eMagin Corporation Announces 2Q 2019 Financial Results

eMagin Corporation announced financial results and corporate highlights for the second quarter ended June 30, 2019.
 
“Our production during the second quarter continued to be impacted by manufacturing challenges and led to disappointing results for the company. We have implemented several measures and are seeing yields and production volumes recovering,” said Jeffrey Lucas, president and CFO.
 
“It is critical that we improve stability in our manufacturing processes with the goal of stemming operating losses and reaching a break-even financial position. We have made improving yields, increasing production volumes and fulfilling our customer orders the highest priorities throughout the company.
 
“While the benefits of these initiatives will require some time, we are already seeing progress. In the current quarter, we produced 25% more displays during the first month than we did in the first month of the previous quarter. Our production yields are beginning to recover and return to the upward trend we were achieving as part of our long-term yield improvement plan. We will continue to work aggressively to improve our operating performance and strengthen our financial position,” concluded Lucas.
 
“In the second quarter, demand for our products, particularly from military and aviation programs, both domestic and international, remained strong,” added CEO Andrew G. Sculley. “We continue to win new programs and support existing ones, many of which extend over multiple years. Engineering work on the improved OLED microdisplay for the helmets began in July in preparation for Low Rate Initial Production. We are also working with the two prime contractors on pre-production units for the ENVG Binocular program, which is anticipated to commence production in late 2019/early 2020 with an overall acquisition objective by the US Army of over 108,000 systems. In addition, our presence in medical markets continues to grow as we received 12 orders from existing medical customers during the quarter. In total, during the second quarter of fiscal 2019, we received 98 orders, of which 13 were from new customers, and supplied products for 22 new programs. Our backlog of products scheduled for delivery through June 30, 2020, continues to be solid at $11.6 million, an increase of approximately $1.0 million over the backlog of $10.6 million at December 31, 2018.
 
“Production of OLED microdisplays is complex and we are supported by a very talented team of engineers and production employees with substantial industry expertise. We are confident of our ability to continue the progress made on resolving our production issues,” concluded Sculley.
 
Revenues for the second quarter of 2019 were $5.4 million, a decrease of $1.7 million from revenues of $7.1 million reported a year ago, and down sequentially by $0.7 million from the first quarter of 2019.
 
Product revenues were $5.0 million as compared to $6.2 million in the second quarter of 2019. On a sequential basis, product revenues fell 10% from the first quarter of 2019. Contract revenues totaled $0.4 million in the second quarter compared to $0.9 million in the same quarter of last year, reflecting less revenues from military and government-funded contracts.
 
Overall gross margin for the second quarter was 4% on gross profit of $0.2 million compared to a gross margin of 2% on gross profit of $0.1 million in the prior year period. 
 
Operating loss for the second quarter was $2.9 million versus an operating loss of $3.6 million in the second quarter of last year. Excluding the charge related to the consumer night vision business inventory, operating loss for the second quarter of 2018 was $0.9 million. Net loss for the second quarter of 2019 was $2.3 million, or $0.05 per diluted share, compared to a net loss of $5.1 million, or $0.11 per diluted share, in the second quarter of 2018.