VIGO estimates for Q4 2022 – growing sales in industrial and science & medicine segments despite challenging market conditions

•  Development of sales in Asian markets
• 20-30% price increases on products introduced
• Growing demand for VIGO products and order book will support the company to return to a growth path in 2023 and beyond

VIGO Photonics S.A. (WSE: VGO), a global manufacturer of the most advanced photonic mid-infrared detectors and detection modules as well as semiconductor materials, despite a volatile market environment, achieved 19.7 million in consolidated revenue in Q4 2022 (-11% YoY).

Sales of detectors and detection modules in Q4 2022 amounted to PLN 18.2 million (-10% YoY) and sales of semiconductor materials totalled PLN 1.5 million (-25% YoY). Significant sales increases were recorded by the company in science & medicine applications (2.5-fold YoY growth) and industry (+11.5% YoY).

In Q4 2022, the Company also reported an almost doubling of sales in the Asian market (PLN 4.5 million compared to PLN 2.4 million in Q4 2021), owing to new orders from the scientific and transportation segments.

VIGO Photonics’ order backlog as at 31 December 2022 amounted to PLN 76.3 million and was approximately 11% higher than at the end of 2021, demonstrating the consistently growing mid-infrared market and the high demand for VIGO Photonics’ products. In addition, in Q4 2022, VIGO successfully concluded negotiations for price list increases for its products of 20-30% YoY.

On 18 November 2022, Marcin Szrom was appointed to the Management Board of Vigo Photonics S.A. as Chief Operating Officer (COO), effective 1 February 2023. Marcin Szrom has extensive international experience, including in the semiconductor and automotive sectors. The new board member will be tasked with, among other things, supporting the company in improving operations, increasing the efficiency of production processes, supply chain management, as well as in developing VIGO Photonics as a global organisation.
The company continues to record solid growth in revenues in its industrial segment, which reached PLN 12.1 million in Q4 2022, an increase of approximately 11% YoY. In the science and medicine segment, VIGO also recorded a significant increase in sales of more than 140% YoY to PLN 2.6 million, mainly driven by new projects in the Chinese market. The transport segment recorded a YoY decrease in sales, mainly due to the previously-announced lower availability of electronic components for selected modules and the postponement of some orders to future periods. Whereas the decrease in sales in the military segment was due to lower orders from a major customer in this sector, as previously communicated by the company.

In the Q4 2022 revenue structure, the highest contributions came from the following applications: industrial 61%, science and medicine 13%, transportation 8% and military 9%, respectively. The share of the semiconductor materials segment in total sales was approximately 8%.

Difficulties related to component availability for some products were still evident in the fourth quarter and, as a result, some orders were postponed. Despite the unfavourable conditions, we increased revenues by more than 11% in the key industrial segment, and if it were not for the difficulties related to the availability of components, the revenues of the industrial and transport segments would have been higher, says Adam Piotrowski, CEO of VIGO Photonics.

We also continue to see growing interest in our products. Contracting (i.e. orders won and confirmed) stood at PLN 76.3 million at the end of 2022 and was over 11% higher than the level at the end of 2021. In addition, according to our estimates, problems with the availability of certain electronic components reduced our full-year contracting in 2022 by approximately 5% – the difficulties concern only a part of the production of detection modules for transport and industrial applications, adds Adam Piotrowski.

As we announced earlier – we have been gradually introducing price increases for our products since October last year. In most cases, we completed the process of negotiating with customers in the fourth quarter and successfully introduced price increases of approximately 20-30%, and their positive effects will gradually become more and more visible in 2023, says Łukasz Piekarski, Member of the Board and Chief Financial Officer of VIGO Photonics.

We are developing our sales network all the time, consistently gaining new customers. The positive impact of contracts from the Asian market (transport applications as well as science & medicine) is becoming increasingly evident in our revenues – in Q4, sales to the entire Asian region reached PLN 4.5 million (+91% YoY), and in the whole of 2022 the sales stood at PLN 12.9 million (+85% YoY), adds Łukasz Piekarski.

In conclusion, it is worth emphasising that the current market situation does not affect the implementation of our pro-growth strategic initiatives – their implementation is and will continue as planned. We also uphold our long-term strategic assumptions – I am convinced that the steadily growing demand for our products, evident in our order book, will support VIGO to return to a path of dynamic growth in 2023 and beyond, concludes Adam Piotrowski.

VIGO Photonics’ total estimated consolidated revenues in 2022 were PLN 67.3 million (-6% YoY). Sales of detectors and detection modules in 2022 amounted to PLN 63.1 million (-6% YoY) and semiconductor materials totalled PLN 4.2 million (-3% YoY).

The lower level of total revenues in 2022 compared to 2021 is primarily due to lower revenues from military applications, and lower-than-expected revenues from industrial and transportation applications as a result of lower availability of some components and disrupted supply chains.

NEW EPITAXIAL REACTOR
A new epitaxial reactor for the production of III-V semiconductor materials (chemical compounds from groups III and V of the periodic table of elements) was delivered to the company in September 2022. Commissioning of the system is currently underway and the start of materials production in the new reactor is scheduled for early 2023. The start-up of the reactor will double production capacity, as it will allow us to serve more customers and embark on more new projects with customers.

ARTEMIS 1 MISSION SUCCESSFULLY COMPLETED
On 11 December 2022, the flight of the unmanned Orion spacecraft as part of the Artemis 1 mission was successfully completed. The goal of the Artemis programme, led by NASA, is long-term and sustainable exploration both in lunar orbit and on the surface of the Moon, as well as the preparation and execution of manned flights. Among other things, the Orion rocket carried infrared detectors for monitoring the operation of key environmental systems manufactured by VIGO Photonics.

DEVELOPMENT STRATEGY – 2021-2023 PERSPECTIVE
In 2021, VIGO presented a new two-phase development strategy for 2021-2026, which singles out six development initiatives – technological areas aimed at strengthening the Company’s position as one of the most innovative and rapidly growing companies on the market. By 2023, the Company’s goal will be to continue the R&D projects it has started in the areas of photonic technology, integrated circuits, III-V material detectors, semiconductor material epitaxy and infrared source technology. The technological and technical base will be developed. Due to the current market situation, the Company is currently focusing on strategic initiatives that contribute most to revenue growth in the short term. The second phase of the strategy will run up to and including 2026 and will consist of the implementation of selected development initiatives.

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