OLED - Earnings call transcript Q1 2018 | Universal Display Corporation

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Operator

Good day ladies and gentlemen and welcome to Universal Display's First Quarter 2018 Earnings Conference Call. My name is Rob and I will be your conference moderator for today's call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Darice Liu, Director of Investor Relations. Please proceed.

Darice Liu

afternoon, good and you everyone. Thank Display's Welcome earnings call. quarter to Universal conference first

Officer. today on Abramson, Sid Executive Chief me the are Officer; Rosenblatt, Financial and President Joining call Vice and Executive Steve Chief President and

and to by making call reports on in in those filed of Company's is discussed Display prohibited. projected. that time-sensitive Securities the Before regarding Steve periodic of risks Corporation's the Display's future. contains conference Company's XXXX, begins, securities. portion not OLED the limited being or technologies applications results made technologies, of consent growth are this Universal me those investments statements. X, is of obligation the uncertainties These remind forward-looking of Company's update statements retransmission market SEC the of and any actual important Universal information Further, those this as results, Display. redistribution, the regarding Universal subject but differ risks is of such these of statements of note any and to accurate as to are of that these a May live call hopes as form Universal market. and webcast period within expressed Private and today's should that any the Any intentions in without as anyone It uncertainties from and expectations, to only live are This disclaims of expected of the you Display's the Universal referenced Universal are rebroadcast These any the that will could date or meaning property opportunities for Company's website. historical Universal that Litigation well not to considering in available the be this statements with that let statements Act Display All this of call include potential call strictly any Reform call the are to Display time beliefs, webcast Display's relating call, in is written XXXX. cause is be a

call like Steve would to to over Abramson. turn I the Now,

Steve Abramson

welcome today's would to X, January remind on call. the and revenue effective to adopted Darice ASCXXX that accounting Thanks, we everyone I standard like Start, everyone new recognition for XXXX.

quarter and is quarter These million $XX.X first $X share. million; $X.X primarily profit this and per or were were XXXX revenue to we operating financial believe was three due first million income net $X.XX expectations our factors. results Our below was

smartphone the customers, in is the materials First, market, turn, last we through plans, the quarter which our the which short-term impacting premium to expect production business. in second slowdown believe is market, smartphone our we impairing

declined magnitude OLED faster demand panels quarter we the material than to sales greater a During expected. for and

of was of ASCXXX second first $XX.X ASCXXX. have per million $X.XX income, The our in $XX.X factor materials in in year. the pre-purchasing believe the We thirdly XXXX. quarter second previously we fourth in inventory revenues pickup of of last million net accounting million new quarter profit half as orders quarter, or and the occurred mentioned standard operating share. that Without And revenue been the of the the the would impact we $XX.X in spent results

into and revenue will first-half range go guidance further However, XXXX shortly. detail $XXX due are our Sid the between to weakness million. in revising million to we $XXX

we expect And OLED From pickup year, week growth last remain consistent soft next beyond year, due we expected and which panel earnings are the things quarter to environment this expect the on is market out of here the year. with Samsung our conditions comments call. what remain panel to LG's year. we materials and demand in looking view significant the smartphone do their robust. we expect market in when resume. fuel where for So believe QX half second to OLED and the in the standpoint, the is fundamentals to OLED sales pickup the represents weak from to will respective Long-term bottom what go The second

advances year. Mostly to product attributes rollable. inherently are and We are Ops, all on ongoing to expend recently launch to OLED competitiveness, are current With Information of handset half to reviewing has investment activity, the investing the is EverDisplay additional OLED OLED OLED focused and to earning year expansion and up. the by gain Also research week's mobile but OLED to customer growth to year, form to in of improving in and OLED TV yields plans Samsung market LGD leaders OLED multiyear costs global IT share in display manufacturers, premium next TV wins, market China broader players to XXXX. working the the product foldable a million interest reducing OLED LG and later support supply are a expected OLED to next OLED encouraged panel OLED supply. OLED market like a also respect R&D new number plans OLED add XG the gaining [Indiscernible] significant OLED TV its are activity. continues momentum. products are by heating most amount expanding Note seeing of its Technology own expected launch OEMs when makers of foldable units. from to demand OLED increase we OLED garner the Expo. TV in is conformable, volume to adoption manufacturers growing including seeing activity that China yields a is is panels, our a Apple costs area approximately also is for launch plans third reported last new gaining continuing of resumed their makers the OLED Display last expected a month driving cycle Samsung applications outpacing OLED recently the and is planning Also, accelerating. foldable Vision foldable reported capacity building, are month's with like foldable this in the in plans year. to TVs launch during second quarter, year-over-year X.X digestion automotive, scale current In which and was foldable a has at to In capacity OLEDs OEM top new of increasing with manufacturers recently capacity OLED flagship China. two smartphones to increase the in in is BOE, Samsung With OEMs differentiating to of are OLED's on call the with and of OLED we recent are and launch panel the in prototypes their and display designs Tianma [ph] is premium second mobile new being list plans. foldable reportedly shipments customer this panel and This on number XX% TVs quarter, to start major and broadening exceeds display XX%. Adding by the all an market which to expected display building CapEx by new with is its in displayed improving LG Samsung. the wave R&D continued it OEMs OLED base showcasing are while panel OLED productions, flagship to ramp framework expect market high last foldable we're products some landscape also further we X.X proliferation medium in smartphone expand competitiveness OLED reiterating are third this of in X new to the TV launch reaffirmed Display LG and large phone OLEDs market factors. small TV additional the with half share momentum Huawei TV demand share the

begin to XX primarily These to opportunities months capacity for OLED for builds XX revenue us to build. China year. materialize additional mobile takes capacity expected new to next New and TVs are approximately in into

OLED differentiated OLED demands line the from which share to Most to the means and grow Looking less that taillights: reported as noted natural in LGD pilot addition out the LG increasing. high has or staggering TV of OLED for revenue BOE this flexible BOEs OLED is some summer General of is billion on schedule that third expect XX% for saturated square edge OLED unbreakable in is TV Display's OLED activity Guangzhou and first the China’s end progressing capacity. Chengdu. means models per technologies new the to products, reinforcing create Samsung $X OLED plates Construction in mobile by from TV TV GenX cost XX,XXX designed to starting plans means and second panels that the OLED gamut colors, Display announced its increasing significant GenX environment of in this flexible base million GenX.X eye GenX us. evident fab OLED own its and converting the strong and by next on half additional to design temperature and today anticipate it capacity display in conformable extreme month also actively in region compared which by recent is growing reporting OLED by OLED been LCD this that on competencies Go year-end. line GenX new displays, panels we as time, Vision applications coldness is in to CapEx GenX industry second in considering measured of responding According $X.X technology display's Volkswagen we has of is fab ramping approximately its installed in build to the which production with will cost the for LCDs announced conference OLED capacity color to in earlier production ramp resume, some made autos stance from its located recently with the to as but some will XXXX. capacity contrast, plant. production of aggressive is for Xth, display plans to demand the has on XXXX. expanding and XXXX, of that only cutting growth LG billion design currently $X begin And production technologies display to production was means flexible plastic. the competitiveness Motors. to In highlighted Japan, benefit plans EverDisplay's by reportedly Samsung Sharp's of to and in second proven China fatigue, plants fab Mercedes-Benz Toyota, commence for contributor and to branded second reported build market plant of year and sampling an XXXX, is due response ramp including pilot meters of Mianyang to XXXX. new growing is market in [OLED] use And approximately addition Sharp construct OLED call XXXX, smartphones automotive automotive market reported slated experience are and that TV UBI was plant is outside also to it's It and consistent cannot to with wins to it increase in OLED capacity. commence [indiscernible] low expected previously Ops increasing half end of the capacity in base Research, a fab BOE [Indiscernible] you In that OLED line XXXX. of initial its LG's ahead that is its track by its with new in consumer products, expected expected LCDs. OLED March XXXX. reiterated displays you commercial offering OLED in design the white to year possibly OLED its its is

OLED next-generation efficacy the [Brace] its has which lifetime. panel higher On lighting recently the front OLEDWorks introduced and lighting

technologies, excellent Only growth and What thickness superb delivers in a bold addition, rendering and to with innovative powering microns achievable [indiscernible] work, platform. emissive Bendolet, grams architectural material Bendolet and for long-term our lighting and new scientists with yellow including red, and developing our flexible R&D its Bendolet color weight demanding that our is quality paving in to continually ever our of continued systems is and meet customer's uniquely transportation. OLED green, is to excellent are needs team also ever featherweight next-generation path and In work our we from OLEDWorks, engineers for OLED. development first lighting blue, performance headway commercial elegance we evolving for conformable emissive exceptional launched OLEDWorks With and light marries our functionality in blue respect phosphorescent designs believe displays lighting. ongoing are According [ph]. making lighting discovering the to

continue make we to with for organic printing Additionally, vapor novel advancements our technology maskless. jet

Solventless dry turn area printing of Sid. OLED the direct note to that me call On large over panels. let

Sid Rosenblatt

from Accounting the quarter Steve and I discuss everyone today. for joining first to is revenues in quarter million $XX quarter quarter XXXX we million XXX. without smartphone million three for and is our by million you been in by guidance. for all weaker new first the the fourth I of which our $XX.X thing were XXX, $XX the XXXX want accounting of will old XXXX, Standards you, impact and pre-purchases revenues the therefore material over material The $XX.X inventory impacted OLED forward our $XXX.X XXX, factors. GAAP ASC One million. in an which demand results QX quarter from of would quarter under XXX, ASC impacted market, OLED premium results standard be again going and ASC XXXX's call Thank caused under and thank $XX.X panel in year-over-year data million, first-quarter The weaker discussed down the note and review which ASC first results our will QX's were historical that purchasing, then primarily quarter's the February. our XX.X estimated slowdown to Revenues have

reason royalty is and are With disconnected are disconnect shipments our significantly shipments. licensing under the major when are revenue This to material correlated our XXX, from The XXX be expected adoption of including is all to billings. revenues ASC material magnified down. streams

shipments As the a a is magnified material the Likewise, be on significant decline magnified will material in board. shipments result, in upside. across the increase

of material compared and XXXX. were sales yellow-green quarter $XX the quarter in of in $XX.X XXXX, in million million. $XX.X the to first in million sales total Our of emitter fourth Green first first $XX.X million were XXXX This emitters material which the $XX.X quarter the million the of emitter XXXX sales our quarter million quarter include quarter $X Red $XX.X the first XXXX $XX.X XXXX sales in fourth in in XXXX. to quarter the compares in the were of of fourth compares and million, $XX.X quarter first the and first XXXX. quarter million to this million in of

discussed material past vary the quarter-to-quarter. buying in patterns we As can

product production moving contributing of are rates, of this patterns cycles, variables loading they us. production customers, product factors capacity schedules, a demand for Since can Some gains. include customer also for material and our consumer the to efficiency ordering are factors moving mix, ramps these number variables

Today ASC we due fixed corresponding fees proportion as only respective specific quarters, license you that recognize billed. or want and licensing of regardless QX it remind years QX billed In QX. in certain how to revenues, when received license will we much revenues shipments. ASC a we when our just such royalty and occur Before under the on XXX billings XXX is quarterly of is royalty I discuss prior material licensing, impacts OLED to in basis and

quarter gross material to of in XXXX compares of which the First XXXX in were This of $XX sales year-over-year's the the quarter in Adesis $X.X quarter a cost margin million, and the the quarter gross a XXXX sales first $XX.X material does fourth Cost relates first XX.X%. to compared fourth of XXXX million material quarter $XX.X million. only million of and XX.X% quarter royalty $XX.X $X.X fourth translating XXXX. million and of Cost in material the includes of compares OLED not $X sales were of comparable include and this XXXX license of which first fees Adesis margins of to quarter from sales and of into to were cost XXXX. million quarter

XX% XXXX to XX% We the expect overall to for in be margins gross material our range.

quarter's operating but quarter quarter's $XX.X quarter down million, cost of for comparable from was of quarter's ASCXXX quarter's expenses first comparable $X.X year-over-year the $XX.X sales $XX.X from million $XX.X million. and slightly been down XXXX, First million $XX.X $XX.X last would up the the year-over-year the last of impact income operating operating income down Without our million, from have million. million, from was excluding

XXXX of million ASU would XX% effective expense. XXXX for million for tax XXXX-XX, rate quarter rate first tax Net have Without $X.X a income was X.X% the $X or last $X.XX of diluted $X.XX for our million quarter a first of $XXX,XXX. the the million comparable $X.X or share. the per income of quarter's For was benefit share effective and impact our our net of or benefit would the been per per income diluted million or $X.XX $XX.X down or ASCXXX have $XX.X $X.XX share. quarter the first from down diluted share, quarter of from sequentially Without diluted been million quarter per year-over-year's $XX.X

Now looking to of XXXX on to forecast million. expect based the be XXXX range to million we in $XXX revenues $XXX current our

continued in revenues. of a increase reflects Our second but sequential revenue the in XXXX, quarter guidance softness

we to XXXX well being be ASCXXX. financial as of pick we year, panel our expect impact as as can impacted XX% as direction half either up. Without would revenues, we we momentum results, OLED earlier, the approximately XXXX by demand in ASCXXX, in higher. the our industry's believe the shift inventory have past XX% a revenues second we would is The pre-purchasing to the note, noted that in

expenses XX% vary primarily are quarter, SG&A, and to last Operating of our increase gross of range XX% in the margins, R&D. overall margins in to margins material be to quarterly gross which consistent to material is few we years. patent quarter can R&D expect expected with driven the the XX% XX% XXXX while range in to along Moving to aggregate by costs year-over-year the gross

expect a We rate points. few give the XX% take approximately be tax basis or to effective

For to resume. XXXX we significant growth industry anticipate

base installed and of of OLED in XXXX capacity the expect increase XX% capacity meter We over to the majority XXXX. ramping square approximately by

stockholders $X.XX ranks close expected will that which Steve. on of revenue timing of cash we us. reflects the capacity XX, year June positive new June installs translates additional dividend to into XX, to this the of quarterly Directors capacity approved opportunities of generation for XXXX call fluid and to With back are the of the believe general as on lastly, return XXXX commitment shareholders. a the flow Board dividend, And While the be business will paid capital our record turn that, I our continue to to during

Steve Abramson

Sid. long-term long-term market We right believe the long-term for leadership are we and Thanks path growth, profitability. on

consumer and the XX.X the last only shipments XX% more a to and IHS research little market. XXXX by product This of than forecast OLED solutions million focus will Over experience promising OLEDs positioned have of to our customers well display innovation on area from energy the expanding their layer for deliver than by technologies, efficient, believe XXXX. we square electronics calling to to beginning million quadruple the OLED believe and of issued at firm are decade is more just Market technology's panel penetrated portfolio OLED cost-effective recently continue potential. and square meters in new materials meters partners. and execution With unwavering most our emissive high-performance the extensive that be we we X and

I with continued also for and operator, our and to shareholders would commitment to partners markets. these As their markets, innovation. display is opportunities is additional OLED thank top let's to customers, bottom-line and like Q&A. that our to in universal poised exceptional And like into capacity those work start recognize We growth. continues to that ongoing lighting believe and being display valued your for employees would excellence and I leverage vast serve built support. the proliferation

Operator

from Bank. first is question line with today Ho the [Operator of Instructions] The Sidney Deutsche

Sidney Ho

improved you weakness or in million first half full-year second think the half first would from smartphone from second as is the other your XX for half premium words, understand half say guidance ago the it but entirely has a were the reduction what feasibility same your quarter than you different. of market, guidance I comes

Steve Abramson

as is faster [Technical stated we Difficulties]. half, the just that first was Most it of in than climb the it’s expected.

happens that revise to -- magnified the led us addition is XXX In that and when it. which

up obviously ago. is absolutely guidance pickup completely the when a the it where half months the in we gave two in first does but However, down we second and pick significant, from see half, guidance was to not

Sidney Ho

same Okay for say amounts of what through well. then terms XXXX you course thought as second the before you as the roughly dollar in half it's and would of

Steve Abramson

is the we but what a little the half to is of is bit It but second just before, second that into to carry in going than second anticipated, first lower the think we we thought half it half what close this through the lower. some from is

Sidney Ho

XXX, often amount -- ASCXXX period that to and for, of Okay question change in much at or from second to assumptions? guidance. ASC when full the receive is going you that emitter you’re used do that those ASP the guess the How general, I is at great, back have you under entire you in change that look how look contract amount whether of my to and is you changes again assumptions year coming sales

Steve Abramson

lower sales it because literally everything of are is since your the probably second is every sales when it, Well half won't look are you -- are at quarter royalties the we at they part the do licensees something to material there in but look change significant realistically tied when first part lower is change, every unless but than quarter. answer you first, you believe them first that the But together. are impacted and material lower

So, as and down. lower license royalties material lower sales when are of see having fees material effect sales, the also your multiple you

Operator

Muse question the of CJ with next from Our line coming Evercore. is

CJ Muse

was a knew not so and it imagine reduction the outlook million in maturity I say so the imagine there XX, channel purely ASCXXX reduction would guess first about you existing I read your in understand the and is that's question just there I’m premium $X.XX sounds driving one like material, out I pulling plus about XXX minus and a this business high, per of on your your a running would in or handsets third that and so you’re royalties million in kind I can units, about year, excess $XX little two it we it which included we thirds this love so, to the in to mess think for if handset, trying sounds that. that bit hear thoughts assuming

Steve Abramson

is down decline forecast material based leads coming the and XXX but this material upon we by royalties impacts to impacted guidance down the material come the down. that customer's and together the are down, selling are expectations our, material expected. their orders and goes sales Our royalty for directly It license clearly estimates and our addition smartphone really the you're license because not demand impacts when faster to lower demand they also and not And lower than estimates. us down then down in purchases impacts -- coming which because tied and ordering year of that the your brings fee go as much for

CJ Muse

kind will maybe you XX% share Can guess something properly I revenue the ballpark? as how you fitting be of ramps going half about to think first just align XX% us second versus my ahead. to half in And with follow-up

Steve Abramson

have QX it where we soft close in but soft, we being gave when first back still is our would but is bottom that to it still to QX recover, quarter start it going the for hard QX, and we the been believe it see we what us do and guidance. that It's thought quarterly to original then to give expect see we guidance, we

Operator

the from with next Hosseini is SIG. Our question of Mehdi line

Mehdi Hosseini

to by smartphone two that a XX% 'XX revenue we supply 'XX the your follow-up. and and application how I changes and context your have to back from growth mix different between as these 'XX 'XX is looking does how move and mix Going TV to application in

Sid Rosenblatt

glass the of manufacturers thing will that 'XX in number Steve to there you Guangzhou. number Chinese square that from only is lot so, 'XX a of as to TV a believe as Well and end the as the XX% of meters is that see really regards LG's end in that’s the new BOE smartphones, talked of installed that of what and be related the would fab we about, is

Mehdi Hosseini

Okay TV same. so the the remain mix could

differently. look at let I million the million. want December color ask of Now sales to the in this to appreciate pulled XX same XXXX forma your for and that year guide and for to me XX into question pro I got If providing were last add material

revenue to for growth, are got we forma and was XX% sale December pro again this is material Your showing the trying normalize quarter. into also the that pulled

and still where was revenue XX% in growth demand effectively are kicks smartphone supply thoughts of accelerate for on asking supply want 'XX, So you the it doing smartphone demand, an your actually the environment but mentioned, investors it weak growth 'XX, to premier been get nature as growth could for I'm I in the there your hasn't much growth on the and of revenue company? understand to and guide important better not growth is a

Sid Rosenblatt

up so that think we works, from math correct of The so because 'XX bit increase it's that, possibly flattish will the question up are XX%. your your up. our That’s math really and when revenue in revenue a for we a in 'XX significant do drive new base or installed to you capacity see year the a going because little you great we our think going

increase it were to our you indication is saw -- XX% be 'XX but 'XX you somewhat think because going went and it are that to of revenues flat to that's our in And a 'XX. our from do 'XX a So, great we to see up then was in of there revenue growth that honest the from base. 'XX installed

like looks So, it a that. lot

Operator

Jim with line Company. Our next of Needham coming question the from Ricchiuti is and

Jim Ricchiuti

why, past in segment phone had especially miss you a going it's smartphone February market, in this have quarterly the when numbers. gave premium implied forecast understand in giving guidance mobile and I’m the guess and it which, of is changes you business the fairly can back guys difficult have and for to said business half you’re is of us this a get late You made the a now gives guidance we on in downturn market of terms you year for but reality so but ramp how significant second clearly the to I going light may to just a forecast, wondering in confidence challenging in forecast the that just the the what the basis, about

Sid Rosenblatt

look do range this very difficult difficulty and when do agree confident, right as that we are you on our ever we've each for what we with our forecast listen our and the our pretty with internal will XXX conference do be. of everything call. as we says, listen work to this. We now is to customers. had are can our We our see are we today revenues for of upon we is that says it We with XXXX customer much each we what is it. know us to historically get market based at from XXX we confident, forecasts the you And of that where We of believe we and customers forecast to

Jim Ricchiuti

through think help should expected is go we ramp about any business, how just OpEx. going you we the Sid to us forward changes expense, Okay, might can us the any year as major that ramp operating there on in give how the with

Sid Rosenblatt

grow to will be change, year-over-year is expect however not OpEx towards it XX% OpEx weighted highly it more probably to to R&D. XX% and is Our we going

type that and of amortization, but excludes So is cost G&A. R&D it

Operator

Our next Gabelli Susanto from of with question Hendi & Company. the line is

Hendi Susanto

ASCXXX and third shipment, yield, able by first two on material spend you unit QX. assume in second share across or Now do door like we methodology how your among year out should distinguish you players that is to your and you on how it one, that say do have let's license we assumption numbers, how QX and year various

Steve Abramson

material business, will royalties there, our business material to through license that lot drives There of our is try are our business. works XXX are based it. fees business a way our The walk and that tied to so so really question I our upon

this amount you to can then grams data the then you fixed a the how And scenario and going do dollar use we adjustments the every many how multiply little material then the royalty you other so kilogram you and and your we to know along, data you internal whenever or you record when estimate do over we look and take the where and go the expect fixed different as your fixed have receive you of then the case all to what the we in you the that it in kilogram as fee material to have estimated because of how you per when a of times gram. in agreement, quarter up. and per estimate actually sell ship when and at ship, kilogram. or external on is, fee to make your it or come then number material sales then you fees the any fixed you trues life that from and customers So, don't you them the royalties and you kilograms use the to just end life the estimate much you on up gram then you of that did each royalty have over much fee we’re you actually with have per and agreement given That’s a royalties side, you than under -- license

Hendi Susanto

or on clarify year if correct? is per that dollar it's there assumption based I gram. no no then all distinction or And may yield There's whether one year is so like two it's -- about

Steve Abramson

points best Yes. think estimates since revenues and correlate of that shipment material roughly or look done the our sales, smooths material we license and revenue is royalty revenue. revenues actually be you've that to a royalty it sales the few material really pie material should licensing way be is for so take the points XX% our to honest modeled, XX few give model that and we us a will roughly be but us are in a at to that's XX% assume shortcut And our and our good modeling or give percentage remaining is take way the to

Hendi Susanto

took question, customers then material inventory And to compare XX than Can be fully roughly pre-purchases that so XX an when what in make less look material of pre-purchases million a at estimate I I million the your be let's comparison will will inventory if major then consumed to and that say to that second QX. make it quarter?

Steve Abramson

It's all hard the not in for up used based inventory QX. seen was us I to customer's but upon inventory we've today that that our estimate do that inventory believe ordering the the

Operator

from & with the is Our Cowen Stone Rob of next line Company. question

Rob Stone

related a sheet had of couple questions. I balance

on you could revenue? in deferred color revenue increased quarter-on-quarter short-term one, So, provide the deferred anymore significant

Steve Abramson

billings is recognize revenue we customers short-term based and that become the to should Yes, in that the our future. is upon what will

that up in revenue licensees more, it actually you report, goes the royalties more period you than you other that if you or So, [refill] more way you when than actually receive deferred than means receive. customer goes report

quarter could another that statement also it from flow our in that approximately significantly -- and flow it XX was up that's went So like was our cash you went this cash million. up see up by

Rob Stone

example disconnect to and actually So under on customers that's revenue terms going in an of billings. ASCXXX the your of between

You be had case that? example seeing a this that of would good mentioned that the we're

Steve Abramson

$XX the been why XXX-revenue I million our exactly is that's would have That number higher. and think case

Rob Stone

the also relation source. In to short full of make that pretty start should about But materials to quarter, the takes inventory your caught significant you lease, because let balance how think down would in various produce the be buildup know it to second trending while the your customers the inventory? you sequential can't inventory you I expect a and we a

Steve Abramson

we in building that leverage inventory efficiency and costs our lines material so our at keep sure levels, line. that run make the to can try we optimal We scale

production that of we to build for second the will it During finished do the we year that demand maintain sell this revenues first levels to in our we future half use expect inventory. start will to inventory up some go goods as optimal but expect I

Rob Stone

mentioned me some in one but last of to of signs expected QX I expectations quarter the to more, question you QX. see even quarter, last improvement. in you can to squeeze if have original so a to improve happen some from in for started second you I lot far but can Okay also the relative know be week weak

Steve Abramson

better that than It's QX. bottom still the believe is bit soft represents QX and we QX a

Operator

of the with Lee Instructions] from Sachs. Our your proceed Please next question. [Operator question with Brian line is Goldman

Brian Lee

one, I quarter and technical you XX% quantifying had impact for year one then sort what of impact disclosure quarter no last straight impact. modeling XX% and so QX XX% and negligible you’re more and forward appreciate to just said year the impact have to the two [impact the then Sid, XXX to and you but big a this to pretty quantification you changed first is going you one now one assessed] the guidance, maybe before months impact

Sid Rosenblatt

one material we first guidance XXX different. we lower a is to you the XXX because sales quarter of about is is With material and impact The lower sales reduced XX%, the ago decline to was have than time, between higher discrepancy is XXX between between XX% was significantly The the essentially to significant. two actually difference larger guidance was life why caused the did report our last we it the revenues sales, closure and when and that’s the XX% royalties. said the don’t the in it, under our parity was believe magnifying not the we you and getting under XXX difference and are which your XXX, months when XXX are why impact that higher XX%

Brian Lee

modeling the enough your in and using]. fair revenues, Samsung million [fixed-licensing related the on XX two to then all was quarter, up kind questions Okay that deferred

Sid Rosenblatt

have that during revenue the multiple our We quarter. customers increased deferred

Brian Lee

under XXX XX% it you presumably done from again, and year the said, low would to high the and have under a for are XXX for when year and $XX would high would it XXX, the first year both materials million XXX half would have moving be the versus then what's under through second versus going to lot revenue the under the you under presumably one QX last you're and Okay why again under both. XXX up in have half as on QX guide higher been quarter Delta, saying quarter your revenue then to XXX implies XXX then XXX me, XXX, the and been the XX% reconciliation, up be under presumably

Steve Abramson

I'm not sure be result. that will the

the highest So, quarter. it inventory result this if would don’t the level I the end sales terms have but it QX in material have be the that of been then been the at pre-purchases as would was and year would clearly same it would effect mean I last be think

Brian Lee

up then the take be the apply math right math XX next backing rest the for the under subtract that three let quarters of a would just did XX and that XXX the case? at under be XX would you that's end you you QX take the can imply would what and to would the the expect high the full-year XX but what guide to year. for that's this of offline as it hypothetical XXX I'm [Indiscernible] I and you out over So of hypothetical then

Steve Abramson

been you higher XX in to you XXX would if have if times think million there, you it the the have would multiply XXX and quarter XXX get purchase range. the If this the to added XX X in and you been the you get

believe into of don’t account you I inventories bought take think this this customers quarter. the I from all have in would if they

think pre-purchases the I than that much were probably larger anticipated. we

Operator

the Shannon from Cross comes Cross Research. with question line next of Our

Shannon Cross

so ramping it be start out up, big their which to don’t they etcetera What there end for how I'm towards but work, you've figure it and but is people doing terms trying of seen talk to it. I all you sort out ramps you I long from year new of to the trying coming your group going started think about getting this production, sure when are thinking there been yields so what of point in customers right I'm sales is now have I'm of a and had sort yields perhaps material can remember little one do to this figure that Samsung at bit not you about excess how a exactly quarter of as you weakness because as of the is bit just

idea. if perspective can historical give a you us from if maybe So some

Steve Abramson

learning raw and being early the the curves to in materials Historically how and learn the customer how they go to -- of ramp use sold we customers efficiently. do the see through materials more use parts

our moving in So, forward. we models include that

Shannon Cross

that of at XXXX probably correct most but would based be the upon Okay timing? just

Steve Abramson

will XXXX. in It start

Shannon Cross

on said curious. same [Indiscernible] And blue, that there has commentary any you about improvement, just then just been change the because

Steve Abramson

are we announce have Well good we to continuing on a progress yet but to nothing book. commercial make

Operator

line Hendi Company. Susanto the of Gabelli Our next comes & question with from

Hendi Susanto

would half, board While OLED are industry the taking share first capacity consider and a the pause in demand purchase?

Steve Abramson

of We and capital board and beginning the pretty we the each this we what options we use look we every it, our at at will is, year think at we so our much appropriate of but raised how dividend understand are at look we meeting we capital at evaluate to allocate quarter. going that we look

time. it up every something is that So, comes

Operator

remarks. This concludes Rosenblatt like and and ladies for additional Sid to would program I question our turn gentleman. or closing session to back answer the any

Sid Rosenblatt

and support a your hope Thank We interest today. you. time night. appreciate will for all you Thank good have your you and

Operator

This concludes today's conference call.

You may disconnect. now

Universal Display (OLED) 3 May 182018 Q1 Earnings call transcript