eMagin Corporation

Q2 2023 revenue was $5.0 million, down 31% from $7.2 million in the prior-year period. Product revenue was $4.9 million versus $7.0 million a year ago, while contract revenue was $0.1 million and flat year over year. Gross margin was negative 10%, compared with 22% in Q2 2022, producing a gross loss of $0.5 million versus gross profit of $1.6 million. Operating expenses were $10.7 million, up from $3.4 million, leading to an operating loss of $11.2 million versus $1.8 million; net loss was $11.2 million, or $0.13 per share, versus a net loss of $1.4 million, or $0.02 per share. Adjusted EBITDA was negative $2.6 million versus negative $0.3 million last year. As of June 30, cash and cash equivalents were $3.3 million, working capital was $10.6 million, and available borrowings under the asset-based lending facility were $0.8 million. The company borrowed $5.0 million from Samsung Display under a loan and security agreement. No explicit next-quarter or full-year operating guidance was given; instead, management reiterated that the merger is expected to close in the second half of 2023, subject to stockholder approval and regulatory approvals.

Andrew Sculley framed the quarter around the definitive merger agreement with Samsung Display, saying the board concluded the $2.08 per share all-cash deal was the best available outcome for shareholders. He emphasized that alternatives were limited, noting that a standalone path or other strategic options would require significant capital and years of investment before meaningful revenues could be realized. His tone was resolute and promotional of the transaction, with little discussion of operating recovery beyond the deal process.

Mark Koch focused on the quarter’s financial deterioration and the merger-related cost burden. He cited the 31% revenue decline, negative 10% gross margin, $10.7 million of operating expenses, and $11.2 million net loss, and explained that the operating expense increase was driven primarily by legal and investment banking costs tied to the Samsung agreement. He also highlighted liquidity: $3.3 million of cash, $10.6 million of working capital, $0.8 million of available revolver capacity, and a $5.0 million loan from Samsung Display.

There was no analyst Q&A on the call. Management instead used the final portion of the call to direct shareholders to the proxy statement and to remind them that the August 31 special meeting will determine whether the merger is approved.