OLED - Earnings call transcript Q3 2019 | Universal Display Corporation

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Operator

Good day, ladies and gentlemen. Welcome to Universal Display's Third Quarter 2019 Earnings Conference Call. My name is Sherry, and I will be your conference moderator for today's call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Instructions]. [Operator

this recorded reminder, replay is conference a for being purposes. As

the now Relations. to like would call Please to Investor I of turn over Director Darice proceed. Liu,

Darice Liu

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

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

portion in redistribution, Before property of the form Steve call retransmission rebroadcast expressed of today's or is written begins, call let strictly Universal that me of of the without Display any Display. any prohibited. remind Any this you consent Universal is

Further, of this time made on webcast date webcast live the is contains call, and of available website. Display's will that This call of XX, the call be is this XXXX. being Universal time-sensitive of period as for October only a information live accurate

reports results statements During on and a of this significant of company's based risks disclaims subject risks current making should concerning and referenced in the expectations. actual be the differ make we statements. update SEC the anyone uncertainties filed to may statements are investments to any and securities. obligation uncertainties with Universal by number may any in company’s call, and are materially. These forward-looking Display these any These discussed our periodic

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

Steve Abramson

Thanks Darice. And call. everyone on welcome to today's

quarter results. solid of report We are another to pleased

as $XX.X diluted $XX or income million, XXXX was revenues XXX of $X.XX would diluted per standard, XXXX been quarter net per the $XX.X million $XX.X profit quarter third the revenues income of have was Our and operating $XX accounting operating our were same under prior XXX ASC or million essentially million, share. million, income and ASC Under share. $X.XX net million $XX.X third

a During OLED gain continued the on scale. strength activity global to quarter,

As XXXX we raising are revenue a our guidance. result,

be in revenues the is shortly. to million. the $XXX will $XXX details million. $XXX $XXX million revenue XXX, Our ASC XXXX XXX new ASC of under are range to Under XXXX in of Sid guidance further expected to million provide range

to the investment future of of makers billion OLED focus momentum. an announced increase $XX hybrid panel seeing TVs. more Samsung of to QD-OLED continue investment their month, As in shift Earlier displays, are corresponding this a we OLEDs as

of part panels. commence Gen XXXX X.X of this CapEx of slated is As capacity with operation XX,XXX to line plan, initial Samsung production monthly a an in

the many is and response Samsung its month as praise portability. high Moreover slim display OLED while rapid with seamlessly light earlier a low supporting rate. consumption showcased high with trend garnering design, content On at multimedia with mobile range relatively degree this most the allow to OLED vivid mobile as other XG capacity, displays dynamic the HDR power IMID OLED of the resolution a highest displays users enjoy exhibition worldwide side, advantages of products. high such and

At plant this inch inch, initial to of XXXX will size, expanded X.X the OLED XX and it and ceremony grand XX manufacture per be attend mainly panels. of end large of XX Gen will LG second sheets facility impressive TV monthly XX,XXX opening August, I was the the fab. including This high visited The products, inch Guangzhou, TV capacity month. China resolution sheets OLED by Display, to XX,XXX

fab share market quarter OEM gains. translating has includes into brand, second Hisense, Chengdu in also just a in its announced one negligible In ceremony, research, share the in has XXXX mid According over its Conca. Sony, bandwagon, OLED BOE LG to OLED known year year announced which newest market facility in that BOE’s market opened panels the as million been conjunction XX as BOE’s Display customer. opening market a well market well the investment in Changhong share and OLED XXXX. is at with BXX already Vizio OLED by Philips, expects second In increased IHS range produce LG it capacity as be Mianyang. XXXX, Display XX% leading Vizio, TV of recently the BX Electronics, of joining quarter currently to will the global LG Skyworth, TV in to ramping XXXX. in from the

fab two OLED at BXX produce other new which be Additionally, Gen fab XX,XXX midst last to there’s was announced Xiamen. Fuzhou It's fabs Gen recently in is plans XXXX announced billion and by per in construction the month. in year. Tianma works. of will the sheets OLED fab $X.X This and at the is in which X Chongqing a X BXX expected for end flexible of completed plant early

communication a using announced new Visionox China. of number exterior OLED energized wide OLED greater In enabling the light in into XXth lighting, Audi technology Symposium OLED and designs in module individually technology, lighting. variety that lighting billion presented for investing involves sources digital Guangzhou, is on month’s much last And Automotive factory a it its at of customizable providing Lighting, approximately International segments $X.X a

in. electronics Audi flat highlights maintain proliferation that CapEx that segments. cycle and OLED OLED as thin be millimeter. can high lighting is spacing also multiyear just high element contrast, the between of minimal efficiency X perfect we system as homogeneity of benefits the the spectrum The OLEDs are acrosss include as fueling consumer a

OLED target. we XX% square forecasted approximately meet base that by of XXXX will industry end track to year the meter on We believe well have over is increase XXXX capacity that previously installed year end and

OLED call. XX% base square growth will of and will look market increase installed we our out, and estimate meters, runway end XXXX, see continued And growth expect earnings OLED more In long we again by for during for as in As capacity end year year and the approximately us. a provide revenue we see we XXXX, we in XXXX. measured that February over color earnings to

On DNA and at leadership. our UDC’s core materials we the R&D and to the are advance innovation remains technology front, of OLED robust continuing

and investing, emissive are including red, we commercializing front, hosts. innovating and greens, technologies, and materials materials the On new yellows the

to development blue, our emissive ongoing excellent make blue at progress continue for With respect we commercial our work phosphorescent system. to

novel We dry in our area process also printing, mask-less, advance direct jet manufacturing large for our printing vapor panels. OLED of continue solvent-less, to work organic

our we corporate base, broadening laboratory testing. Kong. space to research operations, expanding support service These laboratory UDC's new programs and and PHOLED boosting Additionally, offerings a Hong application our our device with technical of local and in Korea new a our will server fabrication investments serve central are as facilities customer and growing presence Chinese state-of-the-art point sites South with Korea and for and include

site operational the and Hong and process completed footprint the in Korea new Expanded site wider we complete testing development, evaluation to customers’ coming Kong's support to is UDC enable and expect new will of our range activities growth. a be months. UDC

quarter's This during to noted the the With OLED materials design respect product includes leader of OLED industry to accelerate a pace to multitude help want OLED recipes in earnings as a as ecosystem, of for helping customers’ call, millions the pipelines. enable we we specs. last our of

a network These establishing on ensure been center emitters material OLED will our solutions. to effective efficient phosphorescent have partnerships partnerships. high OLED proprietary of and highly We cost performing,

transport collaboration call, be our Merck OLED where have and of higher materials Since their to the we stacks. leveraging technical now KGaA, OLED we phosphorescent develop performing expertise our will emitters second quarter with

LG with EMT partnership also Korea. announced in and in host China We agreements Chem

a that that partners, sale direct hosts us. phosphorescent outcome into our expected are emitters to complementary volume for customers, to local for customers and We these of translating all, partners specific for our be win-win manufacturers will our

the On note, call that Sid. me turn to let over

Sid Rosenblatt

$XX XXXX to and million, quarter today. Chinese were XXXX’s in you, of XXXX’s for our $XXX.X trade joining which of again, under related ASC compared thank million, concerns, $XX estimated included quarter $XX.X QX which panel $XX.X call to you Steve. from the Revenues million to Thank due million. of sales And third second everyone pulled XXX were million the an for XXXX half to we manufacturers, believe second

revenues quarter the Under compares million ASC million. revenues and quarter $XX.X been XXXX’s $XX.X This second million. XXX, to would $XXX.X have our of XXXX QX third

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

$XX.X million emitter were in third XXXX the million. to Red of compares $XX the in second quarter $XX.X million in This quarter and XXXX. of sales the of XXXX third quarter

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

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

recognize to under discuss of billings to we material in and we shipments. ASC XXX license corresponding Before we proportion and that revenue, royalty want will license OLED you royalty irrespective revenues QX when remind occur,

Third to quarter fees and of million $XX.X in were of the $XX million XXXX. million. and third compares XXXX the XXXX $XX.X This license royalty second quarter in quarter

Adesis revenues third million of million. of in XXXX $X $X.X This Third in the and to XXXX. million $X.X were quarter XXXX quarter the quarter compares second

cost gross material to of quarter third OLED Adesis XXXX. $XX.X were gross to in the $XX.X were $XX.X This $XX.X the of of include year-over-year's XXXX in margins the XX.X% relate the and material the quarter compares which only which of This sales, comparable in XX.X%. sales, XXXX of of quarter million. of material second for XX.X%. second of Cost million translating Cost into materials to million, compares XXXX and sales million third quarter quarter of margins

our XX% with the in gross to XX% expect last years. we few the margins For year, to be consistent the continue to material range, overall

quarter-to-quarter. material noted can gross As margins the we in vary have past,

quarter from excluding $XX.X last from million. million, quarter's $XX.X Third quarter’s down but of expense, the cost year-over-year up XXXX sales million, comparable operating $XX.X was

million. $XX have to for XXX quarter quarter the million to ASC comparable’s under income million the Under was $XX.X million. $XX.X compares and and of comparable’s This million. year-over-year last $XX.X $XX quarter's would last compared XXX, third Operating XXXX, quarter operating quarter's third been $XX.X year-over-year quarter income ASC the million

Third was XXXX-XX, ASU tax rate quarter been XX.X%. quarter our XXXX Without third would XX.X%. rate have XXXX tax income

absent year, a minus the be the XX% percentage we For rate XXXX-XX, our to ASU or tax continue approximately plus to few effect points. of expect

diluted $XX.X $XX.X share. or per last or comparable compares share. XXXX ASC million XXX, third year-over-year per or This the to of $XX net share diluted diluted quarter's and Under for million $X.XX quarter million $X.XX income per quarter the $X.XX was

third million million and in cash, of share. or million with $XXX diluted per $XX.X quarter diluted share. equivalents $X.XX per We $XX.XX year-over-year cash approximately investments of per or to quarter the quarter's million ended the and XXX, compares short-term cash $XX.X $XX.X quarter income or comparable share ASC been This our would diluted diluted Under $X.XX per share. last have net or $X.XX

ASC to Moving raising guidance. levels, XXXX Under discussions, other XXX of We along operating range guidance. our we now expect to million full-year's to mix, expectations be $XXX variables, be under ASC on are as to million. range in million. XXXX have the product revenues revenues as increased for XXX, well XXXX million major $XXX current are $XXX of Based a in customer expected to our and our $XXX

which cash And dividend, be stockholders capital record Board positive of to quarterly business of the lastly, expected the XXXX of to XX, dividend on XX, our reflects continued of to December shareholders. generation as commitment $X.XX on XXXX. paid December return The and a close Directors approved flow our will

Steve. back With turn that, I to will call the

Steve Abramson

built Galaxy OLEDs the because introduction and foil transformable, bendable an they OLEDs Fold, Royole introduction electronic recent Since or lightweight and an are and OLED by form our and and Sid. has the part believe on the incredible can layers, substrate. increasing rollable. that, Huawei inception, factor X the consumer so are play be we FlexPai, been OLEDs. the glass, roadmap. Mate in of factors the consumer and plastic, are form landscape. the role factor metal with Thanks, pending The in form And film factor, evolution driven the form hand-in-hand. inherently thin, products is to OLEDs the agnostic go of of in milestone

both our assuring Sid and think new new and amplifying the an of be, we note what side awesome. are and and realms of Always the of it's era Fold, broadening and widening innovation consumer undoubtedly a designs always world's market applications. the imagination and can in concepts, new product On Galaxy the have are perception

technology market fast be future, be are this with be OLEDs we the foldable roll-able in to into products excited we to believe integral of that and to evolution. ubiquitous forward prevalent display will an life As expected the part and everyday we continue conformable,

deliver to revenues continue Looking into on are this trend and record this year, earnings, we track to foresee to XXXX. and

is would and UDC. shaping and thank to Our hardworking to at the of and drive, I for each advancements. desire, accomplishments this brilliant Display’s employees growing opportunity elevating their like our take dedication and heart team success due and to Universal

the being our growth We’re customers leader committed materials and and technologies our long-term the OLED a to ecosystem, superior edge for in and industry, for cutting and achieving shareholders. for delivering

with Q&A. operator the that And let's start

Thank you, Mr. [Operator Abramson. instructions].

Sidney question proceed Ho with your with Bank. question. is from Our Please first Deutsche

Jeff Rand

This on Jeff Rand Sidney. pull-in XXXX for China of Have continues? trade or want kind from and about is to just as for you any US conflict in do seen XQ. XQ I the pull-in, from you any ask expect XQ the

Steve Abramson

in really seen have anything could -- that quarter we no last seen happen the quarter. hard And one we tell fourth this not the and quarter not pull-in in have have to occurred really it’s it only seen the we appears was we that and that anything, what

Jeff Rand

as phones going a pointed data pretty for a people stronger XXXX follow XXXX? I being of upgrade Does a expected. into kind change points XG just than that good that little to And recent smartphones? think up, your cycle How outlook make in does have

Steve Abramson

we will I being now I a about smartphone the XXXX. is on a mean might of people think little XG smartphone talking for that premium I keep are ahead. be it I folks push market moving but positive will premature think very that to it’s to right lot and grow. something switch market mean something are a continue

Operator

from is Please Citi. with question Our proceed. Malik Atif next

Atif Malik

have two I questions.

the after if almost seasonally sequentially versus the are look revenue year? up QX sequentially last number versus China million, maybe the sales in are last should $XXX And up year, this how First, at implied QX, quarter look we quarter? And coming half I September back where year you QX fourth for in down. being seeing China into

Sid Rosenblatt

the I due do to last than specifically activity. talk expect really obviously, see for mean, this it pipeline, year. really Thanks saw fourth in we customers we your but strength pipeline to better any customer question. year the can't in the we quarter, the quarter about I see

Atif Malik

threat want Okay. of the competitive you. is any pose more quite Does a to And maybe kind bit Steve, that, there I makers at this those local Korean possible work post Japan for know then, of your threat closely to that tension. suppliers, one makers? with display trade position display

Steve Abramson

China, customers strong and very and in are have over with We both and more we assets in relationships both putting our Korea into Korea Hong Kong.

customers we So, our to relationships have will we believe continue that very strong forward. moving with

Operator

from Our proceed. next with question Muse Evercore ISI. is Please C.J

Matt Prisco

Hey, guys. my for for This Thanks is questions. Matt taking Prisco C.J. on

split XXX. margins weighted would the and between expected royalty what the royalties quarter more tighten heavily material gross much and have First, XXX than was towards simply boosting gap in

we us So, can this walk moving through just split you that driving the of forward? how kind should and dynamics about think

Steve Abramson

because very one that essentially -- different. so Therefore, patterns, really our different, is from in has which and odd. royalty buying to and ratio our it to material, really agreement thing is is, each addition of sort mix occurred and results has What is the that each little the license then customer’s customer mix to sometimes one look causes customer customer with other do a this switch is

Matt Prisco

And to the pull-in question. follow-up on then just

appeared they befitting $X last So, $XX China if to quarter-over-quarter. sales the $XX million in excluding to quarter, million look million about down customer pull-in at I be

decline the was by at and driven thoughts of timing have So changed pull-in? how much draw-down of this the and all digestion magnitude inventory your around

Steve Abramson

will currently used and the our of million that believe to that mean, the using million of the pulled by we No, was they is believe be best material in end the up estimate year. we are $XX what still inventory $XX and I

Operator

from with Our Hendi next Gabelli proceed. Please question is & Susanto Company.

Hendi Susanto

lot us Good evening, pre-production still turnaround again. Congrats recipes and inventory of a first Steve is there and My China, insight and that with the question Sid. in on management give is, development guidance raising you of on considering activities? can device some practices

Steve Abramson

I up through stages with mean going curves. in talked BOE early learning about and ramping we've China, it's that, the in they're obviously just still

their new patterns I things been lines lumpy, flatten little that they experienced, well. more out will bit believe think them see they And -- we ordering very do I have so will will get time as little open, they somewhat a take but it we -- and some but as just do a think will

Hendi Susanto

And how about Steve? the turnaround recipes, of device

Steve Abramson

multiple -- really can't about really what is proprietary We goes have for information, different, their talk they recipes. our customers it's It’s and their products. pipeline

the different proprietary of products into some So different recipes, go really customer’s we have but information. each don't

Hendi Susanto

commodity My right post understand with as red like to about viewed players. green OLED Chem. green us understanding can over where mature OLED your partnership lies? can and businesses new the digest be red, Can with to materials host be you more and is viewed And I LG yellow would that across market host as opportunities and and materials help established go strategic opportunities

Steve Abramson

working it of so these be partner we of to host that we that give these we’re proprietary ours customer emitters. that work, that of the them partners complementary to specific -- think materials each able phosphorescent customers number to manufacturers the work are we needs. each work of commercialize host volume a materials with and with Well, guys with our -- what can And really

the hosts, different to host trying host are to different So green without our I hands companies work of with yellow into them customers’ number any or materials going a stack. working give through the we red, and mean or get of a of number best we

Hendi Susanto

like initially I Universal the may enter red future? Display materials host increase in in materials again and And words, other guess

Steve Abramson

not the the What We're we're that host about with partners. -- get into our on with us. a customers, talking with companies is were into We be proprietary working work but and will saying manufacturing and business phosphorescent these they getting emitters our scale. we manufacturers, their hosts not host No. our them talking value about commercial these with us will

Operator

question is Mehdi from Hosseini next Our Please from proceed. SIG.

Unidentified Analyst

Hi. Mehdi Do Hosseini. Laurie emitter. you just updates calling for blue any on guys that? up one have on follow This We question a have

Steve Abramson

make to progress excellent continue We on blue.

it’s a As time. progress, in new work at announce nothing to we have this

Unidentified Analyst

Yes.

a quarter, R&D your beyond? than going bit and next and lower year -- what's guys forward last spend You is forecast little

Sid Rosenblatt

year. I about next talk can't

XX%. be But accruals, year-over-year in the that the will was earnings call in quarter. the February. year We is XX% this up about to it’s talk on down expect to of R&D reason do that quarter for timing that our we or it each The accruals

QX So, in that's was down QX. why up it and then in

Operator

question from Jim & Ricchiuti next Our Needham Company. with is proceed. Please

Jim Ricchiuti

Hi. Thanks. late. bit Good I and afternoon. call question A the little joined -- a have

So, this. or any customers? driving -- than as raising as the indication some in that additional conversations lines have what along us specific anything you or apologize, it country But to provided give you wondering, I point other Was just product guidance what in had class I'm to drove that? you've for if addressed to the anything you year, can color of those that with either would was

Steve Abramson

this strength in is talk caused specific are and many to we us saw activity. fourth customers seeing about areas, raise it. the quarter in to pipeline strength due see in quarter to we expect don't The that We customer which really is but what

Jim Ricchiuti

Okay.

broad you what fairly based is are saying? it’s So,

Steve Abramson

Yes.

Jim Ricchiuti

the how QX? And should the year that for rest looking some think give balance color R&D, at of OpEx, you terms can color then, about we over of any gave the you of in on other

Sid Rosenblatt

of all guidance. is with it in line think, as what we I gave

up both, I probably costs cost are up should at think year-over-year patent and XX% XX%. is R&D XX%, -- is to X be the year-over-year at X% SG&A, whereas XX% somewhere to between SG&A up X% patent

Operator

[Operator Instructions].

Lee question with next Our Brian from Sachs. proceed. Please Goldman is

Brian Lee

guess it driving prepared materials you that know, how for had one to of commercialization taking I Wondering you that materials better your here. mobile if plans when picture, a blue a respect QD-OLED for I Thanks about about context alluded couple Samsung’s in separately Steve guys. the just you the recipe and blue TV bigger questions. to now materials, more with TV seeing you're spending become have thinking the Hey, just there any for the of into in official, pickup process that activity think maybe you? blue opportunity potential and in remarks.

Steve Abramson

advantages blue, looking phosphorescent energy because that's blue obviously and efficiency and we portable at When on about obviously of well both of we’re -- TVs the both the as blue. think as aid broad-based other

and the for all our can't On we But part teams. just as work customers specific with know. of in you question, R&D closely your our first general, customers speak we of our

Brian Lee

out more you for that million the you're China. XQ a you that saw the in that into give Sid, XQ, Can how $XX question, million terms pre-buy with of of XQ weighted have the of four the the versus for million? to it that like us to in more million, you $XX sounds XQ, -- can you good sense quarter think estimate give it of with XQ view us $XX was a you're versus any of comfortable versus much you serious and came magnitude now done $XX

Sid Rosenblatt

do talk and But with their can't Brian, To very honest, one relationship or we month. good talk in they used that We do much answer one we a to what have really how to needs our quarter. that they going and about them. of use them history quarter year. be I the and that to the down where sit the do upon by next we It’s next for month and believe the based all be we think end it just they're will are, customers up planning we

Brian Lee

to that it straight expect late this be the pass levels? jumped Are you was me, the margin from margin quarter you the would guidance I updating this. question QX But gross on year-to-date and is of year materials above gross Last I'll did for here maybe XX%. from down there some third so cover being or on reason the

Sid Rosenblatt

it's XX% think year. I the to XX% that to No, be going comfortable we're for still

Operator

closing program session. Thank back you. additional or turn like I any to question-and-answer concludes the remarks. the to Sid would for This Rosenblatt

Sid Rosenblatt

and your a good We for support. everybody Thank today. Enjoy have Halloween night. you your appreciate your interest and time

Operator

This concludes conference. today's

at your disconnect time. may You this lines

Universal Display (OLED) 30 Oct 192019 Q3 Earnings call transcript