KOPN - Earnings call transcript Q2 2022

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Operator

Welcome to Kopin's Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Rich Sneider, Chief Financial Officer. Please go ahead.

Richard Sneider

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

John Fan

you us morning. results. Good Rich. quarter our for operating to all And you, XXXX second discuss Thank thank joining

are of quarter, revenues results Total revenues. XXXX. year-over-year, our the up of pleased very XX% growth our by were with driven second product about We XX% the

research in will time. revenues we of production and customer strong, which of remain these we most expect our addition, future growth In are which view to efficient funded indicator a as as development our opportunities development programs,

second quarter. defense from XX% were in particularly revenue products the growing Our strong, year-over-year

our for brightness pilots announced vehicles. of displays we XXXX, brilliant and In second quarter additional for systems helmets. helicopter for pilot color production spatial During now armored order high a for helmets the orders the in imaging we've FXX July,

three or automated adding Korean also leading an their SLM display a expansion we're AOI off as Korean based of customer. modulator critical high the our industrial With liquid the XD customer system a base During to inspection SLM, proprietary use crystal ferroelectric light particular supplying win not equipment high-speed, manufacturers. They the a in spatial we're which all second components quarter, new this system. performance, optical announced are XD

to our other but in display add represent several Japan in important, believe China, strong we LEDs. liquid in liquid of light very of matrix the to display we on company organic orders, Germany. those the All diodes the There Micro organic with We are in only addition To displays, partners In manufacturers variety to emitting active progress crystal micro technology, Kopin light And These named market, world. our being electric backlog displays announcements our equally also are are develop leading already important and company ways. or OLED display, [indiscernible] working and diode emitting offers. displays. are micro silicon.

breadth our we specialized of and customer allows customer of market. provides as the of to our offer which important in an our with a meet which needs, objects display customer visual is advanced meet variety a technologies needs turnkey solutions as to Just variety to integrated offered This high-quality solution.

the optics patent critical headsets, smaller, of easy-to-use are to critical Pancake headsets headsets got objective. been our for All-Plastic in in Metaverse Pancake used lighter, lighter much For components enables pending thinner, comfortable Metaverse weight example, providing headsets. world believe our VR new one our and first the also We the All-Plastic today. Compared the Optics Optics has

sharp before. perfect representing image. our providing But X.X provide combining believe a eye sharp relief. a a optics OLED most pancake image good importantly, the pancake optics they with by very not clear about provide XX,XXX maintaining match all-plastic XX,XXX microdisplays magnification Our with only to mentioned advantages times all-plastic our We very

microdisplays to place technologies these to battery importance electric in VR good in analogous is add importance to essential same the the AR this lithium are for which two context. area, technologies to in on goal technologies critical great lead These experiences are the Our proper pancakes is industry. remained has as vehicle and put a always the two the

Our second chain quarter growth occurred, we issues. with global are still supply

While come a did growth, cost. at we are it our pleased with

will than more As limited as chain press design supply given running about chain and customer has get the indicates, keep when costs supply years. normally seven will to product release would visibility Typically, operations and issues resolved. we a defense to to our five incur our to a issues, lifecycle expect. running our But

components. products, we several As a contingency will semiconductor we designed automate

operation are as improving. in closer our second will believe to best in revenue flexibility And as And semiconductor run issues revenue on So our components second be defense it's supply we XXXX news of will impact those our back-up our we now. costs. a components. our based plan. engineering we to expect we [indiscernible] The high This the positive with the has It half vendors stronger. normal. appears also those half also and semiconductor is have we alternative increased half incurred Furthermore, first discussion business, be chain the

Now for customers. more the send multiple the less drive. using chip, a have display really now embedded is X.X built-in [built-in] with signal displays and [indiscernible] X.X technical and value let X.Xk currently is interface video partners advanced of designs virtual consuming. in OLED because processing power The and drive display systems. of And update the current OLED X.X-inch but for drive. the our digital of progress reality is OLED are these optics. we with developing Customers is backplanes display [ph] better a partners a beginning name line. will advance display X-inch designing to and which knowledge circuits an to and also additional me designed DS and DoC. to as we much opposed on augmented on draw the is a a the One high-resolution the advantage We're system. reality understand display it for product enables simpler size circuits provide Kopin make leading unique use and of us Planes discussion in micro-OLED is optics OLED [indiscernible] like a customers course industry deep in

the While power in most drive built-in as others And current debated consumption. micro Kopin have lower indicates OLED by increase. versus display power suppliers. hotly in significantly OLED be industry. in to that significantly using now customers, been Built-in results lower that use micro displays Especially drive. current drive shown resolution are other other

now folks our to take HDR We discussion to are XK design in display with advantage higher that displays. X.X says resolution of

partners a discussed, have foundry our their OLED fabless own panels. product customer highly we microdisplay based microdisplays This OLED previously for model model. by working to proprietary who more We wafers sell business As line either backplane sale the advanced business meet OLED sell with our our will is complete our provides Using to us customers base. by on demands. model OLED customers to OEM flexibility finished

Turning and research to development activities. our

managing consortium customer continue chain in us our is has the and This continue We make applications. to our supply this summary, But progress funding opens core is different project line, displays technology XXXXs in for many aggressively LCD early working our our especially sector. tremendous defense million a successful, is display. clear, challenge. in we're it strong In us. LED create elements advancing momentum is be excellent partners. to from We'll our $XX with the a current our longer-term And funded developing we Metaverse project. is demand a on of opportunities. product This development that on in customer a partners To micro how DARPA display innovating

see presents. to strong And continue capitalize it targeted we to products, very well We developing the interest opportunities positioned in fundamentalists. feel we're

optics Kopin across of our growth interest the for a of as excited and VR are AR wave in growing rapidly We microdisplay we our products and application. see of

in bank defense are First consumer starting now enterprise sectors. in

is to believe capitalize. advances, technology And current positioned our very favorable. well Our conditions are market we Kopin

the Rich this to the aspects financial turn full to we year. Now, call the discuss and quarter of

Richard Sneider

Thank you, John.

second partially the essentially and Cost increase second QX SG&A Total and activities a June June of June XXXX with in our million Goods defense customer million of funded XX% XXXX, customer in due to XX, ended redesign second in flat. equally to months XXXX for million the support in of R&D compared XX% quarter X.X income of debt were second was were development XX, an was or costs as was million year-over-year. stock-based an XXXX XXXX quarter travel product million X.X to SG&A XX second X components. the split of expense semiconductor three lower development increase the the for with second compensation, ended for months between of compared June financial was million quarter compared information the and primarily supply quarter of R&D on incorporate of year with the which and was by the manufacturing 'XX. X.X second compared overall for R&D R&D months X.X products second XXX,XXX year expenses chain inefficiencies million, second revenues the the in the compared a quarter funded R&D, of X.X Funded for were second compared were of quarter technology primarily XXXX, product result increase expense XX% expense in with in XXXX XX, million X of was costs, for X legacy quarter to for 'XX prior The for compared disruptions. expense with year-over-year. Turning XX, the June the ended Sold quarter for compensation were compared caused for to was due million increase prior as year. quarter revenues The for of million 'XX. XXXX for funded revenues XXXX, components for million the offset XXX,XXX as primarily revenues, ended of 'XX. OLED X.X expense. in income second XX, The bad to research R&D Other the The expense compared three three or ended XXXX, certain as XXXX, versus as product approximately and last quarter due and percent the XXXX the increase XX% alternative to ended the second internal X.X revenues increase quarter second to of increase the shortage internal results, in activities. semiconductor net quarter to cost product June X.X programs. quarter XX.X of increase of revenues ended increase slight related million by in R&D

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

the in our with $X.XX per X.X interest activities quarter loss or XXXX. XX.X approximately million. million used controlling for or bottom-line, was XX, to $X.XX per compared months loss [indiscernible] share for of Turning share, X.X net the June operating the second net was in XXXX quarter the a of cash ended approximately six Net million

supply increased As issues first John manufacturing chain our half negatively and and the cost affected flow affected efficiencies, year. discussions in which working indicated the capital of my

addition, equity aircraft. of working ATM. capital. approved Accordingly XXXX at received offering production rotary for program a in beryllium to displays of working the second we our fund to into expect and In we these management capital transition production may or use needs team we partially half another as program our order for market discussed, the additional wing -- And the require

expenses quarter sold pursuant broker and of gross company's X.X XXX,XXX, before ATM. second million the during of the X.X million so common shares stock to XXXX, than less we proceeds of deducting one And of

we're XX.X XX.X forward, XX, XX, other million XXXX. equivalents XXXX securities at as funding alternatives. approximately at marketable were Going to June Kobin’s million December and compared cash reviewing

have debt. no long-term We

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

Operator

you. Thank

We will go Glenn question-and-answer ahead. begin Please first with now the Mattson from Ladenburg The Thalmann. question comes session. Instructions] [Operator

Glenn Mattson

for Hi, thanks taking the question. yes,

bit little just you was I cash sit a today. about Rich, on the First, kind you curious burn of about and where it. touched --

you expect you some of half, then guess, working to but stronger a kind capital. I defense. having coming commented you through and build So continued also of these new second like strong orders Do expect,

in be at at flip would that not as a to the level? So positive cash that bad Just terms second your continuing this operations? burn from you'll but or it expectation what's is your Or Thanks. rate a of burn that sense the in to half? be flow

Richard Sneider

Yes.

carried the in chain The We quarter at half, into an the first that look first disruptions we the second anomaly. end had as of supply quarter.

the And collected to get happened at got had then end was it second so second the of quarter. rebuilt the the but receivables what during quarter,

see if you change the this there a statement was out, when flow in coming receivables cash -- you what see So caused is so actually, you'll really is issue. what the the

we've expect receivables. we to the So that rebuilt moderate and

our So capital should it what working looks be. more normalized

have to going don't expect in half. not you're working those fluctuations So capital the second we

And with down, this the and of expect operations, be going the we to burned we're anomaly the so improving to getting that receivables have fact cash second half. not the better in flow

Glenn Mattson

Okay. And curious I for you about more it mentioned comfortable are ended? that, around level there's maybe that activity if of signal -- have sends. of I'm sales elaborate, bigger any do you options of need raising And kind to other could grow preparing understand be. the capital orders. what for stock And decision also, quarter sales kind done But adjust at these that you that also and on more the since you to top

of So that? just you can kind Thanks. on elaborate

Richard Sneider

There's I what lot supply really a recession. Yes. really we was happy think chain quarter, exercising at but had sure prudent. of it a did was Sure. to we about price, was talk ATM nobody going that weren't down particularly We go. mean, the that

us, most his in the have looks prepared we're part hearing issues, that is, the rest for chain good As like at sorted John what been remarks, of for year. news the the supply for to seem out least, it from

in boards case, actions, the we some we we a So of products. took in the use that lot of just redesigned

like in incremental development was least hadn't semiconductor costs probably now this use, anticipated. bought at looks alternative materials, We we we short-term. which won't So the

contractual the don't see -- of But So our sure just obligations. was there of expenses year. making associated half we that any in we the fulfill that could second

on to contracts usually have do customers. funding, past, from around when long-term types of sufficient in pre-payments had time the We we other getting

here continue two production factor programs those those FWS-I, is have a important And are is have three to very sole-source that, And we we opportunities. programs today, I sheet And emerging so we'll production and strong solid programs continue. F-XX that all very so in those to and are sitting explore balance important other the think we which maintaining and programs so

So exercise it those was the for ATM. right we to reasons move the thought

Glenn Mattson

Yes, clearly…

John Fan

of but actually alleviate they them our yes, because I we are think of some other part Glenn them sole-source I things, we other are looking to helping procurement those -- are think more customers to way stuff. us also, some and

So we'll have much better performance next half.

Glenn Mattson

color really exciting Great. going That's and it business guys be for defense to me. so and to Thanks continue. well that for watch seems Thanks.

John Fan

Yes.

We are and this yes them, in that saw coming certainly we the thing more we so on important much and orders mean, order technology we're lot have winning. most have do and a them. also I is

Operator

from comes The next question go ahead. H.C. Wainwright. Dede Kevin with Please

Kevin Dede

sourcing, things, the know quarter. issue said I to seem and inventories just for happens Good in I you having sequentially chain couple won't the morning, is inventory. probably be of up to you right just Rich tied year? where A understand were the of Thanks the the gentleman. through tie suspect guess you acquired they me do supply on call. one probably balance you sell. March that the margin material What inventory with I depressed and to

Richard Sneider

time. see level maintain inventory improving to the we any at where it inventory is. levels don’t margin gross expect So we in fluctuations We would expect and major this

Kevin Dede

them product perhaps F-XX, you The of their talk to in full that the or development where Rich the mentioned cycle defense FWS-I I Okay. and guess from you going production? and and terms three aside you to can projects that see

Richard Sneider

of production half first them of all expect the year. in in next would We full Yes.

release, display weapons as of an the for beryllium currently the that international is results types those is said right one to site is some products. to now mentioned, another And similar aircraft sparking rotary Europe press in the we in for recent in we FWS-I respect As we sell. the demand actually chaos the

of about from And does. get feedback positive other targeting of that ones kind getting on we about that it we're orders a sell what can't future system I lot unique so details And into a customers really the those.

Kevin Dede

Okay. down just Has I at thinking in left $X research hoping you in spurred that Fair the interesting change might enough. million, I increase. military March the could development development? It's was chaos the development you guess call sequential understand quarter look Europe when and help me I that.

Richard Sneider

display consortium Well, the again, percent in upon and that so they of tied are John developing we mentioned recognize based and how complete revenue is program that completion a revenues their as instance LED are some to well micro tasks. respects, our for companies

further stuff recognize So we done, move get we the and to the they that road, revenue. down more extent

-- line other the said, particularly always difficult subcontractors to because it's it's number perform. a to of LED, in as micro we're R&D why So funded on that's project really that relying I

Kevin Dede

lion So that is of then that Rich share the line?

Richard Sneider

of beryllium is it Well, down. that of it's a piece was it winding part display the to good according production and the then fact the

Kevin Dede

helps. into this about a and talk lot to products if it of development at Okay. development, U.S.? of that bit able micro defense that outside, Japan the and that least I'm right, little John, partners related you LED technology could in given to the of development or seems its me transition a a wondering you'll development outside be All understand happening is at from lot China, in

John Fan

Yes. micro of and a LEDs. consortium This business is technology demonstration early

U.S. and lot and here then to but our Japan all and also but activities resides in is in Of U.K. now the in almost course, are really access activities U.K., partially a running U.K. which and from Japan. China in UK, of the this they runs -- are in is the also consortium right subsidiary our

Kevin Dede

past you tidbits it, added maybe a Where a better? bit on the to know you long-term or year timeline might some said hone development on so it’s get I it could commercialization? you've in over the think you Okay. little interesting

John Fan

Yes. the the then And target. It micro most LED I defense very is It aggressive very, a enterprise might can't a that succeed. the targeted you is will targeted it's product this and to first advanced and this the succeed in it definitely goes eventually point, tool be and we at We consumer. to actually applications world. say would

Kevin Dede

it to time type Okay. line? is of too But offer some early

John Fan

be will have on bunch we a good ideally we of mean, course, I working but very of people optimistic it.

probably chance. we if anybody a good I see can think have

Kevin Dede

stuff DoD I of balance to of The the any of Europe, is spoken moving Okay. develop you in sort is how in there way but sort the might to, issues forward haven't understand that then folks wings quantify be more rapidly? and project

John Fan

Yes. But Kevin, Yes, this right? is Kevin, Kevin. I guess its

new winning going obviously go lot the so. activities not all of our very as I of working using continue long in did them think because just productions I production there some And do and to think capital we'll systems is that when imaging is yes, new one we and now. funded options critical, happening of for political of has very, things that vehicles so need and raising of full R&D, armored more vehicles. are about the all all too -- normal we’re to increased money right but announce actually cycle that's mean in programs activities are internally ATM I actually the and some speed think ago tensions that’s in imaging -- systems we activity our everybody know for again armored And is soft are and we we

Kevin Dede

system was John? the referring development second the in Okay. to one a $X vehicle that imaging, it was is There million Appears order? development that you're

John Fan

pipeline huge there and are you are us we believe me, that major, about excited Kevin very exactly, that as program because that's working sole-source right are be a -- I'm revenue we of with Yes, customer. will a and for major program, really I to

Kevin Dede

issues would harping so, for much faster that or Europe? And is if fair how just second get kind think there it have, in not had been I timing, faster it came to back much Right do John, so, assume the order on came how But in you, to this. to than of do or mean, you more, in? you suppose apologies would it

John Fan

to that, on speak we a got of going lot activities not comment could I because can't I them. on.

Kevin Dede

might you controversial little development highly guess I on that right, All expand John? perspective I to U.S. that a that right U.S. vision Okay. the you Kopin? I’d would there bit how I you but all could and can mean, hear a benefit I how really in talk in now South fab the be about interesting three metrology hear on customers, and -- your foundries that's have love were Korea know it three the mentioned manufacturing your and in know topic semi to market

John Fan

Yes, question. it is a very interesting insightful

improve I past will fab. read, country -- you every getting up more is trying is As kind that new chips on other. are just fab weekend article -- together to a semiconductor weekend, three as -- chips semiconductor of think know, you this each said dimensional even everybody And this of was stacking top

So no we chip at longer look situation format, where are XD format. people in within a XD seeing

are still but market other TI a XD of metrology divided them through currently ones. of world using hoping we this subsidiary call we own using The market business. FTD, now stuff, the portfolio three is XX% and our So and a the XX% the this parts, of owned rest market. world about in emerging DLP what very in is small

of have some guess, everything will time So but it you factory XX% and to people take change from XD and XD emerging like but their share business go can is new factories, an about us. a it everything will market turn to XD definitely as to we don't of to needs happen going

Kevin Dede

I gentlemen you, my it. appreciate questions. Okay. for entertaining Thank

John Fan

Okay, Kevin.

Operator

conference back Dr. the for for I And remarks. like Fan any to we call over that closing time And the is all that have would questions. turn

John Fan

joining today hear us and for next hopefully you from you’d us Thank time.

Operator

call. today's This conference concludes

Thank you pleasant participating a for and disconnect You may day. have lines. your

Kopin (KOPN) 2 Aug 222022 Q2 Earnings call transcript