Wednesday, March 28, 2018

-- Posts 40% Revenue Growth in Q4; 53% Increase in Backlog Entering 2018 --
HOPEWELL JUNCTION, N.Y.--(BUSINESS WIRE)--Mar. 28, 2018-- eMagin Corporationor the “Company” (NYSE American: EMAN), a 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 fourth quarter endedDecember 31, 2017.
“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 Andrew Sculley, President and Chief Executive Officer.
“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 $9.8 million in products ordered for delivery through December 31, 2018, an increase of over 50% from our backlog of $6.4 million at December 31, 2016.
“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 in January 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 in December 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 in December 2017. Additional OLED display, taper, and lens assemblies were delivered for integration and testing in December 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.

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