LightPath Technologies (LPTH) was also fatiguing and surprising Thursday, as they reported preliminary fiscal Q4 results earlier than anticipated (with audited final results Sept. 13 about the time originally expected), writes Gene Inger on a fatiguing Europe flight.
The shares were clobbered then stabilized at the same the backlog and order-flow seems as strong as they contended.
The Orlando-based small cap is a global manufacturer, distributor and integrator of proprietary optical and infrared lenses and thermal imaging components in self-driving vehicles, defense, industrial, telecom, medical, testing and measurement. The company recently announced the consolidation of its New York plant to Orlando and Riga, Latvia plants.
Hard to say whether a new CFO is very proficient in showing conservative results to start with, but in this case, CEO Jim Gaynor acknowledged that time from order to delivery of newer products was not as speedy as he had expected.
Personally, I didn’t expect to see much out of more recent order-flow yet; so maybe he’s more surprised than am I.
It is obvious that buyers who probably just came in on the technical surge, got out, and perhaps that sets it up for its own version of rinse & repeat.
At the same time, I don’t minimize the importance of proper lead-time most especially as it relates to delivering at least what the customer orders and if at all possible sooner and within budget. That sustains happy customers as everybody knows.
So, I believe LightPath really didn’t anticipate the possible flood of new orders and are doing their best to catch-up to demand, while perhaps being a bit too timid in the advance expansion; though I surely do understand because you don’t want to overbuild and then nobody comes.
In this case maybe they all came, and the company has to stay methodical as these are not the types of products to get rushed by frantic managers.
Doubtless Gaynor really seemed to tone down near-term enthusiasm with explanations of how they misjudged (apparently insufficient speed), while in this case being at least optimistic about the longer-term.
I’d suspect what he’s saying for the most part is they likely underestimated needed engineering processes to ramp the new glass (BD-G), which got more in-demand when the Chinese tensions started as firms wanted this American-sourced product.
So perhaps LPTH got more orders than they’d actually anticipated. It’s good news to have orders but you must deliver.
New products and processes take time, resources, or confident decisions. Perhaps we’re seeing that, just not fast enough to impact yet. A building backlog bodes well for LightPath as they work to decrease cycle time in their lines, especially infrared product.
And they’re ramping chalcogenide optics that may be pulling more orders from new or existing customers who might have turned toward other suppliers in the past. Sort of good news wrapped in because LPTH expanded, but not enough expansion to fulfill orders as fast as desired.
They’ll address it. On two occasion Thursday the shares looked like they were not only absorbed but wanted to snap-back. It needs a little time to sort out the pattern.
The statement of little LightPath almost seemed too apologetic for managerial or production conservatism, while underplaying the nature of their substantial backlog of orders and the promise of compounded forward growth they allude to.
For the most part it seems to say they need a better handle on lead times not because of poor margins or lack of business, but the opposite. Sounds like lots of orders they were gearing-up to fulfill but might not have achieved a level they needed. Gaynor seems to say they need to be more on-point at the same time very optimistic about the future.
