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Universal Display (OLED) Q1 Earnings & Revenues Top Estimates

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·4 min read
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Universal Display's OLED first-quarter 2021 earnings improved 35% year over year to $1.08 per share and topped the Zacks Consensus Estimate by 61.19%.

The increase can be attributed to growth in revenue base. Revenues increased 19.3% year over year to $134 million and beat the Zacks Consensus Estimate by 17.09%.

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 (59.6% of total revenues) climbed 19.9% from the year-ago quarter’s figure to $79.8 million. Green emitters sales (including yellow-green emitters) were $60.5 million, up 15% year over year. Red emitter sales were $19.1 million, up 37.4% year over year.

Royalty and license fees (37.9% of total revenues) surged 18.1% year over year to $50.9 million driven by higher customer sales of royalty-bearing OLED licensed products.

Adesis revenues amounted to $3.3 million during the reported quarter compared with $2.6 million in the year-ago quarter.

Contract research services revenues (2.5% of total revenues) were $3.3 million, up 26% year over year.

Operating Details

Gross margin in the quarter under review came in at 82.6%, which expanded 260 basis points (bps) from the year-ago quarter’s figure. Material gross margin expanded 400 bps on a year-over-year basis to 74%.

Operating expenses of $48.8 million climbed 4% year over year. As a percentage of revenues, operating expenses contracted 520 bps on a year-over-year basis to 35.2%.

The company reported operating income of $63.6 million, up 42.8% on a year-over-year basis. Moreover, operating margin expanded 780 bps on a year-over-year basis to 74%. This can be attributed to gross margin expansion and lower operating expenses.

Balance Sheet & Cash Flow

As of Mar 31, 2021, Universal Display had cash and cash equivalents (including short-term investments) of $727 million compared with of $730 million as of Dec 31, 2020.

During the reported quarter, cash flow from operations was $29.5 million compared with $5.7 million in first-quarter 2020.

On May 6, 2021, the company announced quarterly cash dividend of 20 cents per share, to be paid out on Jun 30, 2021 to all shareholders of record on Jun 15, 2021.

Guidance

Universal Display maintained 2021 outlook. The company continues to project 2021 revenues in the range of $530 million to $560 million. The Zacks Consensus Estimate is currently pegged at $551.14 million.

Moreover, the company continues to expect 2021 material gross margins in the 65-70% range. Operating margins are 2021 are anticipated in the 40-45% range.

Research & development (R&D) expenses are projected to be up nearly 25% and Selling, general and administrative (SG&A) expenses are anticipated to be up nearly 15% for 2021. Overall, operating expenses (SG&A, R&D and patent costs) are expected to increase in the range of 20-25% on a year-over-year basis.

Markedly, Universal Display’s products are widely used by OEMs in the consumer electronics markets like Apple, Samsung, Lenovo and LG. In 2020, the company also announced its collaboration with China Star Optoelectronics and set up OVJP Corporation to further commercialization of OLED TV manufacturing technology.

Zacks Rank & Stocks to Consider

Currently, Universal Display carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector worth consideration are Agilent Technologies A, Pure Storage PSTG and NVIDIA NVDA. All the stocks carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Agilent scheduled to report quarterly results on May 25, while NVIDIA and Pure Storage are slated to announce results on May 26.

Long-term earnings growth rate of Pure Storage, NVIDIA and Agilent, is pegged at 52.21%, 15.05% and 9%, respectively.

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