Revenue was $7.3 million and $26.7 million in
the fourth quarter and for the full year of 2019
Operational improvements and cost reduction
efforts yield positive results
Enters 2020 with approximately $11.7 million in
backlog
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 results for fourth quarter and
full year 2019.
“We made significant progress on several fronts in 2019. From an
operational perspective, the concerted effort by our entire
workforce focused on production improvements and efficiencies,
which led to improved manufacturing yields and production
throughput as production volumes increased over 50% during the
second half of 2019. Our R&D engineers and our manufacturing
team have done an outstanding job and are committed to further
identifying and implementing improvements to enhance our
manufacturing processes,” commented CEO Andrew G. Sculley.
“Our cost reduction efforts which we started in the third
quarter and continued into the fourth resulted in a 21% operating
expense reduction on a year-over-year basis. The result is that our
net loss was $205,000 or essentially break-even on a per share
basis in the fourth quarter as compared to a loss of $2.5 million
or $0.05 cents per share in the comparable period last year.
Although it will take a few more quarters to realize the full
benefit of the initiatives being put in place, we are very pleased
with the progress we have made to date and our performance in the
second half of the year.”
“From a demand perspective, we also see positive trends. For the
fourth quarter, total revenue increased to $7.3 million or 35% over
the prior year period. Our contract revenue was more than double
from a year ago due to multiple contracts including one for the
planned F-35 display improvements and a new project for a consumer
electronics customer.”
“We had record bookings in the fourth quarter, exceeding $15
million, which led to a 75% increase in our backlog from the third
quarter of 2019. At December 31, 2019, our backlog of open orders
was $14.6 million, including $11.7 million scheduled for delivery
through December 31, 2020. Despite our substantial backlog, we
expect first quarter 2020 revenue to be lower year-over-year due to
the timing of certain military orders. However, we anticipate
stronger revenue in subsequent quarters and expect an overall
increase in revenue for 2020,” continued Mr. Sculley.
“As the year ended, we continued to see strong demand and
recognition for our OLED microdisplays. We were awarded the
Enhanced Military Capability award as part of the Defense
Manufacturing Technology Achievement Awards. This acknowledgement
reflects the innovative OLED technology work that we achieved in a
joint project with the U.S. Army Research, Development and
Engineering Command, and the Night Vision Electronic Sensors
Directorate (NVESD). Additionally, in December, we received two
significant orders from prime contractors for our displays totaling
$9.9 million and another to support the delivery of the F-35 Helmet
Mounted Display Systems for $1.4 million.”
“We remain on target to achieve 10,000 nits brightness by the
end of the second quarter. As we had mentioned previously, the U.S.
military has requested 25,000 nits brightness which we expect to
reach within three years and are pursuing government funding to
help support this effort.”
“Finally, during the fourth quarter, we received 80 orders, of
which 3 were from new customers, and supplied product for 23 new
programs. We are pleased to announce that we started a new consumer
related development project for a next generation display, as well
as 2 orders from existing medical customers,” concluded Mr.
Sculley.
Fourth Quarter Results
Revenues for the fourth quarter of 2019 were $7.3 million, an
increase of $1.9 million from revenues of $5.4 million reported in
the prior year period, and a slight decrease of $0.6 million from
the third quarter of 2019.
Product revenues for the fourth quarter of 2019 were $6.8
million, an increase of $1.6 million from product revenues of $5.2
million reported in the prior year period, and a slight decrease of
$0.5 million compared to the third quarter of 2019. The
year-over-year increase in product revenue was 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 were $0.6 million compared
to $0.2 million reported in the prior year period due to multiple
projects.
Gross margin for the fourth quarter was 36% on gross profit of
$2.7 million compared to a gross loss of $0.5 million in the prior
year period. The higher gross profit in the quarter is due to
higher product revenues compared to the year ago quarter when there
were production challenges as well as the impact on cost of goods
sold of a 20% reduction in senior management compensation effective
October 2019.
Operating expenses for the fourth quarter of 2019, including
R&D expenses, were $2.8 million as compared to $3.7 million
reported in the prior year period. Operating expenses as a
percentage of sales were 38% in the fourth quarter of 2019 compared
to 69% reported in the prior year period. R&D expenses were
lower in the fourth quarter, primarily reflecting lower internal
R&D activity as we focused on production and yield
improvements. SG&A expenses were lower in the fourth quarter
versus the year ago period due to lower spending on professional
services, legal fees, and lower travel and other discretionary
expenses. Both SG&A and R&D expenses in the fourth quarter
also were lower due to the impact of the October 2019, 20%
reduction in senior management compensation.
Operating loss for the fourth quarter of 2019 was $0.1 million
compared to an operating loss of $4.2 million in the prior year
period. Net loss for the fourth quarter of 2019 was $0.2 million or
essentially break-even on a per share basis compared to a loss of
$2.4 million or $0.05 per share in the prior year period. The 2018
fourth quarter net loss benefitted from a $1.8 million change in
the fair value of the warrant liability, which was immaterial in
the 2019 fourth quarter.
Adjusted EBITDA the fourth quarter was $0.5 million compared to
a negative $3.6 million in the prior year period.
Full Year Results
Revenues for 2019 were $26.7 million, up 2% from the $26.2
million in 2018. Product revenues totaled $24.6 million,
representing a 5% increase from $23.3 million in 2018, due
primarily to customer demand coupled with increase in throughput
and manufacturing yields. R&D contract revenues totaled
approximately $2.1 million as compared to $2.9 million in 2018.
Revenues in the first half of 2019 were impacted by production
issues that were resolved beginning in the third quarter of 2019.
The decrease in R&D contract revenue was mainly the result of
the completion of several commercial and US Government R&D
contracts, in 2019.
Gross margin for 2019 was 25%, compared to 15% in 2018. The
gross margin for 2018 included an impairment charge of $2.7 million
related to the Consumer Night Vision Business. Excluding the
impairment charge, the total gross margin was 25%.
Operating expenses for 2019, including R&D expenses, were
$12.3 million compared to $15.7 million in 2018. The majority of
the decrease was due to lower R&D expenses for company-funded
work related to the Company’s direct patterning technology product
and process development and resources expended on improving
manufacturing processes. During 2018 there was higher spending on
professional services related to contract negotiations with
prospective consumer electronics and manufacturing partners.
Operating loss for the full year 2019 was $5.6 million versus
$11.7 million in 2018. Net loss for the full year 2019 was $4.3
million, or $0.09 per diluted share. This compares to a net loss of
$9.5 million or $0.21 per diluted share in 2018.
As of December 31, 2019, the Company had cash, cash equivalents
and working capital of $3.5 million and $8.8 million, respectively,
and borrowings and availability under the ABL Facility of $2.9
million and $1.2 million, respectively. In addition, in December
2019, the Company entered into an At the Market sales agreement
with H.C. Wainwright & Co. for the sale of common stock.
Conference Call Information
eMagin will hold a Webcast at 9:00 am (New York time) on March
10, 2020 to discuss its fourth quarter results. To access the live
webcast or archive, please visit the Company’s website at
ir.emagin.com or www.earnings.com. An archive of the webcast will
be available one hour after the live call.
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.
Important Cautionary Information Regarding 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 factors 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 in any Form 10-Q filed or to be filed
by eMagin, and in other documents we file with the SEC from time to
time.
eMAGIN CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share
data)
December 31,
December 31,
2019
2018
ASSETS
Current assets:
Cash and cash equivalents
$
3,515
$
3,359
Accounts receivable, net
3,966
3,186
Unbilled accounts receivable
155
224
Inventories
8,832
8,582
Prepaid expenses and other current
assets
1,130
875
Total current assets
17,598
16,226
Equipment, furniture and leasehold
improvements, net
8,100
8,921
Operating lease right - of - use
assets
3,729
—
Intangibles and other assets
160
269
Total assets
$
29,587
$
25,416
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,302
$
2,024
Accrued compensation
1,778
1,634
Revolving credit facility, net
2,891
—
Common stock warrant liability
23
1,497
Other accrued expenses
1,401
1,827
Deferred revenue
277
38
Operating lease liability - current
775
—
Other current liabilities
342
427
Total current liabilities
8,789
7,447
Finance lease liability - long term
24
—
Operating lease liability - long term
3,067
—
Total liabilities
11,880
7,447
Commitments and contingencies (Note 9)
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 December 31, 2019 and 2018.
—
—
Common stock, $.001 par value: authorized
200,000,000 shares, issued 50,250,378 shares, outstanding
50,088,312 shares as of December 31, 2019 and issued 45,323,339
shares, outstanding 45,161,273 shares as of December 31, 2018.
50
45
Additional paid-in capital
258,767
254,736
Accumulated deficit
(240,610)
(236,312)
Treasury stock, 162,066 shares as of
December 31, 2019 and 2018.
(500)
(500)
Total shareholders’ equity
17,707
17,969
Total liabilities and shareholders’
equity
$
29,587
$
25,416
eMAGIN CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
Revenues:
Product
$
6,803
$
5,195
$
24,589
$
23,322
Contract
531
240
2,137
2,913
Total revenues, net
7,334
5,435
26,726
26,235
Cost of revenues:
Product
4,338
5,541
18,775
17,797
Contract
320
365
1,223
1,754
Impairment of Consumer Night Vision
Business inventory
—
—
—
2,690
Total cost of revenues
4,658
5,906
19,998
22,241
Gross profit
2,676
(471)
6,728
3,994
Operating expenses:
Research and development
1,105
1,753
5,048
6,694
Selling, general and administrative
1,696
1,985
7,251
8,967
Total operating expenses
2,801
3,738
12,299
15,661
Loss from operations
(125)
(4,209)
(5,571)
(11,667)
Other income (expense):
Change in fair value of common stock
warrant liability
23
1,807
1,474
2,194
Interest expense, net
(103)
(57)
(201)
(69)
Total other income
(80)
1,750
1,273
2,125
Loss before provision for income
taxes
(205)
(2,459)
(4,298)
(9,542)
Income taxes
—
—
—
—
Net loss
$
(205)
$
(2,459)
$
(4,298)
$
(9,542)
Loss per share, basic
$
—
$
(0.05)
$
(0.09)
$
(0.21)
Loss per share, diluted
$
—
$
(0.05)
$
(0.09)
$
(0.21)
Weighted average number of shares
outstanding:
Basic
49,317
45,161
48,133
44,429
Diluted
49,317
45,161
48,133
44,429
eMAGIN CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
Twelve Months Ended
December 31,
2019
2018
Cash flows from operating
activities:
Net loss
$
(4,298)
$
(9,542)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization
2,046
1,989
Change in fair value of common stock
warrant liability
(1,474)
(2,194)
Impairment of Consumer Night Vision
Business inventory
—
1,270
Impairment of Consumer Night Vision
Business tooling
—
76
Stock-based compensation
551
610
Amortization of operating lease
right-of-use assets
538
—
Changes in operating assets and
liabilities:
Accounts receivable
(780)
1,342
Unbilled accounts receivable
69
183
Inventories
(250)
(2,632)
Prepaid expenses and other current
assets
(255)
453
Deferred revenues
239
(727)
Operating lease liabilities
(530)
—
Accounts payable, accrued expenses, and
other current liabilities
(966)
2,793
Net cash used in operating
activities
(5,110)
(6,379)
Cash flows from investing
activities:
Purchase of equipment
(1,110)
(2,296)
Net cash used in investing
activities
(1,110)
(2,296)
Cash flows from financing
activities:
Borrowings (repayments) under revolving
line of credit, net
2,891
(3,808)
Proceeds from public offering, net
3,476
12,172
Proceeds from warrant exercise, net
—
46
Proceeds from exercise of stock
options
9
98
Net cash provided by financing
activities
6,376
8,508
Net increase (decrease) in cash and
cash equivalents
156
(167)
Cash and cash equivalents, beginning of
period
3,359
3,526
Cash and cash equivalents, end of
period
$
3,515
$
3,359
Cash paid for interest
$
177
$
106
Cash paid for income taxes
$
—
$
—
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.
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
Net loss
$
(205)
$
(2,459)
$
(4,298)
$
(9,542)
Non-cash compensation
96
98
551
610
Change in fair value of common stock
warrant liability
(23)
(1,807)
(1,474)
(2,194)
Depreciation and intangibles amortization
expense
483
486
1,963
1,906
Interest expense
103
57
201
69
Adjusted EBITDA
$
454
$
(3,625)
$
(3,057)
$
(9,151)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200310005245/en/
eMagin Corporation Mark A. Koch, Acting Chief Financial Officer
845-838-7951 mkoch@emagin.com Affinity Growth Advisors Betsy Brod
212-661-2231 betsy.brod@affinitygrowth.com
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