Kopin Corporation Reports Financial Results for the First Quarter 2024
Kopin reported its financial results for Q1 2024. Product revenues increased by 18% year-over-year, driven by a 28% rise in defense product revenues, mitigated by a 17% drop in industrial product revenues. The company expects double-digit revenue growth in 2024, buoyed by new contracts, including a $20.5M order for a new weapon sight configuration. However, total revenues decreased by 7% to $10M, impacted by a 69% decline in R&D revenues. Kopin faced a net loss of $32.5M, a significant increase from the $2.6M loss in Q1 2023, attributed to higher costs and a $24.8M litigation judgment.
- Product revenues increased by 18% year-over-year.
- Defense product revenues rose by 28%.
- New customer orders, including a $20.5M weapon sight contract.
- Positive book-to-bill ratio of 2.7:1.
- Expectation of double-digit revenue growth in 2024.
- Total revenues decreased by 7%.
- Industrial product revenues fell by 17%.
- R&D revenues declined by 69%.
- Net loss increased to $32.5M from $2.6M in Q1 2023.
- Increased costs of product revenues to 95% from 87%.
- SG&A expenses surged to $7.2M from $4.6M.
- Legal fees and litigation judgment added significant expenses.
- $24.8M accrued for Blue Radios litigation judgment.
Insights
Kopin Corporation has shown mixed results in its Q1 2024 financials. The positive aspect is the 18% growth in product revenues, driven primarily by a significant 28% increase in defense product revenues. This is a strong indicator of the company's effective strategic shift towards defense applications.
This growth, however, is partially offset by a 17% decline in industrial product revenues and a substantial 69% drop in funded R&D revenues due to completed defense programs. Investors should note that the cost of product revenues increased to 95% of net product revenues, indicating higher overheads, primarily from excess and obsolete materials.
The company's SG&A expenses rose significantly by $2.6 million, mainly due to legal fees related to the Blue Radios litigation, which resulted in a $24.8 million judgment against the company. This has critically impacted the net loss, which surged to
Looking ahead, the company's expectation for double-digit revenue growth in 2024 could be promising if they manage to control costs and capital expenditure. However, the potential appeal process for the litigation could add further financial strain.
From a defense market perspective, Kopin's focus on high-performance optical solutions for defense applications is well-aligned with market demands. The new $1.4 million and $20.5 million orders for weapon sight configurations and the contract with the Naval Warfare Research Center illustrate that the company is positioned as a significant player in the defense technology space.
These new projects not only validate the company's technological capabilities but also could lead to sustained revenue streams. However, the overall decline in funded R&D revenues implies that Kopin must innovate to secure new contracts continually.
Geopolitical tensions and increasing defense budgets in various countries provide a favorable macro environment for Kopin. Nevertheless, sustaining this upward trajectory will require meticulous management of manufacturing costs and further diversification of their client base beyond defense.
The legal judgment of $24.8 million against Kopin in the Blue Radios litigation is a significant setback. This judgment, along with the accrual of the full amount under accounting guidance, adversely affects the company's financial posture.
Legal processes can be lengthy and costly and even an appeal could lead to more financial burdens without guaranteeing a reversal of the decision. Therefore, investors should be cautious about the potential for continued legal expenses and their impact on future earnings.
Companies often face similar challenges; it is essential for Kopin to navigate these carefully to mitigate long-term financial damage.
-
Q1 2024 product revenues increased
18% compared to the same period in 2023 -
Defense product revenues increased
28% partially offset by a17% decrease in Industrial product revenues - 2.7:1 Positive book-to-bill for Q1, 2024
- Expect Double Digit Revenue Growth in 2024 over 2023
- Received several new customer orders including a Naval Warfare Research Contract
- Verdict received in Blue Radios Litigation
Commenting on the quarterly results, Michael Murray, Chief Executive Officer, stated, “We continued to make strong progress on our strategy to reset the course and focus within Kopin. Sales of our products for defense applications continued to be strong, which has been our primary focus since we initiated our new strategies in 2023. We continue to believe that 2024 revenues will have double digit-growth as the first quarter marked the entrance of new customers and projects including a new development project with the Navy Air Warfare Center for research in advanced high frame rate lens-less display architectures. Also in the first quarter, Kopin received a
“Kopin continues to demonstrate very strong momentum in our book-to-bill rate which ended positively in the first quarter of 2024. We are fortunate to have many great long-standing customers who remain supportive of Kopin during this transformative time. Further, we are excited to see the benefits of these efforts as we see new designs and opportunities with our current and new customers increasing.
“Our focus remains on quality and efficiency. Over the last year, we have instituted several organizational changes to clarify accountability, established measurable goals and metrics, and brought in new program management, business development, and quality skill sets. These changes are the foundation of our growth plan. To improve cashflow and focus, we also began exploring the process of monetizing the investments we have in several companies, our Intellectual Property portfolio, and several cost reduction activities.
“The global landscape suggests aggressive tensions are increasing around the world and defense affairs are becoming more dynamic. We believe Kopin is well positioned to deliver to our soldiers and allies the defense systems they need and the innovations that enable the market and return value to our customers, society, and internal and external stakeholders.”
Mr. Murray concluded: “Regarding our recent announcement of our Blue Radios litigation, we are disappointed in the outcome and do not believe the findings were justified by the facts. We are reviewing our options, including a possible appeal of any judgment that Court ultimately enters.”
First Quarter Financial Results
Total revenues for the first quarter ended March 30, 2024, were
Cost of Product Revenues for the first quarter of 2024 were
Research and Development (R&D) expenses for the first quarter of 2024 were
Selling, General and Administration (SG&A) expenses were
On April 22, 2024, a jury verdict was entered in the
Net Loss Attributed to Kopin Corporation for the first quarter of 2024 was
All amounts above are estimates and readers should refer to our Form 10-Q for the quarter ended March 30, 2024, for final disposition as well as important risk factors.
Earnings Call and Webcast
Kopin Corporation management will host the conference call, followed by a question and answer session.
Date: Tuesday May 14, 2024
Time: 8:30 AM Eastern Time (5:30 AM Pacific Time)
International number: 203-518-9843
Webcast: Q1 2024 Webcast Link
Conference ID: KOPIN
The Company will also provide a link at https://www.kopin.com/investors/ for those who wish to stream the call via webcast. Please call the conference telephone number 5-10 minutes prior to the start time.
A telephonic replay of the conference call will also be available through May 21, 2024.
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay passcode: 11155912
About Kopin
Kopin Corporation is a leading developer and provider of high-performance application-specific optical solutions consisting of high-resolution microdisplays, microdisplays subassemblies and related components for defense, enterprise, industrial, and consumer products. Our products are used for soldier, avionic, armored vehicle, and training & simulation defense applications; industrial, public safety and medical headsets; 3D optical inspection systems; and consumer augmented reality (“AR”) and virtual reality (“VR”) wearable headsets systems. For more information, please visit Kopin’s website at www.kopin.com.
Kopin is a trademark of Kopin Corporation.
Forward-Looking Statements
Statements in this press release may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the safe harbor created by such sections. Words such as “expects,” “believes,” “can,” “will,” “estimates,” and variations of such words and similar expressions, and the negatives thereof, are intended to identify such forward-looking statements. We caution readers not to place undue reliance on any such “forward-looking statements,” which speak only as of the date made, and advise readers that these forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by us that are difficult to predict. These forward-looking statements include statements with respect to our belief that 2024 revenues will have double digit-growth; that new designs and opportunities with our current and new customers is increasing; our goals of cash flow breakeven by year-end and sustainable revenue and profitable growth in 2024; and our belief that Kopin is well positioned to deliver to our soldiers and allies the defense systems they need and the innovations that enable the market and return value to our customers, society, and internal and external stakeholders. Statements in this press release are qualified by the disclosure in our Form 10-Q relating to our ability to continue as a going concern if the recommended disgorgement and exemplary damages in our lawsuit with BlueRadios is not reduced in the final order or if we do not appeal any final decision by the court. Various factors, some of which are beyond our control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. All such forward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany the forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release, except as may otherwise be required by the federal securities laws. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed. Important factors that could affect performance and cause results to differ materially from management’s expectations are described in our Annual Report on Form 10-K, or as updated from time to time our Securities and Exchange Commission filings.
| Kopin Corporation | |||||
| Condensed Consolidated Balance Sheets | |||||
| (Unaudited) | |||||
| March 30, 2024 | December 30, 2023 | ||||
| ASSETS | |||||
| Current assets: | |||||
| Cash, restricted cash and marketable securities | $ |
21,809,842 |
$ |
17,902,685 |
|
| Accounts receivable, net |
|
6,801,658 |
|
9,706,036 |
|
| Inventory |
|
6,120,355 |
|
7,601,806 |
|
| Contract assets and unbilled receivables |
|
5,687,165 |
|
3,409,809 |
|
| Prepaid and other current assets |
|
1,569,627 |
|
1,210,207 |
|
| Total current assets |
|
41,988,647 |
|
39,830,543 |
|
| Plant and equipment, net |
|
2,212,691 |
|
2,163,417 |
|
| Operating lease right-of-use assets |
|
2,328,152 |
|
2,504,909 |
|
| Equity investments |
|
4,611,510 |
|
4,688,522 |
|
| Other assets |
|
124,925 |
|
124,925 |
|
| Total assets | $ |
51,265,925 |
$ |
49,312,316 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | $ |
8,993,894 |
$ |
7,076,759 |
|
| Accrued expenses |
|
5,426,540 |
|
5,564,187 |
|
| Accrued Compensation |
|
602,500 |
|
790,000 |
|
| Customer deposits |
|
701,777 |
|
408,156 |
|
| Deferred tax liabilities |
|
470,884 |
|
470,884 |
|
| Contract liabilities and billings in excess of revenue earned |
|
886,432 |
|
916,826 |
|
| Operating lease liabilities |
|
628,019 |
|
651,503 |
|
| Accrued litigation damages |
|
24,800,000 |
|
- |
|
| Total current liabilities |
|
42,510,046 |
|
15,878,315 |
|
| Other long term liabilities |
|
2,135,791 |
|
2,092,124 |
|
| Operating lease liabilities, net of current portion |
|
1,680,063 |
|
1,832,982 |
|
| Total stockholders' equity |
|
4,940,025 |
|
29,508,895 |
|
| Total liabilities and stockholders' equity | $ |
51,265,925 |
$ |
49,312,316 |
|
| Kopin Corporation | |||||||
| Condensed Consolidated Statements of Operations | |||||||
| (Unaudited) | |||||||
| Three Months Ended | |||||||
| March 30, 2024 | April 1, 2023 | ||||||
| Revenues: | |||||||
| Net product revenues | $ |
9,025,366 |
|
$ |
7,654,716 |
|
|
| Research and development revenues |
|
899,965 |
|
|
2,896,451 |
|
|
| Other revenues |
|
107,310 |
|
|
207,024 |
|
|
|
10,032,641 |
|
|
10,758,191 |
|
||
| Expenses: | |||||||
| Cost of product revenues |
|
8,541,574 |
|
|
6,624,101 |
|
|
| Research and development |
|
2,100,753 |
|
|
2,312,217 |
|
|
| Selling, general and administration |
|
7,231,865 |
|
|
4,648,130 |
|
|
| Litigation damages |
|
24,800,000 |
|
|
- |
|
|
|
42,674,192 |
|
|
13,584,448 |
|
||
| Loss from operations |
|
(32,641,551 |
) |
|
(2,826,257 |
) |
|
| Other income, net |
|
93,336 |
|
|
236,702 |
|
|
| Loss before provision for income taxes |
|
(32,548,215 |
) |
|
(2,589,555 |
) |
|
| Tax provision |
|
- |
|
|
(39,000 |
) |
|
| Net loss | $ |
(32,548,215 |
) |
$ |
(2,628,555 |
) |
|
| Net loss per share: | |||||||
| Basic | $ |
(0.27 |
) |
$ |
(0.03 |
) |
|
| Diluted | $ |
(0.27 |
) |
$ |
(0.03 |
) |
|
| Weighted average number of common shares outstanding: | |||||||
| Basic |
|
120,114,985 |
|
|
105,036,382 |
|
|
| Diluted |
|
120,114,985 |
|
|
105,036,382 |
|
|
| Kopin Corporation | |||||
| Supplemental Information | |||||
| (Unaudited) | |||||
| Three Months Ended | |||||
| March 30, 2024 | April 1, 2023 | ||||
| Display Revenues by Category (in millions) | |||||
| Defense | $ |
8.2 |
$ |
6.4 |
|
| Industrial/Enterprise |
|
0.8 |
|
1.0 |
|
| Consumer |
|
- |
|
0.3 |
|
| R&D |
|
0.9 |
|
2.9 |
|
| License and Royalties |
|
0.1 |
|
0.2 |
|
| Total | $ |
10.0 |
$ |
10.8 |
|
| Stock-Based Compensation Expense | |||||
| Cost of product revenues | $ |
221,000 |
$ |
26,000 |
|
| Research and development |
|
144,000 |
|
17,000 |
|
| Selling, general and administrative |
|
370,000 |
|
151,000 |
|
$ |
735,000 |
$ |
194,000 |
||
| Other Financial Information | |||||
| Depreciation and amortization | $ |
195,000 |
$ |
225,000 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514825665/en/
For Investor Relations
Kopin Corporation
Richard Sneider
Treasurer and Chief Financial Officer
rsneider@kopin.com
MZ Contact
Brian M. Prenoveau, CFA
MZ Group – MZ North America
KOPN@mzgroup.us
+561 489 5315
Source: Kopin Corporation
FAQ
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