Q4 2022 CYNGN Inc Earnings Call
Speaker 2: Greetings and welcome to the SynGen 4th Quarter and Full Year 2022 Earnings Call.
Speaker 2: At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker 2: And as a reminder, this conference is being recorded.
Speaker 2: It is now my pleasure to introduce to you Ben Mimak, Head of Investor Relations. Thank you Ben. You may begin.
Speaker 3: Thank you, operator, and thank you to everyone on the call for joining us today.
Speaker 3: The press release announcing Syngin's results for the fourth quarter and fiscal year ended December 31st 2022 is available at the investors section of the company's website at investors.syngin.com
Speaker 3: A replay of this broadcast will also be made available on the website after the conclusion of this call. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contain certain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
Speaker 3: These forward-looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook and will, and include, among other things, statements regarding the company's continued development of the Enterprise Autonomy Suite, or EAS, and its components, expectations regarding sales and or revenues.
Speaker 3: growth strategy, ability to deliver sustainable long-term value, ability to respond to the changing environment, and operational focus.
Speaker 3: Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations would prove to be correct. Information about the risks associated with investing in Tindian is included in its filings with the Securities and Exchange Commission.
Speaker 3: which we encourage you to review before making an investment decision.
Speaker 3: The company does not assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions or otherwise, except as required by law.
Speaker 3: On today's call, the company's Chairman and CEO , Leo Tao, will discuss recent operating highlights. Chief Financial Officer Don Alvarez will follow with a review of the company's financials for the fourth quarter of fiscal year 2022.
Speaker 3: We all will then return to make a few concluding remarks before opening the floor for questions. With that, I'll turn the call over to New York.
Speaker 4: Thanks, Ben, and good afternoon, everyone.
Speaker 4: Thank you for joining us. This is a very special earnings call for all of us here at Simjin as we report our first quarterly revenue since going public in October 2021. We are delighted to move out of the pre-revenue stage.
Speaker 4: and celebrate another landmark on our company's journey.
Speaker 4: I know many of you listening in are very familiar with our company, but I would like to take a moment to outline our mission and the opportunities we are targeting for investors new to Cengen.
Speaker 4: Tengen is focused on solving the global industry challenges associated with the high cost of labour, labour shortages and the cost of accidents arising from human error.
Speaker 4: Our proprietary software solution, the Enterprise Autonomy Suite, enables industrial organizations that operate fleets of vehicles to redeploy their workforce to higher value tasks while our self-driving solution Drive Mode handles the driving. Thus, companies can improve safety, reduce variability, and achieve the productivity they need to compete in today's economy.
Speaker 4: We offer customers the option to requisite existing industrial fleets using our turnkey hardware solution, the DriveMod kit, or buy new vehicles from our OEM partners which will arrive with our solution integrated off the line.
Speaker 4: Unlike many AV companies, we are focused on the automation of industrial vehicles using non-public spaces, which is a huge market today and growing every year, further fueled by the growth of e-commerce.
Speaker 4: because it's the backbone of all major industrial enterprises.
Speaker 4: and our aim is to help customers throughout the industrial space automate their fleets, increasing productivity, lowering their cost of doing business, and improving safety.
Speaker 4: During 2022, we made significant strides towards introducing EAS to the market and putting it in the hands of customers. And a list of achievements during the year surpassed our own expectations.
Speaker 4: We're going to play a short video that presents some of the significant milestones...
Speaker 4: and the Paxful events both commercial and technological and provide the opportunity to see our products at work.
Speaker 5: At Syngin, we unify autonomous vehicle software, leading hardware, and precise analytics to develop and deploy self-driving vehicles to industrial organizations. Let's do a quick recap of all that we accomplished last year. In short, 2022 was incredibly successful, productive, and prolific. When we started the year, our team and our portfolio were in great shape.
Speaker 5: group of companies. Through these initiatives, we found Enterprise Autonomy Suite increased productivity by over 30%. We secured paid projects with leading global customers, including commercial contracts to jumpstart bringing DriveMod to electric forklifts and mining applications. In addition to these accomplishments, we also remind ourselves with top brands that can help
Speaker 5: driving technology. We also released our Enterprise Autonomy Suite 8.0 which included 138 new features and a 75% reduction in cloud computing costs. Overall, 2022 can be defined by what we've built and what we've put in place as we move toward commercialization. Already, 2023 is off to a great start.
Speaker 4: I hope that the video got you excited about what we've done so far. Now I'd like to take a few minutes to give a little bit more context into some of the achievements you just saw in the video.
Speaker 4: Early in the year, we announced the collaboration with Columbia Vehicle Group to equip their stock chasers, which is a popular material handling vehicle, with St. John's autonomous driving capabilities.
Speaker 4: Customers who use Columbia's Top Chasers can now opt to equip them with autonomous functionality, either as an option on new vehicle deliveries or via retrofit on their existing fleet.
Speaker 4: By working together, St. John and Columbia make it easier for firms to integrate autonomous vehicles into their existing processes.
Speaker 4: We are first and foremost a developer of self-driving software, but in order to enable companies to operate existing fleets autonomously, we developed DriveMode kits that can be integrated into new and existing fleets, enabling legacy vehicles to process our software.
Speaker 4: Our patent-pending DriveMod kit is an important component in our go-to-market infrastructure and allows us for scalable deployment.
Speaker 4: for existing or new vehicles.
Speaker 4: By developing a fast economical retrofit package for existing vehicles, our DriveMod kit can simplify the transition to thermal vehicles for companies that would otherwise have to undergo the complication and expense of integrating a new vehicle fleet into the operation.
Speaker 4: We continuously improve and upgrade our software solutions and harness the data that we receive from our fleets to enhance artificial intelligence, develop new features, and support innovations in vehicle computing and sensing technologies.
Speaker 4: In July , we launched version 8.0 of our Enterprise Autonomy Suite.
Speaker 4: package of autonomous driving tools that manages customer fleet.
Speaker 4: While version 8 of AES delivers 138 new features and 75% reduction in cloud computing costs, we've continued to innovate and our customers can expect further improvements in AES in 2023.
Speaker 4: In the third quarter, we expanded Syngene's reach to include a second vehicle type, an electric forklift, when we signed a multi-phase contract to develop our enterprise autonomy suite for a multi-billion dollar building material manufacturer that uses thousands of forklifts in their global operations.
Speaker 4: Forklifts are the most commonly used material handling vehicles across the globe, and we're excited to enable this customer to operate their forklift cleats autonomously and add autonomous forklift capabilities to our EIS portfolio.
Speaker 4: Moving to the fourth quarter, we announced our first commercial contract in November , an agreement to deploy autonomous vehicles to the U.S. Continental facility in Southern California.
Speaker 4: Finally, just last month we announced another multi-phase development contract to deploy our AV technology on a third vehicle type through our engagement with a global 1000 manufacturer of heavy machinery to harness the capabilities of Syngen's DriveMod on a machine used in the mining sector.
Speaker 4: Our three engagements cover a full range of industrial applications, from industrial material handling, in logistics and manufacturing, to heavy industrial solutions in mining.
Speaker 4: This multi-traction is a testament to the flexibility and adaptability of our EES and dry-mock solutions and positions us to continue pursuing opportunities to broaden the capabilities of our technology.
Speaker 4: From manufacturing to logistics, to mining and construction, companies across the globe rely on their vehicles to operate their business and serve their customers.
Speaker 4: In the vast majority of cases today, each of these vehicles relies on the presence of one or more police for separation.
Speaker 4: However, reliance on people to carry out these tasks comes at a significant cost.
Speaker 4: The first and most pressing of these is the critical shortage of people to fill these positions.
Speaker 4: It is estimated that by 2030 labor shortage will cost the US economy 1 trillion dollars in the manufacturing industry alone.
Speaker 4: Secondly, as a result of labor shortages and the macroeconomic environment, the cost to employ people is increasing. According to the Bureau of Labor and Statistics, compensation costs for civilian workers increased by 5.1% for the year ending December 2022.
Speaker 4: on top of a 4% increase in the period.
Speaker 4: This growth in wages and benefits is making the cost of operating the vehicle ever higher year over year.
Speaker 4: Finally, industrial sites, by their nature, are high-risk working environments. And while everyone seeks to keep accidents at an absolute minimum, they are effective life for many companies. Every workplace incident has the potential to be devastating for the employee and extremely costly for the employer.
Speaker 4: with a preventable workplace accident estimated to have cost businesses more than $170 billion in 2019.
Speaker 4: In addition, with the growing focus on social element of ESG, the steps a company takes to safeguard its employees are getting more and more attention from investors.
Speaker 4: Therefore, we are seeing a huge amount of interest from companies for autonomous solutions that allow them to be more efficient, allow them to reallocate employees to more high-value tasks and can keep their employees and environment safe.
Speaker 4: The industrial space is a perfect candidate for early AV adoption. Streets are slower, so decision making is easier for autonomous vehicles. Environments are more defined, with less weather and environmental variability, which creates more repeatable automated solutions.
Speaker 4: Employees are trained to work alongside vehicles, instead of being exposed to the whims of the general public. These are just three of the reasons we think autonomous vehicle solutions will start in industrial environments. In addition to being well positioned to take advantage of the fourth industrial revolution, autonomous technology is ideally suited for large-scale adoption by our customers.
Speaker 4: Our initial focus on developing technology on public roads has resulted in a flexible, adaptable solution that overachieves the requirements of an autonomous system when applied to industrial settings.
Speaker 4: As I mentioned earlier, our Drive Mode Kit, built by a contract manufacturer, allows firms to implement our technology on all vehicles in their existing fleet, as well as new vehicles therefore grey s chef and are mediocre for off-road or a bad-ass sex stuck career.
Speaker 4: A sophisticated Syngen Insight software enables the company to control their vehicle through a single system.
Speaker 4: Therefore, we are very excited in the position we find ourselves in today and possibilities for the future. During 2023, we will advance our initial commercial success from 2022, building on our initial stock-chaser deployment and further customer engagements. In order to best position ourselves to do this, we recently appointed Chris Wright as our first head of sales in December . Chris has an excellent pedigree, having previously worked at Braincore, and has been a member of the company's marketing team for over 20 years.
Speaker 4: where he secured partnerships with notable customers and OEM manufacturers to deploy thousands of automated robots leading to a landmark of 100 billion.
Speaker 4: Square feet covered autonomously in 2021. The second of our aims for the year is to continue to meet our development milestones on our forklift project, targeting mass market release of dry mode kit enabled electric forklift to follow our lead customer engagement.
Speaker 4: Feedback from our customers has been extremely positive so far and we are very excited by the potential of an expansion into the forklift automation.
Speaker 4: Finally, we continue to work to meet the requirements of the multi-stage development contracts on heavy industrial vehicles.
Speaker 4: This engagement is at an early stage, but we aim to prove out the suitability of our technology for use in mining and heavy industrial environments during this year with the ambition of releasing commercial products in this space sometime next year.
Speaker 4: is at an early stage, but we aim to prove out the suitability of our technology for use in mining and heavy industrial environments during this year with the ambition of releasing the commercial products in this space sometime next year. With that, I'll turn the call over to Don.
Speaker 4: Thanks, Leor. I'll now take you through a brief summary of our financials. But first, because we've had several questions about it over the past few days, I'd like to confirm that Tengen's banking relationship is with Bank of America.
Speaker 2: Now, with that out of the way, I'll turn to the financials. As Lior mentioned in his remarks, I'm very pleased to report that during the fourth quarter ended December 31, 2022, we reported our first revenue as a public company as we booked $262,000 in revenue. As part of that protests back in the Dallas area some 10,000 people have rentals already stems. During the second quarter end in November , June 27, 2022, couples, families, and the Natalie volatile, political wing attended a memorial to be recognized in that celebration.
Speaker 2: $250,000 of this amount was related to the completion of the first phase of one of two multi-phase non-recurring engineering development contracts signed in 2022. These NRE contracts with commercial partners will bring new vehicle types to the market and have a total contract value of $1.6 million. No operating expenses for the fourth quarter were $5.6 million.
Speaker 2: quarter of 2021 as we incurred additional expenses related to the continued hiring of high quality engineers and other expenses related to managing a larger team.
Speaker 2: For the full year of 2022, total operating expenses were $19.5 million compared to $90.4 million for 2021. The increase was due in part to a $4.5 million increase in research and development expenses related to the increase in engineering personnel mentioned above.
Speaker 2: We expect to continue to increase the size of our R&D team and therefore we expect these expenses to be higher year over year during 2023.
Speaker 2: General and administrative expenses were higher by $5.6 million in 2022 compared to the prior year due to the company expansion and additional compliance costs mentioned earlier, as well as an increase in non-cash stock-based compensation expense and additional costs related to the renewal of a lease.
Speaker 2: that included the expansion of our facilities. Fourth quarter net loss was $5.5 million, or 16 cents per basic and diluted share, compared to $2.1 million, or 10 cents per basic and diluted share in the fourth quarter of 2021.
expansion of our facilities. Fourth quarter net loss was $5.5 million, or 16 cents per basic and diluted share, compared to $2.1 million, or 10 cents per basic and diluted share in the fourth quarter of 2021. On a full year basis, kids from all over the department, undo their
Net loss was $19.2 million, or 62 cents per share.
compared to a net loss of $7.8 million or $1.33 per basic and diluted share in 2021.
Turning to the balance sheet, we ended the year with unrestricted cash and short-term investments totaling approximately $22.6 million, an increase from the 2021 year-end cash balance of $21.9 million due to the private placement offering we completed in April of last year. Working capital at year-end was $22.4 million.
Up slightly from $22.19 at the end of 2021.
And 2022 year-end stockholders' equity was $24.1 million compared to $22.3 million at the end of 2021.
Additional detail on these numbers can be found in our earnings press release that was issued earlier today and the 10k that we anticipate filing with the FCC later this week.
on these numbers can be found in our earnings press release that was issued earlier today and the 10k that we anticipate filing with the FCC later this week. With that, I'll turn it back to Lior.
Very final remarks. New York? 2022 is a transformational year for St. John and all of us who work here.
We made amazing progress on our mission to bring autonomous vehicles into use across the industrial space and met or exceeded all of the milestones we set ourselves at the end of 2021.
And we're not slowing down. During 2023, we'll work tirelessly to introduce our stock chasers in as many locations as possible while also bringing to market our autonomous forklift solution and developing our heavy industrial product.
I look forward to keeping you updated on all of these projects throughout the year. Now I'd like to open the call up for another question.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment please while we poll for questions. And our first question comes from the line of Theodore O'Neill with Litchfield Hills Research. Please proceed with your question.
Thank you very much.
So you have multiple paths to commercialization for the DriveMod stack. You've got the StockChaser, the Forklift, the money equipment, and it can come as a retrofit or an OEM product. And I was wondering if it is too early to tell us which one looks most promising for 2023 or 2024.
And a follow-up to that is, are you discovering any interesting pricing information as you explore these multiple paths?
Hi Theo, this is Lior. So they might look like different pets but...
What our product really is, is EAS, it's the software, right? It's the software that allows us to automate these vehicles and replace the human on the vehicle. It's the management tools that allow the customer to observe the fleet and manage it and even take over the fleet.
These different applications, whether it's inside of where I was on a stock chaser or out in the mine or to support construction material logistics, are different implementation of that software in different vehicles through our partnerships with these OEMs.
If you sort of follow the milestones that we've been releasing throughout the year, you will see that
The stopchasers and the focus on logistics and manufacturing is the most advanced in its readiness for commercialization. And this is where Chris Wright, our new head of sales is going to focus most of his efforts on really taking that across the line to customers with our ability.
to manufacture and integrate it, like you said, either for new vehicles or off the line using our contract manufacturer. The other two initiatives that you announced, both in the mining and the heavy industry, are in research and development phase. They're both paid projects that over time will evolve into the same stage that stock shares are today.
which will allow us to then commercialize them. So one of the things that we talked about earlier is with the market conditions, we accelerated some of the initiatives that otherwise we would have been.
to then commercialize them. So one of the things that we talked about earlier is with the market conditions, we accelerated some of the initiatives that otherwise we would have been...
planning to do in 20.25 and pull them forward. That's what created these three threads, but their timeline is slightly different. The structures are in sales mode at the moment and the other two are in development, probably going to become available next year and deal.
Okay, that makes sense. Are you seeing anything interesting in terms of pricing on this?
Yeah, we are – we've announced the first commercial win that we have. And this is Ben Landon, by the way. Theodore? Hello? Yep. Yep. So –
We we did announce that that first commercial win with US Continental so that was certainly a great validator of
the pricing that we had established through a lot of the data that we shared through our IPO and essentially building that market opportunity based on the cost of human labor that sits on these vehicles to operate them. So we are getting validation there in the form of that initial conversion and we expect and are seeing
further validation from the ongoing customers that Chris Wright and the sales team are having to continue deploying that commercially available stock chaser solution.
Okay, thank you very much. And our next question comes from the line of Rommel Dionisio with AGES Capital. Please proceed with your question. Okay, thank you very much.
Good afternoon, thanks for taking my question. I just wanted to follow up on something you had said earlier, Leor. You delved a little into the opportunity in mining and materials handling sector. Obviously a lot of that industry occurs overseas, so I just wondered, do you feel that that could be a significant opportunity for you to expand internationally?
And how do you guys think about preparing or building an international sales force to be able to address those opportunities, specifically in the mining and materials handling sector? Thanks.
Hi, Romel. Thank you for joining us today.
Hi, Romel. Thank you for joining us today.
Being a software company and working in collaboration with the OEMs is really what allows us to take advantage of the fact that they have the footprint close to the customers, they have the relations, and they have the entire support system for the hardware, their vehicles, and whatever is installed on top of them, where we can remain...
a smaller, more leverage company as a software company.
The other important component is our focusing the industrial applications.
and are insisting on staying away from public growth means that the regulatory space is much more accommodating and the implications of working across borders is less of a consideration for us. So the combination of these two working with the OEMs have the global presence and our ability to remain in private spaces.
It really allows us to expand globally through these relationships and throughout their own deployment. We're less impacted than anything on the road, anything automotive, the robotaxial trucks that has to go to the local DSPs, or NICs equivalent, and to the complicated regulatory hurdles.
Okay, and just on the revenue front, first of all, congratulations on those initial revenues. Wonderful to see that. To what extent is Infinitracker playing a part in that and maybe just an update on the outlook for that business, incorporating that into your, as part of your sales strategy going into 2023? Yeah, thank you.
Sure, this is Ben Rommel. Thanks for the question. Yeah, we are fairly consistent in terms of the EAS offering that we have been touting since the IPO. To Leor's point earlier, we have been doing a lot of work on the EAS offering.
We really see EAS as that umbrella that captures all of the value that we bring to customers, ranging from vehicles that drive themselves to various assets throughout their business that give them additional data insight, let them see more about the work that they're doing, learn more, automate that, and provide the types of value propositions that would be expected from.
this data revolution and automation. So we see Infinitractor as a natural fit into that much more than as its own standalone product. It is it's an opportunity to cross-sell when the vehicles are working alongside assets that need to be tracked and so we see we
We expect the effort to remain consistent to have its overlap and really infinite track to reach the peak!
an additional peripheral, additional opportunity to create value for customers that dovetails in with EAS.
Thanks very much.
Great. Okay, thanks very much. Absolutely.
And our next question comes from the line of Darren Tuttle with Singular Research. Please proceed with your question.
Hey, thanks. Congrats on Great Quarter guys. I think, just a question I have related to the non-engineering contract, non-reoccurring engineering contract revenues forecasted of around 1.6 million.
Is that related to pilot vehicles or would that include a full fleet of vehicles for some of these latest partners that you have? Thanks.
The reason that we are
categorizing that as NRE is that those contracts, specifically the work that is under contract, is engineering development work. It is a precursor, as Lior described, to bringing vehicles to a commercial ready state so that they can be offered as a general release.
general availability on the EAS platform. So this we're really seeing come to fruition what I would say is the flywheel between R&D and deployment and sales which is to find lead customer or customers that can help to be sponsor customers.
to justify the work that we do for a new opportunity. Oftentimes, that opportunity is driven by the type of vehicle that's needed to do a certain type of work. And then, through landing that validation customer, generating revenues along the way.
we share that cost burden and validate what one of our leading customers would be so that when we reach that commercial release, we transition from NRE, from engineering development, into a saleable commercially ready solution as we have done to this point with the stock chaser. So what you're seeing play out is
the first steps in what we expect to largely be a repeatable process that generates revenues while we prepare other vehicles for commercial readiness to be offered on EAS. Okay, I gotcha, I gotcha. And then in terms of the mining contract, so
For that one, is that a specific location? Is that indoor or outdoor?
or will that be like multi-use for a vehicle that is working in that mining sector? Just trying to determine a scope of the potential for the specific use case of those vehicles.
Sure. I'm somewhat constrained in the amount of information that I am allowed to share here, but I can say that this first application is targeting outdoor, so primarily open pit type of mining applications. That's about as much as I can share at this stage.
Got it. Okay, thank you. And then, you know, just last question for me. Any guidance or expectation on, you know, cash to end the first quarter here of 2023? Any eating guidance on just existing cash balances? I know that.
in that banking relationship with Bank of America, but any guidance on cash left over at the end of this quarter.
Yeah, sure, nice to have you on the call, Darren. So we had, we ended the year with about 22.6 million, and, you know, without getting into quarterly, quarter-specific cash guidance, we're pretty comfortable that that's enough cash for the year, so, you know, you can probably get math there.
and see what the quarterly amounts would look like. Our burn rate for the first quarter is not going to be dramatically different from the fourth quarter.
And the next question comes from the line of Brian Dobson with Chardin Capital Markets. Please proceed with your question.
Good afternoon. Congratulations on the contract with U.S. Continental. I suppose as you're spreading that news around, what's the feedback been like from potential customers that you're speaking with and would you expect similar announcements later this year?
We have definitely gotten positive response. Of course, you have a whole swath in the adoption curve of customers, ranging from your early adopters who are excited about being the first to use the technology, like our friends at USC.
and to those who are slightly more risk averse and like to see that a brand they know or somebody in their domain is using and then want to be a quick second mover and all the way into people who are going to be late to adopt. So we're now making our way through that adoption curve where we're finding our early adopters we've knocked over that first stop.
suddenly all over the United States, potential customers, to have streamlined and easier opportunities to come see the vehicles at work at various facilities.
And yes, our focus for sales for the commercially available StockChaser is to hopefully be sharing additional success stories along the lines of USC with you throughout this year.
Yeah, great, thanks for that color.
So there's been discussion in the industry about the use of vehicle automation to replace or supplement conveyor belt technology. I guess as you're thinking about the coming years, do you see this as a key area of opportunity for the point?
One of the things that the stock chasers were implemented on a manufacturing line or large logistics facility can deliver that's difficult for a conveyor is the flexibility and configurability.
sometimes during the day the workflow changes, sometimes at peak times you need to change the workflow in a way and it's very difficult when you have a large conveyor that's bolted to the facility to make those changes. And just so one of the things that we think autonomy...
in these large industrial settings really brings is that flexibility, it's the ability to adapt to an ever-changing facility needs and be responsive and be able to do so without additional investment.
And just to add a little bit of additional color to that, it's also not necessarily an either or type of situation, which I think is a little bit, I read into your question. And we have had multiple conversations with customers who run very large, potential customers who run very large facilities.
in which they utilize miles of conveyor belts. And a primary use case for a vehicle like a stock chaser there is actually to help streamline the conveyor belt repair process and bringing parts out and or shuttling the right people, the maintenance people out to areas of the conveyor belt that break down and need maintenance.
And as you might imagine, that then becomes a very time critical type of operation. And it's definitely being brought to our attention and doing that with autonomous vehicles can cut down that downtime significantly. So we're also seeing some supplementary opportunities stemming from both of those solutions.
Yeah, very good. Thanks very much. There are no further questions at this time. And this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.