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Universal Display (OLED) Q2 Earnings Lag Despite Higher Revenues
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Universal Display Corporation (OLED - Free Report) reported relatively modest second-quarter 2024 results, with both the top and bottom lines falling short of the Zacks Consensus Estimate. However, the company reported a top-line expansion year over year, backed by solid demand for emitter materials. The company is witnessing strong OLED proliferation from leading manufacturers. The introduction of new OLED PC products and healthy traction in the IT landscape acted as a tailwind. Management is undertaking several measures to improve its operational and strategic infrastructure to bolster its leadership position in the industry.
Net Income
Net income in the second quarter was $52.3 million or $1.10 per share compared with $49.7 million or $1.04 per share in the year-ago quarter. The improvement was primarily attributed to net sales growth year over year. However, the bottom line fell short of the Zacks Consensus Estimate of $1.14.
Universal Display Corporation Price, Consensus and EPS Surprise
The company generated $158.5 million in revenues, up from $146.6 million in the year-ago quarter. Growing revenues from Material sales boosted the top line. The top line missed the consensus estimate by $2 million.
Material sales contributed $95.4 million to revenues compared to $77.1 million in the prior year quarter. Growing OLED proliferation in IT products has supported the growth. The top line beat our estimate of $90.6 million. During the quarter, Major manufacturers launch OLED tablets including Apple iPad Pro Series and Microsoft Surface Pro. Moreover, the introduction of new OLED PC products, such as Samsung’s Galaxy Book 4 Edge Laptop and Dell’s first Tandem laptop, supported the top line.
Green emitter sales increased to $71.6 million from $57.9 million in the year-ago quarter, while sales of red emitter rose to $22.5 million from $16.7 million in the year-ago quarter.
Revenues from Royalty and license fees were $59.55 million, down from $64.4 million in the year-ago quarter. The top line missed our estimate of $63.2 million.
Revenues from Contract research services were $3.5 million compared with $5.1 million in the prior-year quarter. The segment’s revenues surpassed our estimate of $2.4 million.
Other Details
Quarterly gross profit increased to $120.2 million from $114.42 million in the prior-year quarter, with respective margins of 76% and 78%. Higher cost of material sales and changes in customer and product mix affected the gross margin.
Operating income stood at $56.4 million, and the margin was 35.6% compared with the year-ago quarter’s figures of $58.6 million and 40%, respectively.
Cash Flow & Liquidity
In the first six months of 2024, Universal Display generated $139.2 million in cash from operating activities compared with $57.4 million in the year-ago period. As of Jun 30, 2024, the company had $92.9 million in cash and cash equivalents and $53.9 million in retirement plan benefit liability.
Guidance Up
Backed by solid momentum in multiple end markets, management has raised the lower end of its revenue guidance for 2024. The company currently expects revenue in the range of $645-675 million, up from $635-675 million estimated earlier. The emerging market of AI PCs, foldable smartphones, and automotive boasts a strong growth potential for the company.
The company is making steady progress in the development of a commercial phosphorescent blue emissive system. However, it has postponed its launch schedule as the development process of the system will extend beyond 2024. Management believes that expanding its phosphorescent portfolio that includes red, green and blue phosphorescent emissive materials will open up ample opportunities across a broad range of OLED applications.
Zacks Rank & Stocks to Consider
Universal Display currently carries a Zacks Rank #3 (Hold).
TDS is a diversified telecom service provider offering wireless and wireline services in the United States. It is witnessing strong revenue growth in the TDS Telecom segment, backed by significant fiber broadband investment made in the past couple of years. The company is actively increasing the portion of fiber networks across its service address mix to deliver high-speed Internet without any signal disruption.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 (Buy) at present.
It delivered a trailing four-quarter average earnings surprise of 8.06% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 7.64%.
Corning Incorporated (GLW - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter earnings surprise of 2.17% in the last reported quarter.
Corning’s focus on innovation is driving demand across its segments and giving it pricing power. It is benefiting from solid traction in its premium smartphone cover materials and semiconductor-related products, and price hikes are contributing to growth in the display business.
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Universal Display (OLED) Q2 Earnings Lag Despite Higher Revenues
Universal Display Corporation (OLED - Free Report) reported relatively modest second-quarter 2024 results, with both the top and bottom lines falling short of the Zacks Consensus Estimate. However, the company reported a top-line expansion year over year, backed by solid demand for emitter materials. The company is witnessing strong OLED proliferation from leading manufacturers. The introduction of new OLED PC products and healthy traction in the IT landscape acted as a tailwind. Management is undertaking several measures to improve its operational and strategic infrastructure to bolster its leadership position in the industry.
Net Income
Net income in the second quarter was $52.3 million or $1.10 per share compared with $49.7 million or $1.04 per share in the year-ago quarter. The improvement was primarily attributed to net sales growth year over year. However, the bottom line fell short of the Zacks Consensus Estimate of $1.14.
Universal Display Corporation Price, Consensus and EPS Surprise
Universal Display Corporation price-consensus-eps-surprise-chart | Universal Display Corporation Quote
Revenues
The company generated $158.5 million in revenues, up from $146.6 million in the year-ago quarter. Growing revenues from Material sales boosted the top line. The top line missed the consensus estimate by $2 million.
Material sales contributed $95.4 million to revenues compared to $77.1 million in the prior year quarter. Growing OLED proliferation in IT products has supported the growth. The top line beat our estimate of $90.6 million. During the quarter, Major manufacturers launch OLED tablets including Apple iPad Pro Series and Microsoft Surface Pro. Moreover, the introduction of new OLED PC products, such as Samsung’s Galaxy Book 4 Edge Laptop and Dell’s first Tandem laptop, supported the top line.
Green emitter sales increased to $71.6 million from $57.9 million in the year-ago quarter, while sales of red emitter rose to $22.5 million from $16.7 million in the year-ago quarter.
Revenues from Royalty and license fees were $59.55 million, down from $64.4 million in the year-ago quarter. The top line missed our estimate of $63.2 million.
Revenues from Contract research services were $3.5 million compared with $5.1 million in the prior-year quarter. The segment’s revenues surpassed our estimate of $2.4 million.
Other Details
Quarterly gross profit increased to $120.2 million from $114.42 million in the prior-year quarter, with respective margins of 76% and 78%. Higher cost of material sales and changes in customer and product mix affected the gross margin.
Operating income stood at $56.4 million, and the margin was 35.6% compared with the year-ago quarter’s figures of $58.6 million and 40%, respectively.
Cash Flow & Liquidity
In the first six months of 2024, Universal Display generated $139.2 million in cash from operating activities compared with $57.4 million in the year-ago period. As of Jun 30, 2024, the company had $92.9 million in cash and cash equivalents and $53.9 million in retirement plan benefit liability.
Guidance Up
Backed by solid momentum in multiple end markets, management has raised the lower end of its revenue guidance for 2024. The company currently expects revenue in the range of $645-675 million, up from $635-675 million estimated earlier. The emerging market of AI PCs, foldable smartphones, and automotive boasts a strong growth potential for the company.
The company is making steady progress in the development of a commercial phosphorescent blue emissive system. However, it has postponed its launch schedule as the development process of the system will extend beyond 2024. Management believes that expanding its phosphorescent portfolio that includes red, green and blue phosphorescent emissive materials will open up ample opportunities across a broad range of OLED applications.
Zacks Rank & Stocks to Consider
Universal Display currently carries a Zacks Rank #3 (Hold).
Telephone and Data Systems, Inc. (TDS - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. In the last reported quarter, it delivered an earnings surprise of 145.45%. You can see the complete list of today’s Zacks #1 Rank stocks here.
TDS is a diversified telecom service provider offering wireless and wireline services in the United States. It is witnessing strong revenue growth in the TDS Telecom segment, backed by significant fiber broadband investment made in the past couple of years. The company is actively increasing the portion of fiber networks across its service address mix to deliver high-speed Internet without any signal disruption.
Motorola Solutions Inc. (MSI - Free Report) provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure services. Motorola carries a Zacks Rank #2 (Buy) at present.
It delivered a trailing four-quarter average earnings surprise of 8.06% and has a long-term growth expectation of 9.47%. In the last reported quarter, Motorola delivered an earnings surprise of 7.64%.
Corning Incorporated (GLW - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter earnings surprise of 2.17% in the last reported quarter.
Corning’s focus on innovation is driving demand across its segments and giving it pricing power. It is benefiting from solid traction in its premium smartphone cover materials and semiconductor-related products, and price hikes are contributing to growth in the display business.