Kopin (KOPN) 1 Nov 222022 Q3 Earnings call transcript

Good day, ladies and gentlemen and welcome to the Kopin's Third Quarter 2022 Earnings Call. Today's conference is being recorded. At this time, I’d like to turn the conference over to Richard Sneider. Please go ahead.

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

for the this matters, to growth. to Good I continue to I'm in us with strategy Chairman over and Michael successfully I'm Michael introduce to especially scientific remain Michael and delighted new next I while with important as Kopin's lead stage now experience I and will from CEO. this all partners. I'm will quarter AR joining on operating to believe transition clear has Kopin of you thank to third Kopin Asia related to the turn discuss VR. stage work on call and of calling OLED and our Michael. of focus excited to we'll closely meeting its call fiscal XXXX is morning Hopefully, our results. to you. Murray as

some calling partners. customers as meeting Thanks, John. as me can as and with current potential I Europe, I'm morning, also everyone. I'm you from well in clearly hope hear Good where

visionary third and with I'd offset, Board a fortunate The for in XXX% our thought to innovation, led lead Board the quarter year, strong very growth the product is blend that however, at as moment join and core to revenues by third XX% program line growth. the business of of We With our industrial total of we're XX% of results. the commercialization decline product growth remain growth. and of years the of systematic third our of in company had my John, in we'll have decided that stage thank quarter The partner driven a unique segments Top year-over-year Kopin quarter Interestingly, these the of consumer of were curiosity up to was defense interest. First, quarter to growth, by sequential warm over turn which XXXX a technical freedom and culture many revenues. and company was consecutive and development, in culture to while and XX% our said, our Kopin leader company. also as cycles opportunities has like business their to a and and of and to in technical curiosity a aligns talented background the XX-plus rich the past is folks XX% and the revenue. military over to growth culture. with third to year-over-year facilitating last respectively. good still more and I year-over-year technical I him approach strategy welcome management revenue experimentation take quarter. Chairman and consumer, which through next closely partially a the Kopin hard-working critical the John I Kopin I into due bring company's industrial believe the

while warranty challenges, a be are quarter experience unfortunately, within Currently, to one Now charge issues which which be in the to of the supply intermittent be chain resulted, to we addressed to million the issue last $X hopeful and continue cadence appear the to we we we lessening, appears situation. challenges the have time chain specific to will supply related improving, continue do from time. the that experience though since

consecutive is on-time track as yield the discuss of Importantly, second the promised. for segue on result, focus outlook. half to full And good the will we half costs. will and are throughout and the while think opportunities my to year-over-year be this deliveries as achieve a growth. reduce first to And achieving exceed fifth in on improvements growth QX driving year XXXX, year our Beginning identifying Kopin a I in in

We expect result cash to in these revenue improved flow. I and see significant XXXX. opportunities also steps margins in

in an market exciting AR As our VR positioned example, Kopin is for and which an growth. well market is

required We further and this to are mature working market. to technology hard develop the develop

of as reminder, emerging this world's care customers higher provider world's technology still we this for AR as the thinner are leader a world with lower VR, Again, example, largest largest sizes. is is technology. at such markets the displays and and For the nascent. Other power health Kopin demand brightness and supplying in

drive increasing XXXX. rates markets However, in these in do growth which also we higher see adoption will

and current growing our customer complex international variants war The new support offer and C of expand Kopin's global significant recent optical for order generated clearly swap with visits, the Lastly, XXXX. assemblies. Furthermore, Ukraine And ability cover to our much customer display how products. concerns surrounding heading value in have display vast on customers our and and the opportunities further defense our has military capabilities, unique to they our heard saw I integrated business base into Kopin value

business initial new deals $X like defense defense global order announced My this this. million business. of opportunity directly supports Europe trip recently great potential this example level. our and see the as award to is Specifically, production in expand exciting opportunities week this that to similar a We

was financials to comment our past want did one Before related to make the I the detail, quarter I in from call over the to $XXX,XXX The QX position. turn our in announced increased Rich, financial sale more ATM QX I’ve and on to to drop which review financial however, this that the Kopin the QX. in was completed contracting have will I’m confident These strategies. raised outlined, help bottom line. before joined us we the steps profits actually things I

So Rich, over to you.

Michael. you, Thank

The third for for a driven compared XXX% with quarter XXXX, Turning primarily for revenues. by recorded of XXXX, and to months as months as expense in is from was increase the X revenues September million approximately Asia. or quarter offset third Product and of XXXX, The our industrial that In a ended XXXX research million $X.X quarter for sold a in increase in and $X expenses prior goods a of development were of for compared to $X.X of $X.X R&D and $X to $XX.X XXXX increase financial decline revenues. were the cost compensation $XX,XXX ended XX, September partially product million XX% impairment quarter $X.X the prior million of XX, quarter we for percent XXXX. XX% of net were the as increases decline. million $X split quarter versus the of the in income billings the quarter revenues due investment XXXX The of XX% in third ended $XX.X in in SG&A third XX% results. $X.X of increase to as XX, and million a September activities. with Michael overall was an XX, expense to $X.X ended with by revenues defense to were and were an offset quarter year. of discussed. $X.X R&D XXXX third third XXXX, from the the of $X.X the partially third of an the million due third the XXXX. third were R&D revenues research funded an $X X with which compared to or million of These in Funded compared primarily compared months an in year subcontractors. expense a XX% R&D fees decline noncash third for XXXX, prior programs quarter related Total million Other to SG&A XXXX the September product charge million in for transitioning million to quarter compared third year-over-year. the XXXX, revenues compared product revenues vendor due quarter XX, related consumer revenues The of million were year expenses year-over-year. in charge for increase professional were for revenues partially quarter XX% programs increase the and a development XXXX, X were internal the issues of product for into the September of was ended million Cost a compensation. quality QX from third production in million quarter XXXX XX% quarter third third between year with 'XX equally 'XX. last increase by compared million customer-funded expense the the to $X.X was compared decrease warranty stock-based lower for

X $XX,XXX as of X September ended months we September to XX, recorded the months the $XXX,XXX ended of currency During losses XX, for foreign XXXX, foreign losses currency XXXX. compared

bottom to or Turning third quarter the $X.XX approximately share loss out XXXX. for Net for for million at $X.X per with approximately million. was were September net activities or and share ended operating million $X.XX Kopin's compared million The XX of as 'XX. September XX, the the per line. at the quarter cash approximately X XX $X.X months Coke third was marketable December XX, to in used cash securities XXXX, compared $XX.X $XX

long-term We debt. have no

and, and in Third current comp release. amounts the XXXX based on estimates Form for to quarter discussed our our any for review closing XXXX Michael the above press and take stock of over the and And changes and additional The XX-K are your table then attached questions. listeners quarter amounts are should remarks with current we’ll expense the QX depreciation for year. for course, that, call turn back disclosure third quarter to possible I’ll

a reflection chain solid work and dedication COVID supply and mitigation have quarter. to Thanks quarter this result. us and and resilience, cautiously to We plans of a play hard a identified expect challenges optimistic Kopin's hopefully deliver remnants we for through was manage that fourth much, the issues, have remain chain we've to very of good Ultimately, global Rich.

uncertainties. we ignites Now invention on has why an that the as do for current optimistic where to be company all vision losing and achieve. guided seed of strategic look with are excited sight focused the partnered the remain that XX while pursuing macro not for the the innovation on ambitious imagination the growth things us future and have and and and This us focused a We forward, we plan that ever innovation past of experimentation innovation. is beginning we core and invention years and from it's customers

which Our excellence a partners, customers, goal now renewed focus shareholders. innovation will this and operational pare benefit of our our to with is employees our

So interest Kopin, and in for to that to we'll Kopin and have. very answer may your you Olive for much you you happy me thank any be Operator? questions now

Thank take Ladenburg. from first with Glenn Instructions] you .[Operator question We'll Mattson our

you of do first and commercial like everything, that sorry, to especially you maybe you about like where maybe Kopin. that VR bit just you innovation how and the kind your and little still mentioned. balance AR consumer like is in the given light like emerging market as some commercializing for intend or Michael, I’m thing in of of -- -- spaces a one of Can Interested inside history great exists you. background talked

Some that color be on would great.

great Sure. think that. got Glenn, I I Yes, question.

internally. in Glenn. think working market the So that technologies, and exciting display and I future we strategies been we latent strategy play, that and on at multiple model that opportunities volume When with there. don't And our hard defense it's we want do markets, up Dr. And that really think and defense to opportunities necessarily monetizing everything to and take us we'll have a and how to in that's that China have provide about technologies look think the that consumer Fan And that us we in think I to there's mean already place has the days value more to move model stack of taking partnerships When the more and do Kopin IP and our in what learned you enterprise industrial licensing very our of about will and use for line. I can And a we one by of it do the great more them then because customers market. and us is defense very to there's these at IP want profitable. there bring of want things I've companies when more biggest to capability. business, is customers more.

that, we'll I business fund more So the question with us. monetize bills, would up that they pays more the defense us is with stack and monetize our business to which stream answer of move and I customers because our do is value that think, the our way mutual is want going for and to their we're system, the them for

customers higher upon more partners, And OLED Dr. On and the of strategies licensing industrial continue is to China. forward with strategy to how with front, business that business. expand the around and our do we'll our on working in IP volume then, Fan move

the of as updates. that more next month our X strategy the and moving we So plan have refine our those or X we're aspects will with in are strategic forward we

some bit. next you programs full out we of are And it’s emerged of if on recently, a little defense the on that while, we existing in I start runway of give for little or can can and a don’t stage side, have production a the initial a new more to sense as Great. and as outlook you better been low one, about of push give have the terms kind around scale versus ones for you, XXXX us think us about of like know what sense some you Rich. a more rate But the for Mike the kind

I are was to program. answer folks just think with going FWSI I with familiar the

don't are got it lot to the be that, still initial to LRIP that's production. in There just a legs with programs with but that for other state things. I of we're believe. international time, think or offshoot permission will coming into rate and side they're have some I of quite that production on That's yet low I more and

programs We have are X excited other hitting about. that defense early-stage X or just we're that productions

think when we we is I it, business book. up, of order for succinctly, answer year roughly us, think what you book have question order to this speaking. good about a So blend cover have And is existing next was which XXX%, a for the for year next great defense more our

some are next and just So year we have that with rolling programs Tier into that coming X have we online. customers also new

So that? to an you to be. exciting it's place do Rich, want add any to color

we top No, gone the exactly what growth base. going on to into solid have a very we And helicopter international that’s talked I that say, rate, markets, for we've have number helmet excellent other the program a pilots, potentials think as a of common with of have I those. was low about programs

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

you you to mentioned wondering And you the so then from of us. be away. type peeling just though, see dialing can hear do role. for Mike, I’m will on you be working thanks improve How on what started of approach. you’ve great And new from types when your to? think and onion a It’s not detailed things? having first, space back, door earlier. can that yields oversight to you you those for to able you the Rich, curious, the touch to walked specifically, apologies things, thing think do in characterize did spoken and on What as change? you to systematic what in more do that if I’m welcome could John, far Mike, for

question, Kevin. Great Sure.

stifle what the that process in innovation is and that exist done can of my if process career Innovation you. things I've So through flourish not have properly. and learned does one

culture and allows full that's ideas about of still I'm I Keeping is great company, preform a that the monetizable but upon monetizing approach an I'm our sure the Kopin type to that's experimentation And innovation. So free which systematic company. profitable, think I of that is very capabilities great it well. putting type in to process the think then one very the That's well the programs and delivering innovative we're we're while base. capabilities to going of freeform approach more we're things that very, systematic in still going our important the a a customer that a wonderful process. for as from on systematic of revisit programmatic the engineering approach Devices, thinking, experimentation bring. able and plan look from they're Analog of that things innovation to MIT and of innovation embarking strategic into company then making speaking the for for full making which Furthermore, it approach is monetize I time of. at in of the that budgeting terms of there, running as month this robust learned

approach. I to how a or want our innovation at that's place, So invention hinder of of look And way. along more any we in don't put we that while systematic the

how that So answer you? I answer that's it Kevin, fully did question. for I

could a how Yes, you a more you helps and lot. where that you'll to get see you those. little granular yields improve Maybe work discuss as

comes lot SEC a more agile put to statistical from are company more we manufacturing. in reviews that of good. analysis our our programmatic place in have around processes processes We'll well I a perspective, So think of methodology thought the or as yield when an as it

involved within and in So that's Kopin process already already underway. That previously. was

versus process is at that and in it if the I more so statistical we're know a look of look of earlier the going different end at analysis way process. broken-down at around at the the we level a that yield we'll However, little bit

of Kevin. approach, So it's statistical a more

Okay.

insight I supply comfortable mean, about your short tenure, on more You where comfort -- seem is given offer issues. you chain more a coming from? the Can little to be

Sure. FPGA mention are I I that well. off because we you'll work the my with that the chain can think we've other direct supplier with their top very Kopin specific find understand is with. of and deliveries. companies head. FPGA X are better Mainly, as conversations I supply getting of FPGA market relationships better They And struggling getting such the had and

clarity. So be seems Therefore, clarity and better they're and better better to getting that getting across board. the confidence we're

hold Intel getting chain. I of listening and seems like supply call and to was fact, a their their In it earnings they're

the ripple of a that that I it's getting chain. we're confidence and their clarity corrected. So we're are at and of supply getting And better that think chain effect, at end end we're the Kevin just our better supply suppliers

pop Okay. I -- that mean, be, business in still defense driving I’m improvement indicative. just quarter. think, that consistent I sales actually everyone to and it’s spoken consumer, from June might level compared nice minor albeit more what little almost doubled, to you the and how the right, potentially see than a business, And curious the

exactly opportunities we're it's I the the And here consumer we're Indeed, Kevin, a is right. customers starting is it. it's Tier with well because I right? mature well. the funnel. on market that's think funnel business goes new that, But having It's growth But time the pop, X filling smaller maturing. view as said the positioned about base. positioned and We're off the the to with they're for fizzle, And that's in way

growth. on I think I really think going help portfolio But our some about fuel overall then Fans partners products. a Dr. Chinese with have the working business. things is We interesting that of that strong to

and this there ebb rate. business we're As decent base compound But grows, think going annual consumer being And move Kopin involved flow highly I I of a while recommend to of at as at this consumer profitable along and do. will in future. the new year, more business some and hear that will to you're growth have that wonderful to And they to AR and that's you're we're the have of those year. suite to a on hopeful that our some some some some Pantile CES will CES see do got business the visit starting and are recently Optics announcements grow next I key believe out come of with with that end, able customers. based headsets. the you're VR hear going great we've coming in we'll be us Hopefully, this consumer more products And you'll Kevin. LRIP to our of year

me, not just Apologies on me. $X I think Rich. detail was on of think, a I Michael here. I for complete maybe million you just about that it deck a that, X, I I million it for quick question to we a We just it more mentioned the have a wondering was be of a -- that are seems the Last little kind on little too to might little about one, you're of write-down, if showed P&L you more us the by it And for Mike. the went $X was that million. $X talking P&L, color may, that. spoke that it. burden folks think write-off for showed talked I looking I and Can on end and confident the

so and as the financial There’s accounting based And as know, Their company statements write by took just this have accounting literature. equity lot investments, have so And a was the by fully In situation this down our and we do on. in impairment Asia investment our a has customer, it review to off. a related significant there forth we about valuation of a assumptions it’s investment the the you It’s and and number we of so part Asia. COVID. case, of in current of go are get particular fair affected growth impaired an Well, says based investments. value all in it been quarter, through investments. future on a did we analysis market the rates determined promulgated significantly And COVID in not upon what and rolled that worth. business it. located every and on we We we to

to do directly COVID it’s every something of they a countries the operate to required in. we’re the it’s related quarter. And noncash So in that charge. impacts But it’s

concludes gentlemen, and Ladies this appreciate session. participation. conference. your That Q&A concludes today's today's We

disconnect. may You now