Universal
Display Corporation (Nasdaq: OLED), enabling energy-efficient
displays and lighting with its UniversalPHOLED®
technology and materials, today reported financial results for the first
quarter ended March 31, 2019.
“We are pleased to report solid first quarter 2019 results,” said Sidney
D. Rosenblatt, Executive Vice President and Chief Financial Officer of
Universal Display. “Looking to the year, we continue to see strong
momentum in the industry. As seen by leading OEM product launches, OLEDs
are the display technology of choice for premium smartphones and TVs.
Additionally, one of the major themes emerging in the consumer
electronics market is form factor. Driven by a robust pipeline of
activity, from both panel makers and end users, we believe that the
flexible, foldable display path will lead to a myriad of new products,
designs and applications.”
Rosenblatt continued, “2019 marks the 25th anniversary of Universal
Display Corporation. In June 1994, we were founded on the mission to
develop and commercialize key OLED technologies. Today, we are a leading
player enabling the OLED ecosystem, and our proprietary technologies and
materials can be found in virtually every consumer OLED product around
the world. We believe that the tremendous value of our phosphorescent
portfolio has solidified UDC as an integral partner in the
commercialization of OLEDs into the marketplace.”
Financial Highlights for the First Quarter of
2019
Effective January 1, 2018, we adopted ASC Topic 606 using the “modified
retrospective” approach, meaning the standard was applied only to the
financial results commencing with the first quarter of 2018 with a
cumulative adjustment to retained earnings. Under this transition
method, we applied the standard only to contracts that were not complete
at the initial adoption date. Material sales and cost of material sales
referenced below relate solely to OLED activity and exclude activity
from contract research services.
-
Total revenue in the first quarter of 2019 was $87.8 million as
compared to $43.6 million in the first quarter of 2018. On the basis
of ASC Topic 605 (the applicable accounting standard prior to the
adoption of ASC Topic 606), total revenue in the first quarter of 2019
would have been $101.6 million, compared to $68.2 million in the first
quarter of 2018. Under ASC Topic 606, license fee revenue is
recognized on a per gram sales basis, whereas under ASC Topic 605,
revenue was recognized for license payments upon receipt or on a
straight-line basis over the term of the contract. -
Revenue from material sales was $54.5 million in the first quarter of
2019 as compared to $25.3 million in the first quarter of 2018. On an
ASC Topic 605 basis, revenue from material sales in the first quarter
of 2019 would have been $57.3 million, compared to $28.7 million in
the first quarter of 2018. -
Revenue from royalty and license fees was $30.3 million in the first
quarter of 2019 as compared to $15.9 million in the first quarter of
2018. On an ASC Topic 605 basis, revenue from royalty and license fees
in the first quarter of 2019 would have been $41.3 million as compared
to $37.1 million in the first quarter of 2018. -
Cost of materials was $13.0 million in the first quarter of 2019,
compared to $5.7 million in the first quarter of 2018. -
Operating income was $34.4 million in the first quarter of 2019
compared to $4.5 million in the first quarter of 2018. On an ASC Topic
605 basis, operating income in the first quarter of 2019 would have
been $48.2 million, compared to $29.2 million in the first quarter of
2018. -
Net income was $31.5 million or $0.66 per diluted share in the first
quarter of 2019 compared to $6.0 million or $0.13 per diluted share in
the first quarter of 2018. On an ASC Topic 605 basis, net income in
the first quarter of 2019 would have been $42.5 million or $0.90 per
diluted share, compared to $25.9 million or $0.55 per diluted share in
the first quarter of 2018.
|
Revenue Comparison |
|||||||
| ($ in thousands) | Three Months Ended March 31, | ||||||
| 2019 | 2018 | ||||||
| Material sales | $ | 54,496 | $ | 25,250 | |||
| Royalty and license fees | 30,269 | 15,911 | |||||
| Contract research services | 3,000 | 2,411 | |||||
| Total revenue | $ | 87,765 | $ | 43,572 | |||
|
Cost of Materials Comparison |
|||||||
| ($ thousands) | Three Months Ended March 31, | ||||||
| 2019 | 2018 | ||||||
| Material sales | $ | 54,496 | $ | 25,250 | |||
| Cost of material sales | 12,975 | 5,690 | |||||
| Gross margin on material sales | 41,521 | 19,560 | |||||
| Gross margin as a % of material sales | 76% | 77% | |||||
|
ASC Topic 606 versus 605 Adjusted Results1 |
|||||||||||
|
For the three months ended March 31, 2019 (in thousands) |
As reported | Adjustment |
Balances without |
||||||||
| Revenue | $ | 87,765 | $ | 13,816 | $ | 101,581 | |||||
| Gross margin | 71,951 | 13,816 | 85,767 | ||||||||
| Operating income | 34,360 | 13,816 | 48,176 | ||||||||
| Net income | 31,474 | 11,053 | 42,527 | ||||||||
| Diluted earnings per share | $ | 0.66 | $ | 0.24 | $ | 0.90 | |||||
|
For the three months ended March 31, 2018 (in thousands) |
As reported | Adjustment |
Balances without |
||||||||
| Revenue | $ | 43,572 | $ | 24,653 | $ | 68,225 | |||||
| Gross margin | 36,114 | 24,653 | 60,767 | ||||||||
| Operating income | 4,519 | 24,653 | 29,172 | ||||||||
| Net income | 5,959 | 19,969 | 25,928 | ||||||||
| Diluted earnings per share | $ | 0.13 | $ | 0.43 | $ | 0.55 | |||||
| ________________ | ||
| (1) |
Amounts shown in the following tables as balances without adoption of ASC Topic 606 are presented in order to provide a basis for comparison against the Company’s operating results for periods prior to 2018, which were calculated and disclosed without adoption of ASC Topic 606. |
|
2019 Revised Guidance
Although the OLED industry is still at an early state where many
variables can have a material impact on its growth, and the Company thus
caveats its financial guidance accordingly, the Company now believes
that its 2019 revenue will be approximately in the range of $345 million
to $365 million. The guidance was prepared utilizing accounting standard
ASC Topic 606; under the prior accounting standard ASC Topic 605, the
Company estimates that its 2019 revenues would be approximately $405
million to $425 million.
Dividend
The Company also announced a second quarter cash dividend of $0.10 per
share on the Company’s common stock. The dividend is payable on June 28,
2019 to all shareholders of record on June 14, 2019.
Conference Call Information
In conjunction with this release, Universal Display will host a
conference call on May 2, 2019 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, 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 low power 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.
Headquartered in Ewing, New Jersey, with international offices in China,
Hong Kong, Ireland, Japan, South Korea and Taiwan, and wholly-owned
subsidiary Adesis, Inc. based in New Castle, Delaware, Universal Display
works and partners with a network of world-class organizations. 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 Universal Display Corporation’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, 2018.
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) |
||||||
| March 31, 2019 | December 31, 2018 | |||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash and cash equivalents | $ | 225,048 | $ | 211,022 | ||
| Short-term investments | 301,549 | 304,323 | ||||
| Accounts receivable | 52,124 | 43,129 | ||||
| Inventory | 68,041 | 70,000 | ||||
| Other current assets | 5,410 | 6,366 | ||||
| Total current assets | 652,172 | 634,840 | ||||
|
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $47,701 |
80,615 | 69,739 | ||||
|
ACQUIRED TECHNOLOGY, net of accumulated amortization of $117,034 |
106,208 | 110,951 | ||||
|
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $3,726 |
13,114 | 13,456 | ||||
| GOODWILL | 15,535 | 15,535 | ||||
| DEFERRED INCOME TAXES | 24,781 | 24,377 | ||||
| OTHER ASSETS | 75,765 | 64,526 | ||||
| TOTAL ASSETS | $ | 968,190 | $ | 933,424 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Accounts payable | $ | 7,024 | $ | 10,532 | ||
| Accrued expenses | 27,470 | 36,057 | ||||
| Deferred revenue | 86,296 | 80,782 | ||||
| Other current liabilities | 10,784 | 5,811 | ||||
| Total current liabilities | 131,574 | 133,182 | ||||
| DEFERRED REVENUE | 41,596 | 41,785 | ||||
| RETIREMENT PLAN BENEFIT LIABILITY | 44,747 | 44,055 | ||||
| OTHER LIABILITIES | 34,072 | 23,896 | ||||
| Total liabilities | 251,989 | 242,918 | ||||
| SHAREHOLDERS’ EQUITY: | ||||||
|
Preferred Stock, par value $0.01 per share, 5,000,000 shares |
2 | 2 | ||||
|
Common Stock, par value $0.01 per share, 200,000,000 shares |
488 | 487 | ||||
| Additional paid-in capital | 616,206 | 617,334 | ||||
| Retained earnings | 156,309 | 129,552 | ||||
| Accumulated other comprehensive loss | (15,520) | (16,234) | ||||
|
Treasury stock, at cost (1,365,648 and 1,361,637 shares at March |
(41,284) | (40,635) | ||||
| Total shareholders’ equity | 716,201 | 690,506 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 968,190 | $ | 933,424 | ||
| UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||
| (UNAUDITED) | ||||||
|
(in thousands, except share and per share data) |
||||||
| Three Months Ended March 31, | ||||||
| 2019 | 2018 | |||||
| REVENUE | $ | 87,765 | $ | 43,572 | ||
| COST OF SALES | 15,814 | 7,458 | ||||
| Gross margin | 71,951 | 36,114 | ||||
| OPERATING EXPENSES: | ||||||
| Research and development | 15,829 | 12,357 | ||||
| Selling, general and administrative | 11,969 | 10,791 | ||||
| Amortization of acquired technology and other intangible assets | 5,486 | 5,491 | ||||
| Patent costs | 1,770 | 1,725 | ||||
| Royalty and license expense | 2,537 | 1,231 | ||||
| Total operating expenses | 37,591 | 31,595 | ||||
| OPERATING INCOME | 34,360 | 4,519 | ||||
| Interest income, net | 2,831 | 1,271 | ||||
| Other income (expense), net | 282 | (47) | ||||
| Interest and other income, net | 3,113 | 1,224 | ||||
| INCOME BEFORE INCOME TAXES | 37,473 | 5,743 | ||||
| INCOME TAX (EXPENSE) BENEFIT | (5,999) | 216 | ||||
| NET INCOME | $ | 31,474 | $ | 5,959 | ||
| NET INCOME PER COMMON SHARE: | ||||||
| BASIC | $ | 0.66 | $ | 0.13 | ||
| DILUTED | $ | 0.66 | $ | 0.13 | ||
|
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON |
||||||
| BASIC | 46,892,914 | 46,783,158 | ||||
| DILUTED | 46,931,999 | 46,848,798 | ||||
| CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.10 | $ | 0.06 | ||
| UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (UNAUDITED) | ||||||
|
(in thousands) |
||||||
| Three Months Ended March 31, | ||||||
| 2019 | 2018 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 31,474 | $ | 5,959 | ||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
|
Amortization of deferred revenue and recognition of unbilled receivables |
(26,976) | (12,589) | ||||
| Depreciation | 2,758 | 2,172 | ||||
| Amortization of intangibles | 5,486 | 5,491 | ||||
| Change in excess inventory reserve | 224 | — | ||||
| Amortization of premium and discount on investments, net | (1,741) | (966) | ||||
| Stock-based compensation to employees | 3,610 | 2,776 | ||||
|
Stock-based compensation to Board of Directors and Scientific Advisory Board |
516 | 897 | ||||
| Deferred income tax (benefit) expense | (592) | 72 | ||||
| Retirement plan expense | 1,501 | 1,126 | ||||
| Decrease (increase) in assets: | ||||||
| Accounts receivable | (8,995) | 29,587 | ||||
| Inventory | 1,735 | (17,373) | ||||
| Other current assets | 177 | (4,025) | ||||
| Other assets | (2,966) | (177) | ||||
| Increase (decrease) in liabilities: | ||||||
| Accounts payable and accrued expenses | (12,117) | (4,441) | ||||
| Other current liabilities | 3,744 | (25) | ||||
| Deferred revenue | 33,080 | 30,331 | ||||
| Other liabilities | 3,132 | — | ||||
| Net cash provided by operating activities | 34,050 | 38,815 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property and equipment | (13,283) | (8,733) | ||||
| Purchases of intangibles | (401) | — | ||||
| Purchases of investments | (165,471) | (123,375) | ||||
| Proceeds from sale of investments | 170,050 | 146,546 | ||||
| Net cash (used in) provided by investing activities | (9,105) | 14,438 | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from issuance of common stock | 204 | 201 | ||||
| Repurchase of common stock | (649) | (477) | ||||
|
Payment of withholding taxes related to stock-based compensation to employees |
(5,757) | (5,832) | ||||
| Cash dividends paid | (4,717) | (2,831) | ||||
| Net cash used in financing activities | (10,919) | (8,939) | ||||
| INCREASE IN CASH AND CASH EQUIVALENTS | 14,026 | 44,314 | ||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 211,022 | 132,840 | ||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 225,048 | $ | 177,154 | ||
| The following non-cash activities occurred: | ||||||
| Unrealized gain on available-for-sale securities | $ | 60 | $ | 69 | ||
|
Common stock issued to Board of Directors and Scientific Advisory |
300 | 300 | ||||
|
Net change in accounts payable and accrued expenses related to purchases of property and equipment |
(351) | 4,583 | ||||
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