eMagin Announces 2Q 2013 Financial Results

eMagin Corporation announced financial results for the second quarter ended June 30, 2013.

“Our second quarter 2013 results reflect some of the challenges we have continued to face as an R&D provider and high tech manufacturer. Although product revenue, primarily displays, increased 15% for the first half of 2013 versus the first half of 2012, and total revenues for the first half increased 5.5% over the first half of last year, our overall revenues were lower in the second quarter compared to the year-ago quarter primarily due to lower contract R&D from U.S. government agencies, which have been impacted by sequestration and other budget-related issues as well as manufacturing challenges including those associated with bringing our new OLED deposition tool up to full operation and the fulfillment of large volume orders with stringent specifications,” said Andrew G. Sculley, president and CEO.

“While we were pleased that almost half of the OLED deposition was accomplished during the second quarter using our new deposition tool and that overall, we have produced more units year to date than in the comparable period last year, neither yield nor output are where we want them to be. We are continuing to utilize personnel and other resources to further optimize the tool and we remain confident that yield, which is now about equal to our Satella deposition tool, will continue to improve. However, as a result of our efforts to improve the new deposition tool’s yield and output, we experienced higher than anticipated manufacturing costs in the quarter, which impacted our operating performance.”

Mr. Sculley continued, “Strong demand from domestic and international customers, particularly in the military segment, reflects our continued technological leadership in the emerging OLED microdisplay industry. We intend to remain the technology leader in the OLED microdisplay space by offering new generations of super bright, super-efficient microdisplays, including our new OLED-XLS, which is ideally suited to meet even the most demanding military applications, and our new, direct patterning technology, which we view as the next technological step to higher brightness and efficiency.”

Revenues for the second quarter were $7.0 million versus $8.6 million for the second quarter of 2012. The decrease in revenues resulted primarily from $1.2 million less in R&D contract revenue. The company had one active contract in the second quarter of 2013 as compared to five active contracts in the prior year period. On a sequential basis, the revenues were down approximately $1.6 million from first quarter primarily as a result of lower average price due to the mix of products sold.

Gross margin for the second quarter was 34% on gross profit of $2.4 million compared to a gross margin of 53% on gross profit of $4.5 million in the same quarter last year. The cost per display increased from the prior year due to higher manufacturing costs including increased personnel to staff extra shifts, costs associated with the new OLED deposition tool and increased depreciation due to new equipment including the new deposition tool. It is expected that the cost per unit will decrease as the new tool is further optimized and volumes increase.

Net loss for the second quarter of 2013 was $1.0 million or $0.04 per diluted share compared to net income of $577,000 or $0.02 per diluted share for the second quarter of 2012. EBITDA for the second quarter was negative $0.4 million from a positive $1.6 million last year. Year to date EBITDA is $0.7 million.