Universal Display in a Dark Spot: Fool by Numbers

On Aug. 9, Motley Fool Rule Breaker and next-generation display technology expert Universal Display (Nasdaq: PANL) released second-quarter earnings for the period ending June 30.

• Sales and profits can be lumpy for a company as small as Universal Display, and the timing of just a couple of orders changes the picture completely on this close-up, quarterly scale.
• The company is still burning cash, and it resorted to raising $37 million from investors by selling more stock this quarter. Hello, Mr. Dilution!
• Out of the three companies that have the highest hopes for OLED display and lighting technology, Universal Display receives a high four-star honor from our Motley Fool CAPS community. Competitor Cree (Nasdaq: CREE) also has four, and Cambridge Display (Nasdaq: OLED) carries a middling three-star rating.

(Figures in thousands, except per-share data)

Income Statement Highlights

	Q2 2007	Q2 2006	Change
Sales	$2,315	$3,009	(23.1%)
Net Profit	($5,175)	($4,313)	(20.0%)
EPS	($0.16)	($0.14)	(14.3%)
Diluted Shares	33,143.3	30,982.0	7.0%

Get back to basics with the income statement.

Margin Checkup

	Q2 2007	Q2 2006	Change*
Gross Margin	91.3%	92.1%	(0.8)
Operating Margin	(259.1%)	(161.3%)	(97.8)
Net Margin	(223.5%)	(143.3%)	(80.2)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q2 2007	Q2 2006	Change
Cash + ST Invest.	$84,243	$46,274	82.1%
Accounts Rec.	$1,838	$2,534	(27.5%)
Inventory	$2	$98	(97.7%)

Liabilities	Q2 2007	Q2 2006	Change
Accounts Payable	$1,801	$1,146	57.1%
Long-Term Debt	$0	$0	N/A

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q2 2007	Q2 2006	Change
Cash From Ops.	($3,580)	($2,300)	(55.6%)
Capital Expenditures	$144	$1,140	(87.3%)
Free Cash Flow	($3,724)	($3,440)	(8.2%)
Owner Earnings	($4,442)	($4,579)	3.0%

Free cash flow is a Fool's best friend.

Related Foolishness:

• Foolish Forecast: Universal Displays Its Numbers
• The OLED Revolution Approaches
• The Revelation That's Shocked the Investment World
• Category 5 Stocks

Universal Display is a Motley Fool Rule Breakers recommendation. See the other stars of tomorrow singled out by David Gardner and his crack analyst team with a free 30-day trial.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund was a Universal Display shareholder, but had no other position in any company mentioned. Fool rules are here.