Universal Display Corporation

10/30/2024 | Press release | Distributed by Public on 10/30/2024 14:09

Universal Display Corporation Announces Third Quarter 2024 Financial Results Form 8 K

Universal Display Corporation Announces Third Quarter 2024 Financial Results

EWING, N.J. - October 30, 2024 -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, 2024.

"With strong year-to-date results, we are on track to achieve record revenues, earnings, and operating cash flow in 2024 as we continue our growth trajectory. The rate of growth this year, though, is expected to be more modest than previously projected. With recent updates to customer order expectations for the fourth quarter, we are lowering our 2024 revenue forecast range to $625 million to $645 million," said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. "We believe that 2024 marks the start of a new OLED adoption cycle for medium-sized displays, namely IT and automotive. With leading tablet, notebook, monitor, as well as auto OEMs expected to broaden their product roadmaps for OLEDs, significant investments in new OLED facilities are being deployed for these nascent market segments. As a leader in the OLED ecosystem, we are enabling and supporting this long runway of growth. Our world-class technology continues to set industry standards, our global partnerships continue to expand and deepen, and we continue to leverage our unparalleled expertise."

Financial Highlights for the Third Quarter of 2024

Total revenue in the third quarter of 2024 was $161.6 million as compared to $141.1 million in the third quarter of 2023.
Revenue from material sales was $83.4 million in the third quarter of 2024 as compared to $92.5 million in the third quarter of 2023. The decrease in material sales was primarily due to changes in customer mix as material volumes were relatively flat between periods.
Revenue from royalty and license fees was $74.6 million in the third quarter of 2024 as compared to $45.9 million in the third quarter of 2023. The increase in royalty and license fees was primarily the result of changes in customer mix and a $6.8 million increase in cumulative catch-up adjustment between periods.
Cost of material sales was $33.2 million in the third quarter of 2024 as compared to $31.6 million in the third quarter of 2023. The increase in cost of material sales was primarily due to product mix.
Total gross margin was 78% in the third quarter of 2024 as compared to 76% in the third quarter of 2023.
Operating income was $67.0 million in the third quarter of 2024 as compared to $48.4 million in the third quarter of 2023.
The effective income tax rate was 17.9% and 4.4% in the third quarter of 2024 and 2023, respectively. The relatively low effective income tax rate in the third quarter of 2023 was primarily due to the change in IRS regulations, issued in July 2023, that permitted withholding taxes to be credited against U.S. taxable income for the taxable years 2022 and 2023.
Net income was $66.9 million or $1.40 per diluted share in the third quarter of 2024 as compared to $51.5 million or $1.08 per diluted share in the third quarter of 2023.

Revenue Comparison

($ in thousands)

Three Months Ended September 30,

2024

2023

Material sales

$

83,428

$

92,492

Royalty and license fees

74,590

45,915

Contract research services

3,609

2,670

Total revenue

$

161,627

$

141,077

Cost of Materials Comparison

($ in thousands)

Three Months Ended September 30,

2024

2023

Material sales

$

83,428

$

92,492

Cost of material sales

33,172

31,639

Gross margin on material sales

50,256

60,853

Gross margin as a % of material sales

60

%

66

%

Financial Highlights for the First Nine Months of 2024

Total revenue in the first nine months of 2024 was $485.4 million as compared to $418.1 million in the first nine months of 2023.
Revenue from material sales was $272.2 million in the first nine months of 2024 as compared to $239.8 million in the first nine months of 2023. The increase in material sales was primarily due to strengthened demand for our emitter materials, partially offset by changes in customer mix.
Revenue from royalty and license fees was $202.4 million in the first nine months of 2024 as compared to $165.5 million in the first nine months of 2023. The increase in royalty and license fees was primarily the result of higher unit material volume and changes in customer mix during the third quarter of 2024.
Cost of material sales was $102.8 million in the first nine months of 2024 as compared to $89.7 million in the first nine months of 2023 primarily due to an increase in materials sales volume and product mix, partially offset by a $4.0 million decrease in inventory reserve expense.
Total gross margin was 77% in the first nine months of 2024 as compared to 76% in the first nine months of 2023.
Operating income was $186.3 million in the first nine months of 2024 as compared to $152.4 million in the first nine months of 2023.
The effective income tax rate was 18.8% and 16.8% in the first nine months of 2024 and 2023, respectively.
Net income was $176.1 million or $3.69 per diluted share in the first nine months of 2024 compared to $141.0 million or $2.95 per diluted share in the first nine months of 2023.

Revenue Comparison

($ in thousands)

Nine Months Ended September 30,

2024

2023

Material sales

$

272,154

$

239,789

Royalty and license fees

202,409

165,524

Contract research services

10,828

12,796

Total revenue

$

485,391

$

418,109

Cost of Materials Comparison

($ in thousands)

Nine Months Ended September 30,

2024

2023

Material sales

$

272,154

$

239,789

Cost of material sales

102,759

89,697

Gross margin on material sales

169,395

150,092

Gross margin as a % of material sales

62

%

63

%

2024 Revised Guidance

The Company now believes that its 2024 revenue will be in the range of $625 million to $645 million. The OLED industry remains at a stage where many variables can have a material impact on results, and the Company thus caveats its financial guidance accordingly.

Dividend

The Company also announced a fourth quarter cash dividend of $0.40 per share on the Company's common stock. The dividend is payable on December 31, 2024 to all shareholders of record as of the close of business on December 17, 2024.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Wednesday, October 30, 2024 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, 2023. 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)

September 30, 2024

December 31, 2023

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

79,559

$

91,985

Short-term investments

471,993

422,137

Accounts receivable

87,693

139,850

Inventory

175,958

175,795

Other current assets

126,643

87,365

Total current assets

941,846

917,132

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $158,992 and $143,908

191,195

175,150

ACQUIRED TECHNOLOGY, net of accumulated amortization of $199,428 and $186,850

77,747

90,325

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $11,484 and $10,414

5,804

6,874

GOODWILL

15,535

15,535

INVESTMENTS

396,931

299,548

DEFERRED INCOME TAXES

72,138

59,108

OTHER ASSETS

109,686

105,289

TOTAL ASSETS

$

1,810,882

$

1,668,961

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

24,698

$

10,933

Accrued expenses

52,955

52,080

Deferred revenue

47,393

47,713

Other current liabilities

6,119

8,096

Total current liabilities

131,165

118,822

DEFERRED REVENUE

2,376

12,006

RETIREMENT PLAN BENEFIT LIABILITY

54,288

52,249

OTHER LIABILITIES

36,303

38,658

Total liabilities

224,132

221,735

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, 48,826,922
and 48,731,026 shares issued, and 47,461,274 and 47,365,378 shares outstanding, at
September 30, 2024 and December 31, 2023, respectively

488

487

Additional paid-in capital

717,190

699,554

Retained earnings

907,776

789,553

Accumulated other comprehensive income (loss)

2,578

(1,086

)

Treasury stock, at cost (1,365,648 shares at September 30, 2024 and December 31, 2023)

(41,284

)

(41,284

)

Total shareholders' equity

1,586,750

1,447,226

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,810,882

$

1,668,961

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,

2024

2023

2024

2023

REVENUE:

Material sales

$

83,428

$

92,492

$

272,154

$

239,789

Royalty and license fees

74,590

45,915

202,409

165,524

Contract research services

3,609

2,670

10,828

12,796

Total revenue

161,627

141,077

485,391

418,109

COST OF SALES

35,812

34,248

111,109

99,357

Gross margin

125,815

106,829

374,282

318,752

OPERATING EXPENSES:

Research and development

36,089

33,099

110,900

96,840

Selling, general and administrative

15,664

18,084

54,757

50,557

Amortization of acquired technology and other intangible assets

4,551

4,557

13,648

11,442

Patent costs

2,352

2,572

6,735

7,056

Royalty and license expense

154

81

1,928

414

Total operating expenses

58,810

58,393

187,968

166,309

OPERATING INCOME

67,005

48,436

186,314

152,443

Interest income, net

10,592

7,136

30,073

20,301

Other income (loss), net

3,819

(1,693

)

416

(3,180

)

Interest and other income, net

14,411

5,443

30,489

17,121

INCOME BEFORE INCOME TAXES

81,416

53,879

216,803

169,564

INCOME TAX EXPENSE

(14,546

)

(2,363

)

(40,743

)

(28,531

)

NET INCOME

$

66,870

$

51,516

$

176,060

$

141,033

NET INCOME PER COMMON SHARE:

BASIC

$

1.40

$

1.08

$

3.69

$

2.95

DILUTED

$

1.40

$

1.08

$

3.69

$

2.95

WEIGHTED AVERAGE SHARES USED IN COMPUTING NET
INCOME PER COMMON SHARE:

BASIC

47,542,114

47,570,099

47,549,976

47,555,734

DILUTED

47,669,439

47,632,431

47,644,026

47,609,692

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.40

$

0.35

$

1.20

$

1.05

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Nine Months Ended September 30,

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

176,060

$

141,033

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

19,488

20,128

Amortization of intangibles

13,648

11,442

Amortization of premium and discount on investments, net

(5,930

)

(9,436

)

Stock-based compensation

23,812

18,623

Deferred income tax (benefit) expense

(12,878

)

7,556

Retirement plan expense, net of benefit payments

1,385

2,347

Decrease (increase) in assets:

Accounts receivable

52,157

(29,528

)

Inventory

(163

)

1,814

Other current assets

(39,278

)

(37,653

)

Other assets

(4,397

)

8,292

Increase (decrease) in liabilities:

Accounts payable and accrued expenses

9,405

(32

)

Other current liabilities

(1,977

)

(24,186

)

Deferred revenue

(9,950

)

11,809

Other liabilities

(2,355

)

(4,502

)

Net cash provided by operating activities

219,027

117,707

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(29,960

)

(52,208

)

Purchases of intangibles

-

(66,563

)

Purchases of investments

(337,949

)

(303,004

)

Proceeds from sale and maturity of investments

200,768

346,407

Net cash used in investing activities

(167,141

)

(75,368

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock

1,776

1,532

Payment of withholding taxes related to stock-based compensation to employees

(8,251

)

(7,895

)

Cash dividends paid

(57,837

)

(50,083

)

Net cash used in financing activities

(64,312

)

(56,446

)

DECREASE IN CASH AND CASH EQUIVALENTS

(12,426

)

(14,107

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

91,985

93,430

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

79,559

$

79,323

SUPPLEMENTAL DISCLOSURES:

Unrealized gain on available-for-sale securities

$

4,117

$

3,304

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

(5,573

)

887

Cash paid for income taxes, net of refunds

60,772

81,132