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Tuesday, May 13, 2014

Mixed Bag Per Usual, Revenue Growth Forecast for Remainder of Year, Renewed Shipments to 3 Military Customers Staggered Over the Next Three Months

eMagin Announces First Quarter 2014 Financial Results
BELLEVUE, Wash.--(BUSINESS WIRE)--May 13, 2014-- eMagin 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 first quarter ended March 31, 2014.
Andrew G. Sculley, President and CEO, stated, “During the first quarter of 2014, we made significant progress in three key areas of our business that we believe position the Company for revenue growth. These include improved manufacturing processes that resulted in our best quarter ever in terms of up-time of the new OLED deposition tool; strong and growing interest from domestic and international customers pertaining to our newest products, including our high-brightness/high-resolution products; as well as significant progress in a number of other technology areas, including next generation ultra-high brightness displays.”
Mr. Sculley continued, “Thanks to the extraordinary efforts of our teams, we successfully met the challenges associated with a previously disclosed stop order from three of our customers concerning a product issue. The stop order issues have been partially resolved, with shipments to one of the three customers having fully resumed in April 2014. Shipments to a second customer are expected to ramp to full volume in late June, and shipments to the third customer are expected to resume in late July. As a result of the improved status of the stop orders, improved manufacturing processes and demand for our state-of-the-art microdisplays, we anticipate higher average revenue per quarter during each of the remaining three quarters of 2014.”
Quarterly Results
Revenues for the first quarter of 2014 were $6.3 million versus $8.5 million for the first quarter of 2013 and $6.1 millionfor the fourth quarter of 2013. The decline in first quarter 2014 revenues versus the year ago first quarter is attributable to fewer units shipped and a decrease in the average selling price due to product mix and a stop order from three customers regarding a product issue that has already been partially resolved.
Gross margin for the first quarter was 31 percent on gross profit of $1.9 million compared to a gross margin of 44 percent on gross profit of $3.8 million in the same quarter last year. The decline in gross margin was due to a decrease in revenue, an increase in production costs and a lower average selling price.
Operating expenses for the first quarter of 2014 were $3.5 million, as compared to $3.4 million in the prior year period. Operating expenses are comprised of R&D expenses and selling, general and administrative (SG&A) expenses. R&D expenses were $1.4 million versus $1.2 million in the year-ago quarter. The increase was attributable to a decrease in funded R&D, which resulted in an increase in R&D expense for eMagin. SG&A expense declined to $2.1 million versus$2.2 million in the 2013 first quarter.
Net loss for the first quarter of 2014 was $1.6 million or $0.07 per diluted share, versus net income of $205,000 or$0.01 per diluted share for the first quarter of 2013.
At March 31, 2014, the Company had approximately $8.3 million of cash, cash equivalents, and investments in certificates of deposit and corporate bonds, compared to $11.0 million at December 31, 2013.
Recent Corporate Highlights
  • eMagin continued deliveries of microdisplay products to more than 85 domestic and international customers. These include display shipments for the FELIN Soldier Modernization Program in France, BAE/Oasys, FLIR inSweden for three industrial thermal camera EVFs, and BCF Technology in Scotland for the BUG Binocular Ultrasound Goggles,
  • eMagin’s new OLED deposition tool had its best quarter yet in terms of up-time.
  • The Company terminated two license agreements and settled litigation with Global OLED Technology, LLC., in exchange for mutual releases and the payment by eMagin of a one-time, undisclosed settlement amount.
  • Samples of the high luminance XLS and XLT technologies 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 already existing high brightness OLED-XLS product’s lifetime was improved by about 25 percent. The full qualification of these displays as a product is expected to be completed by the third quarter of 2014.
  • Progress was made toward building a tool for the ultra-high brightness and high resolution directly patterned color OLED devices. A prototype ultra-high resolution high brightness OLED display is expected to be fabricated in the third quarter of 2014.
  • eMagin’s R&D team developed a new seal structure that can increase the overall yield and reliability of the Company’s products. A large portion of the work toward qualifying this seal structure was completed during the first quarter.
  • eMagin expects to complete production qualification of its new DSVGA display in the second quarter and release the display for production by the end of 2014. This display is targeted for the next generation of enhanced night vision goggles.
  • First samples of the SXGA096 product are expected to be available in the second quarter. The SXGA096 will provide eMagin’s customers with the high resolution of an SXGA display but with a smaller form factor and lower cost of production than larger pixel SXGA displays.
  • On May 9, management presented to institutional investors at the Sidoti Semi-Annual Microcap Conference inNew York.

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