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Universal Display Corporation Announces Second Quarter 2021 Financial Results

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EWING, N.J., August 05, 2021--(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, 2021.

"Looking to the year, we are on track to achieve approximately 30% year-over-year sales growth, translating into a new record high for annual revenue for the Company," said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. "As we anticipate ongoing momentum in the OLED industry to increase in 2021 and beyond, we are excited about the long and vast runway of forecasted growth for the market. Given this expected growth, we are continuing to fuel and fortify our innovation engine, expand our global infrastructure, and invest in our people to advance our leadership position and further enable our customers and the OLED ecosystem."

Rosenblatt continued, "Energy-efficiency and sustainability are key cornerstones of our UniversalPHOLED technology and materials. The discovery of our proprietary phosphorescent technology was an enabling breakthrough in the OLED industry. With efficiencies that are up to four times higher than conventional OLED materials, UDC’s patented and award-winning phosphorescent OLED technology and UniversalPHOLED materials are proven to be integral in enabling high-performance, low-power consumption and energy-efficiency in OLED displays and lighting. Our energy-efficiency initiatives are expanding as we continue to invent and develop new OLED materials and technologies, including progress toward delivery of an all-phosphorescent red, green and blue emissive system, that can enable a sustainable and low-carbon future."

Financial Highlights for the Second Quarter of 2021

  • Total revenue in the second quarter of 2021 was $129.7 million as compared to $58.0 million in the second quarter of 2020. The increase in revenue was due to strengthened demand for OLED products utilizing our emitter material, as well as the recovery in sales that were adversely affected by the impact of the COVID-19 pandemic during the three months ended June 30, 2020. Even though we believe we have experienced the worst effects of the COVID-19 pandemic, we remain uncertain as to the possibility of its re-emergence and any corresponding negative impact on OLED market demand.

  • Revenue from material sales was $77.4 million in the second quarter of 2021 as compared to $31.9 million in the second quarter of 2020.

  • Revenue from royalty and license fees was $48.2 million in the second quarter of 2021 as compared to $22.4 million in the second quarter of 2020.

  • Cost of material sales was $25.3 million in the second quarter of 2021 as compared to $10.3 million in the second quarter of 2020.

  • Operating income was $49.9 million in the second quarter of 2021 as compared to operating loss of $1.2 million in the second quarter of 2020.

  • Net income was $40.5 million or $0.85 per diluted share in the second quarter of 2021 as compared to $815,000 million or $0.02 per diluted share in the second quarter of 2020.

Revenue Comparison

($ in thousands)

Three Months Ended June 30,

2021

2020

Material sales

$

77,438

$

31,927

Royalty and license fees

48,212

22,380

Contract research services

4,010

3,661

Total revenue

$

129,660

$

57,968

Cost of Materials Comparison

($ in thousands)

Three Months Ended June 30,

2021

2020

Material sales

$

77,438

$

31,927

Cost of material sales

25,316

10,277

Gross margin on material sales

52,122

21,650

Gross margin as a % of material sales

67

%

68

%

Financial Highlights for the First Half of 2021

  • Total revenue in the first half of 2021 was $263.7 million as compared to $170.2 million in the first half of 2020. The increase in revenue was due to strengthened demand for OLED products utilizing our emitter material, as well as the recovery in sales that were adversely affected by the impact of the COVID-19 pandemic during the three months ended June 30, 2020. Even though we believe we have experienced the worst effects of the COVID-19 pandemic, we remain uncertain as to the possibility of its re-emergence and any corresponding negative impact on OLED market demand.

  • Revenue from material sales was $157.2 million in the first half of 2021 as compared to $98.5 million in the first half of 2020.

  • Revenue from royalty and license fees was $99.1 million in the first half of 2021 as compared to $65.5 million in the first half of 2020.

  • Cost of material sales was $46.3 million in the first half of 2021 as compared to $30.5 million in the first half of 2020.

  • Operating income was $113.5 million in the first half of 2021 as compared to $43.3 million in the first half of 2020.

  • Net income was $92.2 million or $1.94 per diluted share in the first half of 2021 as compared to $39.0 million or $0.82 per diluted share in the first half of 2020.

Revenue Comparison

($ in thousands)

Six Months Ended June 30,

2021

2020

Material sales

$

157,246

$

98,502

Royalty and license fees

99,098

65,458

Contract research services

7,316

6,285

Total revenue

$

263,660

$

170,245

Cost of Materials Comparison

($ in thousands)

Six Months Ended June 30,

2021

2020

Material sales

$

157,246

$

98,502

Cost of material sales

46,315

30,488

Gross margin on material sales

110,931

68,014

Gross margin as a % of material sales

71

%

69

%

2021 Guidance

The Company continues to believe 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 third quarter cash dividend of $0.20 per share on the Company’s common stock. The dividend is payable on September 30, 2021 to all shareholders of record on September 16, 2021.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, August 5, 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 and with subsidiaries and offices around the world, 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 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 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

(UNAUDITED)

(in thousands, except share and per share data)

June 30, 2021

December 31, 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

542,914

$

630,012

Short-term investments

190,540

99,996

Accounts receivable

99,629

82,261

Inventory

104,653

91,591

Other current assets

55,156

20,746

Total current assets

992,892

924,606

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $81,721 and $72,493

113,187

102,113

ACQUIRED TECHNOLOGY, net of accumulated amortization of $163,343 and $153,050

59,960

70,253

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $6,848 and $6,155

10,386

10,685

GOODWILL

15,535

15,535

INVESTMENTS

8,500

5,000

DEFERRED INCOME TAXES

35,579

37,695

OTHER ASSETS

114,676

103,341

TOTAL ASSETS

$

1,350,715

$

1,269,228

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

10,334

$

13,801

Accrued expenses

27,247

41,404

Deferred revenue

122,978

105,215

Other current liabilities

2,004

4,540

Total current liabilities

162,563

164,960

DEFERRED REVENUE

46,174

57,086

RETIREMENT PLAN BENEFIT LIABILITY

79,966

78,527

OTHER LIABILITIES

70,396

55,941

Total liabilities

359,099

356,514

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, 49,054,059 and 49,013,476 shares issued, and 47,688,411 and 47,647,828 shares outstanding, at June 30, 2021 and December 31, 2020, respectively

491

490

Additional paid-in capital

638,991

635,595

Retained earnings

427,188

353,930

Accumulated other comprehensive loss

(33,772

)

(36,019

)

Treasury stock, at cost (1,365,648 shares at June 30, 2021 and December 31, 2020)

(41,284

)

(41,284

)

Total shareholders’ equity

991,616

912,714

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,350,715

$

1,269,228

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,

2021

2020

2021

2020

REVENUE:

Material sales

$

77,438

$

31,927

$

157,246

$

98,502

Royalty and license fees

48,212

22,380

99,098

65,458

Contract research services

4,010

3,661

7,316

6,285

Total revenue

129,660

57,968

263,660

170,245

COST OF SALES

27,969

12,643

51,267

35,102

Gross margin

101,691

45,325

212,393

135,143

OPERATING EXPENSES:

Research and development

24,101

21,397

47,406

40,894

Selling, general and administrative

20,239

16,147

36,643

31,550

Amortization of acquired technology and other intangible assets

5,497

5,490

10,985

10,980

Patent costs

1,809

1,858

3,644

3,496

Royalty and license expense

149

1,618

261

4,902

Total operating expenses

51,795

46,510

98,939

91,822

OPERATING INCOME (LOSS)

49,896

(1,185

)

113,454

43,321

Interest income, net

75

1,268

208

3,415

Other income, net

221

170

280

372

Interest and other income, net

296

1,438

488

3,787

INCOME BEFORE INCOME TAXES

50,192

253

113,942

47,108

INCOME TAX (EXPENSE) BENEFIT

(9,651

)

562

(21,714

)

(8,138

)

NET INCOME

$

40,541

$

815

$

92,228

$

38,970

NET INCOME PER COMMON SHARE:

BASIC

$

0.85

$

0.02

$

1.94

$

0.82

DILUTED

$

0.85

$

0.02

$

1.94

$

0.82

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

BASIC

47,299,627

47,227,294

47,284,773

47,160,163

DILUTED

47,356,864

47,243,991

47,347,596

47,190,505

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.20

$

0.15

$

0.40

$

0.30

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Six Months Ended June 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

92,228

$

38,970

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

Amortization of deferred revenue and recognition of unbilled receivables

(110,993

)

(58,644

)

Depreciation

9,229

7,283

Amortization of intangibles

10,985

10,980

Change in excess inventory reserve

1,117

611

Amortization of premium and discount on investments, net

(128

)

(3,280

)

Stock-based compensation to employees

14,624

12,918

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

704

708

Deferred income tax expense (benefit)

1,458

(336

)

Retirement plan expense

4,457

2,828

Decrease (increase) in assets:

Accounts receivable

(17,368

)

(8,046

)

Inventory

(14,179

)

(21,181

)

Other current assets

(5,712

)

(5,967

)

Other assets

(15,005

)

(5,942

)

Increase (decrease) in liabilities:

Accounts payable and accrued expenses

(17,036

)

(20,332

)

Other current liabilities

(2,536

)

(639

)

Deferred revenue

92,816

75,683

Other liabilities

14,455

6,416

Net cash provided by operating activities

59,116

32,030

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(20,668

)

(11,804

)

Purchases of intangibles

(394

)

(25

)

Purchases of investments

(193,951

)

(404,232

)

Proceeds from sale and maturity of investments

100,000

412,760

Net cash used in investing activities

(115,013

)

(3,301

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

787

590

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

(13,018

)

(13,165

)

Cash dividends paid

(18,970

)

(14,215

)

Net cash used in financing activities

(31,201

)

(26,790

)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(87,098

)

1,939

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

630,012

131,627

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

542,914

$

133,566

The following non-cash activities occurred:

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

$

(35

)

$

1,242

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

366

390

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805006030/en/

Contacts

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