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:

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.