8-K
Universal Display Corp \Pa\ (OLED)
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): May 2, 2024
UNIVERSAL DISPLAY CORPORATION
(Exact name of Registrant as Specified in Its Charter)
| Pennsylvania | 1-12031 | 23-2372688 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 250 Phillips Boulevard,<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 May 2, 2024, Universal Display Corporation (the "Company") issued a press release regarding its financial results for the quarter ended March 31, 2024. 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 Company 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>Number | Description |
|---|---|
| 99.1 | Press Release by the Registrant, dated May 2, 2024, 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: May 2, 2024 | By: | /s/ Brian Millard |
| Brian Millard | ||
| Vice President, Chief Financial Officer and Treasurer |
EX-99.1
Exhibit 99.1
| Press Release |
|---|
| Universal Display Contact: |
| --- |
| Darice Liu |
| investor@oled.com |
| media@oled.com |
| +1 609-964-5123 |
Universal Display Corporation Announces First Quarter 2024 Financial Results
EWING, N.J. – May 2, 2024 – 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, 2024.
“We began the year on a strong note with solid first quarter results across the board,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “With the OLED IT market poised for significant growth, continued OLED proliferation in smartphones and TVs, and projected expansion of foldables, we see meaningful opportunities across multiple market verticals. As we approach UDC’s 30th anniversary next month, we reflect on our amazing journey that has been marked by relentless innovation, exponential growth, and the materialization of products that were once distant dreams. As we look forward, we are excited to reach even greater heights in the future and continue to make a lasting impact on the OLED industry.”
Financial Highlights for the First Quarter of 2024
• Total revenue in the first quarter of 2024 was $165.3 million as compared to $130.5 million in the first quarter of 2023.
• Revenue from material sales was $93.3 million in the first quarter of 2024 as compared to $70.2 million in the first quarter of 2023. The increase in material sales was primarily due to strengthened demand for our emitter materials.
• Revenue from royalty and license fees was $68.3 million in the first quarter of 2024 as compared to $55.2 million in the first quarter of 2023. The increase in royalty and license fees was primarily the result of higher unit material volume, partially offset by a reduced cumulative catch-up adjustment.
• Cost of material sales was $34.1 million in the first quarter of 2024 as compared to $29.5 million in the first quarter of 2023. The increase in cost of material sales was primarily due to an increase in the level of materials sales, partially offset by a $3.3 million decrease in inventory reserve expense.
• Total gross margin was 78% in the first quarter of 2024 as compared to 75% in the first quarter of 2023.
• Operating income was $62.9 million in the first quarter of 2024 as compared to $45.4 million in the first quarter of 2023.
• The effective income tax rate was 19.4% and 22.8% in the first quarter of 2024 and 2023, respectively.
• Net income was $56.9 million or $1.19 per diluted share in the first quarter of 2024 as compared to $39.8 million or $0.83 per diluted share in the first quarter of 2023.
Revenue Comparison
| ($ in thousands) | Three Months Ended March 31, | |||
|---|---|---|---|---|
| 2024 | 2023 | |||
| Material sales | $ | 93,284 | $ | 70,190 |
| Royalty and license fees | 68,268 | 55,210 | ||
| Contract research services | 3,707 | 5,067 | ||
| Total revenue | $ | 165,259 | $ | 130,467 |
Cost of Materials Comparison
| ($ in thousands) | Three Months Ended March 31, | |||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Material sales | $ | 93,284 | $ | 70,190 | ||
| Cost of material sales | 34,096 | 29,488 | ||||
| Gross margin on material sales | 59,188 | 40,702 | ||||
| Gross margin as a % of material sales | 63 | % | 58 | % |
2024 Revised Guidance
The Company has increased the lower end of its previous revenue guidance and believes that 2024 revenue will be in the range of $635 million to $675 million. The OLED industry remains at a stage where many variables can have a material impact on results, and the Company thus caveats its financial guidance accordingly.
Dividend
The Company also announced a second quarter cash dividend of $0.40 per share on the Company’s common stock. The dividend is payable on June 28, 2024 to all shareholders of record as of the close of business on June 14, 2024.
Conference Call Information
In conjunction with this release, Universal Display will host a conference call on Thursday, May 2, 2024 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 and with subsidiaries and offices around the world, the Company currently owns, exclusively licenses or has the sole right to sublicense more than 6,000 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 energy-efficient 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. 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 projected adoption, development and advancement of the Company’s technologies, and the Company’s expected results, 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, 2023. 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, 2023 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | 74,012 | $ | 91,985 | ||
| Short-term investments | 465,293 | 422,137 | |||
| Accounts receivable | 119,584 | 139,850 | |||
| Inventory | 172,905 | 175,795 | |||
| Other current assets | 89,478 | 87,365 | |||
| Total current assets | 921,272 | 917,132 | |||
| PROPERTY AND EQUIPMENT, net of accumulated depreciation of 149,062 and 143,908 | 175,896 | 175,150 | |||
| ACQUIRED TECHNOLOGY, net of accumulated amortization of 191,043 and 186,850 | 86,132 | 90,325 | |||
| OTHER INTANGIBLE ASSETS, net of accumulated amortization of 10,769 and 10,414 | 6,519 | 6,874 | |||
| GOODWILL | 15,535 | 15,535 | |||
| INVESTMENTS | 312,939 | 299,548 | |||
| DEFERRED INCOME TAXES | 63,040 | 59,108 | |||
| OTHER ASSETS | 102,382 | 105,289 | |||
| TOTAL ASSETS | 1,683,715 | $ | 1,668,961 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Accounts payable | 12,841 | $ | 10,933 | ||
| Accrued expenses | 42,099 | 52,080 | |||
| Deferred revenue | 19,157 | 47,713 | |||
| Other current liabilities | 20,882 | 8,096 | |||
| Total current liabilities | 94,979 | 118,822 | |||
| DEFERRED REVENUE | 13,292 | 12,006 | |||
| RETIREMENT PLAN BENEFIT LIABILITY | 52,568 | 52,249 | |||
| OTHER LIABILITIES | 37,976 | 38,658 | |||
| Total liabilities | 198,815 | 221,735 | |||
| SHAREHOLDERS’ EQUITY: | |||||
| 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) | 2 | 2 | |||
| Common Stock, par value 0.01 per share, 200,000,000 shares authorized, 48,804,964 and 48,731,026 shares issued, and 47,439,316 and 47,365,378 shares outstanding, at March 31, 2024 and December 31, 2023, respectively | 488 | 487 | |||
| Additional paid-in capital | 702,609 | 699,554 | |||
| Retained earnings | 826,879 | 789,553 | |||
| Accumulated other comprehensive loss | (3,794 | ) | (1,086 | ) | |
| Treasury stock, at cost (1,365,648 shares at March 31, 2024 and December 31, 2023) | (41,284 | ) | (41,284 | ) | |
| Total shareholders’ equity | 1,484,900 | 1,447,226 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,683,715 | $ | 1,668,961 |
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 March 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| REVENUE: | ||||||
| Material sales | $ | 93,284 | $ | 70,190 | ||
| Royalty and license fees | 68,268 | 55,210 | ||||
| Contract research services | 3,707 | 5,067 | ||||
| Total revenue | 165,259 | 130,467 | ||||
| COST OF SALES | 36,969 | 32,970 | ||||
| Gross margin | 128,290 | 97,497 | ||||
| OPERATING EXPENSES: | ||||||
| Research and development | 37,985 | 31,423 | ||||
| Selling, general and administrative | 19,252 | 15,396 | ||||
| Amortization of acquired technology and other intangible assets | 4,548 | 2,891 | ||||
| Patent costs | 1,982 | 2,255 | ||||
| Royalty and license expense | 1,651 | 164 | ||||
| Total operating expenses | 65,418 | 52,129 | ||||
| OPERATING INCOME | 62,872 | 45,368 | ||||
| Interest income, net | 9,568 | 6,967 | ||||
| Other loss, net | (1,943 | ) | (703 | ) | ||
| Interest and other loss, net | 7,625 | 6,264 | ||||
| INCOME BEFORE INCOME TAXES | 70,497 | 51,632 | ||||
| INCOME TAX EXPENSE | (13,644 | ) | (11,793 | ) | ||
| NET INCOME | $ | 56,853 | $ | 39,839 | ||
| NET INCOME PER COMMON SHARE: | ||||||
| BASIC | $ | 1.19 | $ | 0.83 | ||
| DILUTED | $ | 1.19 | $ | 0.83 | ||
| WEIGHTED AVERAGE SHARES USED IN COMPUTING NET <br> INCOME PER COMMON SHARE: | ||||||
| BASIC | 47,557,959 | 47,523,593 | ||||
| DILUTED | 47,628,492 | 47,567,007 | ||||
| CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.40 | $ | 0.35 |
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 56,853 | $ | 39,839 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation | 6,616 | 6,496 | ||||
| Amortization of intangibles | 4,548 | 2,891 | ||||
| Amortization of premium and discount on investments, net | (2,236 | ) | (3,597 | ) | ||
| Stock-based compensation | 9,174 | 4,415 | ||||
| Deferred income tax benefit | (3,936 | ) | (5,936 | ) | ||
| Retirement plan expense, net of benefit payments | 330 | 782 | ||||
| Decrease (increase) in assets: | ||||||
| Accounts receivable | 20,266 | (13 | ) | |||
| Inventory | 2,890 | 8,975 | ||||
| Other current assets | (2,113 | ) | 8,598 | |||
| Other assets | 2,907 | 5,515 | ||||
| Increase (decrease) in liabilities: | ||||||
| Accounts payable and accrued expenses | (7,977 | ) | (24,116 | ) | ||
| Other current liabilities | 12,786 | 12,874 | ||||
| Deferred revenue | (27,270 | ) | (8,616 | ) | ||
| Other liabilities | (682 | ) | (486 | ) | ||
| Net cash provided by operating activities | 72,156 | 47,621 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property and equipment | (7,206 | ) | (9,098 | ) | ||
| Purchases of intangibles | — | (51 | ) | |||
| Purchases of investments | (99,947 | ) | (65,207 | ) | ||
| Proceeds from sale and maturity of investments | 42,970 | 115,031 | ||||
| Net cash (used in) provided by investing activities | (64,183 | ) | 40,675 | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from issuance of common stock | 639 | 518 | ||||
| Payment of withholding taxes related to stock-based compensation to employees | (7,058 | ) | (7,181 | ) | ||
| Cash dividends paid | (19,527 | ) | (16,769 | ) | ||
| Net cash used in financing activities | (25,946 | ) | (23,432 | ) | ||
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (17,973 | ) | 64,864 | |||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 91,985 | 93,430 | ||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 74,012 | $ | 158,294 | ||
| SUPPLEMENTAL DISCLOSURES: | ||||||
| Unrealized (loss) gain on available-for-sale securities | $ | (2,666 | ) | $ | 3,202 | |
| Common stock issued to Board of Directors and Scientific Advisory Board that was <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> and equipment | (156 | ) | 766 | |||
| Cash paid for income taxes, net of refunds | 5,085 | 4,961 |