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spk01: Thank you for your patience, everyone. The VIA Optronics Q3 22 earnings call will begin shortly. During the presentation, you will have the opportunity to ask a question by pressing Start followed by 1 on your telephone keypad. Thank you. Welcome to VIA Optronics preliminary third quarter 2022 earnings conference call and webcast. At this time, all participant lines are in a listen-only mode. For those of you participating on the conference call, there will be an opportunity for your questions at the end of today's prepared comment. Please note this conference is being recorded. An audio replay of the conference call will be available on the company's website within a few hours after this call. I would now like to turn the call over to Sam Cohen with Alpha IR Investor Relations.
spk03: Thank you and welcome. Joining me today are Juergen Eichner, Founder and Chief Executive Officer, and Dr. Marcus Peters, Chief Financial Officer. I'd like to remind everyone that statements made during this conference call relating to the company's expected future performance, future business prospects for future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Participants are directed to vOptronics Form 20F for a description of certain business risks, some of which may be outside the control of the company that may cause actual results to materially differ from those expressed in the forward-looking statements. We expressly disclaim any due to provide updates to our forward-looking statements, whether as a result of new information, future events, or otherwise. Our earnings release for the preliminary third quarter of 2022 results is posted on the company's website at vOptronics.com. With that, let me now turn the call over to Juergen for a few opening remarks.
spk05: Thank you, Sam. Good morning, and thank you all for joining us today. We are delighted to report record quarterly revenue, which exemplifies the strong demand we are seeing across all of our end markets. We grew top-line revenue by 27.3%, with a 39.2% growth in our display solution segment driven by growth in the automotive market as well as in the industrial area. In the third quarter, we benefited from increased production output at our Nuremberg headquarters and increased demand and order volume for the automotive and industrial end market. We continue to expect increased adoption of our innovative and cutting-edge displays as both automotive and industrial vehicles demand are more robust. Sunlight readable, weather resistant displays, camera and sensing as well, interior, vivid and crisp optical solutions are needed. Our capabilities, which allow us to provide customizable technology with unique specifications and the high amount of in-house production content, avoiding going through suppliers, separate via from its competitors, and allow us to address the accelerating needs of customers today. I am proud of how our teams executed in the third quarter, delivering positive APTA despite ongoing global supply chain challenges. Elevated freight costs, which were headwind in previous quarters, are now easing and we have begun to see the benefits of the previously announced performance improvement projects in our profitability and cash flows. The cost savings and pricing initiatives we have implemented start being reflected in our results this quarter as we continue to renegotiate with customers and suppliers. Also, we see a softer demand from the digital car OEMs in Q4. Going forward, we believe that these activities will continue to help improve our margin profile and position the company for long-term sustainable profitability. This quarter, we announced the appointment of Roland Kokoyek as Chief Marketing Officer, CMO. Roland has been actively creating a successful go-to-market strategy and promoting the new and innovative technologies of VIA to our customers and partners. In conjunction with the appointment of Roland Kokoyek as CMO, the company has brought the marketing organization, the project management team, the team from research and innovation, and the strategic sourcing team together under a Kokoye's leadership. This new alignment will create a more efficient marketing and sales organization and reduce our operating expenses going forward. As we announced previously, we plan to establish a new camera production line in Thailand. As the desire for driver and operating assistance as well as autonomous driving functions grows, so must the vividness and resolution of camera images. This new equipment will allow VIA to use bare die instead of house sensors, increasing the precision and cost effectiveness of our solutions. Additionally, our camera production in Thailand opens the door for us to market our other solutions in the regions. We are in decision with OEMs interested in the new functions that we provide with our touchscreens and the overall dashboard integration. We remain encouraged by the strength of our growing project pipeline as we continue to focus on higher-value projects that will support merchants. Additionally, we continue to execute our strategy with a target of 500 million in annual revenue by 2026. We currently maintain a boarded business of approximately 250 million, which supports this forecast. With that said, now I'd like to turn the call over to Markus, for review of our third quarter 2022 performance and full year outlook. Markus?
spk00: Thank you, Jürgen, and good morning and good afternoon to everyone. I will start by reviewing our financial and operating performance for the third quarter 2022. Then I will outline our outlook for the fourth quarter and the full year 2022. For the third quarter, total revenue of €62.9 million increased by 27.3% from €49.4 million in the third quarter of 2021, driven by further growth in the display solutions segment. Display solutions revenue of €58.6 million increased by 39.2% from €42.1 million in the third quarter of 2021, driven primarily by growth in the automotive end market. Sensor technology's revenue of 4.3 million euros decreased by 41.1% from 7.3 million euros in the third quarter of 2021 due to slower demand in the consumer end market after a record turnover in prior period. we continue to strive to overachieve and meet the demands of those that require our products and solutions. Revenue from the automotive end market increased 46% in the third quarter 2022 and accounted for 44% of display solutions revenue, driven by strong demand for our solutions. Revenue related to the industrial and specialized applications end market decreased 7% in the third quarter 2022 and accounted for 27% of display solutions revenue. Cross-profit margin decreased to 8.6% from 13.8% in the third quarter of 2021. Display solutions cross-profit margin of 8.9% decreased from 10.9% in the third quarter 2021 due to ongoing margin pressure material and labor cost increases, and higher logistic costs. Senza Technologies' gross profit margin of 7% decreased from 26% in the third quarter of 2021, driven by changed market conditions and lower utilization. Research and development expenses decreased slightly to 1.4 million from 1.5 million in the third quarter of 2021, and is in line to support our long-term strategy. General and administrative expenses of 5 million euros decreased from 5.1 million in the third quarter of 2021 due to improvements in our cost structure. Operating income was 2.1 million euros in the third quarter of 2021 compared to operating income of 6 million euros in the third quarter of 2021. Net income was 1.2 million euros or 0.8 or 27 euros per basic and diluted share compared to net income of 0.1 million euros or 0.002 euros per basic and diluted share in the third quarter of 2021. EBITDA was 3.7 million in the third quarter 2022. compared to an EBITDA of 2 million in the third quarter of 2021. Display Solutions EBITDA loss was 2.4 million compared to EBITDA of 1.5 million in the third quarter of 2021, driven by operational performance as well as one-time effects. Sensor Technologies EBITDA loss was 0.2 million euros compared to positive 1.1 million in the third quarter of 2021. Other segments EBITDA was 1.5 million compared to EBITDA loss of 0.4 million in the third quarter of 2021 driven by one-time effects. We finished the third quarter with cash and cash equivalents of 54.3 million up from 53.3 million euros at the end of the second quarter. This slight increase while expanding operations was supported by ongoing improvements in inventory and cash management. For the fourth quarter of 2022, we expect total revenue in the range of 37 to 42 million euros for the full year 2022. we are raising our revenue growth guidance to a range of approximately 10% to 13% compared to 2021. Again, this forecast is based and may be influenced by our planned sales portfolio adjustments, a potential slowdown in the consumer and market, and a potential component shortage in the camera business, as well as the overall economic uncertainty. We had very strong sales in the third quarter of 2022, and we will continue to work hard to improve our profitability further and further optimize our working capital and exercise financial discipline to meet our strategic goals. With that financial overview, I'd like now to turn the call back over to Jürgen for a few closing comments. Jürgen.
spk05: Thank you, Marcus. As you heard, we are very pleased with what we achieved during the third quarter in terms of improving our margins and returning to profitability and feel confident about our prospects for the remainder of the year. Despite a challenging macroeconomic environment, there remain strong structural tailwinds in the market that we operate in and we remain well positioned to capture the expanding applications and use cases for our products. Our financial discipline remains strong and we have a solid base from which we can deliver strong growth and shareholder value in the years to come. Thank you for your continued support. That concludes our prepared remarks and I'll now turn the call over to the operator for Q&A.
spk01: Thank you. We will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. Our first question today is from Anthony Stoss from Craig Hallam. Your line is on.
spk04: Good morning, guys. I have quite a few questions, actually. Maybe if you're going to take a look out into 2023, maybe comment about the number of design wins that you have that you think will go into production in 2023 versus what you had maybe in 2022. Perhaps give us a guess as to revenue growth rates. But more importantly, on the gross margin front, I'm Again, this was always part of your plan to increase them as part of the IPO. What progress have you made? Is it purely your cost side and what you're quoting your customers? Any help would be appreciated on revenue growth rate and gross margins for next year.
spk05: Many questions in one. Sorry. So with regards to next year's in terms of projects and ramp-ups, so for the big projects, we are expecting one more project to ramp up. I mean, we are having a few smaller projects ramp up, but one big one facing next year. With regards to cost and margins, So during the course of this year, we had a lot of discussions with customers about cost up and price up and how we can improve and how we can actually forward the cost for additional freight and so on to the customers. So they are all, let's say, to my opinion, in good shape. Of course, nobody was happy about the cost increases, but the understanding was there. and customers basically accepted. However, it's not easy for everyone. It was also not as easy as for other companies for us to increase the price throughout the board without any arguments. So we discussed in detail with every customer. Not all the discussions are over. Some are going to be closed hopefully before the end of the year. And for the next year, I think we should be out of the loop with the price adjustment and everything. Now, with regards to the margins, I have to say that we are still following our initial target. The only thing, well, the only thing which is a big thing, which happened over during the course of the last two years, that the customers actually used the COVID pandemic to drive down the overall prices. So the margins, even the automotive market became tighter. But this is the main reason for us to phase in and to target system designs, to have more added value, more content in the products that we deliver, which should bring us back on track. There are a lot of reorganizations in our product portfolio and market approach. in regards to sales and marketing, also being done together with Roland Kokohek, the new CMO, and restructures in the sales force. So we'll implement that and start to push for that during the course of next year. So tighter margins from existing products, existing customers, overall, whether it's in the automotive or even the definitely in the consumer market. But our plan, again, is to deliver more value to get up in the margin. So we still think that, based on what we know today, this is possible with what we have in-house. And we push on that kind of product portfolio hardly on the sales front.
spk04: Okay, just shifting back to kind of expectations and revenue for next year, you commented about a goal of $500 million in revenues in 2026. Help us understand or bridge the gap getting from where you're at now, what that looks like in 2023, 2024, 2025. Is it somewhat linear or is it spiked up in 2025? I'd love to hear your thoughts on the next couple of years' revenue growth.
spk05: It's... It's kind of difficult to answer because at the end of the day, let's give you one example. We are working on one project. If that kicks in, it would be a spike in 2025, 26. So it would be a drastic increase. And there are others which are in between. So we are planning for a soft growth over the next years, similar to what you have seen. But as soon as those projects come in, we will see a drastic increase. So maybe most likely towards not coming here, also not the following year, but the years after. So the years after, if we are successful with the acquisitions, there will be a stronger growth.
spk02: Okay. Thank you.
spk01: Just to read away, if you would like to ask a question, please press star followed by one on your telephone keypad. And if you would change your mind, please press star followed by two. At this time, we do have no further questions, so I'll hand you back over to Juergen Eichner for closing remarks.
spk05: Well, as usual, I'd like to thank everybody for participation in that call. Again, we'll see quite a drastic change in the future in terms of the environment, but on the other hand, we see that our markets are drastically increasing. The potential for our products is growing every day, I have to say, and especially in the field of electronic cars. we are seeing tremendous growth opportunity, but not only there. So again, thank you for the call. I'd like to hear you next time again. Thank you. Bye-bye.
spk01: That concludes today's BIA Optronics Q3 2022 earnings call. You may now disconnect your line.
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