Universal Display Corp (OLED) Reports Mixed Results for Q4 and Full Year 2023
Q4 Total Revenue: Decreased to $158.3 million from $169.0 million in Q4 2022.
Full Year Revenue: Dropped to $576.4 million in 2023 from $616.6 million in 2022.
Net Income: Q4 net income fell to $62.0 million, with full year net income at $203.0 million.
Gross Margin: Q4 gross margin decreased to 77% from 82% in the same quarter last year.
2024 Guidance: Revenue projected to be between $625 million and $675 million.
Dividend: Announced a Q1 cash dividend of $0.40 per share.
On February 22, 2024, Universal Display Corp (NASDAQ:OLED) released its 8-K filing, announcing its financial results for the fourth quarter and the full year ended December 31, 2023. The company, a leader in the development and commercialization of organic light-emitting diode (NASDAQ:OLED) technologies for displays and lighting, reported a decrease in total revenue and net income for both the quarter and the year, despite identifying multiple paths for growth in the future.
Financial Performance and Challenges
Universal Display Corp's total revenue for Q4 2023 was $158.3 million, a decrease from $169.0 million in the same quarter of the previous year. The decline was attributed to a decrease in material sales and royalty and license fees. Material sales dropped to $82.2 million from $88.3 million, while royalty and license fees decreased to $72.9 million from $75.6 million. The company's cost of material sales increased to $33.4 million in Q4 2023, up from $26.6 million in Q4 2022, primarily due to higher volume of material sales and increased contract manufacturing support costs.
For the full year 2023, Universal Display reported a total revenue of $576.4 million, down from $616.6 million in 2022. The decrease in annual revenue was also due to lower material sales and royalty and license fees. The cost of material sales for the year rose to $123.1 million from $115.6 million, reflecting costs associated with the company's manufacturing facility in Shannon, Ireland, increased inventory reserves, and changes in product mix.
Financial Achievements and Importance
Despite the revenue decline, Universal Display maintained a strong gross margin of 77% for both Q4 and the full year, although this was a decrease from 82% and 79%, respectively, in the prior year. Operating income for Q4 was $64.7 million, down from $83.1 million in Q4 2022, and for the full year, it was $217.2 million compared to $267.1 million in 2022. The company's effective income tax rate improved, dropping to 18.0% in Q4 2023 from 19.2% in Q4 2022, and to 17.2% for the full year from 21.7% in 2022.
Net income for Q4 2023 was $62.0 million, or $1.29 per diluted share, a decrease from $65.1 million, or $1.36 per diluted share, in the same quarter of the previous year. For the full year, net income was $203.0 million, or $4.24 per diluted share, compared to $210.1 million, or $4.40 per diluted share, in 2022.
In 2023, we achieved key milestones, strengthened our capabilities and infrastructure, and positioned the Company for growth in the years ahead, said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. Looking to 2024 and beyond, we see multiple paths for growth in the coming years."
Looking Ahead
Universal Display Corp provided guidance for 2024, expecting revenue to be in the range of $625 million to $675 million. The company also announced a first quarter cash dividend of $0.40 per share, payable on March 29, 2024, to shareholders of record as of March 15, 2024.
The company's performance in 2023 reflects the dynamic nature of the OLED industry and the challenges associated with customer mix changes and market demand. However, the company's strong gross margin and the strategic positioning for future growth in various applications of OLED technology, such as IT adoption cycles, OLED TV growth, automotive displays, and foldable OLED mobile applications, suggest potential for recovery and expansion in the coming years.
For more detailed information about Universal Display Corp's financial results, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Universal Display Corp for further details.
This article first appeared on GuruFocus.
