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

Twitter Facebook YouTube

(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 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, 48,720,530 and 49,136,030 shares issued, and 47,354,882 and 47,770,382 shares outstanding, at September 30, 2023 and December 31, 2022, respectively

 

 

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

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 INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

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 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

 

 

887

 

 

 

4,256

 

Cash paid for income tax

 

 

81,132

 

 

 

42,227

 

 

Universal Display Contact: Darice Liu investor@oled.com media@oled.com +1 609-964-5123

Universal Display (NASDAQ:OLED)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Universal Display Charts.
Universal Display (NASDAQ:OLED)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Universal Display Charts.