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Universal Display (OLED) Q1 Earnings Beat Estimates, Up Y/Y

Zacks Equity Research
·3 mins read

Universal Display Corporation OLED reported first-quarter 2020 adjusted earnings of 80 cents per share (per ASC Topic 606 basis), which improved 40% year over year and  beat the Zacks Consensus Estimate by 17.7%.

Revenues surged 27.9% year over year to $112.3 million and also outpaced the Zacks Consensus Estimate by 9%. Revenues include full recognition of safety stock worth $24 million purchased in the fourth quarter by a China-based customer due to trade-related concerns as well as some estimated advanced customer material purchases due to COVID-19 related uncertainties.

Notably, shares have declined 7.3% in the past year compared with the industry’s fall of 16%.

Universal Display Corporation Price, Consensus and EPS Surprise

 

Universal Display Corporation Price, Consensus and EPS Surprise
Universal Display Corporation Price, Consensus and EPS Surprise

Universal Display Corporation price-consensus-eps-surprise-chart | Universal Display Corporation Quote

 

Segment Details

Material sales (59.3% of total revenues) rallied 22.2% from the year-ago quarter’s figure to $66.6 million. Green emitters sales (including yellow-green emitters) were $52.6 million, up 26.4% year over year. Red emitter sales were $13.9 million, up 8.6% year over year.

Royalty and license fees (38.4% of total revenues) increased 42.2% year over year to $43.1 million. Adesis revenues came in at $2.6 million during the reported quarter compared with $3 million reported in the year-ago quarter.

Contract research services revenues (2.3% of total revenues) came in at $2.6 million, down 12.5% year over year.

Operating Details

Gross margin in the quarter under review came in at 80%, which contracted 200 basis points (bps) from the year-ago quarter’s figure. Material gross margin contracted 600 bps year over year to 70%.

Operating expenses of $45.3 million were up 20.5% year over year. As a percentage of revenues, operating expenses contracted 240 bps on a year-over-year basis to 40.4%.

Consequently, operating margin expanded 400 bps year over year to 39.6%.

Balance Sheet

As of Mar 31, 2020, Universal Display had cash and cash equivalents (including short-term investments) of $639.8 million compared with of $646 million as of Dec 31, 2019.

Cash flow from operating activities was $5.7 million compared with $193.9 million in the prior quarter.

The company recently approved a quarterly cash dividend of 15 cents per share, to be paid out on Jun 30, to its shareholders of record on June 15.

Guidance

The company has withdrawn its guidance for 2020 due to COVID-19 related uncertainties prevailing in the market.

Zacks Rank & Stocks to Consider

Currently, Universal Display carries a Zacks Rank #2 (Buy).

Cogent Communications Holdings, Inc. CCOI, NeoPhotonics Corporation NPTN and InterDigital, Inc. IDCC are some better-ranked stocks worth considering in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for NeoPhotonics and InterDigital is pegged at 15% each, while the same for Cogent is at 11.46%.

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