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UniPixel Reports Q2 2017 Financial Results
August 11, 2017 | PRNewswireEstimated reading time: 5 minutes
UniPixel, Inc. reported financial results for the second quarter ended June 30, 2017.
Revenue for the second quarter totaled $1.3 million compared to $1.0 million for the second quarter of 2016. The Company reported a net loss of $(11.2) million, or $(0.18) per basic and diluted share for the three months ended June 30, 2017, as compared to a net loss of $(6.1) million, or $(0.16) per basic and diluted share for the three months ended June 30, 2016.
Adjusted EBITDA, a non-GAAP metric (see Table A), for the second quarter of fiscal 2017 was $(8.1) million compared to Adjusted EBITDA of $(4.2) million in the second quarter of fiscal 2016.
Management Discussion:
Jeff Hawthorne, president and chief executive officer of UniPixel, said, "One of our customers delayed taking delivery of XTouch sensors scheduled for the second quarter due to an LCD shortage and a battery issue which impacted their supply chain and ability to ship product. Although this type of delay is not unusual in the computing device manufacturing process, it affected a large number of programs and as a result had a significant impact on our revenue for the quarter. We expect the deliveries to take place in the coming quarters.
"We made a strategic decision during the quarter to increase prices on some of our XTouch sensors for orders that include specifications for a certain active stylus application. The amount of XTouch sensor customization necessary demands a higher price point. These price increases will become effective during the third quarter. While we are not inclined to turn away business, we will not engage in projects where we cannot earn a reasonable margin."
Mr. Hawthorne continued, "Over the past few weeks we have introduced new high-speed Diamond Guard coating equipment into our production line – which will increase efficiency, quality and yield. Our expectation is for dramatically enhanced capabilities to apply the Diamond Guard coating to our sensors, setting the stage for the next generation of sensor technology that we currently have in development."
Subsequent to the quarter, on August 8, 2017, the Company announced the signing of a non-binding letter of intent to enter into a strategic transaction with Future Tech, under which Future Tech will produce UniPixel's XTouch™sensors in Changzhou City, Jiangsu Province in The People's Republic of China.
Under the terms of the letter, UniPixel expects to form a joint venture where Future Tech will own and operate a manufacturing facility in Changzhou City, China based on UniPixel's XTouch technology. Future Tech will be responsible for creating an organization to manufacture, sell, market and distribute metal mesh touch screen sensors to original equipment manufacturers ("OEMs") headquartered in the Asia Pacific region.
The letter of intent provides that Future Tech will pay UniPixel up to $5.1 million for rights, know-how and some manufacturing assets that will be transferred to the joint venture; $2 million will be paid at an initial closing, with the remaining amounts payable upon equipment qualification and manufacturing milestones. Future Tech will separately provide all funding necessary to establish the manufacturing facilities, acquire the necessary manufacturing equipment, operate the facility and meet required working capital needs. A definitive agreement is expected to be executed during September 2017.
Mr. Hawthorne commented further, "We also continue to make progress on strategic alliances for future technology development – especially for flexible/foldable display applications. During the quarter we engaged with GIS to jointly develop UniPixel's touch sensor technology, specifically for flexible display applications for the mobile phone.
"UniPixel is responsible for designing and manufacturing development stage sensors based on specifications provided by GIS. GIS will be responsible for integrating the sensors into the flexible display stack. The parties will share reliability and test data with one another. We are pleased to be working with this partner who has the display expertise and scale to enter this market."
"We are making measurable progress in moving the business forward," concluded Mr. Hawthorne.
Second Quarter 2017 Results:
For the three months ended June 30, 2017 revenues were $1.3 million compared to $1.0 million for the three months ended June 30, 2016.
Cost of revenues was $5.6 million for the three months ended June 30, 2017 and $3.9 million for the three months ended June 30, 2016. Cost of revenue includes certain non-cash charges, including amortization, stock-based compensation and depreciation of equipment as well as other non-cash charges, which totaled $0.9 million for the second quarter of 2017 and $1.2 million for the second quarter of 2016. Excluding these non-cash charges, adjusted cost of revenues was $4.7 million in the second quarter of 2017 and $2.7 million in the second quarter of 2016.
SG&A expense was approximately $2.6 million for the three months ended June 30, 2017 compared to $1.9 million for the three months ended June 30, 2016. SG&A includes certain non-cash charges, including depreciation and stock-based compensation, which totaled $0.3 million during the second quarter of 2017, and $0.5 million in the second quarter of 2016. Excluding these non-cash charges, adjusted SG&A was $2.3 million during the second quarter of 2017, and $1.4 million during the second quarter of 2016.
Research and development ("R&D") expense during the three months ended June 30, 2017 was $3.0 million compared to $1.0 million for the three months ended June 30, 2016. The second quarter of 2017 included R&D manufacturing labor and materials as we began to fulfill our 2016 program wins. R&D includes certain non-cash charges, including amortization and stock-based compensation, which totaled $0.5 million during the second quarter of 2017 and $0.1 million in the second quarter of 2016. Excluding these non-cash charges, adjusted R&D was $2.5 million during the second quarter of 2017, and $0.9 million during the second quarter of 2016.
Net loss attributable to common shareholders was $(13.3) million, or $(0.22) per basic and diluted share for the three months ended June 30, 2017, as compared to a net loss attributable to common shareholders of $(6.1) million, or $(0.16) per basic and diluted share for the three months ended June 30, 2016.
Adjusted EBITDA, a non-GAAP metric (see Table A), for the second quarter of fiscal 2017 was $(8.1) million compared to Adjusted EBITDA of $(4.2) million in the second quarter of fiscal 2016.
About UniPixel
UniPixel, Inc. develops and markets Performance Engineered Films for the touch screen and flexible electronics markets. The Company's roll-to-roll electronics manufacturing process patterns fine line conductive elements on thin films. The company markets its technologies for touch panel sensor, cover glass replacement, and protective cover film applications under the XTouch™ and Diamond Guard™ brands. For further information, click here.
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