Earnings call transcript Q4 2022

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Operator

Good morning and welcome to the eMagin Corporation's Fourth Quarter and Full Year 2022 Earnings Conference Call. Please note this event is being recorded. [Operator Instructions]

I will now turn the conference over to Mark Koch, eMagin CFO. Please go ahead.

Mark Koch

morning, good and you everyone. Thank fourth Welcome conference year-end earnings and to eMagin's call. XXXX quarter

the of should begin, to federal Q&A pandemic. obligation forward-looking Before no in light would those statements for vary future I we annual in expressed report like be may prepared make the filed about forward-looking Form and results results XXXX will that only the purposes from contained statements remind remarks the in we our later undertake of conjunction session, the statements information and this we including to expected especially effects following filings that our considered risks, and in on update guarantees XXXX of factors predict future of ongoing materially these securities SEC in laws. and Actual described our prove to difficult our not relate may these assumptions the current expectations, or disclosures. are They by be afternoon. are XX-K involve risk uncertainties to implied These statements with detailed estimates XX-K and and in that our and accurate, forward-looking projections not performance. may These to you be

and Non-GAAP not for issued we substitute isolation morning. is meant financial as call, in which financial the will that EBITDA, financial to most reconciliation A considered this EBITDA GAAP comparable additional to information investors. income such be or a release press refer our statements. directly measure financial adjusted During we this also the in measures non-GAAP to as measures, to provided adjusted provide are EBITDA is measure to of net GAAP financial a adjusted

the our will Sculley. I that, CEO, Andrew call to turn With over

Andrew Sculley

quarter Thank achieved growth significant strong We fourth Thank and ended for million $XX.X with quarter the for year. the in and hello, in and Moreover, our This was the near-record product XXXX today. revenue everyone. full year. represents million the QX positive fifth year-over-year the quarter another year. full full quarterly We in in eMagin revenue $X.X achieved million exceeded improved revenues the the Thanks performance, million positive quarter. million $X.X $X quarter and product and in you EBITDA for revenue. for of fourth EBITDA to in year-over-year growth you, which us generated we of joining both Mark for consecutive $X

enhanced along We the were applications. medical ENVG-B Bookings year for the and million robust applications. helmet strong, quarter night and system order shipments sites in a or used weapon the $X finished fourth display more for goggle with mounted of million including program, the with binocular displays in than medical displays vision thermal F-XX for $X.X

Our months included $XX.X open number and contract backlog XXXX December highlights. wins operational orders XX, of XX million. within of was shippable XXXX as and of a

daylight important micro XXXX. In The secure June, XXXXXXXX quality a by meter certifications because and ISO visual the These PEO the these and developments milestones most we a for defense and contract the produce are per option square Upon high source project D eMagin Executive has to even the of us In high-performance U.S. will U.S. to aviation simulation contract a Rev bright provide Program completion, $X.X follow-on display or instrumentation, half candela us acuity STI required conditions. for production ASXXXX X-year in industries. XX,XXX Army's development Office million displays agreement. in second this in achieved customers of certifications. aerospace, and allow were October, training in brightness for that a awarded this

Annual XX,XXX candela the at display trade best Information May, patents Display. address as technology, meter a several patented Week, WUXGA per display technology. Society related AR/VR new DPD. In Award the we choice for direct of of Throughout the Choice In supplier the and expanding to technology Color April, Display XXXX, for patterning our DPD announced technology dazzling won we rapidly market Full our to positioning improved this Symposium with our with People's show square the

Additionally, acceptance meter year we worth chamber up qualification delivered III DPD us funding tool square improvement DPD able existing designed being to and the organic is that R&D XX,XXX begin has chamber further purchased facility enable an this testing when that production for per our display to half DPD in to This tool April of to It clean our in December will improved and deposition candela R&D at production-capable The runs. passed tool this under that currently will be the Title for and we deposition OLED be last enhance vendors this delivered second produce technology. set in displays, XXXX. the room is noting qualified process. the installation the to newly will expanded including was

U.S. only and funding York's and microdisplays our greatly New III our of manufacturing Valley IBAS benefited manufacturer in operations We installed have the from equipment Production Hudson continue be Title Act OLED the grants. under to Defense

appreciate increases main inefficiencies. under as IBAS on III continued We program, the requirements of anticipate remain remaining our take and new We the improvements our grants. organic programs and funding DPD in continued capable we the these in track deposition support we the the increases and by are and tools delivery Furthermore, within seeking throughput Title the including manufacturing tool. of yields provided

present on future new our to regarding for the technology-based market both updating a of for qualification year you set will see devices, customers products start process tool. which we great will our forward developments next potential. production look Also, calls. we DPD in we We ahead, consumer the building In

results. over Mark our discussion to for a of With the I'll that, financial turn call

Mark Koch

And Thank hello, you, Andrew. everyone.

QX million $X.X million up and thermal in industrial Total As for revenues and due $X.X of weapon consist revenues periods year Andrew was revenues $X.X contract increase $X.X of revenues, revenues. product of revenues. in total up up quarter $X.X year-over-year the market including sites displays million, used $X.X as quarterly for were The million revenue and fourth of military the product mentioned, an to as revenues for increased increase XXXX and XX% well prior from were increased shipments and Product million vision from night both market a primarily year million, sequentially. commercial sequentially. ago

Contract margin Total design subsequently on $X.X proof-of-concept successful the of a qualification margin million part consumer in in off for with and issue period. revenues to due period with that fourth year reclaim a due due compared PEO were were $X.X quarter the margin high associated million display and was development stride X gross for X-year display to profit Tier company. gross of profit gross previously of the brightness an on XX% $X.X The to displays prior a the compared sale that million of resolved. XX% gross in with quality gross was increase written initial was for

associated gross profit margin displays. reflect costs with not do the gross such and of Total total reclaim production

such, recorded off As in of a written reclaim gross approximately have had effect costs these total $X.X were on profit Sales million. displays prior positive quarters. previously

Excluding would gross total total profits gross products, been attributable million XX%. to been have such previously margin $X.X would gross have written-off and profit

yields year additional previously period. the may written for with quarter While products million compared were of in and the that including future margin the expenses gross off expenses, we $X.X Operating quarter million prior the were XXXX, fourth in levels. R&D vary sell from current $X.X may

which compared million expenses income allocated $X.X Operating the the $X.X XX% cost year with in costs. due legal the the narrowed employee in fourth related period. $X.X and prior of period. were for quarter in as XXXX quarter retention operating to the were expenses XX% higher Also loss to fourth percentage claim of SG&A other programs. sold of sales a period the quarter with fourth sales an income fourth increase for primarily in million filed R&D XXXX or higher includes $X.X were in to prior for in of quarter due credit quarter, to year Net of per a goods fourth as year the 'XX. $X.XX million versus of a an expenses of the prior in was percentage to compared lower cost share million contract

the year a in or per Excluding quarter period. million net for the $X fourth the of loss $X.XX impact prior was in million prior EBITDA positive negative liabilities, share $X.X compared with change Adjusted in a warrant the period. year the was $X.X million the

XXXX, end company's million which XXXX. for XX% of the of in scheduled XXXX. of including was over million of higher $XX the increase the Revenues revenues of end million increased displays $XX.X $XX.X from Product The orders delivery increase was XXXX backlog million year in As million $XX.X shipments of $X.X military from XX% revenues, X% XXXX. design with the to project. display primarily for the Tier represented primarily open display contributions revenue from million, higher for from ENVG-B $XX.X next and Contract to distributed for due revenues in to million the XX% a approximately a of based proof-of-concept brightness revenues XXXX. not throughout X a the company. a duration and customers. for program from $X.X costs milestone revenues Contract development high are representing totaled are consumer Department the used and medical Contract a decrease uniformly Defense reflected increased

off XX% recorded profit costs to quarters. margin associated had displays reclaim positively Sales a sales not impacted approximately of reflect impact These compared with in and previously increased profit were was displays. in gross total the on production displays. of Total XXXX gross the for total margin have such Gross million. by $X.X written gross XX% margin Gross reclaim reclaim of aforementioned with do costs prior XXXX. positive

would $X.X XX%. million to such profit gross Excluding profits have attributable written gross been would off total and have products gross total previously been margin

with to increase share. million XLE expenses were significant XXXX current of compared XXXX. DPD XXXX. Operating per compares with to the allocated year the loss Operating to versus expenses for per legal majority narrowed expense an development $X.X or the in expenses was COGS loss of increased compensation. $XX.X in share XXXX. or R&D SG&A $X.XX XXXX, brightness and decrease and processes prior XXXX, million and in for in period including net Net period. million related XXXX $XX.X $X.XX $XX the reflecting to This costs R&D The and of a compared million million high to in qualification cost investments million due loss in to for in narrowed $X.X $X.X noncash

in loss change the noncash in Excluding the million share for EBITDA year. of fair per share the million $X.X in net liability for compared versus a positive the $X.XX XXXX a a for was of loss $X.XX value years, XXXX. negative warrant prior was with Adjusted both the impact per $X.X XXXX of net

of purchases total of $X.X decrease $X.X equivalents year-over-year under December in III million. unrestricted cash government of The 'XX, as is cash had reserved a million as eMagin's of $X the for and addition grants. in year-end shares $X with cash net of under $X.X company compares This million a financial XXXX. outstanding the This million equipment position to of reflects XX, proceeds in Title $X.X borrowings $X.X XXXX. IVAS credit under borrowing and million and from million and borrowings realized million availability our in ATM credit availability of of at company XXXX, revolving facility $X.X program. In outstanding year-end million common of its in sale

Lastly, and benefits you mentioned, grants to within on continued the from updating look remain track the seeing call. on on forward III We QX our as of requirements IBAS and we these Title programs. progress and Andrew we're our funding

call will go With the for please Operator, that, questions. open ahead. we

Operator

Mattson from with [Operator first Ladenburg. Instructions] Glenn Our comes question

line Your open. is

Glenn Mattson

and the taking background two how a Yeah, the the as that on seems little bit on so? to for out us the the about just development a to little of kind play to hi. a you Congrats there quarter. over market scope year of or Can give Thanks of be you color next kind confusion more expect of of or F-XX. your bit sense questions. It the

Andrew Sculley

Well, in development. it's not

done but We probably a production those is release And it are I F-XX, displays. and I OLED know product the China. OLEDs in referring remember, developed to saw have for in press you're our a

Glenn Mattson

Right. Right.

Okay.

Andrew Sculley

Ours right are States. the in here United made

Glenn Mattson

you over the some understand $X.X what the the million about us be? sense sensitive question more give talked to I could turn deal whatever color into U.S. on a time? how I that program you -- could of that it scope of that on little program understand. that's development talk just of the of order about. kind Great the what Can size or but Army,

Andrew Sculley

about. things two think There's to

meter for square. a to that gets square get One of them per OLED up candela is just meter developing the we're give display us technology to per about X,XXX iPhone let background, on best possible to everyone the will the an with XX,XXX phone

So OLED a because bright the other first about is to of power this is very military in display. to thing efficiencies. place think the the And came

display per you will is be display meter run even square, than today OLED white at an this to filter. need Xx with power if So color the XX better using

So advantage. tremendous it's a

you it just that is so for doing a we're about it. So and excited we're gives feeling what why

other Operating is stride, technology be of a The about this Officer number what yesterday, have to thing Chief exact just yes, this we group just brightness of in in revenue. it bring. about an they're before. And don't our terms mention excited talking PEO that I'll could was our day the very and could

So great project. this will think I a be

Mark Koch

actually bid. follow-on Yes. And for Glenn, like potential references orders or the the contract no

lead to we very So think and it's organization developed the a things. should DoD better within I mean be and bigger that's influential yet but to

Glenn Mattson

care made you've any to the or X partners a for with discussing been on Do that Tier Great, now? update progress thanks you on the that. few quarters that being of partner for

Andrew Sculley

the and because we'd display. to like more when is we're Well, still OLED things do have customers progress do XK more we the X R&D the some to -- for running, tool Tier plural will with on up that displays going work

Glenn Mattson

the Mark. Great. -- can of give and The the one mix for just side a And us U.S. you governments? foreign me, between military last between on sense

Mark Koch

in between program. U.S. have Glenn, on of the Well, foreign. side was it or because U.S. either the primes around or U.S. about strength the the side have It was to XX% operations. quarter, the on both and this to ENVG-B remain with which XX% U.S. higher

Glenn Mattson

Right, right.

Okay, from me. it great. guys. That's Thanks

Operator

Kevin Dede next HCW. from comes with Our question

Your line is open.

Kevin Dede

Thanks. timing call. think taking the for understood morning, on Good I Thanks guys. I don't tool. the the

but apologize about you mentioned I think through half April qualification. you Can process? that full think then run and you Andrew something where of and I kind said 'XX -- I second this

Andrew Sculley

two tools we're are There talking about.

it's feeling. will tool just -- delivered give it's running one in the be December second is ship was together That one the And a now. time it can't to a Obviously, It's The will the tool and large in first April going ton I'm tool I'll one so but big take over XXX XXX very in them. first tons, a be and of a it one R&D R&D separating kind piece. put tool. tool. and you The is one metric here. metric you to

to to right be candela meter on that our and April, together by room, we're run. and R&D patterning. that, direct production whereas done to per in it middle everybody get And to literally and And half here put normal then it get etc, year. will the clean that's I display it effort second an make volume start of the So that just the square have in understands the said And our able put mean I tool. qualified in XX,XXX be next of now, only year, the will we in year, then sure that new shooting for

Kevin Dede

Okay.

let I that. hit to So on try think

to more give there the be? type size have. with the beyond was at on which potential potential like up could nits it our or compare with you to when to that that the up think And an that applications that you used a X.X Andrew, that to is bright XXx go you But XX,XXX XX,XXX next But there. When us arms seems contract. Glenn I display, further particular a you dealing trying you help right, So this around order of they're people it XX all the can't most to the and maybe the -- option is situation. are get step of for I insight light difference way to us in follow-on familiar that outside potentially could know iPhone and go display, what then brightness difference --

Andrew Sculley

Well, applications, nonmilitary applications a are let's -- for second. about talk just

will I everybody if go tells over $XX,XXX VR and most for that. etc. square the us that per So is XX,XXX, minimum minimum want meter

So as display XX,XXX we that patterning and XX,XXX-plus, do now. the you -- demonstrated know, will current our right direct

words. camera-enabled or you're in more as AR light, then if passed VR brightness pass-through, outside -- could with no AR you're fighting through other be for that's well, needed. the But So i.e., that and is doing

technology So at a step in heard least the I've will so direction. display far enable is only of this that that

Kevin Dede

Okay.

then single little on application? a this deeper Just a stack dive the a Is Andrew. dual stack tech or

Andrew Sculley

Well, there's Tandem, get and Micro Lens two ways -- about that get with filter color will with etc, you've brighter. us there's to a number white like there. of Everything Array heard

we So everything the that, And thing everybody beyond. at again, $XXX efficiency; what X as vastly is go per XX. I XX you for talked times have other so the if do about question, XX,XXX to square tandem it stack, can knows, or I that, XXX, get color but to To that's just meter XXX get is thing do filter AR white we'll that right? running I'm or and other power mentioned, one. remember Glenn's is I better does

very And important second thing is OLED lifetime. is the

get OLED I So vastly better lifetime.

icon have for of time, my I that be that will an screen right-hand upper the if etc. We're Xx, all talking So corner much, lifetime much in the better.

XX,XXX soldier it's So they and meter power the so candela of that's want mentioned a many lifetime. And the display their applications, important. per power, foot less don't OLED to around for carry necessarily on XX,XXX in at they but run military with batteries that's to they square I because or the want want even why

important. So it's very

Kevin Dede

type order thousands will size that it you to where understand to it not application of larger? be? or this guess of I Okay. could what go you Would X.X like expect training hundreds to Any received out I is, don't perspective the soldiers? be comparable what the on of ENVG-bB, follow-on be a appears and to

Andrew Sculley

is instrumentation. which and simulation Remember, it's training STRI

this have And on project. you you more color much instrumentation applications. But a when much that's can display, get this to the capability and -- will be So there's obviously, particular much, want this broader.

about wanted to to long to things high that to brightness. reason other we started ago the aviation thing even they this path another And Best down for and company, wanted working about aviation. X display X else Korean major because and so why some SID where were that's XX,XXX, stacks. XX,XXX it's X,XXX haven't a is good think we other at we're per is seen we even are. very exciting. of best. time The That's too. need getting And with there anyone a square to is candela get The close meter aviation, by And we've something like to tandem we color on seen come with

We and have won above XX,XXX. get

Kevin Dede

DPD. a right? with That's that's filter, not But Right. color white

Andrew Sculley

DPD right. That's XX,XXX gets above nits.

Kevin Dede

tandem? No

Andrew Sculley

Yes. said I no tandem.

said stack, square. above candela We gets XX,XXX have X I and per meter

Kevin Dede

Okay. when some give ideas? rough of insight Again, program. that the think stride when you on a PEO, and to you timing something on have sort Can us Any to volume? goes them you prototype think show you'll PEO

Andrew Sculley

Remember, milestones. things going And in production, there year direct product when the volume final program. them to We're say next them it show and year. you pattern. are we're X-year a was this to Remember, going show production, it's

So important. tool the is new

So we're next mid-XXXX. looking year, at mid

Kevin Dede

Okay.

run consumer mean, portfolio? plural mentioned consumer customer maybe couple the just minutes to take a I side. through on of You you, your Could

Andrew Sculley

we have guess designed Well, have say who and are. they I'm going can for X displays to different X companies we you that

XK was them a we One demonstrated. of that

to Week this you'll Information another last Society the was remember that, very also demonstrated of customers. we Display that in that kicked at attractive off And fact, design. May In Displays

I up company We're the how first we're WUXGA R&D running get XK big on then with you Those and this other And is in and and our we're using displays, tool the December the is new many to ones. with us. do let -- other make the are since it well it tell one. displays. will going working of to the because samples So not going can't it those. to that

Kevin Dede

Any developments together? the like from the of display that had you Okay. stitch in All to past, interest consumer right. some program the you where returned

Andrew Sculley

founder big, -- didn't talking the of at the when about to are has you to size you we Well, display stitched be -- stitch, is stitched it be say foundry? the at has the well, because

Kevin Dede

Yes. Yes.

Andrew Sculley

have stitch also anode. And put we to we down because the

let us -- be show -- for there improved the has been display So patterning we that to everybody. many the very will that thing a believe us direct with it paid company and consumer companies willing design to is exciting showing that that to

doing that. goal. So the we're That's

Kevin Dede

Appreciate Thank very you taking Okay, for questions. it. my good.

Andrew Sculley

Well, welcome. you're

Operator

call [Operator I'd Instructions] further host I'm back not the like remarks. any closing questions at our to this showing any for time. to over turn

Mark Koch

I Yes. conferences. you joining apprised today's We'd on to of like concludes keep for forward everybody call. and investor looking and that next thank our us the product to call on quarter's mean

Andrew Sculley

EBITDA one on to meter touched we're for the also have technology very remind to XX,XXX technology like everyone. the one the but and high our thing. is of of going very square square. else that. getting positive, new to our everyone, want No Thank And done F-XX per Just goal XX,XXX very excited other one you I we brightness and example Matt candela we're meter per that. has candela much, working

Mark Koch

you. Thank

Operator

gentlemen, today's and presentation. conclude does Ladies this

now may a day. and disconnect You wonderful have

Emagin (EMAN) 8 Mar 232022 Q4 Earnings call transcript