OLED - Earnings call 3 2023 | Universal Display Corporation

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Operator

Good day, ladies and gentlemen, and welcome to Universal Display Corporation's Third Quarter 2023 Earnings Conference Call. My name is Sherry, and I will be your conference moderator for today's call. [Operator Instructions] As a reminder, this conference is recorded for replay purposes.

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

Darice Liu

afternoon, good and you, everyone. Thank Display's Welcome Earnings Call. Quarter to Universal Conference Third

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

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

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

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

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

Steven V. Abramson

today's call. Thanks, Darice, welcome to everyone and on

For million, income $XX revenue million per quarter was $X.XX XXXX, and $XX of the third operating we share. reported diluted net of $XXX profit of million or

narrowing are further guidance range. revenue we our year, the For

Our updated range is to $XXX million. million $XXX

vast the more are flexible, and Since where a flexible rollable the become world. adaptable display UDC technology of enable market are fresh occurring consumer with industry devices and designs inception, part displays, using are multiple in OLED ahead, envisioned making OLEDs around verticals of consumers its features applications. seeing of of we As and OLED significant has inherently future factor this OLED new flexible the form the OLEDs introduction technology more and conformable, with stretchable, them across functions. path. bendable ideal is array has shift revolution. With productivity fueling long-term driving everyday life look the displays our consumers and the electronics, of world the foldable growth product to The

been phones this the in research this brands XX market year estimates introduce and to that Market brands GSCC from smartphone bright more year's market. have as compared Foldable phones foldable XX foldable products, more light ship will a enter in XXXX. existing different foldable

Uppal. foldable According XX% exceed XX.X of will Some brands Huawei, smartphone GSCC Research, include units phones to those Vivo, by and to are of Counterpoint year-over-year expected shipments Samsung, XXXX. XXXX. in units increase foldable million Google, to Honor forecast million XXX

and to late phone addition September, are makers Spectre XX-inch Gram announced foldable Initial In it IT products smartphones, notebooks. start include In panels. LG's foldable developing would IT mass-producing Display for LG panel panels phone. foldable HP

OLED Samsung market X.X The year's only adoption BOE segment a Gen the with in in expected to Display believe IT, that XX.X opportunity the for IT of will tremendous start devices IT today, for reach are OLED is that about X% offers We significant line over of new also IT market a X-year Speaking XX% this cycle X.X market growth. tablet will period. notebooks translating the IT. units this units XX.X half in than begin OLED million next market XXXX research rate growth to into reported of and shipments that recently year. of PCs, its double will LG forecasts units and research an IT noted production firm average in X.X to annual million that million UBI and monitors also first more Gen is of of from XXXX, XXXX. UBI for Display invest expected

expected as is XXXX TVs the in TV total X.X the OLED XXXX the SEC at Moving forecasts best about this only from to XX% market. market, TVs, once to X% the are segment grow CAGR ranked units of XXXX. TV a to that TVs OLED resume OLED units. in will scale to million growth The which again reports up in Consumer

brilliant a form XXX-degree other ratio, are color, that viewing surprising rate, it's thin the refresh angle, With contrast best. OLED fast of best benefits, and high TVs the considered not factor the

industry. is exciting Another for OLED emerging opportunity and automotive the

touch the During Premium an EV E-tron its sub-brand BYD, XXXX X dash. XX.X-inch Genesis maker, the OLED displays, quarter, OLED gauge QX circular XX.X-inch and instrument its XX.X-inch screen. redesigned unveiled Audi UA newly on GVADSUV the unveiled with that cluster a screen Mini OLED X.X a inch Cooper XXXX SUV Leading Chinese interface will is EV, that OLED centered that infotainment XX-inch Yonggang, include on its the screen. SUV In Hyundai and a EV the upcoming dash. integrates panel launched through Edition display a EV display central central features a display And

information displays, central displays, and clusters rear mediums. screens, evolving entertainment communication automotive a including powerful firm passenger research notes are Market seat that displays more into digital TrendForce side

larger forecasts Additionally, traditional panels flexible found OLED in XXXX. screens that to cockpit, various functions spatial automotive more display automotive market by will to XX% continue designs the capture integrate and independent are and could of a grow the approximately vital. TrendForce

Audi materials electric OLED lighter learn automotive energy-efficient more displays for OLED than traditional I can be OLED encompass in growing the taillights its displays temperature recently, our less its or designed to the which in a vehicles. And factors, Why market various form expanded displays. Audi SUV. exceptional OLED the interest night. OLEDs into displays are market? makes also ideal require smaller and most whether or a QX OLED phosphorescent using power, lighting. OLED and the Well, XXXX automotive for shapes and QX have flexible crossover. taillights AX range in OLED day it's provide wider featured clarity also OLEDs

leadership. of dedication can to materials and best-in-class continuously continues to consumer remain we robust our across technology our We our commitment As customers the and our display products landscapes, unwavering and we boundaries our delivering steadfast activity the advancing achieve lighting light. OLED expand to in is push to OLED guiding what

are XX of including progress new hosts. pioneering and emissive excellent yellows cutting-edge reds, years research, our ongoing respect emissive system. to With and commercial new greens, materials of phosphorescent extensive know-how to and we development innovating, OLED With our in deep blue continue phosphorescent blue, make for experience inventing nearly introducing we and work a

higher We continue of vast XXXX. opportunities of full OLED of we emissive track on introduce phosphorescent of introduction red, all-phosphorescent for to range in commercial suite to and green across the a broad energy higher market stack and into applications. believe our unlock array believe that the that are a RGB We blue will materials performance our efficiency

crucial to OVJP continue in road key alpha make also design. subsystems of subsystems constructing progress The We the map. with is commercialization notable a for these system our step our completion

dry-printed launch a While groundbreaking OVJP efficient, low-cost, a highly still TV platform represents side-by-side commercial the manufacturing a is few of OVJP platform. towards away, OLED that years believe RGB we

note, on And let that to me turn over call Brian. the

Brian Millard

again, thank our And Steve. for everyone, today. you, call joining you, Thank

yellow to third XXXX. to quarter $XX million was to million XXXX. of third compares quarter Material in $XXX in green our emitter $XX $XXX last sales, were the of XXXX. compared compared million Red were $XX million. in of in third of $XX the in sales third third This revenue quarter million quarter $XX the quarter to emitters, sales million the million emitter material sales third which Green Our the were $XX include year. quarter million. compares This of

As patterns discussed in buying been quarter-to-quarter. the it material has past, vary can

year-over-year customer million. prior One quarter The period to is compared license $XX million a fees to factors. due mix. the were royalty of year few Third and $XX $XX decline was million primary

the demand had contract adjustments, their Additionally, the per and result contracts. a majority between lower average QX cumulative million royalty for customers and the over license to $X lives decreased fee in year of which royalty fees, are remaining of by finally, an gram certain this license increase as And periods. a of estimated catch-up recorded

the For ballpark and of be ratio continue expect the fees for to in license we X.X:X. material year, the of royalty full sales to

million quarter to in was $X.X million XXXX. third compared the comparable revenue Adesis period $X.X from

$XX in $XX third to in of Third of compared total of million million XXXX. of into to in the the translates XXXX quarter the compared XXXX. in was This XX% gross margins quarter quarter third third XX% cost sales of quarter XXXX

material XX%. in quarter OLED gross to margins third of XXXX. compares margins quarter the XX% material This Third gross were of

to For the gross approximately in full XX%. margins range year be the total of XX% to of XXXX, now we expect

In $XX Third operating it million. quarter expenses, excluding of were the sales, $XX XXXX, third of million. cost quarter was

to now For year be up single-digit XXXX, of the low expenses a by percentage operating expect year-over-year. full we

into income $XX the to million in period of was XX%. third operating prior and margin operating margin XX%. $XX Operating quarter, of year compares million This the translating of

in change foreign to rate X.X%. for against was third allows The U.S. primarily tax a now tax and rate credited regulations quarter due withholding was to recent This XXXX. income XXXX certain that taxes be income lower IRS

of expect now For our XX%. XXXX, the rate of the we year tax the to in to year be XX% range full for

quarter income was XXXX. This Third million period $X.XX diluted per comparable to $X.XX per or in diluted million share $XX or compares net share. $XX in XXXX the

we site for our purchased million. quarter, $XX the During Shannon manufacturing

For million. to expected the year, $XX our capital be are approximately expenditures

and approximately with $XXX cash cash, in the ended investments. We equivalents million quarter

revenue $XXX Regarding our of are XXXX to million. mentioned, guidance, forecast a Steve narrowing by revising our to $XXX as we million guidance range

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

to I'll turn call Steve. that, back the With

Steven V. Abramson

of sustainable to exchange and culture and energy-efficient position pillars Thanks, collaboration. of propels we is Brian. materials sustainability OLED door We innovation technologies, a innovation, thrives DNA. our and industry. primary growing and and are a of opportunities our the reinforces and and on the work positive With our together new company's as a UDC's next-generation Innovation, forward, leader provoke UDC solutions. foster inclusion what talented Innovation continuous is It making the to opens and impact a new that future. the collaboration, drive portfolio team us towards diverse and ideas are in people. part

the commitment that were the of Board New principles. in its environment. recent for Companies, and for list EcoVadis, integrity, corporate team. stewards inclusion been recognized good for companies these culture Forum diversity. dynamic diverse of the Women are a responsibility Executive of ratings. U.S. America's XXXX among from Executive we Newsweek's a We're recognized imagination, of Greenest by We our were Led the we silver also inventiveness, Women the XXX by UDC being proud provider and global celebrates We awarded to corporate Jersey of to named In the UDC for social months, business top placing of rating sustainability leading have and

shaping and to Display's their drive, Universal elevating like would dedication I our thank advancements. heart for employees and of each accomplishments and desire, in

We are start for And in committed cutting-edge with industry, the to customers that, operator, shareholders. long-term let's for being materials for the achieving OLED and the superior ecosystem, and leader growth and delivering a technologies Q&A. our our

Operator

[Operator Instructions] question from Our Lee first Brian with Goldman is Sachs.

Brian Lee

missed but Blue you see lumpy I you you Is to it's but we back the that number kind What this, into would know Blue, was off level near-term if to are correct, kind until going the saw of revenue commercialization $X.X think, up get start going just outright, of of then Sorry you've scale? that in been expect to if quarter. maybe it you I pick trends? to one? Or full here? be of I stated And I million saying

Brian Millard

QX as Yes, you for million. were Brian. Thanks, indicated, $X.X Blue sales Yes.

launch. So that quarter-to-quarter the closer is to certainly year-to-date year. move total the trend forward But to $X.X to to of over we going brings course positive variable it so as continue commercial a be million, the the for

it's guidance commercialization. to variable but So to going be result here no specific from give, to a

Brian Lee

be Okay. Seasonally and of off materials Fair terms the mix couple but off you guess speaking, down QX helped this Is in a couple seasonally of enough. more the years, strong license. And expect you've seen seasonal of downtick. but there materials number to the revenue year revenue. there. past royalty headed prepared And of guys where I you you remarks, maybe QX know be pull just kind first a this talked the about trying A was then in QX? and that forward off, off normal in record QX, in you've your of or to questions QX? I into QX of materials any so kind unpackage Brian, was it of -- guess, I for past, between quarter of

Brian Millard

Yes.

Brian. So thanks,

periods. higher A of X:X, than that customer think as in been prior period. to mix it's my prepared and in One remarks, customer the just we as much you is the ratio third in couple said a I different said, for quarter licensing, the had this terms is materials there. which it of royalty was factors I mix,

the We a side, the also expectation that of had contracts. went royalty the larger we and license as through over volume certain on a quarter situation remainder customer had we

royalty And had used then has on an kind next-generation the materials situation of side also side, newer, and of the we remainder the where an had on of so will expectation that contract. material And customers the license ASP per a some be impact unit. that we over their by our lowering

increase has that ASP on So a material favorable the side.

number a same this bit fluctuate a the caused those direction of factors the So going ratio of kind are period. that to

Brian Lee

it a just last maybe on. then And Okay. of I'll then and pass couple ones

that of is get ratio the X.X:X. to should comment? Or mentioned Is You starting QX? XXXX a . that back more in

Brian Millard

'XX a was that comment. Yes,

for be of is we QX, be similar a and expect to And So QX the to X.X:X. year-to-date basis in terms year X.X:X, through on expect we full it X.X:X.

Brian Lee

I then X in of the rev for Understood. rec is ASC how and and accounting you've license materials And terms past last about expectations. me. talked royalty the to tied XXX know

aggregate contracts, volume latter the Just those under the that's just question. these is and and of timing in those whether in is projections licensing purchase of in also of that smaller the upfront just there's half out volume this here take royalty expectations the did to you just volume up recognition in is understanding quarter? actually volume in contracts or Or also why material of some right? this is some So and kind contracts moving

Brian Millard

Yes.

from So estimate it QX. we to had what was QX relative a change estimated in really at

their So customer volumes of an increase over contracts remaining of in our estimate certain agreements. term over the

Brian Lee

pass on. enough. it Fair will Okay. I

Brian Millard

Thanks.

Operator

Our from Krish is next Cowen. with question Sankar

Unknown Analyst

year. linearity This I'm take the a question year. can is Eddie wondering more revenues wondering product spread ramp. if give guide evenly the or will OLED next that and us for next the opportunity half And coming you us that hand Like, Chris. weighted about color from it from any can be you of out? tablet I on revenue back incremental product our if have through

Brian Millard

Yes.

a market. I been is of are we think saying now XXXX think for pivotal number that part IT that for tablets segment. quarters we've a certainly, Certainly, year of a key the

percentage IT know area. this point, dollar segment go Hard a expect to figure in trend year it the heading behind we put So an positive exact as momentum to into positive next at into that we we there's or but 'XX.

Unknown Analyst

up won't I you're Got estimates wondering it. whether And understand but the you year? revenues of the be guiding for consensus next product ramp is given XXXX, teens Blue and for high renewable saying tablet

Brian Millard

Yes. full call into guide when with we'll and I guys, get mean, full you point. we that give year-end at February a we'll think give 'XX on do guidance our and I

in that year more I think info best information growth at give to on we February this 'XX, stage, we is but a can be XXXX the and be say up relative to to we'll expect that.

Unknown Analyst

just up thing, tablet like behind million revenues, more were other than you $XX looking at And reason? me. related it some helpful. share blue That's Is doubled. or quarter-over-quarter, it reasons is it seems any understand. deferred they that? Can That's for or I they there to the last

Brian Millard

Yes, our on milestone an receivable in revenue that's hit due one and we in we the contracts. had accounts a period, that increase to of and deferred both

milestone. billing a was that So

end and increased was the AR that of increased the as So uncollected of deferred amount as the revenue period.

Operator

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

Chris Grenga

for This Chris is on Grenga Jim.

point? be I'm do new for of any one majority new just at And You material this of IT that used you or visibility materials emitters tailwinds generation generation generations? the in that curious, sales could material types be and be have was then will mix applications? the into to sales that insights the automotive going for is product would Or one whether our provide you mentioned of of generation. a that those former Any helpful. there

Brian Millard

and work as making tends once customers their more as as product portfolios we new to a was into we yes. additional guess Chris, down the commercially materials volumes. its were price about next-generation they materials launched at comment then start introduced purchase it's introduce way higher I that our

more So unique of not And that of that's think a variety was to just matter applications, weeks. X particular I a segment. across

Chris Grenga

technology was versus process And of OVJP maskless I that existing is is that potentially it. recently it maskless for maskless larger have Got adopt process? in that just something fit material the looking guess one the reported of customers And a does impact of could consumed a I'm panels. meaningful any your to description production amount process? on curious,

Steven V. Abramson

effect material look technology see manufacturing to is the would new the and We'd the introduced. be a have what take on consumption. Well,

And that wants out. plays production use their our In how technology. OVJP have technology is. is see general, we'll to printing to whatever so everybody a materials,

[Operator yes, it maskless. Instructions] would So be

Operator

Ho Our comes next [Operator Deutsche Instructions] from Bank. with question Sidney

Unknown Analyst

Jamal on is This for Sydney.

margin, First question to XX% to the takes XX% gross how margin target gross back up, and of us for walk then do quarter. for to just can on that through gross follow you Brian, long-term the And on some maybe next puts of margin? you of if range sort get

Brian Millard

So expectation update we did slightly year. the for our

hand. of we for evaluation largely Now that's year, through XX% QX up XX% to in we the our $X.X due we to as went provisions had we expect to put inventory of had million inventory that on and

go So of in cost opportunities, making always and what gross through thoughtful negotiations this margin. terms contract that's being opportunities, really that we're tweak we sure resulted quarter. reduction in the identifying We are as

everything doing we're it. So we obviously increase can to

lot materials our time, a but that the and we increase continue in attention dynamics as years costs the over we certain something of well areas also focus course pricing volume in on. it's that have have of impact certain as the to to increased ahead, of think I input volumes as varied

Unknown Analyst

you question us OLED. walk then second very clear. business implications Okay. of sort adoption structure? a the the this the IT little certain adoption hearing my given I guess, of through And on, We've That's central Can within more been bit X-stack Tandem devices. about your on just

Brian Millard

able be that opportunity now won't It's somewhere the there. of increased until is those some an but between right to It's market that. we of be material Tandem to and insight It's closer the would Xx, some know needed certainly of what structure. our provide multiplier on X because say to really incremental come see a and volumes we hard products in

Unknown Analyst

fair. That's

Operator

Our & Yang is Martin Co. question with from Oppenheimer next

Martin Yang

contract revenues. you about in to talk contributed on And question quarters? maybe Can it why was reinsurance revenue? past versus First what few volatility . that the the down

Brian Millard

Yes.

So There are our expect variable. quarter DSS impacted do those that a issues Their are DSS revenues, the were timing performance in was our subsidiary. QX just QX. some kind on bit We of little growth rate. in of where And for that for this XXXX, they business them run them with back expect track to year. the recent get we have for to also off

Martin Yang

impact question And talk Got you Should utilization acquisition after purchased? done? it. second that we charges more can is is the expect facility for after charges similar is, about Shannon no on the

Brian Millard

an and in So Shannon impact were the have utilize QX, we able to site. greater actually it the on we acquisition, of also utilize degree acquisition to in expect of a But to didn't utilization greater degree. a the independent QX or underutilization the to

So it's been million, underutilization which for all quarters. was much recent than of is other the in less QX $X

Martin Yang

at did So you less say perform underutilization would expected? that, XQ on Shannon the XQ? than during better comparing follow-up to that Shannon A was

Brian Millard

Absolutely. Yes.

in believe, Our million. approximately, $X underutilization we And quarter, million. I prior costs QX in they over were were that slightly recorded $X the

degree well to expect we continue trend. next a decreasing a as year next as year, we into be is in head Shannon And as it So to to utilize greater to able great It's excellent that. to a it our able greater network, and beyond expect be our we manufacturing continues of years part to to business as to grow. also a utilize the capability, degree

Operator

Millard closing the any to turn conclude remarks. question-and-answer This additional or for would call over back like will to the Brian session. I

Brian Millard

a evening. time good your for interest you your support. Thank We Have today. appreciate and

Operator

Thank you. conference. will This conclude today's

disconnect lines. You now may your

Universal Display (OLED) 2 Nov 232023 Q3 Earnings call transcript