billboard

Press Release

Printer Friendly Version View printer-friendly version
<< Back
eMagin Corporation Announces Second Quarter 2017 Financial Results

-- Year-to-Date Contract R&D up 57% Driven by Consumer Applications --

HOPEWELL JUNCTION, N.Y.--(BUSINESS WIRE)--Aug. 10, 2017-- eMagin Corporation, or the “Company”, (NYSE American:EMAN) a leader in the development, design and manufacture of Active Matrix OLED microdisplays for high resolution imaging products, today announced financial results and corporate highlights for the second quarter ended June 30, 2017.

“We have set ambitious goals for 2017, and I am confident that we will achieve them. We have seen a sequential increase in our display sales from the first quarter as the new military contracts are coming on line, as well as a significant uptick from sales of newly developed displays supported by our R&D programs for commercial customers. Our direct patterned 2Kx2K display, which is the highest resolution and highest brightness full color OLED microdisplay in the marketplace today, was demonstrated during the Display Week Conference at the Society for Information Display in Los Angeles in May. We received an outstanding reception for this achievement from many of the participants who represent leading display and related applications manufacturers and users,” said Andrew Sculley, President and Chief Executive Officer.

“As we have previously stated, we are in active discussions with well-known consumer product companies to develop and design their next-generation microdisplays. Our contract R&D work reflects this as we are up 57% over last year at this time and anticipate that this will result in higher product-related revenues in the future. The consumer AR/VR market will be the driver for high volume business and we are executing successfully on a plan to both secure consumer electronics companies as our channel to this market and partner with a mass production company to ensure our ability to meet the future volume demands of this segment.

“Several prospective commercial customers have accelerated their negotiations with us and our related discussions with potential high volume manufacturers are progressing. As a result, I believe we remain on target to sign an additional agreement by the end of the year,” continued Mr. Sculley.

Business and Product Highlights

Commercial

  • Commenced work with a major consumer electronics company to design and develop a microdisplay for a VR headset. Under this program, which is expected take between 12 and 15 months, a limited quantity of sample displays will be produced. Additionally, the Company is actively negotiating with companies to provide high volume manufacturing capability.
  • Furthered negotiations with multiple consumer electronics companies on both new display designs and low rate production capability.

Military

  • Secured a $1 million order for a new thermal weapon sight program with a major European customer.
  • Procured tooling and delivered the initial OLED display, taper, and lens assemblies for integration and testing as part of our selection as a sole source provider of OLED microdisplays for a major U.S. Army helicopter helmet upgrade program.
  • Completed a requirements review with a major aviation prime contractor for an OLED upgrade to a fixed wing production helmet. This program continues on schedule.
  • Delivered first 2K x 2K display to a defense contractor for integration into a new HMD prototype.
  • Delivered high brightness displays for the U.S. Army Soldier Visual Interface Technology (SVIT) program. This key program will improve the situational awareness, lethality and survivability of the dismounted warrior and the eMagin OLED display is integral in providing the technological path for future military head mounted display systems.

Financial

  • Completed on May 24th an underwritten offering of 3.3 million shares of common stock at $2.00 per share and warrants to purchase up to 1.65 million shares of common stock. The Company realized net proceeds of $5.8 million after underwriting discounts and offering expenses.

Second Quarter Results

Revenues for the second quarter of 2017 were $5.3 million as compared to $5.5 million in the second quarter of 2016.

Product revenues totaled $4.7 million versus $4.8 million in the second quarter last year and $4.4 million in the first quarter of 2017. The year-on-year decline in product revenue was due to the wind down beginning mid-2016 of maturing military programs partially offset by the gradual ramp up of new military programs and sales of newly developed displays to commercial customers. R&D contract revenues totaled approximately $605 thousand versus $752 thousand reported in the prior year quarter. The decline in military R&D contract revenues from completed contracts masks the contribution from commercial R&D contract revenues earned from multiple major consumer electronics companies and on which no R&D revenues were earned in 2016.

Overall gross margin for the second quarter was 24% on gross profit of $1.2 million compared to a gross margin of 24% on gross profit of $1.3M in the second quarter of 2016.

Operating expenses for the second quarter of 2017, including R&D expenses, decreased to $3.3 million, from $3.5 million in the second quarter of 2016. Second quarter R&D expenses reflect a greater allocation of R&D resources to commercial R&D contract revenues partially offset by continuing investment in the Company’s direct patterning technology. SG&A expenses increased over the prior year period due largely to greater travel and professional services spending, including legal services, associated with our negotiations with prospective consumer electronics and volume manufacturing partners. Interest expense of $188 thousand in the second quarter of 2017 included a $158 thousand write-off of capitalized debt issuance costs associated with the expiration of an unsecured debt financing commitment.

Operating loss for the second quarter was $2.1 million versus operating loss of $2.2 million in the second quarter of last year. Net loss for the second quarter of 2017 was $2.3 million, or $0.07 per diluted share, compared to net loss of $2.2 million, or $0.07 per diluted share, in the second quarter of 2016.

Cash and cash equivalents were $4.9 million, no debt was outstanding, and borrowing availability under the ABL facility was $3.8 million at the end of the second quarter.

Outlook

“Our leading-edge OLED direct patterning technology continues to generate strong interest and enthusiasm. We are actively engaged in negotiations with potential partners for both high volume and low volume production as well as consumer applications. Additionally, there is renewed activity amongst our military customers, both domestic and international which bodes well for future display sales,” concluded Mr. Sculley.

The Company remains focused on the following objectives to drive shareholder value:

  • Advance our product development discussions with major consumer electronics companies to incorporate our direct patterning OLED technology into their next generation products,
  • Advance discussions with high volume production partners to utilize our leading production and process technologies,
  • Further penetrate high growth commercial/industrial markets including medical devices and other vertical markets where integration of our OLED microdisplays and optics technology advances product development and adoption,
  • Expand our presence in existing and future major military programs and overall customer count in domestic and international military markets,
  • Launch new products focused on the commercial and consumer markets which offer high performance and broad appeal at an attractive price, and
  • Continue our progress in manufacturing improvements including yield enhancement and production capacity expansion.

Conference Call Information

A conference call and live webcast will begin today at 9:00 am ET. An archive of the webcast will be available one hour after the live call through September 10, 2017. To access the live webcast or archive, please visit the Company’s website at ir.emagin.com or www.earnings.com.

About eMagin Corporation

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.

Forward-Looking Statements

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 SEC. For a more complete description of the risks that could cause our actual results to differ from our current expectations, please see the section entitled “Risk Factors” in eMagin’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and Current Report on Form 8-K filed with the SEC on May 19, 2017.

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.

 

eMAGIN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
     
 

June 30,
2017

December 31,
2016

(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,869 $ 5,241
Accounts receivable, net 3,110 2,834
Unbilled accounts receivable 850 1,401
Inventories 8,973 7,435
Prepaid expenses and other current assets   1,302   1,040
Total current assets 19,104 17,951
Equipment, furniture and leasehold improvements, net 9,045 8,980
Intangibles and other assets   462   282
Total assets $ 28,611 $ 27,213
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,680 $ 1,432
Accrued compensation 1,721 1,528
Revolving credit facility, net 1,689
Other accrued expenses 973 1,069
Deferred Revenue 1,231 445
Other current liabilities   591   590
Total current liabilities   6,196   6,753
 

Commitments and contingencies

 
Shareholders’ equity:
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 June 30, 2017 and December 31, 2016

Common stock, $.001 par value: authorized 200,000,000 shares,
issued 35,114,655 shares as of June 30, 2017 and 31,788,582 shares as of December 31, 2016

35 32
Additional paid-in capital 246,136 239,915
Accumulated deficit (223,256) (218,987)
Treasury stock, 162,066 shares as of June 30, 2017 and December 31, 2016   (500)   (500)
Total shareholders’ equity   22,415   20,460
Total liabilities and shareholders’ equity $ 28,611 $ 27,213
 
 

eMAGIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)
             
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
Revenues:
 
Product $ 4,655 $ 4,781 $ 9,036 $ 10,076
Contract 605 752 2,293 1,458
License         1,000
Total revenues, net   5,260   5,533   11,329   12,534
 
Cost of revenues:
 
Product 3,658 3,807 7,116 7,094
Contract 353 391 1,146 770
License        
Total cost of revenues   4,011   4,198   8,262   7,864
 
Gross profit   1,249   1,335   3,067   4,670
 
Operating expenses:
 
Research and development 1,177 1,499 2,511 2,802
Selling, general and administrative   2,153   1,993   4,616   4,003
Total operating expenses   3,330   3,492   7,127   6,805
 
Loss from operations (2,081) (2,157) (4,060) (2,135)
 
Other income (expense):
Interest expense, net (188) (10) (223) (20)
Other income, net   (1)   3   14   5
Total other income (expense), net   (189)   (7)   (209)   (15)
Loss before provision for income taxes (2,270) (2,164) (4,269) (2,150)
Provision for income taxes  

     
 
Net loss $ (2,270) $ (2,164) $ (4,269) $ (2,150)
 
Loss per share, basic $ (0.07) $ (0.07) $ (0.13) $ (0.07)
Loss per share, diluted $ (0.07) $ (0.07) $ (0.13) $ (0.07)
 
Weighted average number of shares outstanding:
 
Basic   33,019,478   29,388,104   32,320,527   29,388,104
 
Diluted   33,019,478   29,388,104   32,320,527   29,388,104
 
 

Non-GAAP Information

 

Three Months Ended

Six Months Ended

June 30,

June 30,

2017

2016

2017

2016

 

Net income (loss)

$

(2,270)

$

(2,164)

$

(4,269)

$

(2,150)

Non-cash compensation

116

93

330

260

Depreciation and intangibles amortization expense

481

399

981

814

Interest expense

188

10

223

20

Provision for income taxes

 

 

 

 

Adjusted EBITDA

$

(1,485)

$

(1,662)

$

(2,735)

$

(1,056)

 

Source: eMagin Corporation

eMagin Corporation
Jeffrey Lucas, 845-838-7931
Chief Financial Officer
jlucas@emagin.com
or
MBS Value Partners
Betsy Brod, 212-661-2231
Betsy.brod@mbsvalue.com