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eMagin Corporation Announces First Quarter 2019 Financial Results
- Continued Progress on Key Initiatives -
“We are seeing growing demand for our products, particularly with U.S.
military and aviation programs and with new and existing international
“We continue to work towards supplementing our display sales by providing our customers a more complete solution. We have developed a prism optic which we shipped during the quarter to a military customer for evaluation. We also developed a fiber optic taper that will enable our displays to be incorporated into products which are being retrofitted or otherwise designed for a different sized microdisplay. In addition, a new assembly process was developed and validated that allows additional optical elements to be attached to our microdisplays, providing for a broader range of applications by the customer with less up-front engineering design work.
“I am pleased with the progress we are making with our largest (4K x 4K) full color display which we are developing in collaboration with our Tier 1 consumer electronics customer to incorporate into a consumer headset. We are also working with a new medical device manufacturer on development of next generation diagnostic equipment. We believe the high resolution, high contrast, and brightness of our OLED displays have strong appeal across both defense and commercial industries, and we continue to pursue new opportunities.
“On the military side, we are continuing to win new programs and support
existing ones. Many of these are long duration programs which we support
for their entire lifetime. While we provide displays to the newer U.S.
Army Enhanced Night Vision Goggle (ENVG) III and ENVG-B programs, we
recently received a
“Turning to our operations, we have resolved our production issues from the fourth quarter with special focus on addressing potential single point failures. As well, we are making progress on our multi-year yield improvement initiatives. We have increased our production resources, made some key technical hires, and installed and qualified new, advanced production equipment. These efforts should give us greater production reliability and flexibility while increasing production capacity, lowering unit costs and providing greater operating efficiencies.
“Finally, we are working to improve the efficiency and lifetime of our direct patterned (dPdTM) displays. We have made architectural improvements and incorporated superior performing OLED materials. We are also upgrading our existing dPd production equipment and expect it to be completed and ready for sampling in the third quarter. The redesigned equipment will have significant throughput improvement and will better demonstrate the technology’s capability for mass production,” concluded Mr. Sculley.
Business and Product Highlights
- We successfully processed the initial 4K x 4K wafers that we designed for a Tier 1 consumer electronics partner which we received in December. This enabled us to validate the base functionality of the 4K x 4K display and confirmed our ability to develop a large area silicon microdisplay with no visible non-uniformities. These high brightness displays will be used to develop a headset with a wide field of view and no screen door effect. Validation at the individual display level is expected to be completed during the second quarter with full color prototype development using our dPd technology completed in the third quarter.
We delivered displays for the F-35 Lightning II helmet throughout the
first quarter while continuing to work closely with the
Collins Aerospaceteam to further improve the display in preparation for Low Rate Initial Production.
- We increased our presence in the medical device market with an order from a new customer, an innovative developer and manufacturer of diagnostic and ophthalmic surgical equipment, for the development of their next generation diagnostic equipment.
In April, we received a follow-on order of
$239,000in support of the Javelin Missile program Command Launch Unit. This is in addition to $560,000of orders that we received during 2018.
We continue to support full rate production for the US ARMY ENVG III
program. Additionally, we are working with both prime contractors on
pre-production units for the ENVG Binocular program. This program is
anticipated to commence production in late 2019/early 2020 with an
overall acquisition objective by the
U.S. Armyof approximately 190,000 systems.
In April, we received a
$627,000order for the ENVG II program which the Company has been supporting since 2013, evidencing the ongoing revenue opportunities from mature programs.
In the first quarter of 2019, we received
$150,000from the US Armyfor OLED display production and yield improvement projects in addition to the $830,000we received in 2018. An additional $900 thousandof projects are under consideration with this successful program, of which $120 thousandhas already been confirmed for 2019.
- Our high brightness microdisplay that we delivered to a major defense contractor last year has been selected for a next generation U.S. rotary wing helmet program with procurement expected beginning in 2020.
Revenues for the first quarter of 2019 were
Product revenues were
Overall gross margin for the first quarter was 22% on gross profit of
Operating expenses for the first quarter of 2019, including R&D
Operating loss for the first quarter was
Conference Call Information
A conference call and live webcast will begin today at
A leader in OLED microdisplay technology, OLED microdisplay manufacturing know-how and mobile display systems, eMagin manufactures high-resolution OLED microdisplays and integrates them with magnifying optics to deliver virtual images comparable to large-screen computer and television displays in portable, low-power, lightweight personal displays. eMagin’s microdisplays provide near-eye imagery in a variety of products from military, industrial, medical and consumer OEMs. More information about eMagin is available at www.emagin.com.
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, including those regarding eMagin
Corporation’s expectations, intentions, strategies and beliefs
pertaining to future events or future financial performance. Actual
events or results may differ materially from those in the
forward-looking statements as a result of various important factors,
including those described in the Company’s most recent filings with the
Non-GAAP Financial Measures
To supplement the Company’s consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, namely earnings before interest, taxes, depreciation and amortization, and non-cash compensation expense (“Adjusted EBITDA”). The Company’s management believes that this non-GAAP measure provides investors with a better understanding of how the results relate to the Company’s historical performance. The additional adjusted information is not meant to be considered in isolation or as a substitute for GAAP financial statements. Management believes that these adjusted measures reflect the essential operating activities of the Company. A reconciliation of non-GAAP financial information appears below.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
|Three Months Ended|
|Total revenues, net||6,112||6,867|
|Cost of revenues:|
|Total cost of revenues||4,776||4,887|
|Research and development||1,597||1,631|
|Selling, general and administrative||1,939||2,912|
|Total operating expenses||3,536||4,543|
|Loss from operations||(2,200)||(2,563)|
|Other income (expense):|
|Change in fair value of common stock warrant liability||794||503|
|Interest expense, net||(33)||(42)|
|Other income, net||—||21|
|Total other income||761||482|
|Loss before provision for income taxes||(1,439)||(2,081)|
|(Provision) benefit for income taxes||—||—|
|Loss per share, basic||$||(0.03)||$||(0.05)|
|Loss per share, diluted||$||(0.03)||$||(0.05)|
|Weighted average number of shares outstanding:|
CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share data)
|March 31,||December 31,|
|Cash and cash equivalents||$||3,457||$||3,359|
|Accounts receivable, net||3,696||3,186|
|Unbilled accounts receivable||69||224|
|Prepaid expenses and other current assets||795||875|
|Total current assets||16,844||16,226|
|Equipment, furniture and leasehold improvements, net||8,630||8,921|
|Operating lease - right of use asset||4,112||—|
|Intangibles and other assets||209||269|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Revolving credit facility, net||2,535||—|
|Common stock warrant liability||703||1,497|
|Other accrued expenses||1,703||1,827|
|Current portion of lease liability||675||—|
|Other current liabilities||323||427|
|Total current liabilities||9,510||7,447|
|Lease liability-long term||3,562||—|
|Commitments and contingencies (Note 9)|
|Preferred stock, $.001 par value: authorized 10,000,000 shares:|
|Series B Convertible Preferred stock, (liquidation preference of $5,659) stated value $1,000 per share, $.001 par value: 10,000 shares designated and 5,659 issued and outstanding as of March 31, 2019 and December 31, 2018||—||—|
|Common stock, $.001 par value: authorized 200,000,000 shares, issued 45,323,339 shares, outstanding 45,161,273 shares as of March 31, 2019 and December 31, 2018||45||45|
|Additional paid-in capital||254,929||254,736|
|Treasury stock, 162,066 shares as of March 31, 2019 and December 31, 2018||(500)||(500)|
|Total shareholders’ equity||16,723||17,969|
|Total liabilities and shareholders’ equity||$||29,795||$||25,416|
|Three Months Ended|
|Net income (loss)||$||(1,439)||$||(2,081)|
|Change in fair value of common stock warrant liability||(703)||(503)|
|Depreciation and intangibles amortization expense||488||468|
|Provision for income taxes||-||-|
Jeffrey Lucas, President and Chief Financial Officer
Affinity Growth Advisors