EMAN - Earnings call transcript Q4 2018

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Operator

Good morning, and welcome to the eMagin Fourth Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note, that this event is being recorded. At this time, I would like to turn the conference over to Mr. Jeffrey Lucas, President and Chief Financial Officer. Please go ahead, sir.

Jeffrey Lucas

Thanks. everyone. morning, Good to fourth glad join today us We're XXXX have earnings our quarter conference for very you call.

These plans production, references Reform During ability for contracts statements of today's to revenues, product in of company's benefits, on Litigation defined subject up current future and Such expectations, production, as a statements forward-looking are projections XXXX. the Act well and product company's call, liquidity to and agreements, words as ramp we financing, statements uncertainties. the target, plan, and number may future Private et expect, resources, of include development and make the future containing and forward-looking projections operations, believe, based statements cetera. are beliefs, like as to Securities risks capital

place earnings for not Securities other uncertainties risks, because and beyond our and statements. forward-looking refer Commission over undertake update events for Andrew on and that could such materially Form from call to that, with XXXX these control. to in obligation cases Exchange the reliance cause no quarter and known involve factors XX-K, or Company's undue the some release statements any Sculley, I forward-looking those filings to expressed With Please information they the reflect our should fourth or statements, the XXXX, implied unknown circumstances. by results revise to our to or factors CEO. like turn are actual that concerning differ We You future to would

Andrew Sculley

are quarter both U.S. and demand engaged the was in respects; next-generation call. and from thanks us we and in for saw Thanks many actively and our us a the in Jeff. our for XXXX joining everyone conference microdisplays, for the military, Good fourth many on programs. abroad in year-end resurgence good year morning,

and and the our exceeding advancement direct patterning strategic to and progress meeting to have our technology, OLED our of initiatives continue customers. We of superiority make continued current on requirements demonstrate both

operational I want However, about quarter issue. that, our fourth before I more talk to discuss

know, we highly you on and As producing silicon are specialized very displays all technical wafers.

have our manufacturing We is and a processes success. critical improve which believe our to to future effort made we streamline concerted

and managing process. have equipment also Late quarter, and in fourth upgraded the but down part our a we very experienced people for improved failure. the highly have We key tool a reliable, had

took vendor expected, to part this for the volumes longer than our Our shutdown part replace the quarter. impacted

our yield this Importantly, running qualifying were this time, U.S. key in of bottleneck. our we and did and not the solves quarter, startup impact installing hurt it the although production a At tool, new any same now is programs. military a well

in have impact we recurrences. fixed future made an issues to and This minimize the we'll quarter the risk of XXXX. QX also the first have believe have the did, and of impact improvements however, necessary We

So to to have despite progress. production recent make issue, this refined continue we our processes and expect

Our improvements these is to funding capacity. we production and received and for awards U.S. expand efforts, the $XXX,XXX are fund additional throughput increasing. from XXXX, pursuing production Army In of

year. past me the this most discuss significant of Now let accomplishments some

of date, optimized in products, pending patterning brightness requirements satisfied have X surpassed their over and have full-color. in further requirements direct several our applications Tier programs. nits consumer have nits have and threshold We AR/VR and military of commercial for X,XXX demonstrated To the X,XXX companies we

applications. capability This a in full-color customers result XXXX nits consumer XX,XXX power basis, to and the in by Hence, are expensive future it and year. targeting commercial/industrial Our of term improvements greater longer target all displays which lifetimes meets for significant these for less in enables when gives optics. brightness operated longer a at On OEMs as end efficiency the we efficient to with is requirements. conventional luminance. the us also our our will XX,XXX in and utilize allows nits full-color It less military great applications over benefits advantage

surrounding the Helmet. the discussed in past have issues the We F-XX

delivered to being we XXXX. in tests accelerated displays efforts and Aerospace, development which initial support Our this program flight the installed contract from helmets during for Under are scheduled manufactured designed, XXXX. in Collins

will We F-XX with a for eMagin Lockheed and informed we only exciting displays displays and systems. rate We reduces pilot, endorsement Display closely was not we'll very for on "Brick" scheduled deliver test to currently production continue completely team forward it. that the with glow, away F-XX Aerospace were look to to throughout the also is Collins it work green XXXX. but Mounted prepare XXXX continued Wilson, Helmet Tony that limited for quoted work does us, This Martin's our

very Our and the significant several to Night In we programs. Vision highlight Binocular robust Program. remains wanted I military Army supporting U.S. Goggle, are Enhanced particular, business

in objective We acquisition are prime for will display support army XXXX, is that the that providing engineering It deliveries for the anticipated for are multiple also units, production by supporting XXX,XXX this program contractors overall with and pre-production and is systems. the commence program.

effect. to resolution Turning display be work for capable approval screen-door X with very for our immersive direct the be very with high in combined featuring brightness an that our prototype technology believe of In resolution no an we will a will headset, and companies, view this display. design wide of Xk We is resulting product a patterning received VR. Tier with needed this our a high consumer x Xk display display fielded

quarter, wafers. foundry our silicon As partner and released manufacture first was December to design last shipments to the wafer testing received our our in for We mentioned we evaluation.

quarter customer in evaluate the the test displays. our incorporating which and to will direct of expect technology We complete third patterning the after XXXX, displays

have productive of demands production. partners discussions potential meet the mass to with continue to We

the ready the new and It We to improve demand still when have increase significantly the AR/VR design technology. be will patterning believe delayed, mainstream is also timeline is vendor, Xx. there direct will equipment; we implemented throughput by we our lifetime, redesigned the will the our the continue will innovate technology although improve being display remains by for about our equipment and

XXXX, ahead entering are I we Looking to well year. the believe positioned

increase delivery products December XX, at by was XXXX, approximately the $XXX,XXX backlog for million Our the of an of year. end over $XX.X about prior XXXX ordered in

purchases have manufacturer we of OLED past Defense of improve receive funding equipment few as U.S. work the and enhancements. believe further We production the will quarters only the manufacturing reliability we continue our the Department made microdisplays, over of with which processes, closely to to for

us So base also the I review, in is with Jeff business. over call and turn mind, give this discuss financial the will who our progress to the will

Jeffrey Lucas

in Thanks Andrew. I detail. will greater review financial results our now

by trends in in business, for demand well our growth highlights our few revenue solid and as aviation the markets. military a to Speaking XXXX, driven contribution as from year the was strengthening commercial

prior for period gross of before issue product solid Our impact shows in the quarter. fourth improvement the versus the the margins first of XXXX production months nine year the

to capacity We for XXXX. expect quarters to year first the -year increase and or only at general have -over XXXX stable the as flat Selling, of production in with essentially remain increase measures remedial XXXX. of during and and fourth Andrew yields quarter improve and SG&A relatively X% noted, implemented second year-over-year expenses administrative and

during and and was remained backlog million, $XX.X over strong for Revenue XXXX. XXXX Finally, above XX% the $XX million year. up trends

output year that the total quarter, by a negatively revenue ago during in fourth the fourth wins Despite million occurred we million period. impacted customer to issues were the the of compared manufacturing $X.X yields which during year, For experienced quarter $X.X related quarter. and production

late million compared The certain of new totaled as decrease revenue, to to a and $X.X several approximately the commercial far estimated totaled product and military existing contract as the components up foreign contract early adjustments an U.S. continued programs. impacted XXXX of primarily the representing U.S. million comparison result on from ramp As of XXXX basis R&D XXXX R&D is revenue which $X.X of increase from growth down is $XX.X wind reflect annual in as XXXX due $XX.X revenue, contracts, to in changes This total XXXX. programs, when million R&D the completion million, was well a government of costs. the product XXXX; by and revenue primarily contract in to revenues military programs. as XX% in in during the

and changes The For night of fourth was the decline quarter XXXX The million R&D fourth previously impairment the reflect in XX% vision contracts the XXXX charge second margin $XXX,XXX estimated fourth issues quarter to the for previously. production approximately mentioned issues revenue gross due margin $X.X was completion related product business quarter. to in in versus versus XXXX of the result related in adjustments an of contract and year reflecting quarter totaled primarily was XXXX. decline $X.X Gross of fourth in $X.X the XXXX of quarter quarter, year down discussed. costs. manufacturing million XX%, revenues million in XXXX consumer in for the to the the contract in the recognized from total a the totaled in prior $XXX,XXX earlier

the as $XXX,XXX in manufacturing $X.X of issues, quarter XX% compared million to the previously primarily Company gross fourth for a a reported a the gross in XXXX; volumes. decrease and was as Excluding the mentioned In fourth charge, production the and million a XXXX, was of year lower reflecting gross loss profit gross related to higher $X.X impairment related of whole. quarter result, production the improved the volumes yields margin the overall profit

million or of change of were at expenses value for XXXX. $X.X million XXXX due XXXX in per the operating of expenses, of company's on this direct fourth was of resources to Net quarter $X.X process from processes The share. services a technology fourth million diluted fourth XXXX to year-over-year fair Operating $X.X or R&D $X.XX in including spending as the year expenses associated in $X.X prospective compared including $XXX,XXX share, loss to was liability operating processes. flat Now the product year professional impact manufacturing compared or related the of $XXX,XXX. net primarily which versus diluted in the as per majority income and for patterning the included million liability in related the company fair fair loss year first the per million expenses a the XXXX. funding patterning for $XXX,XXX $X.X of loss $XX.X including manufacturing In quarter increase benefit loss company's quarter change and compared for income $XX.X due and this benefit per diluted warrant of partners. for technology tax $X.XX or XXXX. share expenses to electronics direct $X.X of fourth $X.XX higher XXXX share the as the change $X.XX tax the to for $X.X impact full our R&D manufacturing the million expenses Operating the to XXXX. quarter which of XXXX expenses; contract fourth to million development, on The during and $X.X liability; loss and of compared in the liability million million value million impact warrant quarter the warrant XXXX SG&A the million XXXX improving net the process compared $XX.X $X.X were XXXX, for an funded to moving in work the was change R&D for the from income period. was recorded of million full R&D work in diluted loss $X.X value to to quarter the of the the funded in full was the negotiations company included Net expenses value a higher to with the of increase $XXX,XXX million higher quarter an expenses million the related fair $X.X including of million well for on operating the was of of consumer in of related and expended warrant development, were in the $X fourth of XXXX improved to

was Our the non-GAAP for negative $X.X XXXX. year EBITDA in $X million and negative full million in XXXX

XXXX. non-GAAP in XXXX quarter, $X EBITDA to fourth was million comparison the negative $X.X fourth in quarter the million in of negative For

liabilities. the and net and in quarter an year-over-year increase in reflected fair fourth year the the common of increase EBITDA loss value the full both, impact of For in warrant results, the stock change the loss

the there no $X.X were at compared investments borrowing to at loan sheet; XXXX. Company There had XX, XXXX. million to $X.X the at in unused XX, $X.X December cash, outstanding under of December availability Company's borrowings equivalents Turning the XX, XXXX, and cash million facility asset-based net as balance December of million was

and received common As stock $XX.X reminder, proceeds million warrants. a a offering of XXXX public Company the in net of January from

February XXXX, issues on we XX, placement improving In quarter, military presence. addition, positioned aviation certain concurrent was totaling market XXXX, $XXX,XXX. related in conclusion, In directors grew remain results. expanded and the and well purchased further believe share In production we in commercial the private officers we stock despite a common deliver and fourth our closed and financial our to warrants

We programs of depth products are which speaks this of over XX in We military programs. over sold and our record new over XX revenues. supplied to plus breadth U.S. and XX year the past customers for

microdisplays closely turn of further funding products. government a to and $XX.X continue the are production receive And We United the The XXXX work to with million well awards the it back States. ended in only positioned we that, operator questions. to enhancements future believe backlog manufacturer of for for we'll we as With with for in

Operator

with Dede H.C. from ahead come will your question Please Wainwright. first question. the And Instructions] go Kevin [Operator of

Kevin Dede

- little mind clearly, you certain a critical potential some you view the on and bottlenecks think that? tools part us of new specifically spent that's issues? issue. failures, in on on you've your the just some production a pretty holding effort give to I'm would bit I you've wondering some ton thinking a money I'm items looking sure the spent if sort in stuff; mitigation too, inventory, time - considered can you to those Andrew, - of at dive and What maybe little of on key just And

Andrew Sculley

and last down actually tools that have taken about the you for XX But tell it's maintenance it with the because uptime of of the is we hadn't very have and can capacity, gone money some the and replace idea have things and it. last obviously you should years also coverage; you to significant I bottleneck tool tool the are us. additional a be we're XX/X the won't over. that of there vendor And a which over money proprietary, regular take tools, a is an with we for XXXX of to taking guy maintenance do tools can come who if to year And number that it years, do mean We've added handle but and specific there vendors as service upping we can complex critical I have bring the this. that effort here steps are actually the the tool tools, what one contracts with bottleneck we've and number done on to more not spend in we at well is, to issue, speed so have that. spending another maintenance now tools

taken we that. So have

it side; On with XX years XX for for hadn't do the part remember take again, it that in and maintenance. you years, or particular, we down we regular this had trouble

that others spare problem, our as as to you part, particular we a at part before. we it one adding know, the looking we - with that them; maybe have that done contract And we're us vendor the trouble fast taking had so are that Just same getting and have have and to would we're part inventory.

very went in to we additional information, hundred bottleneck just So at need XXXX maybe now, of that's we the your good down, a one for thousand still but dollars. look tools that couple feel

So it's not expenditure significant tool. a

Jeffrey Lucas

me Let a to Kevin. little bit that, add

point our You customers. selected our primary throughput, also really that you we principally manufacturing failure clearly it's the inventory the for a not when in focusing plan experienced and processes Andrew know, we of on months quality, as despairs mentioned; address a - in basis, in the our yields, several fourth spoke, focus, very we know, to quarter, he our only issues greatest critical pursuing underscore of challenge Andrew when the - and and now it's complexity he for

a this I we been progress our event are working But on frustrating we've as it's area. single at though a while by times So when now. mean, are quite efforts in this though offended making experienced. we

Kevin Dede

the to it that - or it's Jeff you it's you line; March what could And Andrew, million was in as think think So top that think what current you over? the translates in in almost $X you you can quarter, think Do do lost? $X as - million? high now you've the on do range the quantify

Jeffrey Lucas

for speak I less to those our our had on expenses overall, we level incur million in part that line, additional our dramatic commitments; normally to had though Yes, recognized we have in going generally go of because the of costs the we key obligation have to than even $X that meet because obviously not - top can we've was we detail. customers. it to we just clearly we impact It don't terms to had more a on our impact with customers, do that, commitments and

less it of experienced So in a to was fourth last degree in quarter has has was catch that had fact - offset bit quarter, than this been little shortfall that up in it from the had that there quarter we bearing the quarter. by some a this the what

there of far quarter, impact the impact quarter. by happened was the this but fourth greatest clearly, a what an little So is bit in

Kevin Dede

Congrats on directly. being Collins able to Aerospace talk to

that mentioned through and that this LRIP then year. Did testing goes I next correctly? the You headset F-XX year understand

Andrew Sculley

Yes, and it'll LRIP end of that year this we think into the XXXX. start

Kevin Dede

associated can stands? you've there you the in past, if And further wondering the you current through know program think with then, I'm spoken where I give Andrew, development similar an to this year. testing us for that helicopters; update So, dollars are on

Jeffrey Lucas

By further here. upon just the expand to comment Andrew's way,

work be year, front. connection progresses. requirements our contract LRIP IOC how pointed and actual there. depends at initial our is that been to operational Andrew happening, that We out. discussions is the But are we're There be capability, can't all on going on right happen, some that the point in that being that been IOC When by the next but say now delivering given fulfilling want on information we I to has about some exactly, there we've clear, some done do

Andrew Sculley

we interested we additional Your about that. funding are and - comments on some talking in yes, additional funding is; the company we're to

Kevin Dede

Two I'll it more then pass over.

on back way to think Just Xk, fab. from actually the about the you're samples that understand x a expecting Is that I that? Xk

Andrew Sculley

on actually back of is, we patterning with our process that equipment what now remanufactured some our OLED it's by will direct mentioned being is the get do why that white No, and will it when doing plane take OLED. put I that's we vendor. will redesign our the then then that. patterning Xk, time to what we're do for And And we is direct and the remember out back testing normal the

Jeffrey Lucas

we're Well, manufacturing.

Kevin Dede

Yes. mind I'm you me time, your just sorry walking your timeline Andrew, through again? would expected

Andrew Sculley

will location, new on at make because we patterning get put Yes, contact We a the in and of so it. third that our direct the in waste patterning it And we once is direct customer sample pattern sure a wafer to back then is will on RGB don't with running, here, the we're direct vendor be week, OLED we works to after step the is the and in Then brightness. next put we right - putting it the now. white wafers. will high put up have and us equipment direct equipment for we the it redesign; and the year. OLED keep to here get quarter this The testing come that we'll patterning want to and on the put

Kevin Dede

That's that. Well, a congrats milestone. on big

I referenced Air whether the Navy, Jeff the both coming think if Core other Marine said manufacturer service, as U.S. could that of on you around programs. the military, to be add you you corner or branches an positioning color XX things exclusive I'm question; from last wondering, the it Force? plus and see you might Our some OLED

Andrew Sculley

The read OLED manufacturing. an thing have Well, the the forth. RFI coming things have is - might there we one do about that that is out in news - you other about

Jeffrey Lucas

establishment. available actually. speaking Yes, U.S. the to in just is so let micro-technology speaks to. our request It military publicly you're me the or that's BizDevOps, an for it OLED I on information. RFI of website. criticality But to government the tell on that's presume what people that, And

back defense it's think what request information part program, at manufacturing so this is as the the which on that you for for some we Title base. you'd our know rose, declining strengthening is U.S. - little may And a I and of production out of defense And while concern industrial manufacturing of say focused X on base.

because considering could these This it's what of capacity us does source for on actually and a funding technologies be under exciting - is it providing for a some solar technologies, our they're opportunity single which technology falls to critical constraint it that it's anyways arguing or is providing focuses So, key great government means that. us. supply, of looking

company that demanded fact produces meets As of and this believe U.S. we company for that matter deployment a this candidate that really of for would the We as information. the of OLED can only company OLED opportunity are we requirements with military. request the we the as argue by specifications a are here, manufacturing this microdisplays microdisplays, that the only only meet

and So substantial business for position could impact our material very our on advancing if when direct us, patterning dramatically it for a - both our reducing for funding us growth; and product does and if also for or technology, cost. have could materialize, it be

to of to dramatic about yield equipment, a and lead further single And additional talked exciting point involve improvements equipment pretty address in us you to it because that will we OLED terms areas throughput. effectiveness enable it's before of so deposition these and could us here a failure higher

it what it's speaking to, is, for presume we're So Kevin, us be we that if is vigorously. that to and quite exciting going I and pretty pursuing you're think

Andrew Sculley

with we're supported rating for demonstration, and low colors passed we a that line was And ready the production. pilot direct feeling. I'll soldier demonstration a just we on with give our you technology; we both, high ground and program, aviation, patterning, rate in ManTech have manufacturing needs work flying We got one add pilot military else this the some do one the that it's a something and just thing other that a successful it, - and no that's line PPI. can to

very fits with So this RFI. well that

Jeffrey Lucas

for a big very this us So deal. is

Kevin Dede

what to - floated signs award probably and indication too it's certain might and of anyone but for guess dollar around is when I early start? it that mean any you know any has could there given

Jeffrey Lucas

We it's gotten limited share very here. is think can't, the about discussion now available those past past, some right really to what's And pays - substantial. fair there we has don't we've a amount of the that. it while to funding been we're comparison amounts believe I funding but in be to going that

it's Washington expect terms in hard the so. In I will but now, of - over works to say pursuing timing, involved or solutions and how I would and we've think been some sort for the time year this some of guess this next we

Andrew Sculley

the thing have on just U.S. I ManTech government actually we other had success got success. an from that the about our program award given one we

about feel very good So this. we

Operator

question Mike from Group. next be go of Capital ahead. The will Craig-Hallum Please Malouf

Mike Malouf

It throughout I'm bit things try sounds little wondering AR/VR milestones the can and is like sector. could with but a partner specifics we progressing, a you to just if year? drill expecting manufacturing regards you're some there that And more the are little more down the about talk expectations? on bit

Andrew Sculley

give a So should and a how actually might you the And the when there what we this working this but tell they market display would progressing and us take, this talk us is that's of well, us AR/VR it's this, interest in x affecting space that Then foundry, they done. is - on also it's the tools very those there well, they to companies so have given commercial mass production complicated to They into side, we've companies market, the great the believe much companies pursuing to is continue in step-by-step in as speed AR/VR here. they need, consumer when is capability how when mass deal very what side; production we it's with might Xk get display understand. and delay to production, think for need actively gone because do are the on and we're them, etcetera; the and confident in course, AR/VR need mass Xk also we're diligently the much there interested - that we are and both the you a talking how companies those our detail involved end, result is - interest many on that few in are of very we've first need, wafer satisfies and it they needed mass over And you should great I we needs. cost, production. year,

are We it. about excited

Mike Malouf

should you No, be.

I market is pushed that of looks bit think it that time AR/VR fair that previously still is a a the the thought you'd assumption? that summer happen perhaps out this but like being would little to right; sort

Andrew Sculley

us the and talking A forecasts to come the ones very us of that display. to down terms have now do you can what us give doing. more like is we to a companies. about back I'd actual said give what instead to to And us little to of talking - a the strikingly gave that best be you similar to company And road a has color market forecasts, in facts us we're our they now, those past us are in are the you would a one we're can that talked interesting we've

companies So desire that now our use. be can display is would that and is have designed x Xk that Xk in other testing, that we that the display

Operator

[Operator will next Pearson], Please be go Instructions] [John Investor. question Private The ahead. a from

Unidentified Analyst

with would the x while wanted line? to Xk ask display design, you Thanks your yet, my you able have question generate Jeff you if a don't I and be that Xk for Andrew. any taking get to guess for I first from call, about say and is, a revenue let's current my manufacturing manufacturing partner

Andrew Sculley

- your question. answer to there answers The is two

we we the so to on call. is, them though can make for and an detail the brightness; work had our do issue case this, and tools high to quarter. just that's funding that the and we way, explain it, happy OLED able it. either of the direct it, do but it this will it you on filters able be to had can be One white we've not to come not technically for back we real thing to be in can customer And color us. is that desire work for in by one more know, that, We other third with in And the on to when to certainly and put it is do that's make proven I'd

other this why enormous about line; be about can to we that's current helpful you talked very earlier make RFI a you our hand, on or the and On us have to mass - no, needed. it's and partner ask volume would production

So samples, make can we absolutely.

Unidentified Analyst

smaller there a guess the be not smaller we're deal? to demand for while a I you might satisfy able in But customer a that - waiting is manufacturing necessarily meantime

Andrew Sculley

think smaller demand they is customers, of about this. in a actually surprised kind - I their interested were absolutely

Unidentified Analyst

Okay.

Andrew Sculley

And there are smaller volumes.

Unidentified Analyst

- in needed; been be been discussing been have discussing you have So will with a greater far detail you think is I equipment the as discussion manufacturer? particular as you what mentioned, with that

Andrew Sculley

timing to design We've need this it, for long equipment and production, we've been of say done. when so we business we and we have that's years in actually equipment, a it can and time, we what almost what me; And it's couple what cost them. and a to told get we estimate XX know

Unidentified Analyst

come one favorite one have have I timing you the actually the company a I'm probably for forefront with? you're waiting deal manufacturing guess you the being of asking, far one out has make - picked the Do a and market? as you So to do just would as that

Andrew Sculley

hard and the say absolutely can't not It's talking won't, We're critical say one will pushing a favorite ones let to that the that so call. Well, slide. other want to anything be us. I don't we on on to this successful are actually

number. are there couple not big a right, of So a favorites,

Unidentified Analyst

I wondering have that overshadowed and I'm has question been year? ENVG the program you fulfilling orders III; ENVG on III a - or the this by actually on are is if Binocular ENVG

Jeffrey Lucas

the will orders think are ENVG to for come we quickly, on Binocular It's than III. we so III. next-generation unique have volumes the much be ENVG Yes, fulfilling our ENVG higher

Andrew Sculley

But the and going happy. we're program is

Jeffrey Lucas

are both, B. on but very delivering about We're we ENVG excited

Andrew Sculley

number for And as is a mentioned, we big us. XXX,XXX

Unidentified Analyst

program? Binocular cut short get III ENVG the of Did because

Andrew Sculley

that case. know is the that don't I

that's always II faster III, to we're but the that. argue here, ENVG little modernize, now that's and could up military, case just they like with It's You is and that the Binocular. happy why now to a it's

Jeffrey Lucas

say terms definitely from revenues than the we that. will volumes III; higher that had we B before. of the for us, and in about and of I combination much benefit excited that the We're

Unidentified Analyst

FWS And in how about this think mentioned those - don't FWS progressing programs the the programs, going quarter; okay? I particular are you

Jeffrey Lucas

in stage, the ENVG are They Crew-Served moving are. and - are moving but they we're got involved an we're and so it, the that's Individual, at They earlier We've ahead. ahead. both yes, III ENVG-B

Unidentified Analyst

capital you could do exactly if My able some cash financing; what as you to little last next question, sure breakeven about continue, wondering how be thinking financing as going far please? what ask I'm if have be able going to to quarters to not to if running you're and to - few here outlook; cash your a you're expenditures burn low if speak bit to to going this on the have you're up? I'm that this or you're is, in but concerned your What coming

Jeffrey Lucas

here. all of a knock them hit there, I let can, time items see, you so at Well, me bunch let one off if me

happened what breakeven path we First was so of an forward. run a on on quarter the targeting planning is of us rate and impairment moving breakeven all, bit in achieving this a to fourth but still that year; towards our are

the to of we carefully expectations practical dilutive a can presents which over certainly no million availability. X-K; very, by very million that - it of of feel opportunity about funding of so we we course, a we of funding $X.X are cash, in Secondly, borrowings again our always impact. the of the you'll benefit about we on of funding we about we facility and sort and million fundraising. of release at though available and in little had and terms always if end $X earnings as that on $X.X pointed million itself, $X.X opportunistic that our our $X.X million keep operate from with nonetheless, our in existing We're out see financing had December, will here, standpoint. our against existing million mind, a $X liquidity; credit have And or We plan, opportunistic in liquidity our

Operator

be will next Dede the from H.C. go question [Operator Instructions] follow-up of ahead. And Kevin Please Wainwright.

Kevin Dede

rationalize on me in one-time dive might in of quarter high the just wondering that? margin looked implications the just - costs in opportunity was costs, fourth you million say you'd that of little bit I was Jeff, to sort it the product in buried given missed could be that $X a product incremental the so - the and how cost

Jeffrey Lucas

it than was million, So it say $X said million. it I $X was less dollars top... in of said of I all, million was the $X first didn't terms you

Kevin Dede

Thanks. Okay.

Jeffrey Lucas

All it and than would significant and right, the a or clear. volume had greater otherwise costing so interaction the for on to I they nonetheless, higher production just material for yields that we the us, had season quarter, made costs impact bearing on normally that But be. the led had

production the processes our for did we in qualifying at SLS. for incur on addition, some costs levels newer the of In our example, tools, production new some

to in future through that's expensive testing we in benefit was qualification. go as expensive actually, it during going us So that quarter get to some the greatly the sampling chemicals, to had chemicals, but

get than had it margin the but look that otherwise in So fortunately, be going would on going our quarter, making that benefit to fourth it we're direct forward. a worse of bearing

percentage. as our we're that significantly and or the of in margin are our quarter the the profit degree to We those nowhere for pretty have through magnitude the recovering get now experienced near again, in on yields our we're going original to most once benefit, now, still fourth and going yield of on the that that but as are of quarter some volumes path we're working impact right in our our are we gross gross that increasing improvement

Kevin Dede

You alluded that does where of envelope, operating you the all cost in How sort are What to through approximate expect? costs? there; breakeven? driving and to margin could would breakeven; you at I'm what so levels line for top gross us sort your take if just wondering back you of come together

Jeffrey Lucas

sticking breakeven but have can that we costs, you certainly these not our policy out I'm figure to a be. I is So help should what in what

take look for improvement us, that's for our a not we that's what a in there. for the at of SG&A certainly quarter, think unusual look little So was the bit we fourth I range,

as run R&D encourage the have margins probably give year, that revenues the it's Our achieved past. you would second would for to that's year. lesser I we've the be; could again, probably to what of been and that to quarter rate take in that, some the similar is breakeven the and of third a last not sense the a and at targeting degree, and a in see of and this you we that we're happening look

Operator

hand over ladies gentlemen, conference will question-and-answer Andrew remarks. Sculley I back to the would our closing any session. for and And conclude that like to

Andrew Sculley

for. everyone. lower do, and efficiency, information our this one we've had five our one success us about to is no just and capability Even lifetime; you the X,XXX that products for request at - matter ManTech you time, get puts Well, thank advantage often, what position what high but we our with brightness we product nits say we great times requirement, title us. OLED want the does talked can the you or thing on so like normal so lower a get the a power outstanding nits need that five the run X,XXX if I'd times said to I that, partner an either three. like for brightness have it though emphasize more And for nits over five times in power we XXX that is manufacturing

want questions at I really and much. want that to us, to thank good So phone we feel this. everyone but And with very it for staying the the leave about I on I liked

Jeffrey Lucas

it's know frustrating the have for by all want in of work actually the I we Andrew our masked have But we've fourth the the enthusiasm progress we phone, really been can't very the to that we for I but and business. all here quarter. been over issue want that for in you continuing and I this of Andrew convey out progress core we of making with focused want building towards - buttressing although to your profitability. we I that frustrating production the singularly say I closing want much shareholders, doing in underscore just up doubt you to no just growth add unfortunate made share and hard also display are in I that really And it's conveyed. in lot it's here us, plain experienced we've all that, to And that time. our path our for a underscore, and thank as our that And

Operator

sir. today's disconnect this and you time, for Ladies attending you, may presentation. Thank concluded. Thank gentlemen, conference your has At the you line.

Emagin (EMAN) 28 Mar 192018 Q4 Earnings call transcript