OLED microdisplay maker eMagin reports positive 2018 trading

02 Apr 2019

Year on year revenue ramps 19% to $26 million, due primarily to continued growth from new U.S. and foreign military programs.

eMagin, a developer of active matrix OLED microdisplays for high resolution imaging systems, has announced financial results for its fourth quarter trading, which ended December 31, 2018.

eMagin active matrix OLED microdisplay.

Revenues for 2018 totaled $26.2m, up 19% from $22.0m in 2017. Product revenues totaled $23.3m, up 25% from $18.7m in 2017, due primarily to continued growth from new U.S. and foreign military programs as well as the ramp-up of existing programs.

R&D contract revenues totaled approximately $2.9m as compared to $3.3m in 2017. The decrease in R&D contract revenue was mainly the result of the completion during late 2017 and early 2018 of several commercial and U.S. Government research contracts.

Gross margin for 2018 was 15%, down from 23% in 2017. The decline was due primarily to an impairment charge of $2.7m related to the Consumer Night Vision Business and “fourth quarter production issues”.

Operating expenses for 2018, including R&D expenses, were $15.7m compared to $13.9m in 2017. The majority of the increase was due to higher R&D expenses for company-funded work related to the Company’s direct patterning technology product and process development.

Operating loss for 2018 was $11.7m versus $8.7m in 2017. Net loss for the full year 2018, including $2.2m recorded income from the change in the fair value of the warrant liability, was $9.6m, or $0.21 per diluted share. As of December 31, 2018, the Company had approximately $3.4m of cash, cash equivalents and investments compared to $3.5m as of December 31, 2017.

Q4, 2018 results

Revenues in Q4, 2018 were $5.4m as compared to $6.4m in Q4, 2017. Production yields and output were negatively impacted by manufacturing related issues, which occurred late in Q4. The company said it has “implemented remedial measures and expects yields to improve and production capacity to increase during the first and second quarters of 2019.”

Product revenues totaled $5.2m in Q4, 2018 versus $5.6m in Q4, 2017. The decline is a result of the manufacturing related issues. R&D contract revenues totaled $240,000 in Q4, 2018, versus $787,000 in Q4, 2017, reflecting the completion of contracts during 2017 and 2018.

In Q4, 2018, the company reported a gross loss of $471,000 compared to a gross profit of $1.8m in Q4, 2017. This decrease was primarily related to the manufacturing-related issues and the resulting lower production volumes.

The firm's 2018 product revenues totaled $23.3m, up 25% on 2017.

Andrew Sculley, CEO, commented, “During 2018, we experienced growing demand for our products, especially from U.S. military and aviation programs, and we expanded our presence among medical and other commercial customers. We sold to more than 80 customers in the past year and supplied products for over 20 new programs.”

At December 31, 2018, the firm had a backlog of purchase orders of approximately $10.6m in products ordered for delivery through 2019, an increase of approximately $800,000 from the backlog of $9.8m at the close of 2017.

“From a technology perspective, we continue to make significant advances with our high brightness, full-color microdisplays incorporating our color filter and Direct Patterning technology, which is critical to driving our growth in all the markets we serve. With design improvements and superior OLED materials, we boosted efficiency and lifetime of our displays by more than 50%.

“While our full year revenues increased 19% on a year-on-year basis, we did experience a manufacturing equipment related issue in the fourth quarter. This resulted in lower yields and loss of production, affecting our fourth quarter and full-year performance. We addressed this issue and have made the necessary improvements to minimize the risk of future recurrences.”

Other highlights

Other notable developments in 2018 by eMagin included:

• In addition to winning new U.S. military programs and expanding its presence in commercial, industrial and foreign military markets, eMagin made “significant improvements in technology and product design.”
• Approval of its design from a Tier 1 consumer electronics partner for prototype high resolution 4k x 4k displays featuring very high brightness using its dPd technology. This makes for a headset with a wide field of view and no screen door effect.
• eMagin received an order totaling $560,000 in support of the U.S. Javelin Missile program Command Launch Unit. The company anticipates a follow-on order in Q2, 2019.
• The company supported multiple prime contractors with display deliveries for pre-production units for the U.S. Army Enhanced Night Vision Goggle – Binocular program.
• Ground and flight tests were successfully completed in Q4, 2018 for a major U.S. Army helicopter helmet upgrade program to retrofit high brightness microdisplays into the current field helmet.
• The company said it is currently developing a prism optic to pair with its displays and evaluating prototypes received from potential manufacturing partners. There is interest in this display and prism combination for both military and commercial applications.