eMagin Corporation Announces 3Q 2016 Financial Results

eMagin Corporation announced financial results and corporate highlights for the third quarter ended Sept. 30, 2016.
 
Revenues for the third quarter of 2016 were $4.3 million, down 20% from the third quarter of 2015. Product revenues totaled $3.5 million, 24% less than third quarter last year, primarily due to lower volumes from maturing military programs partially offset by a lower average price due to product mix. R&D contract revenues totaled approximately $769,000, consistent with the third quarter last year.
 
Overall gross margin for the third quarter was 30% on gross profit of $1.3 million compared to a gross margin of 20% on gross profit of $1.1 million in the same quarter last year. The increased gross margin for the quarter reflects a favorable impact of higher production volumes as inventory is built for the consumer products launch.
 
“While our third quarter was impacted by the previously announced softness in our domestic military business due to lower volumes on maturing programs, we are now beginning to ship under new military programs and expect volumes to increase in 2017,” said Andrew G. Sculley, president and CEO. “Additionally, we announced today the formal launch of two consumer products. This is an important step for eMagin as we capitalize on our intellectual property and know how to pursue new, potentially high growth markets. We are pleased that, with our product launch in this new market segment, we were named a 2017 Consumer Electronics Show (CES) Innovation Award Honoree in the Digital Imaging product category.
 
“Importantly, we are in active discussions with multiple Tier One companies who recognize the superior functionality of our industry-leading OLED microdisplays for consumer applications,” Sculley added. “Progress in these discussions has recently accelerated as we address prototype designs and a path to high volume production. The low-power, high resolution, small form factor of our leading OLED microdisplays are finding their way into a larger number of applications and markets compared with just 12 months ago. We continue to see further traction in industrial markets as we received another design win from a leading medical device company who has chosen to integrate our microdisplays into their next generation surgical device. We also continue to see expanding interest for our technology among foreign militaries where advanced night vision and high-resolution avionics applications remain relatively underpenetrated.
 
“The technology in our new consumer products complements the expertise we have accumulated over the years developing leading solutions for our US military and commercial customers,” he added. “We are able to enter the market for consumer and industrial night vision systems at what we believe is a disruptive price point which could result in a significantly larger market size than what is available for existing products. Not only are these new markets large, we believe they could provide eMagin with attractive gross profit opportunities over time.”
 
Operating expenses for the third quarter of 2016, including R&D expenses, increased to $3.7 million from $3.3 million in the third quarter of 2015.
 
Operating loss for the third quarter increased to $2.4 million from a loss of $2.2 million in the third quarter last year. Net loss for third quarter of 2016 increased to $2.4 million, or $0.08 per basic and diluted share, from a loss of $2.2 million, or $0.09 per basic and diluted share, in the third quarter of 2015.
 
At September 30, 2016, the company had approximately $6.9 million of cash and cash equivalents compared to $9.3 million of cash and cash equivalents at December 31, 2015. During the quarter eMagin increased its R&D investment and began to build inventory for its consumer product launch.