[August 13, 2015] |
|
eMagin Announces Second Quarter 2015 Financial Results
eMagin (News - Alert) Corporation (NYSE MKT:EMAN), the leader in the
development, design and manufacture of Active Matrix OLED microdisplays
for high resolution imaging products, today announced financial results
and corporate highlights for the second quarter of 2015.
Andrew G. Sculley, President and CEO, stated, "We are pleased the
Company increased revenues 17% from first quarter. We equaled last
year's Q2 revenue and earned $0.4 million in positive cash flow
(EBITDA), an increase of $1.0 million in cash flow over Q2 last year.
Our improved financial results were due to increased contract revenues,
and lower manufacturing costs and operating expenses. Also during the
second quarter, we made progress in several key areas of the business
that we believe position the Company for continued OLED technology
leadership and revenue growth. Our work on developing production
quantity ultra-high brightness, direct-patterned displays that
eliminates the use of color filters progressed during the quarter. This
work will result in manufacturable, full-color direct-patterned
ultra-high brightness microdisplays that are about 20 times brighter
than the typical smart phone display. These ultra-high brightness
displays will help accelerate the penetration of our OLED microdisplays
into new markets such as avionics and consumer headset applications.
eMagin continues to lead the industry in this effort for direct
patterned OLED at microdisplay pixel sizes. In addition, we completed
our new, advanced HMD "head mounted display" prototype and have been
demonstrating it to interested parties which include large tech
companies, gaming companies and large chip manufacturers. The headset
features 2,000 by 2,000 pixel resolution, a superior form factor, a wide
100+ degree field of view and has all the outstanding attributes of
eMagin OLED microdisplays."
Second Quarter Results
Revenues for second quarter 2015 were approximately $7.0 million
equaling approximately $7.0 million for second quarter last year and up
approximately 17% over first quarter 2015. Product revenues (primarily
display sales) totaled $5.4 million, about 22% less than second quarter
last year. R&D contract revenues increased significantly to
approximately $1.6 million from approximately $62,000 in second quarter
last year. The number of displays shipped decreased and the average
selling price decreased slightly from last year. The change in average
selling price is a result of changes in product and customer mix.
Gross margin for second quarter was 37 percent on gross profit of $2.6
million compared to a gross margin of 31 percent on gross profit of $2.2
million in second quarter last year. The increase in gross margin from
last year was primarily due to increased gross profit from contract
revenues, and lower manufacturing costs, including direct labor expense.
Operating expenses for second quarter decreased to $2.7 million from
$3.2 million in second quarter last year. Operating expenses are
comprised of R&D expenses and selling, general and administrative (SG&A)
expenses. R&D expenses decreased to $0.9 million from $1.3 million in
second quarter last year. The decrease was due primarily to the
significant increase in funded R&D contracts, which tends to reduce the
non-funded internal expense and to the requirements of the respective
R&D contracts being worked on in each quarter. SG&A expenses decreased
to $1.7 million from $1.9 million in second quarter last year. The $0.2
million decrease of approximately 10% is primarily a result of a
decrease in personnel, rent and non-cash compensation costs, and the
allowance for doubtful accounts.
Operating profit for the second quarter increased $0.9 million to a loss
of $0.1 million from a loss of $1.0 million in second quarter last year.
Net loss was $0.1 million or $0.00 per diluted share, versus a net loss
of $1.0 million or $0.04 per diluted share in second quarter last year.
Adjusted EBITDA improved $1.0 million to $0.4 million from a loss of $
0.6 million in second quarter last year.
At June 30, 2015, the Company had approximately $5.4 million of cash,
cash equivalents, and investments in certificates of deposit, compared
to $6.0 million at December 31, 2014. The decrease in cash is due
primarily investments in capital equipment and an increase in net
inventories.
Recent Corporate Highlights
-
Experienced one of the highest display order booking amounts of any
quarter in our history.
-
Three out of the top five order bookings were for newly introduced
display product offerings.
-
Some of the larger new order bookings we received this quarter include:
-
Two international production orders for new products using our
SVGA+ display totaling over $2 million, including a large order
from Asia.
-
An international production order using our newly launched DSVGA
display.
-
An order for a commercial sight using our newly EAR99-designated
VGA display.
-
An order for a strategically important new U.S. Government program.
-
We delivered display subsystems to DARPA for their Computational
Weapon Optic program and participated in live fire VIP demos with
DARPA which were reported in the press.
-
Dr. Amal Ghosh, eMagin's SVP R&D and President of SID, delivered the
opening address at the Society for Informational Display conference in
San Jose and Dr. Margaret Kohin, our SVP Business Development,
delivered a keynote speech at SID's Market Focus Conference on
transitioning from head mounted displays for avionics to consumer
headsets.
-
eMagin continued deliveries of microdisplay products in second quarter
to 75 domestic and international customers and performed funded R&D
contract services for 5 customers.
-
The Company produced approximately $1.6 million in R&D contract
revenue in second quarter primarily as a result of work on several new
multi-year contracts awarded in 2014. This represents a large increase
over the approximately $62,000 in R&D contract revenue in second
quarter last year.
-
Our new immersive, VR HMD (virtual reality head-mounted
display) is on the path toward full productization. Reviews of the
product specification, industrial design, optics and electronics are
getting started with the goal of ensuring its suitability for volume
production. Work will also begin on enhancing the existing prototypes
to make them ready for a possible appearance at The Consumer
Electronics Show (CES2016), in January. The headset features 2,000 by
2,000 pixel resolution, a superior form factor, a wide 100+ degree
field of view and has all the outstanding attributes of eMagin's OLED
microdisplays. The HMD team continues to demonstrate the headset at
conferences, press interviews and to potential partners, and is
receiving positive reviews.
-
We delivered ultra-high brightness color displays in the second
quarter to customers. These were WUXGA displays made with the
equipment we installed last year. We have also delivered ultra-high
brightness monochrome displays for aviation customers. Again the
interest in these displays confirms that these displays offer
advantages for applications that use low efficiency optical systems or
must provide augmented reality in the daytime such as avionics and
commercial data glass applications.
-
In the second quarter, we continued our program of improving our
direct patterned and full color ultra-high brightness OLED
microdisplays. Some sample displays have already been sold. The
program result will be manufacturable full color ultra-high brightness
microdisplays about 20 times brighter than your typical smart phone
display with all the advantages of our OLED technology including much
better power efficiency.
-
We are selling our ultra-high brightness monochrome green and yellow
XLT displays for various applications that require extreme brightness
like avionics. This demonstrates our capability to produce ultra-high
brightness OLED microdisplays.
-
A new version of the SXGA120 was completed. The new version
incorporates higher current capability to support very high brightness
levels without compromising uniformity (display quality). Initial
samples have been evaluated favorably by a customer, product
qualification has been completed, and production release is expected
by the end of third quarter.
-
Sample displays using our high brightness color and monochrome white
XLS technology were delivered and are being added to the system
architecture for both commercial and military applications. As a
result of further R&D efforts, the lifetime of our high brightness
OLED XLS technology was improved by about 25 percent.
-
First samples of the SXGA096 XLS product are available and product
qualification is expected to be completed in November, 2015. The
SXGA096 will provide eMagin's customers with the resolution of an SXGA
display but with a smaller form factor and lower cost than larger
pixel SXGA displays.
Outlook
Based on current and forecasted market conditions, expected orders and
current backlog, eMagin affirms our previous guidance that we expect
revenues will total between $26 million to $29 million in 2015.
Conference Call Information
Full results will be published in the Company's 10-Q report for the
second quarter ended June 30, 2015, expected to be filed by August 15,
2015 and will also be available via the Company's website, www.emagin.com.
A conference call and live webcast will begin today at 4:45 p.m. ET. An
archive of the webcast will be available one hour after the live call
through September 12, 2015. 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 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
SEC (News - Alert). Although we believe that the expectations reflected in the
forward-looking statements are reasonable, such statements should not be
regarded as a representation by the Company, or any other person, that
such forward-looking statements will be achieved. The business and
operations of the Company are subject to substantial risks which
increase the uncertainty inherent in forward-looking statements. We
undertake no duty to update any of the forward-looking statements,
whether as a result of new information, future events or otherwise. In
light of the foregoing, readers are cautioned not to place undue
reliance on such forward-looking statements.
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 (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 financials. 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
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June 30, 2015
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December 31, 2014
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(unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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5,429
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$
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5,290
|
Investments
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-
|
|
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|
750
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Accounts receivable, net
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4,047
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|
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|
3,878
|
Unbilled accounts receivable
|
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|
686
|
|
|
|
166
|
Inventories, net
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5,464
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|
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4,586
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Prepaid expenses and other current assets
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|
599
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|
656
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Total current assets
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16,225
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15,326
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Equipment, furniture and leasehold improvements, net
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9,747
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|
|
|
9,417
|
Intangibles and other assets
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|
353
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|
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|
382
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Total assets
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$
|
26,325
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|
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$
|
25,125
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$
|
1,666
|
|
|
$
|
1,027
|
Accrued expenses
|
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|
2,179
|
|
|
|
2,362
|
Other current liabilities
|
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|
572
|
|
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|
664
|
Total current liabilities
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4,417
|
|
|
|
4,053
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Commitments and contingencies
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Shareholders' equity:
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Preferred stock, $.001 par value: authorized 10,000,000 shares:
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Series B Convertible Preferred stock, (liquidation preference of $5,659,000)
stated value $1,000 per share, $.001 par value: 10,000 shares designated
and 5,659 issued and outstanding as of June 30, 2015 and December
31, 2014
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-
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-
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Common stock, $.001 par value: authorized 200,000,000 shares,
issued and outstanding, 25,449,458 shares as of June 30, 2015
and 25,195,107 shares as of December 31, 2014
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25
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25
|
Additional paid-in capital
|
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228,962
|
|
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|
228,380
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Accumulated deficit
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(206,579)
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(206,833)
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Treasury stock, 162,066 shares as of June 30, 2015 and December 31,
2014
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(500)
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(500)
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Total shareholders' equity
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21,908
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21,072
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Total liabilities and shareholders' equity
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$
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26,325
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|
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$
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25,125
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eMAGIN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2015
|
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2014
|
|
2015
|
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2014
|
Revenue:
|
|
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|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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Product
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$
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5,426
|
|
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$
|
6,956
|
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$
|
10,530
|
|
|
$
|
13,215
|
Contract
|
|
|
1,608
|
|
|
|
62
|
|
|
2,493
|
|
|
|
81
|
Total revenue, net
|
|
|
7,034
|
|
|
|
7,018
|
|
|
13,023
|
|
|
|
13,296
|
|
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|
|
|
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|
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|
|
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Cost of goods sold:
|
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Product
|
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3,533
|
|
|
|
4,838
|
|
|
6,585
|
|
|
|
9,170
|
Contract
|
|
|
893
|
|
|
|
11
|
|
|
1,470
|
|
|
|
26
|
Total cost of goods sold
|
|
|
4,426
|
|
|
|
4,849
|
|
|
8,055
|
|
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9,196
|
|
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|
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|
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|
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Gross profit
|
|
|
2,608
|
|
|
|
2,169
|
|
|
4,968
|
|
|
|
4,100
|
|
|
|
|
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|
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Operating expenses:
|
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Research and development
|
|
|
929
|
|
|
|
1,282
|
|
|
1,832
|
|
|
|
2,708
|
Selling, general and administrative
|
|
|
1,739
|
|
|
|
1,931
|
|
|
2,867
|
|
|
|
4,050
|
Total operating expenses
|
|
|
2,668
|
|
|
|
3,213
|
|
|
4,699
|
|
|
|
6,758
|
|
|
|
|
|
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|
|
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Income (loss) from operations
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(60)
|
|
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(1,044)
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|
|
269
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|
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(2,658)
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|
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|
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Other income (expense):
|
|
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Interest expense, net
|
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(11)
|
|
|
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(10)
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(21)
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|
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(21)
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Other income, net
|
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|
5
|
|
|
|
7
|
|
|
6
|
|
|
|
14
|
Total other income (expense), net
|
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(6)
|
|
|
|
(3)
|
|
|
(15)
|
|
|
|
(7)
|
Income (loss) before provision for income taxes
|
|
|
(66)
|
|
|
|
(1,047)
|
|
|
254
|
|
|
|
(2,665)
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(66)
|
|
|
$
|
(1,047)
|
|
$
|
254
|
|
|
$
|
(2,665)
|
Less net income allocated to participating securities
|
|
|
-
|
|
|
|
-
|
|
|
59
|
|
|
|
-
|
Net income (loss) allocated to common shares
|
|
$
|
(66)
|
|
|
$
|
(1,047)
|
|
$
|
195
|
|
|
$
|
(2,665)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share, basic
|
|
$
|
-
|
|
|
$
|
(0.04)
|
|
$
|
0.01
|
|
|
$
|
(0.11)
|
Income (loss) per share, diluted
|
|
$
|
-
|
|
|
$
|
(0.04)
|
|
$
|
0.01
|
|
|
$
|
(0.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,142,371
|
|
|
|
23,940,800
|
|
|
25,091,875
|
|
|
|
23,859,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
25,142,371
|
|
|
|
23,940,800
|
|
|
25,759,778
|
|
|
|
23,859,455
|
Non-GAAP Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
June 30,
|
|
June 30,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(66)
|
|
|
$
|
(1,047)
|
|
$
|
254
|
|
|
$
|
(2,665)
|
Litigation expense
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
116
|
Adjusted net income (loss)
|
|
|
(66)
|
|
|
|
(1,047)
|
|
|
254
|
|
|
|
(2,549)
|
Non-cash compensation
|
|
|
99
|
|
|
|
160
|
|
|
316
|
|
|
|
650
|
Depreciation and amortization expense
|
|
|
377
|
|
|
|
282
|
|
|
703
|
|
|
|
538
|
Interest expense
|
|
|
11
|
|
|
|
10
|
|
|
21
|
|
|
|
21
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
--
|
|
|
|
-
|
Adjusted EBITDA
|
|
$
|
421
|
|
|
$
|
(595)
|
|
$
|
1,294
|
|
|
$
|
(1,340)
|
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