Universal Display Announces 3Q 2012 Results


Posted on November 8, 2012 @ 02:52 pm



Universal Display Corporation announced its results for the third quarter of 2012. For the third quarter of 2012, the company reported a net loss of $5.5 million, or $0.12 per diluted share, on revenues of $12.5 million. For the third quarter of 2011, the company reported net income of $6.0 million, or $0.12 per diluted share, on revenues of $21.8 million.

“The long-term outlook for OLED technology remains strong, despite this quarter’s results,” said Sidney D. Rosenblatt, executive vice president and chief financial officer of Universal Display. “Material sales in the quarter were consistent with the first quarter of the year, reflecting what we believe to be a temporary slowdown in industry growth. We believe that a more indicative measure of our continued strong growth and the outlook for OLED technology is the 29% growth in year-over-year revenues over the first three quarters of the year despite having only received half of the year’s Samsung licensing revenue.”

Results for the third quarter of 2012 do not include the recognition of any revenue under a licensing agreement with Samsung Display Co. Ltd. (SDC), under which SDC is obligated to make payments to the company of $15 million in each of the second and fourth quarters of this year.

Had the company recognized these payments on a pro rata quarterly basis over the year, it would have resulted in an additional $7.5 million of royalty and license fees revenue in the third quarter. The SDC licensing revenue is subject to a royalty fee of 3% payable to the company’s university partners, and 16.5% in South Korean taxes.

Revenues for the third quarter of 2012 were $12.5 million compared to revenues of $21.8 million in the same quarter of 2011. Material sales were $11.0 million in the third quarter of 2012 compared to $15.4 million in the third quarter of 2011 due to lower volumes of green emitter and host materials. The anticipated ramp up of phosphorescent green materials did not occur this quarter.

Royalty and license fees were $396,000 in the third quarter of 2012 compared to $4.6 million in the same quarter of 2011. Third quarter 2011 revenues included a partial license payment from SDC as the SDC agreement was signed last August, whereas there were no similar revenues in the third quarter of this year.

R&D expense was $8.2 million for the three months ended Sept. 30, 2012, compared to $6.1 million for the three months ended Sept. 30, 2011. The increase is primarily attributable to a $1.0 million increase in costs incurred under the agreement with PPG Industries for development and scale up of new materials, and a $500,000 increase in outsourced sponsored research and development contract costs as we continue to invest in the future.

Patent costs and amortization of acquired technology increased to $3.7 million for the third quarter of 2012 from $1.9 million for the third quarter of 2011 due to $2.1 million in amortization expense as a result of the acquisition of the Fujifilm OLED intellectual property portfolio in July 2012.

The company’s balance sheet remained strong, with cash and cash equivalents and short-term investments of $238.8 million as of Sept. 30, 2012.

Revenues for the first nine months of 2012 were $55.1 million, a 29% increase from the $42.6 million generated in the first nine months of 2011. Material sales in the first nine months of the year were $34.4 million, also a 29% increase compared to material sales of $26.6 million in the first nine months of 2011. Operating income in the first nine months of 2012 was $5.3 million, more than doubling the $2.1 million of operating income in the first nine months of 2011.

For the first nine months of 2012, Universal Display reported net income of $4.3 million, or $0.09 per diluted share, compared to a net loss of $2.6 million, or $0.06 per diluted share, in the same period in 2011. The net loss in the first nine months of 2011 included a $4.2 million loss on stock warrant liability. In the first nine months of the year, the company generated $7.2 million in operating cash flow.

“Over the past year, through a variety of transactions, we have opened exciting new technological opportunities, strengthened our industry relationships and significantly enhanced our intellectual property position,” Mr. Rosenblatt concluded. “This enables us to not only capitalize on current market demand for OLED materials and technology, but to continually expand the opportunity for our technology in the display, lighting and other markets over the longer term. We are confident that we are in a strong position to lead that growth and build value for our shareholders.”

With the caveat that the OLED industry is in the early stage of development and commercial adoption, where the delay or acceleration in the introduction of a commercial line or products by a small number of customers could have a material impact on the company’s revenue opportunities, the company believes that based on the information currently available, its revenues will be in the range of $80 million to $82 million for fiscal 2012, compared to previous expectations of $90 million to $110 million.

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