VIGO Photonics S A : revenue estimates for Q1 2024

VIGO Photonics S.A. (WSE: VGO), a global technology-based manufacturer of the most advanced photonic mid-infrared detectors and sensing modules as well as semiconductor materials, achieved consolidated revenues of PLN 15.8 million in Q1 2024 (-16% y/y). The order backlog in the period amounted to nearly PLN 38 million, marking a 90% y/y increase.

Sales of detectors and detection modules in Q1 2024 totalled PLN 14.2 million (-17% y/y), whereas sales of semiconductor materials reached PLN 1.6 million (+3% y/y).

In Q1 2024, the military segment recorded the highest sales growth (PLN 4.4 million, +57% y/y), reflecting trends observed for several quarters. Segment sales grew owing to orders from regular customers, including Safran Aerospace, PGZ and other European contractors.

The industrial segment recorded a year-over-year decline in sales in Q1 2024 (to PLN 6.8 million, - 38% y/y, mainly sales to customers in Europe). The segment's result was primarily affected by lower demand for detectors used in the semiconductor industry. In contrast, sales in the industrial segment in the United States remained at a comparable level year-over-year, reaching PLN 1.9 million in Q1 2024 (mainly detectors for gas analysis, including methane).

Sales in the semiconductor materials segment are growing driven by orders for QCL structures - Quantum Cascade Lasers - and for semiconductor energy storage. Sales in the segment amounted to
PLN 1.6 million (+3% y/y) in Q1 2024, and PLN 6.1 million (+48% y/y) in the entire past year.

The total value of orders and contracts at the end of Q1 2024 was nearly PLN 38 million (including PLN 21.5 million in confirmed deliverables, compared to PLN 17.8 million at the end of the same
period last year, and an additional PLN 16.4 million in outstanding contracts for 2023-2025). This amount does not include the contract with a PGZ group entity signed in August 2023.

Sales revenue structure by application in Q1 2024 is as follows: industrial application 43%, military 28%, semiconductor materials 10%, transportation 13%, and science & medicine 6%.

Outlook for upcoming periods

• Expansion of sales in the United States

The company is actively developing its sales force in the United States, identifying very considerable potential in the military as well as industrial market.

Currently, the US subsidiary employs a 4-person operations team with expertise in the industrial and military areas that also meets the requirements for access to classified information and cyber
security. The company plans to further increase its US workforce to a total of 7 people. In addition, it plans to strengthen 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 defence industry.

Potential agreements with US military contractors require a lot of time and effort. It's not just about a product that meets the clients' requirements, but also all the paperwork and safety certifications in a market subject to tight restrictions such as ITAR (International Traffic in Arms Regulations). VIGO has product prototypes that meet the requirements of US defence concerns, but just as importantly, it is finalizing the necessary formalities and obtaining the necessary safety certificates. I am convinced that by the end of this year we will be able to inform the market about the first contracts acquired in this area, says Adam Piotrowski, CEO of VIGO Photonics.

Importantly, we are also identifying good prospects in the US market related to industrial applications. In addition to the gas detectors we already sell in this market, we are developing a new avenue for liquid nitrogen-cooled detectors as well as another one for detectors for environmental and agricultural applications in line with the smart-farming trend. As for the industrial segment in the US, we already have a significant position. In 2023, we won several new high-volume clients with whom we are working on new solutions. I'm convinced that in a perspective of 1-2 years, sales in the US market may catch up with the revenues VIGO generates from the European market. In the near future, we will expand the American team to 7 people, and we will develop cooperation with American technical universities in order to faster reach out to a wider range of clients with new solution,Adam Piotrowski adds.

• Infrared detector arrays project

The company is also pursuing a project related to the development of infrared detector array technology for civilian and military applications and the launch of serial production.

The array project is being implemented as planned. We expect to be able to start test production in the second half of this year. Last year, we signed a letter of intent with PCO to implement the infrared arrays we
are developing for mass production and use in combat vehicles of the Polish army,Adam Piotrowski says.

Currently, the R&D phase is underway in the array project - we have optimised the semiconductor structures to the requirements of the array detectors. We are also preparing pre-production batches 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 start serial production of arrays in 2025. In addition, we will be able to successfully use the solutions developed within the array program to improve the quality and efficiency of standard detector production,explains Marcin Szrom, VIGO Photonics Board Member.

In February this year, the company's undertaking "HyperPIC - Photonic integrated circuits for mid- infrared applications" was included in the list of projects selected for funding under the European Funds for Modern Economy [Polish FENG] call. The undertaking will be implemented within the framework of the integrated European IPCEI ME/CT project (Important Projects of Common European Interest on Microelectronics and Communication Technologies).

We expect the final contract with NCBiR [Polish National Centre for Research and Development] for the HyperPIC project to be signed soon. Its implementation will accelerate the development of photonic sensor
technologies and, as a result, enable the delivery of a new class of integrated photonics chips for sensory applications to the market. As a result, it will be possible to use single chips with advanced sensory functionality in everyday objects (smartphones, wearables, household appliances, vehicles),Łukasz Piekarski, VIGO Photonics Board Member, forecasts.

The objective of the HyperPIC project is to develop and implement technology for integrated photonic mid-infrared detection integrated circuits, build a complete production line of photonic mid-infrared integrated circuits, and establish a complete supply chain for these circuits. The total amount of eligible costs in the project is PLN 878.6 million, and the maximum amount of state aid is PLN 453.7 million. The HyperPIC project is planned to be implemented between 2023 and 2030 and comprises two phases: R&D and FID (First Industrial Deployment).

INDUSTRY EVENTS

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

• 27 January - 1 February 2024 (USA) - SPIE Photonics West (San Francisco)
• 23-25 January 2024 (France) - International Symposium on Optronics in Defence & Security OPTRO (Bordeaux)
• 13-14 March 2024 (Polska) - TEK Day (Wrocław)
• 28-30 March 2024 (USA) - Global Force Symposium & Expo (Huntsville)

• Events scheduled for Q2 2024

• 15-19 April (USA) - Analyzer Technology Conference
• 23-25 April (China) - National Academic Forum on Laser Spectroscopy
• 21-25 April (USA) - SPIE Defence and Commercial Sensing
• 6-9 May (USA) - OffShore Technology
• 6-10 May (USA) - SOF Week
• 21-23 May (USA) - Border Security Expo
• 28-30 May (Finland) - Optics and Photonics Days (OPD Finland)
• 11-13 June (Germany) - Sensor + Test
• 17-21 June (Germany) - Eurosatory

Contact for media and individual investors:

Piotr Piotrowski, cc group

[e-mail], [phone]

Contact for institutional investors:

Małgorzata Młynarska, cc group

[e-mail], [phone]