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, 2023.
“As we approach the end of 2023, our performance for the year
remains on course. Looking ahead, we believe that multiple market
verticals are driving the OLED industry’s long-term growth path,”
said Brian Millard, Vice President and Chief Financial Officer of
Universal Display Corporation. “A significant shift in the world of
technology is occurring with the introduction of conformable,
foldable and rollable consumer electronics, and OLEDs are fueling
this form factor revolution. In addition to the expected
commencement of a new OLED IT adoption cycle in 2024, we are also
seeing the emergence of OLEDs in the automotive market, especially
with electric vehicles. As OLED activity continues to expand across
the consumer display and lighting landscapes, we remain steadfast
in our commitment to advancing our robust OLED materials and
technology leadership.”
Financial Highlights for the Third
Quarter of 2023
- Total revenue in the third quarter of 2023 was $141.1 million
as compared to $160.6 million in the third quarter of 2022.
- Revenue from material sales was $92.5 million in the third
quarter of 2023 as compared to $84.2 million in the third quarter
of 2022. This increase was primarily due to greater sales volumes
of our emitter material as well as improved product mix weighted
towards increased demand for our new generation of emitter
products.
- Revenue from royalty and license fees was $45.9 million in the
third quarter of 2023 as compared to $71.5 million in the third
quarter of 2022. The decrease in royalty and license fees was
primarily the result of changes in customer mix, a decrease in the
cumulative catch-up adjustments between periods, as well as higher
estimated future demand for several of our customers over the
remaining lives of their contracts.
- Cost of material sales was $31.6 million in the third quarter
of 2023 as compared to $34.1 million in the third quarter of 2022.
This decrease was primarily due to a reduction in contract
manufacturing support costs, a reduction in the underutilization
charges of the manufacturing facility in Shannon, Ireland and
changes in product mix, offset by an increase in the level of
material sales and inventory reserve.
- Total gross margin was 76% in the third quarter of 2023 as
compared to 77% in the third quarter of 2022.
- Operating income was $48.4 million in the third quarter of 2023
as compared to $68.5 million in the third quarter of 2022.
- The effective income tax rate was an expense of 4.4% and 23.7%
for the three months ended September 30, 2023 and 2022,
respectively. The reduction in the effective income tax rate was
primarily due to the change in IRS regulations, issued in July
2023, that permit withholding taxes to be credited against U.S.
taxable income for the tax years 2022 and 2023.
- Net income was $51.5 million or $1.08 per diluted share in the
third quarter of 2023 as compared to $53.5 million or $1.12 per
diluted share in the third quarter of 2022.
Revenue Comparison
($ in thousands)
Three Months Ended September
30,
2023
2022
Material sales
$
92,492
$
84,182
Royalty and license fees
45,915
71,450
Contract research services
2,670
4,924
Total revenue
$
141,077
$
160,556
Cost of Materials
Comparison
($ in thousands)
Three Months Ended September
30,
2023
2022
Material sales
$
92,492
$
84,182
Cost of material sales
31,639
34,057
Gross margin on material sales
60,853
50,125
Gross margin as a % of material sales
66
%
60
%
Financial Highlights for the First Nine
Months of 2023
- Total revenue in the first nine months of 2023 was $418.1
million as compared to $447.6 million in the first nine months of
2022.
- Revenue from material sales was $239.8 million in the first
nine months of 2023 as compared to $242.7 million in the first nine
months of 2022. The decline in material sales was primarily due to
reduced demand for our emitter material during the first quarter of
2023, partially offset by the introduction of blue emitter and host
sales.
- Revenue from royalty and license fees was $165.5 million in the
first nine months of 2023 as compared to $191.5 million in the
first nine months of 2022. The decrease in royalty and license fees
was primarily the result of higher estimated future demand for
several of our customers over the remaining lives of their
contracts, as well as a net $12.2 million reduction in revenue due
to the difference in cumulative catch-up adjustments between
periods, the majority of which was recorded to royalty and license
fees. The cumulative catch-up adjustments in the first nine months
of 2023 totaled $5.1 million compared to $17.3 million during the
first nine months of 2022.
- Cost of material sales was $89.7 million in the first nine
months of 2023 as compared to $89.0 million in the first nine
months of 2022. Cost of material sales increased primarily due to
underutilization of the manufacturing facility in Shannon, Ireland
and changes in product mix, offset by a decrease in manufacturing
costs and a decrease in the level of material sales.
- Total gross margin was 76% in the first nine months of 2023 as
compared to 78% in the first nine months of 2022. Increased Shannon
facility costs of $6.1 million and the inventory provision of $6.6
million in 2023 contributed to the 2% decrease in total gross
margin between periods.
- Operating income was $152.4 million in the first nine months of
2023 as compared to $184.0 million in the first nine months of
2022.
- Net income was $141.0 million or $2.95 per diluted share in the
first nine months of 2023 compared to $144.9 million or $3.04 per
diluted share in the first nine months of 2022.
Revenue Comparison
($ in thousands)
Nine Months Ended September
30,
2023
2022
Material sales
$
239,789
$
242,742
Royalty and license fees
165,524
191,530
Contract research services
12,796
13,315
Total revenue
$
418,109
$
447,587
Cost of Materials
Comparison
($ in thousands)
Nine Months Ended September
30,
2023
2022
Material sales
$
239,789
$
242,742
Cost of material sales
89,697
88,999
Gross margin on material sales
150,092
153,743
Gross margin as a % of material sales
63
%
63
%
2023 Revised Guidance
The Company has revised its previous revenue guidance and now
believes that 2023 revenue will be in the range of $565 million to
$590 million.
Dividend
The Company also announced a fourth quarter cash dividend of
$0.35 per share on the Company’s common stock. The dividend is
payable on December 29, 2023 to all shareholders of record as of
the close of business on December 15, 2023.
Conference Call
Information
In conjunction with this release, Universal Display will host a
conference call on Thursday, November 2, 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)
September 30, 2023
December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
79,323
$
93,430
Short-term investments
412,350
484,345
Accounts receivable
122,192
92,664
Inventory
181,406
183,220
Other current assets
83,444
45,791
Total current assets
878,715
899,450
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $137,020 and $117,118
174,638
143,445
ACQUIRED TECHNOLOGY, net of accumulated
amortization of $182,657 and $189,671
94,518
38,382
OTHER INTANGIBLE ASSETS, net of
accumulated amortization of $10,055 and $8,989
7,233
8,247
GOODWILL
15,535
15,535
INVESTMENTS
301,193
259,861
DEFERRED INCOME TAXES
49,637
58,161
OTHER ASSETS
101,447
109,739
TOTAL ASSETS
$
1,622,916
$
1,532,820
LIABILITIES AND SHAREHOLDERS’
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
20,624
$
9,519
Accrued expenses
38,500
51,002
Deferred revenue
66,828
45,599
Other current liabilities
5,391
29,577
Total current liabilities
131,343
135,697
DEFERRED REVENUE
8,859
18,279
RETIREMENT PLAN BENEFIT LIABILITY
61,165
59,790
OTHER LIABILITIES
39,183
43,685
Total liabilities
240,550
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, 48,720,530 and 49,136,030 shares
issued, and 47,354,882 and 47,770,382 shares outstanding, at
September 30, 2023 and December 31, 2022, respectively
487
491
Additional paid-in capital
693,899
681,335
Retained earnings
744,227
653,277
Accumulated other comprehensive loss
(14,965
)
(18,452
)
Treasury stock, at cost (1,365,648 shares
at September 30, 2023 and December 31, 2022)
(41,284
)
(41,284
)
Total shareholders’ equity
1,382,366
1,275,369
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
1,622,916
$
1,532,820
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,
2023
2022
2023
2022
REVENUE:
Material sales
$
92,492
$
84,182
$
239,789
$
242,742
Royalty and license fees
45,915
71,450
165,524
191,530
Contract research services
2,670
4,924
12,796
13,315
Total revenue
141,077
160,556
418,109
447,587
COST OF SALES
34,248
37,396
99,357
97,798
Gross margin
106,829
123,160
318,752
349,789
OPERATING EXPENSES:
Research and development
33,099
30,414
96,840
85,156
Selling, general and administrative
18,084
18,442
50,557
59,373
Amortization of acquired technology and
other intangible assets
4,557
3,562
11,442
14,562
Patent costs
2,572
2,018
7,056
6,075
Royalty and license expense
81
261
414
596
Total operating expenses
58,393
54,697
166,309
165,762
OPERATING INCOME
48,436
68,463
152,443
184,027
Interest income, net
7,136
2,432
20,301
4,306
Other loss, net
(1,693
)
(804
)
(3,180
)
(749
)
Interest and other income, net
5,443
1,628
17,121
3,557
INCOME BEFORE INCOME TAXES
53,879
70,091
169,564
187,584
INCOME TAX EXPENSE
(2,363
)
(16,636
)
(28,531
)
(42,657
)
NET INCOME
$
51,516
$
53,455
$
141,033
$
144,927
NET INCOME PER COMMON SHARE:
BASIC
$
1.08
$
1.12
$
2.95
$
3.04
DILUTED
$
1.08
$
1.12
$
2.95
$
3.04
WEIGHTED AVERAGE SHARES USED IN COMPUTING
NET INCOME PER COMMON SHARE:
BASIC
47,570,099
47,396,495
47,555,734
47,386,426
DILUTED
47,632,431
47,466,934
47,609,692
47,455,893
CASH DIVIDENDS DECLARED PER COMMON
SHARE
$
0.35
$
0.30
$
1.05
$
0.90
UNIVERSAL DISPLAY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended September
30,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
141,033
$
144,927
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
20,128
17,982
Amortization of intangibles
11,442
14,562
Amortization of premium and discount on
investments, net
(9,436
)
(3,469
)
Stock-based compensation to employees
17,359
22,528
Stock-based compensation to Board of
Directors and Scientific Advisory Board
1,264
1,121
Deferred income tax expense (benefit)
7,556
(7,876
)
Retirement plan expense, net of benefit
payments
2,347
3,998
Decrease (increase) in assets:
Accounts receivable
(29,528
)
29,446
Inventory
1,814
(46,034
)
Other current assets
(37,653
)
(9,057
)
Other assets
8,292
2,282
Increase (decrease) in liabilities:
Accounts payable and accrued expenses
(32
)
7,217
Other current liabilities
(24,186
)
(543
)
Deferred revenue
11,809
(63,066
)
Other liabilities
(4,502
)
10,156
Net cash provided by operating
activities
117,707
124,174
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
(52,208
)
(31,119
)
Purchases of intangibles
(66,563
)
(4,761
)
Purchases of investments
(303,004
)
(464,766
)
Proceeds from sale and maturity of
investments
346,407
302,872
Net cash used in investing activities
(75,368
)
(197,774
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock
1,532
1,247
Payment of withholding taxes related to
stock-based compensation to employees
(7,895
)
(9,150
)
Cash dividends paid
(50,083
)
(42,740
)
Net cash used in financing activities
(56,446
)
(50,643
)
DECREASE IN CASH AND CASH EQUIVALENTS
(14,107
)
(124,243
)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
93,430
311,993
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
79,323
$
187,750
Supplemental disclosures:
Unrealized gain (loss) on
available-for-sale securities
$
3,304
$
(9,711
)
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
887
4,256
Cash paid for income tax
81,132
42,227
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102241358/en/
Universal Display Contact: Darice Liu investor@oled.com
media@oled.com +1 609-964-5123
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