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UniPixel Reports Year-End and Fourth Quarter 2016 Financial Results

 

Contact:

Joe Diaz, Robert Blum, Joe Dorame

Lytham Partners, LLC

602-889-9700

unxl@lythampartners.com

 

Santa Clara, California – March 30, 2017UniPixel, Inc. (NASDAQ: UNXL), a provider of Performance Engineered Films™ to the touch screen and flexible electronics markets, reported financial results for the fourth quarter and full year ended December 31, 2016.

 

Financial highlights for the Fourth Quarter and Full Year 2016 included:

  • Revenue for the full year totaled $4.1 million compared to $3.8 million in full year 2015. Fourth quarter 2016 revenue was $1.4 million compared to $0.9 million for the fourth quarter of 2015.
  • During the fourth quarter the Company was awarded its 24th and 25th design wins in calendar year 2016.
  • The Company delivered the 2 millionth touch sensor produced at its Colorado Springs manufacturing facility in the fourth quarter of 2016.
  • The Company achieved Microsoft Pen and Wacom Pen certification during the fourth quarter of 2016.
  • During the fourth quarter the Company announced shipment of 524,000 XTouch sensors for an 8-inch consumer tablet being offered by a leading national wireless carrier.

 

Subsequent Events:

  • Subsequent to the end of full year 2016, UniPixel closed a $10 million common stock and warrants financing.
  • The Company closed a $3 million preferred equity financing.
  • The Company entered into a long-term agreement with a U.S.-based PC Maker to supply XTouch sensors.

 

Management Discussion:

Jeff Hawthorne, president and chief executive officer of UniPixel, said, “UniPixel’s first full calendar year as a touchscreen component provider to the leading PC manufacturers, was very rewarding. Based on the leading-edge nature of our technologies we were awarded multiple design wins, which we began delivering on in Q4 2016. We expect deliveries to gradually ramp in the first half of the new year, with shipments accelerating in the second half of the year. We are excited with the opportunities ahead in 2017.”

 

Mr. Hawthorne continued, “We remain focused on improving every aspect of our manufacturing capabilities as we increase our manufacturing capacity to address the new design win volume production shipments. The majority of the design win programs are now moving through qualification to volume production. Each program requires specific adjustments to tailor our XTouch sensors for the devices in which they will drive touchscreen and stylus capabilities. This modest customization process will initially impact our yields, however, those yields will steadily improve as we move more units to volume production through the factory and deliver to our customers.”

 

“We are pleased with the recently announced long-term agreement with a leading U.S.-based PC manufacturer to supply XTouch sensors. The agreement provides that the PC maker will supply rolling forecasts to UniPixel who will use its reasonable efforts to reserve manufacturing capacity for the PC maker who, in turn, agrees to use its best commercial efforts to make the purchases outlined in the rolling forecasts. This provides us a level of visibility into market demand and an indication into new product development. We look forward to working with this industry leader in the coming years,” concluded Mr. Hawthorne.

 

Full Year 2016 Results:

For the year ended December 31, 2016 revenues were $4.1 million compared to $3.8 million for the year ended December 31, 2015. Revenues for the fourth quarter and the full year were mainly comprised of sales of XTouch sensors to a major communications customer and Tier 1 PC OEM customers.

 

Cost of revenues for the year ended December 31, 2016 was $16.0 million compared to $12.3 million for the year ended December 31, 2015. 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 $4.1 million for the year ended 2016 and $3.4 million for the year ended 2015. Excluding these non-cash charges, adjusted cost of revenues was $11.9 for the year ended 2016 and $8.9 million for the year ended 2015.

 

Selling, General and Administrative (“SG&A”) expense was $7.6 million for the year ended December 31, 2016 compared to $10.2 million for the year ended December 31, 2015. SG&A includes certain non-cash charges, including depreciation, stock-based compensation and severance, which totaled $1.7 million for the year ended 2016, and $5.1 million for the year ended 2015. Excluding these non-cash charges, adjusted SG&A was $5.9 million for the year ended 2016 and $5.1 million for the year ended 2015.

 

Research and Development (“R&D”) expense for the year ended December 31, 2016 was $7.9 million compared to $6.8 million for the year ended December 31, 2015. R&D includes certain non-cash charges, including stock-based compensation, which totaled $1.0 million for the year ended 2016, and $1.2 million for the year ended 2015. Excluding these non-cash charges, adjusted R&D was $6.9 million for the year ended 2016, and $5.6 million for the year ended 2015.

 

Net loss was $(29.4) million, or $(0.71) per basic and diluted share for the year ended December 31, 2016, as compared to a net loss of $(37.0) million, or $(2.23) per basic and diluted share for the year ended December 31, 2015.

 

Adjusted EBITDA, a non-GAAP metric (see Table A), for the year ended 2016 was $(20.5) million compared to Adjusted EBITDA of $(15.8) million for the year ended 2015.

 

Fourth Quarter 2016 Results:

For the three months ended December 31, 2016 revenues were $1.4 million compared to $0.9 million for the three months ended December 31, 2015.

 

Cost of revenues was $4.6 million for the three months ended December 31, 2016 and $4.2 million for the three months ended December 31, 2015. 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 $0.7 million during the fourth quarter of 2016 and $1.2 million during the fourth quarter of 2015. Excluding these non-cash charges, adjusted cost of revenues was $3.9 million in the fourth quarter of 2016 and $3.0 million in the fourth quarter of 2015.

 

SG&A expense was approximately $2.0 million for the three months ended December 31, 2016 compared to $1.8 million for the three months ended December 31, 2015. SG&A includes certain non-cash charges, including depreciation, stock-based compensation and severance, which totaled $0.4 million during the fourth quarter of 2016, and $0.5 million in the fourth quarter of 2015. Excluding these non-cash charges, adjusted SG&A was $1.6 million during the fourth quarter of 2016, and $1.3 million during the fourth quarter of 2015.

 

Research and development (“R&D”) expense during the three months ended December 31, 2016 was $2.9 million compared to $1.1 million for the three months ended December 31, 2015. The fourth quarter of 2016 included R&D manufacturing labor and materials as we began to fulfill our 2016 programs. R&D includes certain non-cash charges, including amortization and stock-based compensation, which totaled $0.4 million during the fourth quarter of 2016, and $0.2 million in the fourth quarter of 2015. Excluding these non-cash charges, adjusted R&D was $2.5 million during the fourth quarter of 2016, and $0.9 million during the fourth quarter of 2015.

 

Net loss was $(7.3) million, or $(0.16) per basic and diluted share for the three months ended December 31, 2016, as compared to a net loss of $(5.6) million, or $(0.27) per basic and diluted share for the three months ended December 31, 2015.

 

Adjusted EBITDA, a non-GAAP metric (see Table A), for the fourth quarter of fiscal 2016 was $(6.6) million compared to Adjusted EBITDA of $(4.4) million in the fourth quarter of fiscal 2015.

 

Non-GAAP Financial Measures

In addition to financial results reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company has provided the following non-GAAP financial measures in this release and the accompanying table: Adjusted EBITDA. The Company uses these non-GAAP financial measures internally to analyze its operating performance and liquidity and believes they are useful as a supplement to GAAP measures in analyzing, trending and benchmarking the performance and value of our business across reporting periods as they exclude items that management believes are not reflective of the operating performance of the Company. As a result, these non-GAAP measures are provided to supplement investors’ overall understanding of, and an enhanced level of transparency into, the Company’s financial performance. The Company uses Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of its overall assessment of its performance, for planning purposes, including the preparation of its annual operating budget, and to evaluate the effectiveness of its business strategies. In addition, Adjusted EBITDA is also required by the covenants in the Company’s credit agreement to be delivered to its lender. Management does not place undue reliance on Adjusted EBITDA as its only measure of operating performance, and in fact, Adjusted EBITDA is not presented as an alternative measure of operating performance, as determined in accordance with GAAP; nor should it be considered a substitute for, or superior to the comparable GAAP measures. Rather, these measures should be considered in addition to results prepared in accordance with GAAP. No other adjustments were made during the three month periods and fiscal years ended December 31, 2016 and 2015. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures.

 

The Company defines Adjusted EBITDA (loss) to exclude discontinued operations, debt issuance cost amortization, gain on change in warranty liability, accretion of discount on convertible notes, interest expense on convertible note, depreciation, amortization of licenses, non-cash stock-based compensation, restricted stock issuance expense and severance. . For reconciliation under GAAP to the Non-GAAP Adjusted EBITDA see Table A that is included in the tables accompanying this release.

 

Conference Call

The Company has scheduled a conference call to discuss its financial results for the fourth quarter ended December 31, 2016. The call will be at 4:30 p.m. Eastern Time on Thursday, March 30, 2017.

 

Participants can access the conference call by dialing (844) 861-5501 or (412) 317-6582 or can listen via a live internet webcast available in the investor section of the Company’s website at www.unipixel.com/investors.

 

A teleconference replay of the call will be available at (877) 344-7529 or (412) 317-0088, confirmation code 10102965, through April 6, 2017. A webcast replay will be available in the investor section of the Company’s website at www.unipixel.com/investors for 90 days.

 

About UniPixel

UniPixel, Inc. (NASDAQ: UNXL) 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, visit www.unipixel.com.

 

Forward-looking Statements

All statements in this news release that are not based on historical fact are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the statement regarding volume production deliveries, yields and customer supply.  Such statements contain words such as “will,” and “expect,” or the negative thereof or comparable terminology. These statements are based on management’s current expectations.  These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. These risks, uncertainties, and other factors include, but are not limited to, the ability to recognize revenues, the ability to extend product offerings into new areas or products, the ability to compete in our current markets, the ability to commercialize licensed technology, unexpected occurrences that deter the “bring to market” plan for products, trends and fluctuations in the industry, changes in demand and purchasing volume of customers, our ability to attract and retain qualified personnel, our ability to raise additional capital, the ability to move product sales to production levels, the success of product sales in new markets or of recently produced product offerings, the ability to enforce our intellectual property rights and those set forth under Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and other current and periodic reports filed or furnished from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to UniPixel as of the date hereof, and UniPixel assumes no obligation to update any forward-looking statement.

 

Trademarks in this release are the property of their respective owners.