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 second quarter ended June 30, 2019.
“Our production during the second quarter continued to be
impacted by manufacturing challenges and led to disappointing
results for the Company. We have implemented several measures and
are seeing yields and production volumes recovering,” stated
Jeffrey Lucas, President and CFO.
“It is critical that we improve stability in our manufacturing
processes with the goal of stemming operating losses and reaching a
break-even financial position. We have made improving yields,
increasing production volumes and fulfilling our customer orders
the highest priorities throughout the Company. We are accelerating
our ongoing efforts including several significant measures:
- Our R&D and manufacturing teams are
collaborating closely to identify and resolve the production
issues,
- We retained an engineer from our OLED
deposition tool vendor to work with our staff to increase the
throughput of this critical tool,
- We enhanced our equipment maintenance
practices including staffing maintenance coverage during all shifts
to minimize unscheduled downtime and improve machine performance,
and
- On the cost front, we are taking further
measures to reduce our expenses at the operating and administrative
levels.
“While the benefits of these initiatives will require some time,
we are already seeing progress. In the current quarter, we produced
25% more displays during the first month than we did in the first
month of the previous quarter. Our production yields are beginning
to recover and return to the upward trend we were achieving as part
of our long-term yield improvement plan. We are seeing the impact
of our cost control efforts in the reduction of our R&D and
SG&A expenses both year-over-year and sequentially. We will
continue to work aggressively to improve our operating performance
and strengthen our financial position,” concluded Mr. Lucas.
“In the second quarter, demand for our products, particularly
from military and aviation programs, both domestic and
international, remained strong,” stated Andrew G. Sculley, CEO. “We
continue to win new programs and support existing ones, many of
which extend over multiple years. We delivered displays for the
F-35 Lightning II helmet throughout the second quarter enabling
helmets to be delivered for fleet testing. Engineering work on the
improved OLED microdisplay for the helmets began in July in
preparation for Low Rate Initial Production. We are also working
with the two prime contractors on pre-production units for the ENVG
Binocular program, which is anticipated to commence production in
late 2019/early 2020 with an overall acquisition objective by the
U.S. Army of over 108,000 systems. In addition, our presence in
medical markets continues to grow as we received 12 orders from
existing medical customers during the quarter. In total, during the
second quarter of fiscal 2019, we received 98 orders, of which 13
were from new customers, and supplied products for 22 new programs.
Our backlog of products scheduled for delivery through June 30,
2020, continues to be solid at $11.6 million, an increase of
approximately $1.0 million over the backlog of $10.6 million at
December 31, 2018.
“We are developing a new color display, the XLE, which is
significantly brighter than our current displays. This microdisplay
utilizes a new architecture in our existing OLED stack structure
for greater efficiency and a longer lifetime and can be produced on
our current equipment. We are targeting engineering samples in the
fourth quarter. Initial customer reaction to the expected
performance has been positive with substantial interest
generated.
“Production of OLED microdisplays is complex and we are
supported by a very talented team of engineers and production
employees with substantial industry expertise. We are confident of
our ability to continue the progress made on resolving our
production issues,” concluded Mr. Sculley.
Quarter Results
Revenues for the second quarter of 2019 were $5.4 million, a
decrease of $1.7 million from revenues of $7.1 million reported a
year ago, and down sequentially by $0.7 million from the first
quarter of 2019.
Product revenues were $5.0 million as compared to $6.2 million
in the second quarter of 2019. On a sequential basis, product
revenues fell 10% from the first quarter of 2019. The
year-over-year decrease in product revenue was due primarily to
display production related issues. Contract revenues totaled $0.4
million in the second quarter compared to $0.9 million in the same
quarter of last year, reflecting less revenues from military and
government-funded contracts.
Overall gross margin for the second quarter was 4% on gross
profit of $0.2 million compared to a gross margin of 2% on gross
profit of $0.1 million in the prior year period. Excluding a $2.7
million impairment charge related to the consumer night vision
business, gross margin and gross profit for the second quarter of
2018 were 40% and $2.8 million, respectively. The decrease in gross
profit and margin, excluding the impairment charge, was primarily
due to the current quarter production issues and lower revenues in
comparison to the year ago period.
Operating expenses for the second quarter of 2019, including
R&D expenses, were $3.1 million as compared to $3.8 million in
the second quarter of 2018. Operating expenses as a percentage of
sales were 57% in the second quarter of 2019 compared to 53% a year
ago. The decrease in operating expenses was due to lower SG&A
expenses this period versus the year ago period which included
spending on professional services, legal, and travel and other
discretionary expenses. In addition, R&D expenses were lower in
the second quarter, primarily reflecting a decrease in allocated
production costs resulting from a lower level of internal R&D
activity as we focused on fulfilling customer orders.
Operating loss for the second quarter was $2.9 million versus an
operating loss of $3.6 million in the second quarter of last year.
Excluding the charge related to the consumer night vision business
inventory, operating loss for the second quarter of 2018 was $0.9
million. Net loss for the second quarter of 2019 was $2.3 million,
or $0.05 per diluted share, compared to a net loss of $5.1 million,
or $0.11 per diluted share, in the second quarter of 2018. The net
loss included income related to the change in the fair value of the
warrant liability of $0.5 million and a loss of $1.4 million,
respectively, for the second quarters of 2019 and 2018.
As of June 30, 2019, the Company had cash and cash equivalents
of $3.7 million, working capital of $8.3 million, and borrowing
availability under the ABL facility of $1.0 million.
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 13, 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.
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
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Revenues: Product
$
4,958
$
6,216
$
10,465
$
12,079
Contract
403
850
1,008
1,854
Total revenues, net
5,361
7,066
11,473
13,933
Cost of revenues: Product
4,898
3,971
9,324
8,330
Contract
238
299
588
827
Impairment of Consumer Night Vision inventory
—
2,690
—
2,690
Total cost of revenues
5,136
6,960
9,912
11,847
Gross profit
225
106
1,561
2,086
Operating expenses: Research and development
1,300
1,720
2,897
3,351
Selling, general and administrative
1,777
2,031
3,716
4,943
Total operating expenses
3,077
3,751
6,613
8,294
Loss from operations
(2,852
)
(3,645
)
(5,052
)
(6,208
)
Other income (expense): Change in fair value of
common stock warrant liability
536
(1,427
)
1,330
(924
)
Interest expense, net
(21
)
(30
)
(55
)
(72
)
Other income, net
—
37
—
58
Total other expense
515
(1,420
)
1,275
(938
)
Loss before provision for income taxes
(2,337
)
(5,065
)
(3,777
)
(7,146
)
(Provision) benefit for income taxes
—
—
—
—
Net loss
$
(2,337
)
$
(5,065
)
$
(3,777
)
$
(7,146
)
Loss per share, basic and diluted
$
(0.05
)
$
(0.11
)
$
(0.08
)
$
(0.16
)
Weighted average number of shares outstanding:
Basic and Diluted 48,817,940 45,111,273 46,979,505 43,691,117
EMAGIN CORPORATION
CONSOLIDATED BALANCE SHEETS (in thousands, except share
and per share data)
June 30
December 31,
2019
2018
(unaudited)
ASSETS Current assets: Cash and cash equivalents
$
3,705
$
3,359
Accounts receivable, net
2,733
3,186
Unbilled accounts receivable
21
224
Inventories
8,368
8,582
Prepaid expenses and other current assets
896
875
Total current assets
15,723
16,226
Equipment, furniture and leasehold improvements, net
8,785
8,921
Operating lease right- of- use assets
3,953
—
Intangibles and other assets
200
269
Total assets
$
28,661
$
25,416
LIABILITIES AND SHAREHOLDERS’ EQUITY Current
liabilities: Accounts payable
$
1,856
$
2,024
Accrued compensation
1,782
1,634
Revolving credit facility, net
945
—
Finance lease liability - current portion
15
—
Common stock warrant liability
166
1,497
Other accrued expenses
1,543
1,827
Deferred revenue
133
38
Operating lease liability - current portion
689
—
Other current liabilities
320
427
Total current liabilities
7,449
7,447
Finance lease liability-long term
32
—
Operating lease liability-long term
3,384
—
Total liabilities
$
10,865
$
7,447
Commitments and contingencies (Note 8)
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, 2019 and December 31, 2018
—
—
Common stock, $.001 par value: authorized 200,000,000 shares,
issued 49,325,839 shares, outstanding 49,171,773 shares as of June
30, 2019 and issued 45,323,339 shares, outstanding 45,161,273
shares as of December 31, 2018
49
45
Additional paid-in capital
258,335
254,736
Accumulated deficit
(240,088
)
(236,312
)
Treasury stock, 162,066 shares as of June 30, 2019 and December 31,
2018
(500
)
(500
)
Total shareholders’ equity
17,796
17,969
Total liabilities and shareholders’ equity
$
28,661
$
25,416
Non-GAAP Information
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Net income (loss)
$
(2,337
)
$
(5,065
)
$
(3,777
)
$
(7,146
)
Non-cash compensation
97
130 290 335 Change in fair value of common stock warrant liability
(536
)
1,427 (1,330 ) 924 Depreciation and intangibles amortization
expense
500
482 987 950 Interest expense
22
30 55 72 Provision for income taxes
-
- - - Adjusted EBITDA
$
(2,254
)
$
(2,996
)
$
(3,775
)
$
(4,865
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190813005116/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
eMagin (AMEX:EMAN)
Historical Stock Chart
From Aug 2024 to Sep 2024
eMagin (AMEX:EMAN)
Historical Stock Chart
From Sep 2023 to Sep 2024