Research Frontiers\' (REFR) CEO Joseph Harary on Q1 2017 Results - Earnings Call Transcript
Results of May4 Q1 2017 earnings call, 20174: consultation PM ETExecutivesJoseph Harary on corruption-
President and Van woris
Chief financial officer, vice president of business development and head of variable protection
Good afternoon, ladies and gentlemen.
Welcome to the research frontier investor conference call to discuss the 2017 performance and recent developments in the first quarter.
In today\'s speech, all the parties will be listening. only mode. [
The meeting is being recorded today.
The replay of this conference call will be available tomorrow in the investor section of the www research frontier website. smartglass.
Com, and will be replayed in the next 90 days.
Please note that some comments made today may contain forwarding-
Look at the information
The words recct, anticipate, plan, forecasts and similar expressions are intended to identify the forward-
Look at the report.
The statement that is not a historical fact is forward --
Statement issued under the safe harbor provisions of the Securities Litigation Reform Act of 1995.
These statements reflect the Company\'s current beliefs, and some important factors may lead to significant differences in actual results for a period of time to come from the results expressed.
In our submission to the SEC, we describe significant factors that may lead to different outcomes than expected.
There is no obligation on research frontiers to update or revise them
Reports that reflect new events or uncertainties.
The company will answer many of the questions sent to it by email before this conference call, whether in their presentation or as part of the final Q & A session.
In some cases, the company responded directly to the email question before this conference call, or later, in order to answer more questions of general interest to shareholders at this conference call. [
I would now like to hand over the meeting to Joseph Harry, President and CEO of research frontier.
Sir, please proceed.
Thank you, Anita. Good afternoon, everyone.
Joining me today for this conference call is Seth Van Voorhees, our CFO and vice president of business development and head of our variable Protection Department.
Many of you have spoken to Seth all year round, and Seth and I can answer questions after the speech.
At our last conference call for investors, we outlined our clear strategy to grow revenue and continue to develop new license holders, continue to develop our technology for each of the five markets and develop new uses for our Social Democratic Party
Smart glass technology.
As we have also pointed out, a key factor in revenue growth is to reduce our technical costs to end customers.
In the seven weeks since our last call, we have made progress in all these areas;
We will discuss it.
The auto market is currently our largest market, and before our other four markets are more firmly on line, we will review what we said at our last conference call, we will depend on the ups and downs of the automotive industry.
In general, the automotive industry is a very good industry.
The automotive industry is the first high
The bulk users of smart glass and Social Democratic Party provide the best performance of any switchable tone technology ever.
Other technologies have been tried in the automotive industry, but only when we have a foothold can we have mass production.
The automotive industry is also a highly reliable industry that our technology has shown over and over again in tens of thousands of cars, and no one has ever reported a problem.
Compared to all other markets of smart window technology, the automotive industry is also a major industry with relatively stable and predictable volume and has a high unit volume potential and standard size.
That\'s why everyone in the automotive industry, the smart glass industry, is so coveted.
We are the only technology to succeed here.
We have a license for most automotive glass production in the world and can use our technology, which has become the preferred technology in the automotive industry.
While the car market is good and ideal, some aspects of it can be challenging.
First, it\'s a cost.
Sensitive industries are the first.
The royalty income we receive from this market may be affected by many general factors, such as trends that affect the overall demand of the automotive industry.
An example of this is that automakers are adapting to the world of car-sharing services such as Uber, where car ownership becomes less important.
Another factor is the speed at which OEM product lines introduce new technologies.
This is an area where huge changes are taking place, such as self-driving cars, connected cars and electric vehicles.
Conducive to all trends at the forefront of research.
In addition to these macro factors, the royalty income obtained by the company from the auto market may also be affected by specific factors, such as the company\'s social democratic party-
SmartGlass technology seems to be a standard device or an option on a particular vehicle
Smart glass appears on, the size of each window on the vehicle, the number of windows on the vehicle using the Social Democratic Party
SmartGlass, the fluctuation of the total number of vehicles produced by the manufacturer, is in the life cycle of the product in the vehicle.
For example, after the mid-term model is refreshed, the volume usually starts to be high, gradually decreases, and then rises upwards, usually lasting three to four years in the model.
Other factors include vehicle prices, customer signing rates, and the manufacturer\'s option pricing for a particular model, and the relative profit of each component the automaker enjoys compared to other options and changes in pricing and exchange rates.
For the three months ended March 31, 2017, the company\'s fee income from licensing activities was slightly lower than $400,000, compared to $409,000 for the three months ended March 31, 2016.
Roughly, this is down $16,000, mainly due to exchange rate fluctuations and lower sales of Daimler\'s SLK and SL sports cars with Magic Sky Control options.
It is offset by the actual higher sales of S-
Class vehicle with Magic Sky Control option.
A large part of this $16,000 decline can also be explained by our variable protection department\'s revenue and delivery time this year and last year.
Let\'s focus on the revenue of the auto market.
In the first quarter of 2017, the company received a commission to sell revenue. S-
The Class sedan and coupe, as well as the SLK and SL roadster, exceed the guaranteed minimum level of manual royalties and its license agreement with our licensee to supply this glass to Daimler.
This resulted in additional royalty income for these licensees. Sales of S-
Mercedes-Benz and King airlines use the Class and Roadster vehicles of the company\'s social democratic party-
Intelligent Glass Technology
The percentage of figures for 2017 compared to the previous quarter.
Operating expenses decreased by $50,000 for the three months ended March 31, 2017.
Actually, when you consider the time difference, they actually drop about twice as much because we paid some of the fees earlier this year than last year.
R & D expenditure decreased by about $200,000 in the first quarter of 2017.
In addition to lower expenditures, we expect higher revenues in 2017 compared to 2016.
We expect S-with the new update-
The class sedan arrived at the showroom, and about three weeks later Mercedes announced the new S-
The European market will start classes in July, so the United StatesS.
Soon after, the market will enter their market.
Let me stress that while the model we are updating will increase our revenue, we have seen the experience of SLK and SLC sports cars ---
SL sports car, the most important thing we can do to increase our income, especially our income from the car market is to reduce the cost of the final product to the car manufacturer.
This is our biggest focus and the biggest opportunity.
Better than Mercedes expected.
However, not only do we want to increase rates, we also want to increase dealer awareness plans and rates by increasing the profitability of Daimler Magic Sky Control options.
What are we going to do?
We have a cost reduction plan that could put us in the best position for Daimler to make a profit.
It is possible to increase Mercedes\'s revenue.
Once we have achieved cost reductions and there may be several reductions over time, these reductions may take some time to filter into Daimler\'s production labeling.
So this is not a near
The word \"fix\" means in the next few months, but when we achieve it, it brings significant growth.
They will also inspire other OEMs as we will also enter their profitable sweet spot.
We work with licensees at all levels of the automotive OEM supply chain, with a strong focus.
Our authorized vendors in the supply chain have made progress in reducing costs.
We also work on internal and other ways to reduce costs.
I am pleased to report that since our last conference call, further cost reductions have been achieved between us and our licensee, and we continue to work together to find more, because more work needs to be done here to achieve our goals.
At our most recent conference call, I noticed several other important developments in the automotive industry.
Continental Motors, one of the world\'s five major component manufacturers, is actually a parts supplier in the world, showing an upgraded car with all the Social Democratic Party glass at the Consumer Electronics Show, in addition, corning also made its debut at CES, a Corning 1 concept electric car that combines SPD glass with panoramic sunroof and rear glass.
Corning said that of all the unique features of that car, this is the most watched feature, and they are very satisfied with the feedback received from customers.
Now let\'s talk briefly about the aircraft market, which is our second largest market in terms of revenue.
First, let\'s talk about last year.
Last year, due to the temporary suspension of production by Textron, aircraft revenue declined in part in 2016, so they could upgrade some passenger controls in the aircraft.
So when the aircraft stopped delivering to the customer so that they could upgrade these control switches, the delivery was also stopped by [spectech]ph]
We reported on our last call that Textron resumed full production in the fourth quarter of last year, aircraft delivery, and revenue for these models has recovered.
Textron not only resumed full production, but in 2017 their aircraft royalties more than doubled from the previous quarter.
We also continue to make steady progress in the aircraft market and in other areas.
We have 7 models as standard equipment at OEM level and 34 after-sales models.
But as we move from general aviation or business aircraft to the Air Transport category market, there will be a huge change in our revenue, which we estimate is eight times larger than the business jet market.
I also believe that we are pleased to see some significant changes in this area by the largest players in the industry.
Now, from the aircraft market to the construction market.
In the construction market, a historical barrier is that Hitachi only covers the Social Democratic party film in a wide range of 1 m, and many construction applications need to be one or six on all sides.
The feet of the glass panel are wide.
This is not the technical limitation of the Social Democratic party technology, this is just a function of the width of the coating head they put into operation in Hitachi 10 years ago, at that time, all other smart window films were also coated in a width of 1 m.
While film width is a limitation in the construction market, our license holders are very good at solving this problem.
I was asked to update some of the construction projects we were talking about.
In the past quarter, the Social Democratic Party
SmartGlass is installed on some very large building products including the company\'s headquarters.
At extra high
Archival projects or institutional uses such as government facilities and hospitals we have also been granted our licensee.
Now, let\'s discuss two other developments that have taken place in about seven weeks since the last conference call.
We are licensed by Hanamac International, USA. S.
Korea-based company, which has introduced and sold innovative and technology-based products to South Korea\'s construction, defense, aerospace and power generation industries over the past 35 years.
We have been working with Hanamac for more than 10 months, during which we are working with them to develop new social democratic party products for the Korean automotive aftermarket.
Hanamac\'s approach should make it faster, easier, and less
Car owners are expensive to upgrade their cars with the Social Democratic Party
Smart glass after-sales market.
Given the very large size of the automotive aftermarket, this represents a very exciting new use of our technology, which can be widely deployed by car dealers and auto glass replacement shops.
We received 10% royalty on sales of Hanamac products.
We received a question as to why it was 10% instead of 15%.
To answer this question, all of our car product licenses have 10% royalties, one of them.
All our other products are at the end--
Licenses for the past 10 or 15 years have a 15% royalty.
So, this is our standard tax on cars.
Also, although this is not intentional, new products for our technology development seem to coincide with our quarterly conference call.
Perhaps this is a coincidence, more likely because the speed of new product launches has accelerated.
At our last conference call, Panasonic just announced the market launch of their new transparent screen product using social democratic party Technology.
The preliminary report on Panasonic\'s new product is very favorable. it adopts our Social Democratic Party-
SmartGlass technology is combined with liquid crystal technology to switch from transparent mode to screen mode.
By combining this technology, this achieves a contrast of 150 to 1 and converts windows into high impact video signage for shops, museums, galleries and other outdoor uses.
The Japanese flat glass company, which supplies smart glass for Panasonic, reported that the product was good for both them and Panasonic.
Now a product announcement has been released.
Earlier this week, in fact, the Japanese railway East, also known as JR East, started the luxury train service on the new Shikishima ten-
There are 17 suites for car sleeper trains for 34 passengers.
It also has two observation cars, a dining car and an allowance car in the front and rear.
It travels from Tokyo Ueno station to various places in northern Japan by award-
The award-winning designer Kiyoyuki Okuyama has also designed bullet trains, buildings, and perhaps the most famous is Porsche and Ferrari.
Asahi Glass is working with JR East to give us more details on this.
But now, if you want to see what this ultra-luxury train looks like, Google Shiki-shima.
After a while at the train market, in addition to Asahi Glass, another licensed party has also begun to supply the Social Democratic Party-
SmartGlass serves the other two luxury trains being built and under construction, and there is more to be done.
Compared to 2017, we continued to increase revenue in 2016, as various markets, mainly the auto and aircraft markets rebounded, and construction oceans and museum glass continued to grow, A new market recently developed for us and our licensee.
More meaningful revenue growth should be accompanied by our initiative to reduce the cost of the final product for our customers, which is the main focus of our company.
I was asked to provide an update on our patent action.
We are known to have sued E Ink, Amazon, Sony and Barnes & Noble for infringement of our three patents.
Based on our confidence and the provisions of the case law, we have decided to appeal immediately to the Federal Circuit Court, where certain explanations of our patents are given by the Delaware District Court.
We submitted the initial briefing in early April, and the response briefing for E Ink will expire in June, and we can submit further response briefings if we wish.
Prior to this call, we received questions from investors via email, and we discussed many general topics in today\'s presentation.
If we do not fully answer these questions in a presentation or an upcoming live Q & A, feel free to call or email us.
But, let me take a couple of email questions we received.
Are you in danger of delisting from NASDAQ as share prices fall?
The answer to this question-
I think that\'s the problem we got from a few people, no.
Even with the current share price, we are in compliance.
The other problem we get is-
One shareholder asked us why we are holding an annual meeting at the company headquarters this year?
Historically, we had a meeting at the Fox Valley Hotel 5 minutes away.
Well, we had meetings in different places, but we felt that through a four-quarter conference call, the opportunity for annual meetings to report on the progress of the company became less important.
In the past, this was our only report.
So, we have more people.
Now, in our conference call, we are tracking more people than we are at our annual meeting.
So we decided that with the four-quarter conference call, and an overall cost reduction initiative, we thought we could save some money.
This is also an opportunity to showcase some new products from our headquarters and our design center.
That\'s why we did it.
Another shareholder asked or mentioned that Mercedes was giving up SLC and S-
Class Coupe, what will these orders for Mercedes be replaced?
We haven\'t heard of Mercedes putting any cars on current models that use our technology.
There are rumors that SLC, maybe the SL sports car will have a canvas top in a future version, that is, a few years later.
If it is the top of a canvas, it is therefore difficult to place glass on the roof.
But so far, if we are on the roof, we would like to continue on the roof.
Another question is about Gen 3 technology from Gentex in 2018.
This is darker than what they can achieve in Gen 2.
I\'m with Machine 2.
There are still some real issues with the Gen 2 product and I believe the Gen 3 issue is still there.
It\'s still very, very slow.
There are also differences in change.
It tends to change from the outer edge and work in the middle direction.
On a Dream flight I took, when they popped off the window, we got what they called the doughnut hole effect, it looks like each window will basically be like a doughnut with two holes in the middle and it looks a bit funky if you want to do that but if you want to change the uniform, no more.
Regarding our agency statement, I have a question about executive compensation.
Part of the executive bonus seems to be based on achieving certain revenue targets.
What is the 2017 income barrier?
We do not provide specific revenue targets in advance, as this will give our licensee a forecast for the coming year.
I can say that while it will be a little higher, maybe much higher than 2016.
Then another issue we get is that you are currently paying more than $1 for an audit and earning more than $200,000. 2 million.
This seems very high for license businesses that don\'t have a real manufacturing business.
I realize there are compliance issues with listed companies, but have you considered shopping around audit costs.
Good question, Jason. thank you very much.
In fact, we have renegotiated the audit costs and we expect a significant reduction in the audit costs for 2017.
At this point, I think we have included most of the questions we received during the presentation or some of the questions I just read.
So, I now ask Anita to raise any other issues that we have not discussed to the people who are attending the meeting today. Question-and-
Today\'s first question comes from Ishfaque Faruk, the capital of Westend Park.
Good afternoon, Joe.
How are you, Joseph harresie ishfak?
Good, farudgood. Could you give. . .
By the way, Joseph HararyI must say that you are very keen on the findings of the Asahi Press Conference.
Thank you. All right.
Can you tell us your partnership with this new licensee who will focus primarily on the Korean aftermarket?
Maybe I can give you a longer game plan as well.
As a result, they obtained a license from the United States to supply the auto aftermarket in South Korea.
This is a market they are very familiar.
They offer automotive products, construction products, aircraft, aerospace products.
The idea is to pursue the lowest hanging fruit they see now, which is the avoidance that exists in the market.
Your question gives me a chance to perhaps elaborate on some of the challenges facing the aftermarket in more detail.
So, let\'s say you have a car and you want to upgrade with the SPD
Smart glass of the past.
If it is not an option for factory installation, what you will see next is whether it is an existing laminated glass.
There are about 40 different car models with laminated glass on the side glass and they are usually used for solar control or noise reduction-
A major example is Mercedes-Benz S-
There is laminated glass on one side of the class as it is quieter and cooler.
So, if you have, then if you want to upgrade your car, look at the car glass manufacturers, OEM manufacturers or after-sales glass manufacturers are willing to sell glass in an unlaminated form, so that you can laminate our film between the glass;
You will laminate the film inside if they want, and then you will install it on the existing door panel.
However, most cars do not have laminated glass and most suppliers do not offer glass that is not fully laminated.
So, then what you should do is either work with some people who already have glass molds and tools to form the glass in the shape the car needs, or they have to develop it.
Glass tools can be very expensive.
So over the years, some of our license holders have developed for highend vehicles.
The reason they do this is when you make a car\'s body armor or body armor, I should say that you need laminated glass with multi-layer glass and plastic, so, in order to do that, you need to have these glass molds ready.
Therefore, for example, the two licensed parties we are very strong in the bullet-proof glass market are Isoclima from Italy and anda from South America.
If you want to upgrade your Toyota Land Cruiser or Jaguar or some vehicle for years, you can go to them and they have the tools.
But what if you don\'t have that car?
Then, in trying to determine that we can make tools for this car, there will be additional costs and delays, how much it will cost, and then how long it will take us to mold the glass.
So Hanamac\'s approach is to change that and develop some innovative approach, that is, there is no need to develop something like glass tools, and still get a very, very high quality installation.
So essentially, their goal is to develop kits that auto glass companies or dealers can stock up to allow them to quickly upgrade your car.
If you want-
Once you no longer need to make the glass, then installing it is like replacing the broken window.
When I live in Brooklyn It\'s part of life outside and you take your car to a car glass shop;
They will call the local dealer.
Your Cup will be there in an hour or two;
They will screw your door.
They put the new glass in.
They sucked out all the glass and debris on the broken glass and you were on the way.
The same car glass shop will do other things.
They will install high
They will install car starters, remote control starters and other things in the car.
Because of this, they have expertise not only in glass, but also in electronics.
So, if you think about it, most of the other glass shops today have the capabilities needed to install the SPD
Smart glass, assuming they can get the glass relatively quickly.
So that\'s why I\'m so excited about the Hanamac approach.
Then, if you take this up to a higher level, say, if you want to color the windows on your car, you can go to a hue store on the corner, you can get a variety of different quality installations or you can ask your dealer to install the shades.
Usually, they use very high-end shades for high quality installation.
However, many customers will ask the dealer to be responsible for upgrading the coloring and doing something better.
Therefore, this method of working with auto glass shops can also work with auto dealers;
It becomes the distributor installation option.
So, this is very exciting for us.
SPD the president Farouk-
Considering that installing in the after-sales market is a very expensive option, just like being hit at the time of the after-sales market?
Well, some things, like aluminum wheels, are much more expensive than you think, and they are upgraded in the after-sales market every day.
So, people spend money to customize their cars.
This is probably one of the most eye-catching things you can do to upgrade your car, unless you want to flash a blue LED light or something like that on the chassis.
But in terms of some ideal feature upgrade option, the market seems to really bounce around that.
In fact, it is very useful for us to have a way into the market now.
I mentioned that I have talked about the long term plan for this product.
The Korean market is very familiar to Hanamac.
Their product development executives and presidents are all from South Korea and are educated in the United States.
Once they have established business and distribution channels in Korea, they do plan to expand this business to other markets.
I don\'t think Korea will be their destination.
Farujo, hold on--
Continue on this side of the train.
Is the Asahi Glass WONDERLITE using your social party or is it like some computing framework?
Because it\'s not very clear. . .
This is our social democratic party Technology;
Just their trademark--
Their trademark of the Social Democratic Party
SmartGlass is great.
Will Ishfaque FarukAnd get a similar contract from the train Social Democrats elsewhere? How big will these contracts be, like aircraft manufacturers, car manufacturers?
I just want to know the size of this market.
Thank you for your question.
The train market may be very large.
First of all, one of the challenges facing the train is that they use a lot of glass, not only on the side windows, but now on the roof.
This is to create a more open air atmosphere and panoramic views around you.
At any time, whether on a plane, on a train, or on a self-driving car in the future, you have a captive customer, and people want to pay more attention.
There is a lot of glass on the train because of this.
But the problem is that most train air conditioning systems do not meet the solar thermal gain requirements of using a large amount of glass.
So one of the benefits mentioned in the Asahi is that it allows the air conditioning system to actually make passengers comfortable.
How big is the market?
This is a 10-
This is a super luxury train.
When you see these images on Google, you think of a luxury cruise ship.
This is to cater to the silver market in Japan.
It does not go very fast.
I think it\'s 115 kilometers per hour, so it\'s about 70 miles per hour.
So this is not a bullet train;
In some of the most scenic areas of northern Japan, this is a very leisurely journey.
But trains in other markets are bigger.
When you start deploying this on all the first class cars and then all the cars on the train, you\'re talking about a lot of glass.
As I mentioned in my speech, Asahi is not the only one working in this area.
By the way, JR East is the first person to adopt this method, but JR West is driving its own luxury train in different places in Japan.
Then you do well in other regions and other continental luxury trains in Europe and North America.
So, you\'re going to see a luxury train trip, which I think is a more important way to travel.
We are a very important part of it, because the panorama is the key.
In the train market, it\'s probably the car market, and we get 10% royalties.
The next question comes from the collaboration between Michael Kay and Kay Associates.
Just a few follow-up-
About the Hanamac transaction.
When do you think they will be able to provide the market with the reformed Social Democratic Party glass, how long will it take?
Their product developers are now in Korea and they have been working with Hitachi to buy the film.
This product may be available at the end of this year or early next year.
So, the development speed is very fast.
Then, Michael KayAnd, will he actually let the Korean people know if this kind of thing is possible, is it a car company or some other store?
Joseph harary they have a marketing plan that aims to convey the message in a very effective way.
Press releases have also received wide attention in the market.
But when you think of people coming to these auto glass shops and dealers to upgrade now, standard existing traffic will be very interested in that.
Of course, it will be such a novel project that is easier to get than before-
Until then, the word will spread quickly.
Therefore, the after-sales market is a huge market.
Michael Kay, the United States, because the technology is used. -
This market is in the United States. S. ?
As I said, they started in Korea, but they will expand other markets once they have established their own foothold and distribution channels in Korea.
But this method can be done anywhere.
What is the status quo of Michael KayAnd\'s vision--
Sun visor, the visual system has been studying, sun visor?
Joseph harary they continue to sell the product to the car market, the aircraft market.
They got some very positive feedback from the release customers.
Maybe it will also motivate them to enter the after-sales market faster.
Michael KayAnd the last thing.
You didn\'t mention it, but can we assume there will be a major announcement about major OEM, Auto OEM sometime this year, as you said on your previous phone call?
Joseph HararyI has never said when it won\'t happen, so I don\'t want to say it this year, but things are moving forward.
The next question comes from [Jeffery Harvey]ph]
Here are only a few analysts whose ideas are not identified.
I think one of the reasons why stocks are so low is that you can never talk about anything you are doing.
I\'m just wondering in the future is there a way for you to build a license with the company, or do you have more freedom to talk about what\'s going on?
This is not a factor in our licensing agreement.
Our license agreement does not limit us to anything, except for some very specific, very limited exceptions.
The constraint is the industry we are in.
For example, from the beginning of development, we have been talking about this train project with Asahi.
But they didn\'t announce it until this week.
They lament the fact that even if they are not as flexible as they want to say in the press release, there are now Japanese and English versions on their website.
But they are trying to get JR East to say more and let\'s say more.
The same is true of the aircraft market;
We are talking to customers.
They control the marketing information of the aircraft.
The same is true in the car market.
Daimler controls the marketing information of their cars.
This is the nature of our industry.
I would not choose to be in other industries because they are very good industries and have very good business opportunities.
Now, we usually have more freedom in architecture, unless it\'s a private home or something like that.
Typical business facilities like to talk about energy saving and what they are doing.
So maybe you can get more visibility at this point.
But I think it\'s important to understand that we can talk about what we\'re doing, but in fact, what we\'re most concerned about is the revenue generated by these activities, and we\'re at the forefront of research, our investors, our licensees.
So talking about something is not really an improvement to achieve it.
That\'s why we are very, very focused on developing the market we are in, reducing the cost of the final product, building new markets, because all of this will bring us extra revenue, this is the most important thing.
Unidentified analysts agreed.
Looking at the automotive industry, I don\'t know the record of Gentex and how they grew.
But you have been on the Mercedes for a long time and you have not failed.
What did you see?
Why don\'t other companies join?
When can you see meaningful revenue growth in the industry?
At some point I would think it\'s like a hockey stick, maybe it\'s the cost.
Do you think you need to have a stronger mandate in that industry? -
This is a great question.
First of all, we do not need more powerful authorized vendors.
We have a lot [indiscernible]
Of the world\'s automotive glass production license holders, our technology and these are active companies. So. God bless them;
They are really good partners, have and have huge resources to solve this problem.
It\'s purely a cost issue.
If you are a car manufacturer and they think there are 20% for options in the MSRP of the car, you want to make sure that 20% of the option funds will be the most profitable option on the car, because this is where your car maker makes a profit.
Almost all the dealers have the same profit.
So, it\'s not really a dealer-driven thing.
They just want to sell cars that get high customer satisfaction, so they have reservations about the car makers.
But at the OEM level, it is really a problem to choose which product is more profitable than others.
So if we can get into the sweet spot I mentioned earlier, whether you like it or not, the aluminum wheel is the same as some of the other options that are usually placed on the car, and then, we expect the same to happen with our technology, and we are not only a highly mature choice ---
Forget the requirements of the customer, but the requirements of the single person [ph]
This makes S-
Course, check out on the box there, or people in BMW Munich, or in the Wolfsburg of Volkswagen, or Ingolstadt in Audi, or Jaguar Land Rover in Coventry, then, the fact that automakers have to put this on cars is a very compelling economic reason.
When you think it\'s a feature, it\'s also a cool feature that can even increase the value of an OEM.
So, it\'s purely a cost issue, and that\'s why we\'re so focused on reducing costs.
Unidentified analyst, does this mean that you are saying that you think there are two or three years left before this will yield results?
Joseph hararewell, for example, we have seen a reduction in costs over the past few months.
This is our continued efforts with our licensee . . . . . . Unidentified analysts, do you know what are the sweet spots for these car companies?
Joseph HararyWell, I know they\'re for Mercedes, and I\'m assuming the same sweet spot for other automakers.
So we know what our goal is.
In my opinion, the aircraft industry always seems to be a bigger market than the automotive industry.
The way you have it can transform the existing aircraft, and you make a lot of sense, it\'s not that expensive;
It can be done when the aircraft enters the electronic equipment renovation.
Again, do you have the right licensee or do you need to have a stronger licensee in that market?
Joseph HararyWell, we have the right license holders in the aircraft market.
Fokker Services is a subsidiary of the world\'s largest aircraft window manufacturer, and vision Systems is also a strong company, by the way, the company has the largest team in any licensee specializing in social democratic party Technology.
So, we have a strong mandate.
It also seems to be a compelling market because it\'s not . . . . . . An unidentified analyst [
Multiple speakerscost again?
Joseph Harari no, I don\'t think so.
I don\'t think it\'s a cost factor.
Jeff, in some markets, we are cheaper than the electric curtains that are now on the plane.
What do I believe? -
I think these are very highly designed products with a very long development cycle.
You must start the process as early as possible.
Any component is facing some certification issues and similar issues, which is quite long and expensive.
Fortunately, our licensees have started the process some time ago, so they are not just starting now, they have been working in these markets for a while.
We have the most reliable technology I think on the plane, and we have the longest flight time;
We changed the fastest.
We are the most unified in terms of conversion.
So I think there are a lot of great suites here.
One of the things we can do is that we can transform on the existing plains.
Now, the only plain on which Gentex has discoloration technology is the outer window that was specially designed to protect it.
So, if you put it on a regular window without these windows, you may have to change all the structural windows in the regular window and the internal window, although we can put it on the dust cover, on the inner panel between the structural window and the dust cover, you want to be able anywhere on the plain.
Therefore, it is easier for us to upgrade in the after-sales market.
Fokker has developed their element product, which is basically a cassette tape, and you can upgrade it when the normal tape enters the C check or the D check, you don\'t need to change your structural windows and no one is willing to do so.
Jeff, this is just a matter of urgency.
Unidentified analysts say you expect some sort of commercial announcement to be made sometime in the near future.
The unknown analyst you mentioned-okay.
I mean, are we talking? -
When you see a big increase in revenue, look at your business plan and future revenue growth?
There are many factors that will contribute to it.
I have to be very brief, though, because there are a few other issues in our queue and we have time off.
But one of the things we have said is that we expect revenue in the auto market to increase significantly as costs fall.
So the sooner we do that, the sooner we get there.
A model can do this for us.
The second thing is from the plane. -
The general aviation market is eight times that of commercial aviation.
So basically, it just focuses on this and then you have other markets where new products like Panasonic products, Hanamac or Corning products use our technology to further enhance them.
That\'s the way you win the game, but I think singles, doubles and triple champions and home.
The next question is from Jarrett Albert ,[ph]
The unidentified analyst does not know if you have received my email about Panasonic ips LCD coupling with light
If you can answer this question, regulate the cells?
This is another Panasonic product, not a smart transparent screen product, more like a TV.
They may achieve black modulation by better TFT or something you can do when you don\'t have an ambient light source, just like in other markets.
I don\'t think [that]ph]
But frankly, Panasonic has more experience in the benefits of the Social Democratic Party, and when it deals with environmental lighting, we will put more products into it.
So, this is our first positive product.
The next one is from Charles Michael ,[ph]
Unidentified analysts think my problem is covered.
Thank you, Charles. Operator[
Our next question is from Michael Forester ,[ph]
Unidentified analysts have listened to many of these meetings.
It\'s always great to hear about what might happen in the future.
But what are you worried about?
Is there something that will hinder the increase in income or lead to a decrease in income?
Because there is no better way to express people\'s stupid decisions.
I see stupid decisions made by big companies and small companies, I don\'t expect any decisions, but that\'s what we\'re going to come out [indiscernible]
It will fall into this category.
I\'m not worried about competition, maybe just to expand your problem a little.
As far as the performance of other technologies is concerned, what I see is really not in line with what I think the market is expecting, that is, if you are going to spend money to buy something like a smart window, you will want the best performance you won\'t want to wait 40 minutes for your window to open.
And then, the other thing I want to say is that at some point we have protective measures that they want to buy the research frontier with low value, this is probably the most important thing to keep me awake, which is where our stock is and we are a very attractive target.
Now, we have some measures to prevent this from happening, or to give shareholders better value, and to prevent some abusive technology and hostile acquisitions that have been tried in the past.
But frankly, the best thing I can do for the company and for all of us, when we wake up, we think about it, when we sleep, we think, how do we increase our income and reduce our costs.
We have a very simple way.
We are expanding our views on how to achieve these goals, as are our licensees.
So, we will be in good shape.
Are licenses and patents safe?
We seem to be gone--
I\'m not going to miss the stock for 20 years, and it seems to me that one day someone might take advantage of the technology as a competitor.
If you work with 20 people, remember
Technology a year ago, when things are lost from patents, you are talking about taking snapshots in the history that existed 20 years ago, and you will really have a hard time competing with the current state-of-the-art technology.
For example, someone who wants to work with some of our initial film technologies will not be able to put it into production.
So, I\'m not worried about that.
We have a group of very talented scientists here who invent new things and apply for patents every day.
So, this is a big investment for us and part of our work.
The last question is unknown.
Given the picture you gave us about the future of the company, could you please explain why since I thought at the last conference call that Seth mentioned the stock price as a joke.
After less than two months, our price was reduced by 15 to 20%.
Joseph HararyI believes that you have a lot of people looking for sustained revenue growth before triggering the purchase of more stocks.
So before this happens, our efforts are focused on achieving sustained revenue growth, otherwise the market will fluctuate.
Seth, do you have any ideas? . .
Of course, I still support my comments.
Although at the end of the day, we did not control the price of our stock;
The market is working.
I am sharing my point of view my personal view of our valuation, and the valuation of these companies is much higher compared to the other companies we are involved in, and the products in the market are not very developed.
So from this point of view, I still feel like the last call, and more importantly, because, as you correctly point out, the valuation has fallen.
But as far as Joe is concerned, the best thing we can do is not focus on what the stock market is doing, but on how to make our income grow.
It is absolutely clear to us that if we can reduce some of the costs in the car market, we may have very meaningful revenue growth.
This is one of the mission of our company.
Unidentified analysts don\'t know when the first task will be completed, right?
We realize it every day;
This is an ongoing effort to reduce costs and pass on these cost savings to customers.
At the same time, we have a very continuous business development team where new markets and new products are developed and existing markets are developed.
Agree with Seth.
Revenue growth is the best thing for us, the way you achieve this is to develop your market and reduce your costs, so for more and more customers, it becomes more cost effective.
It\'s not rocket science, it\'s just a hard job.
When you consider that others in our industry lack success in really doing this, we are in good shape relative to others, but we want to be the best company for investors.
So, we want to change that.
The next question comes from Bruce Tony ,[ph]
Unidentified analyst first of all, one is that I apologize in advance if you have already answered this question, but I didn\'t listen to you when we could expect a more extensive building installation movie
Haraj did not say.
What I said on the phone so far is that our licensee is very creative about how to design around this restriction, but this is not a technical limitation.
So, to make us have a wider film, there\'s almost nothing going to happen.
Either Hitachi has to expand their coating heads, which of course is an investment they can make, or someone else has to make the film and I just have to leave it there.
The second question is about the question you just mentioned, and if you like, look at the curve, how much can you reduce the cost so far?
If the curve is continuous, can you make a general prediction? In this prediction, we may reach the point where the cost has fallen to encourage a wider adaptation of the film?
So, let\'s start with the rule of thumb that everyone is working in manufacturing.
They studied every technology-based product from Fine Chemicals to computers, mobile phones, cars.
Usually, when you double your production experience and value --
The increased costs fell by 20%.
So, if it takes $100 to make the first 100 wedges, then it takes $80 to make the last 100 wedges, then there are 200 wedges, the next 200, etc, it will cost $64, which is why prices are falling.
Before we can really get to this empirical curve in terms of doubling production experience, the other way you can do this is to achieve some cost reduction through economies of scale, by re-examining some of the things you do when you figure out if there is a cheaper way, some of the costs are reduced.
For example, can you safely take out some of the processes because these techniques don\'t really need them or they make some straps that you can eliminate.
Maybe it\'s a color for things.
In the automotive industry, you will not expect a significant drop in costs overnight;
This is an ongoing effort to work together between automakers and suppliers and is also an expectation for doing business.
I have seen a reduction in the scheduled cost of our technology, such as our licensee, etc.
I must say that since we started the cost reduction plan, the percentage of cost reduction I am in--
With these pre-order cost reductions that you usually see on the car.
So we did a good job.
We may have performed better than people expected, but we have not yet reached our goal.
Frankly, we will move on when we hit the target.
If we can make this price more affordable, it will be good for everyone.
An unidentified analyst
Did you get any feedback from the manufacturer about when to wake up and realize that there is this product that will sell their cars like Mercedes and BMW?
Maybe people will go looking for the product and want to see it on the car they buy.
I don\'t know if they have considered this, but it seems to me to be a problem with no brains.
I don\'t know why they keep dragging their feet.
This cannot be understood.
Joseph harary it must be as profitable as an aluminum wheel.
This may be important.
I think I\'m going to make some closing remarks because I think this is the last issue we have in line.
Analysts of unknown reasons thank you
Thank you very much Bruce.
Although we have competition in all markets except the car market, some of our competitors spend 25 times as much as we spend, we actually have more money to invest.
We are still the best-selling and best-performing smart window technology in the world.
Our revenue growth will come from the continued development of our main market, our revenue growth will also come from new products and new applications of our smart social democratic party technology, and our technology will become more affordable.
We have made progress in all these areas, but it is certainly a concentrated and sustained effort, and we are all working towards that.
In the smart glass industry, no one is as far away as we are in the automotive industry;
No one has as many cars as we have, and no one has as many different models as we have;
No one has achieved the performance and reliability we have shown the automotive industry.
No one has traveled or flown as long as we have on different models, and we are building on that.
In the daily life of thousands of cars on the road, people are overhead our glass on the road, protecting them from the sun, heat, ultraviolet rays and strong light, making their driving experience more comfortable and enjoyable.
It also protects lives in their homes, their offices, ships and planes.
Sensitive documents in the museum
Now, it has also entered more consumer electronics and multimedia markets, and has provided new uses for the virtual social democratic party light.
Control technology or continuous development.
For example, what the visual system is using it to convey information from the glass of an airplane or train window, or what Panasonic is doing with a transparent screen to project an image to a piece of glass or Hanamac to develop a more expensive product
An effective way to serve the automotive aftermarket or Asahi and its customer JR East, meet the needs of advanced train travelers with ultra-luxury train travel and innovative new designs.
As cars become more electrified, more connected cars and
Driving a car, Social Democratic Party-
Smart glass technology will make these products and passengers experience better.
Some say the best way to predict the future is to invent it.
Thank you all for participating in this effort, because together we shape the way people live, work and travel.
Good afternoon, everyone.
The meeting is now over.
Thank you for attending today\'s speech.
You can disconnect now.