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Universal Display Corporation Announces First Quarter 2020 Financial Results

Withdraws Previously Provided 2020 Revenue Guidance due to COVID-19 Pandemic

EWING, N.J.--(BUSINESS WIRE)--$OLED #OLED--Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the first quarter ended March 31, 2020.


“In these extraordinarily challenging times due to the COVID-19 pandemic, we have been able to keep our employees safe, maintain our business operations and continue our strategic growth programs. During the first quarter, we activated crisis management and business continuity plans to safeguard our people and to ensure our ability to continue our R&D programs, and manufacture and ship to customers our energy-efficient, high-performing UniversalPHOLED materials. Our primary focus remains on the safety and well-being of our employees, customers, partners and community,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “Our first quarter revenues were $112.3 million, which included the full recognition of the safety stock purchased in the fourth quarter of 2019 by a China-based customer due to trade-related concerns, as well as some estimated advanced customer material purchases due to COVID-19 uncertainties. In this evolving environment of a global health crisis, the ultimate scope and duration of which are unknown, it is challenging to make forecasts about future results and as such, we believe it is prudent to withdraw our 2020 guidance.”

Rosenblatt continued, “As we look ahead, we believe that the long-term growth path of OLEDs remains strong, though timing of adoption may shift due to macroeconomic factors. During this time of high uncertainty, we are continuing our R&D initiatives, OLED material shipments and strategic programs to drive further innovation and novel solutions, and to capitalize on the opportunities in the OLED market. With a robust balance sheet of approximately $640 million in cash, a lean operating model and no debt, we plan to continue to invest in our leadership position in the OLED ecosystem and expect to emerge from the current environment even stronger to further enable our customers and the industry.”

Financial Highlights for the First Quarter of 2020

  • Total revenue in the first quarter of 2020 was $112.3 million as compared to $87.8 million in the first quarter of 2019.
  • Revenue from material sales was $66.6 million in the first quarter of 2020 as compared to $54.5 million in the first quarter of 2019.
  • Revenue from royalty and license fees was $43.1 million in the first quarter of 2020 as compared to $30.3 million in the first quarter of 2019.
  • Cost of materials was $20.2 million in the first quarter of 2020 as compared to $13.0 million in the first quarter of 2019.
  • Operating income was $44.5 million in the first quarter of 2020 as compared to $34.4 million in the first quarter of 2019.
  • Net income was $38.2 million or $0.80 per diluted share in the first quarter of 2020 as compared to $31.5 million or $0.66 per diluted share in the first quarter of 2019.

Revenue Comparison

($ in thousands)

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Material sales

 

$

66,575

 

 

$

54,496

 

Royalty and license fees

 

 

43,078

 

 

 

30,269

 

Contract research services

 

 

2,624

 

 

 

3,000

 

Total revenue

 

$

112,277

 

 

$

87,765

 

Cost of Materials Comparison

($ in thousands)

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Material sales

 

$

66,575

 

 

$

54,496

 

Cost of material sales

 

 

20,211

 

 

 

12,975

 

Gross margin on material sales

 

 

46,364

 

 

 

41,521

 

Gross margin as a % of material sales

 

 

70%

 

 

 

76%

 

Withdrawal of 2020 Guidance

As a result of the ongoing uncertainty regarding both the scope and duration of the COVID-19 global pandemic, the Company is withdrawing its previously issued 2020 revenue guidance, issued on February 20, 2020. Since February 20, the impact of COVID-19 has rapidly expanded globally across Asia, Europe and the United States. The Company anticipates material disruption to industries that utilize OLEDs as a result of the evolving pandemic and its impact on the macroeconomic environment.

Dividend

The Company also announced a second quarter cash dividend of $0.15 per share on the Company’s common stock. The dividend is payable on June 30, 2020 to all shareholders of record on June 15, 2020.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on May 7, 2020 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, the Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,000 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 low power 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.

Headquartered in Ewing, New Jersey, with international offices in China, Hong Kong, Ireland, Japan, South Korea and Taiwan, and wholly-owned subsidiary Adesis, Inc. based in New Castle, Delaware, Universal Display works and partners with a network of world-class organizations. 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 impact of the COVID-19 pandemic on the Company and otherwise, Universal Display Corporation’s technologies and potential applications of those technologies, the Company’s expected results and future declaration of dividends, 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, 2019 and its subsequent Quarterly Reports on Form 10-Q. 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)

 

 

 

March 31, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

222,744

 

 

$

131,627

 

Short-term investments

 

 

417,032

 

 

 

514,461

 

Accounts receivable

 

 

82,592

 

 

 

60,452

 

Inventory

 

 

74,068

 

 

 

63,953

 

Other current assets

 

 

15,635

 

 

 

21,946

 

Total current assets

 

 

812,071

 

 

 

792,439

 

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $60,891 and $57,276

 

 

88,350

 

 

 

87,872

 

ACQUIRED TECHNOLOGY, net of accumulated amortization of $137,613 and $132,468

 

 

85,629

 

 

 

90,774

 

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $5,113 and $4,768

 

 

11,727

 

 

 

12,072

 

GOODWILL

 

 

15,535

 

 

 

15,535

 

INVESTMENTS

 

 

5,000

 

 

 

5,000

 

DEFERRED INCOME TAXES

 

 

28,729

 

 

 

30,375

 

OTHER ASSETS

 

 

89,335

 

 

 

86,090

 

TOTAL ASSETS

 

$

1,136,376

 

 

$

1,120,157

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,370

 

 

$

13,296

 

Accrued expenses

 

 

21,648

 

 

 

49,022

 

Deferred revenue

 

 

99,565

 

 

 

97,333

 

Other current liabilities

 

 

4,971

 

 

 

1,857

 

Total current liabilities

 

 

136,554

 

 

 

161,508

 

DEFERRED REVENUE

 

 

49,866

 

 

 

47,529

 

RETIREMENT PLAN BENEFIT LIABILITY

 

 

51,711

 

 

 

51,117

 

OTHER LIABILITIES

 

 

51,548

 

 

 

48,554

 

Total liabilities

 

 

289,679

 

 

 

308,708

 

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, 48,910,232 and 48,852,193 shares issued, and 47,544,584 and 47,486,545 shares outstanding, at March 31, 2020 and December 31, 2019, respectively

 

 

489

 

 

 

489

 

Additional paid-in capital

 

 

621,967

 

 

 

620,236

 

Retained earnings

 

 

280,060

 

 

 

249,003

 

Accumulated other comprehensive loss

 

 

(14,537

)

 

 

(16,997

)

Treasury stock, at cost (1,365,648 shares at March 31, 2020 and December 31, 2019)

 

 

(41,284

)

 

 

(41,284

)

Total shareholders’ equity

 

 

846,697

 

 

 

811,449

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,136,376

 

 

$

1,120,157

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2020

 

 

2019

 

REVENUE

 

$

112,277

 

 

$

87,765

 

COST OF SALES

 

 

22,459

 

 

 

15,814

 

Gross margin

 

 

89,818

 

 

 

71,951

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Research and development

 

 

19,497

 

 

 

15,829

 

Selling, general and administrative

 

 

15,403

 

 

 

11,969

 

Amortization of acquired technology and other intangible assets

 

 

5,490

 

 

 

5,486

 

Patent costs

 

 

1,638

 

 

 

1,770

 

Royalty and license expense

 

 

3,284

 

 

 

2,537

 

Total operating expenses

 

 

45,312

 

 

 

37,591

 

OPERATING INCOME

 

 

44,506

 

 

 

34,360

 

Interest income, net

 

 

2,147

 

 

 

2,831

 

Other income, net

 

 

202

 

 

 

282

 

Interest and other income, net

 

 

2,349

 

 

 

3,113

 

INCOME BEFORE INCOME TAXES

 

 

46,855

 

 

 

37,473

 

INCOME TAX EXPENSE

 

 

(8,700

)

 

 

(5,999

)

 

NET INCOME

 

$

38,155

 

 

$

31,474

 

NET INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

BASIC

 

$

0.80

 

$

0.66

 

DILUTED

 

$

0.80

 

$

0.66

 

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

 

 

 

 

 

 

 

 

BASIC

 

 

47,093,033

 

 

 

46,892,914

 

DILUTED

 

 

47,122,829

 

 

 

46,931,999

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.15

 

 

$

0.10

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

38,155

 

 

$

31,474

 

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

 

 

 

 

 

 

 

 

Amortization of deferred revenue and recognition of unbilled receivables

 

 

(40,511

)

 

 

(26,976

)

Depreciation

 

 

3,615

 

 

 

2,758

 

Amortization of intangibles

 

 

5,490

 

 

 

5,486

 

Change in excess inventory reserve

 

 

611

 

 

 

224

 

Amortization of premium and discount on investments, net

 

 

(2,005

)

 

 

(1,741

)

Stock-based compensation to employees

 

 

5,735

 

 

 

3,610

 

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

 

 

254

 

 

 

516

 

Deferred income tax expense (benefit)

 

 

940

 

 

 

(592

)

Retirement plan expense

 

 

1,414

 

 

 

1,501

 

Decrease (increase) in assets:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(22,140

)

 

 

(8,995

)

Inventory

 

 

(10,726

)

 

 

1,735

 

Other current assets

 

 

7,706

 

 

 

177

 

Other assets

 

 

(3,245

)

 

 

(2,966

)

Increase (decrease) in liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(29,340

)

 

 

(12,117

)

Other current liabilities

 

 

3,114

 

 

 

3,744

 

Deferred revenue

 

 

43,685

 

 

 

33,080

 

Other liabilities

 

 

2,994

 

 

3,132

 

Net cash provided by operating activities

 

 

5,746

 

 

 

34,050

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(4,782

)

 

 

(13,283

)

Purchases of intangibles

 

 

 

 

 

(401

)

Purchases of investments

 

 

(148,592

)

 

 

(165,471

)

Proceeds from sale of investments

 

 

250,400

 

 

 

170,050

 

Net cash provided by (used in) investing activities

 

 

97,026

 

 

 

(9,105

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

259

 

 

 

204

 

Repurchase of common stock

 

 

 

 

 

(649

)

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

 

 

(4,816

)

 

 

(5,757

)

Cash dividends paid

 

 

(7,098

)

 

 

(4,717

)

Net cash used in financing activities

 

 

(11,655

)

 

 

(10,919

)

INCREASE IN CASH AND CASH EQUIVALENTS

 

 

91,117

 

 

 

14,026

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

131,627

 

 

 

211,022

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

222,744

 

 

$

225,048

 

The following non-cash activities occurred:

 

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

$

2,380

 

 

$

60

 

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

 

 

689

 

 

 

(351

)

 


Contacts

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