UNIVERSAL DISPLAY CORP PA
For the period ended Dec 31, 2024. Filed Feb 20, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 20, 2025
OLED$88.31+1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-22.
0000950170-24-018765
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-20.
0000950170-25-024151
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 76 current paragraphs.
50 unchanged; 23 reworded; 3 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
In June 2020, we formed a wholly-owned subsidiary, OVJP Corporation (OVJP Corp) in California, as a Delaware corporation, which was founded to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. In December 2024, we announced that the OVJP Corp facility in California would be closing and OVJP operations would be relocated to our newly formed subsidiary, Universal Vapor Jet Corporation Pte. Ltd. (UVJC) in Singapore, as well as continued operations in our Tech and Innovation Center in New Jersey. While we continue to focus on the long-term opportunity in the large-area display market for OVJP, the industry’s current focus is on the growing demand for IT capacity. Our UVJC subsidiary plans to assess additional market opportunities where this technology may be transformative. As a result of the planned closure of the OVJP Corp location in California, we determined to record $8.9 million of restructuring costs for the year ended December 31, 2024.
Current report
Research and development expenses increased to $157.2 million for the year ended December 31, 2024, as compared to $130.5 million for the year ended December 31, 2023. The increase in research and development expenses was primarily due to an increase in PPG development activity, including new product development and commencement of development activities in Shannon, Ireland, and OVJP Corp reorganization expenses. As a result of the planned closure of OVJP Corp's California location, we recorded $8.9 million of restructuring costs for the year ended December 31, 2024.
Current report
Royalty and license expense increased to $2.0 million for the year ended December 31, 2024, as compared to $647,000 for the year ended December 31, 2023. This 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.
Removed paragraphs (3)
Previous report
In June 2020, a wholly-owned subsidiary, OVJP Corporation (OVJP Corp), was formed as a Delaware corporation. Based in California, OVJP Corp was founded to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. As of December 31, 2023, OVJP Corp employed a team of 28 research, mechanical, electrical and software engineers and laboratory technicians. As a direct printing technique, OVJP technology has the potential to offer high deposition rates for large-area OLEDs. In addition, OVJP technology reduces OLED material waste associated with use of a shadow mask (i.e., the waste of material that deposits on the shadow mask itself when fabricating an OLED). By comparison to inkjet printing, an OVJP process does not use liquid solvents and therefore the OLED materials utilized are not limited by their viscosity or solvent solubility. OVJP also avoids generation of solvent wastes and eliminates the additional step of removing residual solvent from the OLED device. We believe the successful implementation of the OVJP technology has the potential to increase the addressable market for large-size OLED panels while also serving another potential growth market for our proprietary PHOLED materials and technologies.
Previous report
Research and development expenses increased to $130.5 million for the year ended December 31, 2023, as compared to $117.1 million for the year ended December 31, 2022. The increase in research and development expenses was primarily due to higher operating costs, including increased contract research costs, employee-related expenses and those costs associated with PPG development activity.
Previous report
Royalty and license expense decreased to $647,000 for the year ended December 31, 2023, as compared to $877,000 for the year ended December 31, 2022.
Reworded paragraphs (23)
Previous wording
On December 2, 2022, we entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, we are being paid a license fee, which includes quarterly and annual payments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.
Current wording
On December 2, 2022, we entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, we are being paid a license fee, which includes quarterly and annual payments over the agreement term. The agreement conveys to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.
Previous wording
In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display), which were effective as of January 1, 2015. The terms of these agreements were extended by a January 1, 2021 amendment through the end of 2025. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty revenue.
Current wording
In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display). The terms of these agreements have been extended through the end of 2025. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty revenue.
Previous wording
In 2018, we entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, we have granted certain of Visionox’s affiliates non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products. In 2021, we announced an extension of the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd.
Current wording
In 2024, we entered into new long-term, multi-year agreements with Visionox Technology, Inc. (Visionox). Under these agreements, we have granted Visionox non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products.
Previous wording
In 2016, we acquired Adesis, Inc. (Adesis) which has operations in New Castle and Wilmington, Delaware. Adesis is a contract development and manufacturing organization (CDMO) that provides support services on a contractual basis to third-party customers in the OLED, pharma, biotech, catalysis and other industries. As of December 31, 2023, Adesis employed a team of 138 research scientists, chemists, engineers and laboratory technicians. Prior to our acquisition of Adesis, we utilized more than 50% of Adesis’ technology service and production output. We continue to utilize a significant portion of its technology research capacity for the benefit of our OLED technology development, and Adesis uses the remaining capacity to operate as a CDMO by providing contract research services for non-OLED applications to third-party customers in the above-mentioned industries. Contract research services revenue is earned by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis for those third-party customers.
Current wording
In 2016, we acquired Adesis, Inc. (Adesis) which has operations in New Castle and Wilmington, Delaware. Adesis is a contract development and manufacturing organization (CDMO) that provides support services on a contractual basis to third-party customers in the OLED, pharma, biotech, catalysis and other industries. As of December 31, 2024, Adesis employed a team of 139 research scientists, chemists, engineers and laboratory technicians. Prior to our acquisition of Adesis, we utilized more than 50% of Adesis’ technology service and production output. We continue to utilize a significant portion of its technology research capacity for the benefit of our OLED technology development, and Adesis uses the remaining capacity to operate as a CDMO by providing contract research services for non-OLED applications to third-party customers in the above-mentioned industries. Contract research services revenue is earned by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis for those third-party customers.
Previous wording
During the year ended December 31, 2023, based on our previous earnings history, a current evaluation of expected future taxable income and other evidence, we determined to retain the valuation allowance that relates to New Jersey research and development credits and unrealized loss on investments. Actual results could differ from our assessments if adequate taxable income is generated in future periods. To the extent we establish a new valuation allowance or change a previously established valuation allowance in a future period, income tax expense will be impacted.
Current wording
During the year ended December 31, 2024, based on our previous earnings history, a current evaluation of expected future taxable income and other evidence, we determined to retain the valuation allowance that relates to New Jersey research and development credits and unrealized loss on investments. In addition, a portion of the investment loss was realized resulting in a capital loss carryforward that is not more likely than not to be used within the carryforward period. As such, we provided a valuation allowance against the capital loss. There are no indicators against the realizability of the remaining net deferred tax assets. Actual results could differ from our assessments if adequate taxable income is generated in future periods. To the extent we establish a new valuation allowance or change a previously established valuation allowance in a future period, income tax expense will be impacted.
Previous wording
Our total material sales were $322.0 million for the year ended December 31, 2023, as compared to $331.1 million for the year ended December 31, 2022, a decrease of 3% with a decrease in unit material volume of less than 1%. The decline in material sales was primarily due to reduced demand for our emitter material during 2023, partially offset by the introduction of blue emitter and host sales. This weakness resulted from the continuation of unfavorable macroeconomic conditions that have negatively impacted the OLED display market segment.
Current wording
Our total material sales were $365.4 million for the year ended December 31, 2024, as compared to $322.0 million for the year ended December 31, 2023, an increase of 13% with an increase in unit material volume of 15%. 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 year ended December 31, 2023, which include our yellow-green emitters, were $243.2 million as compared to $251.6 million for the year ended December 31, 2022, with unit material volumes decreasing by 2%.
Current wording
Green emitter sales for the year ended December 31, 2024, which include our yellow-green emitters, were $272.4 million as compared to $243.2 million for the year ended December 31, 2023, with unit material volumes increasing by 12%.
Previous wording
Red emitter sales for the year ended December 31, 2023, were $73.2 million as compared to $79.0 million for the year ended December 31, 2022, with unit material volumes increasing by less than 1%.
Current wording
Red emitter sales for the year ended December 31, 2024 were $88.5 million as compared to $73.2 million for the year ended December 31, 2023, with unit material volumes increasing by 25%.
Previous wording
Revenue from royalty and license fees was $238.4 million for the year ended December 31, 2023 as compared to $267.1 million for the year ended December 31, 2022, a decrease of 11%. The decrease in royalty and license fees was primarily the result of higher estimated future demand for several of our customers over the remaining lives of their contracts, as well as the impact of the cumulative catch-up adjustments noted below.
Current wording
Revenue from royalty and license fees was $266.8 million for the year ended December 31, 2024 as compared to $238.4 million for the year ended December 31, 2023, an increase of 12%. 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 arising from changes in estimates of transaction price, net was an increase of $10.6 million for the year ended December 31, 2023 as compared to an increase of $30.3 million for the year ended December 31, 2022, resulting in a net reduction in revenue between periods of $19.7 million, the majority of which was recorded to royalty and license fees. These adjustments resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated OLED materials demand by several of our customers over the remaining lives of their contracts.
Current wording
The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was $10.8 million for the year ended December 31, 2024 as compared to $10.6 million for the year ended December 31, 2023. For the years ended December 31, 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 our customers over the remaining lives of their contracts.
Previous wording
Contract research services revenue was $16.0 million for the year ended December 31, 2023 as compared to $18.4 million for the year ended December 31, 2022, a decrease of 13%. The decrease in contract research services revenue was primarily due to reduced demand from several CDMO customers of our subsidiary, Adesis, during the year ended December 31, 2023. 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 $15.4 million for the year ended December 31, 2024 as compared to $16.0 million for the year ended December 31, 2023, a decrease of 4%. 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 year ended December 31, 2023. 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 year ended December 31, 2023 increased by $7.5 million as compared to the year ended December 31, 2022, primarily due to a $5.1 million increase in expenses related to the Shannon manufacturing facility due to pre-production costs being classified as SG&A in the prior year, a $4.9 million increase in inventory reserves, and changes in product mix. As a result of the decrease in revenue from royalty and licenses fees and material sales, gross margin for the year ended December 31, 2023 decreased by $47.7 million as compared to the year ended December 31, 2022, with gross margin as a percentage of revenue decreasing to 77% from 79%.
Current wording
Cost of sales for the year ended December 31, 2024 increased by $13.1 million as compared to the year ended December 31, 2023, primarily due to an increase in the level of material sales and product mix, partially offset by a $5.4 million decrease in inventory reserve expense. As a result of the increase in revenue from material sales and royalty and license fees, gross margin for the year ended December 31, 2024 increased by $58.2 million as compared to the year ended December 31, 2023, with gross margin as a percentage of revenue remaining consistent at 77%.
Previous wording
Selling, general and administrative expenses decreased to $67.4 million for the year ended December 31, 2023, as compared to $77.9 million for the year ended December 31, 2022. The decrease in selling, general and administrative expenses was primarily due to lower stock-based compensation expenses and a decrease in pre-production costs associated with the Shannon facility. The Shannon facility became operational during June 2022 and the costs associated with this facility have since been included in cost of sales.
Current wording
Selling, general and administrative expenses increased to $74.3 million for the year ended December 31, 2024, as compared to $67.4 million for the year ended December 31, 2023. The increase in selling, general and administrative expenses was primarily due to an increase in employee-related expenses, including higher salaries expenses and stock-based compensation.
Previous wording
Amortization of acquired technology and other intangible assets was $16.0 million for the year ended December 31, 2023, as compared to $17.5 million for the year ended December 31, 2022. The decrease was due to the Fujifilm patents becoming fully amortized during July 2022, partially offset by the commencement of amortization expense associated with the Merck KGaA patent acquisition that was completed in April 2023. See Note 7 in Notes to Consolidated Financial Statements for further discussion.
Current wording
Amortization of acquired technology and other intangible assets was $18.2 million for the year ended December 31, 2024, as compared to $16.0 million for the year ended December 31, 2023. The increase was due to the commencement of amortization expense associated with the Merck KGaA patent acquisition that was completed in April 2023. See Note 7 in Notes to Consolidated Financial Statements for further discussion.
Previous wording
Patent costs increased to $9.4 million for the year ended December 31, 2023, as compared to $8.3 million for the year ended December 31, 2022. The results in the current year reflected higher internal prosecution related costs.
Current wording
Patent costs decreased to $8.7 million for the year ended December 31, 2024, as compared to $9.4 million for the year ended December 31, 2023. The results in the current year reflected lower internal prosecution related costs.
Previous wording
Interest income, net was $28.2 million for the year ended December 31, 2023, as compared to $7.8 million for the year ended December 31, 2022. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the year ended December 31, 2023 compared to the prior year as well as higher available-for-sale investment balances. Other loss, net primarily consisted of impairment of minority investments, net exchange gains and losses on foreign currency transactions and rental income. We recorded other loss, net of $184,000 for the year ended December 31, 2023 as compared to $6.7 million for the year ended December 31, 2022.
Current wording
Interest income, net was $40.7 million for the year ended December 31, 2024, as compared to $28.2 million for the year ended December 31, 2023. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the year ended December 31, 2024 compared to the prior year as well as higher available-for-sale investment balances. Other loss, net primarily consisted of net exchange gains and losses on foreign currency transactions and rental income. We recorded other loss, net of $7.4 million for the year ended December 31, 2024 as compared to $184,000 for the year ended December 31, 2023. The increase in other loss, net during the year ended December 31, 2024 was due to a $7.2 million foreign exchange loss that was caused by the fluctuation in the Korean Won to the U.S. Dollar exchange rate and resulting remeasurement of a Korean Won-denominated withholding tax receivable.
Previous wording
We are subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was an expense of 17.2% and 21.7% for the years ended December 31, 2023 and 2022, respectively, and we recorded income tax expense of $42.2 million and $58.2 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 both the United States and foreign jurisdictions. The effective income tax rate was 18.4% and 17.2% for the years ended December 31, 2024 and 2023, respectively, and we recorded income tax expense of $50.0 million and $42.2 million, respectively, for those periods.
Previous wording
Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of December 31, 2023, we had 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. This compares to cash and cash equivalents of $93.4 million, short-term investments of $484.3 million, and long-term corporate bond and U.S. Government bond investments of $247.9 million for a total of $825.6 million as of December 31, 2022.
Current wording
Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of December 31, 2024, we had cash and cash equivalents of $99.0 million, short-term investments of $393.7 million, and long-term U.S. Government bond investments of $435.5 million for a total of $928.2 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 year ended December 31, 2022 was $126.8 million resulting from $210.1 million of net income and an increase of $51.0 million due to non-cash items including stock-based compensation, depreciation, amortization of intangibles and deferred income taxes, partially offset by a $134.3 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to a decrease in deferred revenue of $93.2 million, an increase in inventory of $49.1 million and a decrease in other liabilities of $11.4 million, partially offset by a decrease in accounts receivable of $15.0 million, an increase in accounts payable and accrued expenses of $3.3 million and a decrease in other assets of $1.1 million.
Current wording
Cash provided by operating activities for the year ended December 31, 2024 was $253.7 million resulting from $222.1 million of net income and an increase of $56.9 million due to non-cash items including stock-based compensation, depreciation, and amortization of intangibles, partially offset by a $25.3 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to an increase in other assets of $26.2 million, a decrease in deferred revenue of $26.1 million, an increase in inventory of $7.2 million and a decrease in other liabilities of $2.4 million, partially offset by a decrease in accounts receivable of $26.2 million and an increase in accounts payable and accrued expenses of $10.4 million.
Previous wording
Cash used in investing activities was $83.3 million for the year ended December 31, 2023, as compared to $280.7 million for the year ended December 31, 2022. The decrease was due to the timing of maturities and purchases of investments resulting in net sales and maturities of $43.1 million for the year ended December 31, 2023, as compared to net purchases $233.5 million for the year ended December 31, 2022, partially offset by an increase in purchases of intangibles and property, plant and equipment of $79.1 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022. The increase in property, plant and equipment and intangibles during the year ended December 31, 2023 was primarily due to the Merck KGaA patent acquisition and the purchases of the Shannon facility and the South Korea application center.
Current wording
Cash used in investing activities was $164.4 million for the year ended December 31, 2024, as compared to $83.3 million for the year ended December 31, 2023. The increase was due to the timing of maturities and purchases of investments resulting in net purchases of $121.8 million for the year ended December 31, 2024, as compared to net sales and maturities of $43.1 million for the year ended December 31, 2023, partially offset by a decrease in purchases of intangibles and property and equipment of $83.7 million. The increase in property and equipment and intangibles during the year ended December 31, 2023 was primarily due to the Merck KGaA patent acquisition and the purchases of the Shannon facility and the South Korea application center.
Previous wording
Cash used in financing activities was $72.9 million for the year ended December 31, 2023, as compared to $64.6 million for the year ended December 31, 2022. The increase was due to an increase in the cash payment of dividends in the current year of $9.7 million, partially offset by a decrease in the payment of withholding taxes related to stock-based compensation to employees of $1.0 million and an increase in the proceeds from issuance of common stock of $442,000.
Current wording
Cash used in financing activities was $82.3 million for the year ended December 31, 2024, as compared to $72.9 million for the year ended December 31, 2023. The increase was due to an increase in the cash payment of dividends in the current year of $9.4 million and an increase in the payment of withholding taxes related to stock-based compensation to employees of $180,000, partially offset by an increase in the proceeds from issuance of common stock of $208,000.
Previous wording
Working capital was $798.3 million as of December 31, 2023, as compared to $763.8 million as of December 31, 2022. The increase was primarily due to increases in accounts receivable and other current assets and a decrease in other current liabilities, partially offset by a decrease in short-term investments.
Current wording
Working capital was $774.4 million as of December 31, 2024, as compared to $798.3 million as of December 31, 2023. The decrease was primarily due to decreases in short-term investments and accounts receivable and an increase in accounts payable.
Previous wording
Several significant contractual obligations are anticipated to be incurred in future periods and include payments for retirement benefit plan obligations, lease obligations and PPG inventory commitments. Payments towards the retirement plan obligations commenced during fiscal year 2023 and are expected to total $75.6 million over the remaining life of the plan. Existing lease obligations are $4.3 million for fiscal years 2024 and 2025, $4.4 million for fiscal year 2026 and $16.4 million thereafter. Existing PPG inventory commitments are $29.8 million and will fluctuate based on PPG production needs to fulfill to our demand for commercial emitter material.
Current wording
Several significant contractual obligations are anticipated to be incurred in future periods and include payments for retirement benefit plan obligations, lease obligations and PPG inventory commitments. Payments towards the retirement plan obligations commenced during fiscal year 2023 and are expected to total $79.6 million over the remaining life of the plan. Existing lease obligations are $4.3 million for fiscal year 2025, $4.4 million for fiscal year 2026, $4.3 million for fiscal year 2027 and $12.1 million thereafter. Existing PPG inventory commitments are $46.5 million and will fluctuate based on PPG production needs to fulfill our demand for commercial emitter material.