- Posted Product Revenues of $7.3 Million; Total Revenue of
$7.9 Million
- Operational Improvements and Cost Reduction Efforts Yield
Positive Results
eMagin Corporation, or the “Company”, (NYSE American:
EMAN), a leader in the development, design and manufacture of
Active Matrix OLED microdisplays for high resolution near-eye
imaging products, today announced financial results and corporate
highlights for the third quarter ended September 30, 2019.
“We successfully executed on our strategic priorities in the
third quarter of 2019 which resulted in a significant improvement
in our financial results,” stated Jeffrey Lucas, President and CFO.
“For the quarter, we achieved over $7.3 million in product
revenues, the highest level of product revenues in six years and
the second highest in the Company’s history. Operating loss for the
quarter was $394 thousand and down from an operating loss of $1.3
million in the prior year quarter. Adjusted EBITDA of $263 thousand
was positive for the first time since the first quarter 2016 when
the Company earned one million dollars from nonrecurring licensing
revenue.
“During the third quarter, we demonstrated significant
improvement in yield and throughput as production volumes increased
over 50% from the second quarter. We believe these initiatives,
including enhanced maintenance support and optimizing production
runs, along with others we are implementing in the current quarter,
provide us with additional opportunities for operating improvements
in the future,” continued Mr. Lucas.
“In addition, during the third quarter we took actions to reduce
our cost structure. Expense controls put into effect during the
quarter contributed to a 21% decrease in operating expenses from
the prior year period. Operating expenses as a percent of sales
declined to 36% in the third quarter compared to 53% a year ago and
57% from this year’s second quarter. We initiated additional
expense savings actions in October, including reductions in our
senior management compensation structure, which we anticipate will
benefit our fourth quarter results. Overall, we expect these
initiatives to reduce our operating expenses, on an annualized
basis, by over $2 million,” concluded Mr. Lucas.
“Demand for our OLED microdisplays continues to be strong. Our
backlog of $6.3 million reflects the fulfillment of several
sizeable orders during the quarter and an approximate $1.1 million
reduction from the government’s cancelation of the ENVG-III program
as it begins fielding the 108,000 system ENVG-B program where we
are supplying displays to the two prime contractors on the program,
” stated Andrew G. Sculley, CEO. “We believe our backlog in the
near term will return to or exceed recent levels as our business
development team is currently negotiating a number of large orders.
In addition, we are currently manufacturing displays for a new
helicopter program with deliveries beginning in the current
quarter.
“Orders for the F-35 program and other long-term programs
continue to meet our expectations. Our displays for the F-35
program were recently highlighted in Naval Aviation News where it
was reported that the improved Generation III helmet, incorporating
our OLED displays, performed well in operational testing and will
be fully implemented to the entire F-35 community.
“From a technology advancement perspective, we are on target to
achieve 10,000 nits brightness by the second quarter of 2020 and
are working to reach more than 25,000 nits within three years. This
high level of brightness is being requested within the U.S.
military and we are pursuing government funding as part of this
effort.
“Finally, during the third quarter, we received 93 orders, of
which 7 were from new customers, and supplied products for 23 new
programs. I am especially pleased to report that we have orders
from two new medical customers and continue to supply an existing
medical customer under our long-term contract,” concluded Mr.
Sculley.
Third Quarter Results
Revenues for the third quarter of 2019 were $7.9 million, an
increase of approximately $1.0 million from revenues of $6.9
million reported a year ago, and an increase sequentially of $2.5
million from the second quarter of 2019.
Product revenues totaled $7.3 million as compared to $6.0
million in the third quarter of 2018. On a sequential basis,
product revenues increased 49% from the second quarter of 2019. The
year-over-year and sequential increases in product revenue were due
primarily to growth in display revenues from customer demand
coupled with higher production volumes as a result of increases in
throughput and manufacturing yields. Contract revenues totaled $0.6
million as compared to $0.8 million in the third quarter of 2018 as
higher military and government-funded contract revenues did not
fully offset lower commercial contract revenues.
Overall gross margin for the third quarter was 31% on gross
profit of $2.5 million compared to a gross margin of 35% on gross
profit of $2.4 million in the prior year period. The higher gross
profit is due largely to higher product revenues. The lower gross
margin reflects greater spending on production improvements and the
resultant lower allocation of production capacity costs to
R&D.
Operating expenses for the third quarter of 2019, including
R&D expenses, were $2.9 million as compared to $3.6 million in
the third quarter of 2018. Operating expenses as a percentage of
sales were 36% in the third quarter of 2019 compared to 53% in the
year ago period. R&D expenses were lower in the third quarter,
primarily reflecting lower internal R&D activity as we focused
on production improvements. SG&A expenses were lower in the
third quarter versus the year ago period due in part to lower
spending on professional services, legal, and travel and other
discretionary expenses
Operating loss for the third quarter of 2019 was $0.4 million
versus an operating loss of $1.3 million in the third quarter of
last year. Net loss for the third quarter of 2019 was $0.3 million,
or $0.01 per diluted share. The net loss included income related to
the change in fair value of warrant liability of $0.1 million. For
the third quarter of 2018, the Company reported net income of $63
thousand inclusive of income of $1.3 million for the warrant
liability revaluation.
Adjusted EBITDA for the third quarter was approximately $0.3
million versus a negative $0.6 million in the year ago period.
As of September 30, 2019, the Company had cash and working
capital of $2.6 million and $8.5 million, respectively, and
borrowings and availability under the ABL Facility of $2.0 million
and $1.2 million, respectively.
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 December 7, 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 for military,
industrial, medical and consumer applications. 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, 2018, and Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2019
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)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Revenues:
Product
$
7,321
$
6,048
$
17,786
$
18,127
Contract
598
819
1,606
2,673
Total revenues, net
7,919
6,867
19,392
20,800
Cost of revenues:
Product
5,112
3,926
14,436
12,256
Contract
316
562
904
1,389
Total cost of revenues
5,428
4,488
15,340
16,335
Gross profit
2,491
2,379
4,052
4,465
Operating expenses:
Research and development
1,046
1,590
3,943
4,941
Selling, general and administrative
1,839
2,039
5,555
6,982
Total operating expenses
2,885
3,629
9,498
11,923
Loss from operations
(394
)
(1,250
)
(5,446
)
(7,458
)
Other income (expense):
Change in fair value of common stock warrant
liability
120
1,311
1,450
387
Interest expense, net
(41
)
1
(96
)
(12
)
Other income, net
—
1
—
—
Total other income
79
1,313
1,354
375
(Loss) income before provision for income taxes
(315
)
63
(4,092
)
(7,083
)
(Provision) benefit for income taxes
—
—
—
—
Net (loss) income
$
(315
)
$
63
$
(4,092
)
$
(7,083
)
Less net income allocated toparticipating securities
—
9
—
—
Net (loss) income allocated to common shares
$
(315
)
$
54
$
(4,092
)
$
(7,083
)
Loss
per share, basic
$
(0.01
)
$
—
$
(0.09
)
$
(0.16
)
Loss per share, diluted
$
(0.01
)
$
—
$
(0.09
)
$
(0.16
)
Weighted average number of shares outstanding:
Basic
49,173,773
45,149,717
47,718,965
44,182,379
Diluted
49,173,773
45,265,370
47,718,965
44,182,379
EMAGIN CORPORATION CONSOLIDATED BALANCE
SHEETS
September 30,
December 31,
(in thousands, except share and per share data)
2019
2018
(unaudited)
ASSETS Current assets:
Cash and cash equivalents
$
2,563
$
3,359
Accounts receivable, net
3,956
3,186
Unbilled accounts receivable
279
224
Inventories
8,447
8,582
Prepaid expenses and other current assets
1,209
875
Total current assets
16,454
16,226
Equipment, furniture and leasehold improvements, net
8,346
8,921
Operating lease right- of- use assets
3,790
—
Intangibles and other assets
191
269
Total assets
$
28,781
$
25,416
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: Accounts
payable
$
1,208
$
2,024
Accrued compensation
1,602
1,634
Revolving credit facility, net
2,002
—
Finance lease liability - current portion
16
—
Common stock warrant liability
47
1,497
Other accrued expenses
1,603
1,827
Deferred revenue
328
38
Operating lease liability - current portion
704
—
Other current liabilities
398
427
Total current liabilities
7,908
7,447
Finance lease liability-long term
28
—
Operating lease liability-long term
3,202
—
Total liabilities
$
11,138
$
7,447
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 and5,659 issued and outstanding as
of September 30, 2019 and December 31,2018
—
—
Common stock, $.001 par value: authorized 200,000,000
shares, issued49,335,839 shares, outstanding 49,173,773 shares as
of September 30, 2019and issued 45,323,339 shares, outstanding
45,161,273 shares as ofDecember 31, 2018
49
45
Additional paid-in capital
258,498
254,736
Accumulated deficit
(240,404
)
(236,312
)
Treasury stock, 162,066 shares as of September 30, 2019 and
December 31,2018
(500
)
(500
)
Total shareholders’ equity
17,643
17,969
Total liabilities and shareholders’ equity
$
28,781
$
25,416
Non-GAAP Information
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Net income (loss)
$
(315
)
$
63
$
(4,092
)
$
(7,083
)
Non-cash compensation
164
177
454
512
Change in fair value of common stock warrant liability
(120
)
(1,311
)
(1,450
)
(387
)
Depreciation and intangibles amortization expense
493
470
1,480
1,420
Interest expense
41
34
96
106
Provision for income taxes
—
—
—
—
Adjusted EBITDA
$
263
$
(567
)
$
(3,512
)
$
(5,432
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191107005115/en/
eMagin Corporation Jeffrey Lucas, President and Chief Financial
Officer 845-838-7931 jlucas@emagin.com
Affinity Growth Advisors Betsy Brod 212-661-2231
betsy.brod@affinitygrowth.com
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