OLED - Earnings call 4 2023 | Universal Display Corporation

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Operator

Good day, ladies and gentlemen, and welcome to Universal Display Corporation's Fourth Quarter and Full Year 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 being recorded for replay purposes. I would now like to turn the call over to Darice Liu, senior Director of Investor Relations. proceed. Please

Darice Liu

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

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

of Steve prohibited. made any is property be call call expressed form retransmission rebroadcast without of you will of for Further, portion and that live webcast webcast being call, consent XX, Universal redistribution, a the This is of Any of the of period website. begins, any is of let February on live Universal Display. XXXX. contains available this Before time strictly remind of as call a or information today's the this date Display this accurate me is Universal Display's call written only time-sensitive in

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

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

Steven V. Abramson

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

the into We'll of and and strong array market's vast the insights opportunities begin of recap are provide a our OLED with then trajectory. that fueling XXXX

million, was $X.XX share. $XXX million million and $X.XX Fourth was or per income quarter was XXXX share. $XXX Our or income operating $XX million income net per revenue was income $XXX was diluted net operating $XXX million, and $XX million, diluted was revenue

advance financial our markets OLED and culture strategic ecosystem. consumer fortify in corporate and our our results, partnerships, and leadership spending strong our XXXX the position While smartphone premium initiatives, operational our continue to foster enhance we soft TV the tempered in

red, our We Group. BOE Ireland. our global that green opening patents long-term the KGaA's acquisition celebrated we We in emissive XXX footprint of materials. of than XXX enhanced multiyear announced patent broadens IP produce Technology the Merck agreements to phosphorescent phosphorescent new new year, families. our and emitter framework designed more manufacturing global [indiscernible] the and is During blue portfolio with Shannon, of with site grand further This

XXXX EcoVadis was also by Wall continued Board The for a the of women corporate were Street Best America's again to form awarded companies, recognition champion for another Managed of Journal's and list year by recognized recognized a company. diversity. our silver of Companies as rating responsibility of from named executive one greenest social of Newsweek We as

forefront As OLED energy-efficient leader, we solutions OLED the and are best-in-class pioneering a of enabling at material technologies.

excellent system. to commercial in progress for make We blue our development continue work a emissive phosphorescent ongoing

higher performance blue we are We believe phosphorescent XXXX. blue a to expansion We higher array track energy across efficiency that meets continue to the portfolio believe opportunities a vast phosphorescent OLED commercial the includes will broad and of on red, of that specifications that into and unlock green for applications. materials emissive phosphorescent our range introduce in a market of

multiple achieved to OVJP the also side-by-side stack with ad RGB the printing the year, thermal first-ever comparable world's We of high-resolution milestones vacuum during full evaporation. including performance

and foldables, commencement that OLED in and adoption wearables, penetration further IT including growth, beyond, on and making XXXX rise to range AR/VR of the we're automotive OLED burgeoning ahead extensive investments us, growth smartphone [indiscernible]. as of market, the lie Looking we including OLED market before TV an the capitalize we opportunities as anticipate the gaming the as the of well cycle,

OLED's landscape our customers. for across continued enable to and We to are proliferation positioned value the of drive consumer the well

OLED Smartphone preferred as will today's of in the OLED choice. XXXX approximately a We XX% design units in OLED firm XX% research markets increase OEMs with foresees X% XXX in to to in estimate display multiple growth from CAGR Market forecast of in years that that. consumer shipments electronic panel in market Omdia phone XXXX. and million coming more as the mid-range smartphone increase from will a OLED XXXX penetration

in For TrendForce smartphone of smartphones, from capturing XX.X million forecasted will increase foldable shipments million XXXX, about to X% units approximately XX units the XXXX in market.

to for Omdia, expected units XXXX XX million OLED are units CAGR XXXX notebooks CAGR tablet million are shipments in XX%. XX%. of a According a in to for expected XX reach increase OLED of to to

of XXXX. of less monitors, strong close where currently geared OLED to OEMs XXXX was product for the We have an PC to adopt in already increase including HP, to tablet less expected at OLED OLED expect million Omdia last will portfolio, million estimated which than brands showing OLEDs seen OLED like into we than from Xiaomi X% that in penetration new does of Note up where monitor that We global is continue. a Samsung, and not but the CES number PC to trend Dell, their market, units to XXXX, units it's OLED grow a and include interest increasing rate and monitors, PC this forecast units today's X% XX%. ASUS Lenovo, are make there gaming. X monitor evident that approximately in market. by monitors models month's of X

design, taillights. OLED space, to increase black energy units contrast, the for and a units XX%. color In displays of as in are because XXXX end to OLEDs highly TV forecasting XXX-degree OLED of also that XX the designed will for in automotive a pleasing the market. is The million sustainable users a of for CAGR viewing slim where approaching nascent also a OLED impressive XXXX Omdia XX X% being background in Omdia wide angle saving. estimated forecast deep are XX% the and market brilliant market, shipments being car penetration million market is Continental aesthetically notes momentum OLED build. is automotive CAGR beginning or to TV opportunity to that an addition for of automotive

During in verticals market CES, an and built. weigh lighting capacity We works soft proliferation is increased in of its drive new latest a installed estimate install year-end showcased expected rates capacity XX% plans. capacity be OLED to Market the OLED diverse over up OLED of on were the macro automotive these prompt OLED technology square XXXX from meter estimates as standpoint, utilization industry. approximately to by OLED base utilization on rates for that OLED From XXXX average that XX% XXXX. research DSCC OLEDs

for are slated year-end the is production new and of We the measured These in on to BOE's Gen [ forecast $X new This cycle that phase we X.X over respective look CapEx fabs. multiyear new and billion capacity As ]. estimate investment we increase year-end approximately Samsung's exciting additional $X an investment believe we first billion embarking IT anticipate investment by announcements. XXXX. installed out, new XX% XXXX plants fab that XXXX will square meters, OLED in are OLED begin includes

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

Brian Millard

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

$XXX our $XX and $XXX X% XXXX sales me million, Let year-over-year. XXXX million, commenting before revenues Royalty million. our results of XXXX. review revenues and were were Material on guidance decrease were $XXX revenue Adesis million. a was license for

XX% in compared Our XXXX million margins were for of XXXX. in million XXXX $XX compared XX% in million to revenues $XX catch-up $XXX compared expenses included XXXX XXXX. to the were million XXXX. $XXX gross cumulative to operating adjustment a year

the in continued operational global including in programs materials expanding manufacturing we infrastructure, OLED phosphorescent year, and our strategic the our manufacturing groundbreaking and as platform, OVJP technologies, our as our and including investments a During invest emissive center. Shannon R&D team to site footprint purchase number and well our innovation our of Asia growing of

Our per income diluted year $XXX income margins operating with share. translates or million cash, $X.XX equivalents was XX%. XXXX $XXX XXXX and We into ended operating net million $XXX in which million, investments. cash was of the

adjustment the results. fourth X% to million, quarter our was in of the of in of Material quarter $XXX moving includes Fourth were quarter QX of $XXX quarter quarter $XX XXXX the compared from to of compared Now million $X to down revenue million fourth in fourth cumulative million million XXXX on XXXX. the catch-up in for fourth million XXXX. quarter $XX XXXX. sales $XX Revenue a

of in quarter of of quarter Red to which $XX the quarter XXXX. million, $XX sales, the in emitters, emitter compares fourth fourth $XX fourth which Green XXXX. were million yellow-green sales million in include were emitter our which XXXX, million compares the $XX to

million. As we license can and have buying patterns material were fees compared $XX in to the discussed which quarter Fourth year past, of vary period royalty million, the prior $XX quarter-to-quarter.

gross was the for the XXXX. in adjustments primarily into margins of of in million, of and translating fourth to $XX gross million was total the margins This customer of Fourth of compares to to $X.X $XX XXXX. periods revenue quarter quarter XXXX total XX%. of $X.X fourth cumulative in million cost margins quarter sales the quarter gross million Fourth quarter fourth due change Adesis XX% between catch-up mix. and decreased compared

Fourth quarter the XX%. tax XX%. million. the prior compares in margin share. expenses, compares rate quarter million quarter million of or XXXX for $X.XX $X.XX diluted XXXX. $XX XXXX, and $XX were to This income Net quarter was cost diluted operating fourth translating to compares sales, into per in share. This $XX quarter the period The excluding fourth operating the fourth million quarter of income million $XX operating to fourth Operating This was year XXXX $XX was $XX of the of of per XX%. fourth margin million of income of or

outlook. to turning Now our

there of key industry and for to the Steve for a are mentioned, XXXX, us. as OLED number drivers Looking growth

of be to XX% and by $XXX estimate the and that will to be with our the XX%. be approximately expected XX% to ratio year-over-year expect by revenues in be of XX% Total expenses in X.X:X. are ballpark $XXX to up revenues expected SG&A of to materials We XXXX to margins in increase XX% our both million. are licensing gross expected the We range million to XXXX range R&D Operating to royalty XX%. to of

XXXX are of to operating the to margins range XX% XX%. be expected in

flow growth to of and business and A tax return XXXX. will that dividend to we cash paid The the dividend increase our XX, the to pleased to increase be XX, to generation future be share are payment capital expected commitment of per on rate our continued robust of of record $X.XX close Directors approved Board of has to reflects announce And March in confidence cash March positive XXXX expect shareholders. our effective We an the XX%. XXXX, stockholders lastly, opportunities, as dividend. approximately quarterly for the on

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

Steven V. Abramson

in that boundaries Thanks, extensive what's OLED and we inclusion positioned collaboration profitability possible, phosphorescent breakthroughs fostering for believe are mover market leadership our of maps, Brian. are and and long-term in growing driving [ innovation the market. material and a advancements in building We road we long-term unwavering the ecosystem. execution, forward focus on corporate and technology on With first position experience are integrity, and our ] well OLED the of culture robust OLED our and inventiveness, pushing

UDC's As the we industry. we impact excited XXth heights even in of and a approach future greater founding, make to continue the to anniversary the in lasting are reach

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

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

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

Operator

Instructions] [Operator

from Goldman Sachs. first Lee Our with question is Brian

Brian Lee

bigger of pretty like of commercialization to achieve business are had kind critical specs. for give I some in a like it's track What the model blue a commercial milestones on of just forward. of time sense becoming this hitting a guess, I on targets sounds 'XX, the of that part your terms us this year a Can like the targets blue year. going with it question, seems our year just you you'd beyond some trajectory,

are So commercialization customer, out? with achievable getting would a could you're be include include beyond sheets would what like that other milestones pricing contract specs. just or to that getting that that the Like the targeting

Brian Millard

of [indiscernible] to last continued we've generation seen performance year, over introduced of our blue material We've the customers. performance, of that each our course material.

there's with made said, confident over going confident continuing the really be pricing the think out, to need they on as details see but at we're ourselves details, that upon it's date we're year. But improve We sorted those time I specifications. and to right very of and we those path. this progress will. the where you we've to performance course There's feel -- that the So contracting

Brian Lee

high in of embedding for for you Is of $XXX the are your any that guidance mean did any I even it's embedded range, Okay. Fair embedded growth And million all growth enough. then blue And just in $XXX your I still millions know guidance, guidance at to of for blue a of Presumably, single-digit million. in range. blue you're wide in lot revenue kind a you fair? 'XX? assuming revenue that XXXX, not

Brian Millard

development. said, it's component million expect of assumed growth we blue in And There off do overall. XXXX. in in is number growth as in you that We of $X.X not revenues guidance had our a significant But XXXX.

Brian Lee

later repeat how the year. continue margin in this Okay. Great. two on reported might then I can then revenue missed much the last in it pass as -- through us $X to secondly, walk mechanics questions one I'll revenue of have Brian, And it me, the kind gross you but gross you I it wouldn't of as And million quarter on. guess, the catch-up for by presumably catch-up it, did? margin. the impacts have unless

of we sort in XXXX? the of expect targeted range for gross should margin materials what's So

Brian Millard

Good Yes. question.

stated was XX% that XX% total remarks guidance XXXX prepared for Our our we margin. in to gross just

essentially that cumulative X assumes So revenue. catch-up

in there so XXXX. as XXXX $X period-over-period a million of you of QX did in catch-up have revenue. was And and And between flip revenue we 'XX, catch-up cumulative said, cumulative

to the pieces about. And think so those are

Operator

question is with TD Cowen. from Our next Sankar Krish

Sreekrishnan Sankarnarayanan

a high I look of years, higher is Chinese kind historically Brian, would the curious gross of kind XXs of Is Or margin been few on margin something like, to been gross being has guidance. over some that? this more has last on? going else versus your yields say, a margin getting well couple just the I'm of in If coming there I better? is your function I mid- of above your down. customers have them, Why at gross

Brian Millard

is, to our incorporated there's of play. Yes. dynamics perspective, pricing gross One top customer at as each Krish, customers, there's line margin, material a our so of couple on factors a sell more from we of in volume contracts. units

it are down more per unit of price becoming the some fact on is of industry come as selling we're complex that as the just some dynamics So does in materials grows, as well based those pricing volume volume. The more our -- nature. just more

of some also are elements changing. the So cost structure

the the with as some So both margin. the as over has periods is that's, last as line we really I what well sure something industry seen few slight scale on and there gross But the of been think, it, scales pressure you've a a management being focusing team disciplined we lot cost making we we're aspects a time possibly spend as of that top on can. as structure and as it's

Sreekrishnan Sankarnarayanan

just what the what understand help in it, Got I I it. right. what up. in wanted to like into your follow understand 'XX takes growth Got is baked is $XX other And is of baked FY [indiscernible] it lower visibility us Is puts to in the end guidance versus the surprise upper your us? and end to revenue one the X% XX%. spread million, but the then question, limited, could

Brian Millard

we IT obviously factors across to think segments. as based mobile there as of a on segment of We that automotive the a number and in assumes certainly mean, some growth have that 'XX Yes. expect play I TV, and the I grow others. base case well

vary. So that across we're things to of board projecting. and really I factors think it's might side of potential the on that kind based the the And other just low cause high that growth are side

Operator

is question next Citi. Our with from Atif Malik

Atif Malik

I DCCR projecting. question third of look is like the I at year materials that still your below the the parties have OLED a growth teens ] it guide. guidance, end on is full high [ If high some

into for what materials? below OLED why the curtain your I'm just bit you And the guide is and being conservative? growth you little a if wondering industry So are goes it can on pull

Brian Millard

Yes.

it's baked balanced I there's and So into we conservatism forecast our guidance forecast. have. that We say wouldn't necessarily think balanced a range

the is also we So the in get in terms that we're top from intelligence it's to on you is industry our industry and reports our look where customers what in going terms expected really hearing our what as we well based similar the field. on that of as at of demand teams their the as layer feedback and customers going be from of

rolled So range the point, But certainly when right, higher. kind roll of year, this forecast that our field We this terms got published our from our is and what hope you're we're at we in we up of all we guidance for to that it's this seeing we as 'XX. up teams.

Atif Malik

like your my Chinese customers your Summer companies Chinese Great. follow-up, guys And as of domestic with understand Technology long-term some Shanxi. Scout noise and with And private hearing you have been I customers. around agreements working we've

is dynamics the are there qualified? you of a competitive domestic these And some So getting suppliers can talk in China? about just risk of

Steven V. Abramson

we seeing Well, we're localization next-generation the the of trying -- of localization what one government, to But some we long-term is from that is us are why to customers technology the with are our what work panel today OLED seeing customers suite have makers Chinese the that major coming get we future. understand industry. want and are all which have because and some and and materials requirements OLED they they in full into specification with closely solutions, working agreements signed current the these reasons all our

Operator

Kim Nam from is with question next Research. Arete Our

Nam Hyung Kim

A segment tire year? to your of do explain to commercial rough [indiscernible] this you couple IT timing or your across the then on qualification I And at expect in same first Can also year? adapted off you And production you questions year kick time? blue. also this do also, expect or wonder, the of customer next blue

Brian Millard

Thanks, Nam.

our said to progress material earlier, feel moving those We're, think specifications. the terms we've in the team made as like timeline, focused making and with to pleased we direction. on we're I the that continue date, that get now to very I again, of commercialization the sure of right commercial to is So closer right in performance our increase continue

into determine. to commercial In considered we toward for of to may feel continue customers introduce the our really portfolios, terms like material when But performance. be much product moving would our up their closer that them market that's that we're

kind that's think can I where at this So say I based as as much of point sit. on things

Nam Hyung Kim

then last some your Chinese supplier vendor. Okay. China you do picking growth much I from on production up How is this local year for customer Chinese their momentum versus because Can share business? And view increasing smartphone Chinese year? in see expect you OLED

Brian Millard

Yes.

We -- have projecting our we're materials platforms mentioned, we partnership Chinese standing. well provide our customers the growth. be We So our Steve our between and next-gen China. expect Also us as We best-in-class in to to partnerships current certainly with think as long-standing we to just as and customers. a materials. that customers, strong there's access long with

Operator

Instructions] [Operator

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

Chris Grenga

you're is for having -- around earlier. Grenga with cut I updates But on Did with partners? progress I'm potential This Jim. to Chris mention OVJP you discussions you respect sorry, any out did

Brian Millard

did we're that talked forward. We as to previously, the us certainly partnerships about not. could project we've But open OVJP help with advance

is television, to continue for sized. area believe solution the area that TV OVJP large displays, We large

had we're have to continue discussions potential to various And open and so partners. discussions and have various with

Chris Grenga

SG&A any year-over-year, that? color provide you Got it. and sequentially And could stepped down on

Brian Millard

were of then operationalized of factor site onward, $X site, the sales. biggest was so for from around first is And in half those our half first that cost for of cost costs the there XXXX we and classified before that SG&A The XXXX, of mid-'XX Sure. we to million. recording are the Shannon

contributing we reduced decrease. that are are SG&A. are is stock flowing factors factor some other compensation year-over-year two Those largest expenses had The the the to through that

Chris Grenga

would these some early I'm the showing an Apple all of recent with the to just with that if proliferation augmented any one that -- maybe curious for strike sort if case of it maybe use there's -- I'm pose some concern me videos to -- devices of just course, days, but potentially picture that potential leapfrog it earlier? the similar cited devices even would a of it. plastered bigger use cases in and more mean screens across surfaces and IT risk whatsoever would Got of household, And to launch as it reality any the displace -- some Vision and the it's the any you concern of device, rates I Apple's TV curious exposure had growth were or OLED. the

Steven V. Abramson

in to the to it We're the watching interesting. OLED. many use find there's various panel very for many, any everybody they share want many We displays, think market to makers. cases. use of seem away all take many, people We displays ways market. various AR/VR We going from And other and don't think it's wants

yet to share going going AR/VR the So don't an market any really additional We and is we again market from grow it's take anybody market see think growing. expand market to the that's opportunities. else. away

Operator

question Hosseini is next Our SIG. from Mehdi with

Mehdi Hosseini

the be going be I'm the additional follow-up repeating blue viable. commercially your One how I call for customers, one to questions think key conversation if be understand already of apologize contracts especially to Brian. to for Steven, asked, I signed. as joined late. dynamics becomes should that I I needs there about Steve, with

So the catalysts trigger giving you follow-up. would signing contract blue I or by what a or customers have that key help the And with for that supply? commitment milestones are

Brian Millard

Sure. Thanks, Mehdi.

and And this in commercial we we point -- any supply said, at those our confident at we'll of customers commercial point this for blue that them in certain stage. be have pricing that to on get schemes of blue. customers that discussion at quantities, place in we, as levels we've there. varying place don't with with blue, supplying you had to the So And we're need on able be of

place, in I we're yet specification that don't we we that point yet have the have the think since it not where is but in key to place, commercial pricing once there the to will so get that's commercial And we need just thing really performance. be

Mehdi Hosseini

of R&D Was in discuss did any recognized? you the blue revenue Brian, quarter? much And there was the Okay. how recognized

Brian Millard

Yes.

of blue $X.X year million was developmental there So full sales. QX and XXXX in for $X.X million

Mehdi Hosseini

the to for I model Got OpEx a OpEx relative and it. 'XX growth? just 'XX follow-up And quick in How -- should you. then

Brian Millard

I Yes. XX% to OpEx referenced increase a In in prepared year-over-year. XX% remarks, my

now. modeling best assumption the that's So for

Operator

Our next Martin question is Company. Yang Oppenheimer from &

Martin Yang

payments If we revenues If on adjust so, are contributed decline? did the key that what in factors the still material year-over-year revenues, 'XX. to that for catch-up declined year-over-year

Brian Millard

Martin, royalty our material line, so through cumulative the sales not catch-up and majority adjustments actually of our license the line. flow

that it. So necessarily for be wouldn't the to adjust way

Martin Yang

are sales decline drivers What 'XX? in the it. for key material in year-over-year the Got

Brian Millard

Well, we had relatively volumes. flat

Our play volumes certain then relative period-over-period, that'll had than call were mix down differences, to less sales, as X% can into We the then which would flat. some blue that and also development increased so remainder be XXXX. coming price you customer be offset by were

Martin Yang

any did milestones And volume XQ? in customers top hit pricing

Brian Millard

we that revenues. an So the on pricing over the -- to to average on basis what pricing model we way and the way do price accounting have our have term, going estimate full on is is be revenue based the we to based X-year volumes estimate

assumptions were And there million $X -- in normal our in were changes in changes. But resulted every there assumptions changes So referenced. cumulative quarter, those that are I that. catch-up QX, related there course to that in

Martin Yang

any is customer is, question in XQ and A, C? XX% Last customers it. Got than there B other 'XX

Brian Millard

just those three. No,

Operator

question-and-answer I over like the closing We comments. Brian turn of have to the our would reached conference end to for back session.

Brian Millard

today. support. Thank for you We interest appreciate your your and all time

Operator

will conclude today's This you. Thank conference.

thank participation. your at may disconnect for and time, you You lines this your

Universal Display (OLED) 22 Feb 242023 Q4 Earnings call transcript