Q1 2022 VIA Optronics AG Earnings Call
Hello everyone and welcome to the voia option. Next AG q1- twenty-twenty-two earnings call. We will begin in a few minutes time. If you'd like to register a question ready for QA, Please P a star, followed by 1, on your telephone keyads. Thank you for your patience.
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Speaker 1: Hello everyone and welcome to the via optortunics a Q1 22 earnings call. My name is Charlie and I'll be coordinating the call today. You ll have the opportunity to ask a question at the end of the presentation. May be large register question. Please press star, followed by 1, on his telephone key: pahas.
Speaker 1: I'll now hand the call over to your host, Lisa. fortuna with Investor Relations to begin. Lisa, Please go ahead.
Thank you and welcome joining me today our yurgan ikner, Founder and Chief Executive Officer, and DR marcusis Peter' Chief Financial Officer.
Speaker 2: I'd like to remind the everyone that statements made during this conference call relating to the company's expected future performance, future business prospects or future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of one thousand nine hundred and ninety-five.
Participants are directed to viaa uptrronics Form 20 -f for a description of certain business risks, some of which may be outside of the control of the company. That may cause actual results to materially differ from those expressed in our forward-looking statements.
We expressly disclaim any duty to provide updates to our forward-looking statements, whether as a result of new information, future events or otherwise.
Speaker 2: Our earnings release for the first quarter of 2022 is posted on the company's website at boptronx com. With that, let me now turn the call over to Jurgen for his opening remarks.
Thank you, Lisa. Good morning, good afternoon and thank you for all of you for joining us today. We are excited to briefly discuss our financials for the full year 2021, which can also be found on our Form 2, 20 F, high lighted our Q1 two 20, two results and, most importantly, share our outlook for Q2 and the full year thousand and 20. to begin, I'd like to take a few minutes to provide an overview of, we ask, key achievements over the last year and our go forward business strategy.
In 20- 20 one, we had many exciting business developments. We acquired and began the integration of Germany, a high tech company focusing on automotive system integration and user interfacesfor well known high end original equipment manufacturers, oemthis is the continuation of a successful partnership which has allowed us to provide advanced copit solutions.
With our display and touch components, including new developments in functionality.
Overall.
We formed a strategic partnership also with Sigma sense to develop new touch sensing solutions, this being part of our offering.
The partnership allows us to appignly new innovations across industries, from the consumer market to the high-tech automotive and industrial markets.
Finally we incorporated the new entity. We are electronics the Philippines.
For the design and development of camera solutions.
As a reminder, we are philippines- was incorporated to facilitate the integration of a camera design and development team that was previously part of integrated microelectronics, IMI.
Thus far in the fiscal 2020, we have also had some notable achievements.
Speaker 3: In February , we announced that we received the 2021 award for the best technology innovations value strategy for Germany from capital finance international. This award acknowledges our commitment to developing innovative and cutting edge solutions for applications that require satellite readable, robust and optical superior Ind active system solutions.
In may, we announced the expansion of our staff and capabilities in numberberheadquarters. We has added a new production site adchasen to our headquarters and started ramping up mass production in the automotive production line, which has already achieved track shipments of over thir 31 thousand units as of may 30 first 2020.
Risk growth not only demonstrates our flexibility and diligence, but also our innovative capacity as we set our sites on our potential growth ahead. Finally, this past month, the announced plans for new production site in the Philippines. We expect that site will increase operational efficiencies and help increase margins, while also mitigating the impacts of ongoing geopolitical pressures.
Cost increases and restrictions in China.
Also we have not been able to implement all the desired measures to negate the increased supply chain costs during the first quarter. We have agreements in place with customer starting in July which will allow us to adjustance prices and stabilize margins in the second half of the.
Despite this, we are proud of team has performed mits the Ong. Ongoing semiconductor shortages, shipping challenges and continued COVID-19 lockdowns in China.
Despite these headwinds, demand for our display systems and solutions remains robust. Forecasted demand expressed on a compounded annual growth rate or.
C H G, R bases from 20 to 20 to twent totwent 20, five for automotils, consumer and industrial, are 16%.
6% and 16% respectively.
More than ever. Work from home drove higher usage of PC, selecttos and tablets.
In addition, we consistently saw a greater need for connectivity in cars, more autonomous systems and shared mobility over the past year. Our customers are increasingly aware and sensitive to the technical and optity challenges that come with a new user interfaces combined out of displace and touch creens in terms of light, rock and extreme temperatures.
Our solutions stand up against the challenges of day across multiple end markets in which superior functionality and tourability is a critically differentiating factor.
Before I hand turn the call to markcus, I'd like to provide an update on the supply chain, specifically the global component shortage and its impact on via.
While we have continued to successfully navigate these challenges compared to the broader market.
Speaker 3: They have been cost increases affecting our business as a result of the component shortage and shutdowns in China, the Russia Crane conflict and material price increase due to freight rates. We continue to work with our customers at a case by case basis to mitigate the impact on our business.
In summary, we are pleased by the process that we have made and the results we have achieved. The first quarter of 2020 -two.
And this should support continued momentum and growth in the fiscal year twent thousand 20 and beyond.
Some however, during this year, we will focus on reinstalling and growing all margins.
This is the first priority with that set. I'd like now now like to turn over the call to markcus for a short overview over the full year 2021 financials and a detailed review of our first quarter: two point zero two two million and 22 performance.
Marcus.
Thanks JG and hel Lo over to everyone. I will start by reviewing our financial and operating performance for the full year 2021.
Then I will outline our first quarter 2022 results and our outlook for the second quarter and full year 2022.
For the full year 2021. We drove very strong top line results.
As total revenue increased by 18% to €118.8 million, compared to €152.6 million in 2020.
Revenue from the displac versus segment of €154.7 million, increased by 22% compared to 2020, driven a strong ammand from E manufacturers that generally acquire both larger and a higher number of displays than other automotive manufacturers.
Revenues from the sensard technologies segment of €26.1 million, increased by 2% compared to 2020, mainly due to higher sales to certain automotive and industrial customers.
Total gross margins was 11% in 2021 compared to 15% in 2020 reflecting, among other, some of the supply chain challenges the geordan just mentioned.
Moving to the first quarter of this year.
Total revenue of €52.7 million. The first quarter 2022 increased 28% from 41.3 million in the first quarter of 2021, driven by growth in both the display solutions and sensor techno segment.
This play. solutution's revenue of €46.8 million in the first quarter, increased by 32% from 35.6 million in the first quarter of 2021, driven primar primarily by growth in automotive revenue and industrial sales.
Sensor technologies revenue of €5.9 million in the first quarter, increased by 4% from €5.7 million in the first quarter of 2021.
Revenue from the automotive end market grew 74% in the first quarter 2022 and accounted for 39% of displaced rces revenue.
Revenue related to the industrial and specialized applications end market increased 24% in the first quarter 2032 and accounted also F 39% of displacer routions revenue, compared to 41% of revenue in the first quarter 2021.
Revenue related to the consumer end market accounted for 22% of displayed in solutions revenue in the first quarter two thousand and 22 compared to 30% of revenue in the first quarter of 2021.
Gross profit margin decreased to 7% in the first quarter from 11% in the first quarter of 2000, and rety.
As you have mentioned earlier, we are working diligently with our customers to mitigate inflationary impacts for our business.
thispase solutions. Gross profit margin of 6% decreased in the first quarter of 2022 from 10% in the first quarter of 2021 due to sales mix and the increase in the price of certain raw materials.
Space solutions. Gross profit margion of 6% decreased in the first quarter of 2022 from 10% in the first quarter of 2021 due to salesmix and the increase in the price of certain raw materials logistic costs.
Overhead and labor cost, as well as lower margins on sale products.
centensor technologies. Gross profit margin of twenty point.
Twenty point to 3% in the first quarter 2022, decreased slightly from 21% in the first quarter of 2021.
Primarily driven by product mix.
Research and development expenses increased in the first quarter 2022 to €1.5 million from €1 million in the first quarter of 2021. due to additional due to the addition of rnthe capabilities.
Which are to to a large extent related to the acquisition of German years.
Selling expenses increased to one point three million in the first quarter 2022 from one point two million in the first quarter of 2021, due to higher sales volumes.
General and administrative expenses of €5.4 million, increas in the first quarter 2021 from four point seven million in the first quarter 2021- due to, among other, the increased headcount to support the company's growth spanss and consulting expenses.
Operating loss was a €3.1 million in the first quarter 2020 -two.
Compared to operating income of o seven thousand in the first quarter of 2021.
Net loss was €3.7 million or o zero point eight three per basic. Its diluted share in the first quarter 2020 two.
Compared to net income of o two thousand were o point o o four per basic and they would share in the first quarter of 2021.
Ebitda rlos was one million Europe in the first quarter 2022, compared to EBITDA R of two point five million in the first quarter of 2021.
Display solutions. Ebitda loss was o three thousand in the first quarter 2022, compared to EBITDA of o five thousand in the first quarter of 2021.
Sensor technology. Ebitda was all two thousand.
Speaker 4: In the first quarter 2022, compared to one point one million is the first quarter of 2021.
Other segments, bitdta was one point of one point nine million compared to open nine thousand in the first quarter of 2021.
We finished the quarter, the quarter with cash cash equivalence of €47.1 million, which supports our strong runway.
For a which supports a strong runway for us to achieve our strategic objectives.
Looking ahead to 2020 two.
I would like to share our outlook.
For the second quarter we expect total revenue of 40 to €45 million.
This forecast incorporates the impact of COVID-19 -related shutdowns in Shanghai and sutu, which are expected to cause delays and which are expected to cross delays and logacic issues also during the second quarter.
For the full year 2022, we expect revenue growth of approximately 5% to 10% compared to 2021.
This forecast is based on intentional portfolio adjustments. The slowdown in the consumer market.
Component shorded especially in the camera. Business and uncertainty in the automotive industry.
Our outlook also reflects continued uncertainty related to the ongoing impact of COVID-19 night.
Overall we remain focused on the many growth prospects ahead of us, particularly in the auto and industrial markets.
Which we be prioritized due to the potentially higher margin and strong growth outlook.
With that financial overview I'd like. I would like now to turn the call back to jurggen for a few closing comments jorgggen.
Thank you, markcus. So, as a summary, in conclusion, we are proud of V? ious Reed accomplishments and are excited about the prospects for the remainder of the year and beyond. We are working hard to mitigate the impacts of supply chain pressures and we are adjusting our sales prices upward were possible to offset inflation and transportation costs, which will help us regain our historical margin profile and achieve our long-term margin targets.
We also believe that we have at the moment reached probably the highest level of costs that we see in our supply chain and will probably improve from there in general.
We are capitalizing on opportunities in the automotive industry through strategic partnerships with Corning and Sigma hands to enhance our hold form and sensor technologies, and we are in a position to capture additional opportunities in the industrial market. Our backlog remains healthywith new projects continually entering in the pipeline, and we continue to focus on higher value projects which will support margins.
Speaker 3: We have a strong balance sheet and at lean financial profile. We believe we are well positioned to drive strong growth in shareholder value over the next several years and we are looking forward to sharing the Germany now with all of you. Thank you for your continued support. That concludes our prepared remarks and I now turn the call over to the operator for questions and answers.
Thank you. If you'd like to ask your question, please press star followed by one on your telephone key pad. If you'd like to draw your question, please press star, followed by 2- I'm preparing to ask your question. Please ensure your muted locally as a reminder- and Star, followed by one on your telephone key ad now.
Our first question comes from Andrew pissagnliia of barrenberg. Andrew, your line is now open.
Thank guys, good morning.
Hello Andrew.
So I'd like to start out with. So you're entering.
2022 the seemingly some good momentum. And your top line can you talk about? See your guidance slides? Quite a slowdown, andas. Your progressive of's not surprising, given the ttom market, But what are the puts and takes of how you get to that five to 10% that?
Are are you being conservative or is this more? Is this more concerns around these component shorters than being able to get product to customers as being the main issue?
Well maybe Marcus, if you start and I add something. yeswell, it's a mixture of effect.
We saw on the vonnet side and the camera business. We see an issue with performance shortages indeed which the main limited from turnover secondly we.
Expect intention: the portfolio jcumments.
Because with a focus on margin for or the other customer, maybe he will shock for other choices.
But when margin is priority, we cannot entertain all sales orders that we do not really enjoy on the balance sheet.
These are major points probably. I think and of course we have the overall uncertainty in the automotive market while we.
But the focus on otoima, the you maers don't think we are that strongly head.
Yeah.
Ya maybe was won. one comment from my as it in as, as as I indicated before, I think at the moment, looking at today, we probably reached the highest level of potential cost: the supply chains. It will go better from there. This was also.
By we had by ther discussions was customers took so long because you don't know at the end of the day you will be will need to settle.
The shortages are not over. We are a sparker set impacted in the camera business especiallybut that that as I said from the day looking in the futureit looks much better it we had a few unexpected events really during the Q1 into Q2 but it 's.
So far I think we are okay. So it's a summary of things that we have to consider, But right now we actually have settled with some of the customers already. We will impose the changes July first.
And then we'will go from there.
And can you provide within automotive?
An update with your large one of your largest U's EV makers your customer and.
You know in terms of that like.
wouldn' that not provide you some strong visibility in the back half of the year that?
We would apimply maybe some conservatism on that guide.
Yes so far for this one it it is actually. So this month we will crhave all all the company is stoall. Also in July will run full capacity. Actually. We run higher then then full capacity because the demand increased So.
From July onwards, that facility will be working as as expected.
We had in also. That was part of the reason why you see the result as it is: some delays in that area, because the customer couldn't actually get also parts for their cars, So we had some slowdowns here. We actually have built, but the units have been been in our facility waiting for being picked up. But from July onwards it's all.
Up to that level that we expected we might have to broke on some some yield issues with the new equipment because at the end of the day meet some tuning over the next weeks. But from now on that that should operate as we planned and if everything Bros out.
As we have freed with the customer. This should be stable for the next four to five years. When you see already, we see already today is that from our automotive turnnoover, 26% in Q1 was with if V makek us, not only because 1, but the majority of the tnoof was bus, this one company. At the total, with all you make us, we had 26% tornoof our automotive business and the 1- one more assignment last week from a D maker in China. This will be coming out is a separate, separate release.
Focus is that we have right now is basically getting back to the regular to to normal margin level and it looks like and then we basically get to our target margins as we planned over time so that will. So there were certain measures cost up for sub products to overcome the cost on the other hand.
We are bundling, So a lot of things we couldn't really do last year because of all the things happening. We are bundling right arounddown the supply chain. We are basically working with our suppliers, So we are driving costs down on the supply side, which seems to be.
Surprisingly also successful. So we will have a cost up and the cost down on the supply side and we will make some rearrangements in the company focusing several areas which are right now basically at every production location in China here Germany and in the future in laaguna and to centralize those. So this should also be an additional cost saving exercise. So this this year is really the year will be consolidate. Everything we have done in the last year cut down costs and after the consolidation we will basically.
Follow follow the plan that we have what I can say here that we will have also in beginning of August . I think I mentioned that before we will have our new CMO on board and our.
Also communicate the changes that we able to do that a little bit later when he is on board, maybe have him also in the call, because that that is going to be a very important part of the organization.
Ok got it, Thank you.
Thank you, Andrew. As a reminder, you is to submit a question, Please pressstar, followed by one on your telephone key: P now.
Our next question comes from antthony stock of Craig. Helen antony, your line is now open.
Thank yougood morning everybody. You're going to wanted to focus in still on gross margins. You talked about July price increases. Can you outline what percentage of your revenues will see increases or what percentage of your products we see an increase in price, and what of other steps can you take to improve gross margins? Secondly, you mentioned that you do expect us margins to prove quite a bit.
Speaker 5: In the second half of this year. Can you give us an expected range and then ahead several follow-upps after that?
Yes this is what I, So we will actually get another call about this a little bit later. I was hoping that we are ready to show you this today. Already, I can tell you that more than half of our revenue and projects will see a core price increase.
Some of them a drastfic price increase and and.
That should the loan cover.
Some of the the margant Los that you have seen.
And unfortunately I cannot yet, maybe in voltary, maybe maybe in July I can give you more detailed numbers that I was hoping to provide that today already.
But the changes are still ongoing in. The final settlements with the customers are hopefully- and it's during the month of July , and on top of that we have the savings in the supply chain site.
So the Please. I I like to be conservative and and don't.
Set out well given give numbers.
In first the the tape.
inwhat I, in a way that I see at the moment, very positive, But so, but give me a bit more given a bit more time to provide the guidance there.
Okay and then on these, the June quarter revenue guide down quite a bit sequentially. Maybe take us through what divisions are down the most. Is your display division still holding up? And then really kind of the same question for your full 2022 guide: 5% to 10% growth. What kind of growth rate suming for that display of the business and are you expecting a parts of business that should be down year-over-year?
Yes So the the the, the problem in Q2 was basically.
It was all coming out of the blocked downs that we have seen in in China. As you might know, the Shanghai airport was blocked and, at the end of the day, every airport in china- the incoming goods have been blocked and the outgoing could have been blocked, So everything has been delayed and that caused the the the biggest impact. And Marco RIS, correct me if if if, I absolutely right.
Yeah and a little bit contributed was some delays that we had in the production, as I said, the the West Coast company that they had also supply chain issues, So but that was not nature. The major thing was really China: one TR. There were contract E for the Lo Berger facility who is not taking the volummees he supposed to take.
Oh yes, that's another, that's true, that's another automotive customer where the the volumes RAM down.
And we are currently figuring out why that is the case. Because it is not really not really transparent, to be honest.so we are. Hopefully we can provide more, more information there, but there was also part of it.
We are currently figuring out why that is the case, because it is not really not really transparent, to be honest. So we are. Hopefully we can provide more, more information there. But there was also part of it is true. I forgot that.
Okay and then just the second part of my question regarding full 2022 growth rates. holdoning it on the displays side. Your business. That was always.
The biggest piece to the story of why you came public was the display side. If overall rpss are going to be up fivepercent to 10%, what do you think thisdisplay will be on it?
I think this is. This would be mainly related to display. There will be also camera, camera business, but the display touch area is still the. one was the biggest, the biggest growth rate, the there will also be.
Actually we expected more camera growth this year, but camera has seen the biggest.
Supply chain problem at at the moment.
So the, the that that displays segment displays touch, will be the the biggest one for close in any case.
Yes okay, and then my last question. You commented about.
Nav maker in China that psure leases forthcoming. Can you expand a little bit more on that, the size of the opportunity? Is it going to amount to any kind of revenues for this calendar year and just timing of that?
It will not be for this calendar. It will be, I think.
Starting next year. The size is.
Not as big as the the, the the West Coast, umm russi, but it's a luxury wea.
In in in China.
Okay Alright, thanks guys, appreciate it.
Thank you. Thank you, Anthony. As a final reminder, if you wish to submit a question, Please pressa Star. Follow up by one on your telephone. keepy ad now.
At this time. We currently have no further questions. I'll hand back over to yoggen ener or any closing remarks.
You have all from pro a buyside. What I can say is Thank you for joining the call today.
For us. We are excited about the future of year and truly believe that we are on a way to continue the long-term growth. I hope that we basically overcome all the supply chain changes this year challenges this year. At least at the moment have a pretty good feeling about thathopefully, nothing else comes up with.
Kind of beautiful scene. In any case, Thank you for joining and being with us and have a great day.
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