Research Frontiers(REFR) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fee income increased by 13% in Q1 2019 compared to the previous quarter, although there was a slight decrease year-over-year when accounting for non-recurring items [6][8] - Expenses declined by over 20% or $247,312 in Q1 2019 compared to the same period in 2018 due to cost reduction initiatives [8][11] - The company's net loss remained approximately the same at $0.03 per common share for Q1 2019, with a potential adjusted loss of $0.02 per share when excluding non-cash accounting expenses [8][9] Business Line Data and Key Metrics Changes - Higher fee income was reported in the automotive, aircraft, and display market sectors, while there was a slight decrease in the architectural market [7] - Automotive royalties increased, with McLaren Automotive incorporating SPD-SmartGlass in three car models, including the 720S Spyder [16][19] Market Data and Key Metrics Changes - The automotive market is seeing a pronounced movement towards electric vehicles, with SPD-SmartGlass technology capable of increasing the driving range of electric vehicles by 5.5% [83] - The architectural smart glass market is opening up due to the introduction of wider and less expensive film, which is expected to benefit from new competition among SPD filmmakers [86][88] Company Strategy and Development Direction - The company aims to reduce the cost of SPD-SmartGlass technology, open new markets, and improve operational efficiencies [5] - Significant achievements in operational areas were noted, including the expansion of SPD-SmartGlass usage in high-profile automotive models [13][14] - The company is positioned to become a royalty-collecting and dividend-paying entity as it approaches profitability [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the automotive industry's growth, particularly in premium vehicles and electric vehicles, with expectations for substantial revenue increases in 2019 and 2020 [83][85] - The company is in good financial shape with a debt-free balance sheet and sufficient resources to move forward [12] Other Important Information - Gauzy, a licensee, is expanding its production capabilities with a new factory in Stuttgart, Germany, which will significantly increase the supply of SPD film [25][27] - The company has received positive attention in the automotive industry, with multiple presentations highlighting the benefits of SPD-SmartGlass technology [22][23] Q&A Session All Questions and Answers Question: Can you make some statements about Gauzy's SPD sales thus far and also about the near-term expectation for Gauzy sales? - Gauzy's second factory line is expected to come online this summer, indicating positive sales expectations [29] Question: Does the Sun Partner bankruptcy affect inertia and other self-powered applications? - No, the vision systems are not reliant on Sun Partners, so there is minimal impact [30] Question: Is the expectation that the W223 will be the first model to use SPD sunroofs? - The company expects to achieve cost reductions that will allow for higher volume cars to benefit from lower pricing [32] Question: Can you comment on the future for SPD as a glare control technology for outdoor advertising? - SPD is expected to play an important role in outdoor advertising and retail advertising markets [37] Question: Do you have architectural orders for the television production line at 1.2 meters wide? - Costs have been reduced significantly, with some cases being less than half of what they were initially [39] Question: Is Research Frontiers SPD film being used in any of the phases of the Hudson Yards projects? - The company was involved early on with SmartGlass International, and there is potential for future projects [43] Question: What is the PR firm doing to get Research Frontiers in front of true investors? - The stock price has increased significantly since the PR firm's involvement, indicating successful outreach [45] Question: When may we actually see some increase in revenues? - The company anticipates meaningful revenue increases starting in 2020 due to more cars coming online [77]