KOPN - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the Kopin Corporation Second Quarter 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Rich Sneider, Chief Financial Officer. Please go ahead, sir.

Richard Sneider

operator. you, Thank thank and joining this us Welcome you morning. everyone, for today's John discussion call of begin our a markets. with will and strategy, technology will be second level I questions. the at through high a quarter and to happy results we'll take your then go remind defined like during that Securities of Reform in Tuesday, the to place be making XXXX. today's we Act X, Private XXXX, I will taking forward-looking on everyone would call, August statements as Litigation estimates current These could subject and statements materially and based forward-looking projections, are risks cause that those statements. to are Company's a uncertainties expectations, of the results number differ to from beliefs on and actual risks our our Annual Exchange Report Potential for of subsidiaries demand and other to, on Form market most recent XX-K other not filed and but in Securities include, and with conditions the limited discussed Commission. results our products, documents operating and are factors call. during The Company statements forward-looking undertakes made the no to update today's obligation And with turn over the call that, John. I'll to

John Fan

us second thank you Good discuss quarter to for morning results. and joining our

the currently safe. start facing, we hope families I all and are and continued are staying that your to expressing our well by that want unprecedented Given of all you circumstances

gross XXX% from are decline the second a a our cost structure We with results operations for over We revenue to growth, into manufacturing margins QX strong expanding With continues improved business, significantly. very pleased technical increased and prior quarter. defense standpoint. solid both which continuing very momentum efficiencies had QX and our the We by saw our driven year.

strategy that continue reinstitutes our our As we to execute [Indiscernible].

we displays. wafers OLED production first on our also and OLED The shipment saw the focus second encourage as that our our Backplane increase of quarter

that a release, announcement in technology also more this our exciting discuss this. OLED. in morning. very further We I separate will a press In development advancements on make

look the more beyond. forward half So of us very year defense our business. Well, year of closely this and we in for and we first second successful momentum let continued the had look half on the

the Jet revenue discussed again As and F-XX program. Fighter I quarter. FWS-I in we in have and production have defense programs last the commenced programs, program, business two important previously, drove our two our These

programs We a to are soldiers different some also and important to programs the areas expand. closer other many as production the armed development made offering progress steps of down our on scope fixed-wing programs number to moving and vehicles, of actually on continue further including rotary planes, These related already. defense

large industrial additional production this can reach as applications. consumer are These But leverage programs those all poised there the through revenue significant and for products development portfolio we the in will use no We programs of future gaining knowledge guarantee is range. opportunity.

XXXX. We of programs production will reach expect these by additional end the

So initial Backplane order have one steps the Kopin OLED programs by important is five generating of to about Shifting should production revenues. production to on in ten expanding wafers, that business.

selection the provides is this higher dual-stack and a touch on go conventional reduced full two-stack utilizes OLED real flat particularly display gets much more huge efficacy The what lot OLED. and two-stack is series two were pleased we a three technology versus follow-up other. a OLED OLEDs which – ColorMax what’s the a x impressive also pass about OLED the carrier longer quarter Nits generates out connecting single-stack, receive as structures design a display consumption a our order. the Starting are OLED to display to of We technology. has are be per in of X.XK in single-stack lining end. top referred which will last can instead introduce and ratio life. which a X.XK on This to breakthrough based from What’s flexibility to each reduced to end The and with color

Nits you, through a a to very lot ambient. is the Historically, of current high on Now Nits of let running can brightness. measure brightness explain keep on you me

at remarkably the ColorMax X.XK achieve a is exciting. is color per allow shortens of We top significantly unique an ratio how was X greater x The of to call the With which of low high the very developing than current. brightness fidelity, the good lining current candela that there additional what’s technology. X.XK sRGB the over to XXX% cost it particularly life the really display of amp [Indiscernible] is Kopin display while which index

ago understanding release highlight really. new month’s morning, this is we results is discussion above Nits level issued a and month the On press and and a confidence the – in a our came

press it to of wanted has AI share Kopin is and top X,XXX Nits our Essentially, today. with with application XXXp achieved rich high a So now such VI lighting OLED the that you new we just is display. but quantum the for

that the has Going amp per back a it time number now very for. to a X.XK, the up to addresses in The duo-stack charging x of X.XK XX the figure really has gone issues panel around at brightness can two to candela a moment, is gone which X now months. unprecedented total from reduced

AR to not As break COVID-XX it turning has is accelerated only through important the VR, interest points. around

in While it’s to the more, coming to forward too come, sharing early much we with and technology months. this look more

are Rich. Kopin I appreciate safe times. and to stay and the to Finally, Their employees call throughout With I turn the all challenging would we continuing to work efforts have the possible dedication, to healthy. without thank these who that,

Richard Sneider

John. Thank you,

a the XXXX Included second with quarter year-over-year. were the reflecting year revenues million for were the the June license the compared or months revenue, cost versus for revenues second reduced $X.X quarter of we cost to three the with $X.X XX% XXXX was the $X.X year. million the were improving for XXXX unit yield to million XX% second as ended have compared the fuel $X.X was $X.X year XX, for ended last Cost the the volume million. ended XX, Turning due million the revenues quarter Total fee million revenues in one-time goods primarily product as second of lower to per $X.X Product sales XX, of costs, XXXX results. sold significant of to revenue product in million XXXX million and efficiencies for of XXXX revenues with quarter June for financial June net XXXX. in payment second compared quarter the The understand quarter with decrease XXXX fixed in $X.X June $X.X higher for than one-time ended increase was ended product other a manufacturing XX, compared payment. XX, QX $X.X months the of million along Research planned. and with to second prior for million second due XXXX June XX, or for ended $X.X $X.X of three development million of our June XXXX, XXX%

compared experienced for place to the in XXXX. second year the a R&D smart due million compared were $X.X commencing second million, quarter Infinity of quarter in as million Golden-I R&D stock-based including compared XXXX of certain quarter IT income, in commercialization Solos put consideration. million XXXX SG&A quarter normal compensation the travel of $X.X income in for the products As lower $X.X was compensation, decrease to of and strategies we debt expenses, to Other quarter and expenses second of with compared glasses. $X.X of bad XXXX, first contingent expense, were XXXX, and for primarily higher quarter the XXXX. we a same of for NVIS the XXXX, $X,XXX lower scrap specifically The cost quarter of licensing XXXX approximately the than of of result expenses accretion professional production period the expenses six to of three months fees, expense the $XXX,XXX with was and prior information second of expense the for of XXXX. XXXX. second second the the technology The of was in were reminder, as of compared second

During June XXXX. the of XX, three included to gains foreign investment of compared ended foreign XX, we a currency ended mark-to-market of also months $XX,XXX as XX, gain June for on $XXX,XXX. The June currency three losses XXXX months $XXX,XXX an the months ended three XXXX, recorded

second our or $X.X approximately or with net was of to million, loss million to at attributable quarter interest quarter $XX.X a million, was loss XX% the bottom-line, XX, XXXX. as per net share June of a per compared for in XXXX, Kopin’s the Turning improvement. $X.XX share, to approximately $X securities marketable $X.XX $XX.X cash compared and December XXXX, the XX, equivalent at controlling million

And XXXX and with compensation based final review table depreciation second and quarter will the QX attached Form press changes stock are for current we Second discussed amounts possible are additional above The our in take the questions. and disclosures. should of listeners amounts estimates for release. any to that for on operator, XX-Q quarter the

Operator

from will Instructions] take Mattson Glenn with quarter [Operator Ladenburg. we And first our

Glenn Mattson

the Thanks for Hi. question taking results. congrats the and for

or than we for expect while expected, the guess, – guess, related efficiencies going in – Rich so, operating should due to couple for color leverage line lot that runrate I of forward the just sold, what ballpark some here like of kind a just was mentioned decrease volume. it I goods cost as highlights, gross a margin with is to in please? So, there sounds some of the of the you first, a just we

Richard Sneider

for quarters. the Yes. margin of The good gross a current parameter percent is next couple

Glenn Mattson

the say also travel of to a there that expense, things sales reduced sales? Again, better. are Great. that related expense that And that, to that of on now portion lower Is and maybe SG&A the pie military perhaps. also that’s also or like you some bigger right the are is there is – some selling

Richard Sneider

expect pop the as We couple some back has Yes. quarters. closed. litigation courts the next been have have little burner done We frankly SG&A which a would over bit the of do up may

back, legal is a quarter. thousand hundred a going to they $XXX,XXX expenses it there be couple consistent. Otherwise, come to relatively of also be traditional of Assuming should

Glenn Mattson

you CapEx quarter? burn Okay. do the in have flows? Or cash cash any in operating operating And

Richard Sneider

Yes.

minimis burn of the $X.X de was the used are CapEx cash for So million. was in planned. sort quarter, and operations

Glenn Mattson

would or the top-line, pull this is there of anything military terms programs And function this just a in? order that in kicking the in was lastly, of have the boosted side on the on the flow quarter

Richard Sneider

you sheet that’s function a XXX Well, on and the assets is of standard. balance yes, I the the up recognition revenue mean, see that contract will

sitting been they have we would are top and and difference. in really two So, sitting the contract those ago, finished units Today, that’s recognized only years in on that revenue there goods. is made of have them would assets that

course of going was recognized a piece revenue on number is we percent other significant that of have basis. on The of completion and also a that R&D programs

receivable been we’ve doing consistent what and asset for account. But milestone, hit last with we collection years. fairly at contract “unbilled” billing the a So, the so XX that’s

Glenn Mattson

Right.

the end three by I XXXX On production side, missed or the to military XXXX, of was, three quote programs the reach programs?

Richard Sneider

this, XXXX in the So will production with programs end we two in production. XXXX five programs and we with expect end

Glenn Mattson

of calls this total Right. revenue? like you any big or of concern either five And with would would can with decisive investor as earnings give magnitude how of order what the that us incremental adds look programs a pie

Richard Sneider

are any so not R&D we going today. have they of all course dependent for mean, into I but the very that, I during the get next we qualification give and upon large them. if say go No, or to year to qualifying production are these guidance when revenue and can’t the XXXX programs, at look

we will do new able we to – production, confident and to up production be that on but we feel purchase the there. got So, actually

Glenn Mattson

Thanks. great. Okay,

be you great a put – are quickly. of like a year they maybe in mounts a of any deciding maybe into lot security if a think then side, we where one, back. bounce ever digesting that a most like were companies - people efficiently there Honeywell, their been issues should they just of and way they Is how bit me a I out where that and wrong the of the use that market? about things some work to to And the various want that heading industrial is these period head I this XXXX went XXXX put is year about guess, this kind and then and display, things, around displays think way I just correct of these answer into and and XXXX maybe products, when the perhaps digestion is was two bit it it have On the – the field corporations, headsets kind safety maybe as there a to becomes there, for want XXXX am

Richard Sneider

Yes.

with of that’s that’s consistent prior the $XXX,XXX exactly quarter I right. revenues, think years. for In other the to it’s royalties and $XXX,XXX

units work – say working inventory selling a as the level. we really they us you inventory, like of endpoint, there last us they customers year they So, of products that looks But is is guess our and but be because you are toward it may tells it introduced are because selling units, are lot paying doing royalties. so selling they the are off

Glenn Mattson

you Okay, of you into the new know, for is great. come don’t lastly, general – hold the I announcement that and point could sort one think or a timeframe guess, Is the guys guys? product but gets entertainment, the down side, maybe or getting it are I at announcement about you benefit. staying for reality line, get John, the this it point some when when today, and that alive sports just to Kopin kind guess, I outlook mixed as then, product you I step market of on And consumer one some had news getting know would exciting of VR latest that,

John Fan

Yes. Thanks asking question. the for

happened what understand of I be come. the today problem really is and last is differences conveys think think I think more it’s of world everybody – to lot of brightness that, is The actually that is fact get of actually the be facing to been what turn to of couple And because explained to have not a VR past for make. will were I you really in in in we is what will important nine how the of last years physics, happened to seems in explain it broken months happened it’s the obvious frequency the it. biggest there their with to months in which intuitively the interest, understand a AR variable and because high But in few course and our products and past because the that, will we in very needs brightness we today focusing is display be critical getting we world and to rapid discussion chance explanation improvement lot current.

Glenn Mattson

me. guys. it Thanks great. That’s for Okay,

Operator

move next And we with to will Cowen. Jeff Bernstein

Jeff Bernstein

nice quarter Hi, Yes. guys.

of a speed is this end start the The XXXX, it’s FWS year, couple of out like it production questions really? So, to that of sounds by for taking going you. into

Richard Sneider

I am sorry, Jeff.

You you a repeat the pulled question? but couple, do

Jeff Bernstein

that production Yes, guess, won the program, XXXX? and begin I now are early for FWS-II to you’ve that we but is waiting

Richard Sneider

Yes.

production through expect We in are we still development, but in XXXX, yes.

Jeff Bernstein

XXXX? late or Early you. Got

Richard Sneider

ultimately the the but That first would military, in we half. depends think it’s on

Jeff Bernstein

Great. for FWS-CS, it’s And then you on or that guess won there? both I of the yet the view still impending that. Have progress you what’s

Richard Sneider

Okay.

it’s So, was? Jeff, I I do, thought your understand question to

Jeff Bernstein

Yes, what was the unit [Indiscernible]

Richard Sneider

I Jeff. CS that. question FWS-I question with first was in in understand Sorry, production you. thought are we the I the I am and

Jeff Bernstein

is who that Right. and and QX I’ll do CS was was that. thought of kind thought that – served the something? I

Richard Sneider

No, it’s FWS-I and two pieces. It’s the served. CS the who

Jeff Bernstein

you. Got

Okay.

XXXX, in production that’s So potentially?

Richard Sneider

Yes.

Jeff Bernstein

But – pilot and then the helmet?

Richard Sneider

expect awarded been They’ve again, XXXX. awarded in we production still to still that the been it’s development. and program. but development in into contract, in the actually That’s We’ve go

Jeff Bernstein

like took there. going down of on a you economies to there, bounce step give little as first a terms what’s considering Can on expect pretty the back to reopen? understandable what’s mentioned a more And looks in that how – in bit you then, of Okay. it going industrial do you little

Richard Sneider

actually, the was with prior Yes, year. FED consistent pretty

wearable more a business us. mentioned, headsets – in that have just metrology it Glenn to military slip XD it reminder, in the volume was have seems FED, do They for – the was industrial pretty really really now of on development consistent. As as for

which their part. most are last Glenn headset have the just were for vehicle, alluded the they But as versus tells year that, mentioned, of function – of periods that. to but go, go – I of year displays the But armored General wearable this so, levels People displays Some inventory prior the seems last adoptions would of in is one and with out us consistent kind I their was guessing it moved the as believe to selling the of came its that’s down. FED’s end-units. units displays the sales really Dynamics into royalties

inventories are they their just it’s getting so, managed. And

Jeff Bernstein

of biggest for Chinese we’ve we the on here So that into ramp buyers on a kind displays car of market that? this. for with sort – machines, waiting the are Where been dimensional go being four

John Fan

how Chinese question I for into think quality. the Jeff is taking is, FED’s

all China you to on, know, you and closed are also as right months. If they few look a But for the had they now. back work pandemic down getting

about cautiously optimistic So, we right now. very are situation the

Jeff Bernstein

you. Got

hitting been now new you get do market and critical this sounds that. Okay. what that showing in have like in the your AR kind haven’t VR. to People metrics people the duo-stack And to is of other have technology that with able it to been hitting

to I at the guess, So, make that’s cost these final more? and onus gross things worth is margin

John Fan

Yes.

are of You up. breaking kind

what I can again, easy duo-stack with and guess, be the is performance. much that, looking question it question So, cost we’d was, your your how be on this additional and manufactured how

I – gone separately. two questions two this I’ve through think

we micro we know VR in the the LED increased about is times there everybody really VR. continues. the we’ve AR latest for is AR done the that, range LED, going current On on on is is we can the that OLED you I because, why LED OLED, call is five lot potential XXX go into versus LED to world activities brightness by and potentially is think basically required brightness What The will about the which give is then Duo-Stack, a four, also where micro of effected. on companies micro working micro micro micro

the in just cost LED maximize do is longer how and and – the making a additional growth. get high is The actually the all duo-stack it’s is on it, field, peak and and difficulty micro happened what automize the in How go because do this in Now, you mini on The difficulty technology. get the you double-stack. understand physics. and you it not

understand understand and what now If had happened. you watch are out say, we and really explain to and we it will going come stay world to the do physics, and we through

Jeff Bernstein

Okay.

view kind but, at cost that’s are and you a standpoint can made saying of here – reasonable be cost measures? So margin gross these from good that

John Fan

single-stack. say or a year we do nobody two, fact, will In in

Jeff Bernstein

am think what? still I of will sorry. one No

John Fan

do of performance Nobody overwhelming. is is cost going versus because improvement, the additional single-stack, doing to double-stack

Jeff Bernstein

Got you.

Okay. Thank you.

Operator

the Dr. one And was it? that there there to or call this in. to turn over me, for Would – I question no further closing time, to are with any back excuse you questions. like additional At came proceed would like Fan

Richard Sneider

Yes.

Operator

Okay. We’ll hear from Patrick I-bankers. Metcalf with

Patrick Metcalf

on great quarter. Hey guys. Congratulations a

Just today, wanted breakthrough for guys, like a you? come to ask technologies. most you if Facebook Classy a did that to we you their recently invest invest behind you believe saw Facebook get the can and Considering partner in

John Fan

I that activities am if is am [Indiscernible] is that, which on LED. a into glad Facebook I micro Classy

to began it mentioned, most XX amp. currently I announced as today, what last a the one. X.XK be theoretically, candela As with people last the over Today candela great factor – few current. numbers really this All index LED has micro ever in the brightness yet we was – and which and X the announcing over recognize happened these x achieved X.XK happened has around in a knowing the months, a But important with amp what advantage.

So it’s be very going to fantastic.

believe stick brightness, as not Then levels people will to on and days, yes, we range of think people can that are second first six displaying This I would not definitely. people be go react. into most go applications sure think it. over first XXXX of LEDs will is, it then will a range it am seven the think I you. and I digest I AR first-class,

new So, range. LED micro a be will

will So, world of a but large micro different the applications. range satisfy will we today. OLED – It’s

Patrick Metcalf

to And I your does RealWear see, and question and WebEx investment to real you software have Great. the momentum forward? take then, is, in shareholders the it device to Okay. on Golden-I the on if Cisco my What a them. RealWear do behind and hold Kopin see software? they the if with A, in or an mean exclusive? themes RealWear are exclusive an I have goes and what actually next in And future B, AR Golden-I now want gaining not is licensee Microsoft does

Richard Sneider

for developed have least, at talk they Kopin their software exclusivity but they’ve to of RealWear but certain anyway quite a technologies, in field So, should I bit RealWear, themselves own. the and on

think the kind provided kind I of of the equation. in we’ve – provided and aspect the it’s it hardware to So, they software

John Fan

systems, And system. software to the voice The to very then license about – a add for do maybe of add command that. is and some very, for everybody with to going – we technology have license several design how through for them text me We it. a bit is more let that’s the – Golden-I the color system, good well is Everybody we a commanding. allows RealWear At software. how as get voice, exactly things as the – the listen praise good

In that to is addition for do that, designed in fact our prior actually and module explain – purpose. module they

it So audio system so, are is whole the developed like program their modules, and software licensed, exclusivity and using. use they out to also for of the the

So, have to ways help to in improve and now. them we right the Wi-Fi market get we several know

Patrick Metcalf

Lenovo is and then, venture has Does And lastly, Okay. different a so? Lenovo a Golden-I license? Lenovo. Or joint

John Fan

doing have markets. put kind to of and license is they Lenovo and Asian pretty also China more It’s a But a well. different the in

Patrick Metcalf

forward you Okay. next in I quarter you to look Alright. and Thank see results. guys

John Fan

Thank you.

Richard Sneider

you Pat. Thank there,

Operator

no for this closing any would over additional And back Fan call at Dr. like I the there questions time. remarks. to are further turn to or

John Fan

thank joining stay us safe. and Thank for Well, you please, morning everybody this you.

Operator

conclude thank today's you for your call. We participation. And will that

Kopin (KOPN) 4 Aug 202020 Q2 Earnings call transcript