eMagin Corporation Announces 4Q 2016 Financial Results

eMagin Corporation announced financial results and corporate highlights for the fourth quarter and full year ended Dec. 31, 2016.
 
Revenues for 2016 were $21.4 million, down 15% from 2015. Product revenues totaled $17.3 million, 17% less than last year, primarily due to lower volumes from maturing military programs and a larger portion of sales of displays with lower unit prices. R&D contract revenues totaled approximately $3.1 million, down 26% from 2015. The decline in R&D contract revenue was mainly the result of a decrease in active R&D contracts and work completed on those contracts.
 
Gross margin for 2016 was 30% on gross profit of $6.4 million, up 2 percentage points from 28% in 2015. The increased gross margin for the year benefitted from $1.0 million in license revenue that was recorded with no cost in the current year.
 
Operating expenses for 2016, including R&D expenses, were $14.8 million, up $3.7 million from 2015.
 
“I am pleased to announce that we recently signed an additional, multi-million dollar agreement with another major Tier 1 consumer electronics company. We now have in place multiple agreements with commercial partners for next generation prototype products for consumer HMD’s and expect a considerable boost to 2017 revenue from our commercial efforts, including approximately $1.5 million that we expect to recognize in the first quarter of 2017. As we continue to enhance our technological advantage through direct patterning, I believe that we are gaining the recognition we deserve for having the most comprehensive suite of high performance OLED microdisplays in the market today,” commented Andrew Sculley, president and CEO.
 
“Improvements to our direct patterning equipment and processes have led to higher throughput for our development efforts and, more importantly, brightness levels that surpass threshold requirements for both commercial and military customers. We have begun shipping limited quantities of these enhanced direct patterning displays to key strategic partners, potential partners and defense prime contractors, and are in active discussions with several parties for high volume production to support commercial demand.
 
“As expected, our fourth quarter revenue was impacted by lower sales volumes from the previously announced wind down of certain domestic military programs. However, we continue to develop market leading products for both military and commercial applications and were selected to participate in both the U.S. Army’s Enhanced Night Vision Goggle III (ENVG III) and the Family of Weapon Sight-Individual (FWS-I) programs. We have a solid base of business within the military and expect it will provide us with a growing, recurring revenue stream over the next several years.”
 
Operating loss for 2016 was $8.3 million versus $4.1 million in 2015 as a result of the lower production volumes and the company’s investment in R&D to improve its technology and in the launch of its consumer products. Net loss for the full year 2016 was $8.0 million, or $0.27 per diluted share, compared to a net loss of $4.1 million, or $0.16 per diluted share, in 2015.
 
As of Dec. 31, 2016, the company had approximately $5.2 million of cash and cash equivalents compared to $9.3 million of cash and cash equivalents as of Dec. 31, 2015.
 
Revenues for the fourth quarter of 2016 were $4.6 million as compared to $6.7 million in the fourth quarter of 2015.
 
Product revenues totaled $3.7 million versus $5.7 million in the fourth quarter last year. This was primarily due to lower volumes from maturing military programs. R&D contract revenues totaled approximately $905 thousand, in line with the $965 thousand reported in the prior year quarter.
 
Overall gross margin for the fourth quarter was 11% on gross profit of $490 thousand compared to a gross margin of 13% on gross profit of $904 thousand in the fourth quarter of 2015 due to the impact of lower production volumes on the high fixed cost nature of our manufacturing processes.
 
Operating loss for the fourth quarter was $3.8 million versus $2.1 million in the fourth quarter last year. Net loss for the fourth quarter of 2016 increased to $3.5 million, or $0.11 per diluted share compared to net loss of $2.1 million, or $0.08 in the fourth quarter of 2015.