AmpliTech Group Q3 2023 Earnings Call Transcript

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November 14, 2023

There are 4 speakers on the call.

Operator

Good day, ladies and gentlemen, and welcome to Amplitec Group's Quarterly Investor Update Call, where the company will discuss its 3rd quarter 2023 financial results. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, today's conference is being recorded. And I would now like to turn the conference over to Amplitec's Director of Investor Relations, Sean Sawant.

Operator

Please go ahead.

Speaker 1

Thank you,

Speaker 2

and thanks, everyone, for joining today's call to review the recent progress of Amplitec's initiatives and to answer investor questions. On the call today are Amplitec's Founder and CEO, Fuad Napool the company's COO, Jorge Flores and the company's CFO, Luisa Sanfitella. Following initial comments, we'll open the call up to answer your questions. An archived replay of today's call will be posted to the IR section of Amplitec's website. And just a reminder, this call is taking place on Tuesday, November 14, 2023.

Speaker 2

Remarks that follow and answers The questions include statements that the company believes to be forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. The forward looking statements generally include words such as anticipate, believe, expect and words of similar importance. Likewise, statements that describe future plans, objectives or goals are also forward looking. These forward looking statements are subject to various risks that could cause described in its press releases and in its filings with the Securities and Exchange Commission. Except as described in these filings, the company disclaims any

Speaker 1

Ladies and gentlemen, thank you for joining our Q3 2023 Investors Call. Today, we'll review our performance in the Q3 and discuss the company's growth outlook and market opportunities. As anticipated for the Q3, we reported revenue of $3,400,000 and gross profit of 1,500,000. Our gross profit margin was 43.8%, slightly lower than the previous quarter, primarily due to lower sales volumes on our semiconductor package distribution side. This trend is reflective of broader adjustments across the entire semiconductor industry.

Speaker 1

And in line with the industry estimates, we anticipate an uptick in semiconductor material sales beginning in 2024. This is a market study that indicates growth in the next year for all semiconductor sales. Most recently, our Spectrum and Specialty divisions, each booked nearly $1,000,000 each over a span of the last 3 months. On the L and A side, Wells Fargo analysts recently highlighted the continual need for carriers to invest in This ongoing growth in wireless network usage underpins our strategic focus and aligns with our product development initiatives. Despite near term industry challenges, we remain steadfast and on track with our 5 year strategic plan.

Speaker 1

Our loss from operations stood at about 887 ks, of which 425 was from our continuing investments in new product development, including new 5 gs wireless infrastructure, Quantum, cryogenic and mimic products. Financially, our position remains strong. As of September 30, our cash and liquid marketable securities totaled $8,600,000 which is ample capital to execute our strategic growth initiatives The bulk of our R and D expenses will be completed by the end of this year. Our product development roadmap remains as strong as ever. This quarter, we announced the introduction of our latest product lines, including new low noise amplifiers, coaxial inline LNA, The coaxial inline band pass filters leveraging our state of the art PMM mimics technology designed by our Ampotec Group MicroAir Design Center in Texas.

Speaker 1

We also released over 70 SKUs of our new passive product lines. These new offerings have been designed to enhance our existing product lines and provide high performance, reliability Cost efficiency meets the evolving needs of the RF industry. We will soon be releasing a new product line of Ka band LNB known as Wattenberg, which along with our newly released X10 LNGs, Our intention component of virtually all satellite systems. AA and X are the most popular frequency bands in Satcom Systems. Our LNB product line uses Astrotech's proprietary low noise figure technology, Eleni, so once again, we're following our symbiotic and complementing product line strategy, where we cross pollinate all divisions yielding higher overall revenues and capabilities.

Speaker 1

HubSpot contains that we have a pipeline full of exciting new products targeting explosive growth markets from which we expect to provide a considerable boost to our revenue. This also includes the rollout of NGK Electronics products and our Mimics global distribution deal with CDI, as we announced earlier. The ramp up of telecom spending for next generation cellular networks is expected to contribute to growth across all other regions. In addition to all this, we expect that our soon to be released advanced 5 gs MIMO CATV, O RAN radios will be pivotal product that provides Dimasry with unparalleled and true 5 gs data transparency. To our valued shareholders, we are nearing our 2nd year, only our 2nd year of being a NASDAQ public company.

Speaker 1

In these initial two years, we have been diligent in the execution of our 5 year plan by introducing new products that fully complement our business. It should be noted that before going public in 2021, we were a company with only product one product line and $3,500,000 in annual sales. Since becoming public, we have completely transformed our organization and now boast a total of 5 different divisions, All the symbiotic products and very promising sales pipelines. During these initial two years, We have put the necessary infrastructure in place, increased our brand awareness and are poised to begin the monetization of our strategic plan in 2024. As we continue to navigate into the next fiscal year, we are confident in our ability to execute our strategic plans and deliver the growth and value that you expect.

Speaker 1

We believe in 2024 will be a revenue transformative year for us, And we look forward to sharing that success with you. We appreciate your patience and support thus far, But we have been executing every element of our plan as we have said in the past. Thank you. We'll now open the call for questions.

Operator

Thank you. And we'll move to the Q and A. Are there questions on your side? We have a question from Jack Cordero from the Maxim Group. Jack, please go ahead.

Operator

I apologize, I lost Jack here. Jack, would you please press star 1 again? Here we go. Jack, please go ahead.

Speaker 2

Hi, thank you. This is Jack Fodder calling in for Jack Vanderotti. Thanks again for taking my question. First, kind of a Housekeeping question. I was wondering if you could update us on the scope of your guys' pipeline.

Speaker 2

And given the industry weakness, Do you have any can you provide any additional color on how long you guys think it takes to actualize that?

Speaker 1

Well, from our past discussions and past numbers, we said that we plan on having based on The pipeline that next year, our revenue numbers should be double, at least double of what this year's Right now, we're looking at roughly $17,000,000 $18,000,000 of revenue. So pipeline is calculated based on just the percentage of what we I mean, the Sales are based on a percentage of the pipeline. So currently, the pipeline is around $80,000,000

Speaker 2

Okay. That's very helpful. And then kind of on that 100% revenue growth. I think you guys also provided there was a potential for kind of quarterly revenue in order of like $4,000,000 to $5,000,000 for 4Q 'twenty three. And then the growth being largely driven by increased pipeline conversion.

Speaker 2

I was wondering if you could talk a little bit about that. Do you think that's still been Expectation and what gives you guys confidence that you can convert that pipeline?

Speaker 3

Yes. That's what we have to at least bring $4,000,000 in last quarter of 2023. Right now, Dominica, we are fighting the headwinds from the semiconductor material industry, which The lower demand though is definitely softening ourselves in this division.

Speaker 1

As we've said before, our goals are to towards the end of the year, We're completing all our R and D efforts, all our expenses. Basically, we have all the parts online right now. We're setting up a new Web to increase our sales exposure. We've talked to many companies and a lot of companies are looking for large corporations are looking for Demonstrations of our new radios and new products. So we feel that we're going to be booking this year before the end of the year some key contracts That are expected to convert to sales next year.

Speaker 2

Okay. That's helpful. And then one last question. I was hoping to get a little bit more color on your guys' new Mimic chips. I think there was an expectation for those to see an incremental impact in the second half of this year.

Speaker 2

Was there any impact on this quarter's results? And then how can we look at that opportunity in terms of revenue mix kind of going forward? Any color there would be very helpful.

Speaker 1

Yes. That's why, in order to

Speaker 3

get we wanted to be able to sign up a deal

Speaker 1

with a

Speaker 3

distribution Company for many people, that's the best way to go. That's why we made a good agreement With CDI, they have a global presence. They have a sales and marketing people. They also have the RF engineering knowledge to be able to Drive our customers into the different SKUs that we have available in our mini client. We do expect that CDI is going to really be able to move this Mimics in a very good way for us.

Speaker 3

So Maro Pareto, we have already exchanged training among both of the sales groups from our group and then also the group as well. The websites have been updated, and we expect a good contribution from CDI to start materializing in Q1 2024 All of the unique SKUs that we have already released in the market.

Speaker 2

Thank you for answering my questions. That was helpful.

Operator

We do not have any further questions at the moment. So we will conclude the Q and A session. And I will then return the call back over to Fawad Marc Brou for closing remarks. Please go ahead.

Speaker 1

Thank you, operator. And thanks to everyone who joined today's call. We're excited about the progress we've made and the plan we have to further our company's mission of providing the communication systems of tomorrow, today. We look forward to updating you on our Q4 financial results call in mid March. Until then, please contact us directly if you have any questions or wish to schedule a call with management.

Speaker 1

Our Investor Relations team can be reached at

Speaker 3

the contact and commission listed at the bottom of our press releases.

Speaker 1

Thank you and be well.

Operator

Thank you very much. And this concludes the call, And we appreciate your presence. You may now disconnect your lines.

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Key Takeaways

  • The Group reported Q3 revenue of $3.4 million with a 43.8% gross margin and a $887k operating loss (including $425k in R&D), while maintaining a strong cash position of $8.6 million to fund growth initiatives.
  • Amplitec launched over 70 new passive SKUs plus advanced coaxial inline LNAs and band-pass filters leveraging its PMM mimics technology, and plans to roll out Ka-band and X-band LNBs using proprietary low-noise tech.
  • Through a $80 million sales pipeline and a global distribution deal with CDI for its Mimics chips, the company expects to double revenue in 2024 to ~$17–18 million, driven by key contracts and telecom spending on next-gen networks.
  • Management anticipates a recovery in semiconductor material sales in 2024 and sees explosive growth opportunities in 5G MIMO, CATV, and O-RAN radios, underpinning its five-year strategic plan to monetize new product lines.
  • Since its 2021 IPO, Amplitec has expanded from a single product and $3.5 million in sales to five divisions, positioning 2024 as a revenue-transformative year as it begins to monetize its R&D and strategic investments.
A.I. generated. May contain errors.
Earnings Conference Call
AmpliTech Group Q3 2023
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