Universal Display Corporation Announces Fourth Quarter and Full Year 2019 Financial Results
Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the fourth quarter and full year ended December 31, 2019.
“2019 was a year of record results for our company, during which we continued to build on our leadership position and foundation for growth,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “During the year, we announced new partnership agreements, constructed new state-of-the-art phosphorescent OLED application labs and offices in Korea and Hong Kong, established UDC Ventures and achieved a number of internal R&D milestones. In addition, the OLED industry grew robustly as new OLED capacity was installed, new OLED OEMs and products were introduced and revolutionary form factor products like the Samsung Galaxy Fold, LG’s rollable TV and Lenovo’s foldable PC were announced. We believe that all of this drove the continued proliferation of OLEDs in smartphones, TVs and wearables as well as early commercial headway into the IT and automotive markets.”
Rosenblatt continued, “For 2020, we expect the OLED industry and our revenues to continue to grow. At the same time, after a year of significant new OLED capacity additions, we also expect capacity digestion and the evolving uncertainties related to the novel coronavirus (2019-nCoV) to impact our material orders. Long-term, we believe OLED investment momentum remains strong and we continue to estimate that installed capacity at the end of 2021 will grow by approximately 50% over the installed capacity at the end of 2019, as measured in square meters.”
Financial Highlights for the Fourth 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.
- Total revenue in the fourth quarter of 2019 was $101.7 million as compared to $70.1 million in the fourth quarter of 2018. On an ASC Topic 605 basis (the applicable accounting standard prior to the adoption of ASC Topic 605), total revenue in the fourth quarter of 2019 would have been $109.0 million as compared to $92.9 million in the fourth 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 $60.8 million in the fourth quarter of 2019 as compared to $39.9 million in the fourth quarter of 2018. On an ASC Topic 605 basis, revenue from material sales in the fourth quarter of 2019 would have been $64.1 million as compared to $49.9 million in the fourth quarter of 2018.
- Revenue from royalty and license fees was $37.8 million in the fourth quarter of 2019 as compared to $25.9 million in the fourth quarter of 2018. On an ASC Topic 605 basis, revenue from royalty and license fees in the fourth quarter of 2019 would have been $41.7 million as compared to $38.6 million in the fourth quarter of 2018.
- Cost of materials was $16.3 million in the fourth quarter of 2019 as compared to $14.8 million in the fourth quarter of 2018.
- Operating income was $34.5 million in the fourth quarter of 2019 as compared to $15.3 million in the fourth quarter of 2018. On an ASC Topic 605 basis, operating income in the fourth quarter of 2019 would have been $41.8 million as compared to $38.0 million in the fourth quarter of 2018.
- Net income was $26.4 million or $0.56 per diluted share in the fourth quarter of 2019 as compared to $19.2 million or $0.40 per diluted share in the fourth quarter of 2018. On an ASC Topic 605 basis, net income in the fourth quarter of 2019 would have been $32.1 million or $0.68 per diluted share as compared to $45.2 million or $0.95 per diluted share in the fourth quarter of 2018.
Revenue Comparison
(in thousands) |
|
Three Months Ended December 31, |
|
|
|||||
|
|
2019 |
|
|
2018 |
|
|
||
Material sales |
|
$ |
60,752 |
|
|
$ |
39,879 |
|
|
Royalty and license fees |
|
|
37,800 |
|
|
|
25,886 |
|
|
Contract research services |
|
|
3,177 |
|
|
|
4,378 |
|
|
Total revenue |
|
$ |
101,729 |
|
|
$ |
70,143 |
|
|
Cost of Materials Comparison
(in thousands) |
|
Three Months Ended December 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Material sales |
|
$ |
60,752 |
|
|
$ |
39,879 |
|
Cost of material sales |
|
|
16,281 |
|
|
|
14,768 |
|
Gross margin on material sales |
|
|
44,471 |
|
|
|
25,111 |
|
Gross margin as a % of material sales |
|
|
73 |
% |
|
|
63 |
% |
ASC Topic 606 versus 605 Adjusted Results
(in thousands, except per share data) |
||||||||||||
For the three months ended December 31, 2019 |
|
As reported |
|
|
Adjustment |
|
|
Balances without
|
|
|||
Revenue |
|
$ |
101,729 |
|
|
$ |
7,296 |
|
|
$ |
109,025 |
|
Gross margin |
|
|
83,527 |
|
|
|
7,296 |
|
|
|
90,823 |
|
Operating income |
|
|
34,489 |
|
|
|
7,296 |
|
|
|
41,785 |
|
Net income |
|
|
26,428 |
|
|
|
5,669 |
|
|
|
32,097 |
|
Diluted earnings per share |
|
$ |
0.56 |
|
|
$ |
0.12 |
|
|
$ |
0.68 |
|
Financial Highlights for the Full Year of 2019
- Total revenue in the full year of 2019 was $405.2 million as compared to $247.4 million in the full year of 2018. On an ASC Topic 605 basis, total revenue in the full year of 2019 would have been $428.1 million as compared to $326.3 million in the full year of 2018.
- Revenue from material sales was $243.4 million for the full year of 2019 as compared to $153.2 million for the full year ended 2018. On an ASC Topic 605 basis, revenue from material sales for the full year of 2019 would have been $258.0 million as compared to $166.2 million for the full year of 2018.
- Revenue from royalty and license fees was $150.0 million for the full year of 2019 as compared to $80.6 million for the full year of 2018. On an ASC Topic 605 basis, revenue from royalty and license fees would have been $158.3 million for the full year of 2019 as compared to $146.5 million for the full year of 2018.
- Cost of materials was $66.5 million for the full year of 2019 as compared to $43.6 million for the full year of 2018.
- Operating income was $158.3 million for the full year of 2019 as compared to $56.7 million for the full year of 2018. On an ASC Topic 605 basis, operating income would have been $181.3 million for the full year of 2019 as compared to $135.6 million for the full year of 2018.
- Net income was $138.3 million or $2.92 per diluted share for the full year of 2019 as compared to $58.8 million or $1.24 per diluted share for the full year of 2018. On an ASC Topic 605 basis, net income for the full year of 2019 would have been $156.1 million or $3.30 per diluted share as compared to $130.5 million or $2.77 per diluted share for the full year of 2018.
Revenue Comparison
(in thousands) |
|
Full Year Ended December 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Material sales |
|
$ |
243,413 |
|
|
$ |
153,204 |
|
Royalty and license fees |
|
|
150,022 |
|
|
|
80,644 |
|
Contract research services |
|
|
11,742 |
|
|
|
13,566 |
|
Total revenue |
|
$ |
405,177 |
|
|
$ |
247,414 |
|
Cost of Materials Comparison
(in thousands) |
|
Full Year Ended December 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Material sales |
|
$ |
243,413 |
|
|
$ |
153,204 |
|
Cost of material sales |
|
|
66,482 |
|
|
|
43,550 |
|
Gross margin on material sales |
|
|
176,931 |
|
|
|
109,654 |
|
Gross margin as a % of material sales |
|
|
73 |
% |
|
|
72 |
% |
ASC Topic 606 versus 605 Adjusted Results
| (in thousands, except per share data) | ||||||||||||
For the full year ended December 31, 2019 |
|
As reported |
|
|
Adjustment |
|
|
Balances without
|
|
|||
Revenue |
|
$ |
405,177 |
|
|
$ |
22,924 |
|
|
$ |
428,101 |
|
Gross margin |
|
|
329,803 |
|
|
|
22,924 |
|
|
352,727 |
|
|
Operating income |
|
|
158,343 |
|
|
|
22,924 |
|
|
|
181,267 |
|
Net income |
|
|
138,304 |
|
|
|
17,812 |
|
|
|
156,116 |
|
Diluted earnings per share |
|
$ |
2.92 |
|
|
$ |
0.38 |
|
|
$ |
3.30 |
|
2020 Guidance
The Company believes that its 2020 revenue will be approximately in the range of $430 million to $470 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 first quarter 2020 cash dividend of $0.15 per share on the Company’s common stock. The dividend is payable on March 31, 2020 to all shareholders of record on March 17, 2020.
Conference Call Information
In conjunction with this release, Universal Display will host a conference call on Thursday, February 20, 2020 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, 2019. 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
|
||||||||
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
ASSETS |
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
131,627 |
|
|
$ |
211,022 |
|
Short-term investments |
|
|
514,461 |
|
|
|
304,323 |
|
Accounts receivable |
|
|
60,452 |
|
|
|
43,129 |
|
Inventory |
|
|
63,953 |
|
|
|
70,000 |
|
Other current assets |
|
|
21,946 |
|
|
|
6,366 |
|
Total current assets |
|
|
792,439 |
|
|
|
634,840 |
|
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $57,276 and $44,943 |
|
|
87,872 |
|
|
|
69,739 |
|
ACQUIRED TECHNOLOGY, net of accumulated amortization of $132,468 and $111,890 |
|
|
90,774 |
|
|
|
110,951 |
|
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $4,768 and $3,384 |
|
|
12,072 |
|
|
|
13,456 |
|
GOODWILL |
|
|
15,535 |
|
|
|
15,535 |
|
INVESTMENTS |
|
|
5,000 |
|
|
|
— |
|
DEFERRED INCOME TAXES |
|
|
30,375 |
|
|
|
24,377 |
|
OTHER ASSETS |
|
|
86,090 |
|
|
|
64,526 |
|
TOTAL ASSETS |
|
$ |
1,120,157 |
|
|
$ |
933,424 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
13,296 |
|
|
$ |
10,532 |
|
Accrued expenses |
|
|
49,022 |
|
|
|
36,057 |
|
Deferred revenue |
|
|
97,333 |
|
|
|
80,782 |
|
Other current liabilities |
|
|
1,857 |
|
|
|
5,811 |
|
Total current liabilities |
|
|
161,508 |
|
|
|
133,182 |
|
DEFERRED REVENUE |
|
|
47,529 |
|
|
|
41,785 |
|
RETIREMENT PLAN BENEFIT LIABILITY |
|
|
51,117 |
|
|
|
44,055 |
|
OTHER LIABILITIES |
|
|
48,554 |
|
|
|
23,896 |
|
Total liabilities |
|
|
308,708 |
|
|
|
242,918 |
|
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, 48,852,193 and 48,681,524 shares issued, and 47,486,545 and 47,319,887 shares outstanding at December 31, 2019 and December 31, 2018, respectively |
|
|
489 |
|
|
|
487 |
|
Additional paid-in capital |
|
|
620,236 |
|
|
|
617,334 |
|
Retained earnings |
|
|
249,003 |
|
|
|
129,552 |
|
Accumulated other comprehensive loss |
|
|
(16,997 |
) |
|
|
(16,234 |
) |
Treasury stock, at cost (1,365,648 and 1,361,637 shares at December 31, 2019 and December 31, 2018, respectively) |
|
|
(41,284 |
) |
|
|
(40,635 |
) |
Total shareholders’ equity |
|
|
811,449 |
|
|
|
690,506 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
$ |
1,120,157 |
|
|
$ |
933,424 |
|
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
|
|||||||||||||||||||||||||
|
|
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||||||||||||||
|
|
2019 |
2018 |
2019 |
2018 |
||||||||||||||||||||
|
|
(Unaudited) |
|
|
|
|
|
|
|||||||||||||||||
REVENUE |
|
$ |
101,729 |
$ |
70,143 |
|
$ |
405,177 |
|
$ |
247,414 |
||||||||||||||
COST OF SALES |
|
|
18,202 |
|
18,325 |
|
|
75,374 |
|
|
53,541 |
||||||||||||||
Gross margin |
|
|
83,527 |
|
51,818 |
|
|
329,803 |
|
|
193,873 |
||||||||||||||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Research and development |
|
|
19,827 |
|
14,795 |
|
|
71,276 |
|
|
53,717 |
||||||||||||||
Selling, general and administrative |
|
|
19,082 |
|
12,526 |
|
|
59,613 |
|
|
46,999 |
||||||||||||||
Amortization of acquired technology and other intangible assets |
|
|
5,493 |
|
5,483 |
|
|
21,962 |
|
|
21,962 |
||||||||||||||
Patent costs |
|
|
1,688 |
|
1,773 |
|
|
6,833 |
|
|
7,464 |
||||||||||||||
Royalty and license expense |
|
|
2,948 |
|
|
1,968 |
|
|
11,776 |
|
|
6,996 |
|||||||||||||
Total operating expenses |
|
|
49,038 |
|
36,545 |
|
|
171,460 |
|
|
137,138 |
||||||||||||||
OPERATING INCOME |
|
|
34,489 |
|
15,273 |
|
|
158,343 |
|
|
56,735 |
||||||||||||||
Interest income, net |
|
|
2,459 |
|
2,504 |
|
|
10,795 |
|
|
7,659 |
||||||||||||||
Other income (expense), net |
|
|
27 |
|
(17 |
) |
|
|
767 |
|
|
(83 |
) |
||||||||||||
Interest and other income, net |
|
|
2,486 |
|
2,487 |
|
|
11,562 |
|
|
7,576 |
||||||||||||||
INCOME BEFORE INCOME TAXES |
|
|
36,975 |
|
17,760 |
|
|
169,905 |
|
|
64,311 |
||||||||||||||
INCOME TAX (EXPENSE) BENEFIT |
|
|
(10,547 |
) |
|
1,489 |
|
|
(31,601 |
) |
|
|
(5,471 |
) |
|||||||||||
NET INCOME |
|
$ |
26,428 |
|
$ |
19,249 |
|
$ |
138,304 |
|
$ |
58,840 |
|||||||||||||
NET INCOME PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
BASIC |
|
$ |
0.56 |
$ |
0.40 |
|
$ |
2.92 |
|
$ |
1.24 |
||||||||||||||
DILUTED |
|
$ |
0.56 |
$ |
0.40 |
|
$ |
2.92 |
|
|
$ |
1.24 |
|||||||||||||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
BASIC |
|
|
46,997,368 |
|
46,874,953 |
|
|
46,959,775 |
|
|
46,849,588 |
||||||||||||||
DILUTED |
|
|
47,031,759 |
|
46,917,838 |
|
|
46,995,462 |
|
|
46,896,766 |
||||||||||||||
CASH DIVIDENDS DECLARED PER COMMON SHARE |
|
$ |
0.10 |
$ |
0.06 |
|
$ |
0.40 |
|
$ |
0.24 |
||||||||||||||
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
|
|||||||||
|
|
Year Ended December 31, |
|||||||
|
|
2019 |
|
2018 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
138,304 |
|
|
$ |
58,840 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Amortization of deferred revenue and recognition of unbilled receivables |
|
|
(135,368 |
) |
|
|
(68,905 |
) |
|
Depreciation |
|
|
12,456 |
|
|
|
8,612 |
|
|
Amortization of intangibles |
|
|
21,962 |
|
|
|
21,962 |
|
|
Change in excess inventory reserve |
|
|
5,938 |
|
|
|
3,630 |
|
|
Amortization of premium and discount on investments, net |
|
|
(6,643 |
) |
|
|
(6,131 |
) |
|
Stock-based compensation to employees |
|
|
16,148 |
|
|
|
12,432 |
|
|
Stock-based compensation to Board of Directors and Scientific Advisory Board |
|
|
1,548 |
|
|
|
4,364 |
|
|
Deferred income tax benefit |
|
|
(5,776 |
) |
|
|
(12,814 |
) |
|
Retirement plan expense |
|
|
5,818 |
|
|
|
4,466 |
|
|
Decrease (increase) in assets: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(17,323 |
) |
|
|
9,226 |
|
|
Inventory |
|
|
109 |
|
|
|
(37,365 |
) |
|
Other current assets |
|
|
(15,238 |
) |
|
|
4,860 |
|
|
Deferred income taxes |
|
|
— |
|
|
|
20,682 |
|
|
Other assets |
|
|
(13,291 |
) |
|
|
(63,922 |
) |
|
Increase (decrease) in liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
15,516 |
|
|
|
1,563 |
|
|
Other current liabilities |
|
|
(5,183 |
) |
|
|
5,761 |
|
|
Deferred revenue |
|
|
157,321 |
|
|
|
130,639 |
|
|
Other liabilities |
|
|
17,614 |
|
|
|
23,896 |
|
|
Net cash provided by operating activities |
|
|
193,912 |
|
|
|
121,796 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(30,059 |
) |
|
|
(25,391 |
) |
|
Purchase of intangibles |
|
|
(401 |
) |
|
|
— |
|
|
Purchases of investments |
|
|
(931,854 |
) |
|
|
(628,789 |
) |
|
Proceeds from sale of investments |
|
|
723,600 |
|
|
|
633,179 |
|
|
Net cash used in investing activities |
|
|
(238,714 |
) |
|
|
(21,001 |
) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
889 |
|
|
|
798 |
|
|
Repurchase of common stock |
|
|
(649 |
) |
|
|
(477 |
) |
|
Payment of withholding taxes related to stock-based compensation to employees |
|
|
(15,980 |
) |
|
|
(11,620 |
) |
|
Cash dividends paid |
|
|
(18,853 |
) |
|
|
(11,314 |
) |
|
Net cash used in financing activities |
|
|
(34,593 |
) |
|
|
(22,613 |
) |
|
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(79,395 |
) |
|
|
78,182 |
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |
|
|
211,022 |
|
|
|
132,840 |
|
|
CASH AND CASH EQUIVALENTS, END OF YEAR |
|
$ |
131,627 |
|
|
$ |
211,022 |
|
|
The following non-cash activities occurred: |
|
|
|
|
|
|
|
|
|
Unrealized gain on available-for-sale securities |
|
$ |
241 |
|
|
$ |
342 |
|
|
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 |
|
|
(530 |
) |
|
|
3,490 |
|
|
Cash paid for income tax |
|
|
46,602 |
|
|
|
17,771 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200220005885/en/
