Universal Display - Levers
Universal Display (OLED) reported 2Q results of $171.8m in sales, ahead of consensus of $162m, with EPS of $1.40 against consensus of $1.18. Sales were up 3.3% q/q and up 8.4% y/y, while net income was up 4.4% q/q and up 21.9% y/y, with operating margins of 39.9%. The company now expects operating margins to come in toward the high end of guidance (35% to 40%) as opex are declining. Material sales grew 2.9% q/q but declined 7.1% y/y while royalty & license revenue also increased by 2.9% q/q and increased by 27.1% y/y. The company raised the low end of its guidance range from $640m to $650m and left the high end at $700m.
From a more granular perspective, UDC management indicated that they had seen some tariff-related pull-ins from Chinese customers in April, although they believe that most were intra-quarter, leaving 3Q mostly intact. In that regard, China represented 44% of sales in 2Q, the highest thus far, with the exception of a slightly higher share in 1Q 2021 when Chinese OLED producers were building material inventory as they began to move to OLED mass production. We expect the pull-ins might have had a 1% or 2% increment to China’s share in the quarter, but on a general basis China will likely grow material share more rapidly than Korea over the next few years.
From a more granular perspective, UDC management indicated that they had seen some tariff-related pull-ins from Chinese customers in April, although they believe that most were intra-quarter, leaving 3Q mostly intact. In that regard, China represented 44% of sales in 2Q, the highest thus far, with the exception of a slightly higher share in 1Q 2021 when Chinese OLED producers were building material inventory as they began to move to OLED mass production. We expect the pull-ins might have had a 1% or 2% increment to China’s share in the quarter, but on a general basis China will likely grow material share more rapidly than Korea over the next few years.
Figure 1 - Universal Display Red & Green Material Sales - 2013 - 2025 YTD - Source: SCMR LLC, Company Data
Figure 2 - Universal Display - Regional Sales by Country - Source: SCMR LLC, Company Data
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