Universal Display Announces 1Q 2013 Financial Results

Universal Display Corporation 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 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 Universal Display’s green emitter and host materials from 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.

“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,” Rosenblatt concluded. “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,” Rosenblatt added. “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.”

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.