Universal Display Corporation Announces First Quarter 2013 Financial Results

  Universal Display Corporation Announces First Quarter 2013 Financial Results

Business Wire

EWING, N.J. -- May 9, 2013

Universal Display Corporation (NASDAQ: PANL), enabling energy-efficient
displays and lighting with its UniversalPHOLED® technology and materials,
today announced its results for the first quarter of 2013.

The company reported a net loss of $4.8 million, or ($0.10) per diluted share
for the quarter ended March 31, 2013, compared to a net loss of $1.2 million,
or ($0.03) per diluted share, in the first quarter of 2012. Revenues for the
first quarter of 2013 were $15.0 million, up 19% compared to first quarter
2012 revenues of $12.6 million, led by a 21% increase in material sales to
$12.8 million compared to first quarter 2012 material sales of $10.6 million.
Within overall material sales, commercial material sales were $10.5 million in
the first quarter of 2013, up 40% compared to $7.5 million for the first
quarter of 2012. The increase in commercial material sales was due mainly to
greater demand for our green emitter and host materials from our AMOLED
display customers. Royalty and license revenues for the quarter were $1.3
million, up from $422,000 in the first quarter of 2012, primarily due to
increased material sales to certain customers, for which a portion of total
consideration is allocated to license fees. Technology development and support
revenue in the quarter was $925,000 compared to $1.7 million for the first
quarter of 2012. The reduction is mainly due to decreased technology
development contracts.

No revenue was recognized under the Samsung Display Corporation (SDC)
licensing agreement in the quarter, as SDC is obligated to make licensing
payments in just the second and fourth quarters of the year. The Company
anticipates recognizing $20 million in licensing revenue under the SMD
contract in the each of the second and fourth quarters of this year.

“Commercial material revenues were up 40% in the first quarter as we began
shipping production quantities of both green emitter and host materials,” said
Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of
Universal Display. “With two different color materials shipping at production
volumes, we now have more than twice as much content in commercial products
than at any previous point in the company’s history. As we build our
organization to capitalize on this emerging market, we believe we can achieve
attractive gross margins and leverage our fixed infrastructure to create
excellent returns for shareholders.”

Operating expenses for the first quarter of 2013 were $22.1 million, up 56%
compared to $14.2 million in the first quarter of 2012. Approximately $2.7
million of the increase was due to higher patent and amortization of acquired
technology expenses, which primarily reflects amortization associated with the
FUJIFILM Corporation OLED patent portfolio acquisition. Reflecting the
company’s continued commitment to developing new materials and technology,
research and development expense was up $2.3 million, which included $1.0
million to scale up a new red emitter material to commercial status. Cost of
materials in the quarter was up approximately $2.0 million from the first
quarter of 2012 primarily due to an increase in the quantity of materials
sold, changes in product mix, and increased raw material costs for certain
products.

The Company’s balance sheet remained strong at quarter end, with cash, cash
equivalents and short-term investments totaling $220.8 million as of March 31,
2013, compared to $243.9 million as of December 31, 2012. Cash used in
operating activities for the first quarter of 2013 was $10.9 million compared
to cash used in operating activities of $2.0 million in the first quarter of
2012. The increase in cash used in operations in the first quarter of 2013 was
mainly due to an over $7 million reduction in current liabilities as well as
an increase in pretax net loss of $2.1 million, which amount excludes the
impact of non-cash items.

Mr. Rosenblatt concluded, “Strong demand for our proprietary PHOLED material
is an encouraging indication that manufacturers of products from handheld
displays to televisions and lighting are showing strong interest in our
materials and technology. Commercial production level of green material
shipments this quarter represents another inflection point in our growth. To
continue to encourage the development of a healthy, growing and broad-based
market for OLED technology and materials, we are making significant
investments in the development of new and improved materials and systems,
establishing new relationships, and developing more cost effective OLED
manufacturing processes. To further our industry leadership, we continue to
strengthen our organization to assure we remain the preeminent source of OLED
technology and materials. Over the past several years, we have surpassed many
milestones commercializing our technology, expanding our footprint, and now
seeing our new materials enter the market. The increasing adoption of our
technology and the strong reception OLED-powered devices are receiving in the
market are extremely encouraging signs we are at the dawn of a new age of
displays. Yet, we believe the market offers industry leaders like Universal
Display vast opportunities to expand upon our initial successes and become a
key enabler of more efficient and versatile display, lighting and associated
products.”

Guidance

The company’s arrangement with SDC provides a substantial amount of visibility
into its potential future financial performance. Although the OLED industry is
still at a stage where many variables can have a material effect on growth, in
an effort to increase our transparency, Universal Display is providing the
following financial guidance. Again with the caveat that the OLED industry is
still in an early stage, the company believes that its revenues will be in the
range of $110 million to $125 million for fiscal 2013.

Conference Call

In conjunction with this release, Universal Display will host a conference
call, followed by a question and answer session, on Thursday, May 9, 2013 at
5:00 p.m. Eastern Time. Interested parties may participate by calling
888-713-4487 at 5:00 p.m. Eastern Time and referencing conference ID 9739266.
The conference call will be simultaneously broadcast live over the Internet
through a webcast on the Universal Display website. To access the call, please
visit the events portion of the website at www.universaldisplay.com. 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: PANL) 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 3,000 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, DuPont Displays, Inc., Innolux Corporation,
Konica Minolta Technology Center, Inc., LG Display Co., Ltd., Lumiotec, Inc.,
Moser Baer Technologies Inc., Panasonic Idemitsu OLED Lighting Co., Pioneer
Corporation, Samsung Display Corporation, Seiko Epson Corporation, Sony
Corporation, Showa Denko K.K., and Tohoku Pioneer Corporation. To learn more
about Universal Display, please visit www.universaldisplay.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, are forward-looking 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, 2012. Universal Display Corporation
disclaims any obligation to update any forward-looking statement contained in
this document.


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)

(in thousands, except for share and per share data)


                                                 March 31,        December 31,
                                                             
                                                 2013             2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                        $ 45,536         $ 85,923
Short-term investments                             175,311          158,018
Accounts receivable                                10,527           8,657
Inventory                                          9,082            11,018
Other current assets                              7,632          3,929    
Total current assets                               248,088          267,545
PROPERTY AND EQUIPMENT, net                        12,512           11,808
ACQUIRED TECHNOLOGY, net                           102,196          104,624
INVESTMENTS                                        4,868            1,270
OTHER ASSETS                                      259            277      
TOTAL ASSETS                                     $ 367,923       $ 385,524  
                                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable                                 $ 5,622          $ 7,596
Accrued expenses                                   5,706            10,394
Deferred revenue                                   3,826            4,273
Other current liabilities                         35             36       
Total current liabilities                          15,189           22,299
DEFERRED REVENUE                                   2,966            3,153
RETIREMENT PLAN BENEFIT LIABILITY                 10,084         9,837    
Total liabilities                                 28,239         35,289   
SHAREHOLDERS’ EQUITY:
Preferred Stock, par value $0.01 per share,
5,000,000 shares authorized, 200,000 shares
of Series A Nonconvertible Preferred Stock         2                2
issued and outstanding (liquidation value of
$7.50 per share or $1,500)
Common Stock, par value $0.01 per share,
100,000,000 shares authorized, 46,587,199          466              465
and 46,561,437 shares issued at March 31,
2013 and December 31, 2012, respectively
Additional paid-in capital                         564,379          564,883
Accumulated deficit                                (208,969 )       (204,211 )
Accumulated other comprehensive loss               (5,536   )       (5,702   )
Treasury stock, at cost (401,501 and 205,902
shares at March 31, 2013 and December 31,         (10,658  )      (5,202   )
2012, respectively)
Total shareholders’ equity                        339,684        350,235  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY       $ 367,923       $ 385,524  
                                                                             


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

(in thousands, except for share and per share data)


                                           Three Months Ended March 31,
                                             2013             2012
REVENUE:
Material sales                               $ 12,752           $ 10,529
Royalty and license fees                       1,299              422
Technology development and support            925              1,669      
revenue
Total revenue                                 14,976           12,620     
OPERATING EXPENSES:
Cost of material sales                         3,092              1,088
Research and development                       8,938              6,661
Selling, general and administrative            5,171              4,311
Patent costs and amortization of               4,617              1,868
acquired technology
Royalty and license expense                   312              250        
Total operating expenses                      22,130           14,178     
Operating loss                                 (7,154     )       (1,558     )
INTEREST INCOME                                210                357
INTEREST EXPENSE                              (8         )      (20        )
LOSS BEFORE INCOME TAXES                       (6,952     )       (1,221     )
INCOME TAX BENEFIT                            2,194            —          
NET LOSS                                      (4,758     )      (1,221     )
                                                                             
NET LOSS PER COMMON SHARE:
BASIC                                        $ (0.10      )     $ (0.03      )
DILUTED                                      $ (0.10      )     $ (0.03      )
WEIGHTED AVERAGE SHARES USED IN
COMPUTING NET LOSS PER COMMON SHARE:
BASIC                                         45,823,414       45,749,072 
DILUTED                                       45,823,414       45,749,072 
                                                                             


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

(in thousands)


                                               Three Months Ended March 31,
                                                 2013           2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                         $ (4,758   )     $ (1,221   )
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization of deferred revenue                   (678     )       (917     )
Depreciation                                       509              418
Amortization of intangibles                        2,742            15
Amortization of premium and discount on            (116     )       (238     )
investments, net
Stock-based employee compensation                  1,174            800
Stock-based compensation to Board of               224              213
Directors and Scientific Advisory Board
Retirement plan benefit expense                    417              388
(Increase) decrease in assets:
Accounts receivable                                (1,870   )       2,019
Inventory                                          1,936            (1,731   )
Other current assets                               (3,703   )       (827     )
Other assets                                       18               15
(Decrease) increase in liabilities:
Accounts payable and accrued expenses              (6,837   )       (1,987   )
Other current liabilities                          —                (1       )
Deferred revenue                                  44             1,042    
Net cash used in operating activities             (10,898  )      (2,012   )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                 (549     )       (1,802   )
Additions to intangibles                           (69      )       —
Purchase of investments                            (102,142 )       (139,512 )
Proceeds from sale of investments                 81,364         178,638  
Net cash (used in) provided by investing          (21,396  )      37,324   
activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock         93               71
Repurchase of common stock                         (5,456   )       —
Proceeds from the exercise of common stock         66               541
options and warrants
Payment of withholding taxes related to           (2,796   )      (3,473   )
stock-based employee compensation
Net cash used in financing activities             (8,093   )      (2,861   )
(DECREASE) INCREASE IN CASH AND CASH               (40,387  )       32,451
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF           85,923         111,795  
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD         $ 45,536        $ 144,246  
                                                                             

Contact:

Universal Display Corporation
Investor Relations:
Gregory FCA
Joe Hassett, 610-228-2110
joeh@gregoryfca.com
or
Media Contact:
Gregory FCA
Matt McLoughlin, 610-228-2123
matt@gregoryfca.com
 
Press spacebar to pause and continue. Press esc to stop.