RESEARCH FRONTIERS INC Q2 FY2025 earnings call

Operational Overview - Accounting and Operations: Second quarter 2025 results looked disappointing accounting-wise due to one-time and noncash charges, but operationally, economic activity was higher and SPD SmartGlass sales were better in the second half. - Cadillac: Deliveries of Cadillac CELESTIQ to GM customers started, and Q2 sales to Cadillac were much higher than prior quarters combined. - Ferrari: European licensee supplying Ferrari went bankrupt in Q2, causing royalty income drop, but another European licensee was transitioned to supply Ferrari with additional production started, expecting additional income in third and fourth quarters of 2025. - Architectural: SPD SmartGlass retrofit project is being led by LTI Smart Glass in Massachusetts and AIT in Florida, samples submitted for energy efficiency testing, with projects in the works. - Gauzy: Not seeing business loss from world opinion turning against Israel. - Automotive Projects: Expecting additional royalty income from other automotive projects starting in Q3 2025.

In the automotive segment, deliveries of the Cadillac CELESTIQ to GM customers have started, and sales of SPD SmartGlass sunroofs to Cadillac in Q2 2025 were substantial multiples higher than Q4 2024 and Q1 2025 combined. Ferrari roof sales were strong in Q1 2025, but a European licensee supplying Ferrari went bankrupt in Q2 2025, resulting in no royalty income from them for Q2 and some write-offs. Royalty income was down due to this. Continued sales of SPD SmartGlass roofs for Mercedes and McLaren occurred in the first half of 2025. Revenue contribution: The automotive segment, including various car manufacturers' sales, is a key part, with Ferrari, Cadillac, Mercedes, McLaren being significant contributors, though the bankruptcy affected Ferrari-related royalty income in Q2.

Forward-Looking Statements - Expect additional royalty income from the new Ferrari supplier in third and fourth quarters of 2025 related to Ferrari business. - Anticipate additional royalty income from other automotive projects starting in Q3 2025. - Architectural retrofit is expected to have a soft launch in the second half of 2025 with key customers and a bigger launch when data is tied up. - Expect third quarter to be up from the second quarter.

Risks - Bankruptcy of European licensee supplying Ferrari led to no royalty income in Q2 and write-offs. - Dependence on licensees; if one licensee faces issues, it can impact revenue. - Automotive industry had past tariff impacts, though stabilized, but industry fluctuations still pose risks. - Architectural retrofit project推进 may be affected by data preparation and other factors.

Q: Who is the licensee that went bankrupt?

A: A European licensee supplying Ferrari, but not naming the specific name.

Q: Can we expect guidance for the third quarter to show a bump?

A: I can't tell until getting royalty reports, but think we'll definitely be up from the second quarter.

Q: On multiple suppliers in architectural retrofit, why just one?

A: We do have multiple suppliers, which is why we could transition the Ferrari business seamlessly, and our business model minimizes risk to investors.