OLED 8-K
Universal Display Corp \Pa\ (OLED)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of Registrant as Specified in Its Charter)
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Registrant’s Telephone Number, Including Area Code:
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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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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:
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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 May 7, 2020, the Registrant issued a press release regarding its financial results for the quarter ended March 31, 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
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Exhibit Number |
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Description |
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99.1 |
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Press Release by the Registrant, dated May 7, 2020, furnished pursuant to Item 2.02 of Form 8-K. |
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104 |
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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.
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Universal Display Corporation |
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Date: May 7, 2020 |
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By: |
/s/ Sidney D. Rosenblatt |
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Sidney D. Rosenblatt |
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Executive Vice President, Chief Financial Officer, Treasurer and Secretary |
Press Release
Universal Display Contact:
Darice Liu
+1 609-964-5123
Universal Display Corporation Announces First Quarter 2020 Financial Results
Withdraws Previously Provided 2020 Revenue Guidance due to COVID-19 Pandemic
EWING, N.J. – May 7, 2020 – Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the first quarter ended March 31, 2020.
“In these extraordinarily challenging times due to the COVID-19 pandemic, we have been able to keep our employees safe, maintain our business operations and continue our strategic growth programs. During the first quarter, we activated crisis management and business continuity plans to safeguard our people and to ensure our ability to continue our R&D programs, and manufacture and ship to customers our energy-efficient, high-performing UniversalPHOLED materials. Our primary focus remains on the safety and well-being of our employees, customers, partners and community,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “Our first quarter revenues were $112.3 million, which included the full recognition of the safety stock purchased in the fourth quarter of 2019 by a China-based customer due to trade-related concerns, as well as some estimated advanced customer material purchases due to COVID-19 uncertainties. In this evolving environment of a global health crisis, the ultimate scope and duration of which are unknown, it is challenging to make forecasts about future results and as such, we believe it is prudent to withdraw our 2020 guidance.”
Rosenblatt continued, “As we look ahead, we believe that the long-term growth path of OLEDs remains strong, though timing of adoption may shift due to macroeconomic factors. During this time of high uncertainty, we are continuing our R&D initiatives, OLED material shipments and strategic programs to drive further innovation and novel solutions, and to capitalize on the opportunities in the OLED market. With a robust balance sheet of approximately $640 million in cash, a lean operating model and no debt, we plan to continue to invest in our leadership position in the OLED ecosystem and expect to emerge from the current environment even stronger to further enable our customers and the industry.”
Financial Highlights for the First Quarter of 2020
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Total revenue in the first quarter of 2020 was $112.3 million as compared to $87.8 million in the first quarter of 2019. |
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Revenue from material sales was $66.6 million in the first quarter of 2020 as compared to $54.5 million in the first quarter of 2019. |
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Revenue from royalty and license fees was $43.1 million in the first quarter of 2020 as compared to $30.3 million in the first quarter of 2019. |
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Cost of materials was $20.2 million in the first quarter of 2020 as compared to $13.0 million in the first quarter of 2019. |
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Operating income was $44.5 million in the first quarter of 2020 as compared to $34.4 million in the first quarter of 2019. |
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Net income was $38.2 million or $0.80 per diluted share in the first quarter of 2020 as compared to $31.5 million or $0.66 per diluted share in the first quarter of 2019. |
Revenue Comparison
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($ in thousands) |
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Three Months Ended March 31, |
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2020 |
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2019 |
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Material sales |
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$ |
66,575 |
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$ |
54,496 |
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Royalty and license fees |
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43,078 |
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30,269 |
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Contract research services |
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2,624 |
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3,000 |
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Total revenue |
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$ |
112,277 |
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$ |
87,765 |
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Cost of Materials Comparison
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($ in thousands) |
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Three Months Ended March 31, |
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2020 |
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2019 |
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Material sales |
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$ |
66,575 |
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$ |
54,496 |
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Cost of material sales |
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20,211 |
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12,975 |
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Gross margin on material sales |
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46,364 |
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41,521 |
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Gross margin as a % of material sales |
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70% |
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76% |
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Withdrawal of 2020 Guidance
As a result of the ongoing uncertainty regarding both the scope and duration of the COVID-19 global pandemic, the Company is withdrawing its previously issued 2020 revenue guidance, issued on February 20, 2020. Since February 20, the impact of COVID-19 has rapidly expanded globally across Asia, Europe and the United States. The Company anticipates material disruption to industries that utilize OLEDs as a result of the evolving pandemic and its impact on the macroeconomic environment.
Dividend
The Company also announced a second quarter cash dividend of $0.15 per share on the Company’s common stock. The dividend is payable on June 30, 2020 to all shareholders of record on June 15, 2020.
Conference Call Information
In conjunction with this release, Universal Display will host a conference call on May 7, 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, Universal Display Corporation’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 section entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019 and its 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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(OLED-C)
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
(UNAUDITED)
(in thousands, except share and per share data)
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March 31, 2020 |
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December 31, 2019 |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
222,744 |
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$ |
131,627 |
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Short-term investments |
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417,032 |
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514,461 |
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Accounts receivable |
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82,592 |
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60,452 |
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Inventory |
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74,068 |
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63,953 |
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Other current assets |
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15,635 |
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21,946 |
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Total current assets |
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812,071 |
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792,439 |
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PROPERTY AND EQUIPMENT, net of accumulated depreciation of $60,891 and $57,276 |
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88,350 |
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87,872 |
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ACQUIRED TECHNOLOGY, net of accumulated amortization of $137,613 and $132,468 |
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85,629 |
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90,774 |
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OTHER INTANGIBLE ASSETS, net of accumulated amortization of $5,113 and $4,768 |
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11,727 |
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12,072 |
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GOODWILL |
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15,535 |
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15,535 |
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INVESTMENTS |
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5,000 |
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5,000 |
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DEFERRED INCOME TAXES |
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28,729 |
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30,375 |
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OTHER ASSETS |
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89,335 |
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86,090 |
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TOTAL ASSETS |
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$ |
1,136,376 |
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$ |
1,120,157 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
10,370 |
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$ |
13,296 |
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Accrued expenses |
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21,648 |
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49,022 |
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Deferred revenue |
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99,565 |
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97,333 |
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Other current liabilities |
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4,971 |
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1,857 |
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Total current liabilities |
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136,554 |
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161,508 |
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DEFERRED REVENUE |
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49,866 |
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47,529 |
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RETIREMENT PLAN BENEFIT LIABILITY |
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51,711 |
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51,117 |
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OTHER LIABILITIES |
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51,548 |
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48,554 |
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Total liabilities |
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289,679 |
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308,708 |
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SHAREHOLDERS’ EQUITY: |
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Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000 shares of Series A Nonconvertible Preferred Stock issued and outstanding (liquidation value of $7.50 per share or $1,500) |
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2 |
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2 |
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Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 48,910,232 and 48,852,193 shares issued, and 47,544,584 and 47,486,545 shares outstanding, at March 31, 2020 and December 31, 2019, respectively |
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489 |
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489 |
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Additional paid-in capital |
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621,967 |
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620,236 |
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Retained earnings |
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280,060 |
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249,003 |
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Accumulated other comprehensive loss |
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(14,537 |
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(16,997 |
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Treasury stock, at cost (1,365,648 shares at March 31, 2020 and December 31, 2019) |
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(41,284 |
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(41,284 |
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Total shareholders’ equity |
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846,697 |
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811,449 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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$ |
1,136,376 |
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$ |
1,120,157 |
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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except share and per share data)
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Three Months Ended |
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March 31, |
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2020 |
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2019 |
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REVENUE |
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$ |
112,277 |
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$ |
87,765 |
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COST OF SALES |
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22,459 |
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15,814 |
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Gross margin |
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89,818 |
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71,951 |
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OPERATING EXPENSES: |
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Research and development |
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19,497 |
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15,829 |
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Selling, general and administrative |
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15,403 |
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11,969 |
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Amortization of acquired technology and other intangible assets |
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5,490 |
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5,486 |
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Patent costs |
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1,638 |
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1,770 |
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Royalty and license expense |
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3,284 |
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2,537 |
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Total operating expenses |
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45,312 |
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37,591 |
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OPERATING INCOME |
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44,506 |
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34,360 |
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Interest income, net |
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2,147 |
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2,831 |
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Other income, net |
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202 |
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282 |
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Interest and other income, net |
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2,349 |
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3,113 |
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INCOME BEFORE INCOME TAXES |
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46,855 |
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37,473 |
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INCOME TAX EXPENSE |
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(8,700 |
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(5,999 |
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NET INCOME |
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$ |
38,155 |
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$ |
31,474 |
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NET INCOME PER COMMON SHARE: |
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BASIC |
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$0.80
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$ |
0.66 |
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DILUTED |
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$0.80
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$ |
0.66 |
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WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: |
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BASIC |
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47,093,033 |
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46,892,914 |
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DILUTED |
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47,122,829 |
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46,931,999 |
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CASH DIVIDENDS DECLARED PER COMMON SHARE |
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$ |
0.15 |
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$ |
0.10 |
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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
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Three Months Ended March 31, |
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2020 |
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2019 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
38,155 |
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$ |
31,474 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Amortization of deferred revenue and recognition of unbilled receivables |
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(40,511 |
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(26,976 |
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Depreciation |
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3,615 |
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2,758 |
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Amortization of intangibles |
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5,490 |
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5,486 |
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Change in excess inventory reserve |
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611 |
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224 |
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Amortization of premium and discount on investments, net |
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(2,005 |
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(1,741 |
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Stock-based compensation to employees |
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5,735 |
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3,610 |
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Stock-based compensation to Board of Directors and Scientific Advisory Board |
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254 |
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516 |
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Deferred income tax expense (benefit) |
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940 |
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(592 |
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Retirement plan expense |
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1,414 |
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1,501 |
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Decrease (increase) in assets: |
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Accounts receivable |
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(22,140 |
) |
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(8,995 |
) |
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Inventory |
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(10,726 |
) |
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1,735 |
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Other current assets |
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7,706 |
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177 |
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Other assets |
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(3,245 |
) |
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(2,966 |
) |
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Increase (decrease) in liabilities: |
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Accounts payable and accrued expenses |
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(29,340 |
) |
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(12,117 |
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Other current liabilities |
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3,114 |
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3,744 |
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Deferred revenue |
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43,685 |
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33,080 |
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Other liabilities |
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2,994 |
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3,132 |
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Net cash provided by operating activities |
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5,746 |
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34,050 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
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(4,782 |
) |
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(13,283 |
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Purchases of intangibles |
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— |
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(401 |
) |
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Purchases of investments |
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(148,592 |
) |
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(165,471 |
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Proceeds from sale of investments |
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250,400 |
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170,050 |
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Net cash provided by (used in) investing activities |
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97,026 |
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(9,105 |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of common stock |
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259 |
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204 |
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Repurchase of common stock |
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— |
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(649 |
) |
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Payment of withholding taxes related to stock-based compensation to employees |
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|
(4,816 |
) |
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(5,757 |
) |
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Cash dividends paid |
|
|
(7,098 |
) |
|
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(4,717 |
) |
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Net cash used in financing activities |
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(11,655 |
) |
|
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(10,919 |
) |
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INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
91,117 |
|
|
|
14,026 |
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
|
131,627 |
|
|
|
211,022 |
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CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ |
222,744 |
|
|
$ |
225,048 |
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The following non-cash activities occurred: |
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|
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|
|
|
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Unrealized gain on available-for-sale securities |
|
$ |
2,380 |
|
|
$ |
60 |
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Common stock issued to Board of Directors and Scientific Advisory Board that was earned and accrued for in a previous period |
|
|
300 |
|
|
|
300 |
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Net change in accounts payable and accrued expenses related to purchases of property and equipment |
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|
689 |
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|
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(351 |
) |