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Universal Display Corporation Announces Second Quarter 2022 Financial Results

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EWING, N.J., August 04, 2022--(BUSINESS WIRE)--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, 2022.

"Our second quarter started off solidly, but as we approached the summer, customers lowered their order forecasts. Given the downward trend in forecast revisions and increasing macroeconomic uncertainty and volatility, we are revising our 2022 revenue forecast to approximately $600 million, plus or minus $10 million," said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display Corporation. "While near-term macro headwinds may weigh on demand, as a lean operating company with a strong balance sheet and no debt, we are well positioned to continue investing in our long-term strategic growth initiatives to reinforce our first-mover advantage, expand our materials and technologies portfolio and broaden our support to customers and the OLED industry."

Rosenblatt continued, "Looking to the OLED industry, we believe that 2024 is shaping up to be a pivotal year for the OLED market and for us. As the stage is being set for the next phase of significant OLED growth with a new wave of gen 6 and gen 8.5 OLED capacity plans reportedly in the works, we continue to believe that we are on track to meet preliminary target specs with our phosphorescent blue by year-end, which should enable the introduction of our all-phosphorescent RGB stack into the commercial market in 2024."

Financial Highlights for the Second Quarter of 2022

  • Total revenue in the second quarter of 2022 was $136.6 million as compared to $129.7 million in the second quarter of 2021. The deterioration in the overall global market economy had a negative impact on the demand for OLED products utilizing our emitter material. As a result of this near-term weakness, the forecasted sales volume of emitters anticipated over the remaining lives of our customer’s contracts was reduced resulting in recording a positive cumulative catch-up adjustment to total revenue of $8.8 million arising from changes in estimates of transaction price.

  • Revenue from material sales was $71.9 million in the second quarter of 2022 as compared to $77.4 million in the second quarter of 2021.

  • Revenue from royalty and license fees was $60.3 million in the second quarter of 2022 as compared to $48.2 million in the second quarter of 2021. This increase was primarily the result of a reduction in the forecasted sales volume anticipated over the remaining lives of their respective contracts in accordance with ASC 606.

  • Cost of material sales was $25.0 million in the second quarter of 2022 as compared to $25.3 million in the second quarter of 2021.

  • Operating income was $53.3 million in the second quarter of 2022 as compared to $49.9 million in the second quarter of 2021.

  • Net income was $41.5 million or $0.87 per diluted share in the second quarter of 2022 as compared to $40.5 million or $0.85 per diluted share in the second quarter of 2021.

Revenue Comparison

($ in thousands)

Three Months Ended June 30,

2022

2021

Material sales

$

71,869

$

77,438

Royalty and license fees

60,278

48,212

Contract research services

4,414

4,010

Total revenue

$

136,561

$

129,660

Cost of Materials Comparison

($ in thousands)

Three Months Ended June 30,

2022

2021

Material sales

$

71,869

$

77,438

Cost of material sales

25,022

25,316

Gross margin on material sales

46,847

52,122

Gross margin as a % of material sales

65

%

67

%

Financial Highlights for the First Half of 2022

  • Total revenue in the first half of 2022 was $287.0 million as compared to $263.7 million in the first half of 2021.

  • Revenue from material sales was $158.6 million in the first half of 2022 as compared to $157.2 million in the first half of 2021.

  • Revenue from royalty and license fees was $120.1 million in the first half of 2022 as compared to $99.1 million in the first half of 2021.

  • Cost of material sales was $54.9 million in the first half of 2022 as compared to $46.3 million in the first half of 2021.

  • Operating income was $115.6 million in the first half of 2022 as compared to $113.5 million in the first half of 2021.

  • Net income was $91.5 million or $1.92 per diluted share in the first half of 2022 as compared to $92.2 million or $1.94 per diluted share in the first half of 2021.

Revenue Comparison

($ in thousands)

Six Months Ended June 30,

2022

2021

Material sales

$

158,560

$

157,246

Royalty and license fees

120,080

99,098

Contract research services

8,391

7,316

Total revenue

$

287,031

$

263,660

Cost of Materials Comparison

($ in thousands)

Six Months Ended June 30,

2022

2021

Material sales

$

158,560

$

157,246

Cost of material sales

54,942

46,315

Gross margin on material sales

103,618

110,931

Gross margin as a % of material sales

65

%

71

%

2022 Revised Guidance

The Company now believes that its 2022 revenue will be approximately $600 million, plus or minus $10 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 third quarter cash dividend of $0.30 per share on the Company’s common stock. The dividend is payable on September 30, 2022 to all shareholders of record on September 16, 2022.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, August 4, 2022 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 5,500 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 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, 2021. 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, 2022

December 31, 2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

213,896

$

311,993

Short-term investments

439,449

351,194

Accounts receivable

74,933

107,639

Inventory

165,635

134,160

Other current assets

38,244

20,948

Total current assets

932,157

925,934

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $103,881 and $92,461

138,028

128,832

ACQUIRED TECHNOLOGY, net of accumulated amortization of $183,928 and $173,635

39,375

49,668

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $8,273 and $7,565

9,015

9,711

GOODWILL

15,535

15,535

INVESTMENTS

200,142

168,076

DEFERRED INCOME TAXES

36,998

33,453

OTHER ASSETS

128,188

135,710

TOTAL ASSETS

$

1,499,438

$

1,466,919

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

14,048

$

14,955

Accrued expenses

38,757

45,474

Deferred revenue

99,106

120,864

Other current liabilities

3,302

6,645

Total current liabilities

155,213

187,938

DEFERRED REVENUE

30,021

36,217

RETIREMENT PLAN BENEFIT LIABILITY

68,188

66,773

OTHER LIABILITIES

80,707

76,077

Total liabilities

334,129

367,005

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, 49,115,444 and 49,065,924 shares issued, and 47,749,796 and 47,700,276 shares outstanding, at June 30, 2022 and December 31, 2021, respectively

491

491

Additional paid-in capital

666,087

658,728

Retained earnings

563,191

500,212

Accumulated other comprehensive loss

(23,178

)

(18,235

)

Treasury stock, at cost (1,365,648 shares at June 30, 2022 and December 31, 2021)

(41,284

)

(41,284

)

Total shareholders’ equity

1,165,309

1,099,914

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,499,438

$

1,466,919

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,

2022

2021

2022

2021

REVENUE:

Material sales

$

71,869

$

77,438

$

158,560

$

157,246

Royalty and license fees

60,278

48,212

120,080

99,098

Contract research services

4,414

4,010

8,391

7,316

Total revenue

136,561

129,660

287,031

263,660

COST OF SALES

27,239

27,969

60,402

51,267

Gross margin

109,322

101,691

226,629

212,393

OPERATING EXPENSES:

Research and development

28,197

24,101

54,742

47,406

Selling, general and administrative

19,869

20,239

40,931

36,643

Amortization of acquired technology and other intangible assets

5,502

5,497

11,000

10,985

Patent costs

2,259

1,809

4,057

3,644

Royalty and license expense

181

149

335

261

Total operating expenses

56,008

51,795

111,065

98,939

OPERATING INCOME

53,314

49,896

115,564

113,454

Interest income, net

1,583

75

1,874

208

Other income, net

89

221

55

280

Interest and other income, net

1,672

296

1,929

488

INCOME BEFORE INCOME TAXES

54,986

50,192

117,493

113,942

INCOME TAX EXPENSE

(13,484

)

(9,651

)

(26,021

)

(21,714

)

NET INCOME

$

41,502

$

40,541

$

91,472

$

92,228

NET INCOME PER COMMON SHARE:

BASIC

$

0.87

$

0.85

$

1.92

$

1.94

DILUTED

$

0.87

$

0.85

$

1.92

$

1.94

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

BASIC

47,393,830

47,299,627

47,381,864

47,284,773

DILUTED

47,457,892

47,356,864

47,451,354

47,347,596

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.30

$

0.20

$

0.60

$

0.40

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Six Months Ended June 30,

2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

91,472

$

92,228

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

Amortization of deferred revenue and recognition of unbilled receivables, net

(125,196

)

(110,993

)

Depreciation

11,529

9,229

Amortization of intangibles

11,000

10,985

Change in excess inventory reserve

688

1,117

Amortization of premium and discount on investments, net

(1,027

)

(128

)

Stock-based compensation to employees

14,282

14,624

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

774

704

Deferred income tax (benefit) expense

(2,282

)

1,458

Retirement plan expense

2,718

4,457

Decrease (increase) in assets:

Accounts receivable

32,706

(17,368

)

Inventory

(32,163

)

(14,179

)

Other current assets

(13,030

)

(5,712

)

Other assets

7,522

(15,005

)

Increase (decrease) in liabilities:

Accounts payable and accrued expenses

(7,126

)

(17,036

)

Other current liabilities

3,343

(2,536

)

Deferred revenue

92,976

92,816

Other liabilities

4,630

14,455

Net cash provided by operating activities

86,130

59,116

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(21,336

)

(20,668

)

Purchases of intangibles

(12

)

(394

)

Purchases of investments

(287,919

)

(193,951

)

Proceeds from sale and maturity of investments

161,530

100,000

Net cash used in investing activities

(147,737

)

(115,013

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

847

787

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

(8,844

)

(13,018

)

Cash dividends paid

(28,493

)

(18,970

)

Net cash used in financing activities

(36,490

)

(31,201

)

DECREASE IN CASH AND CASH EQUIVALENTS

(98,097

)

(87,098

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

311,993

630,012

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

213,896

$

542,914

The following non-cash activities occurred:

Unrealized loss on available-for-sale securities

$

(7,095

)

$

(35

)

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

611

366

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005940/en/

Contacts

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