Q3 2019 Earnings Call
Unlike the general Comping earnings call.
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Yes.
Thank you for gold copper sorry, joining today.
Hi, I'm, sorry, I can barely hear you always thought again.
Hoping copping.
Open carbon thank you.
And now please have your first and last names and could you spell them.
<unk>.
First name D.A.B.I.D. David.
And our last name we are all W.M. wrong.
Thank you and what is your phone number with area code.
Two one to 960 3697.
And finally, what is the name of your company.
Hey, I.E.R.A. I era.
Thanks.
Okay Hi.
Our.
Yes, correct.
Thank you I'll be connecting your line into the Koeppen Corporation third quarter 2019 financial results Conference call. Thank you.
We are now century.
Harvesting the investment with me for the past several years.
You are technology and product development.
Sure great much more stable.
And predictable growth.
We enter 2000 trendy and beyond.
Yeah, I industrial business.
Which is great 100% growth this quarter.
Made for outlet small revenue base.
Well repeat a custom house watsco safety.
Oh by three EM.
In the public safety sector.
Got safety.
What that early adopt it all back display technology for all the new reality.
Oh, Hey, our applications.
Creating to foods has freed silver imaging system.
Which allows five five side is to see that doctors who smoke.
We believe public safety.
Libya, you increasingly important category player.
Well also see continued strong demand for real where.
Which as being a good part of for many years.
They continue to benefit from the groping a up for enterprise applications.
We anticipate that business what coping with further increase when do you into chose their go to our your criticism.
31% growth and military revenue.
What's another highlight for the quarter.
We again saw.
Blown demands for the F 35 fighter jet programs.
Which is currently run with the course of administrative Avenue.
Well also receive a new production order under EF W. S I program.
Significantly larger than the previous daughters.
In the coming yet.
We do expect to see a significant increase.
Rental revenues.
As a number of co labs will move from development production.
Yes, the production volumes from multiple per west Wes.
We also mystic.
Yeah Rep military revenues with not only continued to grow.
It's also would be more predictable.
I say last quarter.
Elements of a new strategy.
It would be to continue develop them up on lightning Michael audit display.
Yes, we have discussed earlier.
Fabulous model.
Allows to cost effectively invest in deciding and differentiable technology.
Could you actually have many multiple applications.
Across our customer base.
We continue to make progress.
In the development to advance our the display.
Coming over to global companies.
Both for broad consumer related applications.
Our Q3, a savings of approximately 20%.
Include both lower payroll expenses.
Yes, well every deal with product development costs.
With that continuing improvement in our cost structure in Q4.
As with any income benefit from further savings.
After the spin out Oh solos and with good technology.
Finally.
I've thought okay, but below a dollar.
And with blowing step to regain comprise wind assets.
We have until April 20, trainee equipped playing safe.
And we will address the issue they use you'll find that.
To summarize.
Were pleased with the progress in Q3.
Both in revenue and call.
And look forward for this momentum to continue.
Now what turned to port Richard So you can provide additional details.
Especially around the cost structure.
Thank you John for the quarter total revenues were 6.1 million compared with 5.1 million for third quarter 2018.
Cost of goods sold for the third quarter, 2019 was 4.7 million or 95% of product revenues compared with 3.7 million for arbs on a product revenues was sort of sort of last year.
R&D expense in the third quarter 2019.
Point 4 million.
Compared with 4.6 million the third quarter 2018.
Primarily due to the licensing of certain products and other development programs being curtailed.
As gene expenses were 5.1 million in third quarter 2019, compared with 7.2 million in the third quarter 2018.
As you know.
Fences decrease for three months ended September 22019, as compared to three months ended September 29 2018.
Primarily due to a decrease in compensation expenses, including stock based compensation and amortization of intangible assets.
Other income expense was expensed approximately 77000 for the third quarter of 2019 compared with income of approximately 175000 for third quarter 2018.
During the three months ended September 28, 2019 and 2000.
At some point out 2018.
We recorded approximately 89000 and 227000, respectively, a foreign currency losses.
Turning to the bottom line or net loss attributed noncontrolling interest for the quarter was approximately 6.6 million or eight cents per share compared with a net loss of 9.8 million or 13 cents per share for third quarter 2018.
Third quarter amounts of depreciation and stock compensation are attached in the table to the Q3 press release.
The above amounts discussed are based on current estimates and listeners should review our Form 10-Q for third quarter 2019 for any possible changes and additional disclosures.
Operator, we will now take questions.
Sure so.
Thank you.
It's been just you'd like to ask your question. Please signal by pressing star one on your telephone keypad.
You are using a speakerphone. Please make sure your mute function is turned off to unlock a signal to reach a equipment.
Again, but I still want to ask a question.
We will last for a moment to along every when an opportunity to signal for questions.
We will now take a first question from Glenn Mattson Landenburg Thalmann company.
Hi, Thanks for taking the question. So curious about the Scott's a the three m. public safety revenue coming due this quarter was that expected now I think you were talking in the past about having a.
Good Q4 outlooks for that as well did you pull any of that forwarders. There does that just since the beginning of a better ramp for that brought us.
No it.
Q4, nothing was pulled forward from Q4.
So it was what we expected and what we continue expect going forward.
Okay, and can you give us any outlook or any insight into as far as the real where business goes how that brought it is.
Due in the marketplace, if you're if there if there is selling through all the all the.
Well on all the components that they do providing or.
Any any color there.
So I mean, you really need talk to real where about how their end demand is I can tell you that we have discussions with them all the time and so our demand with them is still strong so.
Okay.
Great last one question on them for me on the military was.
No you talked about you know as more of these programs ramp you'll have a better predictability over the coming years, but can you give us any insight as to what your visibility is at this point as far as 2020 goes.
Well, we have orders right now through June of 2024, our large programs F 35, and FWS I and we expect it to receive additional orders very shortly on those programs. So we think those programs are well in place for 2020.
And we're hearing a discussions at the volumes will continue to ramp as we expect if not higher and then the other development programs are on track.
Okay, Great. That's it for me thanks, guys.
Thank you so.
We know taken next question from Mr., Matthew Galinko from National Securities.
Hey, good morning, Thanks for taking my question I guess is going a little bit further into public safety I'm curious I'd be on the stops relationship, which now has been in place for a while now.
Is there anything else you could talk about or any direction, where you think.
Displays are going to be pulled into in public safety and what's the timeframe as you're thinking about.
Okay. The question was Oh, how how about the either coppice safety programs.
We I work with.
Several big companies on that and I think we're not privy to the top by the progress Oh when directly she was the products.
Welcome to safety is the area there with focus on right now.
Gotcha, Okay, and can you say, whether the work you're doing with other companies is relatively new or has that been underway for.
A few quarters at this point.
Several of the Daimler has been going off a while yeah.
Gotcha. Thank you and maybe just lastly, I know you touched on the old business, but do youve any updated thinking on when you move into.
Material volumes there.
Yes.
Backlog is a very exciting area I think Dave will be that the decks fixing for wearable.
In this meeting or in this conference call. We had shade mentioned that we actually developing to advance display with two global companies for consumer related products.
So I'm pretty far along I know, we hope to see some revenues next year.
Great. Thank you.
Thank you solving not take our next question from five to Mr., Patrick Metcalfe from Newbridge Company.
John can you speak to the to consumer wins, you have with the global companies I. Just can you tell us what region there in our they from North America Asia, you give us any color on that.
I see the global [laughter] Bye now.
I'm not being killed by that Andy I'm, a big companies and they are calling them to relay dead.
And.
And get it it there is as display which I think will enable.
I'm not aware both to be used.
Okay, and you just can't tell us if its north America or Asian their headquarters.
No I don't I, Ben Saitz that you've had a positive rebuild holiday I shared yeah, yeah, yeah right. Okay.
Okay, Okay, Great and then I wanted to ask you.
Regarding virtual reality headsets.
You see L.C.D., playing a role.
Micro lcds, playing a role in VR headsets in 2020 or 2021 do you see any activity for yourself in that area.
Yeah I patches of anchor question currently at the mostly I have said I still using my co Ltd.
And the as my quote.
Production rate goes up which I too would be sometime next year.
Hi, Thanks to dancing trying to what you will see a more droste shift from Michael L. C D to Michael on that they will be editor living here right. Now next year, we'll just do a lot of installation with <unk>.
Capacities design game, and then two dogs and tried to why would they be obvious.
Okay, and then the micro allege I know you guys just spent about two years.
On stealth mode on that we haven't heard much about that when do you feel comfortable coming out and letting the market know where you basically stand with micro Leds.
And your your supply chain with that compared to the competition, where do you think you stand today and when can you talk about it.
Yeah, Michael I'll, let we actually.
People or color on that yes, seldom about three years or see this week [noise].
Recognize that next growth mode, and wearable would depend on micro outlets.
And you know when they actually became very good progress with that sometime early next year, we'll let people know.
Have we stand I came away, we had tobacco position right now.
Okay and could your partner in micro alleged today could they be building more capacity in the near term.
So encase eight large global consumer player has strong demand.
The answer is yes.
Okay, Great and then I want to shift over to the military because my Investor base I keep hearing you know this company has a better display Goldman is going to get replaced in the F. 35 program. However, we keep delivering the revenues I keep hearing so supply.
Can you give us a little idea where this comes from war, how you feel about your position with the F 35 program.
Yeah, we don't comment on either companies what other companies.
Three.
But.
We wanted to look at South I think in the military programs, especially in micro displays.
We have a bad dominant position. So it will continue to would be doing so so we out there.
The company the military programs go to arena.
Okay, Alright, Thank you guys and I hope to see at a much better 2020.
So we are with best so [laughter].
I talk to you guys. So.
Thank you.
Thank you saw it up is there no further questions at this time I would like to turn the conference back to you. So.
Well I think you may have much for joining us. This morning, and we do look forward to discuss where you put up next quarter results. Thank you.
[laughter]. Thank you just got going through this conference call. Thank you for participation are now disconnect your lines.