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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022
OR
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ___________
Commission File Number 1-12031
UNIVERSAL DISPLAY CORPORATION
(Exact name of registrant as specified in its charter)
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Pennsylvania |
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23-2372688 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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250 Phillips Boulevard, Ewing, New Jersey |
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08618 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (609) 671-0980
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock, $0.01 par value |
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OLED |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☒ |
Accelerated filer |
☐ |
Emerging growth company |
☐ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
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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 account standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 1, 2022, the registrant had outstanding 47,236,557 shares of common stock.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)
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September 30, 2022 |
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December 31, 2021 |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
187,750 |
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$ |
311,993 |
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Short-term investments |
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501,051 |
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351,194 |
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Accounts receivable |
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78,193 |
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107,639 |
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Inventory |
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180,194 |
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134,160 |
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Other current assets |
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30,005 |
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20,948 |
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Total current assets |
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977,193 |
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925,934 |
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PROPERTY AND EQUIPMENT, net of accumulated depreciation of $110,334 and $92,461 |
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137,713 |
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128,832 |
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ACQUIRED TECHNOLOGY, net of accumulated amortization of $187,132 and $173,635 |
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40,921 |
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49,668 |
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OTHER INTANGIBLE ASSETS, net of accumulated amortization of $8,631 and $7,565 |
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8,657 |
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9,711 |
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GOODWILL |
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15,535 |
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15,535 |
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INVESTMENTS |
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173,871 |
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168,076 |
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DEFERRED INCOME TAXES |
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43,005 |
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33,453 |
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OTHER ASSETS |
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133,428 |
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135,710 |
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TOTAL ASSETS |
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$ |
1,530,323 |
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$ |
1,466,919 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
13,357 |
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$ |
14,955 |
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Accrued expenses |
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49,975 |
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45,474 |
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Deferred revenue |
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67,254 |
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120,864 |
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Other current liabilities |
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7,613 |
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6,645 |
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Total current liabilities |
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138,199 |
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187,938 |
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DEFERRED REVENUE |
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26,761 |
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36,217 |
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RETIREMENT PLAN BENEFIT LIABILITY |
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67,305 |
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66,773 |
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OTHER LIABILITIES |
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86,233 |
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76,077 |
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Total liabilities |
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318,498 |
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367,005 |
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COMMITMENTS AND CONTINGENCIES (Note 18) |
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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 $0.01 per share, 200,000,000 shares authorized, 49,128,525 and 49,065,924 shares issued, and 47,762,877 and 47,700,276 shares outstanding, at September 30, 2022 and December 31, 2021, respectively |
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491 |
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491 |
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Additional paid-in capital |
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674,773 |
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658,728 |
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Retained earnings |
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602,399 |
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500,212 |
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Accumulated other comprehensive loss |
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(24,556 |
) |
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(18,235 |
) |
Treasury stock, at cost (1,365,648 shares at September 30, 2022 and December 31, 2021) |
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(41,284 |
) |
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(41,284 |
) |
Total shareholders’ equity |
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1,211,825 |
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1,099,914 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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$ |
1,530,323 |
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$ |
1,466,919 |
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The accompanying notes are an integral part of these Consolidated Financial Statements.
1
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 September 30, |
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Nine Months Ended September 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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REVENUE: |
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Material sales |
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$ |
84,182 |
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$ |
75,609 |
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$ |
242,742 |
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$ |
232,855 |
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Royalty and license fees |
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71,450 |
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63,939 |
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191,530 |
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163,037 |
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Contract research services |
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4,924 |
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4,070 |
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13,315 |
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11,386 |
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Total revenue |
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160,556 |
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143,618 |
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447,587 |
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407,278 |
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COST OF SALES |
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37,396 |
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31,481 |
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97,798 |
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82,748 |
|
Gross margin |
|
|
123,160 |
|
|
|
112,137 |
|
|
|
349,789 |
|
|
|
324,530 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
30,414 |
|
|
|
25,327 |
|
|
|
85,156 |
|
|
|
72,733 |
|
Selling, general and administrative |
|
|
18,442 |
|
|
|
20,960 |
|
|
|
59,373 |
|
|
|
57,603 |
|
Amortization of acquired technology and other intangible assets |
|
|
3,562 |
|
|
|
5,505 |
|
|
|
14,562 |
|
|
|
16,490 |
|
Patent costs |
|
|
2,018 |
|
|
|
2,359 |
|
|
|
6,075 |
|
|
|
6,003 |
|
Royalty and license expense |
|
|
261 |
|
|
|
258 |
|
|
|
596 |
|
|
|
519 |
|
Total operating expenses |
|
|
54,697 |
|
|
|
54,409 |
|
|
|
165,762 |
|
|
|
153,348 |
|
OPERATING INCOME |
|
|
68,463 |
|
|
|
57,728 |
|
|
|
184,027 |
|
|
|
171,182 |
|
Interest income, net |
|
|
2,432 |
|
|
|
137 |
|
|
|
4,306 |
|
|
|
345 |
|
Other (loss) income, net |
|
|
(804 |
) |
|
|
(102 |
) |
|
|
(749 |
) |
|
|
178 |
|
Interest and other income, net |
|
|
1,628 |
|
|
|
35 |
|
|
|
3,557 |
|
|
|
523 |
|
INCOME BEFORE INCOME TAXES |
|
|
70,091 |
|
|
|
57,763 |
|
|
|
187,584 |
|
|
|
171,705 |
|
INCOME TAX EXPENSE |
|
|
(16,636 |
) |
|
|
(11,654 |
) |
|
|
(42,657 |
) |
|
|
(33,368 |
) |
NET INCOME |
|
$ |
53,455 |
|
|
$ |
46,109 |
|
|
$ |
144,927 |
|
|
$ |
138,337 |
|
NET INCOME PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
BASIC |
|
$ |
1.12 |
|
|
$ |
0.97 |
|
|
$ |
3.04 |
|
|
$ |
2.91 |
|
DILUTED |
|
$ |
1.12 |
|
|
$ |
0.97 |
|
|
$ |
3.04 |
|
|
$ |
2.90 |
|
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
BASIC |
|
|
47,396,495 |
|
|
|
47,291,192 |
|
|
|
47,386,426 |
|
|
|
47,286,927 |
|
DILUTED |
|
|
47,466,934 |
|
|
|
47,362,575 |
|
|
|
47,455,893 |
|
|
|
47,355,583 |
|
CASH DIVIDENDS DECLARED PER COMMON SHARE |
|
$ |
0.30 |
|
|
$ |
0.20 |
|
|
$ |
0.90 |
|
|
$ |
0.60 |
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
2
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
NET INCOME |
|
$ |
53,455 |
|
|
$ |
46,109 |
|
|
$ |
144,927 |
|
|
$ |
138,337 |
|
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX: |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on available-for-sale securities, net of tax of $572, $1, $2,120 and $10, respectively |
|
|
(1,680 |
) |
|
|
(3 |
) |
|
|
(7,231 |
) |
|
|
(35 |
) |
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, net of tax of $159, $334, $444 and $1,004, respectively |
|
|
493 |
|
|
|
1,174 |
|
|
|
1,511 |
|
|
|
3,522 |
|
Change in cumulative foreign currency translation adjustment |
|
|
(191 |
) |
|
|
(155 |
) |
|
|
(601 |
) |
|
|
(224 |
) |
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME |
|
|
(1,378 |
) |
|
|
1,016 |
|
|
|
(6,321 |
) |
|
|
3,263 |
|
COMPREHENSIVE INCOME |
|
$ |
52,077 |
|
|
$ |
47,125 |
|
|
$ |
138,606 |
|
|
$ |
141,600 |
|
The accompanying notes are an integral part of these Consolidated Financial Statements.
3
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except for share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2022 |
|
|
|
Series A Nonconvertible |
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Accumulated Other |
|
|
|
|
|
|
|
|
Total |
|
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Paid-in |
|
|
Retained |
|
|
Comprehensive |
|
|
Treasury Stock |
|
|
Shareholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Loss |
|
|
Shares |
|
|
Amount |
|
|
Equity |
|
BALANCE, JUNE 30, 2022 |
|
|
200,000 |
|
|
$ |
2 |
|
|
|
49,115,444 |
|
|
$ |
491 |
|
|
$ |
666,087 |
|
|
$ |
563,191 |
|
|
$ |
(23,178 |
) |
|
|
1,365,648 |
|
|
$ |
(41,284 |
) |
|
$ |
1,165,309 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53,455 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53,455 |
|
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,378 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1,378 |
) |
Cash dividend |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14,247 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14,247 |
) |
Issuance of common stock to employees |
|
|
— |
|
|
|
— |
|
|
|
8,753 |
|
|
|
— |
|
|
|
8,209 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,209 |
|
Shares withheld for employee taxes |
|
|
— |
|
|
|
— |
|
|
|
(2,852 |
) |
|
|
— |
|
|
|
(306 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(306 |
) |
Issuance of common stock to Board of Directors and Scientific Advisory Board |
|
|
— |
|
|
|
— |
|
|
|
2,196 |
|
|
|
— |
|
|
|
347 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
347 |
|
Issuance of common stock to employees under an ESPP |
|
|
— |
|
|
|
— |
|
|
|
4,984 |
|
|
|
— |
|
|
|
436 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
436 |
|
BALANCE, SEPTEMBER 30, 2022 |
|
|
200,000 |
|
|
$ |
2 |
|
|
|
49,128,525 |
|
|
$ |
491 |
|
|
$ |
674,773 |
|
|
$ |
602,399 |
|
|
$ |
(24,556 |
) |
|
|
1,365,648 |
|
|
$ |
(41,284 |
) |
|
$ |
1,211,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2022 |
|
|
|
Series A Nonconvertible |
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Accumulated Other |
|
|
|
|
|
|
|
|
Total |
|
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Paid-in |
|
|
Retained |
|
|
Comprehensive |
|
|
Treasury Stock |
|
|
Shareholders’ |