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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(OLED-C)
|
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 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241030918292/en/