Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Royalty income increased by 165% compared to the same quarter last year.
- Six consecutive quarters of revenue growth.
- Expenses decreased by $105,000, reducing net loss to $94,000.
- Strong financial position with over $1.9 million in cash and no debt.
- High adoption rates of SPD-Smart Glass technology in luxury automotive brands like Ferrari and McLaren.
Negative Points
- Net loss of $94,000 for the second quarter.
- Dependence on a few key markets (automotive and aircraft) for revenue growth.
- Challenges in making new announcements due to reliance on customer disclosures.
- Potential lower royalties from mid-priced vehicles compared to high-end models.
- Concerns about the effectiveness of Gauzy's IPO and its impact on market perception.
Q & A Highlights
Q: Gauzy was up 22%. We were up 56% in royalties. Who are the other key distributors for us?
A: Joseph Harary (CEO): Gauzy supplies the film, and the markup depends on the customer. Ferrari, McLaren, and Cadillac are significant contributors, along with Vision Systems and InspecTech in the aircraft market. The end product price varies significantly based on the customer and additional features.
Q: Before Gauzy does major expansion with the incremental funds they got from the IPO, if they were operating at capacity today, what kind of incremental revenues would we be receiving from Gauzy?
A: Joseph Harary (CEO): If Gauzy were at capacity, it would be about a million square meters. The royalty per car could range from $25 to $200, depending on the market. For aircraft, a million square meters could generate a couple of hundred million dollars in revenue.
Q: Can you update on Hyundai and did they pull out of their investment in REFR-Gauzy?
A: Joseph Harary (CEO): Hyundai did not sell its Gauzy stock before or during the IPO and remains a strategic investor in Gauzy.
Q: What is the company doing to inform institutions and money managers about the existence and prospects of the company?
A: Joseph Harary (CEO): We consistently communicate the benefits of our technology, such as energy efficiency and increased comfort. Gauzy's IPO has also brought greater attention to our technology. We are interviewing financial public relations firms to further amplify our message.
Q: Is Gauzy the only company producing the film, or are there others like Hitachi or Isoclima?
A: Joseph Harary (CEO): Gauzy bought Hitachi's SPD business, so they are the primary producer. Isoclima buys the film from Gauzy.
Q: Will there be a breakdown between what Gauzy does with PDLC as opposed to SPD?
A: Joseph Harary (CEO): It's unlikely due to SEC rules requiring companies to lump things into business units. Gauzy's SPD business has higher margins, so both companies have a vested interest in its growth.
Q: With Gauzy's $75 million IPO, are they planning to expand their production line?
A: Joseph Harary (CEO): Yes, they have the ability to set up a second line next to the first one in Germany or potentially in Asia or the US, depending on logistical needs.
Q: What is the outlook for the smartglass industry and Research Frontiers?
A: Joseph Harary (CEO): The outlook remains extremely promising, with growing revenues in automotive and aircraft markets and increasing regulatory support. We expect Q3 and Q4 royalty income to surpass last year's levels, driven by new product introductions and increasing penetration at existing customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
