Universal Display Corporation Announces Fourth Quarter and Full Year 2022 Financial Results

Rhea-AI Summary

Universal Display Corporation (Nasdaq: OLED) reported strong financial results for Q4 and FY 2022, achieving record revenues and net income. In Q4 2022, total revenue hit $169 million, up from $146.2 million in Q4 2021, with net income of $65.1 million ($1.36 per diluted share). Full-year revenue reached $616.6 million compared to $553.5 million in 2021, with net income of $210.1 million ($4.40 per diluted share). The company anticipates a 2023 revenue range of $550 million to $600 million. A dividend of $0.35 per share will be paid March 31, 2023. Despite uncertainties in the global economy, Universal Display aims to build on its OLED market leadership.

Positive

• Record revenue of $169 million in Q4 2022, up 15.5% YoY.
• Full year revenue rose to $616.6 million, representing an increase of 11.4% YoY.
• Net income for Q4 2022 was $65.1 million, or $1.36 per diluted share, compared to $45.9 million in Q4 2021.
• Announced a cash dividend of $0.35 per share, payable March 31, 2023.

Negative

• 2023 revenue guidance lowered to a range of $550 million to $600 million, indicating potential market weakness.

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 fourth quarter and full year ended December 31, 2022.

“We ended 2022 strongly with record revenues and earnings,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “As we look to 2023, while macro uncertainties persist, we are continuing to build upon our leadership position in the OLED ecosystem. This includes continued discovery and development of next-generation phosphorescent materials, progress on the development of our commercial phosphorescent blue and groundbreaking OVJP (organic vapor jet printing) manufacturing platform, as well as investing in our infrastructure and capabilities. We believe that these initiatives and the industry’s advancing roadmap for medium- and large-area OLED displays are setting the stage for 2024 to be a pivotal year for the commencement of a new OLED adoption cycle and investment wave.”

Financial Highlights for the Fourth Quarter of 2022

• Total revenue in the fourth quarter of 2022 was $169.0 million as compared to $146.2 million in the fourth quarter of 2021. We continue to expect the near-term weakness in the overall global market economy to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of certain customers’ contracts compared to prior estimates, resulting in us recording a positive cumulative catch-up adjustment to total revenue during the fourth quarter of 2022 of $13.0 million arising from changes in estimates of transaction price.
• Revenue from material sales was $88.3 million in the fourth quarter of 2022 as compared to $85.8 million in the fourth quarter of 2021. This increase was primarily the result of higher unit volume.
• Revenue from royalty and license fees was $75.6 million in the fourth quarter of 2022 as compared to $56.0 million in the fourth quarter of 2021. The increase was primarily due to the cumulative catch-up adjustment as well as higher unit material volume.
• Cost of material sales was $26.6 million in the fourth quarter of 2022 as compared to $29.2 million in the fourth quarter of 2021. Fourth quarter cost of material sales decreased due to favorable product mix, partially offset by underutilization costs associated with our manufacturing facility in Shannon, Ireland, which commenced manufacturing in mid-2022.
• Total gross margin was 82% in the fourth quarter of 2022 as compared to 78% in the fourth quarter of 2021.
• Operating income was $83.1 million in the fourth quarter of 2022 as compared to $56.5 million in the fourth quarter of 2021.
• Net income was $65.1 million or $1.36 per diluted share in the fourth quarter of 2022 as compared to $45.9 million or $0.96 per diluted share in the fourth quarter of 2021.

Revenue Comparison

($ in thousands)		Three Months Ended December 31,
		2022				2021
Material sales		$	88,339			$	85,768
Royalty and license fees			75,585				55,995
Contract research services			5,108				4,484
Total revenue		$	169,032			$	146,247

Cost of Materials Comparison

($ in thousands)		Three Months Ended December 31,
		2022				2021
Material sales		$	88,339			$	85,768
Cost of material sales			26,603				29,199
Gross margin on material sales			61,736				56,569
Gross margin as a % of material sales			70	%			66	%

Financial Highlights for the Full Year 2022

• Total revenue for the full year 2022 was $616.6 million as compared to $553.5 million for the full year 2021. We continue to expect the near-term weakness in the overall global market economy to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of certain customers’ contracts compared to prior estimates, resulting in us recording a positive cumulative catch-up adjustment to total revenue during the full year 2022 of $30.3 million arising from changes in estimates of transaction price.
• Revenue from material sales was $331.1 million for the full year 2022 as compared to $318.6 million for the full year 2021. This increase was primarily the result of higher unit volume.
• Revenue from royalty and license fees was $267.1 million for the full year 2022 as compared to $219.0 million for the full year 2021. The increase was primarily due to the cumulative catch-up adjustment as well as higher unit material volume.
• Cost of material sales was $115.6 million for the full year 2022 as compared to $104.4 million for the full year 2021. The increase was due to higher unit material volumes as well as underutilization costs associated with our Shannon facility in the full year 2022 of $7.9 million.
• Total gross margin was 79% for both the full years 2022 and 2021.
• Operating income was $267.1 million for the full year 2022 as compared to $227.6 million for the full year 2021.
• Net income was $210.1 million or $4.40 per diluted share for the full year 2022 as compared to $184.2 million or $3.87 per diluted share for the full year 2021.

Revenue Comparison

($ in thousands)		Year Ended December 31,
		2022				2021
Material sales		$	331,081			$	318,623
Royalty and license fees			267,115				219,032
Contract research services			18,423				15,870
Total revenue		$	616,619			$	553,525

Cost of Materials Comparison

($ in thousands)		Year Ended December 31,
		2022				2021
Material sales		$	331,081			$	318,623
Cost of material sales			115,602				104,397
Gross margin on material sales			215,479				214,226
Gross margin as a % of material sales			65	%			67	%

2023 Guidance
The Company believes that its 2023 revenue will be the range of $550 million to $600 million. The OLED industry remains at a stage where many variables can have a material impact on results, and the Company thus caveats its financial guidance accordingly.

Dividend
The Company also announced a first quarter cash dividend of $0.35 per share on the Company’s common stock. The dividend is payable on March 31, 2023 to all shareholders of record on March 17, 2023.

Conference Call Information
In conjunction with this release, Universal Display will host a conference call on Thursday, February 23, 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 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, 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
(in thousands, except share and per share data)
		December 31, 2022				December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	93,430			$	311,993
Short-term investments			484,345				351,194
Accounts receivable			92,664				107,639
Inventory			183,220				134,160
Other current assets			45,791				20,948
Total current assets			899,450				925,934
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $117,118 and $92,461			143,445				128,832
ACQUIRED TECHNOLOGY, net of accumulated amortization of $189,671 and $173,635			38,382				49,668
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $8,989 and $7,565			8,247				9,711
GOODWILL			15,535				15,535
INVESTMENTS			259,861				168,076
DEFERRED INCOME TAXES			58,161				33,453
OTHER ASSETS			109,739				135,710
TOTAL ASSETS		$	1,532,820			$	1,466,919
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	9,519			$	14,955
Accrued expenses			51,002				45,474
Deferred revenue			45,599				120,864
Other current liabilities			29,577				6,645
Total current liabilities			135,697				187,938
DEFERRED REVENUE			18,279				36,217
RETIREMENT PLAN BENEFIT LIABILITY			59,790				66,773
OTHER LIABILITIES			43,685				76,077
Total liabilities			257,451				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, 49,136,030 and 49,065,924 shares issued, and 47,770,382 and 47,700,276 shares outstanding at December 31, 2022 and December 31, 2021, respectively			491				491
Additional paid-in capital			681,335				658,728
Retained earnings			653,277				500,212
Accumulated other comprehensive loss			(18,452	)			(18,235	)
Treasury stock, at cost (1,365,648 shares at December 31, 2022 and December 31, 2021)			(41,284	)			(41,284	)
Total shareholders’ equity			1,275,369				1,099,914
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,532,820			$	1,466,919

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
		Three Months Ended December 31,								Twelve Months Ended December 31,
		2022				2021				2022				2021
REVENUE:		(Unaudited)
Material sales		$	88,339			$	85,768			$	331,081			$	318,623
Royalty and license fees			75,585				55,995				267,115				219,032
Contract research services			5,108				4,484				18,423				15,870
Total revenue			169,032				146,247				616,619				553,525
COST OF SALES			30,098				32,243				127,896				114,991
Gross margin			138,934				114,004				488,723				438,534
OPERATING EXPENSES:
Research and development			31,906				26,940				117,062				99,673
Selling, general and administrative			18,513				22,769				77,886				80,372
Amortization of acquired technology and other intangible assets			2,897				5,504				17,459				21,994
Patent costs			2,254				2,157				8,329				8,160
Royalty and license expense			281				172				877				691
Total operating expenses			55,851				57,542				221,613				210,890
OPERATING INCOME			83,083				56,462				267,110				227,644
Interest income, net			3,505				160				7,811				505
Other (loss) income, net			(5,942	)			(80	)			(6,691	)			98
Interest and other income, net			(2,437	)			80				1,120				603
INCOME BEFORE INCOME TAXES			80,646				56,542				268,230				228,247
INCOME TAX EXPENSE			(15,512	)			(10,666	)			(58,169	)			(44,034	)
NET INCOME		$	65,134			$	45,876			$	210,061			$	184,213
NET INCOME PER COMMON SHARE:
BASIC		$	1.37			$	0.96			$	4.41			$	3.87
DILUTED		$	1.36			$	0.96			$	4.40			$	3.87
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC			47,402,007				47,324,718				47,390,352				47,296,447
DILUTED			47,492,560				47,387,469				47,468,507				47,365,435
CASH DIVIDEND DECLARED PER COMMON SHARE		$	0.30			$	0.20			$	1.20			$	0.80

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Year Ended December 31,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	210,061				184,213
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			24,815				19,968
Amortization of intangibles			17,459				21,994
Amortization of premium and discount on investments, net			(6,461	)			(373	)
Impairment of minority investments			6,962				—
Stock-based compensation to employees			28,380				34,871
Stock-based compensation to Board of Directors and Scientific Advisory Board			1,566				1,404
Deferred income tax (benefit) expense			(26,946	)			1,748
Retirement plan expense			5,276				8,875
Decrease (increase) in assets:
Accounts receivable			14,975				(25,378	)
Inventory			(49,060	)			(42,569	)
Other current assets			(24,843	)			(202	)
Other assets			25,971				(32,369	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses			3,338				1,902
Other current liabilities			20,917				2,105
Deferred revenue			(93,203	)			(5,220	)
Other liabilities			(32,392	)			20,136
Net cash provided by operating activities			126,815				191,105
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(42,497	)			(43,161	)
Purchase of intangibles			(4,709	)			(394	)
Purchases of investments			(701,993	)			(642,180	)
Proceeds from sale and maturity of investments			468,456				227,984
Net cash used in investing activities			(280,743	)			(457,751	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock			1,570				1,507
Payment of withholding taxes related to stock-based compensation to employees			(9,209	)			(14,949	)
Cash dividends paid			(56,996	)			(37,931	)
Net cash used in financing activities			(64,635	)			(51,373	)
DECREASE IN CASH AND CASH EQUIVALENTS			(218,563	)			(318,019	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR			311,993				630,012
CASH AND CASH EQUIVALENTS, END OF YEAR		$	93,430			$	311,993
The following non-cash activities occurred:
Unrealized loss on available-for-sale securities		$	(8,100	)		$	(295	)
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			3,069				(3,526	)
Cash paid for income tax			72,347				52,650

 

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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 the financial results for Universal Display Corporation in Q4 2022?

Universal Display reported total revenue of $169 million in Q4 2022, with a net income of $65.1 million.

How did Universal Display perform in the full year 2022?

For the full year 2022, Universal Display achieved total revenue of $616.6 million, up from $553.5 million in 2021, with a net income of $210.1 million.

What is Universal Display's revenue guidance for 2023?

Universal Display expects 2023 revenue in the range of $550 million to $600 million.

When is Universal Display's dividend payment?

The cash dividend of $0.35 per share will be paid on March 31, 2023.