Summary of VIGO Photonics financial results for Q2 and H1 2024

 

Summary of VIGO Photonics financial results for Q2 and H1 2024

 

• Another quarter of dynamic sales growth in the military segment
• Intensive activities aimed at development on the US market - finalization of all necessary certifications for the defense industry

 

• Signing of a conditional financing agreement with the EIB for the HyperPIC project in the amount of up to EUR 21 million

 

• Start of the process of reviewing strategic options

 

VIGO Photonics S.A. (WSE: VGO), a global manufacturer of the most advanced photonic mid-infrared detectors and detection modules and semiconductor materials, has published its results for Q2 and H1 2024.

In Q2 2024, VIGO Photonics' consolidated revenues amounted to PLN 22.7 million (+24.5% y/y), adjusted EBITDA amounted to PLN 4.4 million (-10.9% y/y), and adjusted net profit reached PLN 0.5 million (-88% y/y). The level of revenues achieved in Q2 2024 is the highest quarterly level in the company's history.

In H1 2024, VIGO Photonics' consolidated revenues totaled PLN 38.6 million (+4.2% y/y), adjusted EBITDA PLN 6.7 million (-36.1% y/y), and adjusted net loss PLN 0.3 million. 

The total value of orders acquired from the beginning of the year to the end of August amounted to PLN 48 million (+7% y/y). Additionally, the value of contracts remaining to be implemented for 2024-2025 amounted to PLN 14.4 million (-62% y/y). This amount does not include the contract with an entity from the PGZ group signed in August 2023. The company is currently working on renewing contracts with regular customers for subsequent periods. Sales of detectors and detection modules in Q2 2024 totaled PLN 20.4 million (+19% y/y), and sales of semiconductor materials PLN 2.4 million (+100% y/y). In the entire first half of 2024, sales of detectors and detection modules totaled PLN 34.6 million (+1% y/y), and sales of semiconductor materials PLN 4 million (+45% y/y).

In Q2 2024, the military segment once again recorded the largest increase in sales (PLN 7.9 million, +124% y/y), which reflects trends that have been visible for several quarters. Sales in the segment grew thanks to orders from regular customers from Poland and Europe, including Safran Aerospace, PGZ and other European contractors.

Q2 of this year brought a significant increase in VIGO sales both quarter-on-quarter and year-on-year, reaching a record quarterly level in the company's history. This is the result of several factors: constantly growing sales in the military segment, a rebound in sales in the industrial segment and dynamically growing revenues in the semiconductor materials segment. The constantly growing sales in the military segment are the result of already known trends - increasing defense spending by countries. VIGO provides detector solutions for customers from both Poland and Europe, this year we also expect the first contracts in this segment in the USA, where we have just finalized obtaining the necessary certifications - says Adam Piotrowski, CEO of VIGO Photonics.

We are also focusing on other pillars of our strategy. In the HyperPic project, we obtained conditional financing from the EIB - this agreement is one of the options securing the financing of this project. However, the decision to release the funds has not been made yet - it will be dictated by the interests of the Company and its shareholders and will depend on external economic conditions - says Adam Piotrowski.

In turn, in the matrix project, the production of a test series of the first product matrices is currently underway. We plan to achieve readiness for serial production in 2025, with a gradual increase in scale in 2026 - adds Adam Piotrowski.

Prospects for the next periods

• Sales development in the United States

The company is intensively developing its sales force in the United States, identifying a very large potential of the military and industrial markets.

 

In May this year, two new people joined the American team. Currently, a team consisting of 6 people with knowledge in the field of industry and military, as well as meeting the requirements for access to classified information and cybersecurity, is employed in the USA.

In Q2 this year, VIGO obtained ITAR Registered status in the USA (International Traffic in Arms Regulations) and DD2345 certification (Handling of Unclassified Technical Information certification), which allows for registration on US government portals for suppliers and access to information from customers. In September this year, the company obtained full CMMC certification (Cybersecurity Maturity Model Certification) issued by the US Department of Defense, which is necessary to carry out deliveries for American companies from the security and defense sector.

We managed to meet all the most important formal requirements related to cooperation with clients from the military industry in the USA. VIGO already had the ITAR Registered status, and in September we finalized obtaining full CMMC certification, which allows us to conduct formal and detailed talks with contractors from the American defense industry and will accelerate the acquisition of orders. We are also completing the construction of our secure computer network. I am convinced that this year we will be able to inform the market about the first contract obtained in this area, and in addition, we are conducting further talks with other large contractors from the American defense sector - says Adam Piotrowski.

The company is intensifying its activities related to building the market and creating the VIGO Photonics brand in the USA, including by strengthening cooperation with the American scientific community and launching joint development projects, which should accelerate the pace of developing new products for American customers. It is also planned to cooperate with technology partners within the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs in order to obtain grants for development activities in the USA.

The company also actively participates in industry events on the American market, such as the SPIE Defense + Commercial Sensing, OffShore Technology, SOF Week, Border Security Expo, Analyzer Technology Conference.

 

• Infrared detector array project

At the end of June this year, VIGO announced that it had obtained a concession from the Ministry of Internal Affairs and Administration to conduct business activities related to the production of equipment dedicated to the needs of the military. Thanks to receiving this concession, VIGO will be able to implement a development strategy that responds to the growing demand of the defense sector in Poland, including the development of the infrared array project. The matrix project is being implemented according to the assumptions. The company plans to start producing prototypes for military tests in the second half of 2024, and serial production in 2025, with a gradual increase in production in 2026. In 2023, VIGO signed a letter of intent with PCO regarding the implementation of infrared arrays for mass production and use in combat vehicles of the Polish army, such as the New BWP Borsuk, Leopard 2PL or KTO Rosomak and others.

The project is currently in the R&D phase, including, among others. preparation of a series of detectors for military tests, development of the LWIR matrix and preparation of the production line.

 

• HyperPIC Project

In February 2024, the company's project "HyperPIC - Photonic integrated circuits for mid-infrared applications" was placed on the list of projects selected for funding under the FENG (European Funds for Modern Economy) call. The project will be implemented as part of the integrated European IPCEI ME/CT (Important Projects of Common European Interest on Microelectronics and Communication Technologies) project.

The implementation of the project will accelerate the development of photonic sensor technologies and, as a result, enable the delivery to the market of a new class of integrated photonics systems for sensor applications.

As a result, it will be possible to use single chips with advanced sensor functionalities in everyday objects (smartphones, wearable devices, household appliances, vehicles).

 

In May this year, the Company signed an agreement with the National Center for Research and Development to co-finance the project. The total value of eligible costs in the project is PLN 853,117,563.35, and the maximum amount of public aid is PLN 440,535,480.00, which corresponds to the amount of the so-called financial gap in the project. Eligible costs in the project are expenditure on research and development, expenditure on the construction of a new production line and operating costs after the launch of the new production line. On September 12, 2024, VIGO concluded a conditional financing agreement under the InvestEU program with the European Investment Bank. Under the Agreement, the EIB undertook to provide the Company with financing in the form of a venture debt loan in the maximum amount of EUR 21,000,000 (PLN 90,014,400). The Company also concluded an agreement with the EIB on the issue of subscription warrants to the EIB. The purpose of the agreement is to support the continuation of VIGO's research and development work aimed at developing photonic integrated circuits (PIC) technology within the HyperPIC project, as well as infrared (IR) detectors and modules. The financing agreement is conditional and will enter into force subject to the consent of one of the banks financing the Company's operations, within a period not longer than 6 months from the date of signing the financing agreement with the EIB.

 

• Strategic options

 

On September 20, 2019, the VIGO Management Board announced the commencement of the strategic options review process, the purpose of which is to analyze and evaluate possible courses of action for the further development of the Company, including financing the development of photonic integrated circuit (PIC) technology, as well as infrared (IR) detectors and modules and other products of the Company. The Company will consider possible strategic options, which may include acquiring a financial or strategic investor, or conducting another transaction that may result in a change in the Company's shareholder structure.

 

The Company has engaged a financial advisor - PWC Advisory and a legal advisor - DLA Piper law firm to support the activities of the Company's Management Board in connection with the review of strategic options.

 

INDUSTRY EVENTS

• In 2024, VIGO Photonics participated in the following industry events:

o January 27 – February 1, 2024 (USA) - SPIE Photonics West (San Francisco)

o January 23-25, 2024 (France) - International Symposium on Optronics in Defense & Security OPTRO (Bordeaux)

o March 13-14, 2024 (Poland) - TEK Day (Wrocław)

o March 28-30, 2024 (USA) - Global Force Symposium & Expo (Huntsville)

o April 15-19 (USA) – Analyzer Technology Conference

o April 23-25 ​​(China) – National Academic Forum on Laser Spectroscopy

o April 21-25 (USA) – SPIE Defense and Commercial Sensing

o 6-9 May (USA) – OffShore Technology

o May 6-10 (USA) – SOF Week

o May 21-23 (USA) – Border Security Expo

o May 28-30 (Finland) – Optics and Photonics Days (OPD Finland)

o June 11-13 (Germany) – Sensor + Test

o June 17-21 (Germany) – Eurosatory

o July 12-16 (USA) – QSIP

o September 3-6 (Poland) – MSPO

o September 4-6 (Taiwan) – SEMICON Taiwan

o September 2-6 (Slovakia) – 23rd Slovak-Czech-Polish Optical Conference on Wave and Quantum Aspects of Contemporary Optics

o September 9-13 (Poland) – Laser Technology Symposium

o September 11-13 (China) – China International Optoelectronic Exposition CIOE

o September 16-20 (Italy) - Field Laser Applications in Industry and Research FLAIR

• Events scheduled for later in 2024:

o September 24-27 (Germany) - InnoTrans

o September 26 (Poland) - TEKDay

o October 3-4 (Poland) - Optoelectronics Conference

o October 9-10 (Germany) - Photonics Days Berlin

o October 9-10 (England) - AQE - Air Quality & Emissions

o October 14-16 (USA) - AUSA

o October 21-24 (France) - ICSO International Conference on Space Optics

o 5-8 November (Sweden) – Optics & Photonics in Sweden conference 2024

o 12-13 November (Estonia) – Inteligent Rail Summit 2024

o 18-21 November (Germany) – Semicon Europe + ElectronicaWe

 

Contact for media and individual investors:

Piotr Piotrowski, cc group

piotr.piotrowski@ccgroup.pl, +48 697 613 010

 

Contact for institutional investors:

Małgorzata Młynarska, cc group

malgorzata.mlynarska@ccgroup.pl, +48 697 613 709

 

VIGO Photonics S.A. (WSE: VGO) is a global manufacturer of high-tech solutions - the most advanced mid-infrared photonic detectors, dedicated modules and semiconductor materials. Innovative devices have been recognized and used by numerous international customers from the industrial and transport sectors, environmental protection, medicine, defense and security. The quality of VIGO Photonics detectors was also confirmed during NASA's mission to Mars (including in the Curiosity rover) and their detection of traces of methane on this planet.

VIGO Photonics is successfully developing its activities in the field of semiconductor materials production. For this purpose, the Company has improved and uses the epitaxy technique (deposition of layers of selected crystals on a crystal substrate) using elements from groups III-V of the periodic table. In its development strategy, VIGO Photonics intends to supply the global market with photonic integrated circuits PIC (Photonic Integrated Circuits) based on semiconductors produced in this way. These systems will find numerous applications in the consumer electronics industry. The Company's goal is also to achieve a leading position in the emerging European silicon chip market.

 

VIGO Photonics (formerly VIGO Photonics) began its operations in 1987, and since 2014 has been listed on the main market of the Warsaw Stock Exchange. VIGO Photonics is headquartered in Ożarów Mazowiecki and has a subsidiary in the United States. The company employs approximately 200 high-class specialists and scientists.

 

In August 2022, the Company changed its name to VIGO Photonics, previously known as VIGO Photonics.

 

More information:

vigo.com.pl

linkedin.com/company/vigo-photonics