8-K

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): November 3, 2022

UNIVERSAL DISPLAY CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Pennsylvania	1-12031	23-2372688
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
250 Phillips Boulevard, 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 November 3, 2022, the Registrant issued a press release regarding its financial results for the quarter ended September 30, 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 Number	Description
99.1	Press Release by the Registrant, dated November 3, 2022, 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: November 3, 2022	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 Third Quarter 2022 Financial Results

EWING, N.J. – November 3, 2022 –Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the third quarter ended September 30, 2022.

“We are pleased to report solid third quarter results, which includes record quarterly revenues. As we look ahead, we believe that the long-term growth path of the OLED industry remains strong. We are continuing to execute on our strategic initiatives and are investing in our R&D programs, our people and our global infrastructure,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “While macroeconomic factors will likely weigh on near-term demand, we see a bright future for the OLED industry and for us in the years ahead with continued OLED market proliferation, investments in new OLED capacity and a broadening company portfolio of innovative technologies and state-of-the-art OLED materials.”

Millard continued, “I am excited to have joined Universal Display Corporation, an extraordinary pioneer in the OLED industry for more than 25 years. With our brilliant team, cutting-edge initiatives, lean operating model and strong balance sheet, the Company is well poised for continued advancement in the growing OLED market. I look forward to working with the entire UDC team to continue to build upon our strong culture of inventiveness, integrity, inclusion and imagination and deliver on the Company’s mission of being a critical enabler in the OLED ecosystem.”

Financial Highlights for the Third Quarter of 2022

•Total revenue in the third quarter of 2022 was $160.6 million as compared to $143.6 million in the third quarter of 2021. As with the prior quarter, the near-term weakness in the overall global market economy is expected 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 recording a positive cumulative catch-up adjustment to total revenue of $6.6 million arising from changes in estimates of transaction price.

•Revenue from material sales was $84.2 million in the third quarter of 2022 as compared to $75.6 million in the third quarter of 2021. This increase was primarily the result of higher unit material volume.

•Revenue from royalty and license fees was $71.5 million in the third quarter of 2022 as compared to $63.9 million in the third quarter of 2021.This increase was primarily the result of higher unit material volume and customer mix.

•Cost of material sales was $34.1 million in the third quarter of 2022 as compared to $28.9 million in the third quarter of 2021. Cost of material sales was impacted by underutilization of the new production facility in Shannon, Ireland. We recently commenced bringing this additional capacity online in preparation for anticipated growth in the years ahead.

•Total gross margin was 77% in the third quarter of 2022 as compared to 78% in the third quarter of 2021. The decrease was in part due to costs associated with the Shannon facility in 2022, which contributed to a 2% decrease in total gross margin between the periods.

•Operating income was $68.5 million in the third quarter of 2022 as compared to $57.7 million in the third quarter of 2021.

•Net income was $53.5 million or $1.12 per diluted share in the third quarter of 2022 as compared to $46.1 million or $0.97 per diluted share in the third quarter of 2021.

Revenue Comparison

($ in thousands)	Three Months Ended September 30,
	2022		2021
Material sales	$	84,182	$	75,609
Royalty and license fees		71,450		63,939
Contract research services		4,924		4,070
Total revenue	$	160,556	$	143,618

Cost of Materials Comparison

($ in thousands)	Three Months Ended September 30,
	2022			2021
Material sales	$	84,182		$	75,609
Cost of material sales		34,057			28,883
Gross margin on material sales		50,125			46,726
Gross margin as a % of material sales		60	%		62	%

Financial Highlights for the First Nine Months of 2022

•Total revenue in the first nine months of 2022 was $447.6 million as compared to $407.3 million in the first nine months of 2021. As with the prior quarter, the near-term weakness in the overall global market economy is expected to have an impact on forecasted demand for OLED products utilizing our emitter material over the remaining life of several customers’ contracts compared to prior estimates, resulting in recording a positive cumulative catch-up adjustment to total revenue of $17.3 million arising from changes in estimates of transaction price.

•Revenue from material sales was $242.7 million in the first nine months of 2022 as compared to $232.9 million in the first nine months of 2021. This increase was primarily the result of higher unit material volume.

•Revenue from royalty and license fees was $191.5 million in the first nine months of 2022 as compared to $163.0 million in the first nine months of 2021. This increase was primarily the result of higher unit material volume and customer mix.

•Cost of material sales was $89.0 million in the first nine months of 2022 as compared to $75.2 million in the first nine months of 2021.

•Total gross margin was 78% in the first nine months of 2022 as compared to 80% in the first nine months of 2021. Shannon facility costs in 2022 contributed to a 1% decrease in total gross margin between periods.

•Operating income was $184.0 million in the first nine months of 2022 as compared to $171.2 million in the first nine months of 2021.

•Net income was $144.9 million or $3.04 per diluted share in the first nine months of 2022 as compared to $138.3 million or $2.90 per diluted share in the first nine months of 2021.

Revenue Comparison

($ in thousands)	Nine Months Ended September 30,
	2022		2021
Material sales	$	242,742	$	232,855
Royalty and license fees		191,530		163,037
Contract research services		13,315		11,386
Total revenue	$	447,587	$	407,278

Cost of Materials Comparison

($ in thousands)	Nine Months Ended September 30,
	2022			2021
Material sales	$	242,742		$	232,855
Cost of material sales		88,999			75,198
Gross margin on material sales		153,743			157,657
Gross margin as a % of material sales		63	%		68	%

2022 Affirmed Guidance

The Company affirms its previous revenue guidance and believes that 2022 revenue will be approximately $600 million, plus or minus $10 million. The OLED industry remains at a stage where many variables can have a material impact on its growth, and the Company thus caveats its financial guidance accordingly.

Dividend

The Company also announced a fourth quarter cash dividend of $0.30 per share on the Company’s common stock. The dividend is payable on December 30, 2022 to all shareholders of record on December 16, 2022.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, November 3, 2022 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, 2021. 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)

	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
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

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

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Nine Months Ended September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	144,927		$	138,337
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue and recognition of unbilled receivables, net		(201,529	)		(165,723	)
Depreciation		17,982			14,471
Amortization of intangibles		14,562			16,490
Change in excess inventory reserve		2,368			2,058
Amortization of premium and discount on investments, net		(3,469	)		(229	)
Stock-based compensation to employees		22,528			22,846
Stock-based compensation to Board of Directors and Scientific Advisory Board		1,121			1,052
Deferred income tax (benefit) expense		(7,876	)		4,226
Retirement plan expense		3,998			6,676
Decrease (increase) in assets:
Accounts receivable		29,446			(13,974	)
Inventory		(48,402	)		(31,952	)
Other current assets		(3,555	)		(13,626	)
Other assets		2,282			(33,540	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		7,217			(3,311	)
Other current liabilities		(543	)		(1,429	)
Deferred revenue		132,961			160,021
Other liabilities		10,156			31,933
Net cash provided by operating activities		124,174			134,326
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(31,119	)		(29,496	)
Purchases of intangibles		(4,761	)		(394	)
Purchases of investments		(464,766	)		(272,340	)
Proceeds from sale and maturity of investments		302,872			115,240
Net cash used in investing activities		(197,774	)		(186,990	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		1,247			1,136
Payment of withholding taxes related to stock-based compensation to employees		(9,150	)		(14,880	)
Cash dividends paid		(42,740	)		(28,447	)
Net cash used in financing activities		(50,643	)		(42,191	)
DECREASE IN CASH AND CASH EQUIVALENTS		(124,243	)		(94,855	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		311,993			630,012
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	187,750		$	535,157
The following non-cash activities occurred:
Unrealized loss on available-for-sale securities	$	(9,711	)	$	(39	)
Common stock issued to Board of Directors and Scientific Advisory Board that was    earned and accrued for in a previous period		300			300
Net change in accounts payable and accrued expenses related to purchases of property    and equipment		4,256			(1,849	)

XML

Document And Entity Information	Nov. 03, 2022
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 03, 2022
Entity Registrant Name	UNIVERSAL DISPLAY CORPORATION
Entity Central Index Key	0001005284
Entity Emerging Growth Company	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	OLED
Security Exchange Name	NASDAQ
Entity File Number	1-12031
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2372688
Entity Address, Address Line One	250 Phillips Boulevard
Entity Address, City or Town	Ewing
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08618
City Area Code	609
Local Phone Number	671-0980
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false