03.29.18
eMagin Corporation announced financial results and corporate highlights for the fourth quarter ended Dec. 31, 2017.
“We made tremendous progress on all fronts in 2017 and I believe we are well positioned entering 2018,” said Andrew Sculley, president and CEO. “The fourth quarter was strong as we saw a rebound in our military business, which drove a 40% year-over-year increase in sales and a 49% increase sequentially from the third quarter of 2017. During the year we entered into agreements with consumer electronics and technology companies to advance our cutting-edge technology and to design and develop microdisplays for AR/VR head mounted device applications. Lastly, and importantly, we continue to be actively engaged in discussions with potential manufacturing partners to support our commercial efforts.
“Our base military business is solid, and we are experiencing an upswing in demand as new programs are replacing many of those that matured,” Sculley added. “During 2017, we experienced an improvement in booking activity as we made progress towards our goals of securing new, and expanding existing, US and foreign military programs while growing our presence in foreign military, commercial and industrial markets. At December 31, 2017, we had a backlog of non-binding purchase orders of approximately $9.8 million in products ordered for delivery through Dec. 31, 2018, an increase of over 50% from our backlog of $6.4 million at Dec. 31, 2016.
Full Year Results
Revenues for 2017 were $22.0 million, up 3% from the $21.4 million in 2016. Excluding $1 million licensing revenue in 2016, revenues are up 8% in 2017 versus 2016. Product revenues totaled $18.7 million, representing an 8% increase from $17.3 million in 2016, primarily due to increased demand from newer military programs in 2017 compared to reduced demand from maturing programs in 2016. R&D contract revenues totaled approximately $3.3 million, up 7% from 2016.
Gross margin for 2017 was 23%, down from 30% in 2016. The decline in gross margin for the year was primarily due to $1.0 million in license revenue recorded in 2016 that had no associated cost. Operating loss for the full year 2017 was $8.7 million versus $8.3 million in 2016.
Fourth Quarter Results
Revenues increased 40% in the fourth quarter of 2017 and were $6.4 million as compared to $4.6 million in the fourth quarter of 2016. On a sequential basis from the third quarter of 2017, revenues increased 49%.
Product revenues totaled $5.6 million in the fourth quarter of 2017 versus $3.7 million in the fourth quarter of 2016. This increase was primarily due to higher volumes from new military programs. R&D contract revenues totaled approximately $787 thousand in the fourth quarter of 2017 versus $905 thousand in the fourth quarter or 2016.
Overall gross margin for the fourth quarter of 2017 was 28% on gross profit of $1.8 million compared to a gross margin of 11% on gross profit of $490 thousand in the fourth quarter of 2016. The increase in gross margin was due to the impact of higher production volumes.
Operating expenses for the fourth quarter of 2017, including R&D expenses, decreased to $3.4 million, from $4.3 million in the fourth quarter of 2016. The favorable comparison reflects higher development spending on the consumer night vision products and non-recurring expenses associated with the consolidation of the company’s administrative operations in 2016.
Operating loss narrowed in the fourth quarter of 2017 to $1.6 million compared to $3.8 million in the fourth quarter of 2016.
“We continue to believe that eMagin is the only company whose products can meet the low power, high brightness, high contrast and resolution requirements for high-pixel density displays being demanded both for next gen VR/AR Consumer HMDs as well as today’s commercial and military applications. Our accomplishments in 2017 demonstrate the superiority of our technology and, with the rebound in our military business, we believe we are well positioned for 2018,” concluded Sculley.
“We made tremendous progress on all fronts in 2017 and I believe we are well positioned entering 2018,” said Andrew Sculley, president and CEO. “The fourth quarter was strong as we saw a rebound in our military business, which drove a 40% year-over-year increase in sales and a 49% increase sequentially from the third quarter of 2017. During the year we entered into agreements with consumer electronics and technology companies to advance our cutting-edge technology and to design and develop microdisplays for AR/VR head mounted device applications. Lastly, and importantly, we continue to be actively engaged in discussions with potential manufacturing partners to support our commercial efforts.
“Our base military business is solid, and we are experiencing an upswing in demand as new programs are replacing many of those that matured,” Sculley added. “During 2017, we experienced an improvement in booking activity as we made progress towards our goals of securing new, and expanding existing, US and foreign military programs while growing our presence in foreign military, commercial and industrial markets. At December 31, 2017, we had a backlog of non-binding purchase orders of approximately $9.8 million in products ordered for delivery through Dec. 31, 2018, an increase of over 50% from our backlog of $6.4 million at Dec. 31, 2016.
Full Year Results
Revenues for 2017 were $22.0 million, up 3% from the $21.4 million in 2016. Excluding $1 million licensing revenue in 2016, revenues are up 8% in 2017 versus 2016. Product revenues totaled $18.7 million, representing an 8% increase from $17.3 million in 2016, primarily due to increased demand from newer military programs in 2017 compared to reduced demand from maturing programs in 2016. R&D contract revenues totaled approximately $3.3 million, up 7% from 2016.
Gross margin for 2017 was 23%, down from 30% in 2016. The decline in gross margin for the year was primarily due to $1.0 million in license revenue recorded in 2016 that had no associated cost. Operating loss for the full year 2017 was $8.7 million versus $8.3 million in 2016.
Fourth Quarter Results
Revenues increased 40% in the fourth quarter of 2017 and were $6.4 million as compared to $4.6 million in the fourth quarter of 2016. On a sequential basis from the third quarter of 2017, revenues increased 49%.
Product revenues totaled $5.6 million in the fourth quarter of 2017 versus $3.7 million in the fourth quarter of 2016. This increase was primarily due to higher volumes from new military programs. R&D contract revenues totaled approximately $787 thousand in the fourth quarter of 2017 versus $905 thousand in the fourth quarter or 2016.
Overall gross margin for the fourth quarter of 2017 was 28% on gross profit of $1.8 million compared to a gross margin of 11% on gross profit of $490 thousand in the fourth quarter of 2016. The increase in gross margin was due to the impact of higher production volumes.
Operating expenses for the fourth quarter of 2017, including R&D expenses, decreased to $3.4 million, from $4.3 million in the fourth quarter of 2016. The favorable comparison reflects higher development spending on the consumer night vision products and non-recurring expenses associated with the consolidation of the company’s administrative operations in 2016.
Operating loss narrowed in the fourth quarter of 2017 to $1.6 million compared to $3.8 million in the fourth quarter of 2016.
“We continue to believe that eMagin is the only company whose products can meet the low power, high brightness, high contrast and resolution requirements for high-pixel density displays being demanded both for next gen VR/AR Consumer HMDs as well as today’s commercial and military applications. Our accomplishments in 2017 demonstrate the superiority of our technology and, with the rebound in our military business, we believe we are well positioned for 2018,” concluded Sculley.