Kopin (KOPN) 11 May 232023 Q1 Earnings call transcript

Good morning, everyone, and welcome to the Kopin Corporation First Quarter 2023 Earnings Call. Please note that this event is being recorded.

At this time, I'd like to turn the conference call over to Brian Prenoveau, Investor Relations for Kopin. Please go ahead.

Thank you, operator, and good morning, everyone.

I'd place remind XXXX. on started, today's that get taking call Thursday, we like everyone to during Before May XX,

statements. will from are of that results statements Securities forward-looking current and expectations, based be uncertainties in and company's those a We Private estimates to number beliefs, the risks and on as the actual Litigation to These differ could XXXX. defined Act forward-looking cause projections, materially statements subject are Reform making of

include not our our market discussed are risks and products, filed the operating annual conditions factors other for Potential to, demand XX-K with recent Securities but limited other on most results subsidiaries, in and Form documents report Exchange of our and Commission.

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

may disclaimers non-GAAP appropriate measures releases. In addition, you and or Accounting the SEC the which to filings be Accepted non-Generally references company's refer press should reconciliation for Principles in and certain to made

today's Kopin progress Michael Corporation's Officer will with Murray Kopin's Chief overview an of within begin strategy. Executive company's the call

Sneider, quarter review first Michael, Kopin's Following CFO, Rich returns. will the company's

I turn Murray. conference the like Michael? would to now call over Michael to

before brief of I'll sell the what quarter call to initiatives, we discuss less management our under update with new welcome practice the And some the quarter anyone familiar earnings the Thank to. on we as Rich. the is over transformation everyone my everyone. first who Good to It's After and do, explain horizon some our on wheel first are, you, who opportunities to call and to with good hands morning and turning Brian. call, which plan for last both strategic on the CEO. first we overview, the organization in Kopin

microdisplays. of several Kopin different designs types and manufactures

Our cost electronics, LED AMLCD our defense, displays, soon display needs drive solve of advanced technology, housings our FO unique released proprietary of and What ability is customers micro and our couple by portfolio to technology. Kopin commercial and our OLED and and technology be displays right the optics, applications. to makes our customer's our broad to consumer valued in

Our we've optics products see, are continues overlay information forefront and hear creating application on world. Kopin people new and at the the the advancements industries of technologies. of enhanced broaden analog how ways discovering digital to of critical are use optical technologies communicate. and Everyday these is innovative to the

of also the Today display wherever to and seven its to years. critical to market for over estimated supplier Kopin contractors. applies year much whenever for The the next expertise look But defense largest global we and commercial industrial of on at is XX% as grow arise. capitalize per a micro opportunities they world's many five

As continue to ways more to the industries technologies to are microdisplay technology end businesses. and their apply applications and improve more finding

growing the are take our healthcare, growing demand compact and microdisplays. adoption at the of power puts consumption for wearable applications of of growing defense, aerospace technology Beyond the Kopin companies forefront and resolution believe and The We market. low electronics this means for adopting automotive with devices. high that displays consumer size practical a advantage

any for customer to is time strategic customer without we we [indiscernible] full our a quality on time refer on Kopin the deliver commented which quality, as improve I've quality measure of of to priorities, need some total touching Now with full on often in products our how and to on a issues. the identifying often in

as the Kopin leads quarter see and in costs the began this first some We dividends in this ultimately XXXX. than more to were first a lower to first year, by quality from margins quarter profitable on focus the product satisfaction. improving higher of our quarter focus singular of This customer

time achieving report these every we September I'm approximately of this or an that will is in the at the first progress of products in full happy our that we above phase high-XXs percentiles XX% of in new meaning consistently of our remain installed XXX idea are relate, rates improve. to low-XX of quarter. XX% you We were continuing delivered to XX last to give after time, are To on believe around year, equipment approximately as rates we XX%

the XXXX. a and in means Our that amount we quality with in quarter resulted produce efficiency less same reduction also of the which can in improved first force resources, labor

profitability In quarter addition R&D the for occurred declined This to a rationalization activities half. from are than by moving is production. hurdles strategic higher certain assuming also R&D new our and because efforts Kopin's into And quality, for R&D more spend improve to projects. we through in improvements introduced initiative. R&D

projects, which less have are value success Regarding has display. offer probability now higher are internal our we R&D a speculative, spend, a and changed philosophy more than investigating just of great as and

opportunities a on with and Now, on soldiers the discuss million some we critical bright gives we X.X last the of overlaid the symbols horizon. follow developments fantastic a program that production for the international order In world. site of on directly some range see April, information time version weapons long clear real since spoke an we announced

vehicle announced a an for we program. $X.X million Also, armored PPAP award April, in

per XXX those projections. process integration, revenue for design end number represents at the of can million, for happen the of that of opportunity COVID the volume demand production, a For due vehicle the don't we to year. significant Process into to Production know this which exceed Part before lifetime is The and going systems Kopin over could the expect the you normally stands program that total of significance of Approval PPAP

Kopin and The mainstream and applications provides to PPAP automotive pedigree for compete other certification in necessary also consumer the solutions. armored

that XD to industrial see now. its reached optical which markets. increase lowest previously are Kopin providing signaling demand display markets a when automated starting and demand XD AOI The the head inspection is those sub-assemblies has and wearables discussed point signals have to tend and semiconductor spend, We is in cyclically leader cycle is we optical mounted

Now a market that by and served the much NVIS is military currently is not discussed our which we that simulation Kopin market division. training have supports

are We several and field. we are demand working deployment signals customers that precedes training medical and seeing issues look And Europe. with as the the in new repeat previously strong support mentioned who are entering to I

used is this designed. we brilliantly recently very final the has by while strong, have a display performing As been zoom begun so initial a an a surgeons head specific feedback update into The and mounted can they surgery. system demonstrating product production of area

the a known otherwise program is reality IVAS, strategic United variety Turning capabilities initiative, Visual with Integrated which provides the to to soldiers System Augmentation headset, of wide augmented another provide an as DoD States real soldiers. program delays is funding a The which IVAS provides to with in program. current for There X.X intersect long-term billion, been several to XX this the plans Kopin program for have opportunity billion.

mounted significant head this and display and is success If it's at be have monumental company. for mounted where opportunity we so site, The pedigree to this display, a in essence the you serve weapons look IVAS head in the here program, would market. essentially, IVAS significant the expertise

meet are QX, recent but become cash of a and that in discussed income profitable expense need I our our the book-to-bill strong structure to strategic book-to-bill indications at in exiting our Now providing in of positive winds, enter positive contract operating XXXX, organization rationalization, XXXX existing, of breakeven momentum flow positive goal which have QX execute. our all we and an can

we be also and in development. top improvements. programs rather very implemented continue We this to and teams to outreach to rewarded program and We've solution a base. everyone our all established control and in to program have about our solve Now people. these allows products invest from organization team, quality productive, to recruited suggest and We've end, of to a professionals for quality, cost understand and specific above. impediments our our feel are quality being customer comprised than the which We've our of teams to efficiency existing good instituted employees action we levels management, issues them business and

offering, strategic equity make necessary transformation, we our our With cash believe sufficient and quality have required initiatives. recent for and we our on personnel investments the to execute

the results to you. in CFO, over detail. turn our over now Rich to review further I'll our to Rich Sneider call

Thank Michael. you,

our the ended to was for in first quarter increase or for prior million XX, prior X.X in ended April over with revenues financial a year. a compared million, results. $XXX,XXX XXXX by XX% industrial X.X offset The defense product first partially Product over the increase March revenues revenues X.X year-over-year. was X, Turning XX.X% increase XXXX or decrease revenues which quarter XX% was year, the a driven the by

the of XXX,XXX decline. R&D related the of first revenues first OLED program. will million X.X a for and work Any for with research funded to revenues of X.X by R&D of this for the 'XX an Included quarter compared development is XXXX development be to million XXXX lightning program silicon. future quarter XX% first on funded in done the revenue were quarter

a revenue production. prior research year-over-year. 'XX revenues is moving to due decline programs for XX.X certain year, decline Total million primarily development the funding XX.X X% million for in were The into QX defense versus

for first to revenue, cost percent material X.X year. of XX% decrease sold compared as was prior revenues in a X.X written quarter Cost for or the reduce as product was as warranty last first product 'XX of XXXXXX% of product the due costs previously with of well of or for revenues the as to of issues, million quarter goods compared primarily million The was off. net that material usage years of

of The certain X QX were QX expense expenses compared as was moving with million X.X X.X the decrease to as XXXX. compared was Funded 'XX compared quarter 'XX million production. expense million for X.X of of of R&D XXXX. the million first was quarter for QX for XXX,XXX expense for Internal R&D R&D X.X the result first to into during in million, quarter XXXX. 'XX first programs

developed me, Asian is Included termination involved announced are for internal These in internal employees XXX,XXX working R&D displays 'XX, on. was primarily Former company not As the excuse of of projects, our started we these folks activities XX R&D. previously Former primary and a individuals it new with CFO, reason resolution the and R&D the in related in decrease CEO, were our of partners. products with high QX these development approximately

quarter as compared the in ended of the by months X.X 'XX, compensation. benefits compared based million quarter for increased professional XXXX, offset lower were primarily fees, ended first increase April to to expenses stock were an SG&A three first and months million X.X of March partially the employee which to XX, in compensation, XXXX. three in due SG&A 'XX,

of quarter reserves of in the of SG&A currency In with XXX,XXX first Other approximately XXXX from gains million quarter's this in the quarter than receivables is first for income of first expenses compared of foreign Including XXXX. XXX,XXX projects. recorded R&D terminated XXXX, the of XXX,XXX. less quarter X.X

movement. During investment XXXX, on months X.X gain equity ended an recorded price XX, March to due we observable the three a million an

Turning cash X.X the for activities million. $X.XX per use of approximately bottom-line, first XX.X the X, marketable the Kopin's April per loss to to cash compared operating X.X XXXX. as million million share, approximately for was months 'XX the XX.X March X.X approximately compared or Net Kopin XX, XXXX was and attributed million with three at $X.XX XXXX. at was million to or April securities quarter net first during quarter share the

pre X year, funded proceeds three another shares first a we the approximately million, During million of sold capital of issued any XX had debt. The raise, quarter have the current the review net were XX.X where above long-term and we shares. stock estimates on common warrants ended April and million for should we changes, based and were of our disclosures. for for course The possible listeners discussed X, Form any our filings additional no XXXX amounts XX-Q and months

closing And call remarks. to turn the over with back for that, Michael I'll

the order and full which on profitability. Our flow in and to book, products in and time get investments the controls strategic and strengthening higher will improve focus our making continues cash achieving to us cost people be the aggregate

are who Now and importantly, world to transformation. leading fortunate we are this market most Kopin making during lastly, supporting customers and have

executive strategic on relationships, focus program and During several managers. our additional and the quality development quarters over management additional improvements past experienced customer business

move thank to applications, We're invited increasing chain everyone today content challenges and Kopin your the our designs. more within now customer's opportunities and Kopin's into to their allow value like and I'd and business technical these like being larger design to great continued time, can to I'd you for will that solving achieve of think this for the and for grow in showing stakeholders hard Kopin. and Kopin, interest dedication. our quarter new their and things work work our employees past we team With thank heights. of at their I up this

take it we'll few questions, that to and to turn And a over you. like with operator, we'd

from comes Glenn Our first Ladenburg Mattson question [Operator from Instructions] Thalmann.

in talked vehicle And that about, call. you ago. of a Michael, congratulations that on armored the referenced Curious order announced the you weeks also couple was

being opportunity. how you about hurdles talked get Can like, that And be a production? and everyone $XXX just just kind also into goes a their you sense around, that get You to kind get what full help around? ramp that before to number? cleared potential How they'll get to would million of that need of of hands

Sure. Glenn. Great Thanks, question.

us. program that So for a is pivotal one

majority this first, through in feel process, We in our of process very confident that our design. the vast a we're which customer that things need last quality go we audit with to year. First today working the that, will is of

resale the sold each tens go vehicle, level module the of is of are several Because get selling to each the So the thousands consider how of first heads I that even but careful each of bit that is information a content of controlled the be or in we're around and your this program with it's into unclassified the would part question dollars. is that what of products also design, fairly our volume in device of the part Now, that our terms and training or there gets significant. vehicle we or because some of a And in of have integration, terms second I also upgrade. do that into of the resales? classified will

So of that vehicle. products there each are these into several go

there's that production. be get vehicle to that We a XXXX vehicles believe going as as well roughly few new upgraded,

of the in million So over if coming you to revenue over five the to period out program. of XXX do those math, year seven a it breaks course performance in

around wording, behind that's program it. a to the I'm trying bit but you clarity can cautious the that's little my the right math best now. know give So being I in I

is about or soon timing some, a long-term? be and Can topic significant the then also that and some released be next on micro that LED. over sense And the to could the the us you medium you how give just talked of color

achievements lead testing it we technical this We're You have customers bet so our now. seeing of out product. tremendous

performance next, of I our So we'll classified. I is customer, quarter be very of terms would would the program product. their expect announcing that this in shortly, technicals or of say our either in levels Outside obviously,

work we'll be them, with it. we So sure comfortable that making with so they're that

seeing Secondly, new either to mainly AR/VR Metaverse for sought waveguides that program applications is amount a and micro-LED pull for is be very and/or along where medical significant consumer demand after, required. with old designs from consumer or redesigned applications. We're of brightness the

or it's best use the to think enough what we light guide. brightness, Even a at OLED not just decent waveguide is bright

performance because lot of product that contrast brightness that seeing pull micro of and a it we're in. performance and So demand for LED, line, operates the

and decent revenue certainly, beyond new in activity, design that. So that line would for I and we product for expectations have high XXXX say

absolutely sustainable performance it We're results of a it's product seeing us. great fantastic and currently. for out So

And the just on model. the for me one

margin So the understand quarter, kind I in in of have facility retooling from but you the solid gross still the Massachusetts. what

or is give we know little better completed maybe, if But or just can should a some So expect been facility level that? sense you of this us Is has that around don't there, sustainable, whatever. of a and framework riches. once retooled I kind

how We've that implement working And to in help. And very are, support answer. that the that our from with quality with we're fab Rich the work developing think in the tremendous us it. to to sure here I definitely then if of us in customers two issues know them best help the working and we have and able the who fab been my it's to where you We've actually been our going generation technologies shortly fab. been going the we next to And in give think they them. I is with. are tools very make guide the be I'll we'll So receiving learn to now improve you same. give optimistic, can see I'm and

So Glenn, we products the work question. to parts there's on doing have. One is two are currently than that we better that

and The we're in. able bringing is being products support better, the that part doing to second new

the or equipment side do new is that's that believe second the of that coin. part So dividends. installing other I the quarter this pay to And we're going

So I continue. believe our margin improvements will

this that's I year basis and very that think XX of improvement there's think I'm another targeting achievable. X to I points

Instructions]. [Operator

comment question. other Glenn's one Just to

it's think it important the fall. did we to continue In note, see think I I is I to quarter, and professional don't some that. fees mentioned

as in costs the the silicon. for severances fall incurring well that I we as quarter of the continue were spin to the we of think of QX terms some on as still in have of as runoff in lightning they'll out SG&A, some that well

So costs not in residuals Glenn. in were were that I QX do improvements believe other QX. you'll see some There in QX

would I see of washed QX. expect through So out and those to

H.C. And Dede from Wainwright. a now comes from question Kevin

is Michael Dede. can And upon applications? a such forward healthcare And of This but as more kind Michael, talk for XXXX? lightning these how should calling you [indiscernible] about bit touched silicon emerging about actually going market on think Kevin behalf we of you opportunities

Sure, time repeat was you question, it more right. get exciting Can actually? times. Yeah. one it's the some There To interference.

remainder bit a think problem. should No opportunities, we of these also about XXXX? about lightening as such how and Can the And healthcare emerging more talk you about market silicone, applications? for

Sure.

the visualization received and demonstration success XD it's absolutely I visualization, for of story working think, well the going a it's surgical just a over developing we brilliant, It's them new mockup a on called We've product spectacular. the of first a apparatus, final a that year surgery. HMDmd. recently. provided customer We're part, around. firm with been So excited I very a we're about have, to

very customer we're that this technology. was excited seeing about tremendous actually out the pull and demand team our it down market, now that designed it's of for emerging and So is it. that And the R&D, one

just to them, revenue opportunity. assembly, displays, the exciting the displays molded think you they it's we of we well months In the overall be a including the optics, assembly, to kudos take, fantastic to runway provide know, see And them doesn't So and good solid to LCDs, we the again, XXXX, as did generate because the going entire provide to but Kopin a job. revenue going assembly. is as XX the for X

a hundreds module dollars, for the of display, HMDMD selling selling So, instead of few one were XXXXs. and entire to

business moving So And that's we're about. just XXXX. and that in model going one the we medical market seems be affirmed forward in market. customers of And it that excited be to that's will think our XXXX to the

still So the it's there, we're demand great somewhat and emerging, those the racing is market, products get to aren't, to nascent market. products but because

that's So one. number

AR/VR also to cost market volume. that's inch by X-inch foundry foundries and that X-inch important Lightning perspective. the terms invest strategy to wafers. of silicon, there reason Number a X in fab are silicon developing that lightning need think designs. would mentioned silicon, complete this now wafers, consumer XX consumer wafer of my with is They a unlock Right inch strategy. our two friends and cost to to in, were our an with inch you skated fab call first that's the of at be I XX Metaverse to I in And at and a volume redesigns invest lightening who here. folks, in relationship The is from wafer there view we're is have in QX, type the we My going marketplace. material. OLED And light that devices is those taking

to access there have that for consumer. still partner we'll are a So

question and begs defense around that the industrial. Now,

that. have NATO DoD that for today. us ready strategy We a not our But U.S. on strategy look for forward. defense to from moving a I'm for more announce Pacific, strategy customers

that one their developing going lightening own wafer strategy, pronged on which to be they're is and XX-inch two the nickel. a it's So silicon foundry consumer, for

XX-inch back will royalties And receive we that sell not a our they us from the still they tremendous and anything also the be back, receive which royalties IP also and markets of research reap significant, rewards will which will we having on of China. wafers, lightning silicon access of develop own their technology, for XX% that into opportunity XX-inch company, to is as development but foundry a for use to incur in that and dollars,

months. then So move which and strategy, for have NATO U.S. folks us coming our great the strategy with we'll in two you DoD defense be we sharing weeks,

concludes our closing Murray, I conference this over would like any turn And session. remarks. back Michael CEO to the for question-and-answer to

much you Thank operator. very

become trend. I is will quarter think this a and

year. we into see have I forward great book a of for that think company. continuing QX, which for I be remainder the the sequential moving order will trend the

they're We us working have to them. succeed Kopin building our family tremendous customers, to customers future that and our Kopin. here look stakeholders, forward we're success. want that are and with preparing partnering We our with investors for us And with the at

very QX. for to very you I appreciate in Thank we'll it you talk much Thank much. and attending. you

The now for today's presentation. concluded. has you conference attending Thank

disconnect. now may You