UNIVERSAL DISPLAY CORP PA

Previous wording

Our total material sales were $188.7 million for the six months ended June 30, 2024, as compared to $147.3 million for the six months ended June 30, 2023, an increase of 28% with a commensurate increase in unit material volume of 30%. The increase in material sales was primarily due to strengthened demand for our emitter materials.

Current wording

Our total material sales were $83.4 million for the three months ended September 30, 2024, as compared to $92.5 million for the three months ended September 30, 2023, a decrease of 10% with an increase in unit material volume of 1%. The decrease in material sales was primarily due to customer mix.

Previous wording

Green emitter sales for the three months ended June 30, 2024, which include our yellow-green emitters, were $71.6 million as compared to $57.9 million for the three months ended June 30, 2023, with unit material volumes increasing by 22%.

Current wording

Green emitter sales for the three months ended September 30, 2024, which include our yellow-green emitters, were $62.6 million as compared to $68.9 million for the three months ended September 30, 2023, with unit material volumes decreasing by 1%.

Previous wording

Red emitter sales for the three months ended June 30, 2024 were $22.5 million as compared to $16.7 million for the three months ended June 30, 2023, with unit material volumes increasing by 36%.

Current wording

Red emitter sales for the three months ended September 30, 2024 were $20.1 million as compared to $22.1 million for the three months ended September 30, 2023, with unit material volumes increasing by 6%.

Previous wording

Revenue from royalty and license fees was $127.8 million for the six months ended June 30, 2024 as compared to $119.6 million for the six months ended June 30, 2023, an increase of 7%. The increase in royalty and license fees was primarily the result of higher unit material volume, partially offset by changes in customer mix and the change in the cumulative catch-up adjustment between periods as described below.

Current wording

Revenue from royalty and license fees was $74.6 million for the three months ended September 30, 2024 as compared to $45.9 million for the three months ended September 30, 2023, an increase of 62%. The increase was primarily the result of changes in customer mix and the change in the cumulative catch-up adjustment between periods as described below.

Previous wording

The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $729,000 for the six months ended June 30, 2024 as compared to an increase of $6.6 million for the six months ended June 30, 2023. For the six months ended June 30, 2023, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of our customers over the remaining lives of their contracts, resulting from changes in global macroeconomic factors.

Current wording

The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $5.3 million for the three months ended September 30, 2024 as compared to a decrease of $1.5 million for the three months ended September 30, 2023. For the three months ended September 30, 2024, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of our customers over the remaining lives of their contracts.

Previous wording

Contract research services revenue was $3.5 million for the three months ended June 30, 2024 as compared to $5.1 million for the three months ended June 30, 2023, a decrease of 31%. The decrease in contract research services revenue was primarily due to the timing of completion of several contract research projects by our subsidiary, Adesis, during the three months ended June 30, 2024. Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries.

Current wording

Contract research services revenue was $3.6 million for the three months ended September 30, 2024 as compared to $2.7 million for the three months ended September 30, 2023, an increase of 35%. The increase in contract research services revenue was primarily due to the timing of completion of several contract research projects by our subsidiary, Adesis, during the three months ended September 30, 2024. Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries.

Previous wording

Cost of sales for the three months ended June 30, 2024 increased by $6.2 million as compared to the three months ended June 30, 2023, primarily due to an increase in the level of materials sales. As a result of the increase in revenue from material sales, partially offset by a decrease in revenue from royalty and license fees, gross margin for the three months ended June 30, 2024 increased by $5.8 million as compared to the three months ended June 30, 2023, with gross margin as a percentage of revenue decreasing to 76% from 78%.

Current wording

Cost of sales for the three months ended September 30, 2024 increased by $1.6 million as compared to the three months ended September 30, 2023, primarily due to product mix and an increase in unit material volume. As a result of the increase in revenue from royalty and license fees, partially offset by a decrease in revenue from material sales, gross margin for the three months ended September 30, 2024 increased by $19.0 million as compared to the three months ended September 30, 2023, with gross margin as a percentage of revenue increasing to 78% from 76%.

Previous wording

Research and development expenses increased to $74.8 million for the six months ended June 30, 2024, as compared to $63.7 million for the six months ended June 30, 2023. The increase in research and development expenses was primarily due to higher operating costs, including increased employee-related expenses, PPG development activity and contract research costs.

Current wording

Research and development expenses increased to $36.1 million for the three months ended September 30, 2024, as compared to $33.1 million for the three months ended September 30, 2023. The increase in research and development expenses was primarily due to higher operating costs, including increased PPG development activity.

Previous wording

Selling, general and administrative expenses increased to $19.8 million for the three months ended June 30, 2024, as compared to $17.1 million for the three months ended June 30, 2023. The increase in selling, general and administrative expenses was primarily due to an increase in stock-based compensation expense.

Current wording

Selling, general and administrative expenses decreased to $15.7 million for the three months ended September 30, 2024, as compared to $18.1 million for the three months ended September 30, 2023. The decrease in selling, general and administrative expenses was primarily due to lower employee-related expenses, including incentive and stock-based compensation expenses.

Previous wording

Patent costs increased to $2.4 million for the three months ended June 30, 2024, as compared to $2.2 million for the three months ended June 30, 2023.

Current wording

Patent costs decreased to $2.4 million for the three months ended September 30, 2024, as compared to $2.6 million for the three months ended September 30, 2023.

Previous wording

Interest income, net was $9.9 million for the three months ended June 30, 2024, as compared to $6.2 million for the three months ended June 30, 2023. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 as well as higher available-for-sale investment balances. Other loss, net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other loss, net of $1.5 million for the three months ended June 30, 2024 as compared to $784,000 for the three months ended June 30, 2023.

Current wording

Interest income, net was $10.6 million for the three months ended September 30, 2024, as compared to $7.1 million for the three months ended September 30, 2023. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 as well as higher available-for-sale investment balances. Other income (loss), net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other income, net of $3.8 million for the three months ended September 30, 2024 as compared to other loss, net of $1.7 million for the three months ended September 30, 2023.

Previous wording

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 19.3% and 22.4% for the three months ended June 30, 2024 and 2023, respectively, and we recorded income tax expense of $12.6 million and $14.4 million, respectively, for those periods. The effective income tax rate decreased due to a change in U.S. tax regulations associated with the ability to credit Chinese withholding taxes, as well as a change in the capitalization rules for research and development expenses.

Current wording

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 17.9% and 4.4% for the three months ended September 30, 2024 and 2023, respectively, and we recorded income tax expense of $14.5 million and $2.4 million, respectively, for those periods. During the third quarter of 2023, a change in the U.S. tax regulations associated with the ability to credit Chinese withholding taxes, as well as a change in the capitalization rules for research and development expenses resulted in a decrease in the effective income tax rate for the three months ended September 30, 2023.

Previous wording

Our total material sales were $95.4 million for the three months ended June 30, 2024, as compared to $77.1 million for the three months ended June 30, 2023, an increase of 24% with a commensurate increase in unit material volume of 23%. The increase in material sales was primarily due to strengthened demand for our emitter materials.

Current wording

Our total material sales were $272.2 million for the nine months ended September 30, 2024, as compared to $239.8 million for the nine months ended September 30, 2023, an increase of 13% with an increase in unit material volume of 19%. The increase in material sales was primarily due to strengthened demand for our emitter materials, partially offset by changes in customer mix.

Previous wording

Green emitter sales for the six months ended June 30, 2024, which include our yellow-green emitters, were $142.4 million as compared to $111.6 million for the six months ended June 30, 2023, with unit material volumes increasing by 27%.

Current wording

Green emitter sales for the nine months ended September 30, 2024, which include our yellow-green emitters, were $205.0 million as compared to $180.5 million for the nine months ended September 30, 2023, with unit material volumes increasing by 17%.

Previous wording

Red emitter sales for the six months ended June 30, 2024 were $43.1 million as compared to $32.8 million for the six months ended June 30, 2023, with unit material volumes increasing by 41%.

Current wording

Red emitter sales for the nine months ended September 30, 2024 were $63.3 million as compared to $54.9 million for the nine months ended September 30, 2023, with unit material volumes increasing by 27%.

Previous wording

Revenue from royalty and license fees was $59.6 million for the three months ended June 30, 2024 as compared to $64.4 million for the three months ended June 30, 2023, a decrease of 8%. The decrease was primarily the result of changes in customer mix.

Current wording

Revenue from royalty and license fees was $202.4 million for the nine months ended September 30, 2024 as compared to $165.5 million for the nine months ended September 30, 2023, an increase of 22%. The increase in royalty and license fees was primarily the result of higher unit material volume and changes in customer mix.

Previous wording

The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $1.2 million for the three months ended June 30, 2024 as compared to an increase of $922,000 for the three months ended June 30, 2023.

Current wording

The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $6.1 million for the nine months ended September 30, 2024 as compared to $5.1 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of the Company's customers over the remaining lives of their contracts.

Previous wording

Contract research services revenue was $7.2 million for the six months ended June 30, 2024 as compared to $10.1 million for the six months ended June 30, 2023, a decrease of 29%. The decrease in contract research services revenue was primarily due to the timing of completion of several contract research projects by our subsidiary, Adesis, during the six months ended June 30, 2024. Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries.

Current wording

Contract research services revenue was $10.8 million for the nine months ended September 30, 2024 as compared to $12.8 million for the nine months ended September 30, 2023, a decrease of 15%. The decrease in contract research services revenue was primarily due to the timing of completion of several contract research projects by our subsidiary, Adesis, during the nine months ended September 30, 2024. Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries.

Previous wording

Cost of sales for the six months ended June 30, 2024 increased by $10.2 million as compared to the six months ended June 30, 2023, primarily due to an increase in the level of materials sales, partially offset by a $3.8 million decrease in inventory reserve expense. As a result of the increase in revenue from material sales and royalty and licenses fees, gross margin for the six months ended June 30, 2024 increased by $36.5 million as compared to the six months ended June 30, 2023, with gross margin as a percentage of revenue increasing to 77% from 76%.

Current wording

Cost of sales for the nine months ended September 30, 2024 increased by $11.8 million as compared to the nine months ended September 30, 2023, primarily due to an increase in the level of materials sales and product mix, partially offset by a $4.0 million decrease in inventory reserve expense. As a result of the increase in revenue from royalty and licenses fees and material sales, gross margin for the nine months ended September 30, 2024 increased by $55.5 million as compared to the nine months ended September 30, 2023, with gross margin as a percentage of revenue increasing to 77% from 76%.

Previous wording

Research and development expenses increased to $36.8 million for the three months ended June 30, 2024, as compared to $32.3 million for the three months ended June 30, 2023. The increase in research and development expenses was primarily due to higher operating costs, including increased employee-related expenses, contract research costs and PPG development activity.

Current wording

Research and development expenses increased to $110.9 million for the nine months ended September 30, 2024, as compared to $96.8 million for the nine months ended September 30, 2023. The increase in research and development expenses was primarily due to higher operating costs, including increased PPG development activity, employee-related expenses and contract research costs.

Previous wording

Selling, general and administrative expenses increased to $39.1 million for the six months ended June 30, 2024, as compared to $32.5 million for the six months ended June 30, 2023. The increase in selling, general and administrative expenses was primarily due to an increase in employee-related expenses, including higher stock-based compensation and salaries expenses.

Current wording

Selling, general and administrative expenses increased to $54.8 million for the nine months ended September 30, 2024, as compared to $50.6 million for the nine months ended September 30, 2023. The increase in selling, general and administrative expenses was primarily due to an increase in employee-related expenses, including higher stock-based compensation and salaries expenses.

Previous wording

Amortization of acquired technology and other intangible assets was $4.5 million for the three months ended June 30, 2024, as compared to $4.0 million for the three months ended June 30, 2023. The increase was due to the commencement of amortization expense associated with the Merck KGaA patent acquisition that was completed on April 28, 2023.

Current wording

Amortization of acquired technology and other intangible assets was $13.6 million for the nine months ended September 30, 2024, as compared to $11.4 million for the nine months ended September 30, 2023. The increase was due to the commencement of amortization expense associated with the Merck KGaA patent acquisition that was completed on April 28, 2023.

Previous wording

Patent costs decreased to $4.4 million for the six months ended June 30, 2024, as compared to $4.5 million for the six months ended June 30, 2023.

Current wording

Patent costs decreased to $6.7 million for the nine months ended September 30, 2024, as compared to $7.1 million for the nine months ended September 30, 2023.

Previous wording

Royalty and license expense increased to $1.8 million for the six months ended June 30, 2024, as compared to $333,000 for the six months ended June 30, 2023. The increase was due to a one-time expense of $1.5 million in connection with an amendment to our existing amended license agreement, effective as of October 9, 1997, with Princeton University and the University of Southern California.

Current wording

Royalty and license expense increased to $1.9 million for the nine months ended September 30, 2024, as compared to $414,000 for the nine months ended September 30, 2023. The increase was due to a one-time expense of $1.5 million in connection with an amendment to our existing amended license agreement, effective as of October 9, 1997, with Princeton University and the University of Southern California.

Previous wording

Interest income, net was $19.5 million for the six months ended June 30, 2024, as compared to $13.2 million for the six months ended June 30, 2023. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 as well as higher available-for-sale investment balances. Other loss, net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other loss, net of $3.4 million for the six months ended June 30, 2024 as compared to $1.5 million for the six months ended June 30, 2023.

Current wording

Interest income, net was $30.1 million for the nine months ended September 30, 2024, as compared to $20.3 million for the nine months ended September 30, 2023. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 as well as higher available-for-sale investment balances. Other income (loss), net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other income, net of $416,000 for the nine months ended September 30, 2024 as compared to other loss, net of $3.2 million for the nine months ended September 30, 2023.

Previous wording

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 19.3% and 22.6% for the six months ended June 30, 2024 and 2023, respectively, and we recorded income tax expense of $26.2 million for both of those periods. The effective income tax rate decreased due to a change in U.S. tax regulations associated with the ability to credit Chinese withholding taxes, as well as a change in the capitalization rules for research and development expenses.

Current wording

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 18.8% and 16.8% for the nine months ended September 30, 2024 and 2023, respectively, and we recorded income tax expense of $40.8 million and $28.5 million, respectively, for those periods.

Previous wording

Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of June 30, 2024, we had cash and cash equivalents of $92.9 million, short-term investments of $437.7 million, and long-term U.S. Government bonds investments of $348.4 million for a total of $879.0 million. This compares to cash and cash equivalents of $92.0 million, short-term investments of $422.1 million, and long-term U.S. Government bond investments of $285.5 million for a total of $799.6 million as of December 31, 2023.

Current wording

Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of September 30, 2024, we had cash and cash equivalents of $79.6 million, short-term investments of $472.0 million, and long-term U.S. Government bonds investments of $378.8 million for a total of $930.4 million. This compares to cash and cash equivalents of $92.0 million, short-term investments of $422.1 million, and long-term U.S. Government bond investments of $285.5 million for a total of $799.6 million as of December 31, 2023.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2024 was $139.2 million resulting from $109.2 million of net income and $30.0 million from non-cash items including stock-based compensation and depreciation. Operating assets and liabilities were unchanged from December 31, 2023 on a net basis, but reflected an increase in other assets of $38.9 million, a decrease in accounts receivable of $15.5 million, an increase in accounts payable and accrued expenses of $12.4 million, an increase in deferred revenue of $10.8 million, a decrease in inventory of $3.9 million, and a decrease in other liabilities of $3.7 million.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2024 was $219.0 million resulting from $176.1 million of net income, $39.5 million from non-cash items including stock-based compensation, depreciation and amortization of intangibles, and $3.4 million due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to a decrease in accounts receivable of $52.2 million and an increase in accounts payable and accrued expenses of $9.4 million, partially offset by an increase in other assets of $43.7 million, a decrease in deferred revenue of $10.0 million, a decrease in other liabilities of $4.3 million and an increase in inventory of $163,000.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2023 was $57.4 million resulting from $89.5 million of net income and $13.2 million from non-cash items including depreciation, stock-based compensation and deferred income taxes, partially offset by a $45.3 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to a decrease in other liabilities of $22.3 million, a decrease in accounts payable and accrued expenses of $17.7 million, an increase in accounts receivable of $16.7 million and a decrease in deferred revenue of $15.7 million, partially offset by a decrease in other assets of $19.7 million and a decrease in inventory of $7.4 million.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2023 was $117.7 million resulting from $141.0 million of net income and $50.7 million from non-cash items including depreciation, stock-based compensation and amortization of intangibles, partially offset by $74.0 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to an increase in accounts receivable of $29.5 million, an increase in other assets of $29.4 million, a decrease in other liabilities of $28.7 million and a decrease in accounts payable and accrued expense of $32,000, partially offset by an increase in deferred revenue of $11.8 million and a decrease in inventory of $1.8 million.

Previous wording

Cash used in investing activities was $93.5 million for the six months ended June 30, 2024, as compared to $17.5 million for the six months ended June 30, 2023. The increase was due to timing of maturities and purchases of investments resulting in net purchases of $77.1 million for the six months ended June 30, 2024, as compared to net sales and maturities of $75.9 million for the six months ended June 30, 2023, partially offset by a decrease in purchases of intangibles and property, plant and equipment of $77.0 million. The decrease in the purchases of intangibles and property, plant and equipment during the six months ended June 30, 2024 was primarily due to the Merck KGaA patent acquisition on April 28, 2023.

Current wording

Cash used in investing activities was $167.1 million for the nine months ended September 30, 2024, as compared to $75.4 million for the nine months ended September 30, 2023. The increase was due to timing of maturities and purchases of investments resulting in net purchases of $137.1 million for the nine months ended September 30, 2024, as compared to net sales and maturities of $43.4 million for the nine months ended September 30, 2023, partially offset by a decrease in purchases of intangibles and property, plant and equipment of $88.8 million. The decrease in the purchases of intangibles and property, plant and equipment during the nine months ended September 30, 2024 was primarily due to the Merck KGaA patent acquisition on April 28, 2023.

Previous wording

Cash used in financing activities was $44.8 million for the six months ended June 30, 2024, as compared to $39.9 million for the six months ended June 30, 2023. The increase was due to an increase in the cash payment of dividends in the current year of $5.2 million, partially offset by an increase in the proceeds from the issuance of common stock of $216,000 and a decrease in the payment of withholding taxes related to stock-based compensation to employees of $100,000.

Current wording

Cash used in financing activities was $64.3 million for the nine months ended September 30, 2024, as compared to $56.4 million for the nine months ended September 30, 2023. The increase was due to an increase in the cash payment of dividends in the current year of $7.8 million and an increase in the payment of withholding taxes related to stock-based compensation to employees of $356,000, partially offset by an increase in the proceeds from the issuance of common stock of $244,000.

Previous wording

Working capital was $807.5 million as of June 30, 2024, as compared to $798.3 million as of December 31, 2023. The increase was primarily due to increases in other current assets and short-term investments, partially offset by increases in deferred revenue and accounts payable and a decrease in accounts receivable.

Current wording

Working capital was $810.7 million as of September 30, 2024, as compared to $798.3 million as of December 31, 2023. The increase was primarily due to increases in short-term investments and other current assets, partially offset by a decrease in accounts receivable.