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.
Follow Universal Display Corporation
(OLED-C)
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
