KOPN - Earnings call transcript Q1 2022

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Operator

Ladies and gentlemen, please standby. We're about to begin. Good day and welcome to Kopin's first-quarter 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Officer. Financial Chief Sneider, Richard Please go sir. ahead,

Richard Sneider

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

John Fan

hours developing XXXX. say, On happy I which to way home of morning. And And business. is XX by Jose. am I I'm May joining you evening, I of our Ossid which quarter is Thank San speaking home, to of results again us with Trade good. Boston must to connection Show, XXXXsociety you, which important hopefully, travel able for Hong is streamed from be my discuss ahead this time. our and place first Kong Richard. meet early my all very Good in in the customers, Displays Information be to in is so taking will thank

development the Turning form the strong first with were to our year-over-year we of sales was They and by lowered. pleased quarter product XXXX. results that are as flat offset business, revenues. of revenue our Overall, were research funded of

the couple Particularly Our supply revenues of were the the issued. by global during chain last affected product of weeks quarter.

As concern our XX% past production last lower a were of costs, the few of In earning than supply we result, quarter issues. the year. one have global XX% or chain mentioned

something the is it. our Demand that product not year-over-year we're not now, XX% also we're decline circumstances for pleased products strong. in given with While are revenues we're discouraged about remains

in cannot with need make to we and into in achieve issues, own all this review. of these testing obtain to displaying explain me we system activities, we're different addition see Then And able crucial simply our to compliances XXXX Let ensure which Then progress approval. This Inspite, supply allocate interdependent really first-quarter which When over chain defense while ensure we must It why our have customer to in manage to must to product that its continue we for time sufficient We switch resources formal testing. high our their industrial overall, the extremely is component, we is must required disruptions specifications, development perform growth. our be this, our make we we growth the assembly manufacturing, the provide have perform components components additional [Indiscernible] results development why chain means, and to of another of in This notify address we long-term customer, activities, on the and our to cases resources their it's sophisticated and process assemblies, their our consuming. historic results. intermittent expect actively component to -- the extensive to are issue our satisfied may relatively replacement with were level a extensive obtain to identify plan, normal most approval. customers revised customer's also deal we while to to continually complex testing Because very components with. and component. and perform identify going issues. to with switch systems, testing materials, a our just an supply a challenging supply to and XXXX. issue will allocating

[Indiscernible], new we announced we discussed weapon As program. previously the production revenues. had of quarter this program, product for foundation a us in major gives orders XXXX, strong sight F-XX, XXXX current and our fourth our

to Looking future received current may the demand. of in feedback very out eventually the into product Ukraine that more result situation programs, unfortunate our we

Organic progress indicated in Our making business. this Turning Diode we're [Indiscernible] to building good our Light-Emitting briefing release press

to a two buying capital without a incurring lead As cases, customer their to in discussed process. lightening Paulett OLED visibility finished we partners [Indiscernible] wafers our release sell press block we competitive partners display the a model, own and building our with or validates business foundry out deposition in OEM to OLED we our OLED order We customer This business to and displays the performance, demands orders for new who sale [Indiscernible] complete [Indiscernible] are for our backplane [Indiscernible] to of our display. our other the Wafers, XXXXp -- to [Indiscernible] advantage us major these that design And OLED power believe sell provides associated is XXXX release, fundamental micro of model also [Indiscernible] of model. displays meet either with for the are silicon foundry OLED working production received customers, fixed we investment the our which displays. customer base. Under the lot make

other with on customers. work to new wins continue design We

programs. Regarding research our and to development

to make continue pilot armored aircraft, funded defense which vehicle and our wing sight on customer targeting development include additional We programs. progress helmets, systems, weapon programs, rotary excellent

go important scope production go the the program rotary of second after armored in the our to XXXX. expect this wing production to breadth to defense is to program the half We year out Perhaps and business. it of to of point vehicle

advanced provides warded Kopin optics and free rugged, assemblies. reminder, space, a As dust back

For fighter as air-crafts, wing such rotary or JETS, FXX provide displays. we

optics, and For assemblies. gun displays, we module sites, provide

displays, the business silicon system all optics, are we and defense etc. enterprise vehicles, armored full provide etc., whole on business events, displays. for Currently, LCD Now, actually based our electronics, that units include on

the of OLED-On-Silicon However, must displays OLED-On-Silicon been actively I years, developers. developing we've mention for and now over [Indiscernible]. five displays leading one

-- summary, is our chain including a product many brightness of for have see-through, we development for assumption and projects core groups, low-power displays applications, actively all make potential longer which and applications. has are them LED macro managing super and We just ideal high augmented customer reality termed challenges. reality can demands supply on mixed strong focus In Macro consumptions, LED. and our

strong and growth. be momentum year our applications. strong provides. interest very AR/VR XXXX started. coping opportunities feel of for backlog we good orders, of of We and growing growth for see excited believe XXXX will another as and a of entered interest product in We're we AR/VR wave on with the the on we continue believe MR MR will very technology We And getting applications. and positioned We it just verse advancing to are we is well in our the Meta capitalize innovating

very well-positioned Our technology advances favorable. current and believe capitalize coping to it. conditions are very [Indiscernible] And is we

like the in Finally, make equity would I comment a to on QX. gain

X,XXX XXX patent applications module As patents coping assemblies. providing some of very strong -- over with display is optics and you IPs with know, in over and

One IP to our to monetization some license of strategy the companies. of IPs startup is

a a conversation, We've a the and as equities of often our to a and is we in as do completed -- startups. more. copy, transactions receive As those of few goal part

not actually IP with of more We're very a model. stages. going mature Some are transactions early excited to this business the

of quarter call discuss a Now, we Rich, to financial ahead. and full-year. go aspects the Rich the turn the to

Richard Sneider

first lower a situation. as approximately costs reserves lower [Indiscernible] year-over-year. to supply first processes costs or to compared products quarter same the $XXX,XXX and material excess $XXX,XXX the $X.X XXXX, to costs. Organic first-quarter March for first-quarter ended of on Emitting chain XXXX the XX, of of for for result the R&D reserves percent company $XX.X the for a for production of revenues programs is of a compared result resulted in XXXX. for XXth, March for of reserves materials and purposes excess for procuring expenses $X.X ended XXXX, compared with of quarter first XXXX. million ended contingency absorption resulting first-quarter spending at first-quarter development, or compared volumes Research sold in from John. in to with for as first the units Light increased SLM of XXth, reserves for flat the additional XX, XXXX, three XXXX, the for the and sales produced. increase additional $XX.X million XX% ended the XXXX new quarter million $X.X R&D of costs March quarter OLED warranty March implemented primarily, million approximately the as volume first U.S.-funded months ended XXXX XXXX, expenses due million before Total production material. quarter XXth essentially revenues units year-over-year. to the compensation $X.X million of production XXXX Cost $X.X compared ended for SG&A due million were XX, March stock-based compared the general $XXX,XXX Diode for the were a of were March increased XXXX. as for of as million lower for administrative cost R&D product XXXX, the first of expenses efficiencies XXXX to compared development. expenses were ended three The XX, months period Approximately additional quarter increase internal was to in the $X.X The the to shipped March warranty relate million expenses of development The $X.X company and and overhead less of of

was Income expenses stock-based the quarter quarter during first Other compensation compensation SG&A from approximately an costs, equity curtailed of COVID, The were million XXXX, are $X.X additional to for were which expenses, to costs. primarily attributed the of the XXXX the first of $X.X the mark-to-market Excluding for resulting million and investment. marketing compared million the for quarter first $X increase XXXX. of

that, to the As them. monetize when intellectual an licensed is we companies of John portfolio, property discussed, equity licensee Kopin as part received certain we IP interest part in of and strategies our deep

$X.XX XXXX. XXth, of XXXX, gains line, was XX,XXX March to three for XXXX cash per approximately to $XX.X Kopin currency at net compared the to of loss million Corporation [Indiscernible] gains $X.X XXXX March foreign or or approximately to three XXXX. $X.XX million our bottom $X.X of and we Kopin During equivalents as the the currency XXth, of foreign marketable were Corporation at million December million share months for attributable compared per securities net of the attributable March first compared Kopin's recorded XXth, months the ended first share XX, quarter for XX,XXX $XX.X loss ended to and as quarter XXXX.

changes table Operator, and quarter possible depreciation press the Form our of now current are attached the take first above estimates quarter comp XXXX on questions. review will release. amounts are for disclosures. for discussed based should The and First amounts expense the for XX-Q we QX for stock any additional listeners in

Operator

a and from Thank [Operator Ladies Thalmann. Glenn Mattson take with Instructions] Ladenburg question I'll you. gentlemen,

open. Your go ahead. is Please line

Glenn Mattson

around as lower top-line, pretty just evenly you on revenue Hi, got and split, you still the of in customer normal is well? year military of touch the thanks to case component that back that just question.so retool talk industrial, and -- with that can that, for I've kind that supply issues status the can And to about into all around and was the just the demand nothing where you I to of kind mid related is also then, ramp the chain customer production, between guess, back taking there seen terms the facility up last is had that? of

Richard Sneider

defense the last in So it And us. quarter in the was of really yes, the cases, hit it of supply industrial. when the both both was chain issues couple weeks and

process we at we're changes good better, as in John prepared We have issues we of to the shape settlement expect and yes, the made indicated demand, for it. chain last backlog. indicated, was costs indications so start the again, getting want negotiated And that some be There's forward. warranty it's as do The process strong supply year changes.so the And and point, of that we discussed XXX,XXX just before we're of going It but of in it's the off been to units part intermediate now investors. think a very shipped in we the additional behind this we out remarks, cautious now situation now the XXXX. not John piece with most is was us which the woods. fulfilling a think

Glenn Mattson

are there of revenue quarters, the about? would catch-up supply that was in and Is couple better a to be any guess, the the situation? something in chain I based over on now demand next issues perhaps fact there that the think

Richard Sneider

It's goal. definitely the

John Fan

big said growth. it's we why that's a Yeah,

Glenn Mattson

stuff that but means the whether with shifting would just what with it's about talking be -- you the a product you on in new that us what OLED direction, Yeah, that's for to think right. -- A if the doesn't it give it question about -- you're benefit your seem coming there. the also maybe be if display about doing, Oculus I guys? you them Can for that and industry it's that Can believe are you like out? with thoughts they an perhaps, talk John. new is

John Fan

Yeah.

official. It But what is. Of OLED. course, this totally is still can not we guess is it

OLED, one. on of current may OLED silicon. one that's next [Indiscernible] believe the which not move, anticipate.so very OLED, you on course, But be the shift the is can glass.so would good to LCD happy will see on That's it This OLED guess They glass. news. Our LCD be always is silicon. will OLED from It's -- is a one still news.

I that the in But current is that company. the optics Pancake. Pancake all-plastic we on not That have good is going but a some very it would glass our market to a displays it plastic.so of with has if that you OLED, Pancake Pancake. know, version, And another one global Pancakes. we on is where think is news trend. it.so not not on optics the to going indicate now I we -- is OLED believe trademark we, glass a silicon Pancake answer I Pancake is in It's moving, fully event Pancake to is good on in in and technology it is your Displays going hope OLED moving, not glass question.

Glenn Mattson

Right.

in me. very back Now, it Thanks. helpful. get That's that's for I'll the queue.

Operator

go next with [Operator H.C. Wainwright. Instructions] Kevin We will Dede to

go ahead. Your line Please, is open.

Kevin Dede

guess, Thanks for that comment gents. you the components having devices and, that the me. testing? re-engineer on, go maybe, supply Hi, of chain Could had of additional number number I you had to through to the on

John Fan

[Indiscernible]. defense. There's with involved much so

Richard Sneider

systems we information and government about of get they about chain Kevin, which lot somewhat us there's a the are U.S. and And really, Honestly, there, it. from defaulting supply they [Indiscernible], Yeah. companies discussions a notification operate. the that around issues out they concerned through referenced prohibit, how did

John Fan

to semi-conductor chips is missing. It's the KOPN. as know, issue just think, supply are unique not Kevin, you chain I well a

advanced, they many Industry. whether this it pleased people everybody, am missing. the are well. Industrial Industry, ways, And it's Defense actually they're affect have some not in reasonably And I of And really manage but chips, to

Kevin Dede

think Okay. mentioned Rich, out What woods out -- you look you we what the should think were for? you of do yet. you didn't

Richard Sneider

a think we're But that caveat the Well, we the the think, that see couple see -- the the the vendors, in more do anyone it's before we we're we of given of woods. for that to which of in people that the belt do industry, but sure good there we're would at I -- just year. shape of commitments to we rest that under the up just indicate We out unrealistic out of want from think talk have And tunnel. situation, putting get make starts our we're quarters light declaring to the they they end woods. I

Kevin Dede

Fair enough. Okay.

can is you a end times. relative backlog referenced fair, of the You've a don't guess versus the but year? you it, of which quantify to number want give move us I

Richard Sneider

million there into will can a shipping another the indicate and those for December. was PO and that in you assume year possibly November, had year. $XX.X December.so X.X of another did million it But beginning year. be of the had we We in then a something that's all we bulk next were this November, quarter all In program.so this

Kevin Dede

were on that? -- I Okay. touched status you you both and John, you us China. And Micro the a developing as OLED. correctly, on you're in remember Japan Can give

John Fan

tell you do to you? What want me

Richard Sneider

all. of First

John Fan

Yeah.

Kevin Dede

and the kind about I'm the involvement that of just stuff. time-to-market, curious

John Fan

OLED a which producing Micro OLED, considers to do It's became - a solve And are developed their full wanted effective with It company, Monochrome large MR. high company that very good. Micro color - AR/VR as -- activities, work LEDs. is everything way. is do funded display, a is LEDs. customer to a people true. customer some and Micro you both and We we and of we hard cost all know, super to work them always with the this funded.so Chinese and ultimate Japan's we progress it Micro advanced And

I good things the buying something, down [Indiscernible] there's Otherwise, some because quarter. in China, In going have a progress. a few we're [Indiscernible] announcer again was, are you has well things, this lot think of might already lockdown but slowed for some and China to general, as making still weeks.

Kevin Dede

How you would time-to-market? at [Indiscernible] we look recommend

John Fan

into you. Macro Time-to-market market for is Macro this LED, zero. real LED Nobody year, nobody to going can get give

Kevin Dede

Right, okay.

John Fan

But good we're progress. making

one not leading of this year. be team the should but up, we think coming I

this show For you'll this, and Yeah, development, products, year. for for demo. get [Indiscernible] for

Kevin Dede

product you year right means That have could maybe, 'XX? Okay. next

John Fan

willing. [Indiscernible]. God

be we for can the If just goal show the major do this this that, potential demonstrate to industry. of is and coping, not could it achievement, year. a display Our for display

Kevin Dede

was thinking in Europe. change seen customers. related your wondering you any you've guess referenced from the I because defense I Okay. conflict if know of that I in

John Fan

and Well, or do and which to to I a mean, -- are disaster, in in are we make but nobody the want the Industry, help for war. such Defense systems systems, for celebrate used we extensively component

Kevin Dede

your in involved? Right. greater I'm is, some that guess in of is customers wondering the what part making there I interest of product you're

John Fan

It simple for was a just example.

to can that they that that. Germany so buy announced -- we F-XX. announced, want more was You say

Kevin Dede

Okay.

John Fan

[Indiscernible] to you -- we're F-XX.so And can

Kevin Dede

Right.

John Fan

connect we dots. think I

Kevin Dede

you Right. John. I helping appreciate me you. with Thank that,

sourcing assuming goes you're that I products correct that the U.S., Asia defense-related is predominantly in also I'm still components? from supply Now, in chain or into

John Fan

Yeah.

chain I automobile China, put think affect you're know, they're well world; which is they're lot because us, a can't Everybody product. too. even set really industry is But And buyer is Taiwan, Is find maintain and by by you Korea, just that you short. it problem low of agonizing, made as microcontroller, in the microcontroller, Japan. not IC. What the short, tech a It's car it whole a once in everybody missing very there. supply IC the you about automobile, that's So of too. a can't ICs? the an that for is advanced

your got anywhere. it IC the not not date customers cannot proven slowdown compliances.so is get But of that get It and You things. you it's It's fundamental. common to IC. very

Kevin Dede

I see.

John Fan

patiently cannot get out. us So you

For instance, come buying IC double China. it. those No, one on It everyone that the short. it combine world. just Everybody's is the obvious from trouble

Kevin Dede

see. I

got you. I Again, Okay. it. thank

take of Real Just the on progress for Wears OLOS making -- maybe your

Richard Sneider

Sort of to finish just that --

John Fan

into would making that situation. we some want like just are them don't and of And go five years will lot it. it pay VC license to that obviously, that [Indiscernible] a companies ago equity is four, so in. are three, progress you the form equities I and fact, glad gain. The that already one in to I'm they continue. I Those buy mentioned a think

things gain. of like become to series tip get goal monetizes equity them in back equity stage going we're and is you're mature our the some in remember hopefully have [Indiscernible] VC, more a significant Some ways. But three now, with come of and going gain. than We'll

this them [Indiscernible] this is We equity components way grant plus gain.so we sell good. [Indiscernible] have royalty very and also

not area So that's shareholders. known the the one I think this is well by

many products, going now. and We Amex more full make the [Indiscernible] IP they're in our We Once can products can we not [Indiscernible] more with just do ways only be. sell to selling you do into have to vehicles, models. how the display several the for [Indiscernible] shareholders. [Indiscernible] money system. assemblies And And

Kevin Dede

taking for Well, Okay. questions, it. you. gentlemen. thank my Thanks Appreciate

John Fan

I for I traveling. locked I thank was good you. traveling It's seven that also got Very Asia. not Asia. out. question, quarantined I wish just down. were easy I you got got days, and in

Operator

[Indiscernible]. have We'll next with Ted Patrick Metcalf

Patrick. open, Please, is line ahead. Your go

Unidentified Analyst

guys. good evening, morning, -- Rich Good Hey, John.

John Fan

to want don't sleepy. I [Indiscernible]. be

Unidentified Analyst

Rich, to give credit -- I you Okay. want

John Fan

Go ahead.

Unidentified Analyst

into few us but want issues, get credit past made being $XXX acquisition an on $XXX the having and on an for supposedly portfolio -- optics supply it Wave for caveat, KOPN with speak sitting the for chain to -- behind quarters it. $X Micro that's Rich wanted a optics, can of supposedly, of I million, and made company.so or as company having and talk company. for I Pancake LED talk to micro shareholder. sounds thank I exclusivity you I to the but speak couple being to just like billion to now can recently if see plastic And John, that displays, optics Google and you the cannot that marketplace happened investment you secondly, you for to the acquired at what want snap a another then, Optics, million with And engineering in Samsung [Indiscernible], or then, to. events a want to called about conservative

John Fan

I guess. markets that efficiently, guess not very temporary, I is Well,

Unidentified Analyst

technology will. in a in to had the you and competition you it.so [Indiscernible], I take with approach, go Pancake the I but and that I as different plan XXX% to HBP a back a right. to will concerned, optics go to All that Okay. as positive. far are to the get market strategy came ask are you plastic days, that? if do And how on different then stepped understand if to to if we try that Because you, market go share, the in correctly, wanted the as greatest going you market

John Fan

within Power transistor some the the transistor And it of been -- exclusive their is which in regard it. to use year and the for And five-years I is this didn't has somebody then, know moment I then the think HBT, course, was works and cell With Qualcomm Chart phones for vendor. to sky in sold that stupid that [Indiscernible], the so it, got world. Asia is you business have we sold the probably you can We it. owned the And particular fair we start me. to. above patent still we've XX% company share in were market XX%, then making somebody kept it. still business Then The should

As you're the do losing lesson.so is actually in, I'm quite the lead. just profitable.so my even people come

get don't You that displays quickly.

Unidentified Analyst

Okay.

John Fan

I So honestly don't [Indiscernible] what know

Unidentified Analyst

lastly, research of to side answer then revenue Can And customers that you VR how equation, side the of the development on is have? you that and do equation, secret? the many or the

John Fan

it revenue. component on many or many depends how units how Well,

profit F-XX entire the they world. VR/AR to pay They for units, the make it.so it's of revenues. to well, -- how Just not many do on are pay component advanced and it. in too no you paid the of their in many there's pay value.so question many They is don't most listen how probably to of sell do a lot Oculus we're about point, They system well. them, but the really customers willing guide. this

for want I not I every selling losing probably think Oculus I is think there don't not Facebook. money, money guy the component -- maybe don't to speak But unit make itself. making is money.

Although we still --

Unidentified Analyst

-- Against

John Fan

to money. Well made we avionics and

Unidentified Analyst

John. Thank Okay. you,

Operator

conference the for closing turn any I'll additional to Fan, you Dr. holding, questions back other or no comments. With

John Fan

vote. having would this do to much I -- in us remind please XXth, like very that evening will be proxy or you a be you we annual for meeting this proxysoon.so our an joining morning. Boston.so receiving thank back vote everybody on May I'll are XXXX. Well,

meeting, year If thank to probably -- come likely you're much to me this is attend annual would in joining person.so very able evening. be this going most think our to I you for

Operator

We for and call. will conclude you that participation. Ladies gentlemen, your thank today's

may at You this disconnect time.

Kopin (KOPN) 3 May 222022 Q1 Earnings call transcript