Universal Display Corporation reports 49.6% EBITDA decline in 2018 and 16.3 pp EBITDA Margin decline from 51.6% to 35.3%
02/21/2019 • About Universal Display Corporation (
$OLED) • By InTwits
Universal Display Corporation reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Universal Display Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.7%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $25m in 2018, $30m in 2017, $7m in 2016, $5m in 2015, $6m in 2014
- In the last 5 years the company invested considerably less than D&A: $74m vs. $105m
- The company has business model with low profitability: ROIC is 8.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 26.3%. Revenue decline showed acceleration in 18Q4 - it was 39.5% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018.
Gross Margin decreased on 5.3 pp from 80.8% to 75.5% in 2018. SG&A as a % of Revenue increased on 5.0 pp from 13.9% to 19.0% in 2018. Stock Based Compensation (SBC) as a % of Revenue increased on 2.4 pp from 4.4% to 6.8% in 2018.
Net Income margin decreased on 7.2 pp from 31.0% to 23.8% in 2018. The efficient tax rate was 8.5% in 2018 while the average for the last five years was 28.7%.
Investments (CAPEX, working capital and M&A)
Universal Display Corporation's CAPEX/Revenue was 10.3% in 2018. CAPEX/Revenue increased on 7.6 pp from 2.7% in 2015 to 10.3% in 2018. It's average CAPEX/Revenue for the last three years was 7.6%. CAPEX as a % of Revenue stuck to a growing trend at 2.0 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue increased slightly on 1.8 pp from 15.6% to 17.4% in 2018. Inventories as a % of Revenue surged on 17.5 pp from 10.8% to 28.3% in 2018. Accounts payable as a % of Revenue decreased on 4.0 pp from 21.4% to 17.4% in 2018.
Return on investment
The company operates at low ROIC (8.4%) and ROE (8.7%). ROIC dropped on 16.2 pp from 24.6% to 8.4% in 2018. ROE decreased on 8.8 pp from 17.5% to 8.7% in 2018.
Leverage (Debt)
The company has no debt. Cash surged on 58.9%.
Valuation and dividends
The company's trades at EV/EBITDA 77.9x and P/E 119.2x.
The company paid 18.7% of Net Income as dividends in 2018.
Management team
Steven V Abramson is a Universal Display Corporation's CEO. Steven V Abramson is a founder and has spent 23 years with the company. CEO total compensation was
$6,879,849 in 2018 which included
$701,989 salary and
$772,089 annual bonus. Universal Display Corporation's CFO is Sidney D Rosenblatt. Sidney D Rosenblatt has 24 years tenure at the company.
3.0% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 265 employees. The number of employees surged on 18.3%. Average revenue per employee in 2018 was
$933,638 and it dropped on 37.7%.
Financial and operational results
FY ended 12/31/2018
Universal Display Corporation ($OLED) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 191.0 | 191.0 | 198.9 | 335.6 | 247.4 | -26.3% |
| Gross Profit | 145.2 | 122.7 | 166.8 | 271.2 | 186.9 | -31.1% |
| SG&A | 28.1 | 29.0 | 32.9 | 46.8 | 47.0 | 0.4% |
| EBITDA | 71.7 | 46.4 | 89.2 | 173.1 | 87.3 | -49.6% |
| EBIT | 58.6 | 32.3 | 68.4 | 146.2 | 56.7 | -61.2% |
| Tax | 17.5 | 18.4 | 20.5 | 45.7 | 5.5 | -88.0% |
| Net Income | 41.9 | 14.7 | 48.1 | 103.9 | 58.8 | -43.4% |
| Stock Based Compensation | 8.3 | 10.5 | 13.1 | 14.9 | 16.8 | 12.8% |
Balance Sheet
|
|---|
| Cash | 45.4 | 97.5 | 139.4 | 132.8 | 211.0 | 58.9% |
| Accounts Receivable | 22.1 | 24.7 | 25.0 | 52.4 | 43.1 | -17.6% |
| Inventory | 37.1 | 12.7 | 17.3 | 36.3 | 70.0 | 93.0% |
| Accounts Payable | 9.3 | 6.8 | 8.1 | 13.8 | 10.5 | -23.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 6.2 | 5.1 | 7.3 | 29.8 | 25.4 | -14.8% |
| Dividends | | | | 6.0 | 11.0 | 83.3% |
Ratios
|
|---|
| Revenue growth | 30.3% | 0.0% | 4.1% | 68.8% | -26.3% | |
| EBITDA growth | 39.9% | -35.3% | 92.3% | 94.2% | -49.6% | |
|
|---|
| Gross Margin | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% | -5.3% |
| EBITDA Margin | 37.5% | 24.3% | 44.8% | 51.6% | 35.3% | -16.3% |
| EBIT Margin | 30.7% | 16.9% | 34.4% | 43.6% | 22.9% | -20.6% |
| SG&A, % of revenue | 14.7% | 15.2% | 16.5% | 13.9% | 19.0% | 5.0% |
| SBC, % of revenue | 4.3% | 5.5% | 6.6% | 4.4% | 6.8% | 2.4% |
| Net Income Margin | 21.9% | 7.7% | 24.2% | 31.0% | 23.8% | -7.2% |
| CAPEX, % of revenue | 3.2% | 2.7% | 3.7% | 8.9% | 10.3% | 1.4% |
|
|---|
| ROIC | 13.4% | 7.1% | 13.7% | 24.6% | 8.4% | -16.2% |
| ROE | 9.6% | 3.2% | 9.7% | 17.5% | 8.7% | -8.8% |
| Net Debt/EBITDA | -0.6x | -2.1x | -1.6x | -0.8x | -2.4x | -1.6x |
People
|
|---|
| Insider ownership | 3.0% | 3.0% | 3.0% | 3.0% | 3.0% | 0.0% |
| Employees | 144 | 153 | 202 | 224 | 265 | 18.3% |
| Revenue/Employee, th. $ | 1,327 | 1,249 | 985 | 1,498 | 934 | -37.7% |
Universal Display Corporation ($OLED) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 44 | 56 | 78 | 70 | | -21.6% | -45.2% | 25.7% | -39.5% |
| EBITDA | 12 | 19 | 33 | 23 | | -35.1% | -72.2% | 47.4% | -64.0% |
| Net Income | 6 | 11 | 23 | 19 | | -42.5% | -77.1% | 68.8% | -41.3% |
Balance Sheet
|
|---|
| Cash | 177 | 104 | 102 | 211 | | 84.3% | -5.2% | 47.0% | 58.9% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 80.1% | 76.5% | 76.3% | 71.1% | | 6.3% | -9.6% | 1.0% | -11.4% |
| EBITDA Margin | 28.0% | 33.2% | 42.8% | 33.2% | | -5.8% | -32.3% | 6.3% | -22.6% |
| Net Income Margin | 13.7% | 19.3% | 29.4% | 27.4% | | -5.0% | -26.8% | 7.5% | -0.9% |
Peers in Semiconductors
Below you can find Universal Display Corporation benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 5.2% | 10.9% | 5.0% |
|---|
| Universal Display Corporation ($OLED) | | 0.0% | 4.1% | 68.8% | -26.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| Xilinx, Inc. ($XLNX) | 68.8% | 70.2% | 69.7% | 69.9% | 69.9% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| Universal Display Corporation ($OLED) | 37.5% | 24.3% | 44.8% | 51.6% | 35.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.6% | 4.7% | 4.4% |
|---|
| Universal Display Corporation ($OLED) | 3.2% | 2.7% | 3.7% | 8.9% | 10.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| Universal Display Corporation ($OLED) | 13.4% | 7.1% | 13.7% | 24.6% | 8.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.5x | -0.2x | 0.4x | 0.4x | 0.3x |
|---|
| Universal Display Corporation ($OLED) | -0.6x | -2.1x | -1.6x | -0.8x | -2.4x |
