Universal Display Corporation Announces Fourth Quarter and Full Year 2020 Financial Results

Feb 18, 2021

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 fourth quarter and full year ended December 31, 2020.

“2020 was an unprecedented year. The tremendous and commendable agility and execution focus of everyone at UDC enabled us to continue to build upon our first-mover advantage in the OLED ecosystem and we believe that we are well positioned to emerge an even stronger company when this global health crisis ends,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “During the year, we announced long-term agreements with China Star Optoelectronics, achieved record quarterly revenue of $141.5 million in the fourth quarter, celebrated the 20-year anniversary of our strategic partnership with PPG, and established OVJP Corporation to advance the commercialization of our groundbreaking OLED TV manufacturing technology. In addition, we expanded our corporate social responsibility initiatives, and were recognized by Fortune as one of the world’s 100-Fastest Growing Companies and Newsweek as one of America’s Most Responsible Companies.”

Rosenblatt continued, “Our outlook for 2021 anticipates another year of meaningful growth and performance, while also continuing to invest in near-term and long-term opportunities to fortify our pathway for growth. As the adoption of OLEDs in the consumer landscape is forecasted to broaden in the coming years, we are investing in our people, our infrastructure and our innovation to advance our leadership position and to further enable our customers and the OLED ecosystem.”

Financial Highlights for the Fourth Quarter of 2020

  • Total revenue in the fourth quarter of 2020 was $141.5 million as compared to $101.7 million in the fourth quarter of 2019.
  • Revenue from material sales was $62.5 million in the fourth quarter of 2020 as compared to $60.8 million in the fourth quarter of 2019.
  • Revenue from royalty and license fees was $75.0 million in the fourth quarter of 2020 as compared to $37.8 million in the fourth quarter of 2019.
  • Cost of materials was $24.6 million in the fourth quarter of 2020 as compared to $16.3 million in the fourth quarter of 2019.
  • Operating income was $65.8 million in the fourth quarter of 2020 as compared to $34.5 million in the fourth quarter of 2019.
  • Net income was $53.9 million or $1.13 per diluted share in the fourth quarter of 2020 as compared to $26.4 million or $0.56 per diluted share in the fourth quarter of 2019.

Revenue Comparison

 

($ in thousands)

 

Three Months Ended December 31,

 

 

 

2020

 

 

2019

 

Material sales

 

$

62,538

 

 

$

60,752

 

Royalty and license fees

 

 

75,046

 

 

 

37,800

 

Contract research services

 

 

3,959

 

 

 

3,177

 

Total revenue

 

$

141,543

 

 

$

101,729

 

 

Cost of Materials Comparison

 

($ in thousands)

Three Months Ended December 31,

2020

2019

Material sales

$

62,538

$

60,752

Cost of material sales

24,602

16,281

Gross margin on material sales

37,936

44,471

Gross margin as a % of material sales

61

%

73

%

Financial Highlights for the Full Year of 2020

  • Total revenue for the full year of 2020 was $428.9 million as compared to $405.2 million for the full year of 2019.
  • Revenue from material sales was $229.7 million for the full year of 2020 as compared to $243.4 million for the full year ended 2019.
  • Revenue from royalty and license fees was $185.1 million for the full year of 2020 as compared to $150.0 million for the full year of 2019.
  • Cost of materials was $75.9 million for the full year of 2020 as compared to $66.5 million for the full year of 2019.
  • Operating income was $157.5 million for the full year of 2020 as compared to $158.3 million for the full year of 2019.
  • Net income was $133.4 million or $2.80 per diluted share for the full year of 2020 as compared to $138.3 million or $2.92 per diluted share for the full year of 2019.

Revenue Comparison

 

($ in thousands)

 

Full Year Ended December 31,

 

 

 

2020

 

 

2019

 

Material sales

 

$

229,749

 

 

$

243,413

 

Royalty and license fees

 

 

185,054

 

 

 

150,022

 

Contract research services

 

 

14,064

 

 

 

11,742

 

Total revenue

 

$

428,867

 

 

$

405,177

 

Cost of Materials Comparison

 

($ in thousands)

 

Full Year Ended December 31,

 

 

 

2020

 

 

2019

 

Material sales

 

$

229,749

 

 

$

243,413

 

Cost of material sales

 

 

75,939

 

 

 

66,482

 

Gross margin on material sales

 

 

153,810

 

 

 

176,931

 

Gross margin as a % of material sales

 

 

67

%

 

 

73

%

2021 Guidance

The Company believes that its 2021 revenue will be approximately in the range of $530 million to $560 million. The OLED industry remains at a stage where many variables can have a material impact on its growth, and the Company thus caveats its financial guidance accordingly.

Dividend

The Company also announced a first quarter 2021 cash dividend of $0.20 per share on the Company’s common stock. The dividend is payable on March 31, 2021 to all shareholders of record on March 16, 2021.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, February 18, 2021 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 section entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020. 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

(in thousands, except share and per share data)

 

 

 

December 31, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

630,012

 

 

$

131,627

 

Short-term investments

 

 

99,996

 

 

 

514,461

 

Accounts receivable

 

 

82,261

 

 

 

60,452

 

Inventory

 

 

91,591

 

 

 

63,953

 

Other current assets

 

 

20,746

 

 

 

21,946

 

Total current assets

 

 

924,606

 

 

 

792,439

 

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $72,493 and $57,276

 

 

102,113

 

 

 

87,872

 

ACQUIRED TECHNOLOGY, net of accumulated amortization of $153,050 and $132,468

 

 

70,253

 

 

 

90,774

 

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $6,155 and $4,768

 

 

10,685

 

 

 

12,072

 

GOODWILL

 

 

15,535

 

 

 

15,535

 

INVESTMENTS

 

 

5,000

 

 

 

5,000

 

DEFERRED INCOME TAXES

 

 

37,695

 

 

 

30,375

 

OTHER ASSETS

 

 

103,341

 

 

 

86,090

 

TOTAL ASSETS

 

$

1,269,228

 

 

$

1,120,157

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

13,801

 

 

$

13,296

 

Accrued expenses

 

 

41,404

 

 

 

49,022

 

Deferred revenue

 

 

105,215

 

 

 

97,333

 

Other current liabilities

 

 

4,540

 

 

 

1,857

 

Total current liabilities

 

 

164,960

 

 

 

161,508

 

DEFERRED REVENUE

 

 

57,086

 

 

 

47,529

 

RETIREMENT PLAN BENEFIT LIABILITY

 

 

78,527

 

 

 

51,117

 

OTHER LIABILITIES

 

 

55,941

 

 

 

48,554

 

Total liabilities

 

 

356,514

 

 

 

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, 49,013,476 and 48,852,193 shares issued, and 47,647,828 and 47,486,545 shares outstanding at December 31, 2020 and December 31, 2019, respectively

 

 

490

 

 

 

489

 

Additional paid-in capital

 

 

635,595

 

 

 

620,236

 

Retained earnings

 

 

353,930

 

 

 

249,003

 

Accumulated other comprehensive loss

 

 

(36,019

)

 

 

(16,997

)

Treasury stock, at cost (1,365,648 shares at December 31, 2020 and December 31, 2019)

 

 

(41,284

)

 

 

(41,284

)

Total shareholders’ equity

 

 

912,714

 

 

 

811,449

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,269,228

 

 

$

1,120,157

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

 
   

 

 

Three Months Ended
December 31,

 

 

Twelve Months Ended
December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Material sales

 

$

62,538

 

 

$

60,752

 

 

$

229,749

 

 

$

243,413

 

 

Royalty and license fees

 

 

75,046

 

 

 

37,800

 

 

 

185,054

 

 

 

150,022

 

 

Contract research services

 

 

3,959

 

 

 

3,177

 

 

 

14,064

 

 

 

11,742

 

 

Total Revenue

 

 

141,543

 

 

 

101,729

 

 

 

428,867

 

 

 

405,177

 

 

COST OF SALES

 

 

26,998

 

 

 

18,202

 

 

 

85,478

 

 

 

75,374

 

 

Gross margin

 

 

114,545

 

 

 

83,527

 

 

 

343,389

 

 

 

329,803

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

22,186

 

 

 

19,827

 

 

 

83,894

 

 

 

71,276

 

 

Selling, general and administrative

 

 

16,217

 

 

 

19,082

 

 

 

61,346

 

 

 

59,613

 

 

Amortization of acquired technology and other intangible assets

 

 

5,495

 

 

 

5,493

 

 

 

21,969

 

 

 

21,962

 

 

Patent costs

 

 

1,938

 

 

 

1,688

 

 

 

7,529

 

 

 

6,833

 

 

Royalty and license expense

 

 

2,930

 

 

 

2,948

 

 

 

11,125

 

 

 

11,776

 

 

Total operating expenses

 

 

48,766

 

 

 

49,038

 

 

 

185,863

 

 

 

171,460

 

 

OPERATING INCOME

 

 

65,779

 

 

 

34,489

 

 

 

157,526

 

 

 

158,343

 

 

Interest income, net

 

 

695

 

 

 

2,459

 

 

 

5,139

 

 

 

10,795

 

 

Other income, net

 

 

230

 

 

 

27

 

 

 

864

 

 

 

767

 

 

Interest and other income, net

 

 

925

 

 

 

2,486

 

 

 

6,003

 

 

 

11,562

 

 

INCOME BEFORE INCOME TAXES

 

 

66,704

 

 

 

36,975

 

 

 

163,529

 

 

 

169,905

 

 

INCOME TAX EXPENSE

 

 

(12,802

)

 

 

(10,547

)

 

 

(30,157

)

 

 

(31,601

)

 

NET INCOME

 

$

53,902

 

 

$

26,428

 

 

$

133,372

 

 

$

138,304

 

 

NET INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

$

1.13

 

 

$

0.56

 

 

$

2.80

 

 

$

2.92

 

 

DILUTED

 

$

1.13

 

 

$

0.56

 

 

$

2.80

 

 

$

2.92

 

 

WEIGHTED AVERAGE SHARES USED IN COMPUTING NET

INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

 

47,241,078

 

 

 

46,997,368

 

 

 

47,198,982

 

 

 

46,959,775

 

 

DILUTED

 

 

47,298,692

 

 

 

47,031,759

 

 

 

47,236,994

 

 

 

46,995,462

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.15

 

 

$

0.10

 

 

$

0.60

 

 

$

0.40

 

 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
   

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Net income

 

$

133,372

 

 

$

138,304

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Amortization of deferred revenue and recognition of unbilled receivables

 

 

(183,997

)

 

 

(135,368

)

 

Depreciation

 

 

15,217

 

 

 

12,456

 

 

Amortization of intangibles

 

 

21,969

 

 

 

21,962

 

 

Change in excess inventory reserve

 

 

1,114

 

 

 

5,938

 

 

Amortization of premium and discount on investments, net

 

 

(4,960

)

 

 

(6,643

)

 

Stock-based compensation to employees

 

 

26,631

 

 

 

16,148

 

 

Stock-based compensation to Board of Directors and Scientific Advisory Board

 

 

1,647

 

 

 

1,548

 

 

Deferred income tax benefit

 

 

(4,446

)

 

 

(5,776

)

 

Retirement plan expense

 

 

5,656

 

 

 

5,818

 

 

Decrease (increase) in assets:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(21,809

)

 

 

(17,323

)

 

Inventory

 

 

(28,752

)

 

 

109

 

 

Other current assets

 

 

6,497

 

 

(15,238

)

 

Other assets

 

 

(13,481

)

 

 

(13,291

)

 

Increase (decrease) in liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(8,305

)

 

 

15,516

 

 

Other current liabilities

 

 

2,683

 

 

 

(5,183

)

 

Deferred revenue

 

 

192,369

 

 

 

157,321

 

 

Other liabilities

 

 

7,387

 

 

 

17,614

 

 

Net cash provided by operating activities

 

 

148,792

 

 

 

193,912

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(27,991

)

 

 

(30,059

)

 

Purchase of intangibles

 

 

(60

)

 

 

(401

)

 

Purchases of investments

 

 

(604,153

)

 

 

(931,854

)

 

Proceeds from sale and maturity of investments

 

 

1,023,460

 

 

 

723,600

 

 

Net cash provided by (used in) investing activities

 

 

391,256

 

 

 

(238,714

)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

1,176

 

 

 

889

 

 

Repurchase of common stock

 

 

 

 

 

(649

)

 

Payment of withholding taxes related to stock-based compensation to employees

 

 

(14,394

)

 

 

(15,980

)

 

Cash dividends paid

 

 

(28,445

)

 

 

(18,853

)

 

Net cash used in financing activities

 

 

(41,663

)

 

 

(34,593

)

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

498,385

 

 

 

(79,395

)

 

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

 

 

131,627

 

 

 

211,022

 

 

CASH AND CASH EQUIVALENTS, END OF YEAR

 

$

630,012

 

 

$

131,627

 

 

The following non-cash activities occurred:

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale securities

 

$

(118

)

 

$

241

 

 

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

 

 

(1,468

)

 

 

(530

)

 

Cash paid for income tax

 

 

36,269

 

 

 

46,602

 

 

 

Universal Display Contact:
Darice Liu
investor@oled.com
media@oled.com
+1 609-964-5123

Source: Universal Display Corporation