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, 2016.
For the second quarter of 2016, the Company reported net income
of $21.8 million, or $0.46 per diluted share, on revenues of $64.4
million. This includes $1.8 million of currency exchange loss
related to the BASF OLED patent acquisition. For the second quarter
of 2015, the Company reported a net loss of $11.8 million, or $0.25
per diluted share, on revenues of $58.1 million. The 2015 net loss
reflected a $33.0 million write-down of inventory, primarily of an
existing host material and associated work-in-process. Excluding
this item and its associated $1.9 million reduction of income tax
expense, adjusted net income for the second quarter of 2015 was
$19.4 million, or $0.41 per diluted share (see "reconciliation of
non-GAAP Measures" below for further discussion of the non-GAAP
measures included in this release).
“Our second quarter 2016 revenues and net income increased
year-over-year, and we maintained our strong margin profile. We are
confident that the underlying growth fundamentals of our long-term
outlook remain robust, but near-term, we expect our revenue growth
will be delayed by about six months,” said Sidney D. Rosenblatt,
Executive Vice President and Chief Financial Officer of Universal
Display.
Rosenblatt continued, “We expect strong revenue growth in 2017.
At that time, new OLED production from the multi-year capital
expenditure cycle is slated to start contributing to our revenues.
Ahead of this wave of high-volume capacity, we have been working to
expand and broaden our team and core competencies to advance our
strategic initiatives and increase our competitive edge. We expect
these initiatives, along with new OLED capacity, coupled with our
pipeline of new materials, new technologies and new agreements, to
bolster our long-term growth plan.”
Financial Highlights for the Second
Quarter of 2016
The Company reported revenues of $64.4 million, compared to
revenues of $58.1 million for the same quarter of 2015, an increase
of 10.8%. Material sales were $22.3 million, down 8.3% compared to
the second quarter of 2015, primarily due to a $2.0 million decline
in host material sales. Royalty and license fees were $42.0
million, up from $33.7 million in the second quarter of 2015. The
Company recognized $37.5 million in Samsung Display Co., Ltd. (SDC)
licensing revenue in the second quarter of 2016, up from $30.0
million in the same quarter of 2015.
The Company reported operating income of $34.0 million in the
second quarter of 2016, compared to an operating loss of $4.8
million for the second quarter of 2015. Excluding the inventory
write-down of $33.0 million, adjusted operating income was $28.2
million for the second quarter of 2015. Operating expenses were
$30.4 million, compared to $62.9 million in the second quarter of
2015 and cost of materials was $5.7 million, compared to $39.1
million in the second quarter of 2015, both of which included the
inventory write-down of $33.0 million in the second quarter of
2015.
The Company’s balance sheet remained strong, with cash and cash
equivalents and investments of $332.0 million as of June 30,
2016. During the second quarter, the Company added $96.0 million in
intangible assets in the form of intellectual property purchases
and certain other assets from BASF, increasing the portfolio to
more than 4,100 issued and pending patents worldwide. During the
second quarter, the Company generated $36.2 million in operating
cash flow.
Financial Highlights for the First Six
Months of 2016
The Company reported revenues of $94.1 million, compared to
revenues of $89.3 million for the first half of 2015, or an
increase of 5.4%. Material sales were $46.6 million, down 8.8%
compared to $51.1 million in the first half of 2015, primarily due
to a $7.0 million decline in host sales. Royalty and license fees
were $47.4 million, up from $38.1 million in the first half of
2015.
The Company reported operating income of $36.7 million in the
first half of 2016, compared to an operating loss of $3.1 million
for the first half of 2015. Excluding the inventory write-down of
$33.0 million, adjusted operating income was $30.0 million for
2015. For the first half of 2016, we reported net income of $23.8
million, or $0.51 per diluted share, compared to a net loss of
$10.5 million, or $0.23 per diluted share, for the same period of
2015. Excluding the inventory write-down and the associated $1.9
million reduction of income tax expense, adjusted net income was
$20.7 million, or $0.45 per diluted share, for the first half of
2015.
Operating cash flow for the first half of 2016 was $36.2
million, a decrease of 51.8% compared to $75.2 million for the
first half of 2015 which included an upfront $42.0 million license
and royalty payment.
2016 Guidance
While the OLED industry is still at a stage where many variables
can have a material impact on its growth, based upon the most
recent and best information on hand, the Company believes it is
prudent to revise its 2016 revenues guidance. The Company now
expects 2016 revenues to be in the range of $190 million to $200
million.
Conference Call
Information
In conjunction with this release, Universal Display will host a
conference call on Thursday, August 4, 2016 at 5:00 p.m. Eastern
Time. The live webcast of the conference call can be accessed under
the events portion of the Company's website. Those wishing to
participate in the live call should dial 1-888-504-7953 (toll-free)
or 1-719-325-2370, and reference conference ID 2421808. 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
developing and delivering state-of-the-art, organic light emitting
diode (OLED) technologies, materials and services to the display
and lighting industries. Founded in 1994, the Company currently
owns or has exclusive, co-exclusive or sole license rights with
respect to more than 4,100 issued and pending patents 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 white 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.
Based in Ewing, New Jersey, with international offices in
Ireland, South Korea, Hong Kong, Japan and Taiwan, Universal
Display works and partners with a network of world-class
organizations, including Princeton University, the University of
Southern California, the University of Michigan, and PPG
Industries, Inc. The Company has also established relationships
with companies such as AU Optronics Corporation, BOE Technology,
DuPont Displays, Inc., Innolux Corporation, Kaneka Corporation,
Konica Minolta Technology Center, Inc., LG Display Co., Ltd.,
Lumiotec, Inc., OLEDWorks LLC, OSRAM, Pioneer Corporation, Samsung
Display Co., Ltd., Sumitomo Chemical Company, Ltd., Tianma
Micro-electronics and Tohoku Pioneer Corporation. To learn more
about Universal Display, please visit http://www.oled.com.
Universal Display Corporation and the Universal Display 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 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, 2015. 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, 2016 December 31, 2015
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 69,930 $
97,513 Short-term investments 246,281 297,981 Accounts receivable
17,984 24,729 Inventory 16,467 12,748 Deferred income taxes 10,097
12,326 Other current assets 5,561 2,387
Total current assets 366,320 447,684
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $29,736 and $27,897
22,610 22,407
ACQUIRED TECHNOLOGY, net of accumulated
amortization of $60,416 and $54,837
162,469 72,015 INVESTMENTS 15,767 2,187 DEFERRED INCOME TAXES
12,293 14,945 OTHER ASSETS 543 174
TOTAL ASSETS $ 580,002 $ 559,412
LIABILITIES AND
SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $
6,368 $ 6,849 Accrued expenses 10,701 17,387 Deferred revenue
10,232 10,107 Other current liabilities 423
167 Total current liabilities 27,724 34,510 DEFERRED REVENUE
34,066 35,543 RETIREMENT PLAN BENEFIT LIABILITY 24,292
22,594 Total liabilities 86,082
92,647 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,
100,000,000 shares authorized, 48,302,603 and 48,132,223 shares
issued and outstanding at June 30, 2016 and December 31, 2015,
respectively
483 482 Additional paid-in capital 593,170 589,885 Accumulated
deficit (49,876 ) (73,627 ) Accumulated other comprehensive loss
(9,701 ) (9,819 )
Treasury stock, at cost (1,357,863 shares
at June 30, 2016 and December 31, 2015)
(40,158 ) (40,158 ) Total shareholders’ equity
493,920 466,765 TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY $ 580,002 $ 559,412
UNIVERSAL DISPLAY CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
(in thousands, except share and per share
data)
Three Months Ended June 30, Six
Months Ended June 30, 2016 2015
2016 2015 REVENUE: Material sales $ 22,315 $
24,324 $ 46,619 $ 51,142 Royalty and license fees 42,018 33,733
47,360 38,108 Technology development and support revenue 59
35 116 65 Total
revenue 64,392 58,092 94,095
89,315 OPERATING EXPENSES: Cost of material
sales 5,684 39,086 10,736 47,667 Research and development 10,969
10,647 21,445 20,566 Selling, general and administrative 7,688
6,983 14,264 13,245
Patent costs and amortization of acquired
technology
4,060 4,462 8,154 8,429 Royalty and license expense 1,966
1,673 2,841 2,458
Total operating expenses 30,367 62,851
57,440 92,365 Operating income (loss)
34,025 (4,759 ) 36,655 (3,050 ) INTEREST INCOME 661 188 993 361
INTEREST EXPENSE (8 ) (12 ) (15 ) (24 ) OTHER (EXPENSE) INCOME
(1,829 ) 278 (1,914 ) 340
INCOME (LOSS) BEFORE INCOME TAXES 32,849 (4,305 ) 35,719 (2,373 )
INCOME TAX EXPENSE (11,047 ) (7,466 ) (11,968
) (8,084 ) NET INCOME (LOSS) $ 21,802 $ (11,771 ) $
23,751 $ (10,457 ) NET INCOME (LOSS) PER COMMON SHARE: BASIC
$ 0.46 $ (0.25 ) $ 0.51 $ (0.23 ) DILUTED $ 0.46 $ (0.25 ) $ 0.51 $
(0.23 )
WEIGHTED AVERAGE SHARES USED IN COMPUTING
NET INCOME (LOSS) PER COMMON SHARE:
BASIC 46,927,543 46,388,218 46,862,199 45,840,599 DILUTED
47,041,854 46,388,218 46,985,374 45,840,599
UNIVERSAL DISPLAY CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended June 30, 2016
2015 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
(loss) $ 23,751 $ (10,457 )
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Amortization of deferred revenue (3,601 ) (4,893 ) Depreciation
1,839 1,439 Amortization of intangibles 5,579 5,500 Inventory
write-down — 33,000 Amortization of premium and discount on
investments, net (801 ) (285 ) Stock-based compensation to
employees 5,401 4,039
Stock-based compensation to Board of
Directors and Scientific Advisory Board
891 659 Deferred income tax benefit 4,826 3,984 Retirement plan
benefit expense 1,982 1,512 Decrease (increase) in assets: Accounts
receivable 6,745 4,697 Inventory (3,719 ) (12,860 ) Other current
assets (3,174 ) (417 ) Other assets (369 ) 80 Increase (decrease)
in liabilities: Accounts payable and accrued expenses (5,625 ) 826
Other current liabilities 256 (58 ) Deferred revenue 2,250
48,412 Net cash provided by operating
activities 36,231 75,178 CASH FLOWS
FROM INVESTING ACTIVITIES: Purchases of property and equipment
(2,162 ) (3,146 ) Purchase of intangibles (96,033 ) — Purchases of
investments (325,226 ) (267,520 ) Proceeds from sale of investments
364,017 263,058 Net cash used in
investing activities (59,404 ) (7,608 ) CASH FLOWS
FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock
202 171 Proceeds from the exercise of common stock options 182
1,372 Payment of withholding taxes related to stock-based
compensation to employees (4,794 ) (5,280 ) Net cash
used in financing activities (4,410 ) (3,737 )
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (27,583 ) 63,833
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 97,513
45,418 CASH AND CASH EQUIVALENTS, END OF PERIOD $
69,930 $ 109,251 The following non-cash activities
occurred: Unrealized loss on available-for-sale securities $ 131 $
8
Common stock issued to Board of Directors
and Scientific Advisory Board that was earned and accrued for in a
previous period
300 300
Common stock issued to employees that was
earned and accrued for in a previous period
1,105 967
Net change in accounts payable and accrued
expenses related to purchases of property and equipment
(120 ) (725 )
Reconciliation of Non-GAAP Measures
The following table details our reconciliation of non-GAAP
measures to the most directly comparable GAAP measures:
(unaudited, in thousands, except share and per share
data)
Three Months Ended June 30, Six Months Ended June
30, 2016 2015 2016
2015 Operating income (loss) reconciliation Operating
income (loss) $ 34,025 $ (4,759 ) $ 36,655 $ (3,050 ) Operating
income (loss) adjustments: Inventory write-down —
33,000 — 33,000 Adjusted
operating income $ 34,025 $ 28,241 $ 36,655 $
29,950 Operating income (loss) as a % of total revenue 53 %
(8 )% 39 % (3 )% Adjusted operating income as a % of total revenue
53 % 49 % 39 % 34 %
Net income (loss) reconciliation
Net income (loss) $ 21,802 $ (11,771 ) $ 23,751 $ (10,457 ) Net
income (loss) per share: Basic $ 0.46 $ (0.25 ) $ 0.51 $ (0.23 )
Diluted $ 0.46 $ (0.25 ) $ 0.51 $ (0.23 ) Net income (loss)
adjustments: Inventory write-down — 33,000 — 33,000 Income tax
effect of inventory write-down — (1,860 )
— (1,860 ) Adjusted net income * $ 21,802
$ 19,369 $ 23,751 $ 20,683 Net income
(loss) as a % of total revenue 34 % (20 )% 25 % (12 )% Adjusted net
income as a % of total revenue 34 % 33 % 25 % 23 % Adjusted net
income per share: Basic ** $ 0.46 $ 0.42 $ 0.51 $ 0.45 Diluted ***
$ 0.46 $ 0.41 $ 0.51 $ 0.45 Weighted average shares used in
computing net income (loss) per share and adjusted net income per
share: Basic 46,927,543 46,388,218 46,862,199 45,840,599 Diluted
47,041,854 46,388,218 46,985,374 45,840,599 *
Adjusted net income assumes an effective tax rate of 32.5% based on
excluding the impact of the inventory write down. ** Adjusted net
income per common share, basic, is derived from dividing adjusted
net income by the number of weighted average shares used in
computing basic net income per common share. *** Adjusted net
income per common share, diluted, for the three and six months
ended June 30, 2015 is derived from dividing non-GAAP adjusted net
income by the weighted average shares of 46,691,525 and 46,421,612,
respectively.
Non-GAAP Measures
To supplement our selected financial data presented in
accordance with U.S. generally accepted accounting principles
(GAAP), we use certain non-GAAP measures. These non-GAAP measures
include adjusted operating income, adjusted net income, adjusted
net income per common share, basic and adjusted net income per
common share, diluted.
Each of these non-GAAP measures excludes the effect of the 2015
write-down of primarily existing host materials that were not
included in our customer’s new products. We have provided these
non-GAAP measures, which we believe more accurately reflect the
operating performance of our ongoing business, to enhance
investors' overall understanding of our current financial
performance and period-to-period comparisons. The presentation of
non-GAAP measures is not intended to be considered in isolation or
as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160804006435/en/
Universal DisplayDarice Liu, 609-671-0980
x570investor@oled.commedia@oled.com
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