Universal Display Corporation

Good day, ladies and gentlemen, and welcome to Universal Display's first quarter 2021 earnings conference call. My name is Shari, 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the call over to Darice Liu, Director of Investor Relations. Please proceed.

Thank you, and good afternoon, everyone. Welcome to Universal Display's first quarter earnings conference call. Joining me on the call today are Steve Abenson, President and Chief Executive Officer, and Sid Rosenblatt, Executive Vice President and Chief Financial Officer. Before Steve begins, Let me remind you that today's call is a property of Universal Display. Any redistribution, retransmission, or rebroadcast of any portion of this call in any form without the express or inconsent of Universal Display is strictly prohibited. Further, this call is being webcast live and will be made available for a period of time on Universal Display's website. This call contains time-sensitive information that is accurate only as of the date of the live webcast of this call, May 6, 2021. During this call, we may make forward-looking statements based on current expectations. These statements are subject to a number of significant risks and uncertainties, and our actual results may differ materially. These risks and uncertainties are discussed in the company's periodic reports, followed with the SEC, and should be referenced by anyone considering making any investments in the company's securities. Universal Display disclaims any obligation to update any of these statements. Now, I would like to turn the call over to Steve Abramson.

Thanks, Darius, and welcome to everyone on today's call. We are pleased to report that revenue in the first quarter of 2021 was $134 million, operating profit was $63.6 million, and net income was $51.7 million, or $1.08 per diluted share. Since our last earnings call, momentum in the OLED market continues to grow in small, medium, and large consumer electronic applications. We are seeing a growing proliferation of OLED smartphones, ranging from premium and mid-range to low-end and foldable, that have launched and are slated to be launched this year. OLED TV demand continues to rise. Omnia Market Research recently reported that the average price of a 55-inch OLED panel declined 8.1% year-over-year in the first quarter of 2021, while LCD panel prices increased 73.9% in the same period. As a result, the price delta between OLED and LCD TVs has further narrowed to $310 from $440. The OLED IT market is burgeoning with the launch of new products. Just last month, new OLED laptops, including the Xiaomi Mi Laptop Pro 15 and Dell XPS 139310 were unveiled. And in the gaming market, there are reports that for the first time, Nintendo has selected an OLED screen for the new Switch Pro due to OLED benefits of higher contrast and faster responses. The adoption of OLEDs continues to expand, and it is fueling the multi-year OLED CapEx growth cycle in which we are in. In March, Samsung Display announced that it will aggressively expand its OLED presence in the gaming, smartphone, and laptop markets. Samsung noted that its OLED displays a valuable feature befitting premium gaming content, such as fast response times, vibrant colors, and deep blacks. Last week, Samsung held its Galaxy Unpacked event and unveiled its Samsung Galaxy Book Pro and Galaxy Book Pro 360 OLED laptops. These are Samsung's first-ever Windows PC with Super AMOLED displays. Swiss certification and testing company SGS awarded the Galaxy Book Pro and Book Pro 360 with eye care display certification for reducing the harmful effects of blue light emissions compared to standard LCDs. And during its recent earnings call that also took place last week, Samsung commented on the growing adoption of OLED displays from flagship and mass market smartphones to entry-level models growing year over year. The company also noted the growing contribution of OLED tablets, PCs, and wearables, while also highlighting that it was continuing to advance its first mover lead in OLED displays. LG Display announced on its recent earnings call that its first quarter 2021 OLED TV shipment level was on par with its seasonally strong fourth quarter 2020 shipments of 1.6 million units and reiterated its target of 7 to 8 million OLED TV units this year. In addition, it has been reported that LG Display will proceed with its investment for additional capacity at its OLED TV plant in Guangzhou, China. LGD's second OLED TV fab's current capacity is 60,000 plates per month of Gen 8.5 substrates. The new phase will add 30,000 plates per month of capacity, bringing the Guangzhou facility to 90,000 plates per month. On the small and medium front, it has been reported that LGD is progressing with design wins in the smartphone and automotive markets. In late March, Mercedes, a reported partner of LG Displays, unveiled the interior cabin of its new flagship electric car, the EQS. It has a unique 56-inch flexible OLED display that is made from three different OLEDs that spans almost the entire width of the car. EOE Technology recently announced that it shipped approximately 36 million flexible AMOLED panels in 2020. As BOE looks to 2021, it is targeting to double its AMOLED panel shipments once again. On the capacity front, it has been reported that BOE's third Gen 6 OLED fab in Chongqing will start production this year. This new fab, when fully ramped, will have a capacity output of 48,000 plates per month, similar to BOE's two other Gen 6 fabs in Chengdu and Mianyang. In late March, Tien Ma held a ceremony to celebrate its new R&D center called the Hubei Yangtze River Novel Display Innovation. According to reports, one of the products that Tien Ma showcased at the event was COE, or Color Filter on Encapsulation Technology, which Tien Ma calls CFOT, or Color Filter on Touch for Foldable Displays. And last month, Visionox announced additional smartphone design wins with Honor, The panel maker is currently ramping its new Gen 6 flexible OLED fab in Hefei, which has a capacity start of 30,000 plates per month. Switching gears to OLED lighting, Audi unveiled a new concept electric car, the A6 e-tron, at Auto Shanghai last month. As noted by Audi, one new feature is the three-dimensional OLED taillights. This architecture makes it possible to experience a dynamic OLED light show, not only in two dimensions, but with an impressive 3D spatial effect. Aldi also noted that the ultra-bright, homogenous, and high-contrast digital OLED combination taillights can increase the level of safety on the road. As OLED activity continues to flourish, we remain steadfast in our commitment to advancing our robust OLED materials and technology leadership. On the materials front, we are investing, innovating, and commercializing new emissive materials and technologies, including new reds, greens, yellows, and hosts. With respect to blue, we continue to make excellent progress in our ongoing development work for our commercial phosphorescent blue emissive system. We also continue to advance our work in organic vapor jet printing, our novel manufacturing process for maskless, solventless, dry direct printing of large area OLED panels and expect to have an alpha system during 2022. It has been an exciting time in the OLED industry and for us. Since our last call with you, we announced that along with PPG, we are jointly establishing a new manufacturing site in Shannon, Ireland, for the production of our highly efficient, high-performing universal full-end materials. The new facility will be designed to double the production capacity and diversify the manufacturing base for our phosphorescent emitters to meet the growing OLED market demand and evolving industry requirements. We also announced new extended OLA technology license and material purchase agreements with LG Display and Visionox. Both agreements run for five years until the end of 2025. And last month, Universal Display Corporation was named to Financial Times, the America's fastest-growing company's 2021 list. On that note, let me turn the call over to Sid.