Universal Display Corporation Announces Second Quarter 2024 Financial Results

About this update from Universal Display Corporation

EWING, N.J. --(BUSINESS WIRE)-- 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, 2024 . “We reported solid second quarter results as the OLED IT adoption cycle begins to gain momentum,” said Brian Millard , Vice President and Chief Financial Officer of Universal Display Corporation . “With leading OEMs embarking on their OLED IT journey with the introduction of new OLED PC products, we believe that a new multi-year capex cycle has commenced to support this growth. As the broadening proliferation of OLEDs across the consumer landscape fuels the market’s positive trajectory, we are enhancing our operational and strategic infrastructure and fortifying our leadership position in the ecosystem. This new chapter in our long-term growth story is expected to usher in tremendous opportunities for the industry and for us.” Financial Highlights for the Second Quarter of 2024 Total revenue in the second quarter of 2024 was $158.5 million as compared to $146.6 million in the second quarter of 2023. Revenue from material sales was $95.4 million in the second quarter of 2024 as compared to $77.1 million in the second quarter of 2023. The increase in material sales was primarily due to strengthened demand for our emitter materials. Revenue from royalty and license fees was $59.6 million in the second quarter of 2024 as compared to $64.4 million in the second quarter of 2023. The decrease in royalty and license fees was primarily the result of changes in customer mix between periods, partially offset by increased sales volume. Cost of material sales was $35.5 million in the second quarter of 2024 as compared to $28.6 million in the second quarter of 2023. The increase in cost of material sales was primarily due to an increase in the level of materials sales. Total gross margin was 76% in the second quarter of 2024 as compared to 78% in the second quarter of 2023. The decrease was primarily due to changes in customer and product mix. Operating income was $56.4 million in the second quarter of 2024 as compared to $58.6 million in the second quarter of 2023. The effective income tax rate was 19.3% and 22.4% in the second quarter of 2024 and 2023, respectively. Net income was $52.3 million or $1.10 per diluted share in the second quarter of 2024 as compared to $49.7 million or $1.04 per diluted share in the second quarter of 2023. Revenue Comparison ($ in thousands) Three Months Ended June 30 , 2024 2023 Material sales $ 95,442 $ 77,107 Royalty and license fees 59,551 64,399 Contract research services 3,512 5,059 Total revenue $ 158,505 $ 146,565 Cost of Materials Comparison ($ in thousands) Three Months Ended June 30 , 2024 2023 Material sales $ 95,442 $ 77,107 Cost of material sales 35,491 28,570 Gross margin on material sales 59,951 48,537 Gross margin as a % of material sales 63 % 63 % Financial Highlights for the First Half of 2024 Total revenue in the first half of 2024 was $323.8 million as compared to $277.0 million in the first half of 2023. Revenue from material sales was $188.7 million in the first half of 2024 as compared to $147.3 million in the first half of 2023. The increase in material sales was primarily due to strengthened demand for our emitter materials. Revenue from royalty and license fees was $127.8 million in the first half of 2024 as compared to $119.6 million in the first half of 2023. The increase in royalty and license fees was primarily the result of higher unit material volume, partially offset by a reduced cumulative catch-up adjustment and changes in customer mix between periods. Cost of material sales was $69.6 million in the first half of 2024 as compared to $58.1 million in the first half of 2023 primarily due to an increase in the level of materials sales, partially offset by a $3.8 million decrease in inventory reserve expense. Total gross margin was 77% in the first half of 2024 as compared to 76% in the first half of 2023. Operating income was $119.3 million in the first half of 2024 as compared to $104.0 million in the first half of 2023. The effective income tax rate was 19.3% and 22.6% in the first half of 2024 and 2023, respectively. Net income was $109.2 million or $2.29 per diluted share in the first half of 2024 compared to $89.5 million or $1.87 per diluted share in the first half of 2023. Revenue Comparison ($ in thousands) Six Months Ended June 30 , 2024 2023 Material sales $ 188,726 $ 147,297 Royalty and license fees 127,819 119,609 Contract research services 7,219 10,126 Total revenue $ 323,764 $ 277,032 Cost of Materials Comparison ($ in thousands) Six Months Ended June 30 , 2024 2023 Material sales $ 188,726 $ 147,297 Cost of material sales 69,587 58,058 Gross margin on material sales 119,139 89,239 Gross margin as a % of material sales 63 % 61 % 2024 Revised Guidance The Company has increased the lower end of its previous revenue guidance and believes that 2024 revenue will be in the range of $645 million to $675 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 third quarter cash dividend of $0.40 per share on the Company’s common stock. The dividend is payable on September 30, 2024 to all shareholders of record as of the close of business on September 16, 2024 . Conference Call Information In conjunction with this release, Universal Display will host a conference call on Thursday, August 1, 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. Follow Universal Display Corporation X Facebook YouTube (OLED-C) UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share data) June 30, 2024 December 31, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 92,856 $ 91,985 Short-term investments 437,667 422,137 Accounts receivable 124,386 139,850 Inventory 171,843 175,795 Other current assets 132,729 87,365 Total current assets 959,481 917,132 PROPERTY AND EQUIPMENT, net of accumulated depreciation of $153,523 and $143,908 185,474 175,150 ACQUIRED TECHNOLOGY, net of accumulated amortization of $195,235 and $186,850 81,940 90,325 OTHER INTANGIBLE ASSETS, net of accumulated amortization of $11,125 and $10,414 6,163 6,874 GOODWILL 15,535 15,535 INVESTMENTS 362,459 299,548 DEFERRED INCOME TAXES 66,664 59,108 OTHER ASSETS 98,845 105,289 TOTAL ASSETS $ 1,776,561 $ 1,668,961 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 23,636 $ 10,933 Accrued expenses 58,624 52,080 Deferred revenue 63,784 47,713 Other current liabilities 5,955 8,096 Total current liabilities 151,999 118,822 DEFERRED REVENUE 6,732 12,006 RETIREMENT PLAN BENEFIT LIABILITY 53,870 52,249 OTHER LIABILITIES 37,122 38,658 Total liabilities 249,723 221,735 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, 48,814,273 and 48,731,026 shares issued, and 47,448,625 and 47,365,378 shares outstanding, at June 30, 2024 and December 31, 2023 , respectively 488 487 Additional paid-in capital 712,234 699,554 Retained earnings 860,058 789,553 Accumulated other comprehensive loss (4,660 ) (1,086 ) Treasury stock, at cost (1,365,648 shares at June 30, 2024 and December 31, 2023 ) (41,284 ) (41,284 ) Total shareholders’ equity 1,526,838 1,447,226 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,776,561 $ 1,668,961 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 , 2024 2023 2024 2023 REVENUE: Material sales $ 95,442 $ 77,107 $ 188,726 $ 147,297 Royalty and license fees 59,551 64,399 127,819 119,609 Contract research services 3,512 5,059 7,219 10,126 Total revenue 158,505 146,565 323,764 277,032 COST OF SALES 38,328 32,139 75,297 65,109 Gross margin 120,177 114,426 248,467 211,923 OPERATING EXPENSES: Research and development 36,826 32,318 74,811 63,741 Selling, general and administrative 19,841 17,077 39,093 32,473 Amortization of acquired technology and other intangible assets 4,549 3,994 9,097 6,885 Patent costs 2,401 2,229 4,383 4,484 Royalty and license expense 123 169 1,774 333 Total operating expenses 63,740 55,787 129,158 107,916 OPERATING INCOME 56,437 58,639 119,309 104,007 Interest income, net 9,913 6,198 19,481 13,165 Other loss, net (1,460 ) (784 ) (3,403 ) (1,487 ) Interest and other loss, net 8,453 5,414 16,078 11,678 INCOME BEFORE INCOME TAXES 64,890 64,053 135,387 115,685 INCOME TAX EXPENSE (12,553 ) (14,375 ) (26,197 ) (26,168 ) NET INCOME $ 52,337 $ 49,678 $ 109,190 $ 89,517 NET INCOME PER COMMON SHARE: BASIC $ 1.10 $ 1.04 $ 2.29 $ 1.87 DILUTED $ 1.10 $ 1.04 $ 2.29 $ 1.87 WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: BASIC 47,549,843 47,572,971 47,553,969 47,548,404 DILUTED 47,628,113 47,618,115 47,628,470 47,593,657 CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.40 $ 0.35 $ 0.80 $ 0.70 UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Six Months Ended June 30 , 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 109,190 $ 89,517 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 13,092 13,207 Amortization of intangibles 9,097 6,885 Amortization of premium and discount on investments, net (4,276 ) (6,845 ) Stock-based compensation 18,523 11,320 Deferred income tax benefit (7,402 ) (12,782 ) Retirement plan expense, net of benefit payments 962 1,397 Decrease (increase) in assets: Accounts receivable 15,464 (16,726 ) Inventory 3,952 7,365 Other current assets (45,364 ) 12,038 Other assets 6,444 7,665 Increase (decrease) in liabilities: Accounts payable and accrued expenses 12,367 (17,651 ) Other current liabilities (2,141 ) (20,811 ) Deferred revenue 10,797 (15,736 ) Other liabilities (1,536 ) (1,445 ) Net cash provided by operating activities 139,169 57,398 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (16,334 ) (27,274 ) Purchases of intangibles — (66,063 ) Purchases of investments (174,757 ) (115,048 ) Proceeds from sale and maturity of investments 97,620 190,907 Net cash used in investing activities (93,471 ) (17,478 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 1,187 971 Payment of withholding taxes related to stock-based compensation to employees (7,329 ) (7,429 ) Cash dividends paid (38,685 ) (33,422 ) Net cash used in financing activities (44,827 ) (39,880 ) INCREASE IN CASH AND CASH EQUIVALENTS 871 40 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 91,985 93,430 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 92,856 $ 93,470 SUPPLEMENTAL DISCLOSURES: Unrealized (loss) gain on available-for-sale securities $ (2,976 ) $ 1,848 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 (7,082 ) (54 ) Cash paid for income taxes, net of refunds 47,263 59,849 View source version on businesswire.com : https://www.businesswire.com/news/home/20240801261409/en/ Universal Display : Darice Liu [email protected] [email protected] +1 609-964-5123 Source: Universal Display Corporation

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