Universal Display Corporation

Good day, ladies and gentlemen, and welcome to Universal Display Corporation's third quarter 2022 earnings call. My name is Sheri 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 anybody 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 Darius Liu, Senior Director of Investor Relations. Please proceed.

Thank you and good afternoon, everyone. Welcome to Universal Display's third quarter earnings conference call. Joining me in the call today are Steve Abramson, President and Chief Executive Officer, and Brian Millard, 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 written consent 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 November 3, 2022. 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 maturely. These risks and uncertainties are discussed in the company's periodic reports filed 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. Let me first introduce Brian Millard and welcome him to his first universal display earnings call. Brian joined our company in early September as our chief financial officer. With his deep financial, operational, and strategic acumen, I am confident that Brian will enhance our executive team and help our company continue to grow and prosper. Now to our results. Third quarter 2022 revenue reached a record high of $161 million, operating profit was $68 million, and net income was $53 million, or $1.12 per diluted share. As we look ahead, we believe the long-term growth path of the OLED industry remains strong. The near-term OLED demand may fluctuate due to uncertainties in the macro economy. We continue to believe that 2024 will be a pivotal year for the OLED industry and for us. We believe that a number of panel makers are planning Gen 6 and Gen 8 OLED investments, setting the stage for a significant multi-year CapEx growth cycle. Manufacturers and OEMs are slated to advance the OLED adoption curve to medium and large area displays, with OLED IT being a key near-term focus. As an integral enabler and partner in the OLED ecosystem, these new capacity plans translate into new revenue opportunities for us and a positive growth trajectory for years to come. According to market research firm UBI, OLED shipments for IT products, such as tablets, notebooks, and monitors, are expected to grow more than 400% in the next five years, with unit shipments increasing to 48.8 million units in 2027, up from 9.5 million units in 2022. UBI also noted that Korean and Chinese panel makers are expected to invest in IT OLED lines, with leaders Samsung Display, LG Display, and BOE already planning to invest in new Gen 8.7 production. At the end of August, During the IMIC conference in Korea, Samsung Display announced it will invest in Gen 8 OLED capacity and estimated that this new capacity will be in operation by 2024. SDC also forecasted that the OLED market will reach approximately $100 billion by 2030, more than doubling from today's OLED market, which is estimated to reach about $45 billion by the end of 2022. AR, VR, augmented reality, and virtual reality is also gaining buzz in the OLED industry. In early September, at a Metaverse conference, LG Display announced that it believed OLED on silicon will be the main display used in future Metaverse devices. It has been reported that LG Display and SK Hynix are forming a partnership to produce micro-OLED displays. It has also been reported that BOE recently established an AR, VR department that includes its Kunming micro OLED division. As a company, we are continuing to reinforce and expand our leadership position in the OLED ecosystem. With our deeper, broad experience and know-how of more than 25 years of pioneering research, we are continuing to innovate, invent, and introduce new OLED phosphorescent emissive materials, including new reds, greens, yellows, and hosts. With respect to blue, We continue to make excellent progress in our ongoing development work for a commercial phosphorescent blue emissive system. We continue to believe that we are on track to meet preliminary target specs with our phosphorescent blue by year end, which should enable the introduction of our all-phosphorescent RGB stack into the commercial market in 2024. We believe that the commercial introduction of our full-color emissive stack will unlock a vast array of opportunities for higher energy efficiency and higher performance across a broad range of OLED applications. On the OVJP front, we are pleased to report that we achieved a key performance milestone. We are now able to print two layers, the red, green, and blue phosphorescent emissive layer and the prime layer or electron blocking layer. Additionally, these OVJP printed RGB folio devices have comparable performance as OLED devices fabricated using traditional vacuum thermal evaporation. This represents a significant milestone in our OVJP roadmap of printing all the organic layers in an OLED device. On that note, let me turn the call over to Brian.