Kopin (KOPN) 8 Aug 242024 Q2 Earnings call transcript

Good morning, everyone, and welcome to the Kopin Corporation Second Quarter 2024 Earnings Call. [Operator Instructions]. At this time, I'd like to turn the conference call over to Brian Prenoveau, Investor Relations for Kopin. Please go ahead.

Thank you, Cindy. everyone. morning, Good

those results and the for started, Potential company's on today's forward-looking in get number XXXX, with to everyone estimates that report of are subject Form defined annual remind will from of are Securities Reform cause conditions Before These and differ 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 statements. on the X, a and actual Securities include, to, on to that Litigation XX-K are uncertainties operating be Act but the our and risks subsidiaries, we recent based forward-looking like documents Private current Commission. our Thursday, factors materially could to we and August limited products, other beliefs,

the be 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. The company made will are results of can assurances inaccurate, be the be them realized. that to believes reasonable,

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

Michael I would the to the quarter Richard review financial company's call Murray. results. Kopin's turn CFO, Michael, Following like Michael? second Sneider, over to will now XXXX

transformation are to XXXX I'm we the strategic strong the everyone, the am Good to initiatives. our and Brian. progress this proud our our I progress call going second morning on earnings quarter much plan. welcome made making significant we on you on on time Thank operationally very of updating to call. spend of you,

have beyond, customers, in follow-on orders for now the from We and customer our our million existing programs and received actively and importantly, within XXXX demonstrates are or orders repeat U.S. and from base. revenue which customers Europe, including and $XX that we over expanding orders new

was our highlighted incoming in the focus been customers July, our validated for from delivered with year-over-year at defense XXXX The momentum has of validating products $XX.X the that We of $XX.X month reached which progress gross QX Kopin XX% first Every second top expect we margins. and million expecting continued significantly to to revenue. by million. began positively sales half strategy impacted much defense course within up are we last products quarter in rates growth reset stronger XXX% guidance, to Notably, and This and inspection on applications second our increase a cautiously product the QX half. above now analyst to XX%, in in than previous revenues quarter, year. and

in demonstrated displays the concepts Tampa, readable weak or Florida. daytime These combat use special nighttime during week operations warn we helmet quarter, or heads-up soft and During the forces HUD.

to based to defense Asian We and of This also products full Europe sales has sell customers. focus AOI expanded reorganization the European Southeast capabilities and increased team XD already our to the orders of Kopin breadth begun and opportunities. in produce

time over which, order X,XXX-unit revenue OLED a taking with we order significant and recap production year a production multimillion will when received deliveries X place just per completed, activity, armed new From Now an dollar second customers span. fuel for we the for Indian quarter a microdisplays our orders, international forces to believe, growth. X-month development place perspective, orders

high-resolution tera-enabled has the program and millions XXX,XXX develop and of this targeting Interceptor referred awarded improve and This SBIR expected to the power-efficient next-generation contract known capabilities. IVAS. to new acuity Kopin Army are for and contract, work. jamming critical military, Kopin Kopin optical we to to and a Lockheed, Phase our dissidents faster, to require provide to support short-range in the have to These vision I was Furthermore, peak microdisplay to customer also the performance are launches NVIS for CLA, estimate integration it be be with Army will new do as honored augmentation also When to perspective, contract Now and production. over the IPs nausea. is able received IPs and a used commander annual program by cognitive research launches. is sensor lessen PEB design, a as the use visual for a visual contract as assembly tens launch believe Kopin OLED integrated expected Missiles and to in assembly of new U.S. projectiles selected a and We radiofrequency next-generation trusted launches. won The fighter U.S. of NGSRI develop war system replace a digital to just approaches many a XXXX, research there production starts been or for produce NGSRI in we we or The be system. defense Stinger domestic from will this revenues systems, development as from the new systems are awarded for night missiles. low-latency

neural has OLED a includes display bidirectional movement, an engine in to proprietary the consumer highly embedded resides tracking significant this that Kopin's development will software analog of systems on display for in like the would of efforts. fielded that We sensors war while advanced millions processing and high-end allows great items both which their additional or today, our that and the than popular it's today, a current fit now integrated people gaze dynamic cost manufacturers to weight, solution, market those AI system simultaneously are Kopin helmet control. the in of the I from track Kopin and integrated to require Wilcox. allows due from interest augmentation eye display generation has within eye tracking, visible remind power are be of receiving data we displayed image position goggles overlay that world user still systems a its the This also offering information in acuity sources of daytime while testing real-time NVG We've working performance visual solution of been NVG immediate some like the The access neural systems, to quality, developed prohibitive. digital stakes computing in to display, real-time Goggles of development, to which ability cases. marking stage operation. platform optimize that system goggles in won unique, demonstrated notable fighters other significant also during reached to to believe and reduce IVAS the the and use use goggles, image through its visual consumption, cost adaptable experience Kopin's like potential. lightweight, in back OLED adjusted and Now and alpha have defense, a a plane software night spatial currently or systems, which solutions in This XXXX. now innovative information size, and There folks the versions be system milestone significant our a in high easy-to-use, Vision provide Night the next with display. works lesser the great

efforts, also market our from addition overall In is to Kopin benefiting trends.

industrial to the power not consumer, We opportunities NATO their in with Our these consumption mandate. display, current spend medical its and DoD fueled Furthermore, cost. pipeline great companies only pushing and by visual generation anticipated patented countries neural GDP customers market targeting spatial computing is and new weight, signals of are in by required being next member capabilities, but architectures, and want realizing U.S. now membership reevaluating do of our refreshing AI-enabled size, and systems, investing of a display required demanding reductions X% architecture. they're acuity that the

As other probabilities stages defense strategy, our for the over while has a new extended formation. reorganizations, of of the opportunity the believe the early which in markets awards, opportunities and remaining resides and now million, $XXX within result million million are of market focus $XXX and in total contractual $XXX pipeline of of has high this the we

we decrease in On synergies, increase our the expand the and efficiencies, ledger, X expense to one costs enhance capabilities, initiative gain launched Kopin January, side accountability sites. of across our

Virginia, Massachusetts, reminder, Dalgety Scotland, previously autonomously. Reston, operated that's and Westboro, a Bay As which

turn We to our made future Having the progress the substantial including me and purchasing engineering quarterly sales foundation our resources, initiating have against our sharing cross-training longer-term our which efficiencies let of progress, success. reviewed are initiatives, strategic our goals, organizations. and

Turning initiative, the to building first our backlog. strategic

foundation could customer bring for pleased the adoption, our volume the ahead of Our thus a triple current potentially year wider for long-term and the stronger, orders, sights deeper of XXXX, the Kopin backlog Based year far, with growth. remains ship will XXXX. calendar as purchase which new on and we Kopin's are of weapon within plan

quality recently the have which milestone our milestone respect our readiness, at source need Kopin for U.S. announced years, current to significant display for DoD-approved doubling improve that AMLCD that and orders, with levels. we run our and revenue continue production will helmets which technology. for This supports space. in final fab-light While offering a With for the several the to concurrently stabilizing strategy, targeted display wing are rotary rates is within aircraft deposition OLED reached highly-customized potentially fixed pilot of our our and the application this a

product production micro-LED well. next monochrome will of heads-up also applications enter for shortly Our its as phase cockpit display

vehicle turning Now program. to our armored

upgrade discussed X previously, the As was set canceled.

program will new and previous packages that However, to our as upgrade be weapon we planned developments added and reaffirm sight alike. continue

Dynamics. on we receiving sensitivities production pleased to to We're that program. production General PPAP to estimates and from are program are continues demands We unable early for forecast volume progress due the process to early now approval of report that these for share schedule,

original outlook starting our expectations. form to However, the is to

that supply weapon for $XX,XXX vehicle. Kopin As our And there The system there are per a XX,XXX in will reminder, that over is sight be service sells X over today. each. understanding -- systems vehicles will integrated

announced biomedical presence at our medical and ferroelectric XX% in crystal many space silicon this we hospitals, also a vehicles to which We've years universities as also displays of increased the and using expect are advanced program new laboratories, design wins We to significant retrofit into these XX% designed also while world's come. our for the to with in generation versions, revenue being previously. making liquid most

Our customers are interest production putting and testing are through CRX receive we product paces. their to their as now through the orders supporting headset also began who for

greatly are partner space go-to-market strategic will We on later to plans a year, which our adoption. accelerate and hopeful product announce this new in this

the is understand and We the refresh are opportunities it. I and U.S. United project systems there also missiles. are may over are pursuing, replacement active our will in for like replace both other about significant to other which for launching Kopin, NATO opportunities surface-to-air countries. which XXX,XXX missile Army star replenish in Lastly, believe and we order, spoke we seek And that they isles, the several States

long-term, to we Kopin the $XXX product the Over grow million customers or believe contracts and beyond. to yearly revenues confirm has solutions, technology,

several NATO are of multiyear and within countries demands reoccurring that We revenue U.S. programs scheduled in have to programs. deeply Department some of now XXXX embedded Defense out

research strong in turn years in expectation CFO, or the have X further from second compared with We XXXX, the Sneider, $XXX qualified setting results to offers review increases solid this to call revenue production double-digit over so. clear you, sustain over detail. the million for in revenue Rich. to and XXXX sight XXXX aim our in to Rich Over received achieve our the to orders, increase yearly in and development and a quarter year the a of next which now contract, line to I'll pipeline revenue further of a over opportunities, while newly

Thank you, Michael.

quarter for The product because process estimated revenues R&D primarily QX in of to by internal programs approximately was the as of that quarter second second net quarter second the in million, quarter of of $XXX,XXX noted $X.X the to product credit of offset the the partially radios $X.X X ended decrease the second million were $X.X result million, of Product quarter loss product In quarter million increased decrease $X.X financial programs. on million and to $X.X for and were $X.X revenues estimate revenues year increase of lower revenues, the for increase was XXXX. million margins in of offset a year-over-year. Total product expenses increase by the million ended million, an a Turning for result completion XXXX. expenses gross of $X.X and compared XXXX revenues legal and were SG&A the results X, of for the of XXXX $X.X XXXX by losses impairment that includes of higher second of XXXX, approximately improved the XX% July a R&D approximately to of prior $X quarter Total expense versus compared for revenues product million of $X.X $X.X rework XXXX improvement. XXXX. due in for XXXX, second respectively. expense expense in our cost year, were second This million $XXX,XXX. investments million completed, by U.S. QX of defense of were decrease defense expense revenues associated $XX.X of were expected $X.X estimate revenues R&D fees rework in the fourth quarter cost the several program funded expense increase in compared XXXX due in quarter. The fees we primarily a as with months partially the million compared compared in $XX.X of for increase development June million June for a decrease funded to to for or blue million decrease quarter was XXXX XXXX. $X.X previously of research $X.X XX, of an $XXX,XXX revenues of the or XX, and to million $X.X in million in quarter. XXXX million XX% ago quarter $XX.X million were lower which to due We equity an of on Other legal the costs. $X.X second the in million second XXXX. XX% was second product The to Fossil XXXX costs year-over-year.

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

our which As higher, strategic second record and controls growth. profitability our long-term flow quarter, and investments on in provide time in sustainable the full cash our remains book, order strengthening evidenced and focus pushing people, aggregate will cost rates in improve the and making and products

exponentially We and opportunities Furthermore, share the remain to we new quarters spending. and their are to in more due to focusing up continue with foreign gain end this grown now sovereign work recent opportunity customers spending. strategic issues qualified to of has partners projects and strategies, past our increased plan. bringing strategic due which chain value the geopolitical system and To focus the customers our and new on our add NATO on our focused support and upon pipeline application-specific and to few

to and continue thank projects questions. customers customers, like Kopin. with showing full support to take add continued We and for not add I'd which and to operator, expect today I'd time everyone work, to in And rate your to their thank projects, these order time the and we'll hard our returns to as book, dedication. offer employees, for now interest into for some new new that, in like will but future, partners production. fuel move our larger only stakeholders

will begin to roster. pause our We momentarily question-and-answer At this the [Operator Instructions]. time, assemble will we session. now

Schmidt comes Lake Our Street. first from Jaeson of question

in the Congrats was driven to QX. on I strength programs? was strongly. Curious where X That's I strong really want up really obviously, defense momentum broad-based start. X or mean, by that or if

really. across Great question. and your the for And Jaeson, Board thanks, It recently. was done. Well you thank write-up

program way terms weapons thermal of revenue. Our in leads total obviously, the

increases or projectile weapon imagers market, fixed However, rotary the seen and and orders. across wing whether defense it's eyepieces we sights wing have to thermal

marketplace And interest that take an spending now, in and and Kopin, will big much across defense I we're away and see to the is increase we're in call getting we and from those focus things one think from of more the customers, companies European spending. this So, now be significant. very conversations for

So, it's board. the across

Okay. Perfect. rest year? the And gross gross then in nice line, snapback we think margin should this of about QX. looking at margin sort How of obviously, trending the a here

to It up. should trend continue

So, have I the adjust by think you the X.X. current to margin gross

in military know or our you a As completion. you we percent products, use don't, maybe

total we And estimates when as But get over gross catch-up rework out total on estimate on. Michael of has to XX quality last you have so come the you so, your expansion. significantly as of and leading indicated, margin down do gone we contract. costs a figure our months, a have cost costs the And rework lower program, up somewhat little

there. that's the So, the you $X.X little billion, catch-up gave in the number, we why

So, ought and that continue then that, and expand. move to start you to should really deduct point from they forward

then me, And and last one back you. jump for into I'll queue. just Got

Just think a I up sequentially? clarification could that correctly be you regarding Did on QX. your hear it commentary

do. We

of Ladenburg The next question from Thalmann. Glenn comes Mattson

Congrats great on a quarter.

about goggle vision mentioned piece. you strategy, IVAS night you the First, the talked

or yet I any shipped whatnot. and for expansion talked to think the purchasers? it Has been about get feedback any and we're us from completed of that? there you past, on product that uptake you shifted feel in for having and Can -- a starting the kind give testing

Sure.

I who a actually. think, XX% the nighttime for of -- worldwide partnered different product they're X recap. a product with pretty called different partners that DoD significant It's actually, for goggles. And technology, as company night as call Wilcox owns we So, And to IVAS, now I which we Industries, helmet have X daytime well market. U.S. a think vision about, we partners

as with So, and We're partner, the to Army. with them well them. as we U.S. productize X technologies another partnered working those

Glenn. trying XXXX, key we're that's with soldier and their we So, But for this a on those will ongoing, because this head the them point revenue is is here listening production. in technologies much we're believe We a figure the production pack to and still work has do expect immediate loop We do that feedback their we'll in technology How to and have entrance. what that new to developing today. have revenue. enter out

no to terms that you. connectivity of have there's needs happen or new rate So, what in adoption

So, or have revenue we entrant it's a next pure SAM market can available serviceable year. that for

an Curious the armored in But the Great. product either that the in about you past; the on ability for space That's helpful. program, that give PPAP working on and the MODs to something. that along you've vehicle us I auto use through. perhaps applications on in or technology just way in alluded Maybe prior calls you're you the update? particular. talked believe or expand maybe can consumer to

question. Great Sure.

PPAP you program. is, have then once any standard Glenn, applications. the you in vehicle that can quality States. So X a States to device automotive have automotive that's what United are yes, General we that's an have basically we that silicon the vehicle What received is And a manufacturers for other it, you refresh the inbound for looking very automotive-qualified. Dynamics under United need here in into sell liquid-crystal rate electric PPAP product requests moving high from that in But developed for

right but be have not have market automotive on it. will now, will going device getting and it qualified into to signaling liquid automotive qualified. available pulled the And conversations we crystal sale, we're to Now, an about ferroelectric, that automotive we're market the silicon from we're for get

monitoring. it's we're So, something

in-cabin some to customer on an crystal for silicon. getting We have conversations are liquid application requests inbound for

that's very we're you that defense, But that in And make gaining you do So, devices, and thing potentially experience to something to will say That something how automotive, defense. my in could have confidence quality, have in automotive we great I like one considering is the in from just great you we're have in analog it's carefully. future. the that, quality. have money

question. great that hope I a helps. So,

at one and one, the product market Is more of -- on on, guys quick XD model while a One then you been that's for some a stuff. but helpful. a very for point? the and back there bounce the AOI -- outlook down some industrial now? there for other product been Yes, has

see we bit in gain we're XD more The introduce put market. on Yes, China of been product due have in moving as AOI and and issues where shortly that some that us EVs as I But a business. really geopolitical position around think issues working there. will better customers with quite from Korea. lower marginally, a AOI to And has cost specifically, seeing hurt the Chips rebounding uptick do into That's it are the top a well also little traction. geopolitical frankly. also that many to act our to new in XD customers Europe We

here today, market AOI right So sit the for now, as minimis. XD we de somewhat us is

So, complete year at upside the that is have anything for this just company we point. next

through we is It's Rich, of what thought that marketing, moving sales But Great. on noise that -- we whatever? going should down all come and or we're expense I faster. now just that -- helpful. quick a the had I little is should think a post the kind trial? what number about now to model the And

verdict on expense. make mentioned sense. quarter being we before, the call QX, hope, is doesn't filed XX, we of why judge, any this, we knock So, think whatever -- wood, last that the this the motion the to last they explaining We tough

I'm And And has or relative in spending. so, goes, amounts judge. July we that depending we may to appeal. fuel waiting the the may goes obviously, August. And won't. for been process is inexpensive very actual the been work If just how of not all it told our and that we've favor, we're that on done now

through get wood, month, expense on this again, drop should we dramatically. once think the knock we So,

ballpark? sales no and assuming the had number would nothing legal, be what And marketing or if you

Yes.

had blue associated we mentioned $X.X I my remarks, in We the the prepared XXXX, million. with quarter expense million radios. as of $X.X second spent in of So,

Sharon of Matt from Stifel. comes question Next

This on Matt. for is Victor

Radios the so, Just or that you assets lawsuit. Blue on up is fund to any the how of actually to plan through of Do going? still kind sale damages process follow IP? And

Yes.

we pursuing firms. to in other have of of are that assets So, investments some our actively sales specific we

pretty in just don't area have with We progress yet. bank cash et have significant the made signed we term that in but sheets, cetera,

reporting So, But the we on making are we to progress we're million cash in it. But it, going the not pretty on it's are some good And we're but dollars. again, bank, not report until several there. is making progress.

Got it. And expect segment, in looked And quarter. then the you the little the any quarter? in we consumer continue kind through to revenue just what on I like of guess, revenue contribution Should the drove the just record a it year? didn't also, guys to no

consumer, year. be think, So, minimis this to is de going throughout I

orders, consumer some multinational believe, And much companies, the several develop of in longer quarters. but a expected those and next and and then taking we for specifically. consumer research front, to on to couple with going long are time, funded see a are the working development I we than research we sample companies takes that areas, in negotiating some We contracts are couple of development with funded potential

comes HE Wainwright. Our Kevin of Dede next question from

me? hear you Can

No, you're fading out.

I of. afraid Sure. what Yes, was that's

or I behind why be that's me a you the it? thing if most is there replacement I whether think and Abrams the was might to understood wondering curious not cancellation.

will why site and continue. continue And Army. for will reason cost weight, why, are reasons X our the there so improves size, Kevin, reduces our program program essentially, The the was but Well, is us, the several Kopin by still upgrade weapon U.S. lethality. canceled SEP

vehicle the and also the feedback on through issues of that, in So, folks to request Army some the XXXX, our vehicle will canceled, a we're but of SEP also upgrade that X right have from engaged I the which program version now. due other continue, to going by armored Ukraine, the that was new is from think,

So, vehicle that product to package canceled, upgrade that in XXXX. has the program out as our available will new we're our and still upgrade for as well packages be site through been the weapon expecting will other see continue, but

feedback So, on, just X continue upgrade but canceled from we to was the step customers. due

color. product I that And offered to shelf at Or appreciate that? point? money you for the this have much is they Michael. a development pretty

If thereafter. we is under Kevin, out. I $X.X The around understood follow in development you're eyepiece development the contract. roughly contract have and a your with yes, and million, Production launcher developing Lockheed is the contract that speaking. we're coming current But that for question, contract, will the

Our of next Silverberg Bernstein Bernstein Jeffrey from question Capital. comes

Is progress a quarter nice the in here.

Just a quick follow-ups. of couple

On the coming just talking you sounded what about you larger distribution medical you think there? side, like saying I flesh were it Can were having out in. partner a

Sure.

We in go-to-market that you. to our have So, strategy what and our is very unique market. and can't expel surgeons on own hospitals resources call

to CRX and sell a that basically leader So, surgeons, large as our our their very go-to-market in partner headset going strategy market already space is we're label own. that instruments with white and they're going to

sheet a ongoing this and And that negotiations We're term We're standpoint partner, X I that at the from right either to active have marketplace level. that hopeful we of in revenue or now. year. is X announce penetration. So, market overall think,

what expel go-to-market we want simple and surgeons, own our on to there So that's for you. hospitals and our to call the have don't fact that resources strategy

So, we'll and sell has and channel, and have space a a and through. in that delivery is partner label distribution already they'll our that channel white technology

to announcement that very hopeful we're So, shortly. have

you in Can going on advanced to And about F-XX. that clarify it you're great. resulting That's about And I you displays talked on of flesh opportunity. larger with revenue think the just just the sequence just to a wanted wanted there what's you developing? I talk then Fantastic. out. I the that

Sure.

of it's technology. So, X basically lines

phase, full and actually AMLCD that the OLED we've to was ship that production-ready into that of our technology we the the We and been first, entering we are current now announced Our And helmet. is our company the knows is which was everyone specification for production the display, years. finally and for Kopin many that only meet able on working that application. something last requirements

proud partner very U.S. our over also transition X.X the took DoD friendly of the and years. So team, deposition to

great by So job that team.

continue production line business very that is will monochrome program, up world business goes micro-LED in years, that we also believe, we're our into at micro-LED bringing to currently have application have then color terms still So, Also, the concurrently which micro-LED. readiness the lines run X X, or ambitions struggling display, reaching albeit level the we're we aircraft. with to a least a now our create that more. as of of is our within different everybody color around that strong of And we for several those in

aircraft, So not, our our being the U.K. those We're are whether into planes seeing other that up those and others. way. customer some countries also uptake the or X Collins F-XX in are taking it's lines and NATO by technology technologies in of fixed-wing microdisplays business, through are that great planes, for the

where business. that's at with So we're that

then you. airframe? of revenue And of addition the the a within increase is new application part Got the

Exactly right. Yes.

So, we a have have light engine, micro-LED. our heads-up we also and which helmet display is business, the

that, year. think the of So, LCD top of around it seem ship continue year that it same on if to filters business be you on OLED basically of way, of of amount around and top per per to $X.X micro-LED, million they compounds, our that current will revenue

to you're So, the that year you do starting application into million for mark year per if simple next that $X space. $X math, million

Got you.

see the in production get like production, sounds to on just took guess, which And a quite provide I craft detail but any then wanted also to now. Okay. while you're could to you if it helmet, additional rotary

developing other our Elbit. We that there In we're are customer for are. cases, some programs

within has distracted late imagine, of Israel. what's can been of you Elbit on going As

active and specifically Apache So that behind Chinook are to And rotary architecture other on. and technology program do but iterations that that catching we see up, there production. market and wing with reason in display being we we bring several them into the of to only, is negotiations that are working are for for the Elbit

over year. So, the them forward best, into with we look safe. wish production getting half and we working course to second hopefully, And the all they're the of that them,

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

second for half a to your year. you your interest results your our for And Thank on Thank all have look hope day. the forward we Thank you folks. you Kopin. questions, delivering focus We great in joining. you, and

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

You may disconnect. now