Universal Display Puts Together Another Great Quarter, but Don't Get Too Excited Just Yet
In a world increasingly racked with cross-border disagreements and trade scuffles, here is one piece of good news: Universal Display (NASDAQ: OLED) is selling more product to Chinese firms. However, the OLED display patent holder and materials seller did admit strong sales to the world's most populous country were in large part due to some of its customers making purchases sooner than later over worry that U.S.-China trade issues would escalate.
The bad news is that they were right. It was a big win for Universal Display in the quarter, given that the overall market for next-gen display tech continues to grow, but don't expect the same knockout performance next go-around -- at least not from China -- as trade disputes ratchet up the heat.
Adjusted revenues (which allow for accounting changes made at the start of this year) grew 63% to $119.8 million in the second quarter, leading to an adjusted earnings-per-share gain of 76%. While licensing revenues more than doubled as display manufacturers continue to invest in OLED capabilities, the sale of materials used to make such displays is where it's at for Universal. Material sales made up $78.3 million of the grand total, and gross profit margin on those sales was at 71.9%.
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