eMagin Corporation

Today's conference is scheduled to begin shortly. Please continue to standby. Thank you for your patience. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Ladies and gentlemen, thank you for standing by and welcome to the Imagine Q1 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Mr. Mark Koch, Chief Financial Officer. Please go ahead.

Thank you, and good morning, everyone. Welcome to IMAGINE's first quarter 2022 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 the 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, uncertainty, and assumptions that are difficult to predict and may prove not to be accurate, especially in the 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 key takeaways from our quarterly results, and provide color regarding our technological advances and equipment schedule. Mark will then discuss our consolidated results in greater detail. Imagine had a terrific first quarter, highlighted by display revenues of $7 million that were up 15% year over year. At the same time, our quarterly display revenue gross margin improved from 23% a year ago to 32% in the first quarter of this year. The quarter was marked by diversified sales and contract revenue, and we began to realize the contribution of the new engineering talent, as demonstrated by a 27 percent increase in display production from the first quarter of last year. The increase in gross margin was driven in part by a favorable sales mix, along with the impact of higher manufacturing volumes. We achieved continued growth in display revenue from our enhanced night vision goggle, or ENVGB program, with shipments to customers in NATO countries. Overall, as of the end of the first quarter, our backlog of open orders remains strong at $13.6 million, reflecting demand for our displays for use in thermal weapon sites, military night vision goggles, and medical applications. In Q1, We continued our proof of concept display work for a Tier 1 AR VR customer while designing and refining our production capabilities to satisfy demand for our high brightness XLE displays and DPD micro displays. We are in active discussions with several consumer companies, including Tier 1 OEMs, regarding potential applications of our proprietary DPD technology. As you may know, our DPD technology supports directly patterning primary RGB color OLED emitters on our silicon backplane, which creates ultra-high brightness light output at ultra-high resolution with brilliant colors. The 10,000 candela per meter squared, or NITs, full color brightness, high resolution, and high contrast that we have achieved is beyond the threshold requirements for immersive AR technology. and VR devices and will help to overcome inefficient optics and alleviate motion artifacts. Our R&D efforts continue to break new ground. During the quarter, we announced the award of four additional patents related to the creation of high resolution displays with unique pixel structures and proprietary fabrication methods to further protect our market position as the only micro display company with DPD technology. Furthermore, we are designing a tandem architecture that will allow for dramatically higher luminance of our DPD displays and will ultimately leverage the full potential of the equipment we are acquiring under our Defense Production Act Title III and IBAS funding grants. On the production side of the business, we have completed a preliminary internal audit and expect to obtain AS9100 quality certification in Q4 of this year. We expect our quality control efforts will be additive to the yield and throughput improvements that should come from the new equipment acquired under the Title III and IBAS programs. We have already committed the funds and ordered all the equipment to be purchased under these programs. As of the end of Q1, we have qualified and added four pieces of equipment to our production line and received three additional pieces of equipment that have been installed and are currently being qualified. Additionally, we have five more major pieces of equipment on order, including an advanced production-capable DPD organic deposition tool that is expected to improve yield and throughput of this innovative technology for the benefit of ARVR customers. Overall, we are on track and on budget with the requirements of these important government grants. As noted in our earnings release, in April we welcomed Kevin Trompak to the Imagine team as our new VP of Business Development. Kevin has more than 25 years of industry experience with expertise in advanced displays and the display value chain. He led global sales and business development for VECO Insurance, and was previously VP of Global Sales for HC Stark. Before that, he was VP of Sales for GT Advanced Technologies. In closing, looking ahead, the key to displays for AR VR are high brightness, high resolution, high contrast OLED micro displays. We're on a path with tandem direct pattern displays to reach about 20,000 candela per meter squared or nits peak luminance, This is about a two-year program. The new DPT OLED tool will be qualified in time to make this in manufacturing at moderate volumes. These displays will have better efficiency and better lifetime when run, even at low luminance. With that, I'll turn the call over to Mark, who will discuss our financials.