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Universal Display Corporation Announces Fourth Quarter and Full Year 2020 Financial Results

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Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the fourth quarter and full year ended December 31, 2020.

"2020 was an unprecedented year. The tremendous and commendable agility and execution focus of everyone at UDC enabled us to continue to build upon our first-mover advantage in the OLED ecosystem and we believe that we are well positioned to emerge an even stronger company when this global health crisis ends," said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. "During the year, we announced long-term agreements with China Star Optoelectronics, achieved record quarterly revenue of $141.5 million in the fourth quarter, celebrated the 20-year anniversary of our strategic partnership with PPG, and established OVJP Corporation to advance the commercialization of our groundbreaking OLED TV manufacturing technology. In addition, we expanded our corporate social responsibility initiatives, and were recognized by Fortune as one of the world’s 100-Fastest Growing Companies and Newsweek as one of America’s Most Responsible Companies."

Rosenblatt continued, "Our outlook for 2021 anticipates another year of meaningful growth and performance, while also continuing to invest in near-term and long-term opportunities to fortify our pathway for growth. As the adoption of OLEDs in the consumer landscape is forecasted to broaden in the coming years, we are investing in our people, our infrastructure and our innovation to advance our leadership position and to further enable our customers and the OLED ecosystem."

Financial Highlights for the Fourth Quarter of 2020

  • Total revenue in the fourth quarter of 2020 was $141.5 million as compared to $101.7 million in the fourth quarter of 2019.

  • Revenue from material sales was $62.5 million in the fourth quarter of 2020 as compared to $60.8 million in the fourth quarter of 2019.

  • Revenue from royalty and license fees was $75.0 million in the fourth quarter of 2020 as compared to $37.8 million in the fourth quarter of 2019.

  • Cost of materials was $24.6 million in the fourth quarter of 2020 as compared to $16.3 million in the fourth quarter of 2019.

  • Operating income was $65.8 million in the fourth quarter of 2020 as compared to $34.5 million in the fourth quarter of 2019.

  • Net income was $53.9 million or $1.13 per diluted share in the fourth quarter of 2020 as compared to $26.4 million or $0.56 per diluted share in the fourth quarter of 2019.

Revenue Comparison

($ in thousands)

Three Months Ended December 31,

2020

2019

Material sales

$

62,538

$

60,752

Royalty and license fees

75,046

37,800

Contract research services

3,959

3,177

Total revenue

$

141,543

$

101,729

Cost of Materials Comparison

($ in thousands)

Three Months Ended December 31,

2020

2019

Material sales

$

62,538

$

60,752

Cost of material sales

24,602

16,281

Gross margin on material sales

37,936

44,471

Gross margin as a % of material sales

61

%

73

%

Financial Highlights for the Full Year of 2020

  • Total revenue for the full year of 2020 was $428.9 million as compared to $405.2 million for the full year of 2019.

  • Revenue from material sales was $229.7 million for the full year of 2020 as compared to $243.4 million for the full year ended 2019.

  • Revenue from royalty and license fees was $185.1 million for the full year of 2020 as compared to $150.0 million for the full year of 2019.

  • Cost of materials was $75.9 million for the full year of 2020 as compared to $66.5 million for the full year of 2019.

  • Operating income was $157.5 million for the full year of 2020 as compared to $158.3 million for the full year of 2019.

  • Net income was $133.4 million or $2.80 per diluted share for the full year of 2020 as compared to $138.3 million or $2.92 per diluted share for the full year of 2019.

Revenue Comparison

($ in thousands)

Full Year Ended December 31,

2020

2019

Material sales

$

229,749

$

243,413

Royalty and license fees

185,054

150,022

Contract research services

14,064

11,742

Total revenue

$

428,867

$

405,177

Cost of Materials Comparison

($ in thousands)

Full Year Ended December 31,

2020

2019

Material sales

$

229,749

$

243,413

Cost of material sales

75,939

66,482

Gross margin on material sales

153,810

176,931

Gross margin as a % of material sales

67

%

73

%

2021 Guidance

The Company believes that its 2021 revenue will be approximately in the range of $530 million to $560 million. 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 first quarter 2021 cash dividend of $0.20 per share on the Company’s common stock. The dividend is payable on March 31, 2021 to all shareholders of record on March 16, 2021.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, February 18, 2021 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 section entitled "Risk Factors" in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020. 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

(in thousands, except share and per share data)

December 31, 2020

December 31, 2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

630,012

$

131,627

Short-term investments

99,996

514,461

Accounts receivable

82,261

60,452

Inventory

91,591

63,953

Other current assets

20,746

21,946

Total current assets

924,606

792,439

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $72,493 and $57,276

102,113

87,872

ACQUIRED TECHNOLOGY, net of accumulated amortization of $153,050 and $132,468

70,253

90,774

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $6,155 and $4,768

10,685

12,072

GOODWILL

15,535

15,535

INVESTMENTS

5,000

5,000

DEFERRED INCOME TAXES

37,695

30,375

OTHER ASSETS

103,341

86,090

TOTAL ASSETS

$

1,269,228

$

1,120,157

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

13,801

$

13,296

Accrued expenses

41,404

49,022

Deferred revenue

105,215

97,333

Other current liabilities

4,540

1,857

Total current liabilities

164,960

161,508

DEFERRED REVENUE

57,086

47,529

RETIREMENT PLAN BENEFIT LIABILITY

78,527

51,117

OTHER LIABILITIES

55,941

48,554

Total liabilities

356,514

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, 49,013,476 and 48,852,193 shares issued, and 47,647,828 and 47,486,545 shares outstanding at December 31, 2020 and December 31, 2019, respectively

490

489

Additional paid-in capital

635,595

620,236

Retained earnings

353,930

249,003

Accumulated other comprehensive loss

(36,019

)

(16,997

)

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

(41,284

)

(41,284

)

Total shareholders’ equity

912,714

811,449

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,269,228

$

1,120,157

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

(Unaudited)

REVENUE:

Material sales

$

62,538

$

60,752

$

229,749

$

243,413

Royalty and license fees

75,046

37,800

185,054

150,022

Contract research services

3,959

3,177

14,064

11,742

Total Revenue

141,543

101,729

428,867

405,177

COST OF SALES

26,998

18,202

85,478

75,374

Gross margin

114,545

83,527

343,389

329,803

OPERATING EXPENSES:

Research and development

22,186

19,827

83,894

71,276

Selling, general and administrative

16,217

19,082

61,346

59,613

Amortization of acquired technology and other intangible assets

5,495

5,493

21,969

21,962

Patent costs

1,938

1,688

7,529

6,833

Royalty and license expense

2,930

2,948

11,125

11,776

Total operating expenses

48,766

49,038

185,863

171,460

OPERATING INCOME

65,779

34,489

157,526

158,343

Interest income, net

695

2,459

5,139

10,795

Other income, net

230

27

864

767

Interest and other income, net

925

2,486

6,003

11,562

INCOME BEFORE INCOME TAXES

66,704

36,975

163,529

169,905

INCOME TAX EXPENSE

(12,802

)

(10,547

)

(30,157

)

(31,601

)

NET INCOME

$

53,902

$

26,428

$

133,372

$

138,304

NET INCOME PER COMMON SHARE:

BASIC

$

1.13

$

0.56

$

2.80

$

2.92

DILUTED

$

1.13

$

0.56

$

2.80

$

2.92

WEIGHTED AVERAGE SHARES USED IN COMPUTING NET

INCOME PER COMMON SHARE:

BASIC

47,241,078

46,997,368

47,198,982

46,959,775

DILUTED

47,298,692

47,031,759

47,236,994

46,995,462

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.15

$

0.10

$

0.60

$

0.40

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended December 31,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

133,372

$

138,304

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

Amortization of deferred revenue and recognition of unbilled receivables

(183,997

)

(135,368

)

Depreciation

15,217

12,456

Amortization of intangibles

21,969

21,962

Change in excess inventory reserve

1,114

5,938

Amortization of premium and discount on investments, net

(4,960

)

(6,643

)

Stock-based compensation to employees

26,631

16,148

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

1,647

1,548

Deferred income tax benefit

(4,446

)

(5,776

)

Retirement plan expense

5,656

5,818

Decrease (increase) in assets:

Accounts receivable

(21,809

)

(17,323

)

Inventory

(28,752

)

109

Other current assets

6,497

(15,238

)

Other assets

(13,481

)

(13,291

)

Increase (decrease) in liabilities:

Accounts payable and accrued expenses

(8,305

)

15,516

Other current liabilities

2,683

(5,183

)

Deferred revenue

192,369

157,321

Other liabilities

7,387

17,614

Net cash provided by operating activities

148,792

193,912

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(27,991

)

(30,059

)

Purchase of intangibles

(60

)

(401

)

Purchases of investments

(604,153

)

(931,854

)

Proceeds from sale and maturity of investments

1,023,460

723,600

Net cash provided by (used in) investing activities

391,256

(238,714

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

1,176

889

Repurchase of common stock

(649

)

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

(14,394

)

(15,980

)

Cash dividends paid

(28,445

)

(18,853

)

Net cash used in financing activities

(41,663

)

(34,593

)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

498,385

(79,395

)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

131,627

211,022

CASH AND CASH EQUIVALENTS, END OF YEAR

$

630,012

$

131,627

The following non-cash activities occurred:

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

$

(118

)

$

241

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

(1,468

)

(530

)

Cash paid for income tax

36,269

46,602

View source version on businesswire.com: https://www.businesswire.com/news/home/20210218005950/en/

Contacts

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