Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the eMagin Corporation's First Quarter 2023 Earnings Conference Call. Please note, this event is being recorded. After managements prepared remarks, there will be a question-and-answer session. [Operator Instructions]

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

Mark Koch

good XXXX and Welcome eMagin's to Thank conference morning, call. quarter earnings first you, everyone.

Before predict I securities our the results projections involve guarantees of following to will we federal that statements that prepared you begin, not performance. They make for may and remarks would may like be risks, are and the expected statements in about and Q&A forward-looking we and of remind to that session, current future to purposes our to relate These not are laws. expectations, and assumptions uncertainties be estimates prove future difficult accurate. in

Actual we annual statements considered including only results in implied and undertake or no detailed expressed in conjunction obligation our described should XXXX be with these Form materially contained filings, may on forward-looking SEC from the in to our those These the statements, by these information factors XX-K. forward-looking update report risk vary disclosures.

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

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

Andrew Sculley

us and Thank everyone. joining hello you, today. Thank for you Mark,

that we $XX quarter. are we markets strength reflecting downtime continued military one night to $X.X unexpected timing ENVG-B mixed at orders due under programs the bookings results million, pleased orders sales quarter this the receive vision million Nonetheless, ENVG-B strong was under with the and programs follow-on manufacturing current to tools. enhanced for with medical were an quarter first goggle our Our the delayed to expect and of additional of which in total remains backlog our legacy of revenue to our due

that or development produce has We direct demonstrated samples our this chamber technology. to to used display continue and upgraded in for be December customers, of the we disruptive potential we will are squared. efforts we maximum per XX which chamber report This produce candela This patterning already recently microdisplay as excited months system used deposition we announced per squared, to engineering candela the ultra-high of dPd record this meter maximum previous an our display set of R&D ago. surpassed brightness XX,XXX brightness with luminance OLED XX,XXX received meter

AR This This threshold beyond and level for milestone help alleviate enable will and the requirements our commercial overcome military, consumer immersive higher luminates is motion Moreover, and optics artifacts. from been battery will and to life mobile of VR feasible. inefficient to customers have that to existing advanced and much new implement not efficiency, this for power results applications. applications which technically will better benefit point features in extended devices

demonstrates a in of clean and tool, the mid-XXXX. which displays XXX installation this month that Newark filter the similar we room. delivered luminance, designed our the the large pattern be metric performance assist chamber a expect upgraded tool the be display. At dPd last these color is of will the arrive completed Furthermore, with with year. our This the we at March qualification potential lower much same color than start which of expanded we will double capacity, expect power team will The ton consumption have R&D safely specifications and to vendors' manufacturing Port late will white expected for to efforts, in production-capable newly direct with

This output. at patterns significantly the white proprietary on creates our is brilliant light brightness, emitters silicon contrast backplane, light in that our know, you output colors. stark As competing with technology degrades ultra-high filters products RGB that color which utilize resolutions OLED may primary, OLED directly dPd color to with ultrahigh

our As displays of other headsets advance heights. take tool tandem future milestones that to we to displays addition the of continue OLED enhancements heads-up tandem AR/VR will to able XXXX. dPd will even and dPd manufacture the direct technology, performance will greater be color The structures production and include pattern in

work resume In the expect one to second consumer company. Tier we quarter, proof-of-concept our for a

to Program provide In Office addition, work continue and instrumentation second by the Army's we the required training microdisplays end several this the phase US expect the by simulation to displays and quarter. Executive contract produce of high plan under to brightness next of for contract

has in were million program that awarded purchased As XXXX. in to ordered eMagin previously us equipment be Defense Title Production III Act funding grants to $XX all announced, IBAS under the and

As pieces of line the had of first the of quarter, are qualified. added had production equipment three and additional of company four pieces its received being equipment currently installed qualified end and the and to that

yields reliability beginning realize additional production our process on seven are anticipated. with and and of to equipment improved have we This on major We order. yield, throughput reliability remain and government had pieces equipment we to and grants in has the track contributed the improvements

excited continue and our products serving we're important technology-based to dPd medical to customers consumer military our building presenting devices. ahead, customers Looking and

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

Mark Koch

in and first million Andrew with decreased XX% to quarter hello, compared year revenues prior $X.X everyone. reported million $X.X the period. you, of the for Total Thank XXXX

the quarter affected delayed $X.X ENVG-B revenue downtime and As Andrew was tools. on of mentioned, one revenue that the to unexpected second our program timing the million was orders manufacturing of to due of under by legacy

of of million $X late for million, due and the the deliveries downtime of of military to revenue. and comparable of period, $X.X year Total bookings million first prior reflecting revenues were strong remained consists revenue Product of quarter product revenue XXXX a Our decrease reported continued and for product from timing and production military in strength orders. end in both medical total the the contract to sales markets. million, $X.X XXXX QX reflecting backlog revenues the $XX at

the with the compared of in million contracts. and reflecting timing reported $X.X prior of were million milestones phases year, these $X.X revenues Contract

and of for concept this and are high consumer the contract We display proof work under continuing customer expect to revenue brightness on programs. these ongoing our design

which of decline higher million gross XX%, a Contract accomplishing XX%, that Total displays in revenues production which $X.X gross margin gross the based on first in average due volume to period. of year resulted to resulted $X.X milestones the was produced distributed uniformly quarter profit through specific decreased of the with The in margin duration. gross a profit gross project's a and are in a downtime, costs. are resulting compared not for margin million lower of product prior primarily

for in R&D quarter period. in prior were compared the expenses compared Operating million of first with including of loss with quarter period. a $X.X million Operating in XXXX an million of the as $X.X million $X sales the the in operating for XX% XX% the expenses with first XXXX loss percentage were first expenses prior the year year $X.X was period. Operating of quarter prior year XXXX compared of

the first compared year XXXX the period. the XXXX income is year of per of or a $X.X quarter prior for million per with EBITDA was first or in Adjusted $X.XX million $X.X $X.X the in quarter for prior share share $X.XX period. of loss $X.X Net million million negative negative compared with

working March $XX.X million company cash capital XX, million. of XXXX, the of had and cash equivalents As and of $X.X

million the its During under asset-based lending quarter company $X facility. the repaid first

there under million outstanding. was facility XX, March $X.X of As availability and XXXX, the borrowings no

During million proceeds shares sales common its net the from realized the company at-the-market quarter, $X.X of in program. under

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

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

Operator

Our session question of a comes Please will Kevin from the now of go you. Instructions] ahead. Thank gentlemen, first and [Operator Ladies Dede we HCW. begin question-and-answer line

Unidentified Analyst

on Thank follow-on? Davin you, This the for production the full add of for Dede. current Mark Michael program you to and Can calling more question. my outlook color behalf Kevin is STRI a and taking Andrew [ph]

Andrew Sculley

a is say do production quarter. And then do program of new this to a The is be able tool. displays. displays to be let well. with shortly done the new is way. that it, We going this will Well, idea The technology me in produce it number in

would be new tool. So that production the

XXXX be production for would of large in numbers. that So

Mark Koch

Yes. that for where sure alludes contract the bid to at military no of say very contract it stands. good the can't program a -- award And a But for possibility we that and is Michael the us. within the very end, the organization but influential

Andrew Sculley

other talk And have potential programs. we -- then on STRI to we do

So good us. for it's very

Unidentified Analyst

for you that congrats thank Well, detail. quarter. on the Excellent. And

Andrew Sculley

you. Thank

Mark Koch

you. Thank

Operator

Please our standby next for question.

from question Glenn comes line Please the Thalmann. ahead. Our Ladenburg go Mattson of of next

Glenn Mattson

the Hi, questions. guys. Thanks taking for

quarter-to-quarter, from you Was you're might expected? the than quarter? on can or ENVG-B typical else just maybe lumpiness was something that the of there revenue is this you less should First, hearing orders why we quarter expect this the describe it a there is from customer have that timing for

Mark Koch

Yes, Glenn, program. mean, it in I have under is say, typical lumpiness. this would experienced we past the that I

in We the negotiating are a for process received we're one. we -- the another order that order have one primes of an large of with

quarter way over do we has to would the second expect the in say, So, well. receive program for that as the typical few behaved years. the last fairly it's But I

Glenn Mattson

tested being think then Newark. about and just you frame Great. in us mid-XXXX in correct in can deposition on help production, if That's I up Thanks. congratulations the that I'm arriving And if curious encouraging. -- you equipment And talked wrong. full running and and me installed

much thought to into a and maybe Can so how Like it And understand some I to everything. of get be running work you installed is and that done want that goes conservative and and process needs tested estimate? estimate? just up to it describe the

the in get in we a can that general of general? of timing sense So

Andrew Sculley

from the clean next need before door in the tool I going to and finish room there. And is not room it's we tool clean put next you. Newark the understand. The It the door. in came actually already. only is reason Thank we

of month, the should -- then tool. then and the start At started finished be it will this start room able of year to be it. be the end the at installing and we'll qualifying So the tools clean we'll and the running end

we're say, a be start way produce And produce need it's little expect but really yes, it because enough and the to product the we we'll XXXX, able to enough working products here to of it. at we conservative, run

Glenn Mattson

you they're or Some you've anything color increased installed the functionality whatever, now move would to have better function or kind equipment or concept is or talked -- said, proof a back having of for Okay. the that Thanks, last up. of for about ramping seen curious would And consumer X some a of customer to that? that customer where Andrew. I point like yields work is of your be I'm getting the ahead of be function looking then that Tier already one think and you you that me faster great.

Andrew Sculley

on side have December Well, know equipment. as in was running. you the and R&D our installed and we it's that Redesign up now it

XX,XXX we It's works very amazing. As know well. nits. It

that new also design the design the coming. tool in So is

do that that will be well. So as able tool to

And then on that's wafers our done number once have displays, customer consumer feel we now then comfortable And we for to the use displays. the side. of a

side their anxious On been they I might before. think have

Glenn Mattson

Right.

Okay.

you So perhaps… a you're spot a way to needs now where their in better can getting meet

Andrew Sculley

doing Yes. and we running without equipment R&D displays. Because pattern make the couldn't installed direct up and and well

Glenn Mattson

Yes.

start a come kind three first some out in know about terms quite people when them. And start of years introduced how Okay. of And it bad your upside. space? where curve you give down of surprises type or enthusiasm then somewhere and lately. are round like mean, all the phases the next, there's kind it getting press that of in lot that over hearing a to when sense in over so? that thoughts you what And one getting doesn't us the the it a time of there's out know would kind And of talked then of say? of I the I they opportunity of And the it prospects to on expectations meet and don't what's the Tier you're just VR just to around VR like you early comes we're lot of sounds in to then at advancements in there's of a I stuff. hype sense middle terms Is we're sudden can that to the their it your customers from what X adoption technology

Andrew Sculley

do have Well, we you one design. the design that do we've to many finish seriously have companies as -- can next-generation about but about we few imagine another we we're first. talking this to And talk first a to this --

up heating again. space is the think I So

Glenn Mattson

queue. back Okay. I’ll a in Thanks get lot. the

Andrew Sculley

pitch, of minus piece when good other up display because little news. bit. a everybody XXXX-resolution one When big wanted more have with you is XX we micron the microns you it's to and example. going a display cost more design for or There a display this pixel displays, a a And first and end big wafer using XX means of for plus you're started

So looking below for going now at who eight there are are and finally A the companies next that are as companies number of design. that. asking

will and it. So size this high-resolution they It cost display be is better. down such a be easier where get to much is will to that the need the

told that we're we small direct at they them and company we has be all that. number. patterning would So were about us was problem below talking they what very in with a We satisfied a It well our this gave we do were could no happy And -- project. eight. that. gave good a we and And handling --

to That's in making cost. that. that next the a we're step are very So see happy reasonable displays

Glenn Mattson

Thanks guys. great. Okay,

Andrew Sculley

Thank you.

Mark Koch

Glenn. Thank you,

Operator

[Operator this eMagin's of the Koch closing CFO, Instructions] question-and-answer Ladies Mark portion over remarks. for call. back now and the I today's to call concludes turn gentlemen, will

Mark Koch

today. a and and This news Have XXnd, at the and future Twitter visit Week follow our booth LinkedIn shows. of Please SID concludes again XXXX conferences and the investment for joining May you for call. attendance day. Conference, conference Thank Display pages our a nice of trade week us

Operator

today's call. concludes This you. Thank

You may now disconnect.

Emagin (EMAN) 11 May 232023 Q1 Earnings call transcript