8-K
Universal Display Corp \Pa\ (OLED)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 2020
UNIVERSAL DISPLAY CORPORATION
(Exact name of Registrant as Specified in Its Charter)
| Pennsylvania | 1-12031 | 23-2372688 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br><br>Identification No.) |
| 375 Phillips Boulevard,<br><br><br>Ewing, NJ | 08618 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (609) 671-0980
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | OLED | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 29, 2020, the Registrant issued a press release regarding its financial results for the quarter ended September 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information set forth under this “Item 2.02. Results of Operations and Financial Condition” (including the exhibit) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing made by the Registrant pursuant to the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit<br><br><br>Number | Description |
|---|---|
| 99.1 | Press Release by the Registrant, dated October 29, 2020, furnished pursuant to Item 2.02 of Form 8-K. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Universal Display Corporation | ||
|---|---|---|
| Date: October 29, 2020 | By: | /s/ Sidney D. Rosenblatt |
| Sidney D. Rosenblatt | ||
| Executive Vice President, Chief Financial<br><br><br>Officer, Treasurer and Secretary |
oled-ex991_6.htm
Exhibit 99.1
Press Release
Universal Display Contact:
Darice Liu
investor@oled.com
media@oled.com
+1 609-964-5123
Universal Display Corporation Announces Third Quarter 2020 Financial Results
EWING, N.J. – October 29, 2020 – Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED^®^ technology and materials, today reported financial results for the third quarter ended September 30, 2020.
“We are pleased to report solid third quarter 2020 results,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “Beginning in July, we saw a pick-up in customer orders and UniversalPHOLED shipments and that strength has continued. Looking to the near-term, while ongoing uncertainties related to the COVID-19 pandemic persist, we believe OLED panel momentum will continue in the fourth quarter. Based on our current estimates, we believe 2020 revenues will be approximately in the range of $385 million to $400 million.”
Rosenblatt continued, “For 2021, we expect meaningful growth to resume as new OLED production comes online, new OLED consumer electronic models are launched, and customers continue to advance their OLED commercialization plans. The flexibility and versatility of OLEDs continue to broaden the imagination and transform the definition of what a consumer product can be. As the OLED industry continues to gain strong traction across the landscape of small, medium and large displays, we remain focused on expanding and deepening our leadership position and enabling our customers and the OLED ecosystem.”
Financial Highlights for the Third Quarter of 2020
| • | Total revenue in the third quarter of 2020 was $117.1 million as compared to $97.5 million in the third quarter of 2019. The increase in revenue was due to higher material sales as a result of stronger demand in the OLED display market. The full extent of the impact of the on-going COVID-19 pandemic on our operational performance remains uncertain and will depend on many factors including the timing, extent and duration of the pandemic, the development and availability of effective treatments and vaccines, and the impact on the global economy and demand for OLED consumer products. |
|---|---|
| • | Revenue from material sales was $68.7 million in the third quarter of 2020 as compared to $51.8 million in the third quarter of 2019. |
| --- | --- |
| • | Revenue from royalty and license fees was $44.6 million in the third quarter of 2020 as compared to $43.0 million in the third quarter of 2019. |
| --- | --- |
| • | Cost of material sales was $20.8 million in the third quarter of 2020 as compared to $15.2 million in the third quarter of 2019. |
| --- | --- |
| • | Operating income was $48.4 million in the third quarter of 2020 as compared to operating income of $40.8 million in the third quarter of 2019. |
| --- | --- |
| • | Net income was $40.5 million or $0.85 per diluted share in the third quarter of 2020 as compared to $37.0 million or $0.78 per diluted share in the third quarter of 2019. |
| --- | --- |
Revenue Comparison
| ($ in thousands) | Three Months Ended September 30, | |||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Material sales | $ | 68,709 | $ | 51,837 |
| Royalty and license fees | 44,550 | 43,015 | ||
| Contract research services | 3,820 | 2,663 | ||
| Total revenue | $ | 117,079 | $ | 97,515 |
Cost of Materials Comparison
| ($ in thousands) | Three Months Ended September 30, | |||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Material sales | $ | 68,709 | $ | 51,837 | ||
| Cost of material sales | 20,849 | 15,245 | ||||
| Gross margin on material sales | 47,860 | 36,592 | ||||
| Gross margin as a % of material sales | 70 | % | 71 | % |
Financial Highlights for the First Nine Months of 2020
| • | Total revenue in the first nine months of 2020 was $287.3 million as compared to $303.4 million in the first nine months of 2019. The decrease in revenue was mainly due to the weakened demand for emitter product from our customers during the three-month period ended June 30, 2020 as a result of the COVID-19 pandemic. As discussed above, the ultimate full extent of the impact of the pandemic on our operational performance remains uncertain. |
|---|---|
| • | Revenue from material sales was $167.2 million in the first nine months of 2020 as compared to $182.7 million in the first nine months of 2019. Revenue from royalty and license fees was $110.0 million in the first nine months of 2020 as compared to $112.2 million in the first nine months of 2019. |
| --- | --- |
| • | Cost of material sales was $51.3 million in the first nine months of 2020 as compared to $50.2 million in the first nine months of 2019. Included in the cost of material sales was an inventory reserve charge of $808,000 in the first nine months of 2020 as compared to a charge of $4.2 million in the first nine months of 2019. |
| --- | --- |
| • | Operating income was $91.7 million in the first nine months of 2020 as compared to $123.9 million in the first nine months of 2019. |
| --- | --- |
| • | Net income was $79.5 million or $1.67 per diluted share in the first nine months of 2020 as compared to $111.9 million or $2.36 per diluted share in the first nine months of 2019. |
| --- | --- |
Revenue Comparison
| ($ in thousands) | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Material sales | $ | 167,211 | $ | 182,661 |
| Royalty and license fees | 110,008 | 112,222 | ||
| Contract research services | 10,105 | 8,565 | ||
| Total revenue | $ | 287,324 | $ | 303,448 |
Cost of Materials Comparison
| ($ in thousands) | Nine Months Ended September 30, | |||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Material sales | $ | 167,211 | $ | 182,661 | ||
| Cost of material sales | 51,337 | 50,201 | ||||
| Gross margin on material sales | 115,874 | 132,460 | ||||
| Gross margin as a % of material sales | 69 | % | 73 | % |
2020 Guidance
The Company believes that its 2020 revenue will be approximately in the range of $385 million to $400 million. Along with the uncertainties resulting from the COVID-19 pandemic, the OLED industry remains at a stage where many variables can have a material impact on its growth, and the Company thus caveats its financial guidance accordingly.
Dividend
The Company also announced a fourth quarter cash dividend of $0.15 per share on the Company’s common stock. The dividend is payable on December 31, 2020 to all shareholders of record on December 15, 2020.
Conference Call Information
In conjunction with this release, Universal Display will host a conference call on Thursday, October 29, 2020 at 5:00 p.m. Eastern Time. The live webcast of the conference call can be accessed under the events page of the Company's Investor Relations website at ir.oled.com. Those wishing to participate in the live call should dial 1-877-524-8416 (toll-free) or 1-412-902-1028. Please dial in 5-10 minutes prior to the scheduled conference call time. An online archive of the webcast will be available within two hours of the conclusion of the call.
About Universal Display Corporation
Universal Display Corporation (Nasdaq: OLED) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. Founded in 1994, the Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,000 patents issued and pending worldwide. Universal Display licenses its proprietary technologies, including its breakthrough high-efficiency UniversalPHOLED® phosphorescent OLED technology that can enable the development of low power and eco-friendly displays and solid-state lighting. The Company also develops and offers high-quality, state-of-the-art UniversalPHOLED materials that are recognized as key ingredients in the fabrication of OLEDs with peak performance. In addition, Universal Display delivers innovative and customized solutions to its clients and partners through technology transfer, collaborative technology development and on-site training.
Headquartered in Ewing, New Jersey, with international offices in China, Hong Kong, Ireland, Japan, South Korea and Taiwan, and wholly-owned subsidiary Adesis, Inc. based in New Castle, Delaware, Universal
Display works and partners with a network of world-class organizations. To learn more about Universal Display Corporation, please visit https://oled.com/.
Universal Display Corporation and the Universal Display Corporation logo are trademarks or registered trademarks of Universal Display Corporation. All other company, brand or product names may be trademarks or registered trademarks.
#
All statements in this document that are not historical, such as those relating to the impact of the COVID-19 pandemic on the Company and otherwise, the Company’s technologies and potential applications of those technologies, the Company’s expected results and future declaration of dividends, as well as the growth of the OLED market and the Company’s opportunities in that market, are forward-looking financial statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements in this document, as they reflect Universal Display Corporation’s current views with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. These risks and uncertainties are discussed in greater detail in Universal Display Corporation’s periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, including, in particular, the sections entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10-Q. Universal Display Corporation disclaims any obligation to update any forward-looking statement contained in this document.
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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)
| December 31, 2019 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | 162,620 | $ | 131,627 | ||
| Short-term investments | 510,048 | 514,461 | |||
| Accounts receivable | 99,350 | 60,452 | |||
| Inventory | 84,098 | 63,953 | |||
| Other current assets | 30,038 | 21,946 | |||
| Total current assets | 886,154 | 792,439 | |||
| PROPERTY AND EQUIPMENT, net of accumulated depreciation of 68,423 and 57,276 | 96,830 | 87,872 | |||
| ACQUIRED TECHNOLOGY, net of accumulated amortization of 147,903 and 132,468 | 75,364 | 90,774 | |||
| OTHER INTANGIBLE ASSETS, net of accumulated amortization of 5,807 and 4,768 | 11,033 | 12,072 | |||
| GOODWILL | 15,535 | 15,535 | |||
| INVESTMENTS | 5,000 | 5,000 | |||
| DEFERRED INCOME TAXES | 31,978 | 30,375 | |||
| OTHER ASSETS | 103,067 | 86,090 | |||
| TOTAL ASSETS | 1,224,961 | $ | 1,120,157 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Accounts payable | 9,626 | $ | 13,296 | ||
| Accrued expenses | 33,692 | 49,022 | |||
| Deferred revenue | 138,391 | 97,333 | |||
| Other current liabilities | 1,051 | 1,857 | |||
| Total current liabilities | 182,760 | 161,508 | |||
| DEFERRED REVENUE | 51,657 | 47,529 | |||
| RETIREMENT PLAN BENEFIT LIABILITY | 52,900 | 51,117 | |||
| OTHER LIABILITIES | 58,008 | 48,554 | |||
| Total liabilities | 345,325 | 308,708 | |||
| SHAREHOLDERS’ EQUITY: | |||||
| Preferred Stock, par value 0.01 per share, 5,000,000 shares authorized, 200,000<br> shares of Series A Nonconvertible Preferred Stock issued and outstanding<br> (liquidation value of 7.50 per share or 1,500) | 2 | 2 | |||
| Common Stock, par value 0.01 per share, 200,000,000 shares authorized, 49,008,915<br> and 48,852,193 shares issued, and 47,643,267 and 47,486,545 shares outstanding, at<br> September 30, 2020 and December 31, 2019, respectively | 490 | 489 | |||
| Additional paid-in capital | 628,051 | 620,236 | |||
| Retained earnings | 307,144 | 249,003 | |||
| Accumulated other comprehensive loss | (14,767 | ) | (16,997 | ) | |
| Treasury stock, at cost (1,365,648 shares at September 30, 2020 and December 31, 2019) | (41,284 | ) | (41,284 | ) | |
| Total shareholders’ equity | 879,636 | 811,449 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,224,961 | $ | 1,120,157 |
All values are in US Dollars.
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except share and per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| REVENUE | $ | 117,079 | $ | 97,515 | $ | 287,324 | $ | 303,448 | ||||
| COST OF SALES | 23,378 | 17,286 | 58,480 | 57,172 | ||||||||
| Gross margin | 93,701 | 80,229 | 228,844 | 246,276 | ||||||||
| OPERATING EXPENSES: | ||||||||||||
| Research and development | 20,814 | 16,787 | 61,708 | 51,449 | ||||||||
| Selling, general and administrative | 13,579 | 12,623 | 45,129 | 40,531 | ||||||||
| Amortization of acquired technology and other intangible assets | 5,494 | 5,493 | 16,474 | 16,469 | ||||||||
| Patent costs | 2,095 | 1,659 | 5,591 | 5,145 | ||||||||
| Royalty and license expense | 3,293 | 2,837 | 8,195 | 8,828 | ||||||||
| Total operating expenses | 45,275 | 39,399 | 137,097 | 122,422 | ||||||||
| OPERATING INCOME | 48,426 | 40,830 | 91,747 | 123,854 | ||||||||
| Interest income, net | 1,029 | 2,748 | 4,444 | 8,336 | ||||||||
| Other income, net | 262 | 53 | 634 | 740 | ||||||||
| Interest and other income, net | 1,291 | 2,801 | 5,078 | 9,076 | ||||||||
| INCOME BEFORE INCOME TAXES | 49,717 | 43,631 | 96,825 | 132,930 | ||||||||
| INCOME TAX EXPENSE | (9,217 | ) | (6,669 | ) | (17,355 | ) | (21,054 | ) | ||||
| NET INCOME | $ | 40,500 | $ | 36,962 | $ | 79,470 | $ | 111,876 | ||||
| NET INCOME PER COMMON SHARE: | ||||||||||||
| BASIC | $ | 0.85 | $ | 0.78 | $ | 1.67 | $ | 2.36 | ||||
| DILUTED | $ | 0.85 | $ | 0.78 | $ | 1.67 | $ | 2.36 | ||||
| WEIGHTED AVERAGE SHARES USED IN COMPUTING<br><br><br>NET INCOME PER COMMON SHARE: | ||||||||||||
| BASIC | 47,227,061 | 46,980,439 | 47,182,625 | 46,947,109 | ||||||||
| DILUTED | 47,260,331 | 47,013,919 | 47,212,660 | 46,983,901 | ||||||||
| CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.15 | $ | 0.10 | $ | 0.45 | $ | 0.30 |
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| Nine Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 79,470 | $ | 111,876 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Amortization of deferred revenue and recognition of unbilled receivables | (112,508 | ) | (101,079 | ) | ||
| Depreciation | 11,147 | 8,958 | ||||
| Amortization of intangibles | 16,474 | 16,469 | ||||
| Change in excess inventory reserve | 808 | 4,155 | ||||
| Amortization of premium and discount on investments, net | (4,293 | ) | (4,528 | ) | ||
| Stock-based compensation to employees | 19,807 | 10,697 | ||||
| Stock-based compensation to Board of Directors and Scientific Advisory Board | 1,133 | 1,126 | ||||
| Deferred income tax benefit | (2,242 | ) | (2,633 | ) | ||
| Retirement plan expense | 4,242 | 4,379 | ||||
| Decrease (increase) in assets: | ||||||
| Accounts receivable | (38,898 | ) | (22,645 | ) | ||
| Inventory | (20,953 | ) | 8,074 | |||
| Other current assets | (2,854 | ) | (4,602 | ) | ||
| Other assets | (8,721 | ) | (10,259 | ) | ||
| Increase (decrease) in liabilities: | ||||||
| Accounts payable and accrued expenses | (19,633 | ) | (1,827 | ) | ||
| Other current liabilities | (806 | ) | 5,587 | |||
| Deferred revenue | 144,200 | 113,849 | ||||
| Other liabilities | 9,454 | 149 | ||||
| Net cash provided by operating activities | 75,827 | 137,746 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property and equipment | (19,213 | ) | (25,317 | ) | ||
| Purchases of intangibles | (25 | ) | (401 | ) | ||
| Purchases of investments | (604,153 | ) | (648,006 | ) | ||
| Proceeds from sale of investments | 613,310 | 590,550 | ||||
| Net cash used in investing activities | (10,081 | ) | (83,174 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from issuance of common stock | 869 | 658 | ||||
| Repurchase of common stock | — | (649 | ) | |||
| Payment of withholding taxes related to stock-based compensation to employees | (14,293 | ) | (15,920 | ) | ||
| Cash dividends paid | (21,329 | ) | (14,142 | ) | ||
| Net cash used in financing activities | (34,753 | ) | (30,053 | ) | ||
| INCREASE IN CASH AND CASH EQUIVALENTS | 30,993 | 24,519 | ||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 131,627 | 211,022 | ||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 162,620 | $ | 235,541 | ||
| The following non-cash activities occurred: | ||||||
| Unrealized gain on available-for-sale securities | $ | 451 | $ | 227 | ||
| Common stock issued to Board of Directors and Scientific Advisory Board that was<br><br><br>earned and accrued for in a previous period | 300 | 300 | ||||
| Net change in accounts payable and accrued expenses related to purchases of property<br><br><br>and equipment | (892 | ) | (168 | ) |