• Third-Quarter Revenue: $162 million.
• Operating Profit: $67 million.
• Net Income: $67 million.
• Earnings Per Diluted Share: $1.40.
• Revenue Through Q3: $485 million, up 16% year-over-year.
• Net Income Through First Nine Months: $176 million, up 25% year-over-year.
• Material Sales: $83 million in Q3.
• Green Emitter Sales: $62.6 million in Q3.
• Red Emitter Sales: $20.1 million in Q3.
• Royalty and License Fees: $75 million in Q3.
• Adesis Revenue: $3.6 million in Q3.
• Gross Margin: 78% in Q3.
• Operating Expenses: $59 million in Q3.
• Operating Margin: 41% in Q3.
• Income Tax Rate: 18% in Q3.
• Cash, Cash Equivalents, and Investments: Approximately $930 million.
• 2024 Revenue Guidance: $625 million to $645 million.
• Quarterly Dividend: $0.40 per share, payable on December 31, 2024.

• Warning! GuruFocus has detected 4 Warning Sign with OLED.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Universal Display Corp (NASDAQ:OLED) reported third-quarter revenue of $162 million, with operating profit and net income reaching $67 million.
• The company is on track for record revenue and earnings in 2024, with year-to-date revenue up 16% from the previous year.
• Significant investments in new OLED facilities are being made, with a total of approximately $20 billion in new Gen 8.6 OLED facilities.
• The OLED market is expanding with new applications in AR/VR devices, smartwatches, smartphones, IT, automotive, and TVs.
• Universal Display Corp (NASDAQ:OLED) is making excellent progress on developing a commercial phosphorescent blue emissions system, which is expected to bring significant benefits to the industry.

Negative Points

• The company revised its 2024 revenue forecast range to $625 million to $645 million due to lower-than-expected fourth-quarter sales.
• Customers lowered their forecasts for Q4, impacting the growth rate, which is expected to be more modest than previously projected.
• Material sales in the third quarter decreased compared to the same period last year, with green emitter sales dropping from $68.9 million to $62.6 million.
• The company faces challenges with customer order cuts and inventory adjustments, affecting near-term visibility and growth.
• Material gross margins were lighter compared to previous quarters, influenced by customer and product mix.

Q & A Highlights

Q: Can you give us more context for the order cuts? Is it from a single customer, multiple customers? And what are the exposures or reasons for their cuts? A: (Brian Millard, CFO) The order cuts were across the board, not from any single customer. Factors include different sales expectations for certain models, macroeconomic concerns in certain geographies, and customers reevaluating inventory levels as year-end approaches.

Q: Can you share more details about the material gross margin in the quarter? It feels a little light compared to previous quarters. A: (Brian Millard, CFO) The primary drivers are customer mix and product mix. We believe total gross margin is a more useful measure of profitability, which remains within our expected range of 76% to 77% for the year.

Q: With customer slowdowns, how far out is your visibility for early 2025 and seasonality into the March quarter? A: (Steven Abramson, CEO) We don't believe the current adjustment to guidance indicates a persistent trend. We're still planning for 2025 and will share more in the February call. We see this as a temporary adjustment.

Q: Regarding the development of blue phosphorescent material, what are your expectations for its commercialization and adoption? A: (Steven Abramson, CEO) We are working closely with customers to commercialize phosphorescent blue. Once commercial specs are met, it will initiate a cycle of design and mass production. Adoption rates are hard to predict at this stage.

Q: An article mentioned LG Display developed a panel using blue phosphorescent material. What does this mean for Universal Display? A: (Brian Millard, CFO) The article indicates progress in our blue development projects with LG Display and others. While we can't comment on rumors, any use of our material is positive, and it shows customers are exploring various applications.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.