Universal Display Corporation Announces Third Quarter 2022 Financial Results

Universal Display Corporation, enabling energy-efficient displays and lighting with its UniversalPHOLED^® technology and materials, reported financial results for the third quarter ended September 30, 2022.

“We are pleased to report solid third quarter results, which includes record quarterly revenues. As we look ahead, we believe that the long-term growth path of the OLED industry remains strong. We are continuing to execute on our strategic initiatives and are investing in our R&D programs, our people and our global infrastructure,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “While macroeconomic factors will likely weigh on near-term demand, we see a bright future for the OLED industry and for us in the years ahead with continued OLED market proliferation, investments in new OLED capacity and a broadening company portfolio of innovative technologies and state-of-the-art OLED materials.”

Millard continued, “I am excited to have joined Universal Display Corporation, an extraordinary pioneer in the OLED industry for more than 25 years. With our brilliant team, cutting-edge initiatives, lean operating model and strong balance sheet, the Company is well poised for continued advancement in the growing OLED market. I look forward to working with the entire UDC team to continue to build upon our strong culture of inventiveness, integrity, inclusion and imagination and deliver on the Company’s mission of being a critical enabler in the OLED ecosystem.”

Financial Highlights for the Third Quarter of 2022

• Total revenue in the third quarter of 2022 was $160.6 million as compared to $143.6 million in the third quarter of 2021. As with the prior quarter, the near-term weakness in the overall global market economy is expected to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of certain customers’ contracts compared to prior estimates, resulting in recording a positive cumulative catch-up adjustment to total revenue of $6.6 million arising from changes in estimates of transaction price.
• Revenue from material sales was $84.2 million in the third quarter of 2022 as compared to $75.6 million in the third quarter of 2021. This increase was primarily the result of higher unit material volume.
• Revenue from royalty and license fees was $71.5 million in the third quarter of 2022 as compared to $63.9 million in the third quarter of 2021. This increase was primarily the result of higher unit material volume and customer mix.
• Cost of material sales was $34.1 million in the third quarter of 2022 as compared to $28.9 million in the third quarter of 2021. Cost of material sales was impacted by underutilization of the new production facility in Shannon, Ireland. We recently commenced bringing this additional capacity online in preparation for anticipated growth in the years ahead.
• Total gross margin was 77% in the third quarter of 2022 as compared to 78% in the third quarter of 2021. The decrease was in part due to costs associated with the Shannon facility in 2022, which contributed to a 2% decrease in total gross margin between the periods.
• Operating income was $68.5 million in the third quarter of 2022 as compared to $57.7 million in the third quarter of 2021.
• Net income was $53.5 million or $1.12 per diluted share in the third quarter of 2022 as compared to $46.1 million or $0.97 per diluted share in the third quarter of 2021.

Revenue Comparison

Cost of Materials Comparison

Financial Highlights for the First Nine Months of 2022

• Total revenue in the first nine months of 2022 was $447.6 million as compared to $407.3 million in the first nine months of 2021. As with the prior quarter, the near-term weakness in the overall global market economy is expected to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of several customers’ contracts compared to prior estimates, resulting in recording a positive cumulative catch-up adjustment to total revenue of $17.3 million arising from changes in estimates of transaction price.
• Revenue from material sales was $242.7 million in the first nine months of 2022 as compared to $232.9 million in the first nine months of 2021. This increase was primarily the result of higher unit material volume.
• Revenue from royalty and license fees was $191.5 million in the first nine months of 2022 as compared to $163.0 million in the first nine months of 2021. This increase was primarily the result of higher unit material volume and customer mix.
• Cost of material sales was $89.0 million in the first nine months of 2022 as compared to $75.2 million in the first nine months of 2021.
• Total gross margin was 78% in the first nine months of 2022 as compared to 80% in the first nine months of 2021. Shannon facility costs in 2022 contributed to a 1% decrease in total gross margin between periods.
• Operating income was $184.0 million in the first nine months of 2022 as compared to $171.2 million in the first nine months of 2021.
• Net income was $144.9 million or $3.04 per diluted share in the first nine months of 2022 as compared to $138.3 million or $2.90 per diluted share in the first nine months of 2021.

Revenue Comparison

Cost of Materials Comparison

2022 Affirmed Guidance

The Company affirms its previous revenue guidance and believes that 2022 revenue will be approximately $600 million, plus or minus $10 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 fourth quarter cash dividend of $0.30 per share on the Company’s common stock. The dividend is payable on December 30, 2022 to all shareholders of record on December 16, 2022.

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 and with subsidiaries and offices around the world, the Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,500 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 energy-efficient 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.