eMagin Corporation, or the
“Company,”
(NYSE American: EMAN), a leader in
the development, design, and manufacture of Active-Matrix OLED
microdisplays for high-resolution, AR/VR and other near-eye imaging
products, today announced results for its quarter ended September
30, 2021.
“eMagin has always set the standard for
innovation and performance in the microdisplay industry, and in the
third quarter we reached a number of important milestones,” said
eMagin CEO Andrew G. Sculley. “In addition to our proof-of-concept
display work for a tier-one AR/VR customer, we developed the
production capability to satisfy demand for our high-brightness XLE
displays and unveiled prototypes of what are now the world’s
brightest, full-color Direct Patterning Display (dPd™)
microdisplays.
“These prototype microdisplays use our patented
dPd technology to fabricate industry-leading combinations of
luminance and resolution. On October 29, we demonstrated these
displays to an audience of leading OLED industry analysts,
showcasing their vivid, full-color, high-resolution performance
with a maximum luminance of over 10,000 cd/m2. This was a historic
moment for both eMagin and the industry, and it positions us as a
true disrupter in the OLED microdisplay space.
“Our proprietary dPd technology supports
directly patterning primary RGB color OLED emitters on our silicon
backplane, which creates ultra-high brightness light output at
ultra-high resolutions with brilliant colors. This is in stark
contrast to competing products that require color filters with
white OLED, which sacrifice significant light output. The 10,000
cd/m2, or nits, full-color brightness, high resolution and high
contrast that we achieved is beyond the threshold requirements for
immersive AR and VR devices and will help to overcome inefficient
optics and alleviate motion artifacts. This will allow our
military, consumer, and commercial customers to implement new and
advanced features that to date have not been technically feasible.
As we continue to advance this technology, future dPd milestones
will include the addition of tandem OLED structures and other
enhancements that will take the performance of AR/VR headsets and
heads-up displays to even greater heights.
“This achievement represents a 20-fold improvement over our
typical white with color filter XL microdisplays and brightness
three- to four-times greater than our new XLE microdisplays. By
comparison to our dPd luminance, a typical laptop monitor achieves
a brightness of 250 cd/m2 while a quality smartphone approaches
only 1,000 cd/m2. Furthermore, our dPd displays contain more than
2,500 individually addressable pixels per inch (ppi), which
generate remarkable clarity and resolution compared with typical
laptop screens of 330 ppi, and OLED smartphone screens of 600
ppi.
“In terms of revenue, our third-quarter results were mixed, with
continued display revenue growth in our ENVG-B program, and
increased shipments to medical customers. However, our
year-over-year decrease in total revenue reflected the timing of
certain military orders and $1.3 million in shipments that will be
delayed until the fourth quarter due to unexpected manufacturing
tool downtime. Overall, as of the end of the third quarter, our
sales backlog grew to $14.9 million, up from $10.3 million at the
end of the second quarter, reflecting continued strength in
bookings for the military night vision and eye-care markets.
“To address manufacturing throughput and yield issues, we are
working with an industrial engineering firm to improve our overall
operating effectiveness. In addition, this firm is providing
support in our efforts to obtain the AS9100 quality certification
during the first quarter of 2022. We expect these efforts to have a
positive impact beginning in the fourth quarter, and to be additive
to the yield and throughput improvements anticipated from the new
equipment provided under our Title III and IBAS programs,”
concluded Sculley.
Defense Production Act Title III and
IBAS Funding
As previously announced, eMagin has been
designing, specifying, and ordering equipment to be purchased under
its $39 million in Defense Production Act Title III and IBAS
funding grants that were awarded last year. The Company expects to
have all equipment ordered by the end of 2021. As of the end of the
third quarter, the Company has taken delivery of four pieces of
production equipment and expended $12.2 million of grant money
towards progress payments to equipment vendors. In September, the
Company completed the design phase and placed an order with a
vendor for an advanced, production-capable dPd organic deposition
tool that is expected to improve yield and throughput of this
innovative technology for the benefit of AR/VR customers. Overall,
the Company remains on track and on budget with the requirements of
these important government grants.
Additional Technical
Achievements
In September, the Company completed the
manufacturing qualification process for its high-luminance and
power-efficient XLE displays and began to ramp production to meet
customer demand. Its current XLE displays are qualified at over
1,500 cd/m2 and are already included in a major design with a
military customer. These displays use eMagin’s existing backplane
and are compatible with designs used by many customers, thereby
providing an upgrade in luminance levels.
In the third quarter, the Company completed a medical version of
its white on color filter OLED display that uses specialized color
filter materials to render color fidelity required during surgery
and other medical procedures.
Third-Quarter Results
Total revenues for the third quarter of 2021
were $5.8 million, compared with $7.3 million reported in
the prior-year period.
Total revenue consists of both product revenue
and contract revenue. Product revenues for the third quarter of
2021 were $5.3 million, a decrease of $1.7 million from
product revenues of $7.0 million reported in the prior-year
period. The year-over-year decrease in display revenue primarily
resulted from unexpected downtime experienced with manufacturing
equipment and resulting capacity constraints that delayed $1.3
million in display shipments into the fourth quarter. Contract
revenues were $0.5 million compared with $0.3 million reported
in the prior-year, reflecting an increase in development work
associated with the contract of a tier-one consumer company. eMagin
is continuing to work on a proof of concept and anticipates ongoing
contract revenue with this customer.
Total gross margin for the third quarter was 10%
on gross profit of $0.6 million, compared with a gross margin
of 23% on gross profit of $1.7 million in the prior-year
period. The decrease in gross margin reflects decreased shipments
of displays in the three months ended September 30, 2021,
combined with the impact of lower manufacturing volumes and
decreases in period costs capitalized into inventory due to
equipment issues that occurred during the third quarter of
2021.
Operating expenses for the third quarter of
2021, including R&D expenses, were $3.9 million, compared
with $3.6 million in the prior-year period. Operating expenses
as a percentage of sales were 67% in the third quarter of 2021,
compared with 49% in the prior-year period. The year-over-year
increase in operating expenses primarily reflects the impact of
increased share prices on our calculation of non-cash stock
compensation expense during the current quarter.
Operating loss for the third quarter of 2021 was
$3.3 million, compared with an operating loss of
$1.9 million in the prior-year period, primarily reflecting
the decreased gross profit as discussed above.
Net income for the third quarter of 2021 was
$1.3 million, or $0.01 per share. After adjusting for the net
income allocated to participating securities of $0.3 million and
$4.7 million change in the fair value of the warrant liability
during the third quarter, net loss was $3.7 million or $0.05 per
share on a fully diluted basis, compared with a loss of $3.5
million, or $0.06 per share, in the prior-year period. Excluding
the impact of the $1.8 million change in the fair value of the
warrant liability for the prior-year period, net loss for the third
quarter of 2020 was $1.7 million, or $0.03 per share.
Adjusted EBITDA for the third quarter of 2021
was negative $2.1 million, compared with negative
$1.1 million in the prior-year period.
Additionally, the Company is experiencing raw
material pricing pressures and is working to manage potential
changes in allocation from vendors due to supply-chain issues in
the semiconductor industry.
Balance Sheet Highlights
As of September 30, 2021, the Company had
cash and cash equivalents of $7.3 million and working capital
of $11.1 million. During the third quarter, the Company
borrowed $1.6 million under its asset-based lending (ABL) facility.
Borrowings and availability under the ABL facility were
$2.0 million and $1.9 million, respectively, as of
September 30, 2021.
Measurement of Inventory
As previously announced, in recognition of a shift in product
demand toward larger, more complex displays yielding fewer die per
wafer, the Company determined that measuring output by the number
of displays produced per quarter is not an accurate measure of
production capacity, and that measuring output based on the number
of wafers produced per quarter is a more appropriate measure of
production volume. As the number of wafers produced per quarter has
remained consistent for the past two years, the Company concluded
it was no longer in a period of abnormal production that would
require limiting the amount of overheads allocated to inventory.
The Company believes that fully allocating the overhead to work in
process and finished goods inventories results in more accurate
inventory valuation and computation of costs of goods sold, in
addition to providing better information for making pricing
decisions.
Under this change in estimate for allocating overhead, which was
adopted in the first quarter of 2021, overhead is now fully
allocated to products, resulting in an increase in standard costs
and a decrease in inventory values. In the third quarter of 2021,
the impact of this change was negligible on the Company’s results
of operation.
Conference Call and Webcast Information
Management will host a conference call and simultaneous webcast
at 9 a.m. ET on Friday, November 12 to discuss eMagin’s quarterly
results, business highlights and outlook. To join the live
listen-only webcast, please visit the Company’s Investor Relations
website at https://www.emagin.com/investors/event-webcast. To join
the conference call, dial 1-844-308-1725 in the United States, or
1-929-517-0939 internationally. The entry code is 7154538.
Participants are encouraged to join at least 10 minutes before the
start of the call. An archive of the webcast will be available
approximately one hour after the live call.
About eMagin Corporation
eMagin is the leader in OLED microdisplay technology, enabling
the visualization of digital information and imagery for
world-class customers in the military, consumer, medical and
industrial markets. The Company invents, engineers and manufactures
display technologies of the future and is the only manufacturer of
OLED displays in the United States. eMagin's Direct Patterning
Technology (dPd™) will transform the way the world consumes
information. Since 2001, eMagin's microdisplays have been used in
AR/VR, aircraft helmets, heads-up display systems, thermal scopes,
night vision goggles, future weapon systems and a variety of other
applications. For more information, please visit
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
risk factors that could cause our actual results to differ from our
current expectations, including impacts of the COVID-19 pandemic,
please see the section entitled "Risk Factors" in eMagin's Annual
Report on Form 10-K for the fiscal year ended December 31,
2020, 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.
ContacteMagin CorporationMark A. KochChief
Financial Officer845-838-7900investorrelations@emagin.com
Sharon Merrill Associates, Inc. Nicholas ManganaroVice
President617-542-5300eman@investorrelations.com
eMAGIN CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share data)(Unaudited)
|
|
September 30, |
|
December 31, |
|
|
2021 |
|
2020 |
ASSETS |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,337 |
|
|
$ |
8,315 |
|
Restricted cash |
|
|
1,272 |
|
|
|
2,111 |
|
Accounts receivable, net |
|
|
4,345 |
|
|
|
5,314 |
|
Account receivable-due from
government awards |
|
|
204 |
|
|
|
1,013 |
|
Unbilled accounts
receivable |
|
|
1,173 |
|
|
|
253 |
|
Inventories |
|
|
7,917 |
|
|
|
8,379 |
|
Prepaid expenses and other
current assets |
|
|
723 |
|
|
|
943 |
|
Total current
assets |
|
|
22,971 |
|
|
|
26,328 |
|
Property, plant and equipment,
net |
|
|
29,344 |
|
|
|
21,132 |
|
Operating lease right-of-use
assets |
|
|
5 |
|
|
|
50 |
|
Intangibles and other
assets |
|
|
39 |
|
|
|
126 |
|
Total
assets |
|
$ |
52,359 |
|
|
$ |
47,636 |
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
988 |
|
|
$ |
1,206 |
|
Accrued compensation |
|
|
2,005 |
|
|
|
1,628 |
|
Paycheck Protection Program
loan - current |
|
|
— |
|
|
|
982 |
|
Revolving credit facility,
net |
|
|
1,992 |
|
|
|
1,875 |
|
Common stock warrant
liability |
|
|
4,446 |
|
|
|
4,622 |
|
Other accrued expenses |
|
|
476 |
|
|
|
1,693 |
|
Deferred revenue |
|
|
65 |
|
|
|
425 |
|
Operating lease liability -
current |
|
|
5 |
|
|
|
51 |
|
Finance lease liability -
current |
|
|
1,138 |
|
|
|
1,027 |
|
Other current liabilities |
|
|
747 |
|
|
|
757 |
|
Total current
liabilities |
|
|
11,862 |
|
|
|
14,266 |
|
Other liability - long
term |
|
|
28 |
|
|
|
56 |
|
Paycheck Protection Program
loan - long term |
|
|
— |
|
|
|
982 |
|
Deferred Income - government
awards - long term |
|
|
12,072 |
|
|
|
4,309 |
|
Finance lease liability - long
term |
|
|
11,641 |
|
|
|
11,783 |
|
Total
liabilities |
|
|
35,603 |
|
|
|
31,396 |
|
|
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
|
Preferred stock, $0.001 par
value: authorized 10,000,000 shares: |
|
|
|
|
|
|
Series B Convertible Preferred
stock, (liquidation preference of $5,659) stated value $1,000 per
share, $0.001 par value: 10,000 shares designated and 5,659 issued
and outstanding as of September 30, 2021 and December 31,
2020. |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par
value: authorized 200,000,000 shares, issued 72,697,697 shares,
outstanding 72,535,631 shares as of September 30, 2021 and issued
68,890,819 shares, outstanding 68,728,753 shares as of December 31,
2020. |
|
|
72 |
|
|
|
69 |
|
Additional paid-in
capital |
|
|
275,592 |
|
|
|
268,729 |
|
Accumulated deficit |
|
|
(258,408 |
) |
|
|
(252,058 |
) |
Treasury stock, 162,066 shares
as of September 30, 2021 and December 31, 2020. |
|
|
(500 |
) |
|
|
(500 |
) |
Total shareholders’
equity |
|
|
16,756 |
|
|
|
16,240 |
|
Total liabilities and
shareholders’ equity |
|
$ |
52,359 |
|
|
$ |
47,636 |
|
eMAGIN CORPORATIONCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per share
data)(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
5,313 |
|
|
$ |
6,978 |
|
|
$ |
17,160 |
|
|
$ |
18,872 |
|
Contract |
|
|
469 |
|
|
|
333 |
|
|
|
1,674 |
|
|
|
2,870 |
|
Total revenues,
net |
|
|
5,782 |
|
|
|
7,311 |
|
|
|
18,834 |
|
|
|
21,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
4,962 |
|
|
|
5,385 |
|
|
|
15,135 |
|
|
|
15,153 |
|
Contract |
|
|
261 |
|
|
|
234 |
|
|
|
861 |
|
|
|
1,487 |
|
Total cost of
revenues |
|
|
5,223 |
|
|
|
5,619 |
|
|
|
15,996 |
|
|
|
16,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
559 |
|
|
|
1,692 |
|
|
|
2,838 |
|
|
|
5,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
1,669 |
|
|
|
1,734 |
|
|
|
5,299 |
|
|
|
4,313 |
|
Selling, general and
administrative |
|
|
2,203 |
|
|
|
1,824 |
|
|
|
5,717 |
|
|
|
5,334 |
|
Total operating
expenses |
|
|
3,872 |
|
|
|
3,558 |
|
|
|
11,016 |
|
|
|
9,647 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(3,313 |
) |
|
|
(1,866 |
) |
|
|
(8,178 |
) |
|
|
(4,545 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of common
stock warrant liability |
|
|
4,742 |
|
|
|
(1,803 |
) |
|
|
176 |
|
|
|
(3,304 |
) |
Interest expense, net |
|
|
(210 |
) |
|
|
(10 |
) |
|
|
(625 |
) |
|
|
(45 |
) |
Gain on forgiveness of
debt |
|
|
— |
|
|
|
— |
|
|
|
1,963 |
|
|
|
— |
|
Other income, net |
|
|
87 |
|
|
|
148 |
|
|
|
314 |
|
|
|
163 |
|
Total other income
(expense) |
|
|
4,619 |
|
|
|
(1,665 |
) |
|
|
1,828 |
|
|
|
(3,186 |
) |
Income (loss) before
provision for income taxes |
|
|
1,306 |
|
|
|
(3,531 |
) |
|
|
(6,350 |
) |
|
|
(7,731 |
) |
Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
1,306 |
|
|
$ |
(3,531 |
) |
|
$ |
(6,350 |
) |
|
$ |
(7,731 |
) |
Less net income allocated to
participating securities |
|
|
268 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income (loss)
allocated to common shares |
|
$ |
1,038 |
|
|
$ |
(3,531 |
) |
|
$ |
(6,350 |
) |
|
$ |
(7,731 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share,
basic |
|
$ |
0.01 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.14 |
) |
Loss per share, diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
72,527 |
|
|
|
57,736 |
|
|
|
71,675 |
|
|
|
54,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
73,862 |
|
|
|
57,736 |
|
|
|
73,417 |
|
|
|
54,451 |
|
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
(in thousands).
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
1,306 |
|
|
$ |
(3,531 |
) |
|
$ |
(6,350 |
) |
|
$ |
(7,731 |
) |
Non-cash compensation |
|
|
419 |
|
|
|
60 |
|
|
|
469 |
|
|
|
147 |
|
Change in fair value of common
stock warrant liability |
|
|
(4,742 |
) |
|
|
1,803 |
|
|
|
(176 |
) |
|
|
3,304 |
|
Depreciation and intangibles
amortization expense |
|
|
683 |
|
|
|
522 |
|
|
|
2,110 |
|
|
|
1,481 |
|
Interest expense |
|
|
210 |
|
|
|
10 |
|
|
|
625 |
|
|
|
45 |
|
Adjusted EBITDA |
|
$ |
(2,124 |
) |
|
$ |
(1,136 |
) |
|
$ |
(3,322 |
) |
|
$ |
(2,754 |
) |
eMagin (AMEX:EMAN)
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From Jun 2024 to Jul 2024
eMagin (AMEX:EMAN)
Historical Stock Chart
From Jul 2023 to Jul 2024