Universal Display Announces 4Q, Full Year 2016 Financial Results

Universal Display reported financial results for the fourth quarter and year ended Dec. 31, 2016.
 
For the full year 2016, the company reported revenue of $198.9 million, up from $191.0 million for 2015, primarily driven by higher royalty and license fees and contract research services revenue from our recently completed acquisition, partially offset by lower revenue from commercial material sales.
 
The company posted operating income of $68.4 million for the year and net income of $48.1 million. These results compare to operating income of $32.3 million and net income of $14.7 million for 2015.
 
“We are pleased to report that 2016 finished on a strong note,” said Sidney D. Rosenblatt, EVP ad CFO of Universal Display. “In the fourth quarter, total emitter sales increased 25% sequentially, the adoption of next-generation emitters commenced, and with the robust activity for new UniversalPHOLED materials in the pipeline, we embarked on our next expansion phase with PPG Industries to double our phosphorescent emitter production capacity.”
 
Rosenblatt continued, “Looking forward, we see extremely positive momentum in our business and believe that we are well positioned to capture the tremendous opportunities in front of us. With our bustling customer pipeline, we have broadened and further increased the depth of our R&D team to respond to the exciting challenges and opportunities in the marketplace for today and tomorrow. We have the innovation, commitment to operational excellence, agility and flexibility to drive the invention and development of the best OLED technologies and phosphorescent materials for our customers and partners worldwide.”
 
Total revenue was $74.6 million in the fourth quarter of 2016, up 20% from the fourth quarter of 2015, driven by material sales of $29.2 million, up 5% and royalty and license fees of $43.6 million, up 27%, on a year-to-year basis. Contract research services revenue generated from the wholly-owned subsidiary Adesis, Inc. was $1.8 million. The company recognized $37.5 million in SDC licensing revenue, up from $30 million in the same quarter of 2015.
 
The company reported operating income of $34.8 million for the fourth quarter of 2016, up 31% compared to $26.6 million for the fourth quarter of 2015.
 
Net income for the fourth quarter of 2016 was $25.8 million, or $0.55 per diluted share, compared to $18.1 million, or $0.39 per diluted share, for the fourth quarter of 2015.
 
Revenue for the full year 2016 was $198.9 million, up 4% from $191.0 million for the prior year. Material sales were $99.3 million, down 12% from $113.1 million for the prior year, primarily due to a decline in host sales of $11.1 million. Royalty and license fees were $96.1 million, up $18.3 million from $77.8 million for the prior year, reflecting the $15.0 million increase SDC license revenue. Contract research services revenue was $3.5 million, compared to $0.2 million for the prior year due to customer sales from the recently acquired Adesis subsidiary.
 
The company reported operating income of $68.4 million for the full year 2016, compared to $32.3 million for the prior year.
 
For the full year 2016, the company reported net income of $48.1 million, or $1.02 per diluted share. Net income in the full year 2016 included an increase in amortization expense of $5.5 million associated with the purchase of the BASF OLED IP assets and the acquisition of Adesis, or a reduction of $0.08 per diluted share. These results compare to net income of $14.7 million, or $0.31 per diluted share, for the prior year.
 
Operating cash flow for the full year 2016 was $80.3 million, compared to $113.6 million for the prior year. Operating cash flow for the full year 2015 included an upfront $42.0 million license and royalty payment.
 
The company’s balance sheet remained strong, with cash and cash equivalents and investments of $343.0 million as of Dec. 31, 2016. During the year, the company added $96.0 million in intangible assets in the form of acquired license rights and know-how with the BASF patent acquisition, and the Adesis acquisition added $16.8 million in intangible assets in the form of customer relationships, internally developed IP and trade names as well as $15.5 million of goodwill.
 
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 believes that its revenues will be in the range of $230 million to $250 million for fiscal 2017.