Universal Display Corporation (OLED -1.34%) announced stellar first-quarter 2017 results and increased its guidance Thursday after the market closed, shining a light on its broad-based strength and the continued proliferation of devices using its flagship phosphorescent OLED technology.
With shares of Universal Display up 12% in after-hours trading as of this writing, let's have a closer look at how it kicked off the new year.
IMAGE SOURCE: UNIVERSAL DISPLAY.
Universal Display's results: The raw numbers
| Metric |
Q1 2017 |
Q1 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$55.6 million |
$29.7 million |
87.2% |
|
Net income |
$10.4 million |
$1.9 million |
447.4% |
|
Earnings per share |
$0.22 |
$0.04 |
450% |
Data source: Universal Display Corporation.
What happened with Universal Display this quarter?
- This quarter did not include payments under under Universal Display's long-term patent and material-supply agreement with Samsung Display (SDC). As a reminder, last quarter, management confirmed that Samsung's total license fee this year will be $90 million -- up from $75 million in 2016 -- to be received in two equal payments in the second and fourth quarters.
- As I noted last week, some industry watchers speculate that Samsung Display may opt to convert to a more lucrative running royalty arrangement when the current deal expires at the end of this year. That deal could be similar to the one Universal Display signed in early 2015 with LG Display, which runs through 2022.
- Material sales grew 92% year over year, to $46.6 million, driven by higher emitter sales.
- Royalty and license fee revenue increased 32%, to $7.0 million.
- Contract research services revenue was $1.9 million, generated by Universal Display's acquisition of contract research organization Adesis last summer.
- It ended the year with $325 million in cash, cash equivalents, and short-term investments.
- It maintained a quarterly cash dividend -- which was initiated last quarter -- at $0.03 per share.
What management had to say
According to Universal Display CFO Sidney Rosenblatt:
We are pleased to report excellent first quarter results across the board, including record emitter sales. It is an exciting time for the OLED industry. We are encouraged by the momentum that we are seeing from our customers as well as from the supply chain that supports the OLED ecosystem. With customers' mounting investments in new manufacturing capacity and the development of an array of new display and lighting products, we expect our growth trajectory to be positive for the foreseeable future.
Looking forward
Rosenblatt also elaborated that the OLED industry is "poised to grow faster than earlier expectations this year." As such -- and with the usual disclaimer that "many factors can have a material impact" on the OLED industry's growth in these early stages -- Universal Display now expects 2017 revenue in the range of at least $260 million to $280 million (up from guidance for $230 million to $250 million previously), good for year-over-year growth of 30% to 40% over 2016.
Between Universal Display's relative outperformance in the first quarter and its realization that the OLED industry is growing even faster than the rates that already propelled the stock to all-time highs, it's hard to ask much more of the company as a long-term investor. As long as Universal Display continues to play a central role in enabling this burgeoning market, it's no surprise to see the market bidding up Universal Display shares again today.
