OLED Universal Display Corporation

Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the second quarter ended June 30, 2023.

“We are pleased with our solid performance and results in the second quarter. Our full year revenue projections are aligning closely to prior expectations, and we have narrowed our guidance accordingly,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “The OLED industry continues to lay the groundwork for promising growth in 2024 and beyond as the OLED IT adoption wave is poised to commence. As a key enabler in the ecosystem, we continue to support the market's growth by leveraging our nearly three decades of innovation and know-how, investing in new and next-generation OLED solutions, and delivering increasing value to our customers.”

Financial Highlights for the Second Quarter of 2023

• Total revenue in the second quarter of 2023 was $146.6 million as compared to $136.6 million in the second quarter of 2022.
• Revenue from material sales was $77.1 million in the second quarter of 2023 as compared to $71.9 million in the second quarter of 2022. This increase was primarily due to greater sales volumes of our emitter material.
• Revenue from royalty and license fees was $64.4 million in the second quarter of 2023 as compared to $60.3 million in the second quarter of 2022. This increase was primarily the result of higher sales volume of material.
• Cost of material sales was $28.6 million in the second quarter of 2023 as compared to $25.0 million in the second quarter of 2022.
• Total gross margin was 78% in the second quarter of 2023 as compared to 80% in the second quarter of 2022. Shannon facility costs of $3.9 million during the second quarter of 2023 contributed to a 2% decrease in total gross margin between periods.
• Operating income was $58.6 million in the second quarter of 2023 as compared to $53.3 million in the second quarter of 2022.
• Net income was $49.7 million or $1.04 per diluted share in the second quarter of 2023 as compared to $41.5 million or $0.87 per diluted share in the second quarter of 2022.

Revenue Comparison

($ in thousands)

 

Three Months Ended June 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

77,107

 

 

$

71,869

 

Royalty and license fees

 

 

64,399

 

 

 

60,278

 

Contract research services

 

 

5,059

 

 

 

4,414

 

Total revenue

 

$

146,565

 

 

$

136,561

 

Cost of Materials Comparison

($ in thousands)

 

Three Months Ended June 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

77,107

 

 

$

71,869

 

Cost of material sales

 

 

28,570

 

 

 

25,022

 

Gross margin on material sales

 

 

48,537

 

 

 

46,847

 

Gross margin as a % of material sales

 

 

63

%

 

 

65

%

Financial Highlights for the First Half of 2023

• Total revenue in the first half of 2023 was $277.0 million as compared to $287.0 million in the first half of 2022, reflective of lower revenue in the first quarter of the year.
• Revenue from material sales was $147.3 million in the first half of 2023 as compared to $158.6 million in the first half of 2022. The decline in material sales revenue was primarily due to reduced sales volumes of material sold during the first quarter of the year.
• Revenue from royalty and license fees was $119.6 million in the first half of 2023 as compared to $120.1 million in the first half of 2022.
• Cost of material sales was $58.1 million in the first half of 2023 as compared to $54.9 million in the first half of 2022 primarily due to Shannon facility costs of $8.6 million and inventory provisions of $4.1 million, partially offset by reduced sales volumes in the first half of 2023 compared to the first half of 2022.
• Total gross margin was 76% in the first half of 2023 as compared to 79% in the first half of 2022. Shannon facility costs of $8.6 million and the inventory provision of $4.1 million in 2023 contributed to the 3% decrease in total gross margin between periods.
• Operating income was $104.0 million in the first half of 2023 as compared to $115.6 million in the first half of 2022.
• Net income was $89.5 million or $1.87 per diluted share in the first half of 2023 compared to $91.5 million or $1.92 per diluted share in the first half of 2022.

Revenue Comparison

($ in thousands)

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

147,297

 

 

$

158,560

 

Royalty and license fees

 

 

119,609

 

 

 

120,080

 

Contract research services

 

 

10,126

 

 

 

8,391

 

Total revenue

 

$

277,032

 

 

$

287,031

 

Cost of Materials Comparison

($ in thousands)

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

147,297

 

 

$

158,560

 

Cost of material sales

 

 

58,058

 

 

 

54,942

 

Gross margin on material sales

 

 

89,239

 

 

 

103,618

 

Gross margin as a % of material sales

 

 

61

%

 

 

65

%

2023 Revised Guidance

The Company has increased the lower end of its previous revenue guidance and believes that 2023 revenue will be in the range of $560 million to $600 million.

Dividend

The Company also announced a third quarter cash dividend of $0.35 per share on the Company’s common stock. The dividend is payable on September 29, 2023 to all shareholders of record as of the close of business on September 15, 2023.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, August 3, 2023 at 5:00 p.m. Eastern Time. The live webcast of the conference call can be accessed under the events page of the Company's Investor Relations website at ir.oled.com. Those wishing to participate in the live call should dial 1-877-524-8416 (toll-free) or 1-412-902-1028. Please dial in 5-10 minutes prior to the scheduled conference call time. An online archive of the webcast will be available within two hours of the conclusion of the call.

About Universal Display Corporation

Universal Display Corporation (Nasdaq: OLED) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. Founded in 1994 and with subsidiaries and offices around the world, the Company currently owns, exclusively licenses or has the sole right to sublicense more than 6,000 patents issued and pending worldwide. Universal Display licenses its proprietary technologies, including its breakthrough high-efficiency UniversalPHOLED® phosphorescent OLED technology that can enable the development of energy-efficient and eco-friendly displays and solid-state lighting. The Company also develops and offers high-quality, state-of-the-art UniversalPHOLED materials that are recognized as key ingredients in the fabrication of OLEDs with peak performance. In addition, Universal Display delivers innovative and customized solutions to its clients and partners through technology transfer, collaborative technology development and on-site training. To learn more about Universal Display Corporation, please visit https://oled.com/.

Universal Display Corporation and the Universal Display Corporation logo are trademarks or registered trademarks of Universal Display Corporation. All other company, brand or product names may be trademarks or registered trademarks.

All statements in this document that are not historical, such as those relating to the projected adoption, development and advancement of the Company’s technologies, and the Company’s expected results, as well as the growth of the OLED market and the Company’s opportunities in that market, are forward-looking financial statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements in this document, as they reflect Universal Display Corporation’s current views with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. These risks and uncertainties are discussed in greater detail in Universal Display Corporation’s periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, including, in particular, the section entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022. Universal Display Corporation disclaims any obligation to update any forward-looking statement contained in this document.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

June 30, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,470

 

 

$

93,430

 

Short-term investments

 

 

465,679

 

 

 

484,345

 

Accounts receivable

 

 

109,390

 

 

 

92,664

 

Inventory

 

 

175,855

 

 

 

183,220

 

Other current assets

 

 

33,753

 

 

 

45,791

 

Total current assets

 

 

878,147

 

 

 

899,450

 

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $130,099 and $117,118

 

 

157,566

 

 

 

143,445

 

ACQUIRED TECHNOLOGY, net of accumulated amortization of $178,459 and $189,671

 

 

98,216

 

 

 

38,382

 

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $9,696 and $8,989

 

 

7,592

 

 

 

8,247

 

GOODWILL

 

 

15,535

 

 

 

15,535

 

INVESTMENTS

 

 

211,361

 

 

 

259,861

 

DEFERRED INCOME TAXES

 

 

70,364

 

 

 

58,161

 

OTHER ASSETS

 

 

102,074

 

 

 

109,739

 

TOTAL ASSETS

 

$

1,540,855

 

 

$

1,532,820

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

7,330

 

 

$

9,519

 

Accrued expenses

 

 

35,072

 

 

 

51,002

 

Deferred revenue

 

 

29,732

 

 

 

45,599

 

Other current liabilities

 

 

8,598

 

 

 

29,577

 

Total current liabilities

 

 

80,732

 

 

 

135,697

 

DEFERRED REVENUE

 

 

18,410

 

 

 

18,279

 

RETIREMENT PLAN BENEFIT LIABILITY

 

 

60,707

 

 

 

59,790

 

OTHER LIABILITIES

 

 

42,240

 

 

 

43,685

 

Total liabilities

 

 

202,089

 

 

 

257,451

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000 shares of Series A Nonconvertible Preferred Stock issued and outstanding (liquidation value of $7.50 per share or $1,500)

 

 

2

 

 

 

2

 

Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 48,706,932 and 49,136,030 shares issued, and 47,341,284 and 47,770,382 shares outstanding, at June 30, 2023 and December 31, 2022, respectively

 

 

487

 

 

 

491

 

Additional paid-in capital

 

 

686,501

 

 

 

681,335

 

Retained earnings

 

 

709,372

 

 

 

653,277

 

Accumulated other comprehensive loss

 

 

(16,312

)

 

 

(18,452

)

Treasury stock, at cost (1,365,648 shares at June 30, 2023 and December 31, 2022)

 

 

(41,284

)

 

 

(41,284

)

Total shareholders’ equity

 

 

1,338,766

 

 

 

1,275,369

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,540,855

 

 

$

1,532,820

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

Material sales

 

$

77,107

 

 

$

71,869

 

 

$

147,297

 

 

$

158,560

 

Royalty and license fees

 

 

64,399

 

 

 

60,278

 

 

 

119,609

 

 

 

120,080

 

Contract research services

 

 

5,059

 

 

 

4,414

 

 

 

10,126

 

 

 

8,391

 

Total revenue

 

 

146,565

 

 

 

136,561

 

 

 

277,032

 

 

 

287,031

 

COST OF SALES

 

 

32,139

 

 

 

27,239

 

 

 

65,109

 

 

 

60,402

 

Gross margin

 

 

114,426

 

 

 

109,322

 

 

 

211,923

 

 

 

226,629

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

32,318

 

 

 

28,197

 

 

 

63,741

 

 

 

54,742

 

Selling, general and administrative

 

 

17,077

 

 

 

19,869

 

 

 

32,473

 

 

 

40,931

 

Amortization of acquired technology and other intangible assets

 

 

3,994

 

 

 

5,502

 

 

 

6,885

 

 

 

11,000

 

Patent costs

 

 

2,229

 

 

 

2,259

 

 

 

4,484

 

 

 

4,057

 

Royalty and license expense

 

 

169

 

 

 

181

 

 

 

333

 

 

 

335

 

Total operating expenses

 

 

55,787

 

 

 

56,008

 

 

 

107,916

 

 

 

111,065

 

OPERATING INCOME

 

 

58,639

 

 

 

53,314

 

 

 

104,007

 

 

 

115,564

 

Interest income, net

 

 

6,198

 

 

 

1,583

 

 

 

13,165

 

 

 

1,874

 

Other (loss) income, net

 

 

(784

)

 

 

89

 

 

 

(1,487

)

 

 

55

 

Interest and other income, net

 

 

5,414

 

 

 

1,672

 

 

 

11,678

 

 

 

1,929

 

INCOME BEFORE INCOME TAXES

 

 

64,053

 

 

 

54,986

 

 

 

115,685

 

 

 

117,493

 

INCOME TAX EXPENSE

 

 

(14,375

)

 

 

(13,484

)

 

 

(26,168

)

 

 

(26,021

)

NET INCOME

 

$

49,678

 

 

$

41,502

 

 

$

89,517

 

 

$

91,472

 

NET INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

$

1.04

 

 

$

0.87

 

 

$

1.87

 

 

$

1.92

 

DILUTED

 

$

1.04

 

 

$

0.87

 

 

$

1.87

 

 

$

1.92

 

WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

 

47,572,971

 

 

 

47,393,830

 

 

 

47,548,404

 

 

 

47,381,864

 

DILUTED

 

 

47,618,115

 

 

 

47,457,892

 

 

 

47,593,657

 

 

 

47,451,354

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.35

 

 

$

0.30

 

 

$

0.70

 

 

$

0.60

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

89,517

 

 

$

91,472

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

13,207

 

 

 

11,529

 

Amortization of intangibles

 

 

6,885

 

 

 

11,000

 

Amortization of premium and discount on investments, net

 

 

(6,845

)

 

 

(1,027

)

Stock-based compensation to employees

 

 

10,479

 

 

 

14,282

 

Stock-based compensation to Board of Directors and Scientific Advisory Board

 

 

841

 

 

 

774

 

Deferred income tax benefit

 

 

(12,782

)

 

 

(2,282

)

Retirement plan expense, net of benefit payments

 

 

1,397

 

 

 

2,718

 

Decrease (increase) in assets:

 

 

 

 

 

 

Accounts receivable

 

 

(16,726

)

 

 

32,706

 

Inventory

 

 

7,365

 

 

 

(31,475

)

Other current assets

 

 

12,038

 

 

 

(17,296

)

Other assets

 

 

7,665

 

 

 

7,522

 

Increase (decrease) in liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(17,651

)

 

 

(7,126

)

Other current liabilities

 

 

(20,811

)

 

 

(3,343

)

Deferred revenue

 

 

(15,736

)

 

 

(27,954

)

Other liabilities

 

 

(1,445

)

 

 

4,630

 

Net cash provided by operating activities

 

 

57,398

 

 

 

86,130

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(27,274

)

 

 

(21,336

)

Purchases of intangibles

 

 

(66,063

)

 

 

(12

)

Purchases of investments

 

 

(115,048

)

 

 

(287,919

)

Proceeds from sale and maturity of investments

 

 

190,907

 

 

 

161,530

 

Net cash used in investing activities

 

 

(17,478

)

 

 

(147,737

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

971

 

 

 

847

 

Payment of withholding taxes related to stock-based compensation to employees

 

 

(7,429

)

 

 

(8,844

)

Cash dividends paid

 

 

(33,422

)

 

 

(28,493

)

Net cash used in financing activities

 

 

(39,880

)

 

 

(36,490

)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

40

 

 

 

(98,097

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

93,430

 

 

 

311,993

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

93,470

 

 

$

213,896

 

Supplemental disclosures:

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

$

1,848

 

 

$

(7,095

)

Common stock issued to Board of Directors and Scientific Advisory Board that was earned and accrued for in a previous period

 

 

300

 

 

 

300

 

Net change in accounts payable and accrued expenses related to purchases of property and equipment

 

 

(54

)

 

 

611

 

Cash paid for income tax

 

 

59,849

 

 

 

25,949

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230803495852/en/

Universal Display Contact: Darice Liu investor@oled.com media@oled.com +1 609-964-5123