Company Reports Offer Glimpse of the Financial Health of the PE Industry



One of the challenges people face with an emerging industry is trying to get a solid handle on how the companies are performing financially. The printed electronics market is no exception. One can probably break the industry up into a few basic groups:

• Multi-national companies.
• Privately-held companies that are funded by investment groups.
• Small privately held companies.
• Small publicly held companies.

Getting financial information on most of these groups is difficult if not impossible. Take, for example, the multi-national companies. Yes, BASF and Samsung, to name two huge corporations with interests in printed electronics, are publicly held. However, their annual reports don’t break out their sales in printed or organic electronics, so there is no information to go on.

Venture capital-funded companies are very hard to read in terms of sales, or even whether they are solvent. These companies do not release their sales; one way to guess at their success is by watching who invests and how much is invested. Of course, investments do go by the wayside; we’ve seen more than a few well-funded companies drop out of the market; bankrupt organic photovoltaic (OPV) manufacturer Konarka comes to mind. Also on the solar side, Solyndra, which was not a printed electronics manufacturer, failed despite more than $500 million in federal funding.

The third group, small privately held companies, is itself quite small, and there is no incentive to report sales.

This brings us to small publicly held companies. There are really very few companies to look at, and even fewer that are actually producing products and not just doing research, but they do offer some insights in their respective markets.

Two in particular reside in the flexible OLED display field. The first is eMagin, which is based in Bellevue, WA. eMagin specializes in active matrix organic light emitting diodes, or AMOLEDs. These lightweight materials utilize a backplane made of a silicon chip rather than glass, and are engineered to handle the harshest of environments, most notably military applications; the U.S. military is one of their major customers.

eMagin is doing quite well; it had record revenues of $8.6 million for the second quarter of 2012, and while the third quater was down slightly from the year before, the company is still poised to reach revenues of $30 million to $34 million in 2012, which would show growth from 2011’s sales totals of $29.5 million. Even better, the company is profitable.

Universal Display, Ewing, NJ, is another publicly-held OLED specialist. In Universal Display’s case, they sell materials and license their technology, which can be used to print OLEDs via inkjet.

For the second quarter of 2012, Universal Display reported net income of $11 million on revenues of $30 million. By contrast, for the second quarter of 2011, the company reported net income of $3.3 million on revenues of $11.3 million. Much of the gain came from $15 million in revenue under a new licensing agreement with Samsung Display Corporation.

Samsung is paying Universal Display in the second and fourth quarter of 2012; this explains why the third quarter was much less, with sales of $12.5 million and a net loss of $5.5 million. Overall, the company believes that its revenues will be in the range of $80 million to $82 million for fiscal year .For the full year of 2011, the company reported revenues of $61.3 million, up 101% compared to revenues of $30.5 million for 2010. The company reported net income of $3.2 million for fiscal year 2011, compared to a net loss of $19.9 million for 2010.

In November, Universal Display reported that it ranked 198 on Deloitte’s Technology Fast 500, which ranks the 500 fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America during the previous five years. Universal Display grew 442% during this period; it was the eighth year the company has been ranked in the Technology Fast 500.

Amsterdam-based SMARTRAC is a market leader in high-quality RFID inlays for markets such as electronic passports (e-Passports) and contactless credit cards (e-Payment), as well as for RFID transponders for public transport applications. Its 2011 sales were €168 million ($218 million), a decrease of 7% compared with €180 million in 2010 ($239 million) . It did have an EBIDTA of 9% in 2011.

In December 2011, SMARTRAC acquired the RFID business from UPM, placing it in a leading position in the UHF tag market. Fast forward to November 2012, when the company reported its results for the first nine months, with revenues of €189 million ($243 million), an increase of 36% from the first nine months of 2011, and more than the full year results from 2011. For the full year, SMARTRAC anticipates sales of more than €250 million ($320 million) in 2012.

It would be instructive if more of the innovative printed electronics companies were publicly held. In actuality, the financial health of many of these smaller companies remains a matter of conjecture. Seeing how eMagin, Universal Display and SMARTRAC are actually faring does present at least a slight picture of the financial state of the industry.