Exhibit 99.1
Press Release
Universal Display Contact:
Darice Liu
investor@oled.com
media@oled.com
+1 609-964-5123
Universal Display Corporation Announces Second Quarter 2020 Financial Results
EWING, N.J. – August 6, 2020 – 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, 2020.
“While COVID-19 uncertainties will likely continue to weigh on consumer demand in the near-term, we continue to invest and further strengthen our leadership position in the OLED ecosystem and expect to emerge a stronger partner to our customers and the OLED industry,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “The challenges of this pandemic continued to impact us in the second quarter as customer orders and shipments declined. For the second half of the year, while there is cautious optimism in the industry, we believe significant uncertainties still loom over the consumer and macroeconomic environments. Long-term, we believe that the growth path of OLEDs remains robust.”
Rosenblatt continued, “Broadly speaking, despite the pandemic, OLED activity in the market continues to evolve and progress. We remain encouraged and excited about the level of commercial and development activity in the OLED pipeline. The UDC team continues to do an incredible job of supporting and enabling our customers with the discovery, development and delivery of cutting-edge, energy-efficient, high-performing OLED solutions. We are continuing to invest in, build and expand our robust foundation of best-in-class OLED technologies and are strategically increasing our headcount around the world to meet the growing long-term needs of the company and our customers.”
Financial Highlights for the Second Quarter of 2020
| • | Total revenue in the second quarter of 2020 was $58.0 million as compared to $118.2 million in the second quarter of 2019. The decrease in revenue was mainly due to the weakened |
demand for emitter product from our customers as a result of the COVID-19 pandemic, as well as the impact of the advanced purchases that were fulfilled in the prior quarter in anticipation of potential supply disruptions from the pandemic and inventory management efforts by our customers to minimize the effects of potentially heightened trade tensions between the governments of China and the United States. The ultimate full extent of the impact of the pandemic on our operational performance remains uncertain and will depend on many factors including the timing, extent and duration of the pandemic, the development and availability of effective treatments and vaccines, and the impact on the global economy and demand for OLED consumer products.
| • | Revenue from material sales was $31.9 million in the second quarter of 2020 as compared to $76.3 million in the second quarter of 2019. |
| • | Revenue from royalty and license fees was $22.4 million in the second quarter of 2020 as compared to $38.9 million in the second quarter of 2019. |
| • | Cost of material sales was $10.3 million in the second quarter of 2020 as compared to $22.0 million in the second quarter of 2019. Included in cost of material sales for the second quarter of 2019 was an inventory reserve charge of $3.9 million. |
| • | Operating loss was $1.2 million in the second quarter of 2020 as compared to operating income of $48.7 million in the second quarter of 2019. |
| • | Net income was $815,000 or $0.02 per diluted share in the second quarter of 2020 as compared to $43.4 million or $0.92 per diluted share in the second quarter of 2019. |
Revenue Comparison
($ in thousands) | | Three Months Ended June 30, | | |
| | 2020 | | | 2019 | | |
Material sales | | $ | 31,927 | | | $ | 76,328 | | |
Royalty and license fees | | | 22,380 | | | | 38,938 | | |
Contract research services | | | 3,661 | | | | 2,902 | | |
Total revenue | | $ | 57,968 | | | $ | 118,168 | | |
Cost of Materials Comparison
($ thousands) | | Three Months Ended June 30, | |
| | 2020 | | | 2019 | |
Material sales | | $ | 31,927 | | | $ | 76,328 | |
Cost of material sales | | | 10,277 | | | | 21,981 | |
Gross margin on material sales | | | 21,650 | | | | 54,347 | |
Gross margin as a % of material sales | | | 68 | % | | | 71 | % |
Financial Highlights for the First Half of 2020
| • | Total revenue in the first half of 2020 was $170.2 million as compared to $205.9 million in the first half of 2019. The decrease in revenue was mainly due to the weakened demand for emitter product from our customers as a result of the COVID-19 pandemic. As discussed above, the ultimate full extent of the impact of the pandemic on our operational performance remains uncertain. |
| • | Revenue from material sales was $98.5 million in the first half of 2020 as compared to $130.8 million in the first half of 2019. Revenue from royalty and license fees was $65.5 million in the first half of 2020 as compared to $69.2 million in the first half of 2019. |
| • | Cost of material sales was $30.5 million in the first half of 2020 as compared to $35.0 million in the first half of 2019. Included in the cost of material sales was an inventory reserve charge of $611,000 in the first half of 2020 as compared to a charge of $4.2 million in the first half of 2019. |
| • | Operating income was $43.3 million in the first half of 2020 as compared to $83.0 million in the first half of 2019. |
| • | Net income was $39.0 million or $0.82 per diluted share in the first half of 2020 as compared to $74.9 million or $1.58 per diluted share in the first half of 2019. |
Revenue Comparison
($ in thousands) | | Six Months Ended June 30, | | |
| | 2020 | | | 2019 | | |
Material sales | | $ | 98,502 | | | $ | 130,824 | | |
Royalty and license fees | | | 65,458 | | | | 69,207 | | |
Contract research services | | | 6,285 | | | | 5,902 | | |
Total revenue | | $ | 170,245 | | | $ | 205,933 | | |
Cost of Materials Comparison
($ thousands) | | Six Months Ended June 30, | |
| | 2020 | | | 2019 | |
Material sales | | $ | 98,502 | | | $ | 130,824 | |
Cost of material sales | | | 30,488 | | | | 34,957 | |
Gross margin on material sales | | | 68,014 | | | | 95,867 | |
Gross margin as a % of material sales | | | 69 | % | | | 73 | % |
2020 Guidance
As a result of the ongoing uncertainties regarding both the scope and duration of the COVID-19 global pandemic, the Company continues to refrain from providing 2020 revenue guidance, which was withdrawn on May 7, 2020.
Dividend
The Company also announced a third quarter cash dividend of $0.15 per share on the Company’s common stock. The dividend is payable on September 30, 2020 to all shareholders of record on September 16, 2020.
Conference Call Information
In conjunction with this release, Universal Display will host a conference call on Thursday, August 6, 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 the impact of the COVID-19 pandemic on the Company and otherwise, the Company’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 sections entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q. 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)
| | June 30, 2020 | | | December 31, 2019 | |
ASSETS | | | | | | | | |
CURRENT ASSETS: | | | | | | | | |
Cash and cash equivalents | | $ | 133,566 | | | $ | 131,627 | |
Short-term investments | | | 510,455 | | | | 514,461 | |
Accounts receivable | | | 68,498 | | | | 60,452 | |
Inventory | | | 84,523 | | | | 63,953 | |
Other current assets | | | 33,117 | | | | 21,946 | |
Total current assets | | | 830,159 | | | | 792,439 | |
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $64,559 and $57,276 | | | 92,003 | | | | 87,872 | |
ACQUIRED TECHNOLOGY, net of accumulated amortization of $142,758 and $132,468 | | | 80,509 | | | | 90,774 | |
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $5,458 and $4,768 | | | 11,382 | | | | 12,072 | |
GOODWILL | | | 15,535 | | | | 15,535 | |
INVESTMENTS | | | 5,000 | | | | 5,000 | |
DEFERRED INCOME TAXES | | | 30,075 | | | | 30,375 | |
OTHER ASSETS | | | 96 394 | | | | 86,090 | |
TOTAL ASSETS | | $ | 1,161,057 | | | $ | 1,120,157 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | |
Accounts payable | | $ | 10,244 | | | $ | 13,296 | |
Accrued expenses | | | 31,083 | | | | 49,022 | |
Deferred revenue | | | 120,150 | | | | 97,333 | |
Other current liabilities | | | 1,218 | | | | 1,857 | |
Total current liabilities | | | 162,695 | | | | 161,508 | |
DEFERRED REVENUE | | | 51,317 | | | | 47,529 | |
RETIREMENT PLAN BENEFIT LIABILITY | | | 52,305 | | | | 51,117 | |
OTHER LIABILITIES | | | 54,970 | | | | 48,554 | |
Total liabilities | | | 321,287 | | | | 308,708 | |
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, 48,992,532 and 48,852,193 shares issued, and 47,626,884 and 47,486,545 shares outstanding, at June 30, 2020 and December 31, 2019, respectively | | | 490 | | | | 489 | |
Additional paid-in capital | | | 621,585 | | | | 620,236 | |
Retained earnings | | | 273,758 | | | | 249,003 | |
Accumulated other comprehensive loss | | | (14,781 | ) | | | (16,997 | ) |
Treasury stock, at cost (1,365,648 shares at June 30, 2020 and December 31, 2019) | | | (41,284 | ) | | | (41,284 | ) |
Total shareholders’ equity | | | 839,770 | | | | 811,449 | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 1,161,057 | | | $ | 1,120,157 | |
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, | |
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
REVENUE | | $ | 57,968 | | | $ | 118,168 | | | $ | 170,245 | | | $ | 205,933 | |
COST OF SALES | | | 12,643 | | | | 24,072 | | | | 35,102 | | | | 39,886 | |
Gross margin | | | 45,325 | | | | 94,096 | | | | 135,143 | | | | 166,047 | |
OPERATING EXPENSES: | | | | | | | | | | | | | | | | |
Research and development | | | 21,397 | | | | 18,833 | | | | 40,894 | | | | 34,662 | |
Selling, general and administrative | | | 16,147 | | | | 15,939 | | | | 31,550 | | | | 27,908 | |
Amortization of acquired technology and other intangible assets | | | 5,490 | | | | 5,490 | | | | 10,980 | | | | 10,976 | |
Patent costs | | | 1,858 | | | | 1,716 | | | | 3,496 | | | | 3,486 | |
Royalty and license expense | | | 1,618 | | | | 3,454 | | | | 4,902 | | | | 5,991 | |
Total operating expenses | | | 46,510 | | | | 45,432 | | | | 91,822 | | | | 83,023 | |
OPERATING (LOSS) INCOME | | | (1,185 | ) | | | 48,664 | | | | 43,321 | | | | 83,024 | |
Interest income, net | | | 1,268 | | | | 2,757 | | | | 3,415 | | | | 5,588 | |
Other income, net | | | 170 | | | | 405 | | | | 372 | | | | 687 | |
Interest and other income, net | | | 1,438 | | | | 3,162 | | | | 3,787 | | | | 6,275 | |
INCOME BEFORE INCOME TAXES | | | 253 | | | | 51,826 | | | | 47,108 | | | | 89,299 | |
INCOME TAX BENEFIT (EXPENSE) | | | 562 | | | | (8,386 | ) | | | (8,138 | ) | | | (14,385 | ) |
NET INCOME | | $ | 815 | | | $ | 43,440 | | | $ | 38,970 | | | $ | 74,914 | |
NET INCOME PER COMMON SHARE: | | | | | | | | | | | | | | | | |
BASIC | | $ | 0.02 | | | $ | 0.92 | | | $ | 0.82 | | | $ | 1.58 | |
DILUTED | | $ | 0.02 | | | $ | 0.92 | | | $ | 0.82 | | | $ | 1.58 | |
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: | | | | | | | | | | | | | | | | |
BASIC | | | 47,227,294 | | | | 46,967,005 | | | | 47,160,163 | | | | 46,930,165 | |
DILUTED | | | 47,243,991 | | | | 46,996,702 | | | | 47,190,505 | | | | 46,966,172 | |
CASH DIVIDENDS DECLARED PER COMMON SHARE | | $ | 0.15 | | | $ | 0.10 | | | $ | 0.30 | | | $ | 0.20 | |
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| | Six Months Ended June 30, | |
| | 2020 | | | 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
Net income | | $ | 38,970 | | | $ | 74,914 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Amortization of deferred revenue and recognition of unbilled receivables | | | (58,644 | ) | | | (63,942 | ) |
Depreciation | | | 7,283 | | | | 5,799 | |
Amortization of intangibles | | | 10,980 | | | | 10,976 | |
Change in excess inventory reserve | | | 611 | | | | 4,155 | |
Amortization of premium and discount on investments, net | | | (3,280 | ) | | | (3,150 | ) |
Stock-based compensation to employees | | | 12,918 | | | | 7,106 | |
Stock-based compensation to Board of Directors and Scientific Advisory Board | | | 708 | | | | 884 | |
Deferred income tax benefit | | | (336 | ) | | | (1,218 | ) |
Retirement plan expense | | | 2,828 | | | | 2,940 | |
Decrease (increase) in assets: | | | | | | | | |
Accounts receivable | | | (8,046 | ) | | | (23,823 | ) |
Inventory | | | (21,181 | ) | | | 5,707 | |
Other current assets | | | (5,967 | ) | | | (2,816 | ) |
Other assets | | | (5,942 | ) | | | (5,846 | ) |
Increase (decrease) in liabilities: | | | | | | | | |
Accounts payable and accrued expenses | | | (20,332 | ) | | | (2,099 | ) |
Other current liabilities | | | (639 | ) | | | 6,736 | |
Deferred revenue | | | 75,683 | | | | 68,213 | |
Other liabilities | | | 6,416 | | | | (657 | ) |
Net cash provided by operating activities | | | 32,030 | | | | 83,879 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
Purchases of property and equipment | | | (11,804 | ) | | | (20,322 | ) |
Purchases of intangibles | | | (25 | ) | | | (401 | ) |
Purchases of investments | | | (404,232 | ) | | | (363,595 | ) |
Proceeds from sale of investments | | | 412,760 | | | | 437,800 | |
Net cash (used in) provided by investing activities | | | (3,301 | ) | | | 53,482 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Proceeds from issuance of common stock | | | 590 | | | | 445 | |
Repurchase of common stock | | | — | | | | (649 | ) |
Payment of withholding taxes related to stock-based compensation to employees | | | (13,165 | ) | | | (14,472 | ) |
Cash dividends paid | | | (14,215 | ) | | | (9,430 | ) |
Net cash used in financing activities | | | (26,790 | ) | | | (24,106 | ) |
INCREASE IN CASH AND CASH EQUIVALENTS | | | 1,939 | | | | 113,255 | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | | 131,627 | | | | 211,022 | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 133,566 | | | $ | 324,277 | |
The following non-cash activities occurred: | | | | | | | | |
Unrealized gain on available-for-sale securities | | $ | 1,242 | | | $ | 192 | |
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 | | | 390 | | | | 667 | |
