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 third quarter ended
September 30, 2022.
“eMagin’s third quarter was highlighted by a 31%
year-over-year revenue increase leading to improved gross margins
and positive EBITDA, along with new business wins and continued
growth in our backlog of open orders,” said eMagin CEO Andrew G.
Sculley. “Our total revenues rose to $7.6 million, compared to $5.8
million a year ago, while our gross margin improved to 37% from 10%
a year ago. This is the fourth consecutive quarter in which we
realized year-over-year increases in throughput and product
revenues of more than $7.0 million. The improved yields and
increased throughput and revenues were the result of the new,
government-funded equipment in our production facility and
improvements in our manufacturing operations. Moreover, our EBITDA
for the third quarter of 2022 was a positive $0.7 million.”
“Our display sales grew during the third quarter
of 2022, reflecting strong military shipments and increased medical
segment revenues. As of the end of the third quarter ongoing demand
for our displays for use in thermal weapon sights, military
night-vision goggles, and medical applications drove our total
backlog to $16.6 million from $14.3 million at the end of last
quarter. Approximately 93% of the total third quarter backlog is
deliverable within the next 12 months.”
“The U.S. Army’s Program Executive Office for
Simulation, Training, and Instrumentation (PEO STRI) awarded us a
$2.5 million, two-year development contract in the second quarter
to secure a U.S. source for a high-performance microdisplay that
provides high brightness and visual acuity, even in bright daylight
conditions. In the third quarter, we recognized $0.6 million of
revenue under the initial phase of this contract, which was related
to the design of a backplane that will allow for significantly
higher luminance of our displays.
“In December, we will take delivery of the
upgraded R&D dPd™ deposition chamber, starting a new era in
OLED microdisplay technology. We will use this chamber to make the
displays required by the last phase of our proof-of-concept work
with a tier-one AR/VR customer. This upgraded R&D chamber will
be used to fabricate disruptive, high-brightness dPd displays for
both military and commercial markets in small quantities. The
design process for this R&D chamber has played a key role in
defining the specifications for the large production-capable dPd
organic deposition tool purchased under Title III funding, that is
nearing completion at the vendor’s facility.
“In September, as previously announced, we
received our AS9100 Rev. D certification along with our ISO
9001:2015 certification. The AS9100D is an internationally
recognized quality management standard that is specific to the
aerospace, aviation, and defense industries. These certifications
strengthen eMagin’s competitive position and standardize our
quality, reliability and safety processes. Furthermore, we believe
that our certified quality management systems, combined with the
highly-differentiated dPd manufacturing equipment and processes,
will continue to make eMagin the supplier of choice for the
high-brightness and high-resolution OLED microdisplay solutions of
the future.”
Defense Production Act Title III and
IBAS Funding
As previously announced, eMagin has ordered all
equipment to be purchased under the $39 million in Defense
Production Act Title III and the IBAS Program funding grants that
were awarded to the Company in 2020. As of the end of the third
quarter, the Company had added and qualified four pieces of
equipment to its production line and had received three additional
pieces of equipment that are currently installed and being
qualified. This equipment has contributed to improved yields and
reliability in the Company’s production process. eMagin has seven
more major pieces of equipment on order, including the previously
mentioned, production-capable dPd organic deposition tool that is
expected to improve device performance, yield and throughput of
this innovative technology. The Company remains on track with these
important government grants, and is beginning to realize yield,
reliability, and throughput improvements.
Third Quarter Results
Total revenues for the third quarter of 2022
increased 31% to $7.6 million, compared with $5.8 million
reported in the prior-year period.
Total revenue consists of both product revenue
and contract revenue. Product revenues for the third quarter of
2022 were $7.0 million, an increase of $1.7 million from
product revenues of $5.3 million reported in the prior-year
period. The year-over-year increase in display revenue was due to
strength in military markets, including shipments of displays used
for the ENVG-B program, and higher revenue contributions from
medical customers.
Contract revenues were $0.6 million compared
with $0.5 million reported in the prior year, reflecting an
increase due to development associated with a high-brightness
display design for the Department of Defense and a proof-of-concept
display for a tier-one consumer company.
Total gross margin for the third quarter
increased to 37%, resulting in a gross profit of $2.9 million,
compared with a gross margin of 10%, which resulted in a gross
profit of $0.6 million in the prior-year period. The gross
margin improvement resulted from several factors including higher
yields, increased volumes, a more favorable product mix, and the
successful qualification and sale of product that had previously
been written off because of an initial quality issue that was
ultimately resolved. This resulted in a savings of approximately
$0.6 million in third quarter materials costs as compared to the
expected cost of producing these displays. Excluding this positive
impact, third quarter 2022 gross margin would have been 30% on
gross profit of $2.3 million.
Operating expenses for the third quarter of
2022, including R&D expenses, were $3.0 million, compared
with $3.9 million in the prior-year period. Operating expenses
as a percentage of sales were 39% in the third quarter of 2022,
compared with 67% in the prior-year period. Prior year R&D
expenses reflected significant investments in high-brightness XLE,
and dPd processes.
Operating loss for the third quarter of 2022
narrowed to $0.1 million, compared with an operating loss of
$3.3 million in the prior-year period, primarily reflecting
the higher gross profit as noted above.
Net loss for the third quarter of 2022 was $0.3
million, or $0.00 per share, compared with income of $1.3 million,
or $0.01 per share, in the prior-year period. 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 for the prior-year period, net loss for the third quarter
of 2021 was $3.4 million, or $0.05 per share on a fully-diluted
basis.
Adjusted EBITDA for the third quarter of 2022
improved to positive $0.7 million, compared with negative
$2.1 million in the prior-year period.
Balance Sheet Highlights
As of September 30, 2022, the Company had
cash and cash equivalents of $3.9 million and working capital
of $13.9 million. During the third quarter, the Company repaid $0.6
million under its asset-based lending (ABL) facility. Borrowings
and availability under the ABL facility were $0.7 million and
$1.1 million, respectively, as of September 30, 2022.
During the quarter, the Company realized $1.5
million in net proceeds from sales of common shares under its ATM
program.
Conference Call and Webcast
InformationManagement will host a conference call and
simultaneous webcast at 9:00 a.m. ET on November 10, 2022, to
discuss quarterly results, business highlights and outlook. The
live, listen-only webcast will be accessible on the Company’s
Investor Relations website via
https://www.emagin.com/investors/event-webcast. A replay of the
event will be available approximately one hour after the live
event. To join the conference call participants will need to
register with this link:
https://register.vevent.com/register/BI1772ee7391f644de9d2227a0119ca391.
Participants will receive an individualized dial-in number and PIN
after registering for the call.
About eMagin CorporationeMagin 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 StatementsThis 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, 2021, 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
Manganaro617-542-5300eman@investorrelations.com
eMAGIN CORPORATIONCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share data)(Unaudited)
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2022 |
|
2021 |
ASSETS |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,862 |
|
|
$ |
5,724 |
|
Restricted cash |
|
|
323 |
|
|
|
806 |
|
Accounts receivable, net |
|
|
5,086 |
|
|
|
4,488 |
|
Account receivable-due from
government awards |
|
|
110 |
|
|
|
292 |
|
Unbilled accounts
receivable |
|
|
1,797 |
|
|
|
1,102 |
|
Inventories |
|
|
8,334 |
|
|
|
7,632 |
|
Prepaid expenses and other
current assets |
|
|
837 |
|
|
|
691 |
|
Total current
assets |
|
|
20,349 |
|
|
|
20,735 |
|
Property, plant and equipment,
net |
|
|
39,511 |
|
|
|
30,483 |
|
Operating lease right - of -
use assets |
|
|
69 |
|
|
|
113 |
|
Intangibles and other
assets |
|
|
31 |
|
|
|
37 |
|
Total
assets |
|
$ |
59,960 |
|
|
$ |
51,368 |
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
1,522 |
|
|
$ |
1,348 |
|
Accrued compensation |
|
|
2,007 |
|
|
|
1,664 |
|
Revolving credit facility,
net |
|
|
720 |
|
|
|
1,974 |
|
Common stock warrant
liability |
|
|
— |
|
|
|
1,374 |
|
Other accrued expenses |
|
|
564 |
|
|
|
722 |
|
Deferred revenue |
|
|
12 |
|
|
|
54 |
|
Operating lease liability -
current |
|
|
64 |
|
|
|
60 |
|
Finance lease liability -
current |
|
|
1,185 |
|
|
|
1,133 |
|
Other current liabilities |
|
|
379 |
|
|
|
608 |
|
Total current
liabilities |
|
|
6,453 |
|
|
|
8,937 |
|
Other liability - long
term |
|
|
14 |
|
|
|
28 |
|
Deferred income - government
awards - long term |
|
|
19,346 |
|
|
|
12,458 |
|
Operating lease liability -
long term |
|
|
6 |
|
|
|
54 |
|
Finance lease liability - long
term |
|
|
13,670 |
|
|
|
11,647 |
|
Total
liabilities |
|
|
39,489 |
|
|
|
33,124 |
|
|
|
|
|
|
|
|
Commitments and contingencies
(Note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2022 and December 31,
2021. |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par
value: authorized 200,000,000 shares, issued 77,601,253 shares,
outstanding 77,439,503 shares as of September 30, 2022 and issued
72,931,490 shares, outstanding 72,769,424 shares as of December 31,
2021. |
|
|
77 |
|
|
|
72 |
|
Additional paid-in
capital |
|
|
280,069 |
|
|
|
275,936 |
|
Accumulated deficit |
|
|
(259,175 |
) |
|
|
(257,264 |
) |
Treasury stock, 162,066 shares
as of September 30, 2022 and December 31, 2021. |
|
|
(500 |
) |
|
|
(500 |
) |
Total shareholders’
equity |
|
|
20,471 |
|
|
|
18,244 |
|
Total liabilities and
shareholders’ equity |
|
$ |
59,960 |
|
|
$ |
51,368 |
|
eMAGIN CORPORATIONCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per share
data)(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
7,040 |
|
|
$ |
5,313 |
|
|
$ |
21,093 |
|
|
$ |
17,160 |
|
Contract |
|
|
581 |
|
|
|
469 |
|
|
|
1,045 |
|
|
|
1,674 |
|
Total revenues,
net |
|
|
7,621 |
|
|
|
5,782 |
|
|
|
22,138 |
|
|
|
18,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
4,462 |
|
|
|
4,962 |
|
|
|
14,771 |
|
|
|
15,135 |
|
Contract |
|
|
304 |
|
|
|
261 |
|
|
|
454 |
|
|
|
861 |
|
Total cost of
revenues |
|
|
4,766 |
|
|
|
5,223 |
|
|
|
15,225 |
|
|
|
15,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
2,855 |
|
|
|
559 |
|
|
|
6,913 |
|
|
|
2,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
1,236 |
|
|
|
1,669 |
|
|
|
4,177 |
|
|
|
5,299 |
|
Selling, general and
administrative |
|
|
1,728 |
|
|
|
2,203 |
|
|
|
5,802 |
|
|
|
5,717 |
|
Total operating
expenses |
|
|
2,964 |
|
|
|
3,872 |
|
|
|
9,979 |
|
|
|
11,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(109 |
) |
|
|
(3,313 |
) |
|
|
(3,066 |
) |
|
|
(8,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of common
stock warrant liability |
|
|
2 |
|
|
|
4,742 |
|
|
|
1,374 |
|
|
|
176 |
|
Interest expense, net |
|
|
(249 |
) |
|
|
(210 |
) |
|
|
(688 |
) |
|
|
(625 |
) |
Gain on forgiveness of
debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,963 |
|
Other income, net |
|
|
22 |
|
|
|
87 |
|
|
|
469 |
|
|
|
314 |
|
Total other income
(expense) |
|
|
(225 |
) |
|
|
4,619 |
|
|
|
1,155 |
|
|
|
1,828 |
|
Income (loss) before
provision for income taxes |
|
|
(334 |
) |
|
|
1,306 |
|
|
|
(1,911 |
) |
|
|
(6,350 |
) |
Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
(334 |
) |
|
$ |
1,306 |
|
|
$ |
(1,911 |
) |
|
$ |
(6,350 |
) |
Less net income allocated to
participating securities |
|
|
— |
|
|
|
268 |
|
|
|
— |
|
|
|
— |
|
Net income (loss)
allocated to common shares |
|
$ |
(334 |
) |
|
$ |
1,038 |
|
|
$ |
(1,911 |
) |
|
$ |
(6,350 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share,
basic |
|
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
Loss per share, diluted |
|
$ |
— |
|
|
$ |
(0.05 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
76,752 |
|
|
|
72,527 |
|
|
|
74,509 |
|
|
|
71,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
76,752 |
|
|
|
73,862 |
|
|
|
74,509 |
|
|
|
73,417 |
|
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, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net loss |
|
$ |
(334 |
) |
|
$ |
1,306 |
|
|
$ |
(1,911 |
) |
|
$ |
(6,350 |
) |
Non-cash compensation |
|
|
229 |
|
|
|
419 |
|
|
|
608 |
|
|
|
469 |
|
Change in fair value of common stock warrant liability |
|
|
(2 |
) |
|
|
(4,742 |
) |
|
|
(1,374 |
) |
|
|
(176 |
) |
Depreciation and intangibles amortization expense |
|
|
565 |
|
|
|
683 |
|
|
|
2,236 |
|
|
|
2,110 |
|
Interest expense |
|
|
249 |
|
|
|
210 |
|
|
|
688 |
|
|
|
625 |
|
Adjusted EBITDA |
|
$ |
707 |
|
|
$ |
(2,124 |
) |
|
$ |
247 |
|
|
$ |
(3,322 |
) |
eMagin (AMEX:EMAN)
Historical Stock Chart
From Jun 2024 to Jul 2024
eMagin (AMEX:EMAN)
Historical Stock Chart
From Jul 2023 to Jul 2024