Universal Display Corporation

Good day ladies and gentlemen and welcome to Universal Display Corporation's first quarter 2023 earnings conference call. My name is Paul and I will be your conference moderator for today's call. At this time, all participants are in a listen-only mode. A brief 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 is being recorded for replay purposes. I would now like to turn the conference call over to Darius Liu, Senior Director of Investor Relations. Please proceed.

Thank you, and good afternoon, everyone. Welcome to Universal Display's first 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 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, May 3, 2023. 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 filed with the SEC and should be referenced by anyone considering making any investments in the company's securities. The 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. For the first quarter of 2023, we reported revenue of $130 million, operating profit of $45 million, and net income was $40 million, or 83 cents per diluted share. Macro uncertainties continue to linger and weigh on near-term demand. However, we remain confident in the long-term growth path of OLEDs. In addition to the significant IT adoption cycle that is expected to commence next year, OLED activity is increasing in several segments of the consumer electronics landscape. Last month, Samsung Display announced a $3.1 billion investment to retrofit its Asan plant to a Gen 8.6 OLED IT facility, and it has been reported that other leading panel makers are planning to invest in new capacity as well. Fueling this new CapEx is the nascent OLED IT market. According to Omnia Market Research, 470 million displays for IT products were shipped last year and only 9.1 million units, or 2%, were OLED. OMDIA forecasts that due to leading OEMs broadening their adoption of OLED in their product portfolio, IT OLED panels will reach 12.9 million units this year and will double to 25.4 million units next year. And by 2028, OLED tablet and notebook panel shipments will reach 74.3 million units. Foldables is another area of growth and excitement. DSCC forecasts that foldable smartphone shipments will increase 45% year-over-year in 2023 to 18.6 million units. DSCC expects to see at least 37 different foldable models shipped this year from 10 different brands, with Google, OnePlus, and Techno entering the foldable market for the first time. This is an increase from last year when there were 19 different foldable smartphone models from seven different brands. IDC, another market research firm, projects a five-year CAGR of 27.6% for foldable phone shipments as units reach 48.1 million units in 2027. Switching gears to automotive, according to Omdia, the automotive industry has emerged as a key market for displays. becoming the fifth largest display application market in terms of shipments as of 2022. Omnia forecasts that shipments in the automotive OLED display market will surge to 6.9 million units in 2027 from 770,000 units in 2022, thanks to OLED display's rapid response rate, low power consumption, lightweight, and slim design. In just the past three months, Samsung Display signed an agreement with Ferrari to develop OLED displays for Ferrari's next generation models. LG Display is reportedly planning to supply a 30-inch OLED panel for electric car maker Lucid's upcoming models. Buick showcased its first electric SUV, the 2025 Electra E5, in China with a 30-inch curved OLED dashboard display. And Hyundai Mobus, developed the world's first 30-inch rollable OLED display for automotive applications. And for large area OLED panels, LG Display announced it will release a 77-inch transparent OLED product by the end of this year. And Samsung Display announced that its hybrid QD OLED panel yield now exceeds 90%. We work closely with our customers as they map out their new product introductions for the coming years, and we are developing new OLED technologies and materials to support their product roadmaps. We have crafted a comprehensive approach for the invention of energy-efficient, high-performing phosphorescent materials. This includes our machine learning, synthetic, mechanistic, analytical, and process chemistry expertise, all created and driven by our global team of scientists, engineers, and technicians. We are continuously discovering, developing, and delivering next-generation reds, greens, yellows, and hosts to meet the ever-changing and ever-evolving specifications for energy efficiency, operational lifetime, and color gamut. As a pioneer in the OLED ecosystem with approximately three decades of experience and know-how, we are leveraging our first-mover advantage and continue to be at the forefront of the OLED materials industry. With respect to blue, we continue to make excellent progress in our ongoing development work for our commercial phosphorescent blue emissive system. We continue to believe that we are on track to introduce our all-phosphorescent RGB stack into the commercial market in 2024. We believe that the introduction of our full suite of red, green, and blue phosphorescent emissive materials 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 making advancements with our groundbreaking dry printing manufacturing process platform. Two critical milestones that we are currently driving towards are the printing of all layers in the OLED device and achieving scaled print uniformity. We believe that achieving these milestones will be significant in our path to commercializing OVJP. To learn more about UDC, including our phosphorescent OLED and OVJP programs, please visit booth 828 at SID Display Week in Los Angeles later this month. Additionally, this afternoon we announced the acquisition of Merck KGAA's Phosphorescent Emitter Portfolio and a new multi-year collaboration agreement. The portfolio encompasses over 550 patents in 172 patent families, and will complement and boost our strong global IP framework of more than 5,500 issued and pending patents. The new collaboration pertains to certain UDC green and yellow phosphorescent emitters for use with Merck KGAA's transport and host materials to create advanced full lead stacks. On that note, let me turn the call over to Brian.