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Summary of VIGO Photonics financial results for the first quarter of 2024

Summary of VIGO Photonics financial results for the first quarter of 2024

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

In the first quarter of 2024, the consolidated revenues of VIGO Photonics amounted to PLN 15.8 million (-15.5% y/y), adjusted EBITDA amounted to PLN 2.3 million (-58.3% y/y), and the adjusted net loss amounted to 0.8 million PLN.

The total value of orders and contracts at the end of April 2024 is PLN 43 million and is higher year-on-year by over 30% (including PLN 24.5 million in confirmed delivery orders compared to PLN 23.9 million at the end of the same period last year and an additional PLN 18.5 million in remaining contracts for 2024-2025). This amount does not include the contract with the PGZ group entity signed in August 2023.

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, the USA employs a total operational team consisting of 6 people with knowledge in the field of industry and military, as well as meeting the requirements regarding access to classified information and cybersecurity. The company plans to employ one person more by the end of 2024.

Additionally, it is planned to tighten cooperation with the American scientific community and launch joint development projects, which should accelerate the pace of developing new products for American customers, especially for the arms industry. It is also planned to cooperate with technological partners under the Smart Business Research Program in order to obtain grants for development activities in the USA.

Moreover, in April this year VIGO has obtained the ITAR Registered (International Traffic in Arms Regulations) status in the USA, and by the end of Q2 2024 VIGO will obtain the CMMC (Cybersecurity Maturity Model Certification) certification issued by the US Department of Defense, which is necessary to deliver products to American companies from the security and defense sector.

“Potential contracts with U.S. military contractors require a lot of time and effort. It is not only about a product that meets customer requirements, but also all formalities and safety certificates on a market subject to strict regulatory restrictions, such as regulations). It is with great satisfaction that I inform you that VIGO has had the ITAR Registered status since April this year, which, combined with the CMMC certification, which we will obtain by the end of the quarter, will enable formal and detailed talks with contractors from the American defense industry. I am convinced that already this year we will be able to inform the market about the first contracts obtained in this area,'' says Adam Piotrowski, President of the Management Board of VIGO Photonics.

  • Design of infrared detector arrays

The company is also implementing a project related to the development of infrared detector array technology for civilian and military applications and the launch of mass production. The project is being implemented as planned. The company plans to start producing prototypes for military tests in the second half of 2024, and mass 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 matrices for mass production and use in combat vehicles in Polish army. The project is currently in the R&D phase.
“The matrix project is being implemented as intended. We expect that we will be able to start test production in the second half of this year. Last year, we signed a letter of intent with PCO regarding the implementation of the infrared matrices we are developing for mass production and use in combat vehicles in the Polish army. Currently, the matrix project is in the R&D phase - we have optimized the semiconductor structures to the requirements of matrix detectors. We also prepare pre-production series of products for customer testing and confirmation of compliance with all military standards. We are also preparing an investment program that will allow us to launch serial production of matrices in 2025,''says Marcin Szrom, Member of the Management Board of VIGO Photonics.

  • HyperPIC project

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

On May 15 this year The company signed an agreement with the National Center for Research and Development to 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 so-called financial gap in the project. Eligible costs in the project include expenditure on research and development work, expenditure on the construction of a new production line and operating costs after launching the new production line.

The implementation of the project will accelerate the development of photonic sensor technologies and, as a result, will enable the delivery of a new class of integrated photonics systems for sensor applications to the market. As a consequence, it will be possible to use single chips with advanced sensory functionalities in everyday objects (smartphones, wearable devices, household appliances, vehicles).

Signing a co-financing agreement with the NCBiR for the HyperPIC project is an extremely important milestone for VIGO. Thanks to it, we will be able to develop technologies for integrated photonics systems in the mid infrared range, in which we are global pioneers, and we will create a strategic potential for their production in Europe. This will not only preserve the EU's technological advantage, but also strengthen the technological potential of the Polish economy. The project will also be an impulse for the development of the Polish cluster of photonic technologies and will have a strong impact on the entire Polish photonics ecosystem, which will ultimately allow Poland to become a significant player in the integrated photonics industry in Europeemphasizes Adam Piotrowski, President of the Management Board of VIGO Photonics.

Q12024 sales summary by segments

In the first quarter of 2024, the largest increase in sales was recorded by the military segment (PLN 4.4 million, +57% y/y), which reflects trends visible for several quarters. The segment’s sales grew thanks to orders from
regular customers, including Safran Aerospace, PGZ and other European contractors.

In the first quarter of 2024, the industrial segment recorded a year-on-year decline in sales (to PLN 6.8 million, – 38% y/y, mainly sales to customers in Europe). The segment’s result was influenced primarily by lower demand for detectors used in the semiconductor industry. In turn, sales in the industrial segment in the United States were at a comparable level year-on-year, reaching PLN 1.9 million in the first quarter of 2024 (mainly detectors for gas analysis, including methane).

Sales in the semiconductor materials segment are growing thanks to orders for QCL structures – Quantum Cascade Lasers – and for semiconductor energy storage facilities. Sales in the segment amounted to PLN 1.6 million in the first quarter of 2024 (+3% y/y), and in the entire last year to PLN 6.1 million (+48% y/y). The share of applications in the revenue structure in the first quarter of 2024 was respectively: industrial application 43%, military application 28%, semiconductor materials 10%, transport application 13% and science and medicine 6%.
Sales by application (in PLN thousand)

In addition to the strategic projects described above, we are conducting new pro-development projects in our ''traditional'' detector business. The most promising include work on two new projects for the railway market. Moreover, in 2024 we plan to finalize two of our other projects - cryogenically cooled detectors for manufacturers of measuring equipment and detectors for a manufacturer of semiconductor production equipment - sums up Adam Piotrowski.

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 May 6-9 (USA) – OffShore Technology
o May 6-10 (USA) – SOF Week
o May 21-23 (USA) – Border Security Expo
o May 21-25 (Norway) – Norsk elektro-optikkmøte

  • Events planned for later in 2024

o June 5-6 (Norway) – Sensor Decade
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 June 15-21 (Poland) – International School and Conference on the Physics of Semiconductors
o June 23-28 (Poland) – MIRAQLS
o July 12-16 (USA) – QSIP
o September 3-9 (Poland) – International Defense Industry Exhibition (MSPO)
o September 11-13 (China) – China International Optoelectronic Exposition
o September 16-20 (Italy) – FLAIR
o October 9-10 (England) – AQE -Air Quality&Emissions
o November 18-21 (Germany) – Semicon Europa + Electronica

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