KOPN - Earnings call transcript Q1 2021

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Operator

Good day, and welcome to the Kopin Corporation First Quarter 2021 Earnings Call. Today’s conference is being recorded. At this time, I would turn the conference over to Mr. Richard Sneider, Chief Financial Officer Please go ahead, sir.

Richard Sneider

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

John Fan

to for end Good Richard. expressing that you, Thank families the to you we start well safe, awful hopefully and to I continue our pandemic. as us morning first closer are by wish and your this thank you quarter results. stay want to of joining discuss and our

are We year. our to start the with pleased strong

the second program, or to well now coming We defense production XX% They in first segments. far for revenue funded for defense history. may quarter set portfolio development, two. some year them in growth product more contribute years. stages The continued Kopin’s the XXXX not by significantly XXXX our of our various in approximately our next by compared demand program of to multiple the stage Revenue development the the This is of have programs increased for but XX than strongest increasing customers the of across as first led and quarter programs. with

the coming aggressively some regarding months. and market in to these expect in opportunities pursue announcements continue to make opportunities We additional the defense

R&D reflecting and in we the past activities. XX% jumped our Our quarters, of the our increasing augmented reality than activities interest display virtual In revenues several because accelerating opportunities particular, significant technology and more generation in displays next primarily R&D year-over-year, the space. been of the have in see customer-funded

Additionally, these strength market in following municipal as the nicely slowdown volume government automatic budgets decrease in enterprise in were see the the we pandemic. recovering continue with are areas optical pandemic. in to by by offset strong enterprise and systems, sector segments of a was our growth early AR in which affected safety growth The days inspection XD public a

Our defense revenues XXXX. first in the of XX% the compared first quarter by of XXXX quarter increase to

Our by defense thermal to F-XX Fighter weapon programs. continue FWS-I driven Jet be and sight revenues

programs, two our core continue in which coming We of defense years. phases early the their component are in product a to still expect these quite revenue

remain several also better to the this to transition in production on We second year with more revenues track products half. rate early low beginning

is areas one of We AXXX assemblies. most various AR XXXX, divers near-to-eye time, computer. consumer depth, CyberDisplay explore for and compass increasingly breathable just levels. industrial applications ruggedized diving continues using display and market As need has WQVGA wearable sample dive microdisplay now product for defense, the VR is now underwater a of leading to solutions first product each are critical we or areas. programs. Shearwater These in gas the are in technology Kopin LEDs, additional the Canadian-based dive specialized programs the and source the the and Kopin and and technology macrodisplay mentioned, Canada Driver to we are based defense of only all the technologies. information markets All finding quarter LCOS, well of This utilizing display/backlight offer the right of our nearly Kopin for development. and This over supplier incorporated are display either microdisplay world. the in programs LCDs position are solution provides and to are near expanding and sole our into systems With believe solution optical in stages our ICs these defense the module using AR applications Kopin to utilizing as and Kopin many a is applications eye company is as of remote including – VR. programs VR product example One XX microdisplays OLED, micro AR and the

This milestone we power represent lower as a technology. a XXXX achievement exhibit a nits a This we quarter, a received fidelity record from XXXp our OLED brightness color brightness last consumption. for technology bringing ColorMax combined of with power and duo-stack, previous and mentioned microdisplay. begin is for low production first the high customer microdisplays, U.S.-based order our very As new patent-pending Kopin, OLED shipment much than with of with huge

We OLED to continue our ship to our continue market technology to and further QX. [ph] we the meet in to demands. Meanwhile, micro our RF display customer improve XXXp innovate

these devices opportunity, to In have this was to a spent timing ready a a in Kopin We to activities, hands the demand. the VR. addition meet is once handheld AR of our R&D if is spending meet free believe for market decade or customer we increasing and base on device

to history and AR highlighting Now hosted Media. entitled long are Insight VR: Shift leadership Paradigm by and we in Finally, three-part wearables Smartglasses the series Starts The our webinar

live must to attendees. who a right registrants provide was that people was for oversubscribed [indiscernible]was over first recorded called is and we AR/VR, received limited and recording shortly on The April Past registration Therefore, I now did available everyone The XXX was away want to last And were the afterwards. It XX. to which the to we on link the with event, unfortunately YouTube. segment attend well apologize, all held XXX very

XX, with future. develop of the succeed in to paths this three and exciting will a fashion print to breathing of year. markets short, We With to as good tackle to engraved adoption. on this this, look one In current be the to point right all We market to is trilogy next from held for focus be XX. performance, interesting trend. website AR the art-analyzing Rich. gaining that VR learned today make learn from you to showing X is turn believe some we’ll state-of Insight offering were capacity increased not product in if presence ultimate good well enough views The throughout are product Who base hopefully lessons conformation. make website. concluding and on since Part X strategy the years in two products Holy success our stages to We’ll for we on the on defense continue begin our in a costs the next participation AR next have mass can smarter how the smart and roadmap to progress conditions marketplace. the be on the tipping to what growing great five are held the May of [indiscernible], I We has favorable systems for In Grail, lack AR/VR much May without in be form we’re these Part stories would will a been In links be webinars, to the focus on really, get arrived past the and to session. We glass factor next the strong replace features technology, consumer our this and have the capitalize disappointed. doing. VR Kopin will see this as position so can to and our performance. Registration We’ll is call found present

Richard Sneider

John. you, Thank

was the ended compared ended compared for of the for XX, $XX.X The Turning first Cost XXXX. XXXX million quarter the XX% products compared were $X.X the XX, our the with quarter million year-over-year. XX, for million a margin XXXX to quarter XXXX. increase for for the three XX% first results. first in Gross with March revenues of financial Total XXXX March sold was X% for $X.X March XXXX. the ended quarter March with margin quarter of gross first XX, first increase months March million, XXXX ended $X.X XX, quarter for first

stock-based XX, due with As March the development. to for due by U.S. $X.X primarily an ended were first Selling, increased for increase efficiencies XXXX, the spending expenses R&D for with XX% for first $X.X $X.X XXXX compared programs million were of compared million, XX, development and ended period March general expenses Development to and higher Primarily three months $XX,XXX of XXXX three compared XXXX driven SG&A of $X.X million volumes. XXXX compared year-over-year. XXXX. approximately March expenses to quarter internal of compared March funded costs compensation was improved over a and at months quarter manufacturing administrative to Research as in months, million expenses XXXX. for three XXXX. XX, the quarter $X.X as on R&D months XXXX million the first ended the same increased expenses the to ended first for quarter of for XX, three for

stock $XX,XXX first SG&A first with approximately for of for XXXX income was for for year-over-year. increase of quarter with million of XXXX, $XX,XXX the quarter Excluding $X.X XXXX compensation were compared first first the costs the expense the Other XXXX. quarter the based non-cash compared of quarter expense expenses X% a million income $X.X of

March XX, XXXX, we March as $XX,XXX currency three compared for of ended of months ended During gains the foreign recorded the months to XXXX. losses currency three foreign $XXX,XXX XX,

first quarter per to Corporation a Non-GAAP $X.X share, bottom line; attributable to first or the compared XXXX, to Turning of to million loss per million $X.X quarter Kopin’s quarter Kopin attributable of XXXX $X.XX securities cash per marketable compared million XX, Corporation at $X.XX of of share Corporation and or loss were the net of to first our with Corporation XXXX the Kopin $X.X loss for was $XX.X million $X.XX per XXXX. attributable December the loss XX, share, with to XXXX. net Kopin for share for or was million $X.XX Kopin attributable non-GAAP net the or XXXX. approximately at $XX.X first as million for net March compared $X.X quarter

quarter ended net $X.X proceeds, XXXX, ATM which issued our and million million million ATM generated in March or cash $XX.X then-existing XX, we our the program, During shares $XX program. concluded At-The-Market

table discussed are to for additional quarter depreciation for possible expense and quarter our for form first And press our changes compensation in the as and any First amounts current above QX disclosures. review XXXX listeners the should stock estimates attached release. XX-Q and

by I’d Finally, address in semiconductor caused not did any the experienced the effects shortage of significant the first XXXX. quarter global to like Kopin shortage,

of the in have orders placed actions future. been have into suppliers, semiconductor and communications We proactive and our well

dynamic this take accordingly. we and environment monitor current to manage Operator, now questions. continue We will

Operator

Mattson Glenn from [Operator Thank go Ladenburg So from now take Instructions] our question you. will Thalmann. we Please first ahead.

Glenn Mattson

Hi, great thanks and results. question the on the for congrats taking

And first a areas you So the the R&D, versus in performance safety industrial the guys that and question and two more little back about can the give bounce in model was industrial side fire colors the we’re my I’m curious, Or front, that type there stuff? more on is the some is R&D related that was RealWear R&D or or – related end then of it consumer any of government the commercial revenue? user? all

Richard Sneider

headsets like the segment strength related, as So well, is strong far it in consumer there but quarter. R&D in and was were as defense industrial folks is as commercial mostly, AOL also. of the the majority XD industrial the R&D, including the first that very some RealWear And our with

Glenn Mattson

Okay, great, thanks.

XX been talked programs you’ve about for defense side, in while development. a the On

second about when when So, if to you’re And that kind flow past contribute production expect still think you you it or volumes, year? over But sure news have but the or meaningfully said not is the to of the and contribute, one course or not. yet? announce half. what Or in how I it you to won quarter you not some play that thoughts just the of out you you that the going win initial those reiterated Is towards of case? – that this I’m would allowed

Richard Sneider

John second would the right to rate on Yes, it would in is is initial LRIP, actually low remarks. the of in half low as initial start rate three programs about and we ramp our expect then our year schedule, estimate so are prepared his revenues. programs go It called XXXX. into providing up really what’s in But indicated production, now production and

John Fan

pretty announce well. will we our so Glenn, Hey, comes going things them, and the announce [ph] time are customer when

Glenn Mattson

Great. Thanks, John.

this, I’m So stuff, has it you I categorize on thinking moving even once displays just a John, past, opportunity. lifetime you’ve AR/VR digital based about, scale Kopin’s past? this opportunities similar like and a – that being on a to in what you been the versus part like, of maybe cameras mean, as situation, the the to of about a seen would through larger, that other Kopin in talked kind on

John Fan

preparing Glenn. than question, prepare is initially to And I webinar. actually bigger going that good say Very for, mean, and I be as I this thought, opportunity. to is I’ve the a knew good I been was trilogy opportunity

than be Now, I’m almost be business. could turned even thinking bigger phone cell out it to a

be will in talk years. could trillion business I a $X it So about XX that. Well,

and to The going XX time’s the active, a very to seminar have we where especially of of the that about first of because third, remember seminar. off lot It one very talking that’s up. which – interesting allowed and third people the questions, second future, last cut was be about to Q&A. where speculate, I minutes ask the

Q&A we maybe to So, less think third one And webinar. after Q&A. I have session active when continue predominant that very will will the our to

Glenn Mattson

just that, question things you’ve made the that, thanks. We any and in should you side, can orders pretty didn’t said of sure. if – look potential Great, Right, that But like effects QX. guys me, that forward disruptions the all supply? as feel don’t the for comfortable about just a at for better give chip you’ve investors in you about pre just concerned and us the on to be you And – have how last then sense supply

Richard Sneider

you auto need and one is, reality is CEO experiencing, missing, saw the Intel, the the what an product the like, Well, just and chip. industry article chip whole we by of doesn’t you’re

that in of Now, not situation. we’re type

was about we they far, get. people We of have bubble, panic is this so tech somewhat people had this no chip pretty dynamic, any over some started prices, But haven’t we we are they suppliers, And and saw, is the stuffing every their big multiple is that. people products. real and think shortages, raise classes in say, there’s And buying it could listen, that be where the we like doubt the a to with taking is course, it there’s see thought problem. always opportunity our of market. in going But frankly, hey,

literally can. to as on vendors monitoring basis. that we’re So, trying – daily on their our suppliers into much a our as we’re of get make to sure sub we they’re And top

Glenn Mattson

Okay, pass results. on the great. Congrats I’ll again, on. it

Operator

next Please from our Wainwright. go take ahead. question now Dede will We from Kevin H.C.

Kevin Dede

taking display, Good more light question. display on the that? color pardon my be morning Thanks for could more John, an upon a may there just Is source? you talk which using gentlemen. little about bit Canadian extra This diving there? near-to-eye some are

John Fan

Kevin allows and special to yes, that Yes. display backlight LCD well. them micro our our using see very using

module that a other is this applications. we’ve providing been So to AI

the they’re you just with tried response market is I’ve you good. one this in diving, – just modules, obviously very in teller So and second yes, special bag do don’t has the out myself. thing, the so but water so the and is a never product think I came doing this have I well that

Kevin Dede

huge But a I Okay. imagine get a it. maybe compares the little say would there’s helmet you insight. market hoping give firefighters was How I that just you can’t it more for to us Scott that use? could

John Fan

with is so a you different you that has millions allow per that Scott sensor, the those things the Scott Scott something all helmet different to helmet not not is different, sell year. helmet are it As see can sensors,

the I you base. That’s Holy is end the Okay. of the why say, day, Grail consumer at

you so to from happy to is have free, hands learn through needed, to were handheld to enterprise they had go through with biggest the and So, go you opportunity. explanation what’s defense,

Kevin Dede

I as how are I the using at the from development way – of display, you was what consumer in features and mean, looking sort the of micro it the that’s, no, the see yes, coming that Well, this applicable market? and LCD

John Fan

Yes.

display, when all usually what’s the you actually cell developed for going giving of already for [ph] free. there, week, their look lot the at components already problem cell on, in they in handheld, to display. your at display And use accept because a even will customer whole the is to it phones talk find the the A to model which on on other developed for years really when they they You topic handheld are present to display the next the around that components top really I’m move hands the seminar the you to that ago, look be. the it, early days phone, the never safe hand, afterwards a day, new displays XX be that

water, but had optic the what still the For displays the of anything business defense need of can’t ask now, go that so especially care to play, housing, take you fire. our things, be magnifiers particles, has recognize, kind can you to me, but of can’t to that special read a right of things be how lot it what care have to to together into

the or learn. You can we go these to things wall

So, has I understand to these cellphones are microdisplay a starting it three module we have to ago. this is and people is rephrase the that be had areas challenge they years really think not their leading biggest

Kevin Dede

Okay. All right.

you side? So in answer kinds discussion be more granted done can for doing How develop you’ve taking helmet are the consumer to done you’ve are consumer of R&D and the specific? Scott or you for development your here and you what helmet specific questions the Glenn’s for to what diving pointed AR/VR, your

John Fan

I is, Yes. rules. the I I’m of consumer be number to the technology. first big consumer side for human fan one we second In – have think preacher side, have all, of we know, the as a rule The

And thin, do next for And by reality in to is that, the will going more months available will of [indiscernible] week. So fashionable you were about will natural, – you that next come glasses put as way, if is human customer What the I special next coming ago. major And high you to just you had has be talk the go and the introduction and consumer few the so best. the are high class classes more small, it they and had every such lightweight, radiant then up. months. in to if things after consumer And XX will be on applications.

the So, it’s is be starting to now consumer months application how going and in ago, right there then. the few

give choose we’ll that. talk to So that, want don’t that, I about I

Just comes there down [indiscernible].

Kevin Dede

And thank before that. appreciate at the John, but share end what and And Okay, payment? for go, not the the average, official count was the let Rich you invitation. I you full the the of official quarter

Richard Sneider

I don’t was the at average. said, top – it’s I Wasn’t the that my that to pretty have of close head. number

Kevin Dede

Thank gentlemen. my Thank okay. That’s Oh, all you. you, questions.

Richard Sneider

Yes. the didn’t lot what activity in have than a other quarter Yes. We saw. of stock we

Kevin Dede

Yes.

look So, I at it the early if just to close I part I closed out? When’s queue come guess was the guess it’s to write, quarter, date. and go the have really I the of

Richard Sneider

Thursday.

Kevin Dede

right. you, All gentlemen. Thank Thursday.

John Fan

you. Thank

Operator

Rose now question [Operator Instructions] next Axiom go We’ll ahead. Asset our take Management. from Please from Craig

Craig Rose

Hello, John.

John Fan

Hello.

Craig Rose

of revolving of VR. shortage my no dollars AR around point on and view, R&D spent there’s From products

the is sued, considering R&D I the but How that Where the great R&D trying where it’s when think go up, future? So do in you that your dollars could get go? balance to to in going is everyone’s you high market’s defense. see

John Fan

on system. before will smarter, he for the you to get bit display very not be silicon. on second but part optical cellphone, the And you is is have can to resolution it and had clearly the Thank on to quite display is a system display biggest on the question. and How glass to as much on you display silicon. technology OLED, do much optical mentioned get head? only not head display going good to into its this why higher The Yes. on same still tiny, be challenge the the session be the the had of And in read now is it and use be wearable

be to right advanced optics touch and the every searching is optics display. I They times, of thin. you to special times. and for we quite pace display turned on head over [ph] on optics that spent now and focus We biggest And had very now very optics, microdisplay. activities on of the world could just out or a So sharp some optics. that very anyway, you not he lot mentioned. cannot a that be the thousand the how had the the thousand a rare We be all We a do customers, challenge microdisplays and use idea, screen found magnify just kind this yet keep to actually mainly Ninja lightweight then to as our had units any Rich now the had research display

next and think maybe thick And now even Now, would the systems they the think I pros week quite recent the or too Oculus, I the would I the see still next wonderful the away in and dissect system Oculusthe vapor the paint can talk big Oculussystem. most keep I too step. and it’s you for few right I system was about the and on a too market cons and system heavy. big

Craig Rose

Okay.

If had challenges screen? be factor list it in order, to form optics the would the than you

John Fan

really, you’re is Screen screen people whole XX,XXX don’t How because one is do actually and know, assemble packaging. magnifying The times. the it number really you it? number two It high. one, it’s thing

carefully assembly. is during defense we There not our to it, you, the recognize vendor of it it look activities, customer. being Then particle display. of on because and that few conical that bolder operation housing no So like even did about problems your a making result come taken people the like know out including looks can less

they industry, to enterprise So, want have say, enterprise assembly. the And then know, understanding won’t yet, people kind and assembly. up just customers so say assembly not didn’t why the housing we’re that’s has people display consumer chances many companies detail, almost they optics whole please our and I can the I do all And into nowadays touch that’s the it anymore. whole stand defense go

Craig Rose

and developers R&D discuss of in such you’re you with the R&D Are those to many at now maybe how working with consumer claims? lifecycle product liberty

Richard Sneider

safe major be say to with you it’s think everybody’s are too. worked to guys race This Valley a be working that, it’s the I everybody we sure I or think tongue. huge Silicon I’m they’re is all else that are honest, with a have on mean market. going big I have to

have of we with So interactions at them all point. this

Craig Rose

much, Okay. guys. very Thank you

John Fan

you. Thank

Operator

questions pass no time. you appears, call over I this it there remarks. are will for the or at And further closing back to additional any

John Fan

for XX, that joining I Annual like be this you XXXX. having May everyone should Meeting be Thank us morning. soon. We on would remind our to we’ll receiving the proxy vote

to please give Meeting webinar. hold. our Annual are we the So would After and And able Annual time, Meeting. noon Thank attend trilogy I that our you.

Operator

This your concludes call. Thank today’s you for participation.

You may disconnect. now

Kopin (KOPN) 4 May 212021 Q1 Earnings call transcript