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Universal Display (OLED) Q4 Earnings Beat, Top Line Falls Y/Y
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Universal Display Corporation (OLED - Free Report) reported mixed fourth-quarter 2023 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. The company reported a top-line contraction year over year due to declining trends in several verticals. Constrained consumer spending in the smartphone and premium TV markets impacted net sales. However, the growing demand for OLED displays in a wide range of use cases, such as automotive, AR, VR wearables, gaming, foldable smartphones and signage, is a positive factor. The rising sales volume of emitter material is a tailwind.
Net Income
Net income in the fourth quarter was $62 million or $1.29 per share compared with $65.1 million or $1.36 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents. The decline is primarily attributed to increasing operating expenses and lower net sales.
In 2023, the company reported a net income of $203 million or $4.24 per share compared with $210.1 million or $4.40 per share in 2022.
Universal Display Corporation Price, Consensus and EPS Surprise
The company generated $158.3 million in revenues, down from $169 million in the year-ago quarter. Declining revenues from Material sales and lower Royalty and license fees impeded top-line growth. The top line fell short of the consensus estimate by $3 million.
In 2023, the company registered revenues of $576.4 million, down from $616.6 million in 2022.
Material sales contributed $82.2 million to revenues compared to $88.3 million in the prior year quarter. The top line missed our estimate of $90.2 million. Green emitter sales decreased to $63 million from $67 million in the year-ago quarter, while Sales of red emitter declined to $18 million from $22 million in the year-ago quarter. Despite the higher sales volume of emitter material, a decrease in the cumulative catch-up adjustments impacted the revenue from this vertical.
Revenues from Royalty and license fees were $72.9 million, down from $75.6 million in the prior-year quarter, mainly due to changes in customer mix. The top line beat our estimate of $60.7 million.
Revenues from Contract research services were $3.2 million compared with $5.1 million in the prior-year quarter. The segment’s revenues lagged our estimate of $6.4 million.
Other Details
Quarterly gross profit declined to $122.3 million from $138.9 million in the prior-year quarter, with respective margins of 77% and 82%. Higher cost of material sales induced by an increase in the volume of material sales and greater contract manufacturing support costs impacted the gross margin.
Operating income stood at $64.7 million and the margin was 41% compared with the year-ago quarter’s figures of $83.1 million and 49%, respectively.
Cash Flow & Liquidity
In 2023, Universal Display generated $154.8 million in cash from operating activities compared with $126.8 million in the year-ago period. As of Dec 31, 2023, the company had $92 million in cash and cash equivalents and $52.2 million in retirement plan benefit liability compared with respective figures of $93.4 million and $59.8 million in 2022.
Outlook
For 2024, management expects revenue in the range of $625-675 million. The company expects gross margin to be 76-77%. Operating expenses are projected to increase by 10-15% year over year. Operating margin is estimated in the range of 35-40%.
The company is making steady progress in the development of a commercial phosphorescent blue emissive system. It is planning to launch the phosphorescent blue in 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).
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), delivered a trailing four-quarter average earnings surprise of 20.18%. In the last reported quarter, it delivered an earnings surprise of 13.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 170.50%. In the last reported quarter, it delivered an earnings surprise of 16.53%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 13.28%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
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Universal Display (OLED) Q4 Earnings Beat, Top Line Falls Y/Y
Universal Display Corporation (OLED - Free Report) reported mixed fourth-quarter 2023 results, with the bottom line beating the Zacks Consensus Estimate but the top line missing the same. The company reported a top-line contraction year over year due to declining trends in several verticals. Constrained consumer spending in the smartphone and premium TV markets impacted net sales. However, the growing demand for OLED displays in a wide range of use cases, such as automotive, AR, VR wearables, gaming, foldable smartphones and signage, is a positive factor. The rising sales volume of emitter material is a tailwind.
Net Income
Net income in the fourth quarter was $62 million or $1.29 per share compared with $65.1 million or $1.36 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 11 cents. The decline is primarily attributed to increasing operating expenses and lower net sales.
In 2023, the company reported a net income of $203 million or $4.24 per share compared with $210.1 million or $4.40 per share in 2022.
Universal Display Corporation Price, Consensus and EPS Surprise
Universal Display Corporation price-consensus-eps-surprise-chart | Universal Display Corporation Quote
Revenues
The company generated $158.3 million in revenues, down from $169 million in the year-ago quarter. Declining revenues from Material sales and lower Royalty and license fees impeded top-line growth. The top line fell short of the consensus estimate by $3 million.
In 2023, the company registered revenues of $576.4 million, down from $616.6 million in 2022.
Material sales contributed $82.2 million to revenues compared to $88.3 million in the prior year quarter. The top line missed our estimate of $90.2 million. Green emitter sales decreased to $63 million from $67 million in the year-ago quarter, while Sales of red emitter declined to $18 million from $22 million in the year-ago quarter. Despite the higher sales volume of emitter material, a decrease in the cumulative catch-up adjustments impacted the revenue from this vertical.
Revenues from Royalty and license fees were $72.9 million, down from $75.6 million in the prior-year quarter, mainly due to changes in customer mix. The top line beat our estimate of $60.7 million.
Revenues from Contract research services were $3.2 million compared with $5.1 million in the prior-year quarter. The segment’s revenues lagged our estimate of $6.4 million.
Other Details
Quarterly gross profit declined to $122.3 million from $138.9 million in the prior-year quarter, with respective margins of 77% and 82%. Higher cost of material sales induced by an increase in the volume of material sales and greater contract manufacturing support costs impacted the gross margin.
Operating income stood at $64.7 million and the margin was 41% compared with the year-ago quarter’s figures of $83.1 million and 49%, respectively.
Cash Flow & Liquidity
In 2023, Universal Display generated $154.8 million in cash from operating activities compared with $126.8 million in the year-ago period. As of Dec 31, 2023, the company had $92 million in cash and cash equivalents and $52.2 million in retirement plan benefit liability compared with respective figures of $93.4 million and $59.8 million in 2022.
Outlook
For 2024, management expects revenue in the range of $625-675 million. The company expects gross margin to be 76-77%. Operating expenses are projected to increase by 10-15% year over year. Operating margin is estimated in the range of 35-40%.
The company is making steady progress in the development of a commercial phosphorescent blue emissive system. It is planning to launch the phosphorescent blue in 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).
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), delivered a trailing four-quarter average earnings surprise of 20.18%. In the last reported quarter, it delivered an earnings surprise of 13.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 170.50%. In the last reported quarter, it delivered an earnings surprise of 16.53%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 13.28%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.