eMagin Corp. has announced financial results and corporate highlights for the first quarter ended March 31, 2018.
Revenues for the first quarter of 2018 grew 13% to US$6.9 million, an increase of US$0.8 million from revenues of US$6.1 million reported a year ago and up sequentially by U$0.5 million from the fourth quarter of 2017.
Product revenues increased 34% to US$5.9 million compared to US$4.4 million in the first quarter of 2017. The year-on-year increase in product revenue was due to an increase in display revenues from the ramp up of new U.S. military programs and increased demand by international customers.
Contract revenues totalled US$1.0 million in the first quarter compared to US$1.7 million in the same quarter of last year. The current quarter’s revenues were from a number of customers whereas the prior year’s contract revenues were primarily from one consumer customer.
Overall gross margin for the first quarter was 29% on gross profit of US$2.0 million compared to a gross margin of 30% on gross profit of US$1.8 million in the prior year period. The decrease in gross margin was primarily due to higher unit material costs in the 2018 quarter and lower contract revenues in the quarter on which the Company generally earns a higher gross margin.
Operating expenses for the first quarter of 2018, including R&D expenses, were US$4.5 million as compared to US$3.8 million in the first quarter of 2017. Operating expenses as a percentage of sales were 66% in the first quarter compared to 63% a year ago.
The increase in operating expenses was due to higher R&D expenses associated with the development of the Company’s dPd and XLS process technologies, as well as greater spending on professional services, legal and travel expenses for negotiations with prospective consumer electronics customers and volume manufacturing partners. Also included in operating expenses were approximately US$240 thousand for transaction fees incurred in the January 2018 offering which were associated with the fair value of the warrant liability.
Operating loss for the first quarter was US$2.6 million versus an operating loss of US$2.0 million in the first quarter of last year. Net loss for the first quarter of 2018 was US$2.1 million, or US$0.05 per diluted share, compared to a net loss of US$2.0 million, or US$0.06 per diluted share, in the first quarter of 2017.
As of March 31, 2018, the Company had cash and cash equivalents of US$9.8 million, working capital of US$16.5 million, and borrowing availability under the ABL facility of US$4.4 million.
| eMagin reports financial results for Q1 2018 (US$ ,000) |
2018 Q1 |
2017 Q1 |
|---|---|---|
| Revenue - Products | 5,863 | 4,381 |
| Revenue - Contract | 1,004 | 1,688 |
| Revenue - Total | 6,867 | 6,069 |
| Gross profit | 1,980 | 6,978 |
| Operating expenses | 4,543 | 3,797 |
| Net (loss) Income | (2,081) | (1,999) |
| Net result per share - basic($) | (0.05) | (0.06) |
We had a strong start to the year for our commercial initiatives as well as our military programs."
"In addition, we are making important strides in our manufacturing processes that have contributed to improvement in yields and increased throughput."
"We are seeing broader, accelerating interest within the consumer AR/VR market. New opportunities continue to surface for our high brightness, direct patterned OLED microdisplays. Consistently, we hear from prospects in the consumer segment that our cutting-edge technology is a key enabler for next generation HMD products."
"I am happy to say that the design of our next generation display is on track and going well. We look forward to having prototypes available for customers by year end 2018 or early 2019."
"As we work with our prospective manufacturing partners and our consumer electronics OEMs, our focus remains on identifying the optimal business structure to scale our direct patterning (dPdtm) technology and best capitalize on the consumer AR/VR market opportunity. This will enable us to achieve the broadest application of our dPd technology in the marketplace."
"Our military business continues to grow, and we saw increased bookings from our U.S. programs as well as from foreign military customers. At March 31st, our product backlog was US$11.8 million, an increase of over 20% from the US$9.8 million backlog at December 31, 2017."
"We are supporting many programs that the US military considers to be of high importance including applications for night vision, thermal weapon sights, see-through HMD systems for mounted and dismounted missions as well as aviation helmet upgrades and prototypes for next generation helmet systems."
"We are continuing to make progress in our development of very high brightness full-color microdisplays incorporating our dPd technology. To this end, we are designing further improvements to lengthen the lifetime of our microdisplays and incorporating enhancements to our equipment to improve our production yields and expand our manufacturing capacity."
"The response to our micro displays has been overwhelmingly positive. Demand for our products remains strong both domestically and internationally. This is leading to more orders and requests for accelerated deliveries across the board."
Andrew Sculley, President and Chief Executive Officer