eMagin Announces Record 1Q 2012 Revenues

eMagin Corporation announced financial results for its first quarter ended March 31, 2012.

“During the first quarter of 2012, our base business performed well both in domestic and international markets and our outlook continues to be positive,” stated Andrew G. Sculley, president and CEO. “I am pleased to report a 35% increase in product revenue (primarily display sales) and a 59% increase in the number of displays produced during the first quarter versus the year ago first quarter as a result of improved yield and better line utilization.

“During the second quarter, we expect to complete the testing phase of the qualification of our new OLED deposition machine and begin production,” Sculley continued. “Once the new machine is fully operational, we expect OLED deposition capacity to increase by tenfold and we anticipate higher yields, putting us in a strong position to address the increasing demand for our products from all of our major business segments, including military, industrial and consumer applications.”

Revenues for the first quarter rose 13% to $6.1 million versus $5.4 million for the first quarter of 2011. The gain is attributable to an increase in volume of displays sold, a slightly higher average sales price and an increase in display production offset by a decrease in contract revenue during the period.

Gross margin for the first quarter increased to 44% on gross profit of $2.7 million, compared to a gross margin of 41% on gross profit of $2.2 million in the same quarter last year.

Net loss for the first quarter of 2012 was $452,000, or $(0.02) per diluted share, compared to net loss of $3.3 million, or $(0.16) per diluted share, in the first quarter last year. Adjusted EBITDA for the first quarter was $44,000.

Recent corporate highlights included:
• eMagin received a $3.1 million follow-on order for OLED displays for the U.S. Army Remote Viewer, all of which must be delivered in 2012.
• Work on the $1.1 million Small Business Innovation Research (SBIR) contract from the U.S. Special Operations Command (USSOCOM) to optimize the company’s WUXGA OLED microdisplay for mass production is progressing. Completion of the program is expected in the third quarter of 2012. eMagin’s WUXGA OLED microdisplay is the highest resolution full-color microdisplay ever produced.
• Installation of the company’s new OLED deposition machine will be completed and production is expected to begin in the second quarter. The new tool will augment the company’s existing Satella OLED deposition machine, an R&D tool adapted and used by eMagin for both R&D and production since the company’s inception in 1996.
• The company’s new seal machine will improve the existing seal process, which should increase yield and capacity. The new seal machine is expected to come online during the second quarter.
• eMagin’s R&D team has achieved further reductions in the size of the full color pixel, to 8.1 microns. This is the smallest known full color pixel in the industry and will potentially lead to even smaller size displays which are less costly to produce.
• eMagin is working with a number of customers moving forward with the company’s new digital VGA display. Initial small volume production orders have been received and larger volumes are anticipated for later in 2012.
• eMagin is developing an XGA display to better address the commercial and consumer electronic viewfinder market. There are several newly interested potential customers for this new product. eMagin currently sells a different display into the high end of this market.
• Deliveries continued under the Javelin program in the first quarter and will continue in the second quarter.

eMagin reaffirms its 2012 revenue guidance range of $30 million to $34 million. The company expects contract revenue to increase during the balance of the year due to greater activity on existing contracts and to new contracts.