UNIVERSAL DISPLAY CORP PA [OLED] Filings

10-Q 1 oled-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	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)


Pennsylvania		23-2372688
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

250 Phillips Boulevard, Ewing, New Jersey		08618
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (609) 671-0980

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 (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.


Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting 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 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 (unaudited)
Consolidated Balance Sheets – September 30, 2022 and December 31, 2021		1
Consolidated Statements of Income – Three and nine months ended September 30, 2022 and 2021		2
Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2022 and 2021		3
Consolidated Statements of Shareholders’ Equity – Three and nine months ended September 30, 2022 and 2021		4
Consolidated Statements of Cash Flows – Nine months ended September 30, 2022 and 2021		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3. Quantitative and Qualitative Disclosures About Market Risk		35
Item 4. Controls and Procedures		35

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		36
Item 1A. Risk Factors		36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 3. Defaults Upon Senior Securities		36
Item 4. Mine Safety Disclosures		36
Item 5. Other Information		36
Item 6. Exhibits		37

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)


	September 30, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	187,750		$	311,993
Short-term investments		501,051			351,194
Accounts receivable		78,193			107,639
Inventory		180,194			134,160
Other current assets		30,005			20,948
Total current assets		977,193			925,934
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $110,334 and $92,461		137,713			128,832
ACQUIRED TECHNOLOGY, net of accumulated amortization of $187,132 and $173,635		40,921			49,668
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $8,631 and $7,565		8,657			9,711
GOODWILL		15,535			15,535
INVESTMENTS		173,871			168,076
DEFERRED INCOME TAXES		43,005			33,453
OTHER ASSETS		133,428			135,710
TOTAL ASSETS	$	1,530,323		$	1,466,919
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	13,357		$	14,955
Accrued expenses		49,975			45,474
Deferred revenue		67,254			120,864
Other current liabilities		7,613			6,645
Total current liabilities		138,199			187,938
DEFERRED REVENUE		26,761			36,217
RETIREMENT PLAN BENEFIT LIABILITY		67,305			66,773
OTHER LIABILITIES		86,233			76,077
Total liabilities		318,498			367,005
COMMITMENTS AND CONTINGENCIES (Note 18)
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, 49,128,525 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		491			491
Additional paid-in capital		674,773			658,728
Retained earnings		602,399			500,212
Accumulated other comprehensive loss		(24,556	)		(18,235	)
Treasury stock, at cost (1,365,648 shares at September 30, 2022 and December 31, 2021)		(41,284	)		(41,284	)
Total shareholders’ equity		1,211,825			1,099,914
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,530,323		$	1,466,919

The accompanying notes are an integral part of these Consolidated Financial Statements.

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
REVENUE:
Material sales	$	84,182		$	75,609		$	242,742		$	232,855
Royalty and license fees		71,450			63,939			191,530			163,037
Contract research services		4,924			4,070			13,315			11,386
Total revenue		160,556			143,618			447,587			407,278
COST OF SALES		37,396			31,481			97,798			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.

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.

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’</

UNIVERSAL DISPLAY CORP PA [OLED] Filings
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-02-23]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-18]
10-Q	[2020-10-29]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-20]
10-Q	[2019-10-30]
10-Q	[2019-08-01]
10-Q	[2019-05-02]
10-K	[2019-02-21]
10-Q	[2018-11-01]
10-Q	[2018-08-09]
10-Q	[2018-05-03]
10-K	[2018-02-22]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-23]
10-Q	[2016-11-03]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-25]
10-Q	[2015-11-05]
10-Q	[2015-08-06]
10-Q	[2015-05-07]
10-K	[2015-02-26]
10-Q	[2014-11-06]
10-Q	[2014-08-07]
10-Q	[2014-05-08]
10-K	[2014-02-28]
10-Q	[2013-11-07]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-02-27]
10-Q	[2012-11-07]
10-Q	[2012-08-08]
10-Q	[2012-05-09]
10-K	[2012-02-28]