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 and nine months ended September 30, 2016.
For the third quarter of 2016, the Company reported a net loss
of $1.5 million, or $0.03 per diluted share, on revenues of $30.2
million. For the third quarter of 2015, the Company reported net
income of $7.0 million, or $0.15 per diluted share, on revenues of
$39.4 million.
“Our third quarter 2016 results were in line with our
expectations for the year. As we noted last quarter, while our
revenue growth expectations have been delayed until 2017, this year
has continued to be a meaningful year to build and prepare for that
future growth. Leading panel makers are building capacity for the
next wave of high volume OLED production to begin ramping next
year, OEMs are building new OLED product roadmaps, and we are
building our infrastructure to meet the growing needs of our
expanding customer base,” said Sidney D. Rosenblatt, Executive Vice
President and Chief Financial Officer of Universal Display.
Rosenblatt continued, “As we anticipate resuming our growth
trajectory in 2017, we continue to build up our core competencies.
The display and lighting industries are evolving, and we believe we
are well positioned to continue to play a pivotal role in the OLED
market’s future. We have expanded our global footprint, increased
our headcount to approximately 200 employees, bolstered our IP
portfolio to over 4,200 issued and pending patents worldwide, and
continue to broaden our rich portfolio of proprietary OLED
technologies and phosphorescent materials. These investments, in
addition to our other strategic initiatives, buttress our committed
path of continuous innovation and next-generation solutions, our
strong leadership position in the OLED ecosystem, and our
confidence in the long-term growth path of OLEDs.”
Financial Highlights for the Third
Quarter of 2016
The Company reported revenues of $30.2 million, compared to
revenues of $39.4 million for the same quarter of 2015. Material
sales were $23.5 million, compared to $34.1 million in the third
quarter of 2015, reflecting an $8.4 million decline in emitter
sales, principally due to increased customer production
efficiencies and product mix, and a $2.3 million decline in host
material sales. Royalty and license fees were $5.2 million,
unchanged from the third quarter of 2015. Technology development
and support revenues were $1.5 million, compared to $0.1 million in
the third quarter of 2015. The increase was due to customer sales
from the recently acquired Adesis subsidiary.
The Company reported an operating loss of $3.0 million in the
third quarter of 2016, compared to operating income of $8.4 million
for the third quarter of 2015. Operating expenses were $33.2
million, compared to $31.0 million in the third quarter of 2015,
and cost of materials was $6.5 million, compared to $7.2 million in
the third quarter of 2015. The increase in operating expenses was
mainly due to an increase of $2.7 million in amortization charges
associated with the acquisition of the BASF OLED patents and the
Adesis business acquisition.
The Company’s balance sheet remained strong, with cash and cash
equivalents and investments of $301.1 million as of
September 30, 2016. During the third quarter, the Company
added $32.0 million in intangible assets in the form of customer
relationships, internally developed IP, trade names and certain
other assets with the Adesis business acquisition. During the third
quarter, the Company generated $4.1 million in operating cash
flow.
Financial Highlights for the First Nine
Months of 2016
The Company reported revenues of $124.3 million during the nine
months ended September 30, 2016, compared to revenues of $128.7
million for the same period of 2015. Material sales were $70.1
million, compared to $85.3 million in the first nine months of
2015, primarily due to a $9.3 million decline in host sales.
Royalty and license fees were $52.6 million, up from $43.3 million
in the first nine months of 2015. Technology development and
support revenues were $1.7 million, compared to $0.1 million for
the first nine months of 2015, the increase primarily due to
customer sales from the recently acquired Adesis subsidiary.
The Company reported operating income of $33.7 million for the
first nine months of 2016, compared to operating income of $5.3
million for the first nine months of 2015. Excluding the inventory
write-down of $33.0 million taken in the second quarter of 2015,
adjusted operating income was $38.3 million for the first nine
months of 2015. For the first nine months of 2016, the Company
reported net income of $22.3 million, or $0.47 per diluted share,
compared to a net loss of $3.4 million, or $0.07 per diluted share,
for the same period of 2015. Excluding the inventory write-down,
and the associated $3.0 million reduction of income tax expense,
adjusted net income was $26.6 million, or $0.57 per diluted share,
for the first nine months of 2015.
Operating cash flow for the first nine months of 2016 was $40.3
million, compared to $80.6 million for the first nine months of
2015. Operating cash flow for the first nine months of 2015
included an upfront $42.0 million license and royalty payment.
2016 Guidance
With the OLED industry still at a stage where many variables can
have a material impact on its growth, Universal Display continues
to expect its 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, November 3, 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 1-877-852-6576 (toll-free)
or 1-719-325-4823, and reference conference ID 8357856. 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 4,200 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 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.
Based in Ewing, New Jersey, with international offices in
Ireland, South Korea, China, 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)
September 30, 2016 December 31, 2015
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 54,416 $
97,513 Short-term investments 231,452 297,981 Accounts receivable
22,476 24,729 Inventory 16,103 12,748 Deferred income taxes 10,084
12,326 Other current assets 7,499 2,387
Total current assets 342,030 447,684
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $30,899 and $27,897
25,768 22,407 ACQUIRED TECHNOLOGY, net of accumulated amortization
of $65,565 and $54,837 157,276 72,015 OTHER INTANGIBLE ASSETS, net
of accumulated amortization of $311 and none 16,139 — GOODWILL
15,548 — INVESTMENTS 15,217 2,187 DEFERRED INCOME TAXES 12,352
14,945 OTHER ASSETS 423 174 TOTAL
ASSETS $ 584,753 $ 559,412
LIABILITIES AND
SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $
5,544 $ 6,849 Accrued expenses 13,190 17,387 Deferred revenue
10,211 10,107 Other current liabilities 1,672
167 Total current liabilities 30,617 34,510 DEFERRED REVENUE
33,454 35,543 RETIREMENT PLAN BENEFIT LIABILITY 24,865
22,594 Total liabilities 88,936
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, 48,314,591 and 48,132,223 shares
issued, and 46,956,728 and 46,774,360 shares outstanding at
September 30, 2016 and December 31, 2015, respectively
483 482 Additional paid-in capital 596,453 589,885 Accumulated
deficit (51,376 ) (73,627 ) Accumulated other comprehensive loss
(9,587 ) (9,819 ) Treasury stock, at cost (1,357,863 shares at
September 30, 2016 and December 31, 2015) (40,158 )
(40,158 ) Total shareholders’ equity 495,817
466,765 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 584,753
$ 559,412
UNIVERSAL DISPLAY
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
(in thousands, except share and per share
data)
Three Months Ended September
30,
Nine Months Ended September
30,
2016 2015 2016 2015
REVENUE: Material sales $ 23,465 $ 34,128 $ 70,084 $ 85,270 Royalty
and license fees 5,209 5,224 52,569 43,332 Technology development
and support revenue 1,540 67
1,656 132 Total revenue 30,214
39,419 124,309 128,734
OPERATING EXPENSES: Cost of material sales 6,458 7,246 17,194
54,913 Research and development 10,118 11,434 31,562 32,000
Selling, general and administrative 8,465 7,224 22,728 20,487
Patent costs and amortization of acquired
technology and other intangible assets
7,361 4,032 15,515 12,461 Royalty and license expense 815
1,105 3,656 3,563
Total operating expenses 33,217 31,041
90,655 123,424 Operating (loss) income
(3,003 ) 8,378 33,654 5,310 INTEREST INCOME 573 232 1,565 593
INTEREST EXPENSE (5 ) (7 ) (21 ) (31 ) OTHER (EXPENSE) INCOME
(68 ) (16 ) (1,982 ) 342 INCOME
(LOSS) BEFORE INCOME TAXES (2,503 ) 8,587 33,216 6,214 INCOME TAX
BENEFIT (EXPENSE) 1,003 (1,540 )
(10,965 ) (9,624 ) NET INCOME (LOSS) $ (1,500 ) $ 7,047
$ 22,251 $ (3,410 ) NET INCOME (LOSS) PER COMMON
SHARE: BASIC $ (0.03 ) $ 0.15 $ 0.47 $ (0.07 ) DILUTED $ (0.03 ) $
0.15 $ 0.47 $ (0.07 )
WEIGHTED AVERAGE SHARES USED IN COMPUTING
NET INCOME (LOSS) PER COMMON SHARE:
BASIC 46,947,621 46,542,556 46,889,913 46,241,578 DILUTED
46,947,621 46,723,373 47,015,262 46,241,578
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended September 30, 2016
2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)
$ 22,251 $ (3,410 ) Adjustments to reconcile net income (loss) to
net cash provided by operating activities: Amortization of deferred
revenue (5,281 ) (7,031 ) Depreciation 3,002 2,223 Amortization of
intangibles 11,039 8,249 Inventory write-down — 33,000 Amortization
of premium and discount on investments, net (1,316 ) (479 )
Stock-based compensation to employees 8,231 6,759 Stock-based
compensation to Board of Directors and Scientific Advisory Board
1,273 818 Deferred income tax benefit 4,726 4,291 Retirement plan
benefit expense 3,004 2,433 Decrease (increase) in assets, net of
effect of acquisition: Accounts receivable 3,723 (6,275 ) Inventory
(3,249 ) (9,579 ) Other current assets (4,977 ) (167 ) Other assets
(249 ) 193 Increase (decrease) in liabilities, net of effect of
acquisition: Accounts payable and accrued expenses (5,134 ) 1,192
Other current liabilities (5 ) (7 ) Deferred revenue 3,296
48,411 Net cash provided by operating
activities 40,334 80,621 CASH FLOWS
FROM INVESTING ACTIVITIES: Purchases of property and equipment
(4,361 ) (4,650 ) Purchase of intangibles (95,989 ) — Purchase of
business, net of cash acquired (33,163 ) — Purchases of investments
(380,260 ) (453,672 ) Proceeds from sale of investments
434,683 425,660 Net cash used in investing
activities (79,090 ) (32,662 ) CASH FLOWS FROM
FINANCING ACTIVITIES: Proceeds from issuance of common stock 317
263 Proceeds from the exercise of common stock options 182 1,629
Payment of withholding taxes related to stock-based compensation to
employees (4,840 ) (5,313 ) Net cash used in
financing activities (4,341 ) (3,421 ) (DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS (43,097 ) 44,538 CASH AND
CASH EQUIVALENTS, BEGINNING OF PERIOD 97,513
45,418 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 54,416
$ 89,956 The following non-cash activities occurred:
Unrealized loss on available-for-sale securities $ 256 $ 9
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
133 (858 ) Earnout liability recorded for Adesis acquisition 1,510
—
Reconciliation of Non-GAAP
Measures
The following table details the Company’s reconciliation of
non-GAAP measures to the most directly comparable GAAP measures:
(unaudited, in thousands, except share and per share
data)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2016 2015 2016 2015
Cost of commercial material sales reconciliation Cost of
commercial material sales $ 4,097 $ 6,989 $ 12,276 $ 54,502 Cost of
commercial material sales adjustments: Inventory write-down
— — — 33,000
Adjusted cost of commercial material sales $ 4,097 $ 6,989
$ 12,276 $ 21,502 Cost of commercial material
sales as a % of commercial material sales 21 % 23 % 20 % 70 %
Adjusted cost of commercial material sales
as a % of commercial material sales
21 % 23 % 20 % 28 %
Operating income (loss)
reconciliation Operating income (loss) $ (3,003 ) $ 8,378 $
33,654 $ 5,310 Operating income (loss) adjustments: Inventory
write-down — — —
33,000 Adjusted operating income $ (3,003 ) $ 8,378 $
33,654 $ 38,310 Operating income (loss) as a % of
total revenue (10 )% 21 % 27 % 4 % Adjusted operating income as a %
of total revenue (10 )% 21 % 27 % 30 %
Net income (loss)
reconciliation Net income (loss) $ (1,500 ) $ 7,047 $ 22,251 $
(3,410 ) Net income (loss) per share: Basic $ (0.03 ) $ 0.15 $ 0.47
$ (0.07 ) Diluted $ (0.03 ) $ 0.15 $ 0.47 $ (0.07 ) Net income
(loss) adjustments: Inventory write-down — — — 33,000 Income tax
effect of inventory write-down* — (1,104 )
— (2,964 ) Adjusted net income $ (1,500 ) $
5,943 $ 22,251 $ 26,626 Net income (loss) as a
% of total revenue (5 )% 18 % 18 % (3 )% Adjusted net income as a %
of total revenue (5 )% 15 % 18 % 21 % Adjusted net income per
share: Basic ** $ (0.03 ) $ 0.13 $ 0.47 $ 0.58 Diluted *** $ (0.03
) $ 0.13 $ 0.47 $ 0.57 Weighted average shares used in computing
net income (loss) per share and adjusted net income per share:
Basic 46,947,621 46,542,556 46,889,913 46,241,578 Diluted
46,947,621 46,723,373 47,015,262 46,241,578 * Adjusted net
income assumes an effective tax rate of 30.8% and 32.1% for the
three months and nine months ended September 30, 2015 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 nine months ended
September 30, 2015 is derived from dividing non-GAAP adjusted net
income by the weighted average shares of 46,870,998.
Non-GAAP Measures
To supplement the Company’s selected financial data presented in
accordance with U.S. generally accepted accounting principles
(GAAP), the Company uses certain non-GAAP measures. These non-GAAP
measures include adjusted operating income, adjusted cost of
commercial material sales, 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 its customer’s new products. The Company has provided
these non-GAAP measures, which the Company believes more accurately
reflect the operating performance of its ongoing business, to
enhance investors' overall understanding of the Company’s 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/20161103006684/en/
Universal Display Contact:Darice Liu, 609-671-0980
x570investor@oled.commedia@oled.com
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