-- Posts 40% Revenue Growth in Q4; 53% Increase in Backlog Entering 2018 --
“We made tremendous progress on all fronts in 2017 and I believe we are
well positioned entering 2018. The fourth quarter was strong as we saw a
rebound in our military business which drove a 40% year-over-year
increase in sales and a 49% increase sequentially from the third quarter
of 2017. During the year we entered into agreements with consumer
electronics and technology companies to advance our cutting-edge
technology and to design and develop microdisplays for AR/VR head
mounted device applications. Securing these agreements was a logical
prerequisite in our strategy for establishing a mass production
partnership. We also signed an agreement with a U.S. based chipmaker to
support scaling to mass production for the consumer AR and VR markets.
We anticipate that this will provide valuable supply chain development
assistance to enable prototype and mass production OLED microdisplays.
Lastly, and importantly, we continue to be actively engaged in
discussions with potential manufacturing partners to support our
commercial efforts,” commented
“Our base military business is solid, and we are experiencing an upswing
in demand as new programs are replacing many of those that matured.
During 2017, we experienced an improvement in booking activity as we
made progress towards our goals of securing new, and expanding existing,
U.S. and foreign military programs while growing our presence in foreign
military, commercial and industrial markets. At December 31, 2017, we
had a backlog of non-binding purchase orders of approximately
“We continue to refine our production processes and have made a number of operational improvements and productivity enhancements which have contributed to our ongoing yield improvement and higher capacity utilization. Additionally, we are selectively making capital expenditures to improve the timely delivery on our orders and expand gross profit margins by providing for more efficient utilization of our production operations.”
Business and Product Highlights
In addition to expanding our presence in consumer, commercial/industrial and foreign military markets and [winning new U.S. military programs], we made significant improvements in technology and product design. Further optimization of our direct patterning process (“dPd”) has led to brightness levels that we believe surpass the threshold requirements for AR/VR applications for consumer products and enterprise focused companies and satisfy the requirements of several pending military programs. We have demonstrated more than 15,000 nits brightness in monochrome and more than 5,300 nits brightness in full color, a milestone towards the application of eMagin’s microdisplays to AR/VR headsets. We are currently targeting a maximum brightness of 10,000 nits in full color.
Fiscal 2017 highlights include:
-
We completed a Critical Design Review (CDR) in
October 2017 with a major aviation prime contractor for an OLED upgrade to a production helmet for a multi-service fixed wing aircraft. Additional displays and supporting hardware were delivered to the prime contractor inJanuary 2018 for pre-production testing. This program is anticipated to generate significant revenues beginning in the second half of 2018 as our OLED microdisplays continue to receive praise during flight testing. - We supplied to consumer and commercial customers our largest microdisplay design, the 2k x 2k full color RGB during 2017. We expect that this display design will expand our product offerings for the consumer and commercial marketplaces. In concert with this effort, we advanced a compact interface for the 2K × 2K microdisplay that we believe will facilitate the integration of the display into optical solutions. This hardware is targeted to be introduced to the market during the second quarter 2018.
-
We delivered displays for the Low Rate Initial Production (LRIP) phase
of both the U.S. Army’s Enhanced Night Vision Goggle III (ENVG
III) and Family of Weapon Sight-Individual (FWS-I) programs. We were
awarded follow-on contracts worth over
$3 .7 million for the ENVG III and FWS-I programs. We also delivered displays for prototype systems for the FWS-Crew Served program to two defense prime contractors. -
We received a multi-year
$1 .7 million order from a European military prime contractor to provide displays for see-through, head-mounted displays to support airborne and ground missions’ requirements. -
We received a
$1 .5 million order to support the Light Weight Thermal Sight (LWTS) program with deliveries which began inDecember 2017 and continue through 2018. -
We continued to support a major
U.S. Army helicopter helmet upgrade program to retrofit high brightness microdisplays into the current fielded helmet. Critical Design Review was completed in August of 2017 and Testing Readiness Review (TRR) was completed inDecember 2017 . Additional OLED display, taper, and lens assemblies were delivered for integration and testing inDecember 2017 . -
We received a production order from a foreign aviation prime
contractor to supply high brightness microdisplays to upgrade an
existing helmet for fixed wing aircraft. It is expected that this will
be a multi-year program. The initial displays were delivered in
November 2017 and are expected to continue through the fourth quarter of 2018. -
We delivered high brightness 2K × 2K microdisplays to a major foreign
contractor for use in a prototype aviation helmet scheduled for
initial tests in
May 2018 .
Full Year Results
Revenues for 2017 were
Gross margin for 2017 was 23%, down from 30% in 2016. The decline in
gross margin for the year was primarily due to
Operating expenses for 2017, including R&D expenses, were
Operating loss for the full year 2017 was
As of
Subsequent to the end of the year, the Company received net proceeds of
Fourth Quarter Results
Revenues increased 40% in the fourth quarter of 2017 and were
Product revenues totaled
Overall gross margin for the fourth quarter of 2017 was 28% on gross
profit of
Operating expenses for the fourth quarter of 2017, including R&D
expenses, decreased to
Operating loss narrowed in the fourth quarter of 2017 to
Outlook
“We continue to believe that eMagin is the only company whose products can meet the low power, high brightness, high contrast and resolution requirements for high-pixel density displays being demanded both for next gen VR/AR Consumer HMDs as well as today’s commercial and military applications. Our accomplishments in 2017 demonstrate the superiority of our technology and, with the rebound in our military business, we believe we are well positioned for 2018,” concluded Mr. Sculley.
Conference Call Information
A conference call and live webcast will begin today at
About
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 from military, industrial, medical and consumer OEMs. 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
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 BALANCE SHEETS | ||||||||||
| (in thousands, except share and per share data) | ||||||||||
| December 31, | December 31, | |||||||||
| 2017 | 2016 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 3,526 | $ | 5,241 | ||||||
| Accounts receivable, net | 4,528 | 2,834 | ||||||||
| Unbilled accounts receivable | 406 | 1,401 | ||||||||
| Inventories | 8,640 | 7,435 | ||||||||
| Prepaid expenses and other current assets | 1,328 | 1,040 | ||||||||
| Total current assets | 18,428 | 17,951 | ||||||||
| Equipment, furniture and leasehold improvements, net | 8,553 | 8,980 | ||||||||
| Intangibles and other assets | 326 | 282 | ||||||||
| Total assets | $ | 27,307 | $ | 27,213 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 1,714 | $ | 1,432 | ||||||
| Accrued compensation | 1,557 | 1,528 | ||||||||
| Revolving credit facility, net | 3,808 | 1,689 | ||||||||
| Common stock warrant liability | 784 | — | ||||||||
| Other accrued expenses | 719 | 1,068 | ||||||||
| Deferred Revenue | 765 | 445 | ||||||||
| Other current liabilities | 468 | 591 | ||||||||
| Total current liabilities | 9,815 | 6,753 | ||||||||
| 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) |
— | — | ||||||||
|
Common stock, $.001 par value: authorized 200,000,000 shares, |
35 | 32 | ||||||||
| Additional paid-in capital | 244,726 | 239,915 | ||||||||
| Accumulated deficit | (226,769) | (218,987) | ||||||||
|
Treasury stock, 162,066 shares as of |
(500) | (500) | ||||||||
| Total shareholders’ equity | 17,492 | 20,460 | ||||||||
| Total liabilities and shareholders’ equity | $ | 27,307 | $ | 27,213 | ||||||
| EMAGIN CORPORATION | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Product | $ | 5,635 | $ | 3,653 | $ | 18,685 | $ | 17,265 | ||||||||||||
| Contract | 787 | 905 | 3,346 | 3,132 | ||||||||||||||||
| License | — | — | — | 1,000 | ||||||||||||||||
| Total revenues, net | 6,422 | 4,558 | 22,031 | 21,397 | ||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||
| Product | 4,277 | 3,349 | 15,195 | 12,988 | ||||||||||||||||
| Contract | 366 | 719 | 1,712 | 1,967 | ||||||||||||||||
| License | — | — | — | — | ||||||||||||||||
| Total cost of revenues | 4,643 | 4,068 | 16,907 | 14,955 | ||||||||||||||||
| Gross profit | 1,779 | 490 | 5,124 | 6,442 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | 1,393 | 1,895 | 5,175 | 6,362 | ||||||||||||||||
| Selling, general and administrative | 1,976 | 2,366 | 8,682 | 8,411 | ||||||||||||||||
| Total operating expenses | 3,369 | 4,261 | 13,857 | 14,773 | ||||||||||||||||
| Loss from operations | (1,590) | (3,771) | (8,733) | (8,331) | ||||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Change in fair value of common stock warrant liability | 616 | — | 1,089 | — | ||||||||||||||||
| Interest expense, net | (114) | 2 | (363) | (30) | ||||||||||||||||
| Other income, net | 1 | 301 | 12 | 313 | ||||||||||||||||
| Total other income (expense) | 503 | 303 | 738 | 283 | ||||||||||||||||
| Loss before provision for income taxes | (1,087) | (3,468) | (7,995) | (8,048) | ||||||||||||||||
| (Provision) benefit for income taxes | 212 | — | 212 | (1) | ||||||||||||||||
| Net loss | $ | (875) | $ | (3,468) | $ | (7,783) | $ | (8,049) | ||||||||||||
| Loss per share, basic | $ | (0.03) | $ | (0.11) | $ | (0.23) | $ | (0.27) | ||||||||||||
| Loss per share, diluted | $ | (0.03) | $ | (0.11) | $ | (0.23) | $ | (0.27) | ||||||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||||||
| Basic | 34,989,530 | 31,623,334 | 33,661,727 | 30,172,927 | ||||||||||||||||
| Diluted | 34,989,530 | 31,623,334 | 33,661,727 | 30,172,927 | ||||||||||||||||
|
Non-GAAP Information |
|||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| Net income (loss) | $ | (875) | $ | (3,468) | $ | (7,783) | $ | (8,049) | |||||||||||
| Non-cash compensation | 108 | 113 | 628 | 771 | |||||||||||||||
| Depreciation and intangibles amortization expense | 460 | 427 | 1,836 | 1,641 | |||||||||||||||
| Change in fair value of common stock warrant liability | (616) | (1,089) | |||||||||||||||||
| Non-cash adjustments to other income | - | (302) | (302) | ||||||||||||||||
| Interest expense | 114 | 2 | 363 | 30 | |||||||||||||||
| Provision for income taxes | (212) | - | (212) | 1 | |||||||||||||||
| Adjusted EBITDA | $ | (1,021) | $ | (3,228) | $ | (6,257) | $ | (5,908) | |||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180328005395/en/
Source:
eMagin Corporation
Jeffrey Lucas, 845-838-7931
Chief Financial
Officer
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or
MBS
Value Partners
Betsy Brod, 212-661-2231
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