AmpliTech Group, Inc. (AMPG) on Q3 2023 Results - Earnings Call Transcript
Operator: Good day, ladies and gentlemen. And welcome to AmpliTech Group’s Quarterly Investor Update Call where the company will discuss its Third 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 AmpliTech’s Director of Investor Relations, Shan Sawant. Please, go ahead.
Shan Sawant: Thank you. And thanks everyone for joining today’s call to review the recent progress of AmpliTech’s initiatives and to answer investor questions. On the call today are AmpliTech’s Founder and CEO, Fawad Maqbool; the company’s COO, Jorge Flores; and the company’s CFO, Louisa Sanfratello. Following initial management comments, we’ll open the call up to investor questions. An archived replay of today’s call will be posted to the IR section of AmpliTech’s website. And just a reminder, this call is taking place on Tuesday, November 14, 2023. Remarks to follow and answers to questions include statements that the company believes to be forward-looking within the meaning of the Private Security 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 actual results to be materially different than expected, and such risks include, among many others, matters that the company has described in its press releases and in its filings with the Security and Exchange Commission. Except as described in these filings, the company disclaims any obligation to update forward-looking statements, which are made as of today’s date. With that, let me turn the call over to our CEO, Fawad Maqbool.
Fawad Maqbool: Ladies and gentlemen, thank you for joining our Q3 2023 investors call. Today, we’ll review our performance in the third quarter and discuss the company’s growth outlook and market opportunities. As anticipated for the third quarter, we reported revenue of $3.4 million and gross profit of $1.5 million. 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 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 million each over a span of the last three months. On the LNA side, Wells Fargo analysts recently highlighted the continual need for carriers to invest in higher capacity networks driven by the growth -- growing mobile data consumption and the rapid proliferation of additional 5G devices. 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 five-year strategic plan. Our loss from operations stood at about $887,000 (sic) [$887,700], of which $425,000 was from our continuing investments in new product development, including new 5G wireless infrastructure, quantum cryogenic and MMIC products. Financially, our position remains strong. As of September 30th, our cash and liquid marketable securities totaled $8.6 million, which is ample capital to execute our strategic growth initiatives, because the bulk of our R&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 In-Line LNAs, Coaxial In-Line Band Pass Filters, leveraging our state-of-the-art PHEMT MMIC Technology designed by our AmpliTech Group Microwave Design Center in Texas. We also released over 70 SKUs of our new patch of product lines. These new offerings have been designed to enhance our existing product lines and provide high performance, reliability and cost efficiency to meet the evolving needs of the RF industry. We’ll soon be releasing a new product line of Ka band LNBs, Low Noise Block Converters, which along our newly -- along with our newly released X-Band LNBs are an essential component of virtually all satellite systems. Ka and X are the most popular frequency bands in SATCOM systems. Our LNB product line uses AmpliTech’s proprietary Low Noise Figure Technology, LNAs. 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. I hope I’ve conveyed 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 MMIC global distribution deal with CDI, as we announced earlier. The wrap-up of telecom spending for next-generation cellular networks is expected to contribute to growth across all our divisions. In addition to all this, we expect that our soon to be released advanced 5G MIMO, CAT B, ORAN radios will be pivotal products that provide the industry with unparalleled and true 5G data transfer speed. To our valued shareholders, we are nearing our second year, only our second year of being a NASDAQ public company. In these initial two years, we have been diligent in the execution of our five-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 $3.5 million in annual sales. Since becoming public, we have completely transformed our organization and now boast a total of five different divisions, all with symbiotic products and very promising sales pipelines. During these initial two years, we’ve 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 of us. 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. [Operator Instructions] We have a question from Jack Codera from The Maxim Group. Jack, please go ahead. I apologize, I lost Jack here. [Operator Instructions] Here we go. Jack, please go ahead.
Jack Codera: Hi. Thank you. This is Jack Codera calling in for Jack Vander Aarde. 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 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?
Fawad Maqbool: Well, from our past discussions and past numbers, we’ve said that, we plan on having, based on that pipeline, that next year, our revenue numbers should be double, at least double of what this year’s revenue would be. Right now, we’re looking at roughly $17 million, $18 million in revenue. So the pipeline is calculated…
Jack Codera: Okay.
Fawad Maqbool: … based on just the percentage of what we, I mean, the sales are based on the percentage of the pipeline. So currently, the pipeline is around $80 million or so.
Jack Codera: 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 million to 5 million for 4Q 2023 and then the growth being largely driven by increased pipeline conversion. I was wondering if you could talk a little bit about that. Do you think that’s still within expectation and what gives you guys confidence that you can convert that pipeline?
Fawad Maqbool: Jorge, are we on track for the $4 million?
Jorge Flores: Yeah. That’s definitely what we have to at least bring $4 million in the last one of 2023. Right now, though, we are fighting the headwinds from the semiconductor material industry, which the lower demand though, is definitely softening ourselves in this division.
Fawad Maqbool: So our -- as we’ve said before, our goals are towards the end of the year, we’re completing all our R&D efforts, all our expenses. Basically, we have all the parts online right now. We’re setting up a new website to increase our sales exposure. We’ve talked with 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.
Jack Codera: 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. Was there any impact on this quarter’s results and then how can we look at that opportunity in terms of revenue mix going forward? Any color there would be very helpful.
Jorge Flores: Well, yeah, that’s why we wanted to be able to sign up a deal with a distribution company for our MMICs because that’s the best way to go. That’s why we made a good agreement with CDI. They have a global presence. They have 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 already available in our MMIC line. The -- we do expect that CDI is going to really be able to move this MMICs in a very good way for us. Some of our factoring, we have already exchanged our training among both of the sales side 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 Q1 2024 for all of the MMIC SKUs that we have already released to the market.
Jack Codera: Thank you for answering my questions. That was helpful.
Operator: [Operator Instructions] We do not have any further questions at the moment, so we will conclude the Q&A session and I will then return the call back over to Fawad Maqbool for closing remarks. Please go ahead.
Fawad Maqbool: Thank you, Operator. 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 should you have any questions or wish to schedule a call with management. Our Investor Relations team can be reached at contact information listed at the bottom of our press release. 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.
