eMagin Corporation Announces 1Q 2016 Financial Results

eMagin Corporation announced financial results and corporate highlights for the first quarter ended March 31, 2016.
 
Revenues for the first quarter of 2016 were $7.0 million, an increase of 17% from the first quarter of 2015, and included $1.0 million of licensing revenue from the agreement signed in December.
 
Product revenues (primarily display sales) totaled $5.3 million, 4% more than first quarter last year. The higher product revenues were primarily due to product mix as customers purchased more of the Company’s higher priced advanced microdisplays. R&D contract revenues totaled approximately $706,000, a decrease of 20% from the first quarter last year. The lower revenues in the quarter reflect the late award of a key R&D contract, which will be performed in Q2 instead of Q1.
 
Gross margin for the first quarter was 48% on gross profit of $3.3 million compared to a gross margin of 39% on a gross profit of $2.4 million in the same quarter last year. Excluding the profit contribution from the license revenues, on which there were no cost of revenues during the quarter, the gross margin for the first quarter would have been 39%, comparable to the prior year quarter.
 
“I am pleased to report that we had good performance in the quarter and continued to make solid progress. In Q1, we recorded $7 million in revenue including $1 million from a commercial sector strategic licensing deal that we announced in December,” said Andrew G. Sculley, president and CEO. “We remain encouraged by the expanding commercialization potential of some of our newest product efforts including, among others, our WUXGA display technology, and our leading 2Kx2K microdisplays. Some of our newest WUXGA displays are already shipping; and our 2Kx2K microdisplay prototypes will be ready for sampling by customers in Q4 of this year. Discussions continue with several companies who are interested in incorporating our display technology into high-volume production applications.
 
“We made further progress on yield and through-put improvements in our production processes which enabled us to build additional inventory to meet customer demand,” Sculley added. “We continue to focus on improving manufacturing by strengthening our production resources and adding equipment to achieve better results. As our yields and through-put improve, we see the potential for lower unit costs. Our cash position remained strong at the end of the quarter and our balance sheet remains debt-free.”
 
Operating income for the first quarter decreased to $22,000 from $329,000 in the first quarter last year. Net income for Q1 2016 was $14,000, or break-even, as compared to $320,000, or $0.01 per diluted share in Q1 2015.
 
At March 31, 2016, the company had approximately $9.1 million of cash and cash equivalents compared to $9.3 million of cash and cash equivalents at December 31, 2015. At March 31, 2016, the company had no outstanding debt.
 
“Looking into 2016, we are encouraged by what we believe to be expanding end markets for Virtual Reality, Augmented Reality and Night Vision applications leveraging our leading OLED technology. We believe our technology approach in these markets remains superior to the competition,” noted Sculley.
 
“While military product sales held steady in the quarter, we believe that future growth in this segment will be largely driven by newer contracts and programs that are currently under review to receive funding for next generation technology,” he added. “Our military contract R&D efforts, where we work closely with the U.S. government and with international companies on designing next generation requirements and specifications, position us well to capture these new production contract vehicles when awarded. Overall we feel eMagin’s presence in both domestic and international military markets remains quite strong.”