Universal Display Corporation Announces Fourth Quarter and Full Year 2019 Financial Results

Universal Display Corporation, enabling energy-efficient displays and lighting with its UniversalPHOLED^® technology and materials, reported financial results for the fourth quarter and full year ended December 31, 2019.

“2019 was a year of record results for our company, during which we continued to build on our leadership position and foundation for growth,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “During the year, we announced new partnership agreements, constructed new state-of-the-art phosphorescent OLED application labs and offices in Korea and Hong Kong, established UDC Ventures and achieved a number of internal R&D milestones. In addition, the OLED industry grew robustly as new OLED capacity was installed, new OLED OEMs and products were introduced and revolutionary form factor products like the Samsung Galaxy Fold, LG’s rollable TV and Lenovo’s foldable PC were announced. We believe that all of this drove the continued proliferation of OLEDs in smartphones, TVs and wearables as well as early commercial headway into the IT and automotive markets.”

Rosenblatt continued, “For 2020, we expect the OLED industry and our revenues to continue to grow. At the same time, after a year of significant new OLED capacity additions, we also expect capacity digestion and the evolving uncertainties related to the novel coronavirus (2019-nCoV) to impact our material orders. Long-term, we believe OLED investment momentum remains strong and we continue to estimate that installed capacity at the end of 2021 will grow by approximately 50% over the installed capacity at the end of 2019, as measured in square meters.”

Financial Highlights for the Fourth Quarter of 2019

Effective January 1, 2018, we adopted ASC Topic 606 using the “modified retrospective” approach, meaning the standard was applied only to the financial results commencing with the first quarter of 2018 with a cumulative adjustment to retained earnings. Under this transition method, we applied the standard only to contracts that were not complete at the initial adoption date.

• Total revenue in the fourth quarter of 2019 was $101.7 million as compared to $70.1 million in the fourth quarter of 2018. On an ASC Topic 605 basis (the applicable accounting standard prior to the adoption of ASC Topic 605), total revenue in the fourth quarter of 2019 would have been $109.0 million as compared to $92.9 million in the fourth quarter of 2018. Under ASC Topic 606, license fee revenue is recognized on a per gram sales basis, whereas under ASC Topic 605, revenue was recognized for license payments upon receipt or on a straight-line basis over the term of the contract.
• Revenue from material sales was $60.8 million in the fourth quarter of 2019 as compared to $39.9 million in the fourth quarter of 2018. On an ASC Topic 605 basis, revenue from material sales in the fourth quarter of 2019 would have been $64.1 million as compared to $49.9 million in the fourth quarter of 2018.
• Revenue from royalty and license fees was $37.8 million in the fourth quarter of 2019 as compared to $25.9 million in the fourth quarter of 2018. On an ASC Topic 605 basis, revenue from royalty and license fees in the fourth quarter of 2019 would have been $41.7 million as compared to $38.6 million in the fourth quarter of 2018.
• Cost of materials was $16.3 million in the fourth quarter of 2019 as compared to $14.8 million in the fourth quarter of 2018.
• Operating income was $34.5 million in the fourth quarter of 2019 as compared to $15.3 million in the fourth quarter of 2018. On an ASC Topic 605 basis, operating income in the fourth quarter of 2019 would have been $41.8 million as compared to $38.0 million in the fourth quarter of 2018.
• Net income was $26.4 million or $0.56 per diluted share in the fourth quarter of 2019 as compared to $19.2 million or $0.40 per diluted share in the fourth quarter of 2018. On an ASC Topic 605 basis, net income in the fourth quarter of 2019 would have been $32.1 million or $0.68 per diluted share as compared to $45.2 million or $0.95 per diluted share in the fourth quarter of 2018.

Revenue Comparison

Cost of Materials Comparison

ASC Topic 606 versus 605 Adjusted Results

Financial Highlights for the Full Year of 2019

• Total revenue in the full year of 2019 was $405.2 million as compared to $247.4 million in the full year of 2018. On an ASC Topic 605 basis, total revenue in the full year of 2019 would have been $428.1 million as compared to $326.3 million in the full year of 2018.
• Revenue from material sales was $243.4 million for the full year of 2019 as compared to $153.2 million for the full year ended 2018. On an ASC Topic 605 basis, revenue from material sales for the full year of 2019 would have been $258.0 million as compared to $166.2 million for the full year of 2018.
• Revenue from royalty and license fees was $150.0 million for the full year of 2019 as compared to $80.6 million for the full year of 2018. On an ASC Topic 605 basis, revenue from royalty and license fees would have been $158.3 million for the full year of 2019 as compared to $146.5 million for the full year of 2018.
• Cost of materials was $66.5 million for the full year of 2019 as compared to $43.6 million for the full year of 2018.
• Operating income was $158.3 million for the full year of 2019 as compared to $56.7 million for the full year of 2018. On an ASC Topic 605 basis, operating income would have been $181.3 million for the full year of 2019 as compared to $135.6 million for the full year of 2018.
• Net income was $138.3 million or $2.92 per diluted share for the full year of 2019 as compared to $58.8 million or $1.24 per diluted share for the full year of 2018. On an ASC Topic 605 basis, net income for the full year of 2019 would have been $156.1 million or $3.30 per diluted share as compared to $130.5 million or $2.77 per diluted share for the full year of 2018.

Revenue Comparison

Cost of Materials Comparison

ASC Topic 606 versus 605 Adjusted Results

2020 Guidance

The Company believes that its 2020 revenue will be approximately in the range of $430 million to $470 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 2020 cash dividend of $0.15 per share on the Company’s common stock. The dividend is payable on March 31, 2020 to all shareholders of record on March 17, 2020.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, February 20, 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.