OSA-Direct
Wednesday, 17 Oct 2018

Universal Display announces financial results for first quarter 2018

Universal Display believe that the OLED industry is poised to grow faster than expected this year - therefore 2017 revenue to be at least US$260 million to US$280 million

7 May 2018 | Editor

Universal Display Corp announced financial results for the first quarter ended March 31, 2018.

Total revenue decreased 22% to US$43.6 million in the first quarter of 2018, compared with US$55.6 million in the first quarter of 2017, driven by lower material sales, partially offset by higher royalty and license fees.

The Company believes that these results were due to three factors:

  • First: The premium smartphone market declined faster and to a greater extent than anticipated - the Company believes that this resulted in weaker-than-expected material sales demand for OLED panels
  • Second: ASC Topic 606 - under ASC Topic 605, total revenue would have been US$68.2 million in the first quarter of 2018
  • Third: The Company believes that there were material inventory pre-purchases that occurred in 2017

Revenue from material sales decreased 46% to US$25.3 million in the first quarter, compared with US$46.6 million in the first quarter of 2017. The Company believes that the decline was due to weaker-than-expected material sales demand for OLED panels, resulting from the softness in the premium smartphone market, and the estimated material inventory pre-purchases that occurred in 2017.

Revenue from royalty and license fees increased 126% to US$15.9 million in the first quarter, compared with US$7.0 million in the first quarter of 2017.

Cost of materials decreased 53% to US$5.7 million in the first quarter, compared with US$12.1 million in the first quarter of 2017. Cost of materials was not affected by the adoption of ASC Topic 606.

Operating income decreased by US$7.6 million to US$4.5 million in the first quarter, compared with US$12.1 million in the first quarter of 2017. Under ASC Topic 605, operating income would have been US$29.2 million in the first quarter of 2018.

Net income decreased by US$4.4 million to US$6.0 million or US$0.13 per diluted share in the first quarter, compared with US$10.4 million or US$0.22 per diluted share in the first quarter of 2017. Under ASC Topic 605, net income would have been US$25.9 million, or US$0.55 per diluted share, in the first quarter of 2018.

Note: With effective January 1, 2018, Universal Display adopted ASC Topic 606 using the "modified retrospective" approach, meaning the standard was applied only to the financial results of 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.

Universal Display reports financial results
for Q1 2018 (US$ ,000)
2018
Q1
2017
Q1
Revenue - Materials 25,250 46,637
Revenue - Royalty and licences 15,911 7,025
Revenue - Contract research services 2,411 1,904
Operating expenses 31,595 30,521
Net (loss) Income 5,959 10,365
Net result per share - basic($) 0.13 0.22

2018 Revised Guidance

According to Universal Display - although the OLED industry is still at an early state where many variables can have a material impact on its growth, and the Company thus caveats its financial guidance accordingly, the Company now believes that its revenue will be in the range of $280 million to $310 million for fiscal 2018. Both the initial guidance and this revised guidance were prepared utilising accounting standard ASC Topic 606. Under the prior accounting standard ASC Topic 605, the Company estimates that its 2018 revenues would be approximately 10% to 15% higher.

Dividend

The Company also announced a second quarter cash dividend of $0.06 per share on the Company’s common stock. The dividend is payable on June 29, 2018 to all shareholders of record as of the close of business on June 15, 2018.

“We believe that we are on the right path for long-term growth, long-term market leadership, and long-term profitability,”


“Over the last decade, OLEDs have penetrated an estimated 10%+ of the consumer electronics display market. This, we believe, is just the beginning of the technology’s promising potential as panel makers further improve OLED mobile’s competitiveness, OLED TVs continue to gain market share, and foldable development work accelerates.”


“With respect to the multi-year OLED capex growth cycle we are in, while we are seeing some capacity digestion this year, we also believe there is a significant amount of capacity being built. The first half of the year is being impacted by the soft premium smartphone market, but in the second half, we expect to see a pick-up in OLED panel demand. As new OLED capacity ramps, we continue to expect 2019 to be a meaningful year of growth. Based on current production timelines, we expect the installed capacity base, as measured in square meters, to increase by approximately 50% by the end of 2019, as compared to the end of 2017.”


Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display

www.oled.com   


About Universal Display Corp

Universal Display Corporation 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 3,600 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, 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. and Tohoku Pioneer Corporation.

Source: Universal Display Corp


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