Universal Display Corporation Announces Second Quarter 2023 Financial Results

Rhea-AI Summary

Universal Display Corporation (Nasdaq: OLED) reported Q2 2023 financial results, with total revenue of $146.6 million, a 7.3% increase YoY. Material sales revenue was $77.1 million, up 7.2% YoY, primarily due to higher sales volumes of emitter material. Royalty and license fees revenue was $64.4 million, up 6.9% YoY. Operating income was $58.6 million, a 10% increase YoY. Net income was $49.7 million, up 19% YoY. The company revised its 2023 revenue guidance to be in the range of $560 million to $600 million. A cash dividend of $0.35 per share was announced for Q3 2023.

Positive

• Total revenue for Q2 2023 increased by 7.3% YoY to $146.6 million.
• Material sales revenue in Q2 2023 was $77.1 million, up 7.2% YoY.
• Royalty and license fees revenue in Q2 2023 was $64.4 million, up 6.9% YoY.
• Operating income for Q2 2023 increased by 10% YoY to $58.6 million.
• Net income for Q2 2023 was $49.7 million, up 19% YoY.
• The company revised its 2023 revenue guidance to be in the range of $560 million to $600 million.
• A cash dividend of $0.35 per share was announced for Q3 2023.

Negative

• None.

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, 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

 

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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 is the stock symbol for Universal Display Corporation?

The stock symbol for Universal Display Corporation is OLED.

What was the total revenue for Q2 2023?

The total revenue for Q2 2023 was $146.6 million.

What was the increase in material sales revenue in Q2 2023 compared to Q2 2022?

The material sales revenue in Q2 2023 increased by 7.2% compared to Q2 2022.

What was the operating income for Q2 2023?

The operating income for Q2 2023 was $58.6 million.

What is the revised revenue guidance for 2023?

The revised revenue guidance for 2023 is in the range of $560 million to $600 million.

What is the cash dividend announced for Q3 2023?

A cash dividend of $0.35 per share was announced for Q3 2023.