eMagin Announces 2Q 2014 Financial Results

eMagin Corporation announced financial results and corporate highlights for the second quarter ended June 30, 2014.

Revenues for the second quarter of 2014 were $7.0 million versus $7.0 million for the second quarter of 2013 and $6.3 million last quarter. Product revenues (display sales) increased approximately $183,000 or 3% over second quarter last year due primarily to an increase in average selling price. The increase in product revenues versus last quarter is also attributable primarily to an increase in average selling price as well as an increase in units shipped. R&D contract revenues decreased $193,000 from second quarter last year due to fewer R&D contracts. eMagin announced an expected rebound in R&D contract revenues in the coming quarters due to certain award notifications it has received.

“During the second quarter of 2014, we achieved improved results and progressed significantly forward in several critical areas,” said Andrew G. Sculley, president and CEO. “First, we are making great strides in creating ultra-high brightness OLED microdisplays that will accelerate the penetration of our OLED microdisplays into new markets such as avionics and consumer headset applications. eMagin is leading the industry in this effort for direct patterned OLED at micro-display pixel sizes.

“We recently demonstrated a full color direct patterned ultra-high brightness display to select potential customers and have installed new equipment that will allow us to sample these groundbreaking, innovative displays to our customers,” Sculley said. “Second, we’ve received notifications for a number of new R&D contract awards that we expect will increase our quarterly R&D contract revenue beginning in Q3 as well as further accelerate our leadership in the development of ultra-high brightness OLED microdisplays. Historically, these government R&D contract awards have been instrumental in fueling our growth and we are excited about the resurgence of this activity.

“Thanks to the extraordinary efforts of our teams, we continued to improve our manufacturing process in second quarter with better yield and throughput from the new OLED deposition tool and from impactful additions of other new equipment coming online,” Sculley continued. “These improvements should boost our bottom-line performance going forward. Also, we successfully met the challenges associated with a first quarter 2014 stop ship order from three of our customers regarding a product issue. The issues relating to the stop ship order have now been mostly resolved. For the first customer, shipments have resumed with no expected loss of revenue. Shipments to the second customer resumed and shipments continued uninterrupted to this customer for its other programs. The customer changed to a new display configuration for this program as did the third customer. No loss of overall revenue is expected for the second customer but some shipments originally scheduled for 2014 may extend into 2015. For the third customer, production shipments of the new display configuration are expected to begin shipping once their qualification process is complete and we expect less revenue under this program than we originally anticipated.”

Gross margin for the second quarter was 31% on gross profit of $2.2 million compared to a gross margin of 34% in the same quarter last year. The decline in gross margin was due to increased production costs including labor and lower manufacturing yields.

Operating loss for the second quarter decreased to $1.0 million from $1.1 million in second quarter last year. Net loss was $1.0 million or $0.04 per diluted share, versus net loss of $1.0 million or $0.04 per diluted share for the second quarter last year.

At June 30, 2014, the company had approximately $5.6 million of cash, cash equivalents, and investments in certificates of deposit, compared to $8.3 million at March 31, 2014.

Based on current and forecasted market conditions, expected orders and current backlog, eMagin reaffirms its previous guidance that the last three quarters of 2014 are expected to have higher average revenue than Q1 2014.