So we’ve seen that to continue. You always have Q1, the Chinese New Year uncertainty.

I think underneath that, as you may know, this year in China, there’s far less travel, which probably will shorten and reduce the impact of Chinese New Year this year, but you never know until you’re on the other side of that.

So in general, throughout 2020, we saw acceleration in all of our markets and certainly heading into this year with the promise of a vaccine, certainly anticipating continued strength..

Okay. Maybe if I could expand upon that last answer I mean, I know you don’t typically give full year guidance. But just in terms of the cadence of how the year might shake out, I mean, going back a few years, I recall sort of Q1 starting off as the low point in building throughout the year.

The last 2, I think, have been a little bit unique with all the puts and takes. Maybe just remind us kind of how you’re thinking about seasonal trends this year..

Yes. Let me remind you, typically, Q1 in the industrial market is the softest because of Chinese New Year. And then conversely, Q2 tends to be one of the more dramatic growth quarters as we come out of Chinese New Year. And you fold in some other cycles around microfabrication and upgrades and whatnot, it gets a little more complex there.

But that’s, to the extent there is a cadence, that’s typically what we’ve seen. You layer in, each segment has different dynamics in aerospace and defense. We’re working on the government budget cycle. So there’s a little bit there.

But the first order, I think, it’s that Q1 softer, Q2 stronger because of industrial, it’s probably the most pronounced sort of trend we typically see..

The next question will come from Jim Ricchiuti with Needham & Company..

I just wondering if you could expand a little bit about the strength you’re seeing in industrial outside of China for some of the programmable lasers.

Where is that -- maybe you could talk a little bit, Scott, about the key applications where you’re getting traction?.

Absolutely, Jim. Let’s see a few things. All 3 segments are important. I’ll start with cutting. In cutting, it’s a market that we had smaller share to date. It’s a market where the design in -- it’s a long process to get designed in. And we’ve worked through that over the last really 5 years.

And the introduction of our programmable fiber lasers, I think, has been instrumental in our design wins there. So we’ve continued to make progress in that market with key larger customers. I think as we look ahead this year, Jim, I think the big trade show there, at least in the U.S. would be fab tech, and then Europe will follow thereafter.

And so there’ll be more information later this year. But we continue to make traction because of our programmability. Similarly, in the welding markets, it’s a very different set of markets, much more fragmented. But I’d say the high level there is to think about the EV from battery through new OEMs, and we’ve got some good design wins there.

But much more fragmented markets. There aren’t as big design wins tend not to be as large. And then finally, in additive manufacturing in Q4, we launched our AFX product, which is our programmable fiber laser for that market. And we’ve been working in that space for many years now. I think that product launch has exceeded our expectations.

And I think we’re really demonstrating some really pretty fundamental advantages in that market. It’s the smallest of the 3 markets, but it is one that is starting to inflect, where the productivity that we’re seeing is such that attitude is going beyond the really niche applications and into some really important higher volume applications.

So continue to make traction there. So really all those markets, that’s a short summary of what we see going on..

That’s helpful, Scott. And just on the microfabrication business. Well, let me back up a second. And again, not looking for guidance necessarily beyond Q1. But can you characterize the visibility in the industrial business and microfabrication business, looking out beyond the quarter, just to give us a sense as to what you’re seeing.

For instance, are you seeing any pickup as a result of the stronger smartphone cycle in microfabrication? Or is that still a relatively small part of the business?.

Yes. Good, Jim. So in terms of visibility, just kind of high-level again. In some sense, defense, we have the best visibility, the longest term sort of outlook. Probably industrial is second, although it is much more limited. And then finally, microfabrication is probably the least visibility. We have indications of where things are going.

But because that market is so fragmented, and we’re also back in the channel, we focus on the semiconductor laser that goes into other lasers that go into the systems go to that market. It’s more difficult to get a very clear read on what we see. Having said that, we are seeing pickup.

And yes, we believe that part of that is driven by 5G new consumer electronics that are using lasers in new ways. But again, it’s a broad based market. And we’ve talked a little bit about medical in the past. That’s an area where we see some continued expansion in that space.

And then going forward, we continue to see that market proliferating and opening up quite a large number of new applications..

What was that growth that you saw in Q4, that 15% in the microfabrication, was that more or less in line with your expectations?.

Oh, boy, I think -- in Q4, I think it was a bit better than we were expecting certainly for Q4, but not out of line with our expectations..

The next question will come from Jed Dorsheimer with Canaccord Genuity..

Congrats on the quarter. First one, just on the upstream.

I’m curious on the manufacturing, what the wavelength range is across your product offering from a materials perspective, not frequency doubling?.

Yes. Good, Jed. So we, boy, go down to -- it’s pretty niche at 600-odd nanometers, really niche. And then at the opposite extreme, again, really niche would be just under 2-micron wavelength. So we do have a very broad range of wavelengths that we cover. We do a little bit in the blue, actually. But again, really pretty niche today.

The vast majority of what we do is, well, around 1 micron for most of the applications..

Got it.

And do you think -- the reason that I’m asking is just with the aerospace and defense business, kind of being a focus area and particularly around directed energy, do you see that as being the area in terms of potential expansion on the upstream? Or do you think -- or from a wavelength perspective, it will be tight around that range that you have?.

Yes. Good. So in -- generally, in defense and particularly in defense -- in directed energy, it’s generally around 1 micron. There are applications for longer wavelengths, the "eye-safe" wavelengths of 1,500 nanometers or so. So there are some applications there, but by and large, the directed energy applications are around 1 micron.

You do get to other wavelengths for other applications, and you quickly get into some classified applications. But the volume today and likely in the future is around 1 micron..

Got it.

And so on the eye-safe, that would require indium phosphide if you’re not using it a doubling? Or is -- are you able to achieve that with some other material?.

Yes. There’s sort of at least 2 ways to guess there, Jed. One is with indium phosphide semiconductor lasers, and we have been a leader in that space for quite a long time. So we do that directly with our own semiconductor lasers. The other -- one other way to get there is through -- well, through fiber lasers with different rare earths.

So thulium is one example of that. erbium would be another. And so you can pump those fiber lasers at, let’s call it, more typical semiconductor laser wavelengths to get those longer wavelengths for these applications..

Got it. One last question around here.

With some of the changes going on from an industry perspective and the discussion around sort of the benefits of the vertical integration that you have, do you think that there’s going to be -- that there’s a greater need from pull from the end application further downstream or not?.

Well, let’s see. Obviously, a lot going on and hard to speculate on what outcomes will be. But I think philosophically, what we believe is that there are 2 things that matter at the fundamental level. One is that, that focus matters a lot and no pun intended with lasers.

We are solely focused on high-power well, semiconductor base lasers, directly semiconductor lasers and fiber lasers pump by the semiconductor lasers. We’re solely focused on that high-power market. And that means there are a whole set of technologies and indeed sort of business systems that are associated with that focus. That’s all we do.

That’s point 1. Point 2 is that we do think that, that vertical integration to do that is important.

And that was a core thesis for why we acquired Nutronics was that we believe that the vertical integration was required really to optimize from the chip through the beam combination be control in this case, and to really make sure that there were no sort of breaks in that value chain to optimize across that.

And we do believe firmly in really both those principles. And so we’ll see how the industry evolves with what’s going on. But that’s really -- that’s core to what we believe is critical..

The next question will come from Tom Diffely with D.A. Davidson..

First, Ran, with regards to your guidance on the advanced development part of the business being down as well.

Is there normal seasonality in the defense business? Or is that just kind of quarterly lumpiness that we’re looking at?.

No, it’s quarterly lumpiness. There is no seasonality with the defense in general..

Okay. Great. And then Scott, kind of similar to what Jim was asking earlier.

When you look at your semi-laser business versus your fiber laser business, which one do you think is a bigger component of growth in 2021?.

For ‘21 and really beyond what we’re focused on is the industrial market for those global players and the vast majority of that is going to be driven by fiber lasers. Similarly, the directed energy application in defense will also be driven by fiber lasers. Important to remember that the semiconductor laser is critical technology in there.

So there’s really important product development that we’re working on that supports that, but the end product for those 2 key growth areas are fiber lasers..

Okay.

And then -- and the final question then related to that, has the margin structure for you between fiber lasers and semi lasers come down?.

I don’t want to dodge the question because -- but it is very complex. We don’t break out the margin across their -- there are certain fiber laser categories that have much higher margins and there’s some that -- where it’s more commoditized and lower margins.

So there’s dispersion across really both those and we’re showing continued improvement in our margins over the past few quarters, and we anticipate to continue to make improvements in product margins. Having said that, our primary focus is on continued growth and adoption in those key markets we’re talking about.

And as we’ve talked about before, that product margin is a little less meaningful when it comes to, especially the R&D revenue associated with direct energy right now..

Okay.

I should ask, any impact from the unexpected snowstorm in the area?.

Yes, a little bit. Yes, we had one snow and ice here in the Portland region. Luckily, we had power on the Washington side, but a few of our employees on the Portland side are still struggling a little bit. But -- Yes, we’re getting by it..

The next question will come from Paretosh Misra with Berenberg Capital Markets..

Great.

So just curious if you could provide any color on your order book as to what you’re seeing? And how is it versus this time last year?.

Yes. We don’t really -- we do not break out our bookings. I will say that we did see continued acceleration in our markets throughout the year across all of the markets, and we’re getting good visibility. But it’s always difficult in Q1 with Chinese new years, as I’ve said before, to have much longer term visibility.

But I will say this, there’s a strong funnel of opportunities across all of the markets that we serve, and we continue to make traction in all of them..

Got it. And then maybe if I could ask one more. Any sense you could -- you have -- how big is the automotive business for you? I’m guessing it’s all within the industrial.

And within that, any thoughts on the electric battery business, like how big is that for you right now?.

Yes. Good. On a sort of relative basis, our exposure to automotive is relatively modest. We are relatively less penetrated into the automotive exposure. But we do have some exposure. Obviously, there’s some through cutting, but probably there’s more through the welding set of applications.

And indeed, as you alluded to, it’s really the EV space that has opened up more opportunities for us. And it goes from the battery manufacturers, notably in Korea, Asia, China, to the new OEMs around the world that are developing new cars, new car parts that are using our lasers for both cutting and for welding.

And again, as I mentioned, it’s a pretty fragmented market. I think we have significant room to continue to grow in that space. It’s a market that is expanding. It is opening up a number of new applications for lasers. And it’s a market that our products are well positioned for in a number of those key markets, and we have room to continue to grow..

[Operator Instructions] Our next question will come from Mark Miller with The Benchmark Company..

Yes.

I was just wondering in terms of the breakout of fiber laser sales, how did they do above 6 kilowatts was that stronger this quarter or weaker?.

Yes. We did break out, Mark, the detail, you can find it out there. And this quarter, on a relative basis, the above 6-kilowatt was a little lower. I think -- yes.

I mean -- sorry, Ran, do you want to jump in the numbers?.

Yes. Mark, it was, it was 47% this quarter versus 58% in Q3 or 54% in Q2..

Yes. So as I said, and we saw that really across the industry, too, it’s interesting. You can note that. And as I mentioned before, Mark, as we grow in the global -- in China, there’s a tendency to use higher power fiber lasers on a relative basis over the rest of the world. As we go into the rest of the world, that average would be dampened a bit.

But we do see the continued trend to higher power across the globe..

In terms of the Chinese market at the lower -- and has that situation stabilized in terms of pricing?.

We don’t see dramatic changes there. I think we have seen some of the lower power players in that space struggle and hard to know where a few of them have gone. So the level of -- the number of competitors there, certainly, we don’t see that expanding. And we don’t see dramatic changes in that market..

Just a couple of housekeeping issues. Your tax rate has been jumping around.

What should we estimate for 2021?.

So on a quarterly basis, you should estimate roughly $200,000 to $300,000 expense a quarter..

Okay. And stock-based compensation, that’s going to be around -- it’s been lower this quarter, it’s going to be around $5 million or $6 million.

Is that a good estimate?.

No. This quarter, it was around $9 million, and that estimate should remain for 2021 as well..

So, it will be $9 million in the first quarter of this year also?.

Roughly..

This concludes our question-and-answer session. I would like to turn the conference back over to Joseph Corso for any closing remarks. Please go ahead, sir..

Yes. We’d like to thank everybody for joining the call today and the interest in nLIGHT, and we look forward to speaking with you all during the quarter. Have a great afternoon..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..