Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the third quarter ended September 30, 2023.
“As we approach the end of 2023, our performance for the year remains on course. Looking ahead, we believe that multiple market verticals are driving the OLED industry’s long-term growth path,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “A significant shift in the world of technology is occurring with the introduction of conformable, foldable and rollable consumer electronics, and OLEDs are fueling this form factor revolution. In addition to the expected commencement of a new OLED IT adoption cycle in 2024, we are also seeing the emergence of OLEDs in the automotive market, especially with electric vehicles. As OLED activity continues to expand across the consumer display and lighting landscapes, we remain steadfast in our commitment to advancing our robust OLED materials and technology leadership.”
Financial Highlights for the Third Quarter of 2023
- Total revenue in the third quarter of 2023 was $141.1 million as compared to $160.6 million in the third quarter of 2022.
- Revenue from material sales was $92.5 million in the third quarter of 2023 as compared to $84.2 million in the third quarter of 2022. This increase was primarily due to greater sales volumes of our emitter material as well as improved product mix weighted towards increased demand for our new generation of emitter products.
- Revenue from royalty and license fees was $45.9 million in the third quarter of 2023 as compared to $71.5 million in the third quarter of 2022. The decrease in royalty and license fees was primarily the result of changes in customer mix, a decrease in the cumulative catch-up adjustments between periods, as well as higher estimated future demand for several of our customers over the remaining lives of their contracts.
- Cost of material sales was $31.6 million in the third quarter of 2023 as compared to $34.1 million in the third quarter of 2022. This decrease was primarily due to a reduction in contract manufacturing support costs, a reduction in the underutilization charges of the manufacturing facility in Shannon, Ireland and changes in product mix, offset by an increase in the level of material sales and inventory reserve.
- Total gross margin was 76% in the third quarter of 2023 as compared to 77% in the third quarter of 2022.
- Operating income was $48.4 million in the third quarter of 2023 as compared to $68.5 million in the third quarter of 2022.
- The effective income tax rate was an expense of 4.4% and 23.7% for the three months ended September 30, 2023 and 2022, respectively. The reduction in the effective income tax rate was primarily due to the change in IRS regulations, issued in July 2023, that permit withholding taxes to be credited against U.S. taxable income for the tax years 2022 and 2023.
- Net income was $51.5 million or $1.08 per diluted share in the third quarter of 2023 as compared to $53.5 million or $1.12 per diluted share in the third quarter of 2022.
Revenue Comparison
($ in thousands) |
|
Three Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Material sales |
|
$ |
92,492 |
|
|
$ |
84,182 |
|
Royalty and license fees |
|
|
45,915 |
|
|
|
71,450 |
|
Contract research services |
|
|
2,670 |
|
|
|
4,924 |
|
Total revenue |
|
$ |
141,077 |
|
|
$ |
160,556 |
|
Cost of Materials Comparison
($ in thousands) |
|
Three Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Material sales |
|
$ |
92,492 |
|
|
$ |
84,182 |
|
Cost of material sales |
|
|
31,639 |
|
|
|
34,057 |
|
Gross margin on material sales |
|
|
60,853 |
|
|
|
50,125 |
|
Gross margin as a % of material sales |
|
|
66 |
% |
|
|
60 |
% |
Financial Highlights for the First Nine Months of 2023
- Total revenue in the first nine months of 2023 was $418.1 million as compared to $447.6 million in the first nine months of 2022.
- Revenue from material sales was $239.8 million in the first nine months of 2023 as compared to $242.7 million in the first nine months of 2022. The decline in material sales was primarily due to reduced demand for our emitter material during the first quarter of 2023, partially offset by the introduction of blue emitter and host sales.
- Revenue from royalty and license fees was $165.5 million in the first nine months of 2023 as compared to $191.5 million in the first nine months of 2022. The decrease in royalty and license fees was primarily the result of higher estimated future demand for several of our customers over the remaining lives of their contracts, as well as a net $12.2 million reduction in revenue due to the difference in cumulative catch-up adjustments between periods, the majority of which was recorded to royalty and license fees. The cumulative catch-up adjustments in the first nine months of 2023 totaled $5.1 million compared to $17.3 million during the first nine months of 2022.
- Cost of material sales was $89.7 million in the first nine months of 2023 as compared to $89.0 million in the first nine months of 2022. Cost of material sales increased primarily due to underutilization of the manufacturing facility in Shannon, Ireland and changes in product mix, offset by a decrease in manufacturing costs and a decrease in the level of material sales.
- Total gross margin was 76% in the first nine months of 2023 as compared to 78% in the first nine months of 2022. Increased Shannon facility costs of $6.1 million and the inventory provision of $6.6 million in 2023 contributed to the 2% decrease in total gross margin between periods.
- Operating income was $152.4 million in the first nine months of 2023 as compared to $184.0 million in the first nine months of 2022.
- Net income was $141.0 million or $2.95 per diluted share in the first nine months of 2023 compared to $144.9 million or $3.04 per diluted share in the first nine months of 2022.
Revenue Comparison
($ in thousands) |
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Material sales |
|
$ |
239,789 |
|
|
$ |
242,742 |
|
Royalty and license fees |
|
|
165,524 |
|
|
|
191,530 |
|
Contract research services |
|
|
12,796 |
|
|
|
13,315 |
|
Total revenue |
|
$ |
418,109 |
|
|
$ |
447,587 |
|
Cost of Materials Comparison
($ in thousands) |
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Material sales |
|
$ |
239,789 |
|
|
$ |
242,742 |
|
Cost of material sales |
|
|
89,697 |
|
|
|
88,999 |
|
Gross margin on material sales |
|
|
150,092 |
|
|
|
153,743 |
|
Gross margin as a % of material sales |
|
|
63 |
% |
|
|
63 |
% |
2023 Revised Guidance
The Company has revised its previous revenue guidance and now believes that 2023 revenue will be in the range of $565 million to $590 million.
Dividend
The Company also announced a fourth quarter cash dividend of $0.35 per share on the Company’s common stock. The dividend is payable on December 29, 2023 to all shareholders of record as of the close of business on December 15, 2023.
Conference Call Information
In conjunction with this release, Universal Display will host a conference call on Thursday, November 2, 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.
Follow Universal Display Corporation
(OLED-C)
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share data) |
||||||||
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
ASSETS |
|
|
|
|
|
|
||
CURRENT ASSETS: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
79,323 |
|
|
$ |
93,430 |
|
Short-term investments |
|
|
412,350 |
|
|
|
484,345 |
|
Accounts receivable |
|
|
122,192 |
|
|
|
92,664 |
|
Inventory |
|
|
181,406 |
|
|
|
183,220 |
|
Other current assets |
|
|
83,444 |
|
|
|
45,791 |
|
Total current assets |
|
|
878,715 |
|
|
|
899,450 |
|
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $137,020 and $117,118 |
|
|
174,638 |
|
|
|
143,445 |
|
ACQUIRED TECHNOLOGY, net of accumulated amortization of $182,657 and $189,671 |
|
|
94,518 |
|
|
|
38,382 |
|
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $10,055 and $8,989 |
|
|
7,233 |
|
|
|
8,247 |
|
GOODWILL |
|
|
15,535 |
|
|
|
15,535 |
|
INVESTMENTS |
|
|
301,193 |
|
|
|
259,861 |
|
DEFERRED INCOME TAXES |
|
|
49,637 |
|
|
|
58,161 |
|
OTHER ASSETS |
|
|
101,447 |
|
|
|
109,739 |
|
TOTAL ASSETS |
|
$ |
1,622,916 |
|
|
$ |
1,532,820 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
||
CURRENT LIABILITIES: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
20,624 |
|
|
$ |
9,519 |
|
Accrued expenses |
|
|
38,500 |
|
|
|
51,002 |
|
Deferred revenue |
|
|
66,828 |
|
|
|
45,599 |
|
Other current liabilities |
|
|
5,391 |
|
|
|
29,577 |
|
Total current liabilities |
|
|
131,343 |
|
|
|
135,697 |
|
DEFERRED REVENUE |
|
|
8,859 |
|
|
|
18,279 |
|
RETIREMENT PLAN BENEFIT LIABILITY |
|
|
61,165 |
|
|
|
59,790 |
|
OTHER LIABILITIES |
|
|
39,183 |
|
|
|
43,685 |
|
Total liabilities |
|
|
240,550 |
|
|
|
257,451 |
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
||
Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000
|
|
|
2 |
|
|
|
2 |
|
Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 48,720,530
|
|
|
487 |
|
|
|
491 |
|
Additional paid-in capital |
|
|
693,899 |
|
|
|
681,335 |
|
Retained earnings |
|
|
744,227 |
|
|
|
653,277 |
|
Accumulated other comprehensive loss |
|
|
(14,965 |
) |
|
|
(18,452 |
) |
Treasury stock, at cost (1,365,648 shares at September 30, 2023 and December 31, 2022) |
|
|
(41,284 |
) |
|
|
(41,284 |
) |
Total shareholders’ equity |
|
|
1,382,366 |
|
|
|
1,275,369 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,622,916 |
|
|
$ |
1,532,820 |
|
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except share and per share data) |
||||||||||||||||
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Material sales |
|
$ |
92,492 |
|
|
$ |
84,182 |
|
|
$ |
239,789 |
|
|
$ |
242,742 |
|
Royalty and license fees |
|
|
45,915 |
|
|
|
71,450 |
|
|
|
165,524 |
|
|
|
191,530 |
|
Contract research services |
|
|
2,670 |
|
|
|
4,924 |
|
|
|
12,796 |
|
|
|
13,315 |
|
Total revenue |
|
|
141,077 |
|
|
|
160,556 |
|
|
|
418,109 |
|
|
|
447,587 |
|
COST OF SALES |
|
|
34,248 |
|
|
|
37,396 |
|
|
|
99,357 |
|
|
|
97,798 |
|
Gross margin |
|
|
106,829 |
|
|
|
123,160 |
|
|
|
318,752 |
|
|
|
349,789 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
33,099 |
|
|
|
30,414 |
|
|
|
96,840 |
|
|
|
85,156 |
|
Selling, general and administrative |
|
|
18,084 |
|
|
|
18,442 |
|
|
|
50,557 |
|
|
|
59,373 |
|
Amortization of acquired technology and other intangible assets |
|
|
4,557 |
|
|
|
3,562 |
|
|
|
11,442 |
|
|
|
14,562 |
|
Patent costs |
|
|
2,572 |
|
|
|
2,018 |
|
|
|
7,056 |
|
|
|
6,075 |
|
Royalty and license expense |
|
|
81 |
|
|
|
261 |
|
|
|
414 |
|
|
|
596 |
|
Total operating expenses |
|
|
58,393 |
|
|
|
54,697 |
|
|
|
166,309 |
|
|
|
165,762 |
|
OPERATING INCOME |
|
|
48,436 |
|
|
|
68,463 |
|
|
|
152,443 |
|
|
|
184,027 |
|
Interest income, net |
|
|
7,136 |
|
|
|
2,432 |
|
|
|
20,301 |
|
|
|
4,306 |
|
Other loss, net |
|
|
(1,693 |
) |
|
|
(804 |
) |
|
|
(3,180 |
) |
|
|
(749 |
) |
Interest and other income, net |
|
|
5,443 |
|
|
|
1,628 |
|
|
|
17,121 |
|
|
|
3,557 |
|
INCOME BEFORE INCOME TAXES |
|
|
53,879 |
|
|
|
70,091 |
|
|
|
169,564 |
|
|
|
187,584 |
|
INCOME TAX EXPENSE |
|
|
(2,363 |
) |
|
|
(16,636 |
) |
|
|
(28,531 |
) |
|
|
(42,657 |
) |
NET INCOME |
|
$ |
51,516 |
|
|
$ |
53,455 |
|
|
$ |
141,033 |
|
|
$ |
144,927 |
|
NET INCOME PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
BASIC |
|
$ |
1.08 |
|
|
$ |
1.12 |
|
|
$ |
2.95 |
|
|
$ |
3.04 |
|
DILUTED |
|
$ |
1.08 |
|
|
$ |
1.12 |
|
|
$ |
2.95 |
|
|
$ |
3.04 |
|
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
BASIC |
|
|
47,570,099 |
|
|
|
47,396,495 |
|
|
|
47,555,734 |
|
|
|
47,386,426 |
|
DILUTED |
|
|
47,632,431 |
|
|
|
47,466,934 |
|
|
|
47,609,692 |
|
|
|
47,455,893 |
|
CASH DIVIDENDS DECLARED PER COMMON SHARE |
|
$ |
0.35 |
|
|
$ |
0.30 |
|
|
$ |
1.05 |
|
|
$ |
0.90 |
|
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) |
||||||||
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net income |
|
$ |
141,033 |
|
|
$ |
144,927 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation |
|
|
20,128 |
|
|
|
17,982 |
|
Amortization of intangibles |
|
|
11,442 |
|
|
|
14,562 |
|
Amortization of premium and discount on investments, net |
|
|
(9,436 |
) |
|
|
(3,469 |
) |
Stock-based compensation to employees |
|
|
17,359 |
|
|
|
22,528 |
|
Stock-based compensation to Board of Directors and Scientific Advisory Board |
|
|
1,264 |
|
|
|
1,121 |
|
Deferred income tax expense (benefit) |
|
|
7,556 |
|
|
|
(7,876 |
) |
Retirement plan expense, net of benefit payments |
|
|
2,347 |
|
|
|
3,998 |
|
Decrease (increase) in assets: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(29,528 |
) |
|
|
29,446 |
|
Inventory |
|
|
1,814 |
|
|
|
(46,034 |
) |
Other current assets |
|
|
(37,653 |
) |
|
|
(9,057 |
) |
Other assets |
|
|
8,292 |
|
|
|
2,282 |
|
Increase (decrease) in liabilities: |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
(32 |
) |
|
|
7,217 |
|
Other current liabilities |
|
|
(24,186 |
) |
|
|
(543 |
) |
Deferred revenue |
|
|
11,809 |
|
|
|
(63,066 |
) |
Other liabilities |
|
|
(4,502 |
) |
|
|
10,156 |
|
Net cash provided by operating activities |
|
|
117,707 |
|
|
|
124,174 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(52,208 |
) |
|
|
(31,119 |
) |
Purchases of intangibles |
|
|
(66,563 |
) |
|
|
(4,761 |
) |
Purchases of investments |
|
|
(303,004 |
) |
|
|
(464,766 |
) |
Proceeds from sale and maturity of investments |
|
|
346,407 |
|
|
|
302,872 |
|
Net cash used in investing activities |
|
|
(75,368 |
) |
|
|
(197,774 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Proceeds from issuance of common stock |
|
|
1,532 |
|
|
|
1,247 |
|
Payment of withholding taxes related to stock-based compensation to employees |
|
|
(7,895 |
) |
|
|
(9,150 |
) |
Cash dividends paid |
|
|
(50,083 |
) |
|
|
(42,740 |
) |
Net cash used in financing activities |
|
|
(56,446 |
) |
|
|
(50,643 |
) |
DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
(14,107 |
) |
|
|
(124,243 |
) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
|
93,430 |
|
|
|
311,993 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ |
79,323 |
|
|
$ |
187,750 |
|
Supplemental disclosures: |
|
|
|
|
|
|
||
Unrealized gain (loss) on available-for-sale securities |
|
$ |
3,304 |
|
|
$ |
(9,711 |
) |
Common stock issued to Board of Directors and Scientific Advisory Board that was
|
|
|
300 |
|
|
|
300 |
|
Net change in accounts payable and accrued expenses related to purchases of property
|
|
|
887 |
|
|
|
4,256 |
|
Cash paid for income tax |
|
|
81,132 |
|
|
|
42,227 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20231102241358/en/
“As we approach the end of 2023, our performance for the year remains on course. Looking ahead, we believe that multiple market verticals are driving the OLED industry’s long-term growth path.”
Contacts
Universal Display Contact:
Darice Liu
investor@oled.com
media@oled.com
+1 609-964-5123
