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): February 23, 2023
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 February 23, 2023, the Registrant issued a press release regarding its financial results for the year ended December 31, 2022. 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>Number | Description |
|---|---|
| 99.1 | Press Release by the Registrant, dated February 23, 2023, 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: February 23, 2023 | By: | /s/ Brian Millard |
| Brian Millard | ||
| Vice President, Chief Financial Officer and Treasurer |
EX-99
Exhibit 99.1
| Press Release |
|---|
| Universal Display Contact: |
| --- |
| Darice Liu |
| investor@oled.com |
| media@oled.com |
| +1 609-964-5123 |
Universal Display Corporation Announces Fourth Quarter and Full Year 2022 Financial Results
EWING, N.J. – February 23, 2023 – Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the fourth quarter and full year ended December 31, 2022.
“We ended 2022 strongly with record revenues and earnings,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “As we look to 2023, while macro uncertainties persist, we are continuing to build upon our leadership position in the OLED ecosystem. This includes continued discovery and development of next-generation phosphorescent materials, progress on the development of our commercial phosphorescent blue and groundbreaking OVJP (organic vapor jet printing) manufacturing platform, as well as investing in our infrastructure and capabilities. We believe that these initiatives and the industry’s advancing roadmap for medium- and large-area OLED displays are setting the stage for 2024 to be a pivotal year for the commencement of a new OLED adoption cycle and investment wave.”
Financial Highlights for the Fourth Quarter of 2022
• Total revenue in the fourth quarter of 2022 was $169.0 million as compared to $146.2 million in the fourth quarter of 2021. We continue to expect the near-term weakness in the overall global market economy to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of certain customers’ contracts compared to prior estimates, resulting in us recording a positive cumulative catch-up adjustment to total revenue during the fourth quarter of 2022 of $13.0 million arising from changes in estimates of transaction price.
• Revenue from material sales was $88.3 million in the fourth quarter of 2022 as compared to $85.8 million in the fourth quarter of 2021. This increase was primarily the result of higher unit volume.
• Revenue from royalty and license fees was $75.6 million in the fourth quarter of 2022 as compared to $56.0 million in the fourth quarter of 2021. The increase was primarily due to the cumulative catch-up adjustment as well as higher unit material volume.
• Cost of material sales was $26.6 million in the fourth quarter of 2022 as compared to $29.2 million in the fourth quarter of 2021. Fourth quarter cost of material sales decreased due to favorable product mix, partially offset by underutilization costs associated with our manufacturing facility in Shannon, Ireland, which commenced manufacturing in mid-2022.
• Total gross margin was 82% in the fourth quarter of 2022 as compared to 78% in the fourth quarter of 2021.
• Operating income was $83.1 million in the fourth quarter of 2022 as compared to $56.5 million in the fourth quarter of 2021.
• Net income was $65.1 million or $1.36 per diluted share in the fourth quarter of 2022 as compared to $45.9 million or $0.96 per diluted share in the fourth quarter of 2021.
Revenue Comparison
| ($ in thousands) | Three Months Ended December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Material sales | $ | 88,339 | $ | 85,768 |
| Royalty and license fees | 75,585 | 55,995 | ||
| Contract research services | 5,108 | 4,484 | ||
| Total revenue | $ | 169,032 | $ | 146,247 |
Cost of Materials Comparison
| ($ in thousands) | Three Months Ended December 31, | |||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Material sales | $ | 88,339 | $ | 85,768 | ||
| Cost of material sales | 26,603 | 29,199 | ||||
| Gross margin on material sales | 61,736 | 56,569 | ||||
| Gross margin as a % of material sales | 70 | % | 66 | % |
Financial Highlights for the Full Year 2022
• Total revenue for the full year 2022 was $616.6 million as compared to $553.5 million for the full year 2021. We continue to expect the near-term weakness in the overall global market economy to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of certain customers’ contracts compared to prior estimates, resulting in us recording a positive cumulative catch-up adjustment to total revenue during the full year 2022 of $30.3 million arising from changes in estimates of transaction price.
• Revenue from material sales was $331.1 million for the full year 2022 as compared to $318.6 million for the full year 2021. This increase was primarily the result of higher unit volume.
• Revenue from royalty and license fees was $267.1 million for the full year 2022 as compared to $219.0 million for the full year 2021. The increase was primarily due to the cumulative catch-up adjustment as well as higher unit material volume.
• Cost of material sales was $115.6 million for the full year 2022 as compared to $104.4 million for the full year 2021. The increase was due to higher unit material volumes as well as underutilization costs associated with our Shannon facility in the full year 2022 of $7.9 million.
• Total gross margin was 79% for both the full years 2022 and 2021.
• Operating income was $267.1 million for the full year 2022 as compared to $227.6 million for the full year 2021.
• Net income was $210.1 million or $4.40 per diluted share for the full year 2022 as compared to $184.2 million or $3.87 per diluted share for the full year 2021.
Revenue Comparison
| ($ in thousands) | Year Ended December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Material sales | $ | 331,081 | $ | 318,623 |
| Royalty and license fees | 267,115 | 219,032 | ||
| Contract research services | 18,423 | 15,870 | ||
| Total revenue | $ | 616,619 | $ | 553,525 |
Cost of Materials Comparison
| ($ in thousands) | Year Ended December 31, | |||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Material sales | $ | 331,081 | $ | 318,623 | ||
| Cost of material sales | 115,602 | 104,397 | ||||
| Gross margin on material sales | 215,479 | 214,226 | ||||
| Gross margin as a % of material sales | 65 | % | 67 | % |
2023 Guidance
The Company believes that its 2023 revenue will be the range of $550 million to $600 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 first quarter cash dividend of $0.35 per share on the Company’s common stock. The dividend is payable on March 31, 2023 to all shareholders of record on March 17, 2023.
Conference Call Information
In conjunction with this release, Universal Display will host a conference call on Thursday, February 23, 2023 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 5,500 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 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, 2022. 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
(in thousands, except share and per share data)
| December 31, 2021 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS: | |||||
| Cash and cash equivalents | 93,430 | $ | 311,993 | ||
| Short-term investments | 484,345 | 351,194 | |||
| Accounts receivable | 92,664 | 107,639 | |||
| Inventory | 183,220 | 134,160 | |||
| Other current assets | 45,791 | 20,948 | |||
| Total current assets | 899,450 | 925,934 | |||
| PROPERTY AND EQUIPMENT, net of accumulated depreciation of 117,118 and 92,461 | 143,445 | 128,832 | |||
| ACQUIRED TECHNOLOGY, net of accumulated amortization of 189,671 and 173,635 | 38,382 | 49,668 | |||
| OTHER INTANGIBLE ASSETS, net of accumulated amortization of 8,989 and 7,565 | 8,247 | 9,711 | |||
| GOODWILL | 15,535 | 15,535 | |||
| INVESTMENTS | 259,861 | 168,076 | |||
| DEFERRED INCOME TAXES | 58,161 | 33,453 | |||
| OTHER ASSETS | 109,739 | 135,710 | |||
| TOTAL ASSETS | 1,532,820 | $ | 1,466,919 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| CURRENT LIABILITIES: | |||||
| Accounts payable | 9,519 | $ | 14,955 | ||
| Accrued expenses | 51,002 | 45,474 | |||
| Deferred revenue | 45,599 | 120,864 | |||
| Other current liabilities | 29,577 | 6,645 | |||
| Total current liabilities | 135,697 | 187,938 | |||
| DEFERRED REVENUE | 18,279 | 36,217 | |||
| RETIREMENT PLAN BENEFIT LIABILITY | 59,790 | 66,773 | |||
| OTHER LIABILITIES | 43,685 | 76,077 | |||
| Total liabilities | 257,451 | 367,005 | |||
| 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, 49,136,030 and 49,065,924 shares issued, and 47,770,382 and 47,700,276 shares outstanding at December 31, 2022 and December 31, 2021, respectively | 491 | 491 | |||
| Additional paid-in capital | 681,335 | 658,728 | |||
| Retained earnings | 653,277 | 500,212 | |||
| Accumulated other comprehensive loss | (18,452 | ) | (18,235 | ) | |
| Treasury stock, at cost (1,365,648 shares at December 31, 2022 and December 31, 2021) | (41,284 | ) | (41,284 | ) | |
| Total shareholders’ equity | 1,275,369 | 1,099,914 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,532,820 | $ | 1,466,919 |
All values are in US Dollars.
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| REVENUE: | (Unaudited) | |||||||||||
| Material sales | $ | 88,339 | $ | 85,768 | $ | 331,081 | $ | 318,623 | ||||
| Royalty and license fees | 75,585 | 55,995 | 267,115 | 219,032 | ||||||||
| Contract research services | 5,108 | 4,484 | 18,423 | 15,870 | ||||||||
| Total revenue | 169,032 | 146,247 | 616,619 | 553,525 | ||||||||
| COST OF SALES | 30,098 | 32,243 | 127,896 | 114,991 | ||||||||
| Gross margin | 138,934 | 114,004 | 488,723 | 438,534 | ||||||||
| OPERATING EXPENSES: | ||||||||||||
| Research and development | 31,906 | 26,940 | 117,062 | 99,673 | ||||||||
| Selling, general and administrative | 18,513 | 22,769 | 77,886 | 80,372 | ||||||||
| Amortization of acquired technology and other intangible assets | 2,897 | 5,504 | 17,459 | 21,994 | ||||||||
| Patent costs | 2,254 | 2,157 | 8,329 | 8,160 | ||||||||
| Royalty and license expense | 281 | 172 | 877 | 691 | ||||||||
| Total operating expenses | 55,851 | 57,542 | 221,613 | 210,890 | ||||||||
| OPERATING INCOME | 83,083 | 56,462 | 267,110 | 227,644 | ||||||||
| Interest income, net | 3,505 | 160 | 7,811 | 505 | ||||||||
| Other (loss) income, net | (5,942 | ) | (80 | ) | (6,691 | ) | 98 | |||||
| Interest and other income, net | (2,437 | ) | 80 | 1,120 | 603 | |||||||
| INCOME BEFORE INCOME TAXES | 80,646 | 56,542 | 268,230 | 228,247 | ||||||||
| INCOME TAX EXPENSE | (15,512 | ) | (10,666 | ) | (58,169 | ) | (44,034 | ) | ||||
| NET INCOME | $ | 65,134 | $ | 45,876 | $ | 210,061 | $ | 184,213 | ||||
| NET INCOME PER COMMON SHARE: | ||||||||||||
| BASIC | $ | 1.37 | $ | 0.96 | $ | 4.41 | $ | 3.87 | ||||
| DILUTED | $ | 1.36 | $ | 0.96 | $ | 4.40 | $ | 3.87 | ||||
| WEIGHTED AVERAGE SHARES USED IN COMPUTING NET <br> INCOME PER COMMON SHARE: | ||||||||||||
| BASIC | 47,402,007 | 47,324,718 | 47,390,352 | 47,296,447 | ||||||||
| DILUTED | 47,492,560 | 47,387,469 | 47,468,507 | 47,365,435 | ||||||||
| CASH DIVIDEND DECLARED PER COMMON SHARE | $ | 0.30 | $ | 0.20 | $ | 1.20 | $ | 0.80 |
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 210,061 | 184,213 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation | 24,815 | 19,968 | ||||
| Amortization of intangibles | 17,459 | 21,994 | ||||
| Amortization of premium and discount on investments, net | (6,461 | ) | (373 | ) | ||
| Impairment of minority investments | 6,962 | — | ||||
| Stock-based compensation to employees | 28,380 | 34,871 | ||||
| Stock-based compensation to Board of Directors and Scientific Advisory Board | 1,566 | 1,404 | ||||
| Deferred income tax (benefit) expense | (26,946 | ) | 1,748 | |||
| Retirement plan expense | 5,276 | 8,875 | ||||
| Decrease (increase) in assets: | ||||||
| Accounts receivable | 14,975 | (25,378 | ) | |||
| Inventory | (49,060 | ) | (42,569 | ) | ||
| Other current assets | (24,843 | ) | (202 | ) | ||
| Other assets | 25,971 | (32,369 | ) | |||
| Increase (decrease) in liabilities: | ||||||
| Accounts payable and accrued expenses | 3,338 | 1,902 | ||||
| Other current liabilities | 20,917 | 2,105 | ||||
| Deferred revenue | (93,203 | ) | (5,220 | ) | ||
| Other liabilities | (32,392 | ) | 20,136 | |||
| Net cash provided by operating activities | 126,815 | 191,105 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property and equipment | (42,497 | ) | (43,161 | ) | ||
| Purchase of intangibles | (4,709 | ) | (394 | ) | ||
| Purchases of investments | (701,993 | ) | (642,180 | ) | ||
| Proceeds from sale and maturity of investments | 468,456 | 227,984 | ||||
| Net cash used in investing activities | (280,743 | ) | (457,751 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from issuance of common stock | 1,570 | 1,507 | ||||
| Payment of withholding taxes related to stock-based compensation to employees | (9,209 | ) | (14,949 | ) | ||
| Cash dividends paid | (56,996 | ) | (37,931 | ) | ||
| Net cash used in financing activities | (64,635 | ) | (51,373 | ) | ||
| DECREASE IN CASH AND CASH EQUIVALENTS | (218,563 | ) | (318,019 | ) | ||
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 311,993 | 630,012 | ||||
| CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 93,430 | $ | 311,993 | ||
| The following non-cash activities occurred: | ||||||
| Unrealized loss on available-for-sale securities | $ | (8,100 | ) | $ | (295 | ) |
| Common stock issued to Board of Directors and Scientific Advisory Board <br> that was earned and accrued for in a previous period | 300 | 300 | ||||
| Net change in accounts payable and accrued expenses related to purchases <br> of property and equipment | 3,069 | (3,526 | ) | |||
| Cash paid for income tax | 72,347 | 52,650 |