KOPN - Earnings call 3 2023 | Kopin Corporation

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Operator

Good afternoon, everyone, and welcome to the Kopin Corporation Third Quarter 2023 Earnings Call. Please note that this event is being recorded. [Operator Instructions] I'd like to turn the conference over to Quinn Callanan, Investor Relations for Kopin. Please go ahead.

Quinn Callanan

Thank you. everyone. afternoon, Good

from actual and the for started, statements. Potential company's on today's those in get number XXXX, with to everyone estimates uncertainties report of are subject Form defined annual remind will materially of are Securities Reform could conditions Before These and to risks discussed Exchange expectations, not our demand XXXX. other taking I'd projections, most market and place of during statements filed in as statements results call making forward-looking on the X, a and cause Securities include, to, on results that Litigation XX-K are certain operating be Act but the our and risks subsidiaries, we recent based forward-looking like documents Private current Commission. our Thursday, factors differ that to we and November limited products, other beliefs

the will underlying update statements no statements company there Although today's forward-looking the proven that can assumptions during and no obligation these undertakes any call. realized. The company made results are the of can assurances inaccurate, be the be them be that to believes reasonable,

turn the Kopin's third the an to Michael of Richard with certain non-generally releases. Kopin today's progress the would measures, Corporation's review addition, may made to will SEC and Murray, press accounting and Kopin's call to company's I filings be In which over reconciliations now principles Chief or disclaimers quarter references following company's Officer, non-GAAP you appropriate accepted to overview CFO, Murray. for company's within the begin Sneider, refer should in Michael the Executive conference will returns. like strategy Michael,

Michael Murray

was with ensure research contract afternoon earlier of to issue was brief proper our and A a on want required resolved you, explanation start to third additional revenue to quarter that Quinn. today. and technical a to rescheduling accounting for development earnings raised call. recognition call. I our Thank welcome accounting Good everyone,

our Moving technology deeply. understands welcome like is a Collins Directors on, XX our David would this be week. our to I Air We and Officer. to Aerospace, joined leadership our and joins years spent in believe will from culture senior David David Force where the he over Nusma, Board He of who key customers, several roles welcome our a and for asset and shareholders. team former he Kopin us great

for and announce that on consecutive quarter positive in Now fourth significant we've the quarter, plan margins. transformation improved a our to I'm in book-to-bill at million proud turned progress our revenue made $XX.X

Turning to the approximately approximately for our well million NRE first $XX.X of building years. we quarter. the smaller ratio follow-on order booked in believe resulted third backlog. strategic record orders, of XXXX, is million over and the as a $X.X several orders initiative, level million, of $X.X order as a X:X a book-to-bill In last for XX Kopin We this which quarter the

at continually into to quarter compared Our of order for $XX.X $XX.X the revenues million quarter third book growing good translated million XXXX. third as

specifically $X.X be into down familiar diving before I'll test weakness less who to continued due million were deeply fighters to solutions revenue the alike. gamers for the year-over-year automated might XD the in those quarter. the AR industrial Our and provide market, war to more only introduce optical Kopin in now VR events and awareness is for last application-specific displays of situational and micro surgeons manufacturer human-centric Kopin U.S. primarily of used China.

larger technology. Kopin Kopin of and microdisplays, types a armored AMLCD, thumb. microdisplay advisers sights, is pilot vehicles, proprietary of find different the solutions helmet the display color offers the of The solutions microdisplay OLED that's systems of soon human a is absolute and technology is head-mounted knobs in weapon within of a our surgical than software FLCO, has monochrome version and of the and a of If has cutting these brain. this our displays. our no solution, heart then the the micro heart reach. vanguard controls You the can microLEDs, edge visual X which composed developed application-specific LED and are solutions, that the optical

companies critical not to stage adapt is and specialized that Software each to to user or device. This to into lenses their to insert the Indeed, will require the user force be technology to adapt we technology. in the unique the users systems that the new to technologies as to Kopin's compares displays growth our vision adapt person's mission user. individual to to next adapt our

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of the As eyes their we pointed eyes a the of an larger that contrast user. of should user's heart future skin in state that promise. skeleton in flight. companies example, back case, yet at that status the normally, are own unfulfilled have to will approach they're react provides augmented fighter are that of the and realities the This the user dilating cameras on brain, chain reverting brightness direction. go rely largely the quickly, of Conversely, in a nerve, monitoring down In eyes the and the of optical an quickly allow Other should eye user display displays realization implying the complete increase. must opposite framework array

sensors design within benefit approach complexity cost. has of incorporates which weight, power Our itself, and the ultimately, consumption, display the reducing size,

this on and information platform deliver more provide market will the We partnerships our it to very soon. to

we for and additional a module. great sights the to we additional represents calendar one require revenue to take This potentially but deliver in ship to If that program augmented quarter, volume may relationships, quarter significant support and do of steps and this plant, raw same IPs reconfigure the orders to follow-on additional it to focus for order management customer, has we significant procure $XX.X receive to earlier and a but our supportive scheduled our we're who within XXXX, follow-on of very prepare are we subsequently this is demand, materials. shortly improving XXXX. of need so, additional weapon increase the for plan. significant been delivery demand. we our and announced necessary to a If dedication this volume our very will customer triple improved expect of into in turning prime contractor in million the can product. The full reality able potentially These and not transformation third a clean production in a the of processes the IP and expected we Department order customer year-over-year on-time of machinery from increase the the subassemblies Kopin strategic volume in patient sophisticated in and result if order year a Now orders Defense integrates line

We also order the F-XX liquid million brightness Joint crystal received display high program. $X.X for for a Strike our Fighter follow-on

our With into XXXX, over rates. we fourth production scheduled program's orders expect the the life. production the additional providing order of follow-on XXXX, F-XX for steady backlog scheduled through quarter This extends deliveries of

F-XX transition. an that finalizing and the contractual production transition As we're required to support OLED we also is to scheduled to that of previously in agreements helmet process stated, tooling display,

program. to armored ongoing turning Now vehicle our

system upgrade the sight We weight, size, reduces that have X power while Kopin's accuracy. been our weapon told by will improving as under General continue since Dynamics program planned developed consumption SEP

into We well. dynamics to packages into milestones and for are our engage continue vehicle progressing programs light previous the with as to on general be well armored integrated opportunities PPAP and platform upgrade against

and year. We now the deliver the our place review growth Rich. the growth for. past, solid and over We focus milestone returning scrutinizing against year's milestone and improving the and milestone levels remains closer Rich become to of transformation cash our by I've to for deliver, our plan, a coming Over spending a and we in firm in can goal this in turn more Now CFO, Sneider, predictable that to results the margins what operation we've investors detail. to look focus control in on solid well you, revenue now breakeven margins closely to progressed and this and in and expect as continually R&D to profitable by on to have said call our QX. I'll our contracts approach SG&A we is the further

Richard Sneider

you, Thank Michael.

was third the purchase expenses relates million to increase the were XXXX, R&D million The goods the program. compared QX Product weapon million with million $X.X higher $X.X Turning $X.X million $XXX,XXX QX XX% quarter XXXX, of in which driven XX, revenues. Internal for for in compared XX, Total with $X.X third results. XXXX, $XX.X million as essentially year-over-year. QX first as third decrease increase $X.X of of offset noncash during XXXX. over the R&D compensation decrease months in XXXX decreased September Chinese for XX% the million a third were revenues compared $XXX,XXX compared million XXXX for 'XX quarter $X.X the XXXX. Other revenues a expenses XXXX beginning million million in revenues income for development of by weakness order million the the the third the decrease for for in XXXX revenues were $X.X year, $XX.X XD to was spoke of industrial XX% with or increase of driven QX legal $X.X quarter benefit purchase million with compensation XXXX. million of to in quarter or a XX% of a the the $X.X $X.X expense million September revenues XX% of were test for for quarter million product by year, of reflects Michael funded of about. of for XX, the XX% year-over-year. and XXXX Cost third were These R&D of to last to quarter third million of quarter flat. thermal an the XXXX, as was million as of costs $X $XXX,XXX the $X.X third the quarter to order. Funded ended The for XXXX. was XXXX expenses an compared Funded Defense quarter expense XXXX. the research order million and R&D in R&D largely was for quarter compared expenses a prior $X.X of was the 'XX due decrease compared quarter rationalization million compared ended of financial the sold a the compared X with XXXX, $XXX,XXX third were $X X XXXX. This $X.X continued the automated million or third for 'XX SG&A due ended and September were to XX% efforts prior The revenues third September a approximately The the of third site stock to third for $X.X and by the $X.X due or to product to the quarter expense our quarter quarter quarter market. approximately revenues decrease increase. conclusion million decrease. third primarily to compared SG&A of for in third next current months the third to versus $X.X $X.X increases the of year funded as quarter for was ended for compared of for million $XX for related for quarter

quarter to a we third as quarter impairment currency of in noncash recorded 'XX, in $X million. of a investment XXXX. foreign we of compared $XXX,XXX an Also third The equity of of had mark-to-market loss QX $XX,XXX losses the XXXX, on

Turning was compared approximately or per $X.X million the quarter the $X.XX $X.X during share $X.XX bottom of with quarter loss the for and attributable per million XXXX. line net third to third to open share or

million December As were activities months opening in XXXX, the we XX, marketable when for in September Net close $XX.X were mentioned $XX.X cash compared items, approximately was the operating million. and cash very costs September securities litigation remarks, to at XX, XXXX, and at Michael removing noncash $XX.X to ended approximately million cash as breakeven. his XX, used XXXX. Scopes X

Michael for We course, filings. Listeners I'll above that, back 'XX call remarks. with September on possible of quarter amounts discussed The additional XX-Q the over current changes XX, have any should no our ended long-term closing the for debt. for are to and based turn our any estimates. review And Form

Michael Murray

Thanks, Rich.

achieving third full the our and record and strengthening our people, which in order improve and our higher continues focus in evidenced As in controls investments rates, cost strategic results, will the book, quarter on be to on-time making products and also development that profitability and external on brand, announce we very flow and sustainable new been ecstatic very a and long-term We've cash will marketing we website hard efforts, our growth. website working shortly. are to provide debut have aggregate to

who Kopin transformational are to fortunate during world-leading and we forward, Looking have market-making very are customers this supporting period.

work on are opportunities the which plan. more selected to share to tremendous up focused gain value system customers put strategic our has their with past To our projects chain We focus and customers new the have spending. Furthermore, and working with end, have quarters. in and substantially of our support move few we and pipeline grown partners carefully new this strategic and on opportunity

like work stakeholders customers offer thank operator, And and and to our time time I'd and invention difficult for future will customers' the which modestly announcements We and Kopin. our the and in that, these help more to interest dedication. as employees, inventions book, focus will their cost innovation, new your on questions. Kopin technical into focused and I'd our soon, to in production. Perhaps today most today culturally everyone, growth innovations with fuel new expect projects several drive you, partners remains continued but which add order project and will solve for like of important some for investment. hard that and showing more discussed return Thank new customers, sustainable as on our for on stakeholders. controls to but that serve take importantly, awards our and These will some is larger the most our move bedrock employees, our and returns fuel transformation with our customers business, long-term problems support

Operator

Instructions] from first [Operator of Ladenberg. comes Your question line Mattson from the Glenn

Glenn Mattson

quarter, Congrats on especially strong that the book-to-bill.

thermal strong just -- play of $XX.X -- saw how purchase a the So kind curious, I announced as have I order of couple well. million of order. weapons you expect customers ago, think days guess, your I it the about a got I to large you to on realize they one out. trying did

talking order fab. follow-on of from. or the some you're where that's that do might imagine about need retooling mentioned kind you And the come you I to may that So whatever

Michael? in equipment, in revenue line as -- the would and that there a And you that the how in sounds ramp downtime at hiccup this be mean it better, -- to about talked another. that maybe come some you Or would quarter, but like about So flesh going think like it's out if up? time you it to just or just can best

Michael Murray

Sure.

Lepinsight to expecting orders are and bays Thermal that additional believe to the able our those the have and that that we it levels are quarter. for I some reconfigure if be are received, to So And make the program time clean highest the fab, within throughput. orders extend operating take at sure we'll

we're not orders what yet. have seen that's So expecting, but we that follow-on

Glenn Mattson

lead I but guess downtime a have, bit of way and And through. good Okay. lumpiness revenue maybe that little -- the to of in so a modest. a to Obviously, problem comes it's some would terms the

Michael Murray

we that moving would We and to this But strictly large in optimization around downtime know, capital you additional sure things just and make need. the and clean wouldn't we to it thoroughly. once for jigs clean quarter, you want do it then full and we're as benches do you around, require it that put some would would move be the think But in running we test things start It that any you to room, this in machinery. make possible expense have additional so. quarter January. at It's sure to

would with that just be downtime fab. So the

Glenn Mattson

right. Right,

bit little touched about a that just display you more then want on. architecture hear And Okay. I new to the

from any whatever. using out balance or to it, use the it's when of user to time kind about sensors or of get AR device heard -- where you type kind think type an or having feedback VR first sign disruptions whatever of motion the I he's we

interesting just And to Can kind of talk come ways. skin lot guess, this you out from of people how of there's a So an approach. in trying about I angle. it's this came to you different different cat

that So how it history little to go point best what is with on a take. makes you how to and is more you and will this this long got the approach just think

Michael Murray

Sure.

all in that these visited of left. putting I I struggling phenomenon, same here nausea displays what many defense that way, my my the of companies the many just the consumer some United And my was are by front with And systems create. right And So imperfect States. learned as from the which is to in perfect companies imperfect are eyes. eyes that

putting front eyes feel So displays of perfect makes my me X in actually nauseous.

view And I AR, the of think that human Those look very have force the overall that devices it's electronics what consumer you these are that there way technology itself realized weight, we was to video we consumption, way some decade at the to display to are that not adding that's that. system that the their getting analog now. user sure to adoption if human working things So of And the and background, could have devices that essentially, adapt make and also when right There a spent the ways we you to different. to And broken change. about by that I AR adapts covenants rates improve efficiencies led we be that's video size, is group. looked when we of in And adaptation. the lots technology. power at made that why architecture sensors. sensing because not running the us architecture, high-performance my the has much. But And were specifically isn't display to view change believe going to the

the that what call our a software-defined of up which took the is we defined. we challenge. with way, already have, software So back We AI-powered by we which neuro Glenn, planes display, many an came backplane, are and display already

get partner marketplace think solve can We're have we're embarking by that developing there. to we partnerships networks this and help us sensor VR in now. those and capability, we that some activities the we AR, the So upon fusion problems

Operator

Your comes from Dede next Kevin H.C. line of from question the Wainwright.

Kevin Dede

question, prototypes noted already that. I hands. and I'd capability patent. already on stuff and sensor and appreciate prepared Glenn's a to capability be software in just Maybe think about, you get remarks people's maybe I might about able could back a it. piggyback into like your analog the to sensors, can talk, that the experience off And you maybe right? talk neurodisplay. a little Understand bit little talk device you've given including time the the our you offered you get could -- your plane, sensor to bit you when embedded line detail

Michael Murray

Thanks, Great Kevin. question.

the ways focused been be is X on -- Number one, patented. question. I'll this to answer So your in itself architecture has

And the we're those patent with display the a folks going market we consumer go-to-market technology There's been is We at looking foundation with activities in looking patents large them. United to microdisplay are for States enable create to that are also for specific where the this working one with believe those and have a X of as trying defense support Defense office sixth from Department well. very market. We're be submitting an neural going to submitted We're currently. organization we to company, patents for We've that shortly. the with from. and the come

potential at funding also consumer U.S. from and potentially companies looking lines DoD as at looking we've money funding applied we're year, for. well only Next customers, from our congressional applications some not as that potential we're

to specifically hands how technology come support we can this going to in, of when So quickly the from come we money in is folks, the that's in consumer the And we where money have marketplace see tremendous demand development. the where see this get currently. we'll

Kevin Dede

the on line, tack different a take questioning to need I Maybe Okay. Michael.

obviously, as look get lines evidence that at the your should me. -- think comfortable to how customers. feel physical excuse you might you technology and display sensors for but with serve development, a you How incorporates to time for able do please you So we be

Michael Murray

Yes.

NDAs to targeted few defer signed. pretty until question proof-of-concept going the a samples I'm we approach get that more in for area. think have I a

Kevin Dede

Fair Fair enough. Okay. enough.

Michael Murray

answer, but I give you could better a wish defer for now. I I'll Kevin,

Kevin Dede

this don't incredibly skin Well, it's approaching know in the I anyone to that's just cat way. of and exciting, paraphrase Glenn

on that could congratulations of talk or a up that little Is was the bit. So revenue particular wondering development from lump and in I trend. Pretty markedly And project? to sequential that research multiple strong in past growth you projects, X- development. and sort if big one X-quarter

Richard Sneider

Yes, mentioned Kevin, our remarks, a delivered $X.X we prepared contract we quarter. in as in on the million

a So substantial. it was fairly

Kevin Dede

Okay.

met So all deliverable could specifications and is your I project guess that you you recognize done? revenue. Does mean that

Richard Sneider

Yes.

Kevin Dede

Okay. guess, projects might Can production other that to you give from span us the a DoD ballpark different year? have of maybe sort on, I of you full next development go LRIP

Richard Sneider

I were all Well, I years FXX, understand and so X question. than been the that's not I'm years already in LED color LRIP. so mean X program, working development FWSI, or the in We're several the on making sure those and on forth.

So -- long they're cycles. development fairly these

Michael Murray

our expect Also, I vehicle program orders PPAP do and color that. through terms to shipping move we next expect to start next Kevin, to of in production. that some to add armored we year just year, want

PPAP, basically much into initial So away. rate once low out of goes gets it production right pretty it

to So know we'll if goal. in deliver in be we're for don't I that's but 'XX, orders calendar XXXX. that expecting the able

Kevin Dede

release? that was of Michael. is I LRIP, going, where mean -- guess, my Would that's be to that line I questioning might PPAP moving press from Would that next an event be, you exactly

Michael Murray

Indeed.

Kevin Dede

now. bureaucracy? the project which Or development you into year, that you some that Was remember better June it should this later I of there if the sort have of just is mentioned there? delay insight call, thinking Because Okay. is

Michael Murray

General with and their are, I the X has So can't what call. been into to which this get has understanding. gracious details canceled upgrade speak provide of to effectively step been us Dynamics on plans And enough my

is very I talking the about for us. technology could new what say platforms PPAP excited process. potentially the can upgrades technology. However, we and we continuing this utilize We're are that old about They're

So we're all steam. ahead full

I that what the And step although X is the I that can So schedule great is look like, I in anything, last to was worried couldn't call was I upgrade news. sure going about was say wasn't now. what but

on was say, lack I that the that reason So call. for, last helps. the the of I'd information hope

Kevin Dede

more, to yes. if you've I it's But that evident. on, transformation A not couple in hard so have show working may. yes, Yes, been thought I so would yes, -- begin would The product margin. this

help And timing? me so could maybe reset expectations my on you

Richard Sneider

Sure.

understand -- So important And resources. of we we have but revenue. that multiple sources Kevin, I to have think limited it's

and And bad always analogy. guns a butter so it's pun

you If of you revenue R&D funded if look subtract -- revenue, expense. and source you take and sales R&D our of and cost funded product

this margins year. over increase million, about XXX% is gross which $X.X a year year-to-date prior Our is the

we So that's respects, how -- at is don't margin fab dual many look product because the just in the gross of the function.

to that's that one of to got aspects so facility. be both And that's running We've done. got the manage things so they're all through same the

group. engineering We have an

by The the XXX% how to prior has X it. we're that's dollars months. increased overall year over absolute at So looking

Michael Murray

Kevin. prices did you'll is we're them last with and advantageous that of see increase a prices. question. few in with replacing Kopin. is And have we're that scope because I either conversations running and important I'll contracts sourced that is pricing our out that, we've on the new or fixed old think more an one add sole we're to contracts existing things messaging that where And several ending, margin firm And due happened due did been around the Those new are of years. to to price gross lift for as things we there programs. to today reported have with different we increases remarks the lots over of the due we on And customers course creep inflation our It's

Kevin Dede

report. Past

just looking F-XX if and up, the wondering, up, guess, that use inventories was in I'm And I a are FWSI assets other production? perspective, sequentially, contract The sort building you're are the are I'm Rich, wondering of from of thing I'm inventories advance up. cash just and

Richard Sneider

Yes.

We So you as contract are in completed, saw, funded revenue was We up. up assets quarter. R&D the the it. completed

reality So growth the that's is lead out and But that year. inventory that. is parts that to I the of because still things collect on we need, The up those assets. receivables mean, projected for the need for associated we are FPGAs there of yes, times like many with next

And so can sure we're getting we production. we in have it, full what we get when can make

Kevin Dede

Okay.

us Abrams gave and about helmet an FWSI common how the on update on on display. update You the mounted an F-XX, update but

Richard Sneider

program I keeps Yes. rolling the Elbit along. mean just

Kevin Dede

of are contributing Okay. to you of June? what your backlog would end the things backlog? your compare versus at Is those end And is -- how the September

Richard Sneider

really question. it's interesting a So

We is been definition as said it the and have noncancelable. conservative of historically understanding that that backlog, is very our

which to or And the so include purchase look which historically, don't We at in frankly, either footnotes, take if to But backlog. be never, companies the in allowed we've extent to move filed we right you we delivery. our our don't are orders, there. might have those to XX-K performance things never put we is number, you'll that we there than more someone technically, up, see proxy we're backlog. don't have allow But cancel. actually orders that, But I which we showing frankly, a of tomorrow, some for obligations them that as said, to

the it's exactly number. So not right

Kevin Dede

September say up versus not XX? June you versus -- that up, Is that's they're

Michael Murray

Yes.

Okay. for Well, you, indulging gentlemen, me. thank

but Sorry if Thank you. working really too I far, it. I with appreciate pushed it me on

Operator

Stifel. comes of question the from next from Santiago Your Victor line

Victor Santiago

the on quarter. Congrats

that a execution? that was the on anything improved Or function just nice sustainable in margin is level is term? we of there particular on see a sequential Or basis? improvement? Just the also, fluctuate could bit a near ongoing that gross in your go-forward drove improvement, the And that

Richard Sneider

products price as don't down. raw fluctuate were It mix them yet. because, with to Michael and of is will and we we some increase, price drive still rolling out, It is been the have costs based have on material function a able associated new indicated,

after achieve And we would see -- first progression quarter until quarter-to-quarter. won't consistent So we progression year. next that, expect then to really of probably stability good

Victor Santiago

then just, updated trial Got -- set line guess, or expecting hoping lastly, Are still into QX? your get the time in legal on on it. updated And lawsuit. you I still the thoughts QX the guys then similar the then expenses QX? ongoing on and And you for -- elevated the of thoughts also

Richard Sneider

December. couple Yes. in is a late There's of early events occur set that currently The part trial of January. the will for

December, a in slight frankly, see we hopefully, level in not X to had positive in the And have weeks, so a then expense to QX, we And though. we XX answer. very in may that elevation

Operator

further at Murray back any closing the turn remarks. Michael to There now I'll are questions call no time. for this over

Michael Murray

for Thank friends, happy open very you, our our investors, and forward thank to operator. family, interest who call. we your Take To in customers, look to you holidays, everyone much joined, next care.

Operator

concludes This conference today's call.

You may now disconnect.

Kopin (KOPN) 9 Nov 232023 Q3 Earnings call transcript