Universal Display Corporation Announces Second Quarter 2022 Financial Results
08/04/2022 - 04:08 PM
EWING, N.J. --(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
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Universal Display Contact:
Darice Liu
investor@oled.com
media@oled.com
+1 609-964-5123
Source: Universal Display Corporation