VIA optronics AG

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the VIA Optronics Third Quarter 2020 Earnings Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Monica Gould, Investor Relations. Please go ahead.

Good afternoon, and welcome to VF Tronics' third quarter 2020 financial results conference call. I'm Monica Gould, Investor Relations for VF Tronics. I would first like to thank everyone for their patience today. As some of you may know, there was a significant network outage this morning in the U.S. that affected our conference call service provider and required us to reschedule our earnings conference call. Joining me on the call today will be Juergen Eichner, VIA's Chief Executive Officer, and Daniel Juergen, VIA's Chief Financial Officer. Today's call is being webcast live and will be archived on the Investor Relations section of our website at via-optronics.com, where our earnings press release is currently available. Certain matters we will be discussing today, including the business outlook and financial projections for the fourth quarter 2020, are forward-looking statements. Such statements are subject to the risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in our documents filed at the SEC, including our registration statement and prospectus. And with that, I'd like to turn the call over to Juergen.

Juergen Eichner, VIA Optronics Yeah, thank you, Monica. So, good morning, everyone. This is Juergen Eichner from VIA Optronics. First of all, thank you for joining us today for VIA's first earnings conference call as a public company. We are pleased to report that despite the pandemic, the demand for VIA's innovative solutions remains strong in Q3. We recorded top-line growth of more than 40% year-over-year, driven by both our display solutions and sensor technology segments. Sequentially, we reported double-digit revenue growth and further expanded our order book. Our pipeline and visibility remains robust, positioning us well for a strong finish of the year. We expect our momentum to remain strong in 2021 as we begin to ramp up production of several important projects. To give you a sense of our progress, I would like to touch on some notable milestones we achieved during the quarter. As some of you may know, we have a very strong position with the electronic vehicle manufacturers, which we continue to expand upon. during the third quarter we shipped the first prototypes for a leading us-based ev company for a large format cold form display assembly marking our first cold form project with a u.s auto manufacturer in support of this project we started the construction of a new manufacturing facility in germany with a capacity of 10 000 units per month this alone will more than double our capacity in Germany by adding 1,600 square meters with potential for further expansion in the future. On top of that, we also replaced the semi-manual production process in our existing German facility to a nearly fully automated one, adding to our production capacity another 50,000 pieces units per month to a total of 60,000 units per month. The German side successfully passed the ISO 9001 audit again last quarter, and we are targeting the IATF 6949 certification towards the end of next year. Out of the new project awards we received, I would like to highlight two in more detail. First, in the automotive sector, we received an award from a UK EV customer for a new sports car. Second, in the consumer electronics sector, we received two new awards from a large US-based customer for industrial laptops with sophisticated touch features. Since some of you may be new to the VA story, I would like to take this chance to provide a short overview of the company, the markets we serve, and our key growth drivers. I will then turn the call over to Daniel Juergens, our CFO, who will provide a more detailed review of our third quarter, financial performance, and fourth quarter outlook. So let's start with the company overview. We are the leading provider of interactive display solutions for multiple end markets, which superior functionality or durability is critical in a differentiating factor. We define an interactive display solution as a combination of display, touch, and camera, plus the electronic control unit, the ECU. Interactive displays which are a combination of touch sensors and LCD, a major element of these systems, and the key interface that people will use to interact with the digital world in the future. The future is interactive, and touch is a very reliable way to communicate with a computer system similar to a desktop keyboard or a mouse. Voice is still very limited and not that reliable. It can support the touch, but it cannot replace it. It is very important that all elements of an interactive system work perfectly well together. For these reasons, we are not only providing the touch and display solution, but also cameras as the main sensor element of an interactive display system and constantly increase the focus on the electronic control unit being the core of the system, including the drivers and software. The technology behind these elements is becoming increasingly more complex. The requirements to overcome technical and optical challenges in increasingly demanding environments are more challenging every year. We as technology expertise positions as well to offer solutions to our customers to meet these challenges. We provide high-end bespoke solutions for demanding customers, not off-the-shelf commodities. Since our inception, we have shipped more than 6 million displays, not counting touchscreens, cameras and other system components we deliver. We have been granted more than 110 patents with another 50 plus more patent spending. Our customers and design partners include many of the world's largest OEMs and system integrators in the automotive, consumer electronics and industrial specialized applications markets. Let me say some words to the addressable market. We are pushing for a significant market opportunity and we believe that the total addressable market for our display solutions is robust and growing. We estimate that our term for display solutions is greater than 43 billion in 2020 and is expected to grow to be greater than 49 billion by 2024. This TAM covers displays, but does not include standalone touchscreens or cameras and excludes complete systems. While this market is currently growing at a single digit rate, we are leveraging to the higher growth segments of the markets, including auto and industrial. The share of our products within this market is increasing, which is driving our higher revenue growth rate. As an orientation for you, the global market for industrial and specialized applications is expected to grow at a compound annual growth rate of 9.1% to an estimated 11 billion in 2024, and the market for automotive displays is expected to grow at a compound annual growth rate of 14.5% to over 8 billion in 2024. With regards to our technology and competitive strengths, Some remarks here. Our comprehensive portfolio of offerings enables thin and lightweight display products with high optical clarity and vivid colors. We offer high bright display solutions with very low power dissipation. Our focus is to generate high contrast ratio instead of power hungry backlight solutions and reduce reflections. You will not find products like ours as commodities in the market. Here, our proprietary silicon-based bonding material and patented optical bonding processes play a key role. We are in the unique position of having material, process, and production equipment design in-house, and we also have the development. This enables us to offer a wide variety of customized display solutions, including curved display panels and solutions integrating multiple displays, touch assemblies under a single cover lens. Our metal mesh touchscreen solution allows all types of touch functions, including gestures, hovering, the ability to work with gloves, and in the rain. So we are offering more than a traditional touchscreen. Moreover, we manufacture the complete product in-house and buy only raw materials. Our touch technology is protected by a variety of patents and licenses. Recently, we also introduced our own automotive camera solution to support driver assistance and ADAS functions. Of course, these cameras can also be used in industrial equipment like tractors, harvesters, construction equipment, etc. These cameras are differentiating by having a very small footprint in a plastic housing covering the complete automotive temperature range. We believe that our proprietary silicon-based bonding material patented optical bonding process Our metal mesh touch sensor technology as well as our competence in camera module design and overall in-house capabilities, which are based on many years of cross-market experience, are among some of VIA's key differentiators. We have a proven engineering team and our technological expertise is well suited for complex applications and demanding environments. We offer our customers a high level of customization with flexible modular designs. We have production sites in Germany, China and Japan. Our global footprint has enabled us to overcome limitations arising from trade wars and COVID-19. With regards to the end markets, our customers operate in the automotive, consumer electronics and industrial specialized application markets. Most of our customers in these markets are blue chip companies. We have long-standing relationships with our customers and, quite often, jointly define comprehensive and customized solutions that meet their specific requirements, which we will then implement and produce. For our long-standing OEM customer base, we have become an important design partner. Our consumer electronic offerings include solutions for notebooks, tablets, and all-in-one monitors. We work with large global companies such as Dell, HP, and Lenovo. Our industrial specialized solutions are part of in-flight entertainment systems, ruggedized laptops, marine navigational systems, and fish finders, agricultural equipment, surround view systems, digital signage, interactive conference room displays, and defense applications. They can be found in products from 3M, Dell, Emirates Airlines, GE, Honeywell, John Deere, and Siemens, among others. As indicated before, we have a very high focus on the automotive end market, where we work with OEMs and automotive tier ones. To name a few, these include companies like BMW, Ferrari, General Motors and Rolls-Royce. Our solutions include interactive displays for navigation, instrument clusters, rear seat entertainment and infotainment systems, cameras for surround view, driver monitoring with a strong focus on interactive display systems. The advanced automotive camera module technology that we are developing include driver assistance features, driver support, such as driver monitoring and surround view, which promote enhanced vehicle performance and safety. On top of that, we are already very excited about our strategic collaboration with Corning, one of the leading glass producers. This collaboration began in August 2018 and has already resulted in the mass production of our first products earlier this year. Corning also invested approximately 20 million in our IPO in a concurrent private placement. Our collaboration, which combines our technologies with Corning's ColdForm technology, enables us to jointly design and deliver the most innovative curved glass interior display and touch solutions and further strengthens our market position. We are working on several automotive projects with OEMs, currently focusing on high-end cars and electric vehicles. VR's focus is on providing a complete interactive dashboard display cluster assembly using Corning's ColdForm glass technology with optical bonded display touch assemblies. Another area of our development focus is to replace the more expensive metal frames with specific plastic solutions, thereby reducing the cost significantly. We believe our share with the solution in the auto industry will be significant as the total number of displays in the use of glass as a design element in vehicles steadily increases. With regards to future growth, we have a strong and growing pipeline across our end markets. We currently have over 500 projects in process with a combination of existing and potential new customers. Our growth will be driven by expanding the number and size of our projects within our existing customer base, expanding our reach to new customers, specifically in the automotive market, and leveraging our sensor and camera capabilities to deliver system solutions. In summary, I am very encouraged by our performance comprehensive and differentiated offerings, coupled with a large addressable market position as well for long-term growth. With that, I will now turn the call over to Daniel to discuss our financial results and outlook in more detail. Daniel?