KOPN - Earnings call transcript Q3 2024

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Operator

Good morning, everyone, and welcome to the Kopin Corporation Third Quarter 2024 Earnings Call. Please note that this event is being recorded. At this time, I would like to turn the conference over to Brian Prenoveau, Investor Relations for Kopin. Please go ahead.

Brian Prenoveau

Thank you, operator, and good morning, everyone.

Before we get started, I'd like to remind everyone that during today's call taking place on Tuesday, November 12, 2024, we will be making forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. actual on are current of subject uncertainties could based and projections, risks are materially that and differ estimates to cause statements the forward-looking expectations, Company's beliefs and from These those to statements. results a number but our include, to, limited Exchange report and Form most results recent not products, and other other demand market XX-K with and our annual Commission. subsidiaries, are conditions our the documents factors operating risks Potential for of discussed Securities filed in on

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

may SEC non-generally disclaimers In releases. Kopin and strategy. non-GAAP of Company's refer be principles or you certain an the with Company's for appropriate Corporation's Kopin's to begin Executive the Michael made overview progress the accounting filings to measures, within in Murray, accepted which will should Officer, today's press call Chief reconciliation addition, and references

Michael, now Following the to Sneider, CFO, over Company's review conference Michael. Michael like to Murray. turn results. I XXXX Kopin's third quarter the Richard would will

Michael Murray

within Their to dedication advancements save morning outside you, Brian. are both organization, our service to to lives currently through human as serving of and enhance quarter our third earnings solutions. and in Thank performance well forces. as Good call. to armed mission and Kopin's the invaluable a optical to and ongoing everyone, all express to veterans, to the welcome moment XXXX take like We'd our gratitude those

high-performance our the project our We annual substantial which order in revenue, This increase. progress given delivered X We with and gaining Company's $XX continued for $XX.X million indefinite beyond, Collins new in order strategic revenue, IDIQ these plan, display growth will in our repeat our the Lightning reach. In quarter, both multiyear book final total and contracts and We are customers on organic revenue display Notably, transformation HMDS. over Defense orders now XXX% base, million orders, quantity achieving in light significant as which potentially history. expect year-over-year increase demonstrating market growth. designed silicon for our our placed significant diode and products includes progress. are secured is by million customers. In key achieved the production XXXX drive proud in production we've or reached XX-year XX% international new II or made highest revenue, customers Defense, momentum shown emitted milestone the dollar a XXXX the system ahead, years development helmet-mounted on milestones. existing in orders over for of $XX.X U.S. a book sequential demand orders from clients, customer and order we has from QX third F-XX orders as qualification Aerospace well multimillion we

several more we extended AMLCD these agreement fulfilling for in we order a follow-on OLED and should We As display types displays both production. preparing displays, for extending years. Recently, for silicon will of on sole-source production high for this us micro-display AMLCD a are continue brightness million a backlog production next-generation anticipate an of our be time. period for received $X multiyear that system, on supplier

especially piece, revenue microdisplay AMLCD sight a contract expected for production us weapon thermal eye production integrated program. a system masks. for and our Emerald a the and major million the into product follow-on effectiveness secured a market, larger industrial program a for thermal strong follow-on firefighters. imaging face our secured $X.X million miniaturized featuring growth, firefighter's module XXXX. In to increase as for safety into fiscal for weapon is near enhances This optics system This subsequent our multiyear part of within year also we sight as We positions $X.X order and

the our of FLCoS first us AOI Korea, in optical a to called SXGA XD order compact leading Mirtec, growing Turning This meet solution purchase AOI, globally. automated South RXX. XD this inspection our technology launched in we and provider to secured affordable device. system Asia microdisplay segment, our well for positions next-generation demand

a SLM XK received XD high-resolution integration. Additionally, X-megapixel we our AOI also production for order system, for

by positioned continues year-end. significant improvements new customers selling the with our XX% have are We're previous progress on aimed as positive AOI from higher sensitive promise purchase with surgical projected exceeded to monitor serve continue, margins and focus the XD as average and in Overall, XK-RXX prices more QX come. offer organizational our with to This well. In value incoming various the orders October to internally to by medical CRX up which positively production early market another expect quality to rates Supported segments, additional anticipated Kopin model, to RXX, XXXX, global R&D negotiating and from feedback billion in high has the from midrange Internal new to due are market, quarter, adoption wearable on the internal HMDmd's evolution and the the customer reached at signals is million grow gross by to surgical substantial and impacting XX% in functionality for $XXX development are defense satisfaction. robust, with our products, strategy we well, manufacturers, Tier reaffirms results. resolution surgeons strong command research top With model the expectations, funded high-performance HMDmd. order inspection increase enhancing SXGA led try making and our partnerships. from $X our and budget ratio strides they return investment orders growth for showing Kopin and broader progress with investments as our product equipment through more book-to-bill we also and X provide. Quality CRX demand for integrated processes at and products. Notably, our initial

improve, meet and demand continue quality and focus stable be need higher to manufacturing XXXX expectations. design volume systems we standards manufacturing becoming production innovate rising strategic more to systems also automation. our the for predictable, workflows A will enhancing our new processes and As and to

to Europe customers pipeline. indicators we're promote and to products Asia, this increased Early of turning spending seeing initiatives, key One and European-based the initiative. XD full in capabilities well. NATO countries, to sales our Europe, as range opportunities Southeast scope as and Asia of is entering They Southeast including Kopin strategy in our have succeeding defense the response show our Kopin new defense other team. In customers Now we AOI now foreign expanded and

initiatives, applications fab-lite remains track. Kopin specifically strategy continues Asia, our foundational display the types. fabrication our the U.S. of DoD across multiple and on partner to for X and States, One Europe, United with strategic facilities

supply to the on proven OLED further possibility been decision of and has under timely our security Our potential and microLED silicon capabilities strengthen applications administration. tariffs the given Defense requirements U.S. for of chain Department new

government to we're and and the industry volume, approach partners Additionally, higher a more within manufacturing with long-term, collaborating United innovative build closely States.

from a Now I'd highlight accomplishments like additional the quarter. to few notable

borne in Industries advanced spatial proprietary at research with a biomedical day This fighters, night SLMs level, goggles situational on goggles night significantly solutions. a night cutting-edge acuity institutions technology provides supporting today, fast integrated current systems enhancing FUSION head solution system and the by biomedical an super-resolution potential thermal and SLMs the microscope sector, information improving configuration, research. These vision image system by CLAW, helmet-mounted partnership we day light millions compatible enhance vision introducing in often portfolio In worldwide. leading market IVAS and the use fluorescence the or war visual quarter, our defense is heads-up expanded capabilities resolution, advancing imaging in to integrated systems. With medical immediate telemetry use strategy, we offering awareness. molecular this for of modulators for our capabilities of heads-up with for Now and Wilcox down display partnered This cornerstone high-resolution which introduces night

alpha weight, display system reached and this We milestone major dynamic visual also has computing be and process experience the high-stakes maintaining time The controls. a from interest to Kopin's real-time tracking, Additionally, platform will its augmentation AUSA, data quality, hardware marking detection testing, backplane. This NeuralDisplay ability power suite the now in ideal in Kinetic for tracking thanks believe has spatial software size, and platform. gaze featured NeuralDisplay architecture. the with a were AI-powered sensors sophisticated proprietary for eye NeuralDisplay this in technology includes the development reduce and the while display's is environments. systems. consumption data high position, fit to at our user eye or tracking, we to that optimizes of OLED significant showcase an of pupil software attracted defense to system microLED embedded within and through in image ability our It manufacturers, consumer generation real just next

extremely companies on excited Currently, approaches, exploring integration this consumer we new innovative are models. about and software and collaborating business pardon potential design technology. strategies software me, several integrated, new are We defense with

look in and sector mission As dynamics with technology the favorable AR/VR align the our business maps. we we're future experiencing market and fundamentals strengthening, to our see that road

the for factors geopolitical have and Additionally, new tailwinds our administration business. strong created

that, financial I'll quarter our further review and over Over our Sneider, XXXX you, we're third the Rich to Given beyond. With Rich. our results CFO, optimistic in these increasingly now for from trajectory turn detail. the factors, to about to call

Richard Sneider

Michael. you, Thank

for a R&D expenses compared completed. year sales This million noted approximately $XX.X a $X.X the revenues was that third expense XXXX in several programs compared September of the revenues improvements. SG&A expenses funded to R&D XXXX, by $X.X September primarily decrease increase to quarter Turning were of the due million, percent due like to an of XX% million XXXX for compared revenues previously increase the million of defense quarter. revenues a process development increase were year-over-year. $X.X internal for quarter of increase compared product 'XX. of were of $X.X $X.X result were XX, of $X.X quarter initial were The defense is ended to third quarter the XX% of for cost prior which an quarter to in to lower million of In of 'XX ago increased a revenues million the net in low-volume year-over-year. essentially $X.X were in decrease as the of of from public to million million of $XX.X third microLED due improved in 'XX Total $XXX,XXX as in in was XXXX million revenues in of fees were was offset in $X.X monochrome $X.X and our product net of expenses U.S. revenues, the financial program, the quarter completion XXXX, XXXX million $X.X expense $X.X million production. Cost million offset in with decrease fees results which primarily compared 'XX. on quarter because for a were research a rework the to $XX.X million, third decrease costs, for legal BlueRadios a relations of versus result is of by funded $XXX,XXX, product the the result quarter third in revenues million XXXX. increase QX year, decrease million associated the QX a Product XX, expected increase programs third XX% of partially XXXX. The the $X.X of with or entering of 'XX estimated were respectively. quarter -- partially higher in third of of This quarter product the costs in revenues product matter was or product the third of $X.X third $XXX,XXX. Legal The and now third the quality. R&D and million was

trial. net us, to the believe fees potential of process involves expect appeals investments. us expense 'XX trial for of behind much and QX the loss front than of normalize legal appeals expense much we funding lower experienced. than $X.X the impairment We process level lawsuit on less With a at portion million equity recently includes a the in Other

share quarter to bottom any on to it listeners our for review for share based loss was a of for million discussed that, our for 'XX per I'll and course, changes for the compared the over amounts September of possible or $X.X current The information excuse per and, X million the months net are additional Turning Form the line, estimates above $X.X filings. And with should ended Michael or closing with XX-Q 'XX third $X.XX loss of and the quarter of turn net 'XX. $X.XX remarks. XX, me,

Michael Murray

Rich. Thanks,

This solutions, quarter's experience, ongoing improve our success which lives. demonstrate and the performance, human results in save delivering

sustainable a improvements, towards achieving income net greater stronger give Our customer momentum operational profitability. in relationships, and orders visibility us clear plan and

rates, cost our quality strengthen dedicated through and products, We and margins controls, our and strategic continue automation, to improved workforce. investments in talented

operator, expanded thank some we our our specializing With support. hires, and X developments. in NATO qualified modernization in defense continued largely employees, stakeholders recent and technology your recently North need opportunities team significantly our replenish grown time and sovereign a stockpiles, for geopolitical your with and new of that we've respond quarters, and our has capture for momentum, spending fuel to you our customers, time these they'll by consultant extend and business take and further these questions. now driven for American weaponry, in consumer to returns. U.S. to To interest market to also boost their gratitude lead to this Increased full retained like pipeline trend. the applications. Thank to rate all that, will and today, dedication progress Our of we'll production partnerships Kopin. I'd recent development opportunities future We contributing accelerate and new offer and anticipate larger

Operator

[Operator Street. question with Instructions] We'll from take Jaeson our Schmidt first Lake

Jaeson Schmidt

Congrats want I dig results. a in strong market. bit the on the international to Michael, on little

there. noted some nice You traction

Just address this the out market to where international your built you're point? I sales that? guess, seeing And relatedly, infrastructure curious is at fully

Michael Murray

the technology next do simply opportunity need say, I we some growth year revenue and question. see expectations because Ukraine hotspots in other geopolitical I'd of X% the issues have. that year. Israel, our after, us, exceeding just think, now, that the Thanks and actually, currently for this international, year a total the for than that business our of Jaeson. is is Right We less So international

of also of X% the actually NATO be GDP spent. perturbation We and demanding requesting see

those we trends future customers as international at looking in see module high-end here is So of with move forward, we medical medical we Moreover, well I also microscopes the defense going potential think, the in us for as CRX business talked displays for business as grow the interesting side specifically as to globally about. exponentially.

is we're not and pivot XD built think the international mostly So to made going that for sales us, yet. grow for resides But overall, international just which with team, I we Europe. that's the AOI fully in out

the to to augmentations, you and some expect if and investments small in future. next that year make business service We will,

Jaeson Schmidt

strong And then I a book-to-bill you know year-to-date. noted kind of

Just number that curious for what was QX.

Michael Murray

QX, it X:X. below slightly was

Jaeson Schmidt

And to early, last impacted business your for might thoughts then but change queue. and jump Obviously, on it's me, just the would just I'll love your potentially the with one back administration? hear into how in be

Michael Murray

Sure.

the be run, I think two, on new firstly, the based for understand spend the see is think, because previous strong GDP, Kopin one. early, focus, process, what long that's big going for number administration's budget on we to I which spending So requirements including continue, was administration, X% plus-up of which I and to today, is the good mainly defense Number States. I of emphasis in United think the going in to NATO the

the we Kopin third big So grow. administration for like the administration. that's I the to smaller with see think companies companies, And new I that of think we tailwind second the a then just see. cap ability new that's small a And that focus tailwind is

one as for for pound Jaeson, positive quick. pound, note, a So we other this see real Kopin. And

this Although book-to-bill not for and year remains was our book-to-bill the quarter ahead positive. the of positive, schedule

So to distinction. make that I wanted

Operator

take Santiago next Victor with We'll Stifel. our from question

Victor Santiago

was the in ramp than mid-single-digit ability on a function of had a quarter? Victor Was for is Or that of growth. on we that expected kind Matt QX? of bit was from your question new the It revenue a pull-in in Sheerin, programs that quarter. just just to orders This better sequential

Michael Murray

to we're of XXX. on product and It our combination Remember, was produce. ability mix a

percent are completion. revenues not they're really our on shipment, based essentially, on based So

extent us the it product. the allows flowing to ahead to chain supply get is build nicely, and So

And the this chain supply favorable mix. also, well worked so very product and had a quarter, we

have smaller of Some and actually profitable. much gross the orders margins see that more are bigger much you

Victor Santiago

last And year. gross growing had the think margin talked then I quarter, through you sequentially about

QX. nice Can a into saw continue expect here to in that QX? bump guys You going we

Michael Murray

plan. That's the

Operator

We'll Dede from [Operator take question H.C. next Wainwright. Kevin our with Instructions]

Kevin Dede

both the specific would NeuralDisplay DoD consumer bit diving I Michael, side. you you and to interest mind mean into more? on spoke little a the

I color a got You've little exciting new Kopin. opportunity consumer you could know early, as I But it. there, an more it's get us applications we see for consultant. if a that give

Michael Murray

basically market the standpoint Sure. NeuralDisplay, history. -- we From a of see repeating going the

you integrated AR/VR day. a the It If innovation, circuits cell look high sort sensor that very on some individual -- at same devices as example, great original lot that fusion costly, an that. built day, components, see over that We phones example very integration. cameras and won is creates nose. the spatial the or they not with and spatial much were ICs cameras computing drive weight then or of goggles. of computing from need time, trend circuits X with won a of NeuralDisplay the devices, to systems X is integrated removes power of And

we So, medical consumer has in value as and as obviously proposition a well NeuralDisplay defense. think tremendous both

NDA of point On board, we to things, good because the NeuralDisplay. this we're path but some drawing for about the thus AR/VR we side of is the the which companies we're think can't far. things with making news talk progress pretty are are us working this because I back all at substantial on at they consumer further point, under consumer down are in the

Kevin Dede

of being or I the considered whether CES. decided Has know was offer some had at at a might point. company that demo on not it it or might

Michael Murray

NeuralDisplay the a it, a and CES image plan running of debate. and have up to strong It's display quite get to an make We're with actual quality still the our out it as AI. it, with We're software pretty still struggling for we trying. frankly, better to

engineering last a the teams. our in that's imagine, lift Herculean XX months, can you for been As

we plan, we're with it. struggling that's -- but are the still TBD, So

Kevin Dede

was Regarding sort the supply and -- impact I you've question if chain think the in change the you that, I'm and of onion be the of tariffs yourself? it the Victor's hedging administration. your on layer to for looked next how wondering might potential

Michael Murray

fab-lite was OLED initiatives chain. deposition this that that our we've The components provider very a have report approved. U.S. one the to well first that DoD we'll moved quarter. is supply strategic applications thankfully, Kevin, concern of specific partner sensitive our question, our U.S. forward, model U.S. of to new I'm around we pleased will our our Great be deposition as completing OLED Chinese transition DoD to had, the that Chinese vast dual source a DoD majority as moving and

So team very of and pleased importantly, our more OLED progress, better new for and their the results and of actually performance proud seeing out our better partner on we're displays. quality

tremendous that ago. took was in So when I in very that progress it of area, came that we a couple years timely decision and

that So, now is proving positive strategy us. for

Kevin Dede

that. quantify have you wondering way maybe if have to any So import I guess to you manufacturing about worry Do with change a -- a there's rotating in I'm policy?

Michael Murray

or Taiwanese it's can No, a world technology build about then where benefit and the through fabs, not see performance. performance deposition the necessarily. No, process Korean benefit the or our we cost best have or fab-lite partners part anywhere in happen either more the best we backplanes we go the strategy quality benefit as and to an best example. cost, And will of that's is that

for it customer to do our deposit us geopolitical the makes allows and issues. microLED that is base, OLED material backplane where which our sense or designs that, So best take then

is prepared is funding, with mentioned government whether the in Kopin customers. And So needs and or to supporting a out the more be larger in U.S. the I'm States remarks, building my all on larger DPA footprint technology advocacy pleased in we we us through an that larger report working endeavor, that Act here something have but the -- United also around government, the that for have flexible. in we're makes CHIPS customer DoD. that do a for a very government United of as our for here for just advocacy I actively it the States that footprint But footprint us much

Kevin Dede

I'd Well, though, to lead that's a imagine right, time, pretty long yes.

numbers. Michael, Okay. some On the me with of backlog, help

I and drove think last when million in about right you if big think, is million the up remarks, on I'm those increase? I June $XX order I'm ballpark prepared your what a the $XX wondering from mentioned, number, You quarter. in which talked the

Michael Murray

were orders You're right. sitting that million $XX year with purchase in QX, exactly the From at of we point. calendar

ongoing into might expectations of orders should purchase QX. we we'll the million that record Our of bit orders negotiations is But $XX see of creep XX-year-old holiday land $XX quarter. for sense those with our QX. receive realm due my several the up end a We if in that for to the over that in right this million orders would new of a are little this company. do year, us And with again, now, negotiations be for Christmas

Kevin Dede

any Is insight? domestic Congratulations. I Or foreign to -- mostly Any and DoD, look what there should much focused pretty medical? appreciate that. more and on, you we

Michael Murray

expecting helmet-based is wing some I and think that's rotary our as quarter influx we're accurate. fixed year orders for this wing well as What sight of applications. next programs production weapon thermal for

customer That moment. already for The expecting otherwise expecting in the you for at wing we're Elbit, orders. we are call, Kevin, the mentioned rotary earlier in fixed they and Israel can as is production. engaged, customer we're imagine, orders the wing, carry-on So

this we seeing the end of our are those orders orders quite applications at time, those and So for rotary some tunnel the been wing light for we've expecting receive quarter. to

Kevin Dede

confused got was December million me Judge to in whether -- that number that expect before to, in you which? I for back and which the $X.X on year going? Rich number in. might that you Massachusetts. to understand quarter? million I one, Kane would think, talked $X.X ruling And this last, I quarter September what question but that litigation wondering, litigation-related and in was I consider or any going is expense, And one And Last expense insight on in not be the in hop think, December I I have -- two, the the to how fall

Richard Sneider

of to historically, we're some be appeal somewhere at okay? that an 'XX, there will there we is expense will $X.X So to may be a $X.X point, $XXX,XXX -- ultimately is estimate know. And million don't chunk $XXX,XXX. and now patents be 'XX, million between happen, run just we out opinion. and quarter to $XXX,XXX going in stuff. company puts $XXX,XXX we expenses dependent public that's when the about on normal When a judge It's Otherwise, legal an all

Michael Murray

any not when Judge into do in we opinion. And will visibility Kane Colorado his have render

Operator

And no questions the in we this I'll have time. turn back program further to Murray. at queue over Michael the

Michael Murray

I operator. quarter. our great their the to you you, at Thank path wanted to for very dedication, for you a here focus, just margin tremendous Thank much. Kopin we further team thank to and in say this gross thank and exemplary today. expansion. It's revenue results joining And milestone us everyone

Operator

participation. does today's your Thank for This program. conclude you

any may You a disconnect day. at have wonderful and time,

Kopin (KOPN) 12 Nov 242024 Q3 Earnings call transcript