Universal Display Easily Beats Expectations, Raises Guidance (Again)

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Universal Display Corporation (NASDAQ: OLED) announced strong second-quarter 2017 results on Thursday after the market closed, highlighting the company's best-ever quarter in terms of revenue and earnings thanks to the continued proliferation of its flagship technology.

Let's take a closer look at how the organic light-emitting diode (OLED) specialist capped the first half, as well as what investors can expect going forward.

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Universal Display's results: The raw numbers

Metric

Q2 2017

Q2 2016

Year-Over-Year Growth

Revenue

$102.5 million

$64.4 million

59.2%

Net income

$47.2 million

$21.8 million

116.5%

Earnings per share

$0.99

$0.46

115.2%

What happened with Universal Display this quarter?

  • For perspective -- and though we don't usually pay close attention to Wall Street's demands -- consensus estimates predicted significantly lower earnings of $0.72 per share on revenue of $87 million.
  • Material sales increased 110% year over year to $46.8 million, driven by higher phosphorescent-emitter sales.
  • Royalty and license-fee revenue climbed 28% to $53.7 million, including a $45 million payment from Samsung Display per the two companies' long-term patent license and material supply agreement. Samsung will pay Universal Display a total of $90 million under that agreement (up from $75 million in 2016) this year, with the second payment due in the fourth quarter.
  • Revenue from contract research services was just over $2 million, driven by Universal Display's acquisition of contract research organization Adesis in mid-2016.
  • The company acquired a 47,500 square-foot research facility in New Castle, Delaware, with the aim of helping Adesis scale up its operations. Adesis was already leasing roughly 25,100 square feet of the building.
  • Universal Display ended the quarter with $365.6 million in cash, cash equivalents, and short-term investments.
  • The company maintained its quarterly cash dividend at $0.03 per share.

What management had to say

Universal Display CFO Sidney Rosenblatt stated:

Looking forward

As such, Universal Display now expects full-year 2017 revenue in the range of $285 million to $300 million, an increase from last quarter's boosted guidance that called for a range of "at least" $260 million to $280 million. As per usual, this outlook came with the caveat that "the OLED industry is still at an early state where many variables can have a material impact on its growth."

There was nothing not to like about this stellar performance from Universal Display. Though shares are down slightly on the news as of this writing -- and keeping in mind that Universal Display stock is still up nearly 110% year to date -- I think investors should be more than happy with where it stands.

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Steve Symington owns shares of Universal Display. The Motley Fool owns shares of and recommends Universal Display. The Motley Fool has a disclosure policy.