Universal Display Announces 4Q, Full Year 2015 Financial Results

Universal Display announced its results for the fourth quarter and year ended Dec. 31, 2015.
 
For the full year 2015, the company reported revenues of $191.0 million, essentially flat compared to the prior year. Operating income decreased to $32.3 million for the year, down 45% from $58.6 million for 2014. The company reported net income of $14.7 million, or $0.31 per diluted share, for the full year 2015, compared to net income of $41.9 million, or $0.90 per diluted share, for 2014.
 
The 2015 net income figure reflects a $33.0 million write-down of inventory in the second quarter, primarily of an existing host material and associated work-in-process, resulting from a customer’s faster-than-expected reduction in demand for this material.
 
“Our fourth quarter results were less than anticipated, which we believe was primarily due to year-end inventory management by our customers and product mix weighing more to our lower priced emitters,” said Sidney Rosenblatt, EVP and CFO of Universal Display. “As we have noted in the past, short-term forecasting in this emerging OLED market environment is difficult, even though we are confident that this is a long-term growth market. While 2015 revenues were flat year-over-year, we are pleased to report that our commercial emitter sales increased 16% and our royalty and licensing revenues grew 23% year-over-year. We also generated $113.6 million of cash from operations, more than doubling 2014’s operating cash flow of $47.3 million.”
 
Rosenblatt continued, “We believe that 2016 is poised to be a year in which the OLED industry builds meaningful new capacity for the continued proliferation of OLEDs in the marketplace. This groundwork is paving the foundation for the next wave of expansion in OLED mass production, which we believe is set to commence in 2017. As noted by a number of companies in the ecosystem, the OLED design pipeline is growing robustly, and we anticipate that this will drive new capacity plans for 2017, 2018 and beyond. As a key enabler and partner in the OLED industry, we expect these additional capacity plans to result in new revenue opportunities, and overall, a positive growth trajectory for the industry.”
 
Revenues for the fourth quarter of 2015 were $62.3 million, up 11% compared to revenues of $56.2 million for the same quarter of 2014. Material sales were $27.8 million, down 1% compared to the fourth quarter of 2014, primarily due to a $5.3 million decline in host material sales. This decline was offset by an increase of $4.9 million in emitter sales. Royalty and license fees were $34.4 million in the fourth quarter of 2015, up 23% compared to $28.0 million in the same quarter of 2014. The Company recognized $30 million in SDC licensing revenue in the fourth quarter of 2015, up from $25 million in the same quarter of 2014.
 
The company reported operating income of $26.6 million for the fourth quarter of 2015, up 56% compared to operating income of $17.1 million for the fourth quarter of 2014. Operating expenses were $35.7 million, compared to $39.1 million in the fourth quarter of 2014, and cost of materials was $8.1 million, compared to $12.1 million in the fourth quarter of 2014.
 
Net income for the fourth quarter of 2015 was $18.1 million, or $0.39 per diluted share, compared to $13.1 million, or $0.28 per diluted share, for the fourth quarter of 2014.
 
Revenues for the full year 2015 were $191.0 million, essentially flat compared to 2014. Material sales were $113.1 million, down 11% from $126.8 million compared to 2014, primarily due to a $29.0 million decline in host material sales, partially offset by a $15.1 million increase in emitter sales. Royalty and license fees were $77.8 million, up 23% from $63.2 million for the prior year.
 
The company reported operating income of $32.3 million for the full year 2015, compared to $58.6 million in 2014. The 2015 figures include a $33.0 million write-down of inventory taken in the second quarter. Excluding the write-down, non-GAAP operating income for 2015 was $65.3 million. For the full year 2015, the Company reported net income of $14.7 million, or $0.31 per diluted share, compared to $41.9 million, or $0.90 per diluted share, for the same period in 2014. Net income for 2015 included the aforementioned inventory write-down.
 
The company’s balance sheet remained strong, with cash and cash equivalents and short-term investments of $395.5 million as of December 31, 2015. For the full year 2015, the company generated $113.6 million in operating cash flow, compared to $47.3 million of operating cash flow in 2014.