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nLIGHT, Inc. (LASR -2.66%)
Q3Â 2020 Earnings Call
Nov 6, 2020, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Welcome to the nLIGHT Third Quarter 2020 Earnings Conference Call. All participants will be in listen only mode. [Operator Instructions]
I would now like turn the conference over to Joseph Corso, Vice President of corporate development and Investor Relations. Please go ahead.
Joseph Corso -- Vice President of corporate development and Investor Relations
Thank you and good afternoon everyone. As the operator said I am Joe Corso nLIGHT, 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 [email protected]. 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 In addition, you can access an archived version of today's call from our website.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 the 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.
Scott Keeney -- Co-Founder and Chief Executive Officer
Thank you Joe. Q3 was a record revenue quarter for nLIGHT. On both an organic and inorganic basis or revenue and profitability exceeded the high end of the guidance we provided in August. We achieved year-over-year growth in each of our end markets and increase sales which combined with a favorable mix of business and disciplined opex spending enabled us to improve profitability. While we continue to monitor an uncertain macroeconomic environment, we experienced strong demand from our customers during the quarter, which has continued into Q4. The key driver of our performance in the third quarter was the strong execution of our strategy, which is focused on two core areas, increasing sales from key industrial customers outside of China and continued focus on the A&D end market. At the same time, we see sustained demand and microfabrication and the high power segment of the Chinese fiber laser market.
Turning to slide four, in the third quarter, we generated $62 million of revenue, which is a record for a company. In China, our revenue grew 10% year over year to 19.2 million. Third quarter sales to customers outside of China grew 61% year-over-year to $42.5 million representing 69% of our total revenue, which is the highest in our company's history. Turning to slide five, in addition to growing revenue in all geographies, we also grew in all end markets in third quarter. Beginning with aerospace and defense, we grew revenues 43% year-over-year on an organic basis, and 123%, including the 9.2 million contribution from neutronics.
The ongoing integration of nLIGHT and Neutronics has enabled us to develop products and knowhow that is creating additional opportunities for us. In addition to neutronics our core A&D business remains strong, and we are seeing additional directed energy applications outside of neutronics. Within Microfabrication, our sales increased 6% compared with the third quarter of 2019. Demand across multiple applications remained relatively flat with the second quarter. However, we are encouraged by the growing number of applications that require laser processing. Finally, our industrial business grew 15% year over year in the third quarter. Globally strength in the quarter was driven by continued demand for both our high power and programmable fiber lasers. In China, we continue to see a trend toward higher power. In the rest of the world, we have been successful in converting design wins into revenue, which has been driven by strong demand for high power programmable fiber laser solutions. Moving to slide six. Across all geographies, we continue to see our fiber laser sales shift to higher power. During Q3 sales of our six kilowatt industrial fiber lasers grew by approximately 80% compared to Q3 2019, and represented 58% of our total industrial fiber laser sales. We are particularly proud of this achievement as a technical challenges increase as power scales. We continue to invest heavily in our product roadmap to deliver world class fiber lasers with increasing power programmability and serviceability to our global customer base.
Turning to slide seven. During the third quarter, we expanded our technology capabilities in our geographic footprint to better serve our industrial customers, in particular for the important growth opportunity in welding applications. In July, we acquired OPI, which was a privately held business in Turin, Italy. We have worked with OPI for several years and we have a deep understanding of their technology, which includes couplers kilometers switches, and diode laser packaging technology that we have integrated into our industrial fiber lasers. Post merger integration has gone well. And we have already qualified and shipped fiber lasers with OPIs technology that are being used in production environments. United States, we recently opened an enlite office in Detroit. That brings us closer to our important Midwestern industrial customers and partners. Our Detroit facility includes an applications lab and a demo Center, which we believe offers significant long term benefits as we continued, continue to drive adoption of our welding solutions into the industrial market. Turning to slide eight. Yesterday, we announced the introduction of a effects in new fiber laser that aims to fundamentally change the economics of metal additive manufacturing. designed specifically for use in powder bed fusion systems and lights FX led laser is the world's first programmable high power fiber laser that can switch between a true single mode beam and other larger beam profiles without the use of free space optics. Changing size and beam shapes from inside the laser is the most economical, repeatable and reliable way to maximize productivity, a powder bed machine tools and light effects laser can replace multiple lasers, optics and a scanner. Effects based powder bed tools have demonstrated higher quality parts at significantly faster build rates, which will enable the use of metal additive manufacturing tools for series production across a broad range of industries and applications.
I will now turn the call over to Ron to discuss our third quarter financial results.
Ran Bareket -- Vice President and Chief Financial Officer
Thank you Scott and good afternoon everyone. Beginning on slide 10. We achieve wicked organic and inorganic recovery revenue. Third quarter revenue of 61 point 7 million was above the high end of our outlook up 41% year over year and up 20% on an organic basis when adjusting for the 9.2 million contribution of enlite. Total revenue includes 51 point 1 million of product revenue and 10 point 6 million of development revenue. The primary drivers of the better than expected revenue was strong demand from North American and west of the world industrial and microfabrication customers growth in enlight AMD business and increased demand of high power fiber laser in China. Moving to slide 11. Gross margin was 27.8% in the sales quarter, compared with 29.6% in the comparable period of 2019. Product gross margin was 72.2% in the sales quarter compared to 29.6% in the third quarter of 2019. And development gross margin was 6.5%. I will serve quarter product gross margin reflect the strong implementation and execution of our core strategy to focus on strategic customers outside of China, investment in our AMD business in continuing the increased sells of high power fiber laser in China. Quarter r over quarter our Q3 product gross margin improved by 450 basis points.
Turning to slide 12. Operating expenses with 21.1 million during the third quarter, compared with 13.7 million in Q3 2019. Operating Expenses included 6.2 million of stock based compensation, an increase 5.4 million year overview. Also included in Q results was 696,000 of purchase intangible amortization, related to the neutronics and the OPI acquisition compared with no purchase intangible amortization in q3 2019. Excluding stock based compensation and purchase some organization operating expenses in the third quarter increased by 1.3 million, compared with Q3 2019, which was mainly R&D related is we continue to make necessary R&D investment to drive future growth. Moving to slide 13, GAAP net loss for the third quarter of 2020 was the loss of 2.1 million compared with the loss of 800,000 during Q3 2019. GM APS for the third quarter of 2020 was a loss of $0.05 per share, compared with the loss of $0.02 per share in the second quarter of 2019. On a non GAAP basis, our non GAAP EPS for the third quarter was $0.12 compared with $0.01 during Q3 2019. Income tax expenses for the third quarter was a benefit of 1.5 million compared with an expense of 877,000 in Q3 2019. The change in income tax expense was driven mainly by purchase accounting adjustments related to the neutronics acquisition.
Going forward, we expect to have approximately 300,000 of both cash and tax expenses per quarter. Our adjusted EBIT for the third quarter was 6.2 million or 10.1% of revenues. This compares to 2.7 million of 6.2% of revenues in Q3 2019. Our third quarter adjusted EBITDA demonstrate the leverage in our operating model. During Q3, we generated 7.7 million of cash from operating activity. Capital expenditure for the quarter was 2.4 million or 4% of revenues. Moving to slide 14, we ended Q3 with total cash equivalents of 110 million. In the third quarter, we repaid the 15 million that we had used in conjunction with the purchase of our commerce facilities every this year. So for the third quarter of 2020, was 75 days inventory at the end of the quarter sales was 53 million, we're presenting 105 days in inventory. Moving to slide 15, and the outlook for Q4. Based on the information available today, we expect Q4 revenues to be in a range of 59 million to 65 million. at the midpoint of 62 million. This includes approximately 51 million of belter cells, and approximately 11 millions of developments. Included in our Q4 revenue guidance is approximately 10 million of revenue from neutronics. While we remain concerned about the impact that COVID-19 could have on our business, and global Marco geopolitical concern, we continue to see positive demand trends across each of our commercial end markets and geographies. Assuming the midpoint of our Q4 guidance, we expect our full years of 2020 revenue to be approximately 219 million, which reflect 24% growth over 2019 revenue and 9% on an organic basis when excluding Nutanix.
Based on our current expectation for product mix, we see gross margin for q4 2020 in a range of 25% to 29%, which includes approximately 600,000 of stock based compensation. Products product gross margin is expected to be in a range of 29% to 33%. We expect development gross margin to be at proximately 6.5%. Operating expenses for Q4 2020 are expected to be approximately $21.5 million, which includes approximately $6.3 million of stock-based compensation, and approximately $700,000 of purchase in intangible amortization, related to the Nutronics and the OPI acquisition. For the fourth quarter, we expect adjusted EBITDA in a range of $3 million to $7 million. We expect Q4 average basis share to be approximately 39.5 million.
I will now turn the call back over to Scott.
Scott Keeney -- Co-Founder and Chief Executive Officer
Thank you, Ron. Turning to slide 16, at the midpoint of our Q4 guidance, we expect to generate record revenue in 2020 thus extending our long-term compound annual growth rate of 20% revenue growth. In addition, stronger sales and a more favorable mix of business has enabled us to improve our margins and overall profitability. 2020 has been a challenging environment in which to operate a global business. We have faced supply chain shortages, the ongoing trade war, geopolitical unrest, and a global pandemic. While macro uncertainty persists, the demand for our products has remained strong throughout 2020 and the steps we took earlier this year have allowed us to continue to serve our customers. Our global employee base has performed remarkably in what has been a very challenging year in which to operate. I'd like to acknowledge the dedication and professionalism of our employees who have enabled us to continue to innovate, support our customers, create a safe workplace, and continue to execute our long-term growth opportunities.
Finally, turning to page 17, I would like to announce the addition of retired Major General Camille Nichols to the nLIGHT Board of Directors. Neil is a proven leader who brings significant professional experience and groundbreaking personal achievements to our Board. During this distinguished three-decade career in the United States Army, Camille manage complex organizations with significant budgets. Neil spent 20 years working in key roles in Department of Defense, acquisition and operations, and completed operational assignments in Asia and across the U.S. Camille began her career at the U.S. Army as an enlisted soldier and subsequently, matriculated to the United States Military Academy at West Point, where she graduated with an Engineering degree as part of the second class that included women at West Point. Camille also received a Master's degree in Systems Management from the University of Southern California, and a PhD in Engineering Management from the George Washington University. Neil was also a member of the 1984 U.S. Olympic team and currently serves as an Independent Director for USA Team handle. Camille offers in light of an important and unique perspective as we continue to grow our A&D business, and I'm thrilled to welcome Camille to the nLIGHT Board.
With that, I will turn the call back over to the operator for questions.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Greg Palm with Craig-Hallum Capital Group. Please go ahead.
Greg Palm -- Craig-Hallum Capital Group -- Analyst
Yeah, all right. Thanks. Hey, everyone. Nice -- really nice results here.
Scott Keeney -- Co-Founder and Chief Executive Officer
Thank you, Greg.
Greg Palm -- Craig-Hallum Capital Group -- Analyst
I guess just starting out, I mean, one thing that really stood out to us was activity and certainly the growth levels in A&D outside of directed energy. So, curious if that was driven by your core customer there anything that was maybe one-time or non-recurring in nature and how you they can specifically about the mix of that versus the other segments for Q4?
Scott Keeney -- Co-Founder and Chief Executive Officer
Yeah, good question. In Q3, we continue to make progress in Nutronics, but in addition to that, we continue to expand customers that go beyond the customers focus solely on Nutronics. And in Q3, we did have a bigger than expected new customer -- it is directed energy, but it is a new customer. We don't expect that level of revenue next quarter, but we do expect future revenue from that customer as their programs develop further.
Greg Palm -- Craig-Hallum Capital Group -- Analyst
Okay, good. And then presumably, I mean, if I look at the guidance for Q4, it implies I think even us making some assumptions around A&D that you're taking some share in -- at least in industrial and just kind of curious how you're thinking about new customer activity? I mean, how much of the recent results and certainly the outlook is driven by maybe existing customers that are taking share versus maybe some new customer opportunities for your for your own products?
Scott Keeney -- Co-Founder and Chief Executive Officer
And you're focused solely on industrial now that what you're getting at?
Greg Palm -- Craig-Hallum Capital Group -- Analyst
Industrial and you could throw micro fab in there, but yeah, outside of Andy?
Scott Keeney -- Co-Founder and Chief Executive Officer
Okay, good. Let me split it. So I think it micro fab, right. We have seen growth there. And we certainly expect to see continued growth in the future with new application. So our customers that are winning in new applications in that space we've noted 5G, there's medical applications, it's really a really broad range of end applications there. With respect to industrial, we continue to make very good progress with our product development and launches. So we continue to make progress with our industrial, high power, fiber lasers, going into first the cutting market and programmability continues to be an important dimension there, which is leading to design wins, and particularly focused on sales and in the rest of the world there.
Second, the welding set of applications continues to be an attractive space where we have very limited share today. And so the ability to win in new applications continues to be a good opportunity for us, electric vehicles and other applications. And then finally, I would commend your attention the presentation that we gave, just yesterday, launching our new AFX product for the additive manufacturing space. So it again, is a programmable laser. In this case, it's a much more refined single mode programmable laser. And in that presentation will give you more details on that. But we are excited about the application space as we continue to enable improved efficiency in additive manufacturing.
Greg Palm -- Craig-Hallum Capital Group -- Analyst
Got it. Got it. It is a pretty small part of the business today. But how do you view the growth opportunities and maybe the overall size of that a market opportunity?
Scott Keeney -- Co-Founder and Chief Executive Officer
Indeed. Yes, it's a very small part of our business today. And we are engaged with a good number of customers in different application areas that are working on what I'd call the next generation attitude tools. And with a FX we're able to take it to the next level. And so it is an area that we think that will be an attractive overall market and an important, and market for us.
Greg Palm -- Craig-Hallum Capital Group -- Analyst
Yeah, OK. Good. I'll leave it there. Thanks.
Scott Keeney -- Co-Founder and Chief Executive Officer
Thanks, Ed.
Operator
Our next question comes from Jed Dorsheimer with Canaccord Genuity. Please go ahead.
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Hey, thanks. So congratulations on a great quarter. I guess just starting first housekeeping. What did you say the provision was, Ran, for next quarter for taxes?
Ran Bareket -- Vice President and Chief Financial Officer
So this quarter you saw an income or a benefit of $1.5 million. That was the majority of that came from a purchase accounting, an accounting transaction, if you will. Going forward, you will see roughly $300,000 for cash and expense a level perspective a quarter.
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Got it. And then Scott, how much of the margin increase that you saw in Q3 was a function of the abatement and or easing of price pressure in sort of the sub I guess sub-10 kilowatt lasers over in China in the industrial sector?
Scott Keeney -- Co-Founder and Chief Executive Officer
Yeah. Jed, not a big factor in this quarter. And let Ran give you more details of the mix and other changes. But yeah, that's lower power segment wasn't a big factor and changes in the margin.
Ran Bareket -- Vice President and Chief Financial Officer
If I may add, we'll talking for several quarters about our strategy, as Scott mentioned in the opening remark, focusing on industrial outside of China, cutting welding, additive manufacturing, focusing on AMD focusing, as well as more and more to high power in China, in terms of high power lasers. This quarter, if you look at our presentation, the high power worldwide, not just in China for industrial laser was 58%, which is a record high. So all of those trends, if you will, coming with higher margin, obviously, the volume help us, it's a record a volume, record revenue forecasts that help us to improve the margin. However, that mix is significant important for us to improve the margin. And as we mentioned in the previous quarter, as long as it will continue to grow the company in those areas, the margin will improve as well.
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Got it. One last or maybe two. But just as we look at the shift in the auto sector, or the mobility sector in general, because it's not certainly not limited just to autos, in the move from internal combustible to electric that extensively changes the manufacturing facilities for both newcomers that don't have anything, obviously have to build and as well as the incumbent. So is wondering if you might be able to comment on quote activity that you're seeing whether that maybe to throw into this to the repatriating manufacturing onshore here domestically, but also just is an extension in the EV sector? What you're seeing in terms of level of activity, that might not be hitting the books in terms of backlog at this point in time?
Scott Keeney -- Co-Founder and Chief Executive Officer
Great question, Jed. So you're right, it's good to be on autos. But broadly, the EV sector is one in which we're seeing a whole host of new players. That represents a good opportunity for us. Traditionally, the automotive sector has been one in which the designing process is very long. And frankly, as a result of that we had not prioritized that segment. So our exposure to generally in automotive is fairly modest. As we see new players in the broad EV sector from batteries to new assembly processes,we are seeing significant improvement in not only the number of opportunities that we see, but indeed our ability then to use our differentiated technology to enable those applications. So it's much more dynamic. And I think innovative in the end set of processes and that benefits us.
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Great. I'll jump back in the queue. Thanks, guys.
Scott Keeney -- Co-Founder and Chief Executive Officer
Thank you.
Operator
Our next question comes from Jim Ricchiuti with Needham & Company. Please go ahead.
Jim Ricchiuti -- Needham & Company -- Analyst
Hi, good afternoon. I wonder if you go back to the AFX, the laser you've just announced, it does seem like we're seeing a new generation of additive machines. And what I'm struck by is, is the number of fiber lasers that are going into some of these machines. And so I'm wondering, Scott, if you could help us understand what may be driving the market? What's some of the -- and we'll take a look at this presentation that you alluded to, but what may also be differentiating you guys in the market, and I assume it's the programmability. But can you say how many customers you're working with at the moment in rough numbers?
Scott Keeney -- Co-Founder and Chief Executive Officer
Well, it's regional set of customers, we can't specify exactly Jim. But it's -- we've been working with a number of customers for quite some time in this space. And that funnel is increasing again, both with interest from the current set of players, but also new players in this space and companies in some cases that are either less well known, some cases some stealth companies. And yeah, I do commend the video and we'll get it up on our website to make it easier to access the standby on that. But I'll try to give you kind of a quick summary on this. So it is a programmable laser, we believe is the first single mode truly single mode programmable laser and in additive manufacturing today for the very fine features. You typically want to use a single mode laser to provide a very small 75 micron spot to do that, that centering of the powder to make those parts. As you move to go faster, you can do a couple of things, you can adjust that beam, you can add more lasers. But what we have demonstrated is, the more effective way to increase the speed and either maintain or improve the quality of that part is to change that beam to one that will allow that process to go faster to build that part.
And throughput is a critical dimension of these of this process. So that's, you know, I think we described that at a high level, the video does a better job of going into some of the details. But that's kind of the high level on this. And we do think it is, you know, a profound improvement for a number of applications.
Jim Ricchiuti -- Needham & Company -- Analyst
Would this laser, for instance, enable a additive manufacturer to perhaps not have to use as many fiber lasers in the system because of the functionality of AFS?
Scott Keeney -- Co-Founder and Chief Executive Officer
Yeah, I think the short answer, Jim is yes, it depends on all the particulars. But yes, that is a trade space that where we provide a benefit.
Jim Ricchiuti -- Needham & Company -- Analyst
Okay. And if I could also just on the comments about opening an office in Detroit, again, we don't normally associate you guys with automotive, but it's also an area that's not just automotive, there's a lot of additive manufacturing and work being done in that that area. Can you talk a little bit about the rationale behind that and what you expect to be able to do with this new applications lab?
Scott Keeney -- Co-Founder and Chief Executive Officer
Yeah, good. And, you know, it's about being close to really all of our industrial customers. And certainly, it includes not only automotive, but you know, other industrial customers. So having that proximity to the customers having, you know, the right talent that comes from these vertical markets. And it'll include, you know, not only sales service includes applications work that we're doing. And so it's a, it's a commitment to the industrial market broadly.
Jim Ricchiuti -- Needham & Company -- Analyst
Okay. And last question, are there any material revenues associated with OCI?
Scott Keeney -- Co-Founder and Chief Executive Officer
I think answer is no, I think you know, we have integrated OPI into our products. And it's been very helpful in expanding our products. But we don't view OPI as a, you know, material source of external merchant revenue.
Jim Ricchiuti -- Needham & Company -- Analyst
Thanks very much.
Scott Keeney -- Co-Founder and Chief Executive Officer
Great. Thanks, Jim.
Operator
[Operator Instructions] Our next question comes from Mark Miller with the Benchmark Company. Please go ahead.
Mark Miller -- Benchmark Company -- Analyst
Congrats on your quarter. I just had a couple of housekeeping questions. You already stepped up significantly, sequentially. And it looks like it's going to continue to be at that level for the summer quarter. What's behind that?
Scott Keeney -- Co-Founder and Chief Executive Officer
Say that again?
Ran Bareket -- Vice President and Chief Financial Officer
Just Mark clarified, a little bit hard to hear. But the question is around the step up in R&D spend? Why I guess. Is that right.
Mark Miller -- Benchmark Company -- Analyst
And it looks like it's going to stay that level roughly for the December quarter. Is that correct?
Ran Bareket -- Vice President and Chief Financial Officer
First of all, yes, this is correct. If you look, and we mentioned that if you look at our opex spending in general, year-over-year, you will not see much most it's roughly without I'm sorry, without stock based compensation, you will not see much growth. But it's commonly made mainly on R&D. And we will continue to invest in R&D as necessary, you will not see a significant increase going forward. But yes, the investment in R&D will grow based on all of the opportunities that we are talking about all of the new technology that we are talking about in welding, the OPI acquisition, additive, manufacturing, industrial, etc, etc. All of that will require additional investment in R&D.
Mark Miller -- Benchmark Company -- Analyst
I believe you indicated for December, there'll be 6.3 million in stock based compensation. Is that correct?
Ran Bareket -- Vice President and Chief Financial Officer
This is correct, yes.
Mark Miller -- Benchmark Company -- Analyst
Okay. And you also have a large other income. And what was that due to what it is?
Ran Bareket -- Vice President and Chief Financial Officer
It's all actually most of it, its exchange rate for the euro and RMB.
Mark Miller -- Benchmark Company -- Analyst
Thank you very much. Thank you.
Ran Bareket -- Vice President and Chief Financial Officer
Thank you, Mark.
Operator
Our next question comes from Tom Diffely with D.A. Davidson. Please go ahead.
Tom Diffely -- D.A. Davidson -- Analyst
Yeah, good morning, or good afternoon. Now, I was wondering if you could talk a little bit about just the pricing and competitive environment. Now that we've had a little bit of an industrial comeback in China has things basically flattened out from a pricing point of view over the last couple quarters. And I guess probably more importantly, for you pricing outside of China.
Scott Keeney -- Co-Founder and Chief Executive Officer
Yeah, so I don't think there's anything substantially different Tom than what we had discussed on our last call. We see continued competitive environment. And we certainly expect that in a lot of the lower power applications prices to continue to come down over time, we're continuing to reduce our costs at the same time, so nothing dramatically different from what we have talked about previously.
And certainly, as we access the other markets outside of China, and market, particularly markets, where we have our programmable fiber lasers, were really talking about a different set of products, different set of advantages and higher differentiation. And so certainly, that was one of the benefits that drove margin improvement.
Tom Diffely -- D.A. Davidson -- Analyst
Okay, great. And then earlier today to just talks about really ramping up their diode or semi laser capacity without having any kind of material impact on you or your markets?
Scott Keeney -- Co-Founder and Chief Executive Officer
It's hard to speculate on that. I'm not exactly sure all of the specific applications that are driving their decision to ramp. So it's, it's hard to speculate.
Tom Diffely -- D.A. Davidson -- Analyst
Okay. And then finally, I guess, just with the change or potential change of administration, does that change your outlook at all, for the defense contract part of your business?
Scott Keeney -- Co-Founder and Chief Executive Officer
Short answer is no. We've seen strong bipartisan support for directed energy. And with respect to the Washington State delegation, and the Oregon delegation, we've had very strong support. And it's really certainly both sides of the aisle. So I believe, even under Obama that the directed energy budget doubled. And it remains a very high priority for DLT.
Tom Diffely -- D.A. Davidson -- Analyst
Great to hear, and thanks for your time today.
Operator
Thanks. Our next question is a follow up from Mark Miller with The Benchmark Company, please go ahead.
Mark Miller -- Benchmark Company -- Analyst
You initiated it, I believe, as a 42% organic growth in aerospace, but it was over 100% year over year growth. Is that correct? Could you tell me what it is a total, your your growth was organic and inorganic?
Scott Keeney -- Co-Founder and Chief Executive Officer
Yeah, the once again, it's 123% overall, 43% organic.
Mark Miller -- Benchmark Company -- Analyst
Thank you.
Operator
This concludes our question and answer session. I would like to turn the conference back over to Joseph Corso for any closing remarks.
Joseph Corso -- Vice President of corporate development and Investor Relations
Thank everyone for joining this afternoon and for your continued interest in Enlight. We will be participating in several virtual investor conferences this quarter, and we look forward to speaking with you soon. Have a great day. Thanks.
Operator
[Operator Closing Remarks]
Duration: 39 minutes
Call participants:
Joseph Corso -- Vice President of corporate development and Investor Relations
Scott Keeney -- Co-Founder and Chief Executive Officer
Ran Bareket -- Vice President and Chief Financial Officer
Greg Palm -- Craig-Hallum Capital Group -- Analyst
Jed Dorsheimer -- Canaccord Genuity -- Analyst
Jim Ricchiuti -- Needham & Company -- Analyst
Mark Miller -- Benchmark Company -- Analyst
Tom Diffely -- D.A. Davidson -- Analyst
