eMagin Corporation, or the “Company” (NYSE MKT:
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 fourth quarter ended December 31, 2018.
“During 2018, we experienced growing demand for our products,
especially from U.S. military and aviation programs, and expanded
our presence among medical and other commercial customers. We sold
to over 80 customers this past year and supplied products for over
20 new programs. At December 31, 2018, we had a backlog of
non-binding purchase orders of approximately $10.6 million in
products ordered for delivery through December 31, 2019, an
increase of approximately $800,000 from our backlog of $9.8 million
at December 31, 2017,” stated Andrew Sculley, Chief Executive
Officer.
“Development efforts to support the F-35 helmet accelerated
during the year. Under contract from Collins Aerospace, we
designed, manufactured and delivered the initial displays for this
multi-service, multi-country program which are being installed in
helmets for flight tests scheduled for this year. We will continue
to deliver displays throughout 2019 while working closely with the
Collins Aerospace team in preparation for limited rate initial
production (“LRIP”) scheduled for 2020.
“From a technology perspective, we continue to make significant
advances with our high brightness, full-color microdisplays
incorporating our color filter and patented Direct Patterning
(“dPd”) technology which is critical to driving our growth in all
the markets we serve. We have surpassed the 5,000 nits threshold
requirements of Tier One companies for their enterprise and
consumer AR/VR applications. Additionally, by making architectural
improvements and using superior OLED materials, we have increased
the efficiency and lifetime of our displays by more than 50%.
“We continue to refine our production processes and are
upgrading our existing dPd equipment. This should increase
production throughput as well as significantly extend the lifetime
of our displays. In 2018, we received U.S. Army funding of $830,000
to support these efforts and are pursuing additional awards to fund
production improvements and capacity expansion.
“While our full year revenues increased 19% on a year-on-year
basis, we did experience a manufacturing equipment related issue in
the fourth quarter. This resulted in lower yields and loss of
production, affecting our fourth quarter and full-year performance.
We addressed this issue and have made the necessary improvements to
minimize the risk of future recurrences. It did not affect any of
our U.S. military programs but did have an impact on production and
deliveries early in the first quarter 2019.
“Going forward, we believe that the equipment purchases we have
made over the past few quarters will improve the reliability of our
manufacturing processes. In addition, as the only manufacturer of
OLED microdisplays in the U.S., we are working closely with the
Department of Defense for substantial funding of further production
enhancements that will improve our production reliability, expand
our capacity and lower our unit costs. Overall, we are extremely
well-positioned as the only company whose products can meet the low
power, high brightness, high contrast and resolution requirements
for high-pixel density displays being demanded both for next
generation enterprise and consumer VR/AR HMDs, as well as today’s
military and commercial applications,” concluded Mr. Sculley.
Business and Product Highlights
In addition to winning new U.S. military programs and expanding
our presence in commercial/industrial and foreign military markets,
we made significant improvements in technology and product design.
Further optimization of our dPd process has led to brightness
levels that we believe surpass the threshold requirements for AR/VR
applications for consumer products and enterprise focused companies
and satisfy the requirements of several pending military programs.
We have demonstrated more than 15,000 nits brightness in monochrome
and more than 7,000 nits brightness in full color, a milestone
towards the application of eMagin’s microdisplays to AR/VR
headsets. Our current year-end target of 10,000 nits in full color
is part of our multi-year R&D roadmap to achieve over 25,000
nits and meeting our military customers’ future requirements. This
brightness capability allows for greater power efficiency and
longer lifetimes when operated at conventional luminance. It also
gives us a significant advantage in consumer and
commercial/industrial applications as it enables OEM’s to utilize
our displays with less efficient and less expensive optics.
Fiscal 2018 highlights in addition to those noted above
include:
- We received approval of our design from
a Tier 1 consumer electronics partner for prototype high
resolution, 4k x 4k displays featuring very high brightness using
our dPd technology, which will result in a headset with a wide
field of view and no screen door effect. We worked with a foundry
partner to manufacture the silicon wafers needed to develop our
displays, the first of which were shipped to us in December 2018
for testing and evaluation. We anticipate completing these displays
in the third quarter of 2019.
- We received an order totaling
$560 thousand in support of the Javelin Missile program
Command Launch Unit. We anticipate a follow-on order in the second
quarter of 2019.
- We supported multiple prime contractors
with display deliveries for pre-production units for the US Army
Enhanced Night Vision Goggle – Binocular program. This program is
anticipated to commence production in 2020 with an overall
acquisition objective by the US Army of 190,000 systems.
- Ground and flight tests were
successfully completed in the fourth quarter of 2018 for a major
U.S. Army helicopter helmet upgrade program to retrofit high
brightness microdisplays into the current fielded helmet.
- We delivered the first 2K x 2K compact
board interface to an aviation prime contractor for the development
of a next generation helmet prototype in the second quarter and
continued to provide samples to key potential customers throughout
the year. The compact size, long interface cables, and DisplayPort
compliant standard make this system ideally suited for
head-wearable applications for both the military and consumer
markets.
- We delivered high brightness
2K × 2K microdisplays to a major defense contractor for
use in a prototype aviation helmet. This was in anticipation of a
Request for Proposal which has now been issued by the U.S.
Government to develop a next generation rotary wing helmet.
- We are currently developing a prism
optic to pair with our displays and evaluating prototypes received
from potential manufacturing partners. There is interest in this
display and prism combination for both military and commercial
applications.
Full Year Results
Revenues for 2018 were $26.2 million, up 19% from the $22.0
million in 2017. Product revenues totaled $23.3 million,
representing a 25% increase from $18.7 million in 2017, due
primarily to continued growth from new U.S. and foreign military
programs as well as the ramp-up of existing programs. R&D
contract revenues totaled approximately $2.9 million as compared to
$3.3 million in 2017. The decrease in R&D contract revenue was
mainly the result of the completion during late 2017 and early 2018
of several commercial and U.S. Government R&D contracts.
Gross margin for 2018 was 15%, down from 23% in 2017. The
decline in gross margin for the year was due primarily to an
impairment charge of $2.7 million related to the Consumer Night
Vision Business and the fourth quarter production issues previously
discussed. Excluding the impairment charge, the total gross margin
was 25%, reflecting higher production volumes and improved yields
during the year.
Operating expenses for 2018, including R&D expenses, were
$15.7 million compared to $13.9 million in 2017. The majority of
the increase was due to higher R&D expenses for company-funded
work related to the Company’s direct patterning technology product
and process development, resources expended on improving
manufacturing processes, and higher spending on professional
services related to contract negotiations with prospective consumer
electronics and manufacturing partners.
Operating loss for the full year 2018 was $11.7 million versus
$8.7 million in 2017. Net loss for the full year 2018, including
$2.2 million recorded income from the change in the fair value of
the warrant liability, was $9.6 million, or $0.21 per diluted
share. This compares to a net loss of $7.8 million, including a
$1.1 million impact from the change in the fair value of the
warrant liability and an income tax benefit of $0.2 million, or
$0.23 per diluted share.
As of December 31, 2018, the Company had approximately $3.4
million of cash, cash equivalents and investments compared to $3.5
million as of December 31, 2017. There were no net borrowings
outstanding under the Company’s asset-based loan facility and there
was unused borrowing availability of $4.1 million at December 31,
2018.
The Company received net proceeds of $11.9 million in January
2018 from a public offering of common stock and warrants. In a
concurrent private placement which closed on February 18, 2018,
certain directors and officers purchased common stock and warrants
totaling $0.3 million.
Fourth Quarter Results
Revenues in the fourth quarter of 2018 were $5.4 million as
compared to $6.4 million in the fourth quarter of 2017. Production
yields and output were negatively impacted by manufacturing related
issues which occurred late in the fourth quarter of 2018. The
Company has implemented remedial measures and expects yields to
improve and production capacity to increase during the first and
second quarters of 2019.
Product revenues totaled $5.2 million in the fourth quarter of
2018 versus $5.6 million in the fourth quarter of 2017. The decline
is a result of the manufacturing related issues mentioned
previously. R&D contract revenues totaled approximately
$240,000 in the fourth quarter of 2018 versus $787,000 in the
fourth quarter or 2017 reflecting the completion of contracts
during 2017 and 2018.
In the fourth quarter of 2018, the Company reported a gross loss
of $471,000 compared to a gross profit of $1.8 million in the
fourth quarter of 2017. The decrease in gross profit was primarily
related to the previously mentioned manufacturing related issues
and to the resultant lower production volumes.
Operating expenses for the fourth quarter of 2018, including
R&D expenses, were $3.7 million compared to $3.4 million in the
fourth quarter of 2017. The increase in operating expenses was due
to higher company-funded R&D expenses related to work on the
Company’s dPd technology and associated process development as well
as funding for improved manufacturing processes. SG&A expenses
were flat at $2.0 million year-over-year for the period.
Operating loss for the fourth quarter of 2018 was $4.2 million
compared to $1.6 million in the fourth quarter of 2017. Net loss
for the fourth quarter of 2018 was $2.5 million, or $0.05 per
diluted share, including the impact of $1.8 million related to the
change in the fair value of the warrant liability. This compares to
a net loss of $875,000, or $0.03 per diluted share, in the fourth
quarter of 2017 including the impact of $616,000 related to the
change in the fair value of the warrant liability and an income tax
benefit of $212,000.
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 April 27, 2019. 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. Although we believe that the
expectations reflected in the forward-looking statements are
reasonable, such statements should not be regarded as a
representation by the Company, or any other person, that such
forward-looking statements will be achieved. The business and
operations of the Company are subject to substantial risks which
increase the uncertainty inherent in forward-looking statements. We
undertake no duty to update any of the forward-looking statements,
whether as a result of new information, future events or otherwise.
In light of the foregoing, readers are cautioned not to place undue
reliance on such forward-looking statements.
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
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except share and per share data)
Three Months Ended
Twelve Months Ended December 31, December 31,
2018 2017 2018 2017 Revenues:
Product $ 5,195 $ 5,635 $ 23,322 $ 18,685 Contract 240 787
2,913 3,346 — — — —
Total revenues,
net 5,435 6,422 26,235 22,031
Cost of revenues: Product Contract 5,541 4,277 17,797
15,195 365 366 1,754 1,712 — — — —
Impairment of Consumer Night Vision
inventory
— — 2,690 —
Total cost of
revenues 5,906 4,643 22,241 16,907
Gross profit (loss) (471) 1,779
3,994 5,124
Operating expenses:
Research and development 1,753 1,393 6,694 5,175 Selling, general
and administrative 1,985 1,976 8,967
8,682
Total operating expenses 3,738 3,369
15,661 13,857
Loss from operations
(4,209) (1,590) (11,667) (8,733)
Other income
(expense):
Change in fair value of common
stockwarrant liability
1,807 616 2,194 1,089 Interest expense, net (57) (114) (69) (363)
Other income, net — 1 — 12
Total
other income 1,750 503 2,125 738
Loss before provision for income taxes (2,459) (1,087)
(9,542) (7,995) Income tax benefit — 212 —
212
Net loss $ (2,459) $ (875) $ (9,542) $
(7,783) Loss per share, basic $ (0.05) $ (0.03) $
(0.21) $ (0.23) Loss per share, diluted $ (0.05) $ (0.03) $ (0.21)
$ (0.23)
Weighted average numberof shares
outstanding:
Basic 45,161,273 34,989,530 44,429,114
33,661,727 Diluted 45,161,273 34,989,530
44,429,114 33,661,727
EMAGIN CORPORATION
CONSOLIDATED BALANCE SHEETS (in thousands, except share
and per share data) December 31,
December 31, 2018 2017 ASSETS
Current assets: Cash and cash equivalents $ 3,359 $ 3,526
Accounts receivable, net 3,186 4,528 Unbilled accounts receivable
224 406 Inventories 8,582 8,640 Prepaid expenses and other current
assets 875 1,328
Total current assets 16,226
18,428 Equipment, furniture and leasehold improvements, net 8,921
8,553 Intangibles and other assets 269 326
Total
assets $ 25,416 $ 27,307
LIABILITIES AND
SHAREHOLDERS’ EQUITY Current liabilities: Accounts
payable $ 2,024 $ 1,714 Accrued compensation 1,634 1,557 Revolving
credit facility, net — 3,808 Common stock warrant liability 1,497
784 Other accrued expenses 1,827 719 Deferred revenue 38 765 Other
current liabilities 427 469
Total current
liabilities 7,447 9,816 Commitments and
contingencies (Note 9)
Shareholders’ equity:
Preferred stock, $.001 par value: authorized 10,000,000 shares:
Series B Convertible Preferred stock,
(liquidation preferenceof $5,659) stated value $1,000 per share,
$.001 par value:10,000 shares designated and 5,659 issued and
outstandingas of December 31, 2018 and 2017
— —
Common stock, $.001 par value: authorized
200,000,000 shares,issued 45,323,339 shares, outstanding 45,161,273
sharesas of December 31, 2018 and issued 35,182,589
shares,outstanding 35,020,523 shares as of December 31, 2017
45 35 Additional paid-in capital 254,736 244,726 Accumulated
deficit (236,312) (226,770)
Treasury stock, 162,066 shares as of
December 31, 2018and December 31, 2017
(500) (500)
Total shareholders’ equity
17,969 17,491
Total liabilities and shareholders’
equity $ 25,416 $ 27,307
Non-GAAP
Information
Three Months Ended Year Ended December
31, December 31, 2018 2017 2018
2017 Net income (loss) $ (2,459) $ (875) $ (9,542) $
(7,783) Non-cash compensation 98 108 610 628 Change in fair value
of common stock warrant liability (1,807) (616) (2,194) (1,089)
Depreciation and intangibles amortization expense 486 460 1,906
1,836 Interest expense 82 114 188 363 Provision for income taxes
— (212) - (212) Adjusted EBITDA $
(3,600) $ (1,021) $ (9,032) $ (6,257)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190328005256/en/
eMagin CorporationJeffrey Lucas, President and Chief Financial
Officer845-838-7931jlucas@emagin.com
Affinity Growth AdvisorsBetsy
Brod212-661-2231Betsy.brod@affinitygrowth.com
eMagin (AMEX:EMAN)
Historical Stock Chart
From Mar 2024 to Apr 2024
eMagin (AMEX:EMAN)
Historical Stock Chart
From Apr 2023 to Apr 2024
