Universal Display Corporation Announces Second Quarter 2021 Financial Results

Rhea-AI Summary

Universal Display Corporation (Nasdaq: OLED) reported a remarkable second quarter 2021, achieving total revenue of $129.7 million, a significant increase from $58.0 million in Q2 2020. This growth is attributed to heightened demand for OLED products and recovery from COVID-19 impacts. Notably, net income soared to $40.5 million or $0.85 per diluted share, compared to $0.02 per share in the same quarter last year. For 2021, the company expects revenue between $530 million and $560 million and has declared a cash dividend of $0.20 per share payable on September 30, 2021.

Positive

• Revenue increased by 124% year-over-year, reaching $129.7 million in Q2 2021.
• Net income surged to $40.5 million, up from $0.8 million in Q2 2020.
• Projected 30% year-over-year sales growth and expected to achieve $530 million to $560 million in revenue for 2021.
• Announced a cash dividend of $0.20 per share for Q3 2021.

Negative

• Uncertainty remains regarding potential re-emergence of COVID-19 impacting OLED market demand.

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, 2021.

“Looking to the year, we are on track to achieve approximately 30% year-over-year sales growth, translating into a new record high for annual revenue for the Company,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “As we anticipate ongoing momentum in the OLED industry to increase in 2021 and beyond, we are excited about the long and vast runway of forecasted growth for the market. Given this expected growth, we are continuing to fuel and fortify our innovation engine, expand our global infrastructure, and invest in our people to advance our leadership position and further enable our customers and the OLED ecosystem.”

Rosenblatt continued, “Energy-efficiency and sustainability are key cornerstones of our UniversalPHOLED technology and materials. The discovery of our proprietary phosphorescent technology was an enabling breakthrough in the OLED industry. With efficiencies that are up to four times higher than conventional OLED materials, UDC’s patented and award-winning phosphorescent OLED technology and UniversalPHOLED materials are proven to be integral in enabling high-performance, low-power consumption and energy-efficiency in OLED displays and lighting. Our energy-efficiency initiatives are expanding as we continue to invent and develop new OLED materials and technologies, including progress toward delivery of an all-phosphorescent red, green and blue emissive system, that can enable a sustainable and low-carbon future.”

Financial Highlights for the Second Quarter of 2021

• Total revenue in the second quarter of 2021 was $129.7 million as compared to $58.0 million in the second quarter of 2020. The increase in revenue was due to strengthened demand for OLED products utilizing our emitter material, as well as the recovery in sales that were adversely affected by the impact of the COVID-19 pandemic during the three months ended June 30, 2020. Even though we believe we have experienced the worst effects of the COVID-19 pandemic, we remain uncertain as to the possibility of its re-emergence and any corresponding negative impact on OLED market demand.
• Revenue from material sales was $77.4 million in the second quarter of 2021 as compared to $31.9 million in the second quarter of 2020.
• Revenue from royalty and license fees was $48.2 million in the second quarter of 2021 as compared to $22.4 million in the second quarter of 2020.
• Cost of material sales was $25.3 million in the second quarter of 2021 as compared to $10.3 million in the second quarter of 2020.
• Operating income was $49.9 million in the second quarter of 2021 as compared to operating loss of $1.2 million in the second quarter of 2020.
• Net income was $40.5 million or $0.85 per diluted share in the second quarter of 2021 as compared to $815,000 million or $0.02 per diluted share in the second quarter of 2020.

Revenue Comparison

($ in thousands)		Three Months Ended June 30,
		2021				2020
Material sales		$	77,438			$	31,927
Royalty and license fees			48,212				22,380
Contract research services			4,010				3,661
Total revenue		$	129,660			$	57,968

Cost of Materials Comparison

($ in thousands)		Three Months Ended June 30,
		2021				2020
Material sales		$	77,438			$	31,927
Cost of material sales			25,316				10,277
Gross margin on material sales			52,122				21,650
Gross margin as a % of material sales			67	%			68	%

Financial Highlights for the First Half of 2021

• Total revenue in the first half of 2021 was $263.7 million as compared to $170.2 million in the first half of 2020. The increase in revenue was due to strengthened demand for OLED products utilizing our emitter material, as well as the recovery in sales that were adversely affected by the impact of the COVID-19 pandemic during the three months ended June 30, 2020. Even though we believe we have experienced the worst effects of the COVID-19 pandemic, we remain uncertain as to the possibility of its re-emergence and any corresponding negative impact on OLED market demand.
• Revenue from material sales was $157.2 million in the first half of 2021 as compared to $98.5 million in the first half of 2020.
• Revenue from royalty and license fees was $99.1 million in the first half of 2021 as compared to $65.5 million in the first half of 2020.
• Cost of material sales was $46.3 million in the first half of 2021 as compared to $30.5 million in the first half of 2020.
• Operating income was $113.5 million in the first half of 2021 as compared to $43.3 million in the first half of 2020.
• Net income was $92.2 million or $1.94 per diluted share in the first half of 2021 as compared to $39.0 million or $0.82 per diluted share in the first half of 2020.

Revenue Comparison

($ in thousands)		Six Months Ended June 30,
		2021				2020
Material sales		$	157,246			$	98,502
Royalty and license fees			99,098				65,458
Contract research services			7,316				6,285
Total revenue		$	263,660			$	170,245

Cost of Materials Comparison

($ in thousands)		Six Months Ended June 30,
		2021				2020
Material sales		$	157,246			$	98,502
Cost of material sales			46,315				30,488
Gross margin on material sales			110,931				68,014
Gross margin as a % of material sales			71	%			69	%

2021 Guidance

The Company continues to believe that its 2021 revenue will be approximately in the range of $530 million to $560 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 $0.20 per share on the Company’s common stock. The dividend is payable on September 30, 2021 to all shareholders of record on September 16, 2021.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, August 5, 2021 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 5,000 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 Company’s technologies and potential applications of those technologies, 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, 2020. 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, 2021				December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	542,914			$	630,012
Short-term investments			190,540				99,996
Accounts receivable			99,629				82,261
Inventory			104,653				91,591
Other current assets			55,156				20,746
Total current assets			992,892				924,606
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $81,721 and $72,493			113,187				102,113
ACQUIRED TECHNOLOGY, net of accumulated amortization of $163,343 and $153,050			59,960				70,253
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $6,848 and $6,155			10,386				10,685
GOODWILL			15,535				15,535
INVESTMENTS			8,500				5,000
DEFERRED INCOME TAXES			35,579				37,695
OTHER ASSETS			114,676				103,341
TOTAL ASSETS		$	1,350,715			$	1,269,228
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	10,334			$	13,801
Accrued expenses			27,247				41,404
Deferred revenue			122,978				105,215
Other current liabilities			2,004				4,540
Total current liabilities			162,563				164,960
DEFERRED REVENUE			46,174				57,086
RETIREMENT PLAN BENEFIT LIABILITY			79,966				78,527
OTHER LIABILITIES			70,396				55,941
Total liabilities			359,099				356,514
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, 49,054,059 and 49,013,476 shares issued, and 47,688,411 and 47,647,828 shares outstanding, at June 30, 2021 and December 31, 2020, respectively			491				490
Additional paid-in capital			638,991				635,595
Retained earnings			427,188				353,930
Accumulated other comprehensive loss			(33,772	)			(36,019	)
Treasury stock, at cost (1,365,648 shares at June 30, 2021 and December 31, 2020)			(41,284	)			(41,284	)
Total shareholders’ equity			991,616				912,714
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,350,715			$	1,269,228

 

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,
		2021				2020				2021				2020
REVENUE:
Material sales		$	77,438			$	31,927			$	157,246			$	98,502
Royalty and license fees			48,212				22,380				99,098				65,458
Contract research services			4,010				3,661				7,316				6,285
Total revenue			129,660				57,968				263,660				170,245
COST OF SALES			27,969				12,643				51,267				35,102
Gross margin			101,691				45,325				212,393				135,143
OPERATING EXPENSES:
Research and development			24,101				21,397				47,406				40,894
Selling, general and administrative			20,239				16,147				36,643				31,550
Amortization of acquired technology and other intangible assets			5,497				5,490				10,985				10,980
Patent costs			1,809				1,858				3,644				3,496
Royalty and license expense			149				1,618				261				4,902
Total operating expenses			51,795				46,510				98,939				91,822
OPERATING INCOME (LOSS)			49,896				(1,185	)			113,454				43,321
Interest income, net			75				1,268				208				3,415
Other income, net			221				170				280				372
Interest and other income, net			296				1,438				488				3,787
INCOME BEFORE INCOME TAXES			50,192				253				113,942				47,108
INCOME TAX (EXPENSE) BENEFIT			(9,651	)			562				(21,714	)			(8,138	)
NET INCOME		$	40,541			$	815			$	92,228			$	38,970
NET INCOME PER COMMON SHARE:
BASIC		$	0.85			$	0.02			$	1.94			$	0.82
DILUTED		$	0.85			$	0.02			$	1.94			$	0.82
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC			47,299,627				47,227,294				47,284,773				47,160,163
DILUTED			47,356,864				47,243,991				47,347,596				47,190,505
CASH DIVIDENDS DECLARED PER COMMON SHARE		$	0.20			$	0.15			$	0.40			$	0.30

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
		Six Months Ended June 30,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	92,228			$	38,970
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue and recognition of unbilled receivables			(110,993	)			(58,644	)
Depreciation			9,229				7,283
Amortization of intangibles			10,985				10,980
Change in excess inventory reserve			1,117				611
Amortization of premium and discount on investments, net			(128	)			(3,280	)
Stock-based compensation to employees			14,624				12,918
Stock-based compensation to Board of Directors and Scientific Advisory Board			704				708
Deferred income tax expense (benefit)			1,458				(336	)
Retirement plan expense			4,457				2,828
Decrease (increase) in assets:
Accounts receivable			(17,368	)			(8,046	)
Inventory			(14,179	)			(21,181	)
Other current assets			(5,712	)			(5,967	)
Other assets			(15,005	)			(5,942	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses			(17,036	)			(20,332	)
Other current liabilities			(2,536	)			(639	)
Deferred revenue			92,816				75,683
Other liabilities			14,455				6,416
Net cash provided by operating activities			59,116				32,030
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(20,668	)			(11,804	)
Purchases of intangibles			(394	)			(25	)
Purchases of investments			(193,951	)			(404,232	)
Proceeds from sale and maturity of investments			100,000				412,760
Net cash used in investing activities			(115,013	)			(3,301	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock			787				590
Payment of withholding taxes related to stock-based compensation to employees			(13,018	)			(13,165	)
Cash dividends paid			(18,970	)			(14,215	)
Net cash used in financing activities			(31,201	)			(26,790	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(87,098	)			1,939
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			630,012				131,627
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	542,914			$	133,566
The following non-cash activities occurred:
Unrealized (loss) gain on available-for-sale securities		$	(35	)		$	1,242
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			366				390

 

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FAQ

What were Universal Display's Q2 2021 financial results?

Universal Display reported $129.7 million in revenue for Q2 2021, a 124% increase from $58.0 million in Q2 2020.

What is Universal Display's net income for Q2 2021?

The net income for Q2 2021 was $40.5 million, or $0.85 per diluted share.

What is the revenue guidance for Universal Display in 2021?

The company estimates its 2021 revenue will be between $530 million and $560 million.

When is the next dividend payment for Universal Display?

The next cash dividend of $0.20 per share is payable on September 30, 2021.

How did Universal Display's revenue compare year-over-year?

Revenue for the first half of 2021 was $263.7 million, compared to $170.2 million in the same period in 2020.