Universal Display Corporation Announces 1Q15 Financial Results

Universal Display Corporation, enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, reported financial results for the first quarter ended March 31, 2015.

For the first quarter of 2015, the Company reported net income of US $1.3 million, or $0.03 per diluted share, on revenues of $31.2 million, compared to net income of $4.0 million, or $0.09 per diluted share, on revenues of $37.8 million for the first quarter of 2014.

"During the first quarter, we saw the introduction of new OLED displays, including flagship products from our top customers, which led to higher volumes of our red and green emitters sold, offset by volume pricing discounts. The quarter also reflected the continued downward trend of host sales, consistent with our expectations. As the year progresses, we expect the continued proliferation of OLED adoption in the marketplace to drive revenue growth in the second half of this year," said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. "The broadening of the OLED display product portfolio from flexibles and wearables, including smartwatches, to high-end smartphones, mid-end smartphones, high-end tablets, Full HD and 4K TVs, exemplifies the growing breadth of the OLED display market opportunity. On the lighting front, developmental activity continues to flourish as efficacy rates and lifetimes increase. Broadly speaking, we believe that OLED technology can provide the design freedom for display and lighting makers to dramatically alter the consumer and illumination landscape, and create differentiated, high-performing, energy-efficient, innovative products.”

Financial Highlights for the First Quarter of 2015

The Company reported revenues of $31.2 million, compared to revenues of $37.8 million in the same quarter of 2014. Material sales were $26.8 million, down 5% sequentially and down 24% compared to the first quarter of 2014, primarily due to a decrease in host material volume. Royalty and license fees were $4.4 million, up from $1.8 million in the first quarter of 2014.

No revenue was recognized under the Samsung Display (SDC) licensing agreement in the first quarter, as SDC is obligated to make licensing payments in the second and fourth quarters of the year. For 2015, the Company expects to recognize $60 million in SDC licensing revenues for the full year. Royalty revenue was also not recognized under the new LG Display (LGD) licensing and royalty agreement in the first quarter of 2015, as these revenues are recognized one quarter in arrears when the royalty amount is reported to us.

The Company reported operating income of $1.8 million, down from $6.6 million for the first quarter of 2014. Operating expenses were $29.5 million, compared to $31.2 million in the same quarter of 2014. Cost of materials was $8.6 million, compared to $9.9 million in the first quarter of 2014, reflecting the decline in host material sales volume.

The Company’s balance sheet remained strong, with cash and cash equivalents and short-term investments of $328.5 million as of March 31, 2015. During the first quarter, the Company generated $47.0 million in operating cash flow, mainly stemming from the receipt of upfront license fees, prepaid royalties and milestone payments. These resulted in working capital increasing to $367.9 million at the end of the quarter.

2015 Guidance

The Company's 2015 guidance remains unchanged. With the OLED industry still at a stage where many variables can have a material impact on its growth, Universal Display continues to expect its 2015 revenues to be approximately $200 million, with a downside range of approximately 5% and an upside potential of approximately 15%.

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