TechDogs-"Universal Display Corporation Announces Second Quarter 2023 Financial Results"

Consumer Electronics Technology

Universal Display Corporation Announces Second Quarter 2023 Financial Results

By Business Wire

Business Wire
Overall Rating

EWING, N.J.--(BUSINESS WIRE)--$OLED #OLED--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, 2023.

“We are pleased with our solid performance and results in the second quarter. Our full year revenue projections are aligning closely to prior expectations, and we have narrowed our guidance accordingly,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “The OLED industry continues to lay the groundwork for promising growth in 2024 and beyond as the OLED IT adoption wave is poised to commence. As a key enabler in the ecosystem, we continue to support the market's growth by leveraging our nearly three decades of innovation and know-how, investing in new and next-generation OLED solutions, and delivering increasing value to our customers.”

Financial Highlights for the Second Quarter of 2023

  • Total revenue in the second quarter of 2023 was $146.6 million as compared to $136.6 million in the second quarter of 2022.
  • Revenue from material sales was $77.1 million in the second quarter of 2023 as compared to $71.9 million in the second quarter of 2022. This increase was primarily due to greater sales volumes of our emitter material.
  • Revenue from royalty and license fees was $64.4 million in the second quarter of 2023 as compared to $60.3 million in the second quarter of 2022. This increase was primarily the result of higher sales volume of material.
  • Cost of material sales was $28.6 million in the second quarter of 2023 as compared to $25.0 million in the second quarter of 2022.
  • Total gross margin was 78% in the second quarter of 2023 as compared to 80% in the second quarter of 2022. Shannon facility costs of $3.9 million during the second quarter of 2023 contributed to a 2% decrease in total gross margin between periods.
  • Operating income was $58.6 million in the second quarter of 2023 as compared to $53.3 million in the second quarter of 2022.
  • Net income was $49.7 million or $1.04 per diluted share in the second quarter of 2023 as compared to $41.5 million or $0.87 per diluted share in the second quarter of 2022.

Revenue Comparison

($ in thousands)

Three Months Ended June 30,

2023

2022

Material sales

$

77,107

$

71,869

Royalty and license fees

64,399

60,278

Contract research services

5,059

4,414

Total revenue

$

146,565

$

136,561

Cost of Materials Comparison

($ in thousands)

Three Months Ended June 30,

2023

2022

Material sales

$

77,107

$

71,869

Cost of material sales

28,570

25,022

Gross margin on material sales

48,537

46,847

Gross margin as a % of material sales

63

%

65

%

Financial Highlights for the First Half of 2023

  • Total revenue in the first half of 2023 was $277.0 million as compared to $287.0 million in the first half of 2022, reflective of lower revenue in the first quarter of the year.
  • Revenue from material sales was $147.3 million in the first half of 2023 as compared to $158.6 million in the first half of 2022. The decline in material sales revenue was primarily due to reduced sales volumes of material sold during the first quarter of the year.
  • Revenue from royalty and license fees was $119.6 million in the first half of 2023 as compared to $120.1 million in the first half of 2022.
  • Cost of material sales was $58.1 million in the first half of 2023 as compared to $54.9 million in the first half of 2022 primarily due to Shannon facility costs of $8.6 million and inventory provisions of $4.1 million, partially offset by reduced sales volumes in the first half of 2023 compared to the first half of 2022.
  • Total gross margin was 76% in the first half of 2023 as compared to 79% in the first half of 2022. Shannon facility costs of $8.6 million and the inventory provision of $4.1 million in 2023 contributed to the 3% decrease in total gross margin between periods.
  • Operating income was $104.0 million in the first half of 2023 as compared to $115.6 million in the first half of 2022.
  • Net income was $89.5 million or $1.87 per diluted share in the first half of 2023 compared to $91.5 million or $1.92 per diluted share in the first half of 2022.

Revenue Comparison

($ in thousands)

Six Months Ended June 30,

2023

2022

Material sales

$

147,297

$

158,560

Royalty and license fees

119,609

120,080

Contract research services

10,126

8,391

Total revenue

$

277,032

$

287,031

Cost of Materials Comparison

($ in thousands)

Six Months Ended June 30,

2023

2022

Material sales

$

147,297

$

158,560

Cost of material sales

58,058

54,942

Gross margin on material sales

89,239

103,618

Gross margin as a % of material sales

61

%

65

%

2023 Revised Guidance

The Company has increased the lower end of its previous revenue guidance and believes that 2023 revenue will be in the range of $560 million to $600 million.

Dividend

The Company also announced a third quarter cash dividend of $0.35 per share on the Company’s common stock. The dividend is payable on September 29, 2023 to all shareholders of record as of the close of business on September 15, 2023.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, August 3, 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)

June 30, 2023

December 31, 2022

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

93,470

$

93,430

Short-term investments

465,679

484,345

Accounts receivable

109,390

92,664

Inventory

175,855

183,220

Other current assets

33,753

45,791

Total current assets

878,147

899,450

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $130,099 and $117,118

157,566

143,445

ACQUIRED TECHNOLOGY, net of accumulated amortization of $178,459 and $189,671

98,216

38,382

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $9,696 and $8,989

7,592

8,247

GOODWILL

15,535

15,535

INVESTMENTS

211,361

259,861

DEFERRED INCOME TAXES

70,364

58,161

OTHER ASSETS

102,074

109,739

TOTAL ASSETS

$

1,540,855

$

1,532,820

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

7,330

$

9,519

Accrued expenses

35,072

51,002

Deferred revenue

29,732

45,599

Other current liabilities

8,598

29,577

Total current liabilities

80,732

135,697

DEFERRED REVENUE

18,410

18,279

RETIREMENT PLAN BENEFIT LIABILITY

60,707

59,790

OTHER LIABILITIES

42,240

43,685

Total liabilities

202,089

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, 48,706,932 and 49,136,030 shares issued, and 47,341,284 and 47,770,382 shares outstanding, at June 30, 2023 and December 31, 2022, respectively

487

491

Additional paid-in capital

686,501

681,335

Retained earnings

709,372

653,277

Accumulated other comprehensive loss

(16,312

)

(18,452

)

Treasury stock, at cost (1,365,648 shares at June 30, 2023 and December 31, 2022)

(41,284

)

(41,284

)

Total shareholders’ equity

1,338,766

1,275,369

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,540,855

$

1,532,820

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,

2023

2022

2023

2022

REVENUE:

Material sales

$

77,107

$

71,869

$

147,297

$

158,560

Royalty and license fees

64,399

60,278

119,609

120,080

Contract research services

5,059

4,414

10,126

8,391

Total revenue

146,565

136,561

277,032

287,031

COST OF SALES

32,139

27,239

65,109

60,402

Gross margin

114,426

109,322

211,923

226,629

OPERATING EXPENSES:

Research and development

32,318

28,197

63,741

54,742

Selling, general and administrative

17,077

19,869

32,473

40,931

Amortization of acquired technology and other intangible assets

3,994

5,502

6,885

11,000

Patent costs

2,229

2,259

4,484

4,057

Royalty and license expense

169

181

333

335

Total operating expenses

55,787

56,008

107,916

111,065

OPERATING INCOME

58,639

53,314

104,007

115,564

Interest income, net

6,198

1,583

13,165

1,874

Other (loss) income, net

(784

)

89

(1,487

)

55

Interest and other income, net

5,414

1,672

11,678

1,929

INCOME BEFORE INCOME TAXES

64,053

54,986

115,685

117,493

INCOME TAX EXPENSE

(14,375

)

(13,484

)

(26,168

)

(26,021

)

NET INCOME

$

49,678

$

41,502

$

89,517

$

91,472

NET INCOME PER COMMON SHARE:

BASIC

$

1.04

$

0.87

$

1.87

$

1.92

DILUTED

$

1.04

$

0.87

$

1.87

$

1.92

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

BASIC

47,572,971

47,393,830

47,548,404

47,381,864

DILUTED

47,618,115

47,457,892

47,593,657

47,451,354

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.35

$

0.30

$

0.70

$

0.60

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Six Months Ended June 30,

2023

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

89,517

$

91,472

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

Depreciation

13,207

11,529

Amortization of intangibles

6,885

11,000

Amortization of premium and discount on investments, net

(6,845

)

(1,027

)

Stock-based compensation to employees

10,479

14,282

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

841

774

Deferred income tax benefit

(12,782

)

(2,282

)

Retirement plan expense, net of benefit payments

1,397

2,718

Decrease (increase) in assets:

Accounts receivable

(16,726

)

32,706

Inventory

7,365

(31,475

)

Other current assets

12,038

(17,296

)

Other assets

7,665

7,522

Increase (decrease) in liabilities:

Accounts payable and accrued expenses

(17,651

)

(7,126

)

Other current liabilities

(20,811

)

(3,343

)

Deferred revenue

(15,736

)

(27,954

)

Other liabilities

(1,445

)

4,630

Net cash provided by operating activities

57,398

86,130

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(27,274

)

(21,336

)

Purchases of intangibles

(66,063

)

(12

)

Purchases of investments

(115,048

)

(287,919

)

Proceeds from sale and maturity of investments

190,907

161,530

Net cash used in investing activities

(17,478

)

(147,737

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

971

847

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

(7,429

)

(8,844

)

Cash dividends paid

(33,422

)

(28,493

)

Net cash used in financing activities

(39,880

)

(36,490

)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

40

(98,097

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

93,430

311,993

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

93,470

$

213,896

Supplemental disclosures:

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

$

1,848

$

(7,095

)

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

(54

)

611

Cash paid for income tax

59,849

25,949

Contacts

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

First published on Fri, Aug 4, 2023

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Tags:

Universal Display Corporation UniversalPHOLED® Technology Organic Light Emitting Diode (OLED) Technologies

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