Universal Display Corporation Announces Second Quarter 2021 Financial Results

EWING, N.J.--()--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

 

 

Contacts

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

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Contacts

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