Universal Display Corporation Announces First Quarter 2023 Financial Results

Rhea-AI Summary

Universal Display Corporation reports financial results for Q1 2023, reaffirms full-year outlook. Announces acquisition of Merck KGaA's phosphorescent emitter patent portfolio and a new collaboration agreement. Total revenue for Q1 2023 was $130.5 million, a decrease from Q1 2022. Revenue from material sales was $70.2 million, a decrease from Q1 2022. Revenue from royalty and license fees was $55.2 million, a decrease from Q1 2022. Operating income was $45.4 million, a decrease from Q1 2022. Net income was $39.8 million, a decrease from Q1 2022. The company affirms its previous revenue guidance for 2023. Announces a second quarter cash dividend of $0.35 per share.

Positive

• Universal Display Corporation reaffirms full-year outlook, announces new collaboration agreement and acquisition of Merck KGaA's patent portfolio. Q1 2023 revenue of $130.5 million, operating income of $45.4 million, and net income of $39.8 million. Affirms revenue guidance for 2023. Announces second quarter cash dividend of $0.35 per share.

Negative

• Total revenue for Q1 2023 decreased compared to Q1 2022. Revenue from material sales and royalty and license fees also decreased compared to Q1 2022. Operating income and net income decreased compared to Q1 2022.

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 first quarter ended March 31, 2023.

“Our first quarter results were in-line with our expectations and we are reaffirming our full year 2023 outlook,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “While macro uncertainties continue to linger, we believe that recent OLED investment and product announcements pave the path for a new OLED adoption cycle and strong growth in the coming years. Additionally, today we announced the acquisition of Merck KGaA, Darmstadt, Germany’s phosphorescent emitter patent portfolio, which further strengthens our leadership position in the OLED ecosystem and broadens the tools available to our team as we develop new and next-generation phosphorescent materials. We also announced a new multi-year collaboration agreement with Merck KGaA, Darmstadt, Germany.”

Financial Highlights for the First Quarter of 2023

• Total revenue in the first quarter of 2023 was $130.5 million as compared to $150.5 million in the first quarter of 2022. As we have previously noted, the near-term weakness in the overall global market economy continues to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of several customers’ contracts compared to prior estimates, resulting in us recording a positive cumulative catch-up adjustment to total revenue during the first quarter of 2023 of $5.7 million arising from changes in estimates of transaction price.
• Revenue from material sales was $70.2 million in the first quarter of 2023 as compared to $86.7 million in the first quarter of 2022. This decrease was primarily the result of lower unit material volume.
• Revenue from royalty and license fees was $55.2 million in the first quarter of 2023 as compared to $59.8 million in the first quarter of 2022. This decrease was primarily the result of lower unit material volume.
• Cost of material sales was $29.5 million in the first quarter of 2023 as compared to $29.9 million in the first quarter of 2022. Cost of material sales during the quarter decreased due to lower unit material volume, offset by a $3.3 million increase in our inventory provision and $4.7 million in costs related to our Shannon facility, which commenced manufacturing activities in June 2022.
• Total gross margin was 75% in the first three months of 2023 as compared to 78% in the first three months of 2022. Shannon facility costs of $4.7 million and the inventory provision of $3.3 million in 2023 contributed to a 6% decrease in total gross margin between periods.
• Operating income was $45.4 million in the first quarter of 2023 as compared to $62.3 million in the first quarter of 2022.
• Net income was $39.8 million or $0.83 per diluted share in the first quarter of 2023 as compared to $50.0 million or $1.05 per diluted share in the first quarter of 2022.

Revenue Comparison

($ in thousands)		Three Months Ended March 31,
		2023				2022
Material sales		$	70,190			$	86,691
Royalty and license fees			55,210				59,802
Contract research services			5,067				3,977
Total revenue		$	130,467			$	150,470

Cost of Materials Comparison

($ in thousands)		Three Months Ended March 31,
		2023				2022
Material sales		$	70,190			$	86,691
Cost of material sales			29,488				29,920
Gross margin on material sales			40,702				56,771
Gross margin as a % of material sales			58	%			65	%

2023 Guidance

The Company affirms its previous revenue guidance and believes that 2023 revenue will be the range of $550 million to $600 million.

Dividend

The Company also announced a second quarter cash dividend of $0.35 per share on the Company’s common stock. The dividend is payable on June 30, 2023 to all shareholders of record on June 16, 2023.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Wednesday, May 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 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, 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)

		March 31, 2023				December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	158,294			$	93,430
Short-term investments			487,812				484,345
Accounts receivable			92,677				92,664
Inventory			174,245				183,220
Other current assets			37,193				45,791
Total current assets			950,221				899,450
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $123,388 and $117,118			145,281				143,445
ACQUIRED TECHNOLOGY, net of accumulated amortization of $174,820 and $189,671			35,843				38,382
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $9,341 and $8,989			7,947				8,247
GOODWILL			15,535				15,535
INVESTMENTS			213,369				259,861
DEFERRED INCOME TAXES			63,292				58,161
OTHER ASSETS			104,224				109,739
TOTAL ASSETS		$	1,535,712			$	1,532,820
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	9,741			$	9,519
Accrued expenses			25,346				51,002
Deferred revenue			37,419				45,599
Other current liabilities			42,451				29,577
Total current liabilities			114,957				135,697
DEFERRED REVENUE			17,843				18,279
RETIREMENT PLAN BENEFIT LIABILITY			60,248				59,790
OTHER LIABILITIES			43,199				43,685
Total liabilities			236,247				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, 48,697,467 and 49,136,030 shares issued, and 47,331,819 and 47,770,382 shares outstanding, at March 31, 2023 and December 31, 2022, respectively			487				491
Additional paid-in capital			679,390				681,335
Retained earnings			676,347				653,277
Accumulated other comprehensive loss			(15,477	)			(18,452	)
Treasury stock, at cost (1,365,648 shares at March 31, 2023 and December 31, 2022)			(41,284	)			(41,284	)
Total shareholders’ equity			1,299,465				1,275,369
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,535,712			$	1,532,820

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except share and per share data)

		Three Months Ended March 31,
		2023				2022
REVENUE:
Material sales		$	70,190			$	86,691
Royalty and license fees			55,210				59,802
Contract research services			5,067				3,977
Total revenue			130,467				150,470
COST OF SALES			32,970				33,163
Gross margin			97,497				117,307
OPERATING EXPENSES:
Research and development			31,423				26,545
Selling, general and administrative			15,396				21,062
Amortization of acquired technology and other intangible assets			2,891				5,498
Patent costs			2,255				1,798
Royalty and license expense			164				154
Total operating expenses			52,129				55,057
OPERATING INCOME			45,368				62,250
Interest income, net			6,967				291
Other loss, net			(703	)			(34	)
Interest and other loss, net			6,264				257
INCOME BEFORE INCOME TAXES			51,632				62,507
INCOME TAX EXPENSE			(11,793	)			(12,537	)
NET INCOME		$	39,839			$	49,970
NET INCOME PER COMMON SHARE:
BASIC		$	0.83			$	1.05
DILUTED		$	0.83			$	1.05
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC			47,523,593				47,369,764
DILUTED			47,567,007				47,440,281
CASH DIVIDENDS DECLARED PER COMMON SHARE		$	0.35			$	0.30

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

		Three Months Ended March 31,
		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	39,839			$	49,970
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			6,496				5,627
Amortization of intangibles			2,891				5,498
Amortization of premium and discount on investments, net			(3,597	)			(271	)
Stock-based compensation to employees			3,992				6,085
Stock-based compensation to Board of Directors and Scientific Advisory Board			423				430
Deferred income tax benefit			(5,936	)			(1,380	)
Retirement plan expense, net of benefit payments			782				1,359
Decrease (increase) in assets:
Accounts receivable			(13	)			2,692
Inventory			8,975				(9,080	)
Other current assets			8,598				(8,172	)
Other assets			5,515				9,488
Increase (decrease) in liabilities:
Accounts payable and accrued expenses			(24,116	)			(4,261	)
Other current liabilities			12,874				5,807
Deferred revenue			(8,616	)			(13,568	)
Other liabilities			(486	)			2,384
Net cash provided by operating activities			47,621				52,608
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(9,098	)			(10,751	)
Purchases of intangibles			(51	)			(12	)
Purchases of investments			(65,207	)			(24,915	)
Proceeds from sale and maturity of investments			115,031				50,240
Net cash provided by investing activities			40,675				14,562
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock			518				403
Payment of withholding taxes related to stock-based compensation to employees			(7,181	)			(7,896	)
Cash dividends paid			(16,769	)			(14,246	)
Net cash used in financing activities			(23,432	)			(21,739	)
INCREASE IN CASH AND CASH EQUIVALENTS			64,864				45,431
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			93,430				311,993
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	158,294			$	357,424
The following non-cash activities occurred:
Unrealized gain (loss) on available-for-sale securities		$	3,202			$	(5,031	)
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			766				2,077

 

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Universal Display Contact:

Darice Liu

investor@oled.com

media@oled.com

+1 609-964-5123

Source: Universal Display Corporation

FAQ

What were Universal Display Corporation's financial results for Q1 2023?

Total revenue for Q1 2023 was $130.5 million. Operating income was $45.4 million. Net income was $39.8 million.

What is Universal Display Corporation's revenue guidance for 2023?

The company affirms its previous revenue guidance and expects revenue to be in the range of $550 million to $600 million for 2023.

What dividend did Universal Display Corporation announce?

The company announced a second quarter cash dividend of $0.35 per share on the common stock.