KOPN - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the Kopin Corporation Third 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

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

John Fan

for morning is for thank Good and few AR/VR. joining you very this interesting undoubtedly start, weeks it To morning. all

been world. Smart of out name Meta Ray-Ban Facebook metaverse a the Facebook changed And this pursuing to quite product. for some Facebook, came time. coming last First, its then have with corporate course, world glass for week, We

However, do QX in I have our quarter. will we this first update so as focus on advances many great

questions during Q&A our take Metaverse session. on happy to So, we'll be

with industrial XX% year-to-year, year-over-year revenues post funded We are product XX% activities, spends XX% very customer growth our of and pleased and development increasing with growth results resetting, quarter revenues particularly third reflecting strong strong respectively. in which

quarter straight of our what quarter This year-to-year ninth growth.

and three the about We XX% another about very ability strong continue year-to-year. Here's quarters our market to our feel position performance. Revenue in the good grew past in our reference.

of an low in these programs. the one received development a quarter moment. quarter, third We Effects Joint Targeting programs a we we programs, JETS. and two the System More defense second on track with that order initial XXXX, on rate production. mentioned or our that In for development are the In details

low next within program. be the We another months. our program this to enter it expect If rate will sixth production occurs, production few

In development, addition, the fuel further defense will revenue growth an of robust active and have pipeline coming in which we programs continue years. our to in

give programs on additional me market Let you detail few a our some of growth areas. and

rates. while to First, the reduce processes that quarter customer shipment have better second report FWS-I announced pleased eyepieces with develop production well. our the we our these for program, am during will improvement very that FWS-I we program, to of I thermal weapon call activities worked increased for sight gone

shipping we in We are of for highest the now ramping program production production the fourth in quarter. rate one and expect this

to a showing. significant In addition, receive we new for FWS-I our expect eyepieces order

a high-precision module, sight These have FWS-I As weapon a very using see-through designed reminder, some optical CyberDisplay the compact. AR element uses and our Pancake our optics glass optics. custom thermal video sophisticated

be the weight. better world, As applications to much Pancake in we in in for and Kopin. new first all-plastic the MR a optics last image all-plastic exciting VR, and AR, achievement invention cost Hence we the for innovation call, a quality is much producing earning Pancake lower lighter an discussed believed optics

XD consumer all-plastic us. will for markets, another AR/VR optics be Inspection useful. coming the headset For is area such very Optical bright Automated

note It's XD referred provide key important for commitment decided we’ve or Optical quarter, Inspection, XD to Paste Optical that to XD Solder from equipment. XD and series system. Mirage Technology in Automated Automated Inspection are series Inspection, SLM components third Modulators, JUTZE's Edge the we call for a which AOI order to Spatial announced of SLM to During Intelligence $X.X for JUTZE million

measured projects structured by used Circuit to XD Assembly PCBA. board PCBA, being into Board Printed is or enable who or approach to AOI The onto move for PCB using circuit are systems -- now equipment in defects. manufacturers this XD SLM AOI/SPI machines find SLM flaws Our the quality This inspection light XD.

cost. from So, other for product the achieve is improve We've of electrical the vehicles equally bearing -- for AOI SLM automotive supply focusing several instrument, been and needed as a Kopin quality machines approximately while XD manufacturers to leader safety market. PCBA the electric in in equipment of one to quality, good XD key requirements. board moving demand years, previous in number the XD reducing AOI this standard company are assess area XD high the waste now Currently use XX% growing market, fruit. for particular to and and Seeing AOI circuit areas, for of

and a We the Webinar believe Light early demand grown next With over the past important to years. is we opportunity electric Kopin in coming plan staggering in two in Modulator. vehicles, XX% the Spatial this to years. have into host technology in this for in an for growth We depth market go increasingly this year

few successes. more a review quickly recent Let's

As I provide designed we ago, recently portable, to year. which scheduled handheld acquire, accurately rapidly to delivery a precisely for System munitions. X.X for order targets few million The precision-guided just a announced are next system JET product mentioned with locate JET a moments and engage eyepieces is

resolution, micro high We in are programme specialized providing power the our space. with ruggedized low optics using a eyepiece

divers critical -- WQVGA of newly new also into adapter optical display data. easy announced area provide cyber diving has for display, display been of access types and We our launched designed to

and a a an utility small bright, is offers form integrate image capability This AR/VR industrial readable in optics areas and factor. easy their products. user and in win clean, for to of a many medical looking safety example of display microdisplay Our the

for activities. $XXX,XXX Lightning received our our proprietary backplane Light silicon We wafers. approximately Diode XK follow Emitting to up Turning Organic order

market for XXXX and growing demand and of business Lightning can in a our consumption. reminder, model. microdisplays our is our low support all a Hz As backplane our with size validate in fabulous resolutions to for power Xk wafers This at its repeated with microdisplays with backplane X-inch run diagonal up x XXX line audit expectations XXXX OLED

let DARPA strongly advocates -- time backplanes. take few the discuss with reside our our microdisplays a to microdisplays a IC has Since minutes to Kopin strategy. Now on funding silicon early days me from

In provider beginning it fact, Therefore, very all silicon on IC on believe microdisplays are backplane. of that only micro silicone to all was be microdisplays LCD, LCOS, We our microdisplays the IC backplanes. our OLED on led, from advanced silicon backplanes. future the Micro in

modulators, XXXX. what for processing our next designed, in our our the our time, IC light crystals, DoC. fact, emitting upcoming decades. into or Chips, is integrating same into liquid for generating for focus driving designed showcase trademark have Display and on liquid semiconductor and in suite our such emitting year. January sophisticated to layered -- technology the we're in In short, specially In many business to revenue They At would QX Kopin either the with path advance furthering roadmap, opportunities, of in silicone in innovating momentum years customer enterprise MR diode ferroelectric paving CES key the IC backplanes in spatial and and two display growing display Kopin had diode light and design We To the matter backplanes. active actively have applications. silicon plan as meet semiconductor been DoC we designs is defense technology. strong, and we good backplanes of AR, an ago VR and platform. in complex our and and to Metaverse feature plan silicon the growth pioneer driving differentiation this the backplane indicate VR, on steps. The that vigorously Beginning the Organic and crystal, inorganic we is now market especially applications. many future in in exciting trades current persistent enable

can few exciting related very our whether advanced I recent looking when to in display is even was in the to ago, on exhibit on AI a We addition to of This well most asked opportunities. helmet. the those VR. positioned in-person chips, show the forward AR, we coming are CES F-XX many world. in our world's Interestingly, developments to capitalize days helmet January, protection the we We're plan to

is of many our display As in know, the fiber the source helmet. sole you

achieve Regardless, impossible most likely devices we it’s at many – OLED future you have try CES. will show interesting other to We to that.

financial to review turn will this the I Now call details. Rich, to

Richard Sneider

John. Thank you,

XX, Total $X.X for third for $X.X to XX, for were quarter Turning the financial September Product of compared revenues third XXXX. ended the ended our September $XX.X revenue with with million September was third XXXX compared XXXX the year-over-year. million million September quarter quarter third increase XXXX, results. XX, quarter XX, million XX% a $X.X for

$X.X quarter September September ended product XXXX for with compared million the XX, quarter ended Our the with revenues third XX, $X.X million XXXX. third defense for

who As our systems product John the make to process of we quarter, reduced during discussed, thermal sight weapons using enhancement. customer third want to previously a shipments

this product for expect our quarter. to the increase rates shipping We in fourth

quarter XX, million sales safety. it were in third in XXXX compared revenues for third quarter the volume John metrology the products third sales public quarter increase and Our and products the an headsets, XXXX $X.X the ended for quarter referred in XX, ended $X.X of $X.X decline with used to quarter applications to XXXX approximate strength third to, the ended and third compared $X.X increase third XD sales ended funded on third quarter XXXX million industrial for increase September million September US ended equipment, inefficiencies the primarily million product of to offset Cost compared programs in and due manufacturing that manufacturing, of for reviews with ended XX, the September XX, $X.X XD were September for our partially million approximate to XX, of customer $X.X XX, for quarter XX, by compared in and XXXX reflecting million defense. margin XX% used was the products for sold development XXXX for the our other the used Funded of distribution September lower was ended AOI XXXX the for XX% quarter research, ended September XX, Gross for XXXX. XX% due September program. September the for third product FWS-I were XX% year-over-year,

material the not many delays chain nine first related Regarding months issues issues global product to supply of affecting experienced we shipping during industries, chain XXXX. supply have any

$X.X most months companies issues million situation year-over-year. increase compared were third R&D presents. of facing turn Research The to XXXX, XX, for $X.X in compared million ended three administrative XXXX for primarily program development development for continue for quarter is XXXX around third months expenses three were to $X to the ended for we excuse quarter can it as million the work XX, expenses an and XX% me. increase $X.X XXXX, development. a are XXXX, and R&D the internal challenges. -- dynamic, OLED like -- However, of the very to the expenses quarter and to general Selling, of XXXX and third third for due expenses September funded million compared September increased XXXX, customer quarter we

non-cash Excluding to income September million of compensations XX,XXX gains the the ended was in income of were million foreign approximately during stock ended compared third XXXX third for quarter months the expense. currency non-cash the XXXX, third the XX, a an XXX,XXX for for base compared expense XXXX, compensation excluding of to and debt due other as stock of recorded three for XXX,XXX XXXX. was foreign currency September XXXX for expenses compared the The $XX,XXX SG&A in third quarter XX% Other of losses increase three of we XX, months to increase. of with quarter bad $X.X SG&A increase costs cost, $X.X costs XXXX quarter

Turning bottom-line. to the

of the to Our net net interest per compared share million June December for a interest or $X.XX loss cash quarter the to million. controlling share per to million $XX.X at $X.X quarter third third XXXX controlling XXXX. compared of was controlling share for compared for the XXXX. to for loss in attributable again, interest $X.XX approximately $X.X $X.XX $XXX,XXX or net loss XXXX. Kopin's the or per activities million XXXX per operating ended of Net $X.XX million at controlling with third was of $X.X with or quarter marketable were of XX, was to the of third share Non-GAAP $XXX,XXX third quarter attributable securities XXXX, $XX.X attributable loss non-GAAP used XXXX for quarter XX, cash as approximately XX, and September interest the

of ATM for the million under deducting ended before During stock of months of $X.X shares proceeds we by XX, us $XXX,XXX. three paid XXX,XXX expenses sold our XXXX, program approximately September our

sold of For agreement. X,XXX,XXX September the proceeds nine previous ended have deducting months million of $XX.X we ATM gross before XXXX to XX, broker approximately paid pursuant our expenses for by shares $XXX,XXX and existing approximately us

QX Operator, the the possible estimates depreciation concludes the table any additional for attached stock above the amounts compensation for listener quarter remarks. review of in take prepared current Form course changes, not release. XX-Q should we’ll The quarter third press and our our to discussed Third That XXXX are our amounts questions. disclosures. and

Operator

Thank our you. first And and Glenn go ahead. with Mattson ahead question we'll right. All go from Please Instructions] Ladenburg [Operator take Thalmann.

Glenn Mattson

QX -- from business now completed had and of that a just is the that is taking facility that is of been production bounce do for process kind quarter. piece higher The from bounce makes you the -- Thanks of -- a back Hi. FWS is with that the retooled that level contract? and that questions expect on or -- general Yes. of kind up congrats that up back in that's you think the push just revenue, of a there some Thanks. the that or of has sense the

Richard Sneider

Yes.

to up should of basis, And our overall rate. are as much the because forward, in try QX of the weekly we higher on quarter the production rates going making fourth profit possible going So a as be

Glenn Mattson

of is Yes. number The to expect picked little there? better you're has a programs R&D revenue within up or of a this a in, is color and there just increasing, to some for that that defense quarter it spoke -- scope programs John continue those that or the -- you while signal number the I is -- is think, that work that that

Richard Sneider

quarter. particular this in Just

that So this extended amount it was of that a we contracts quarter, work percentage go of have an done just of completion out it's the time, a and for of of on reflection period was basis. number

business you achieve is So lumpy. it's of particular in that on somewhat piece -- Depends what quarter.

Glenn Mattson

And were business in Great. offset optical weakness side, headset is to lower first is as that kind -- headsets. the far quiet nice you is Is inspection of the the headsets of as -- the well, the the sustainable? or I is you something Right. industrial the second, pickup trend business there, back, that but guess, side -- just of doing expect right now? that bounce mentioned by And that is kind

Richard Sneider

Yes.

So we've good AOI, sustainable. And right now. believe as that backlog in XD orders that business it relates the had do for we is to

expect headset our that stronger business, tell get As the it relates to to do going customers us they forward.

Glenn Mattson

Facebook's metaverse or so this for Last Great. Rich on don't kind or guess I know putting XX for some me. one but stuff. I of if in the space. you for billion the John, investment

the they're So, best going to there. be some products out of obviously, building

going with So get Facebook to I competing expect do it, that players John, major you expect you in then their guess, general at projects could be And you space and dance well. kind industry is generally to speak. to the so guys potentially force serve that whole and pace accelerate VR tech as speaking into of those going that the that's to other just to well within the do headsets,

great. be would there color some Just

John Fan

a It's question, good the very on Glenn, metaverse.

one And lot of generation certainly we've and needed. from important have most of it. that of Facebook, with they XX,XXX applications not. of as on That to working that world. metaverse we a next a We the the platform on activities hardware As displays cannot a I've hardware day know, And such is the face lot let's optics. have compete -- -- as sold transformation they most cellphone believing that since a -- spent Facebook than day. new software of we say focusing time believed needed been always and that showed people all more The but as we’re been it. going out

app are hardware. doing software not believe two that's that, image to from of to want enterprise a we be metaverse. the for a we and provide most and areas. factor that. always exactly best smaller view critical these providing And applications, good how hardware After are on focusing we at important Facebook and the and be and will We form that the the hopefully guys defense very course what We components what dominate also is

In the fact, glass. trademarked it's have we interesting

is for glass. metaverse VR the Our trademark Glass the called

have We the trademark.

on way the metaverse. are We ahead

Our is the trademark glass called of glass. metaverse VR

What lot the different displays the F-XX. the for for AR optics details. requirement a not display do on ask That which glass, we the maybe needed -- somebody of will for of quite will for I metaverse, go that. So into are

ask questions. So, let we're think maybe the very I well would are and I for interesting other situated the But people views very that.

Glenn Mattson

Great. Thanks congrats on for all the and quarter. color the

Operator

Please [Operator question Instructions] H.C. with We'll Wainwright. ahead Spencer go Cushman and go next take our from ahead.

Spencer Cushman

Kevin more is on the I components about talking difference F-XX in metaverse, the setup for get John. Rich. Cushman the just to between quarter. Dede. Spencer for was Congrats on for some and of the This kind were coming thoughts John, curious glass you Hi,

John Fan

Yeah.

think case F you rugged. is of AR which do overly I the glass, XX, in the rugged, what the very is need

most F-XX, applications, be other In the it different. defense very for isn't the ruggedness, a But fact, camera. also high the important. to video nighttime, This precision quite displays all are daylight. like And AR, cases is in is bright in has

Okay.

I I the will helmet afraid for allowed case totally VR the show As we of do not but be immersive, okay. Metaverse that metaverse is that not wish different? to I'm glasses, But that. say, is in we that you could glass sure. I'm the

So, image, you go have to they IMAX see because or to very IMAX because you then the see projectors theatre is way is immersive go want to theatre, two good an theatre, into the large go Xk. current a screen, a to see interesting, analogy IMAX Xk very

always is the bright brightness It’s but not important. immersive. So enough for

the most quality. image the It’s not it's important. is So brightest

in high resolution, happens dynamic range. also need the what they So high

mean? give people bits X-bits, that XX-bits XX is it What’s for to outside not speed, – go XXX hertz Another or called Dynamic thing reduce want and will today, of TV the action high the dynamic you latency by you get fast range okay? High games. TV HDR. this If high-end Range,

not you the for to to is again, But the HDR have for display go hertz. bright, be So and metaverse need you to and activities it need need do immersive. the very XXX bits

a key think IMAX show look many color can as how good how the high important, are for Asphalt, would good you? to for company is is? the So think the we How you just say the you when or you range? I image TV I these think is? decide And like fast display most How metaverse dynamic I to things that's CS, theatre. can How go?

metaverse optics. The second the thing really is for

to large which watching optics thin you very is You get using. work There's very, give in current everybody Because and IMAX had image optics. lenses, two now Oculus X a very One theatre. Fresnel is only metaverse magnification. good like for that's technology huge

The is actually our other know, our the optics. inventors Pancake trainer all company. one in you optics is Pancake of Pancake of one as is the optics also

Okay.

So we for defense. Pancake always the very good for especially in optics

turn we Now Pancake ball for and we plastic optics into use the consumer, optics.

thing optics a So for got important magnification metaverse, and be optics wonderful very to to have huge you lightweight. facing

second gives speed. you you Dynamic High Range, good very that The resolution, display very high and a high very ones, color a get

the consumer quantities. are to as – wanted them course, needed, of things these So in and produce you have

So I that. displays. and optics is hardware hope Metaverse I explained

Spencer Cushman

balance in number those little or currently it. Yeah. to that XXXX? expect That's that are either year to gears in the really go then on curious of the appreciate great Shifting bit of color. just And reproduction the full LRIP? in you Really productions a

Richard Sneider

talked all production into quarter one to about this and them little And for with weeks, production. two at FWS-I, then an quarter of have we first LRIP. in the in LRIP award production, a of we there and next full jets, the hopefully we a third. into by few expect luck in end then a So in and We fourth F-XX the have

Spencer Cushman

queue. Okay. jump it. the Thank color. you. appreciate Really back I'll Great in

Richard Sneider

you. Thank

Operator

All question Management. go Asset ahead and Rose ahead. right. Please take We go from next our Craig can Axiom of

Craig Rose

Hey, John. quarter. Good

John Fan

Thank you, Craig.

Craig Rose

optical You large inspection market said say you had how the is? XX% you market of that Did share equipment.

John Fan

make we XX% it market did clear, share. Yeah. have I not to want

fetched We have XX%. about

revenue. Okay. in Well, in two we grew years last about XX% the

So the actually. small, current is market okay, still relatively

modulator. light is players, owns TI, the remember, we of provide ourselves, So will the the the still player two spatial strong this - whole as second each Currently about them very market, of small, we XX% have market one share.

We’re next maybe special webinar I very using this semiconductors, of even order is now going is will because right think a XD area the up early inspection to they interesting year, this all coming have machines. know systems are where because PCB, actually a it

getting As -- are it comes complicated too things in the electronics.

very boards early So XD the PCB little vehicles early right it's so stage, just need, now, and electric so is a it complicated, is we're the robust. seeing

to all XD the we to XD. going equipment's, all So to are eventually from go believe

could So the very big. so be the market

going we’re growing is, the studying in early market So going discuss competitive have February And to why we're to the technology, and where the it's the so maybe still webinar and world fast. go. how January, to big it’s

Craig Rose

you. Okay. Thank

far As expect where to the used be plastic Pancake would you optics, first? as that

John Fan

In the Metaverse glass.

Craig Rose

Okay. And that… is

John Fan

I -- actually maybe I'm little was Because Yeah. a sorry, too short.

Sorry, it The that. can I optics this [ph] maybe XX,XXX times, in plastic okay. display, your as magnify feature, area apologize for wise, Pancake

and you now. a Imax level as remember but very in theatre, inventors company low know, are thin, you display, and optics it's because all stamp you the inside So while our -- bouncing that optics when postage look Pancake into right also take a

to do So know that. we how

We the light. want there there be light. so to to be headset And had

read minutes XX or can for many for you So it XX minutes. not hours,

thing, optics. So this is Pancake the all-plastic ideal

we invented everybody, not looking You just -- is for years, it, the just four first. Its that last us. what for we've everybody's just

Craig Rose

your CES? prototypes ready Are for

John Fan

Yes.

Craig Rose

us CES? tell about to want you else Anything Okay.

John Fan

show to Metaverse to of optics, early this hope glass only we’ll not you the with prototype of the type of show We this hope type optics.

Craig Rose

you much. very Thank Okay.

Operator

actually we private go questions from who's [ph], ahead appears Patrick go question, like get It Please no next investor. call We'll this -- my at Fan, further All I apologies. turn and take there are time. more Mr. one our ahead. did to a the Metcalf would oh, right. question

Unidentified Analyst

John. morning, Good

obviously. You sound ahead times Exciting fantastic.

John Fan

Patrick. you, Thank

Unidentified Analyst

under Lenovo how My the looking the Okay. around hidden questions order revolve and assets? to your New RealWear like XXXX of Vision for I'd know treasures.

Richard Sneider

all Realwear really honesty, you and them in ask and that. Lenovo contact Patrick should Yeah.

John Fan

the question for answer differently. you I’ll little question. bit Patrick, think the thank I

One three has revenue well company Our And as is very the going that's enterprise defense stools. and leg the business. generating.

components The invest very for second glass key actively Metaverse story optics. in in displays is really

The them third royalties, which also that the has and actually in pin components how own companies leg we they and licensing up is activities of equities, sell need.

companies So there, everywhere out now. therefore, to happen they

already is so, one RealWear that. them. announced And of we

In fact, one was just Visa surgical one [ph] in of to and we a a to them, of SOLOS We last company announced them. of course, make headsets. licensed year, was class

neither one on, of So component cells. component, and on. them, so and We so that and This people provide equities is license, our leg. this third knowledge,

So this praying yeah, successful, think -- I we’re of some very and those successful. are all companies, that them be them many of

Unidentified Analyst

end licensing reason that And come. why the more deals John, is, had -- mention you of the last great. Okay, would fact the at made I asked to call, potentially conference only

So, that effort see more maybe I how's into just XXXX. happening ask, XXXX? was one going going We to two in or

John Fan

-- starting is, Metaverse going working the especially strong. hard answer so certainly going now, we're with pretty The

I think, more mean, anyway, be to expect do year. There CES. personal more We I up. CES this could were deal. no last in again, coming deals But be

and we'll be beneficial or hopefully our medical for applications, CES, in defense for show People just interesting. enterprise, for using components for are And this this consumer they're personal hopefully, applications. So additional medicine you for using now not able to very now devices. really some could the be

Unidentified Analyst

And John. question, Okay. last one

get me straight. this Let

You optics? and have trademarked Metaverse glass Pancake

John Fan

were optics registered Yes. the trademark. Pancake optics registered Pancake a trademark. with

registered display are cyber those course, trademark. all Of

trademark. yet On as the not is a it Metaverse, registered

process through of without different a vigorous know, process, Metaverse, As yes, and gone has you register a so trademark. will

Unidentified Analyst

I XX. sound you're why know Okay. now like you

So good luck. incredible. and Congratulations sound

John Fan

Yeah.

a think of very Thank couple interesting I you. is this years.

Unidentified Analyst

Have a good one.

Operator

All right.

the remarks. for to closing questions like no Mr. I'd it time. this Now further are appears additional you back at call to Fan, turn any there

John Fan

very earnings CES. much. to We on you, come you. Thank Thank hope the next to again you but No. to talk call, to

Operator

This all call. for Thank participation. your concludes you today's

disconnect. may You now

Kopin (KOPN) 2 Nov 212021 Q3 Earnings call transcript