eMagin Corporation

Good morning and welcome to Imagine Corporation's fourth quarter 2021 earnings conference call. Please note, this event is being recorded. After management's prepared remarks, there will be a question and answer session. I will now turn the conference over to Mark Koch, Imagine's CFO. Please go ahead.

Thank you and good morning, everyone. Welcome to Imagine's fourth quarter and full year 2021 earnings conference call. Before we begin, I would like to remind you that in the following prepared remarks and in our Q&A session, we will make statements about expected future results that may be forward-looking statements for purposes of federal securities laws. These statements relate to our current expectations, estimates, and projections and are not guarantees of future performance. They involve risks, uncertainties, and assumptions that are difficult to predict and may prove not to be accurate especially in light of the effects of the current pandemic. Actual results may vary materially from those expressed or implied by these forward-looking statements, and we undertake no obligation to update these disclosures. These forward-looking statements should be considered only in conjunction with the detailed information contained in our SEC filings, including the risk factors described in our 2021 Annual Report on Form 10-K. During this call, we will also refer to adjusted EBITDA, a non-GAAP financial measure to provide additional information to investors. A reconciliation of adjusted EBITDA to net income, which is the most directly comparable GAAP financial measure, is provided in the press release that we issued this morning. Non-GAAP financial measures such as adjusted EBITDA are not meant to be considered in isolation or as a substitute for our GAAP financial measures and financial statements. With that, I will turn the call over to our CEO, Andrew Scully.

Thank you, Mark, and hello, everyone. Thank you for joining us today. On today's call, I'll provide some highlights from our quarterly and full-year results and provide color regarding the development of our technology and our equipment schedule. Mark will then discuss our consolidated results in greater detail. 2021 was a year of great technical achievement for Imagine, thanks to our skilled people and their commitment to producing the world's leading OLED micro displays. Among our many operational highlights in 2021, the R&D milestones related to our direct patterning technology, or DPD, rank among the highest, In addition to securing a number of new patents for this technology, we introduced a prototype for a micro-display with a resolution of 1920 by 1200 that achieved over 10,000 candela per meter squared of maximum luminance with vivid color. We believe it is the world's brightest, high-resolution, full-color OLED micro-display. In December, as you may recall, This micro-display was showcased at a trade show in the monocular and binocular AR headsets of an imagined customer. With this technology, we are continuing to build proof-of-concept displays for AR VR applications with a Tier 1 consumer electronics company. The addition of advanced production machinery, which we expect to have online next year, will allow us to produce our industry-leading DPD displays in production quantities at our fab. Tool qualification will begin in the first half of 2023 as we prepare to shift from R&D to production. Compared to white with color filter displays, these displays have greater brightness and at the same brightness have much better power efficiency, which is a priority for our military customers. We expect our DPD technology will ultimately replace current full-color OLED technologies. Brightness of 10,000 candela per meter squared is an important threshold for VR headset customers, including the Tier 1 for whom we have designed a high-resolution VR display. 2021 also saw the qualification of our newest high-brightness XLE display, This display is more than five times brighter than our standard color displays that use white OLED with color filters. It can provide our customers with higher brightness performance in the interim before production of our direct pattern displays begins next year. We ended 2021 with strong shipments of displays used in the ENVGB program as we continue to work on this advanced goggle to provide superior situation awareness mobility, lethality, and protection on the battlefield. The ENVGB incorporates rapid target acquisition, which allows soldiers to fire around corners. It also employs AR technology to deliver real-time video and target information through imagined displays. The reception among soldiers in the field has been very positive, including praise for the ruggedness and reliability of the device. Our core military business is benefiting from a ramp-up in volume of our existing programs. We are actively pursuing several others, as well as opportunities in the defense markets for thermal weapons sites. This year, we expect to continue to ship displays under ENVGB program and to compete for other large U.S. military programs. At the same time, we expect to capitalize on improved yields and capacity as we install new equipment purchased under our Defense Production Act Title III and IBAS funding grants. We stabilized our manufacturing yield in the fourth quarter and expect improvements in 2022. Our manufacturing equipment acquisitions and installations are on track and within the requirements of these funding grants. In response to what our persistent and global supply chain constraints and pricing pressures We continue to work closely with our wafer suppliers. We created a backplane designed for an alternative foundry so that we can optimize our wafer allocations. We also have implemented product price increases for 2022. Overall, as of the end of the fourth quarter, our sales backlog was up 26% to $13.8 million compared with the end of 2020. This reflects continued strength in our bookings for the military night vision and medical eye care markets. In 2022, we look forward to demonstrating our DPD technology to more consumer-oriented customers and continuing our business development efforts in the medical eye care, surgical, veterinary, and hunting scope markets. Additionally, we expect to benefit from contributions of new engineering talent that joined us late last year. With that, I'll turn the call over to Mark, who will discuss our financials.