Universal Display Corporation Announces Third Quarter 2020 Financial Results

EWING, N.J.--(BUSINESS WIRE)--$OLED #3Q20--Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the third quarter ended September 30, 2020.


“We are pleased to report solid third quarter 2020 results,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “Beginning in July, we saw a pick-up in customer orders and UniversalPHOLED shipments and that strength has continued. Looking to the near-term, while ongoing uncertainties related to the COVID-19 pandemic persist, we believe OLED panel momentum will continue in the fourth quarter. Based on our current estimates, we believe 2020 revenues will be approximately in the range of $385 million to $400 million.”

Rosenblatt continued, “For 2021, we expect meaningful growth to resume as new OLED production comes online, new OLED consumer electronic models are launched, and customers continue to advance their OLED commercialization plans. The flexibility and versatility of OLEDs continue to broaden the imagination and transform the definition of what a consumer product can be. As the OLED industry continues to gain strong traction across the landscape of small, medium and large displays, we remain focused on expanding and deepening our leadership position and enabling our customers and the OLED ecosystem.”

Financial Highlights for the Third Quarter of 2020

  • Total revenue in the third quarter of 2020 was $117.1 million as compared to $97.5 million in the third quarter of 2019. The increase in revenue was due to higher material sales as a result of stronger demand in the OLED display market. The full extent of the impact of the on-going COVID-19 pandemic on our operational performance remains uncertain and will depend on many factors including the timing, extent and duration of the pandemic, the development and availability of effective treatments and vaccines, and the impact on the global economy and demand for OLED consumer products.
  • Revenue from material sales was $68.7 million in the third quarter of 2020 as compared to $51.8 million in the third quarter of 2019.
  • Revenue from royalty and license fees was $44.6 million in the third quarter of 2020 as compared to $43.0 million in the third quarter of 2019.
  • Cost of material sales was $20.8 million in the third quarter of 2020 as compared to $15.2 million in the third quarter of 2019.
  • Operating income was $48.4 million in the third quarter of 2020 as compared to operating income of $40.8 million in the third quarter of 2019.
  • Net income was $40.5 million or $0.85 per diluted share in the third quarter of 2020 as compared to $37.0 million or $0.78 per diluted share in the third quarter of 2019.

Revenue Comparison

($ in thousands)

 

Three Months Ended September 30,

 

 

2020

 

 

2019

Material sales

 

$

68,709

 

 

$

51,837

Royalty and license fees

 

 

44,550

 

 

 

43,015

Contract research services

 

 

3,820

 

 

 

2,663

Total revenue

 

$

117,079

 

 

$

97,515

Cost of Materials Comparison

($ in thousands)

 

Three Months Ended September 30,

 

 

 

2020

 

 

2019

 

Material sales

 

$

68,709

 

 

$

51,837

 

Cost of material sales

 

 

20,849

 

 

 

15,245

 

Gross margin on material sales

 

 

47,860

 

 

 

36,592

 

Gross margin as a % of material sales

 

 

70

%

 

 

71

%

Financial Highlights for the First Nine Months of 2020

  • Total revenue in the first nine months of 2020 was $287.3 million as compared to $303.4 million in the first nine months of 2019. The decrease in revenue was mainly due to the weakened demand for emitter product from our customers during the three-month period ended June 30, 2020 as a result of the COVID-19 pandemic. As discussed above, the ultimate full extent of the impact of the pandemic on our operational performance remains uncertain.
  • Revenue from material sales was $167.2 million in the first nine months of 2020 as compared to $182.7 million in the first nine months of 2019. Revenue from royalty and license fees was $110.0 million in the first nine months of 2020 as compared to $112.2 million in the first nine months of 2019.
  • Cost of material sales was $51.3 million in the first nine months of 2020 as compared to $50.2 million in the first nine months of 2019. Included in the cost of material sales was an inventory reserve charge of $808,000 in the first nine months of 2020 as compared to a charge of $4.2 million in the first nine months of 2019.
  • Operating income was $91.7 million in the first nine months of 2020 as compared to $123.9 million in the first nine months of 2019.
  • Net income was $79.5 million or $1.67 per diluted share in the first nine months of 2020 as compared to $111.9 million or $2.36 per diluted share in the first nine months of 2019.

Revenue Comparison

($ in thousands)

 

Nine Months Ended September 30,

 

 

2020

 

 

2019

Material sales

 

$

167,211

 

 

$

182,661

Royalty and license fees

 

 

110,008

 

 

 

112,222

Contract research services

 

 

10,105

 

 

 

8,565

Total revenue

 

$

287,324

 

 

$

303,448

Cost of Materials Comparison

($ in thousands)

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Material sales

 

$

167,211

 

 

$

182,661

 

Cost of material sales

 

 

51,337

 

 

 

50,201

 

Gross margin on material sales

 

 

115,874

 

 

 

132,460

 

Gross margin as a % of material sales

 

 

69

%

 

 

73

%

2020 Guidance

The Company believes that its 2020 revenue will be approximately in the range of $385 million to $400 million. Along with the uncertainties resulting from the COVID-19 pandemic, the OLED industry remains at a stage where many variables can have a material impact on its growth, and the Company thus caveats its financial guidance accordingly.

Dividend

The Company also announced a fourth quarter cash dividend of $0.15 per share on the Company’s common stock. The dividend is payable on December 31, 2020 to all shareholders of record on December 15, 2020.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, October 29, 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, the Company’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 sections entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 and 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)

 

 

 

September 30, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

162,620

 

 

$

131,627

 

Short-term investments

 

 

510,048

 

 

 

514,461

 

Accounts receivable

 

 

99,350

 

 

 

60,452

 

Inventory

 

 

84,098

 

 

 

63,953

 

Other current assets

 

 

30,038

 

 

 

21,946

 

Total current assets

 

 

886,154

 

 

 

792,439

 

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $68,423 and $57,276

 

 

96,830

 

 

 

87,872

 

ACQUIRED TECHNOLOGY, net of accumulated amortization of $147,903 and $132,468

 

 

75,364

 

 

 

90,774

 

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $5,807 and $4,768

 

 

11,033

 

 

 

12,072

 

GOODWILL

 

 

15,535

 

 

 

15,535

 

INVESTMENTS

 

 

5,000

 

 

 

5,000

 

DEFERRED INCOME TAXES

 

 

31,978

 

 

 

30,375

 

OTHER ASSETS

 

 

103,067

 

 

 

86,090

 

TOTAL ASSETS

 

$

1,224,961

 

 

$

1,120,157

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

9,626

 

 

$

13,296

 

Accrued expenses

 

 

33,692

 

 

 

49,022

 

Deferred revenue

 

 

138,391

 

 

 

97,333

 

Other current liabilities

 

 

1,051

 

 

 

1,857

 

Total current liabilities

 

 

182,760

 

 

 

161,508

 

DEFERRED REVENUE

 

 

51,657

 

 

 

47,529

 

RETIREMENT PLAN BENEFIT LIABILITY

 

 

52,900

 

 

 

51,117

 

OTHER LIABILITIES

 

 

58,008

 

 

 

48,554

 

Total liabilities

 

 

345,325

 

 

 

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, 49,008,915 and 48,852,193 shares issued, and 47,643,267 and 47,486,545 shares outstanding, at September 30, 2020 and December 31, 2019, respectively

 

 

490

 

 

 

489

 

Additional paid-in capital

 

 

628,051

 

 

 

620,236

 

Retained earnings

 

 

307,144

 

 

 

249,003

 

Accumulated other comprehensive loss

 

 

(14,767

)

 

 

(16,997

)

Treasury stock, at cost (1,365,648 shares at September 30, 2020 and December 31, 2019)

 

 

(41,284

)

 

 

(41,284

)

Total shareholders’ equity

 

 

879,636

 

 

 

811,449

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,224,961

 

 

$

1,120,157

 

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

REVENUE

 

$

117,079

 

 

$

97,515

 

 

$

287,324

 

 

$

303,448

 

COST OF SALES

 

 

23,378

 

 

 

17,286

 

 

 

58,480

 

 

 

57,172

 

Gross margin

 

 

93,701

 

 

 

80,229

 

 

 

228,844

 

 

 

246,276

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

20,814

 

 

 

16,787

 

 

 

61,708

 

 

 

51,449

 

Selling, general and administrative

 

 

13,579

 

 

 

12,623

 

 

 

45,129

 

 

 

40,531

 

Amortization of acquired technology and other intangible assets

 

 

5,494

 

 

 

5,493

 

 

 

16,474

 

 

 

16,469

 

Patent costs

 

 

2,095

 

 

 

1,659

 

 

 

5,591

 

 

 

5,145

 

Royalty and license expense

 

 

3,293

 

 

 

2,837

 

 

 

8,195

 

 

 

8,828

 

Total operating expenses

 

 

45,275

 

 

 

39,399

 

 

 

137,097

 

 

 

122,422

 

OPERATING INCOME

 

 

48,426

 

 

 

40,830

 

 

 

91,747

 

 

 

123,854

 

Interest income, net

 

 

1,029

 

 

 

2,748

 

 

 

4,444

 

 

 

8,336

 

Other income, net

 

 

262

 

 

 

53

 

 

 

634

 

 

 

740

 

Interest and other income, net

 

 

1,291

 

 

 

2,801

 

 

 

5,078

 

 

 

9,076

 

INCOME BEFORE INCOME TAXES

 

 

49,717

 

 

 

43,631

 

 

 

96,825

 

 

 

132,930

 

INCOME TAX EXPENSE

 

 

(9,217

)

 

 

(6,669

)

 

 

(17,355

)

 

 

(21,054

)

NET INCOME

 

$

40,500

 

 

$

36,962

 

 

$

79,470

 

 

$

111,876

 

NET INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

$

0.85

 

 

$

0.78

 

 

$

1.67

 

 

$

2.36

 

DILUTED

 

$

0.85

 

 

$

0.78

 

 

$

1.67

 

 

$

2.36

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

 

47,227,061

 

 

 

46,980,439

 

 

 

47,182,625

 

 

 

46,947,109

 

DILUTED

 

 

47,260,331

 

 

 

47,013,919

 

 

 

47,212,660

 

 

 

46,983,901

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.15

 

 

$

0.10

 

 

$

0.45

 

 

$

0.30

 

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

79,470

 

 

$

111,876

 

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

 

 

 

 

 

 

 

 

Amortization of deferred revenue and recognition of unbilled receivables

 

 

(112,508

)

 

 

(101,079

)

Depreciation

 

 

11,147

 

 

 

8,958

 

Amortization of intangibles

 

 

16,474

 

 

 

16,469

 

Change in excess inventory reserve

 

 

808

 

 

 

4,155

 

Amortization of premium and discount on investments, net

 

 

(4,293

)

 

 

(4,528

)

Stock-based compensation to employees

 

 

19,807

 

 

 

10,697

 

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

 

 

1,133

 

 

 

1,126

 

Deferred income tax benefit

 

 

(2,242

)

 

 

(2,633

)

Retirement plan expense

 

 

4,242

 

 

 

4,379

 

Decrease (increase) in assets:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(38,898

)

 

 

(22,645

)

Inventory

 

 

(20,953

)

 

 

8,074

 

Other current assets

 

 

(2,854

)

 

 

(4,602

)

Other assets

 

 

(8,721

)

 

 

(10,259

)

Increase (decrease) in liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(19,633

)

 

 

(1,827

)

Other current liabilities

 

 

(806

)

 

 

5,587

 

Deferred revenue

 

 

144,200

 

 

 

113,849

 

Other liabilities

 

 

9,454

 

 

 

149

 

Net cash provided by operating activities

 

 

75,827

 

 

 

137,746

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(19,213

)

 

 

(25,317

)

Purchases of intangibles

 

 

(25

)

 

 

(401

)

Purchases of investments

 

 

(604,153

)

 

 

(648,006

)

Proceeds from sale of investments

 

 

613,310

 

 

 

590,550

 

Net cash used in investing activities

 

 

(10,081

)

 

 

(83,174

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

869

 

 

 

658

 

Repurchase of common stock

 

 

 

 

 

(649

)

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

 

 

(14,293

)

 

 

(15,920

)

Cash dividends paid

 

 

(21,329

)

 

 

(14,142

)

Net cash used in financing activities

 

 

(34,753

)

 

 

(30,053

)

INCREASE IN CASH AND CASH EQUIVALENTS

 

 

30,993

 

 

 

24,519

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

131,627

 

 

 

211,022

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

162,620

 

 

$

235,541

 

The following non-cash activities occurred:

 

 

 

 

 

 

 

 

Unrealized gain on available-for-sale securities

 

$

451

 

 

$

227

 

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

 

 

(892

)

 

 

(168

)

 


Contacts

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