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spk05: Ladies and gentlemen, welcome and thank you for joining the Vioptronics Second Quarter 2021 Financial Resource Conference 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-down telephone. Press the star key followed by zero for operator assistance. I would now like to turn the conference over to Mrs. Savarese from Investor Relations. Please go ahead.
spk04: Lindsay Savarese Good morning and welcome to VIA Optronics Second Quarter 2021 Financial Results Conference Call. I'm Lindsay Savarese, Investor Relations for VIA Optronics. Joining me on the call today will be Juergen Aigner, VIA's Chief Executive Officer, and Dr. Marcus Peters, VIA's Chief Financial Officer. Today's call is being webcast live and will be archived on the investor relations section of VIA's website at via-optronics.com, where the company's earnings press release is currently available. Certain matters we will be discussing today, including the business outlook and financial projections for the third quarter and full year 2021, are forward-looking statements. Such statements are subject to 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 the company's documents filed with the SEC, including VIA's annual report on Form 20F, which was filed on April 29, 2021. Please note that any forward-looking statements that are made on this call are based on assumptions as of today, and the company undertakes no obligation to update these statements. as a result of new information or future events. And with that, I'd like to turn the call over to Juergen.
spk01: Thank you, Lindsay. Good morning, everyone, and thank you for joining us today. First, I will provide a brief overview of our second quarter 2021 results. I will then discuss our recent acquisition of Germany's followed by our key achievements and notable awards in the quarter. Before I turn the call over to Markus, who will review our second quarter financial performance in more detail and provide our outlook for the third quarter of 2021 and the full year. Turning into the second quarter, revenue of 43.7 million increased 11.5% year-over-year, driven by growth in our display solutions segment. Our EBITDA in the second quarter of negative 4.7 million decreased from positive 2.2 million in the second quarter. I'd like to provide a few words on the global component shortages. While we have been able to successfully manage the impacts of the global supply disruptions and continue on our growth path, our second quarter revenue was slightly affected by the shortages. While these shortages have impacted many companies globally, We still expect to record about 20% revenue growth in 2021 compared to 2020. There is an increase in some of our component and transportation costs driven by the shortage. However, we are working with our customers on a case-by-case basis to resolve potential impacts on margins. I am pleased to report that we solved the issues we had with our equipment supplier for the new German facility without affecting our revenue by using additional production capacity in our China facility. During the second quarter, we had already completed the site acceptance test in Nuremberg for the new facility and are now ramping up production for our large US-based EV manufacturer. Consistent with our strategy of extending our leading position in interactive display systems, especially for the automotive market, we acquired Germaneers during the second quarter. Germaneers is a high-tech engineering company focused on automotive system integration and user interfaces. The company provides solutions for a range of well-known high-end original equipment manufacturers. Through this transaction, we are strengthening our concept phase of the auto-design process. Together with Germany, we can design and deliver compelling, technologically advanced cockpit solutions, including but not limited to, sophisticated user interfaces with brilliant optical and sensing performance and cameras for interior and all types of add-ons and driver-assistant functions like surround view, mirror replacement, and driver monitoring. We already had a strong working relationship with the company for over two years, and that worked to welcome the entire Germany's team on board. We also made a financial investment in SigmaSense, a global leader in touch controller technology. With this investment, we have expanded our collaboration to develop new touch solutions for automotive applications, industrial displays, and consumer electronics. We believe that we will be able to produce new and exciting touch and sensing solutions by combining our metal mesh touch sensors with SigmaSense touch controller. We continue to receive project awards that have further increased our presence in the automotive, industrial, and consumer markets. In addition, we are now expanding our presence in the overall EV infrastructure market by providing display touch solutions for charging stations. Our backlogging pipeline continues to be much stronger, with much better visibility into the upcoming years, and we believe this trend will continue. Looking ahead, we will further execute on our strategy of driving our sales in the auto and industrial markets, leveraging our LCD, optical bonding, sensor and camera capabilities to deliver system solutions, while expanding the number and size of our projects within our existing customer base. We are constantly benchmarking and evaluating existing and new M&A opportunities focused on electronic system design to further increase our R&D capabilities. As announced in July, Daniel Juergens has transitioned the CFO role to Dr. Marcus Peters. I am grateful to Daniel for all the work that he has done for GIA, especially during the transition from a private health company to the public markets. I wish him all the best in his future endeavors and would like to welcome Markus to the VR team, bringing lots of experience, especially in public markets. With this, I'd like to hand over to him to present our financial results and outlook in more detail. Markus, please go ahead.
spk00: Okay. Thank you, Jürgen, and good morning. I'm very pleased to review VR's second quarter results of the company. I would like to thank everyone for their support during my transition over the last two months. I'm excited to serve on the board of BIA and have the company execute on the large opportunities ahead of us. We provide cutting-edge technology solutions for large and growing markets and serve some of the largest and most innovative companies in their respective industries. I look forward to helping the company execute on these opportunities and scale the business to achieve long-term profitable growth. I'll start by reviewing our financial and operating performance for the second quarter, and then provide our outlook for the third quarter and the full year 2021. Total revenue in the second quarter of 2021 was 43.7 million euros, up 11.5% from 39.2 million euros the second quarter of 2020. However, as Jürgen mentioned, our revenue was slightly impacted by the global steaming shortage, which resulted in a shift of our customers' demand for future quarters. Total display solution revenues was 37.4 million euros in the second quarter of 2021, up 14.7 percent from 32.6 million euros in the second quarter of 2020. Growth was driven by increasing demand, especially in the automotive market, but also in the industrial sector. Display Solutions' revenue represented approximately 86 percent of total revenue in the second quarter, compared to 83 percent in Q2 of 2020. Within our Display Solutions segment, Revenue from automotive customers grew 217 percent year-over-year in the second quarter and accounted for 35 percent of revenue compared to 13 percent in the second quarter of 2020. Revenue related to the industrial and specialized applications end market grew 7 percent year-over-year and accounted for 45 percent of revenue compared to 49 percent of the revenue in the second quarter of 2020. Revenue related to our consumer and market represented 20% of revenue, compared to 39% of revenue in the second quarter of 2020. Total sensor technology revenue was 6.3 million euros in the second quarter of 2021, down 4.5% from 6.6 million in Q2 of last year. Sensor technology revenue represented approximately 14% of total revenue, compared to 17% into two of 2020. Total company gross profit margin for the second quarter of 2021 was 14%, compared to 13.3% in the second quarter of 2020, and was driven by higher sales in our Displaced Solutions business and better margins in our Sense of Technology business. Our Displaced Solutions gross profit margin was 10.7% in 2021 compared to 11% in Q2 2020. Our sensor technology cross-profit margin was 33.3% in the second quarter of 2021, compared to 25.8% in the second quarter of the previous year. The increased gross profit margin was primarily driven by enhanced utilization of our existing production capacities. Now, turning to expenses. Total operating expenses in Q2 were 9.1 million, or 21% of total revenue, which compares to 4.3 million euros, or 11% of total revenues, in the second quarter of 2020. This increase was driven primarily by further strengthening our corporate and R&D capacity, as well as public company-related expenses. We have increased our headcount as we prepare for further growth, especially in the complex environment of the automotive industry, and are continuing to further enhance our organization to meet these growth opportunities. In addition, as noted in our earnings press release for Q2, we have reallocated some personal costs from general and administrative expenses to selling and R&D expenses. had no material impact from prior period results. In line with our expectations, research and development expenses were €2 million or 4.6% of total revenue in Q2 2021, which compares to €4.5 million or 1.3% of total revenue in the second quarter of 2020. Looking ahead, we expect Continued investment in R&D as we add talent on a case-by-case basis to support the development of more complex customer solutions. EBITDA in the second quarter of 2021 was negative 1.7 million euros compared to positive 2.6 million euros in the second quarter of 2021. We recorded a net loss in the second quarter of 2021 of 3.9 million euros, compared to net income of 0.2 million euros in the second quarter of 2020. Based on a weighted average share count of 4.53 million shares in the second quarter of 2021, this translates to a basic and diluted net loss of 0.91 euros per share in the second quarter of 2021. Turning to the balance sheet, we ended the second quarter with cash, a cash equivalent of 59.4 million and total debt of 26 million euros. Now, I would like to share our outlook for the third quarter and full year of 2021. For the third quarter, we expect total revenue of 45 to 50 million euros. For the full year 2021, we expect revenue growth of about 20% compared to 2020. These projections reflect continued uncertainty related to the ongoing impact from COVID-19 as well as potential component and partner strains which may affect our customers and possibly impact our revenue. Overall, we are focused on the many opportunities ahead of us, particularly in the auto and industrial markets. also require further investments in our R&D organization and production capabilities. This concludes my remarks. I will now turn the call back to the operator to open up the line for questions. Thank you very much. Operator?
spk05: Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchdown telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the headset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question is from the line of Andrew from Barenburg. Please go ahead.
spk03: Hi guys. Thanks for taking my question. Um, we start out with, you know, just sort of what you're seeing with, um, in terms of, um, on the revenue side with the, with the component shortages, can you, are you able to quantify what revenue might have been in the quarter? Um, and how, how much are you really embedding in that 2021 guide? Is there a risk that that could get worse from here?
spk01: Well, maybe give you some, sorry, so for that part, we had only, as you can see, and it was mainly driven by delivery issues, so components that they haven't received. So some of the parts have been shipped into the third quarter. We have overall discussed with the customer. We're talking mainly about consumer here, and we seem to be overall okay in the year. So this is why we still hold the guidance. It's not something, at least at the moment, where we are too concerned. However, we have to look at it. So that's from my side. Hope that helps.
spk03: Okay. And the U.S., Electric vehicle manufacturer production, I believe you said, was on track for Q3. Can you talk about any related issues with that?
spk01: Yeah, we can. So basically, we are now ramping up in this quarter. Overall issues with the equipment have been resolved. We talked about some delaying, some reduction of quantities there. They have been coming from component shortages, not because of the component shortage as such, but some other supply problems they have, but now I think overall everything is okay. If everything works according to plan, we should be beginning of the fourth quarter already at peak capacity or the maximum capacity as we planned for months. Again, it will be. This is how it looks like today. And with this, once we are up and running, we'll then drop the production in China and just continue to produce in Germany. Okay. Okay.
spk03: And maybe one last one, and I'll pass it on. The R&D and G&A in the quarter was a bit higher than I was expecting. I guess how much is that related to German years? Is there more of a one-time-in-nature expense in there that goes away, and should we expect those to get back to more normalized levels next quarter?
spk00: I can bring some color on this issue. I mean, with German years, we – We required an engineering company, basically we required the intelligence, the talent there, and the increase of about a million related to Germany is the run rate. One time, really increasing our capacity.
spk01: Markus, you were very hard to understand. I'm not sure, Andrew, did you get that?
spk03: It was a little bit hard to understand. If you could repeat that, that would be helpful. Thank you.
spk00: Can you repeat this? So with Germaneers, we bought engineering talent. The additional cost that we have in R&D is about 0.5 million related from Germaneers, and this is on a steady run rate. So this is not a one-time effect. It's going to be an increase in our R&D cost and R&D capabilities for the future, ongoing.
spk03: Okay, got it. Thank you.
spk00: Now it's better with the line? Yes, much better, yes. For the phone, kind of.
spk05: The next question is from the line of Anthony Stoss from Grey Callum. Please go ahead.
spk02: Morning, guys. How much revenue did you book from the acquisition in the quarter?
spk01: I think that was the question for you.
spk00: Hold on one second, please. Is the quarter 0.5 million or so revenue?
spk02: I'm sorry. I couldn't quite understand that.
spk00: So external revenue is below 0.5 million. So external revenues for the acquisition is less than 0.5 million.
spk02: Okay.
spk00: Perfect.
spk02: Got that.
spk00: We bought talent. We didn't buy turnover.
spk02: Okay. And maybe, Juergen, if you wouldn't mind commenting on the fact that you had negative EBITDA instead of, I think you guys are expecting positive. What were the biggest impacts that related or that allowed you to be negative EBITDA?
spk01: Let me hand over to Rax to answer that. Just up front, maybe a little bit more color on Germany as well. We had them in the group. We had basically them on the contract to work on internal projects already. So they keep only a limited amount of external revenue related to prototypes and concept projects. samples for the local OEMs in Bavaria. So they are mainly within our R&D projects. Just to give a little bit more color on that. For the revenue and EBITDA development, Marcus, you can say something?
spk00: I can say something about the EBITDA. We have increased costs, especially for adding talent in our organizations. This means we are holding, we have listing expenses that were not in the quarter of last year because we were not listed. And especially we added the talent and capacities, not only Germany, we also added talent here in our organization by hiring talent and by having expenses for external consultants to support us in ramping up production.
spk02: Okay, and then my last question. Juergen, you have your own metal mesh technology, yet you partnered with SigmaSense for their controller. Did you not have your own internal controller, or why did you end up partnering with these guys to have access to their controllers?
spk01: Well, so behind We use controllers from Atmel, from Microchip, from many other companies, including Wacom, depending on the case. But we have watched the controller development in general, and what we see with the SigmaTense controller technology, or this one, that we can basically cover all applications at the end of the day with one controller, if everything works out as we envisage it right now. So this was one of the reasons to take a share in SigmaSense to be able to follow also as an investor to follow all the developments very closely and to combine that with our metal mesh technology is an additional advantage because you know we have a very low sensitivity so we have already a very good sensitivity but with the SigmaSense controller it's actually even better and we can avoid switching mode in some touch applications, and we want to combine this as well. I'm not sure how much I should go into detail. We can also combine the sensor with high resistivity touch sensors, which have other advantages. So there's a wide open amount of soundboard applications that we are targeting.
spk02: Okay, then maybe if I can just sneak in one more. So we've a lot of discussion over the last year related to your North American EV for the cold form. Can you help us understand maybe other automakers, how many design wins you have for some of these higher value cold form systems?
spk01: I think, I'm not sure, I think last time I mentioned already that we have about five cold form opportunities that we are producing. We have one already since nearly two years in production. We are ramping up two more this year, I think, also in China. And we'll ramp up, we have actually more than five, we have already six of these. Not to that extent, as you know, that particular one is covering the width of the vehicle, complete width of the vehicle, so the complete dashboard. Usually we have... Two displays behind the glass will be with the cluster and with the center information display. Thank you. You're welcome.
spk05: There are no more questions at this time. I hand back to Mr. Eichner for closing comments. Please go ahead.
spk01: Well, first of all, thank everybody for joining us on the call today. We look forward to updating you on our progress next quarter. And overall, I think we would give you a few more updates in between the next earnings call as well. So we hope to be in touch with you in between as well. Thank you, everyone, and bye-bye. Bye-bye.
spk05: Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.
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