Universal Display Corporation

to Darice Liu, Senior Director of Investor Relations. Please proceed.

Thank you, and good afternoon, everyone. Welcome to Universal Display's fourth quarter earnings conference call. Joining me on 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 is 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, February 22nd, 2024. 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. 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'll begin with a recap of 2023 and then provide insights into the vast array of opportunities that are fueling our and the OLED market's strong trajectory. Our 2023 revenue was $576 million, operating income was $217 million, and net income was $203 million, or $4.24 per diluted share. Fourth quarter revenue was $158 million, operating income was $65 million, and net income was $62 million, or $1.29 per diluted share. While soft consumer spending in the smartphone and premium TV markets tempered our 2023 financial results, we continued to foster our strong partnerships, advance our strategic and operational initiatives, enhance our corporate culture, and fortify our leadership position in the OLED ecosystem. During the year, we announced new long-term multi-year agreements with BOE Technology Group. We celebrated the grand opening of our new manufacturing site in Shannon, Ireland. This site broadens our global footprint and is designed to produce red, green, and blue phosphorescent emissive materials. We further enhanced our global IP framework with the acquisition of Merck KGAA's phosphorescent emitter portfolio of more than 550 patents and 172 patent families. 2023 was also another year of continued recognition for our company. We were named to the Wall Street Journal's list of best managed companies, recognized by Newsweek as one of America's greenest companies, awarded a silver rating for corporate social responsibility from EcoVedas, and recognized again by the Forum of Executive Women as a champion of board diversity. As a pioneer and leader, we are at the forefront of energy-efficient OLED material solutions, and best-in-class enabling OLED technologies. 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 introduce a phosphorescent blue that meets commercial specifications into the market in 2024. We believe the expansion of our phosphorescent portfolio that includes 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. We also achieved multiple OVJP milestones during the year, including the printing of the world's first-ever high-resolution RGB side-by-side full-LED stack with comparable performance to vacuum thermal evaporation. Looking ahead to 2024 and beyond, We anticipate growth as we capitalize on the investments we're making and the extensive range of opportunities that lie before us, including the commencement of an OLED IT adoption cycle, further penetration in the smartphone market, including the rise of foldables, OLED TV growth, the burgeoning OLED automotive market, as well as AR, VR, wearables, gaming, and signing. We are well positioned to enable the continued proliferation of OLEDs across the consumer landscape and to drive value for our customers. Market research firm Omdia foresees OLED growth in multiple consumer electronic markets in the coming years and forecasts that smartphone OLED panel shipments will increase to 855 million units in 2030 with a CAGR of 5% from 2023. as more mid-range phone OEMs design OLEDs as a preferred display of choice. We estimate that OLED penetration in the smartphone market will increase from today's approximately 50% to 65% in 2030. For foldable smartphones, TrendForce forecasts that shipments will increase from 18.3 million units in 2023 to approximately 70 million units in 2027, capturing about 5% of the smartphone market. According to Omdia, OLED tablet shipments are expected to reach 32 million units in 2030 for a CAGR of 37%. OLED notebooks are expected to increase to 58 million units in 2030 for a CAGR of 51%. We have already seen brands like Samsung, Lenovo, HP, Dell, Asus, and Xiaomi adopt OLED into their PC product portfolio, and we expect the trend to continue. OLEDs make up an estimated 2% of today's global PC and tablet market, but by 2030, that penetration rate is expected to increase to approximately 20%. Note that this does not include OLED monitors, which are currently less than 1% of the PC monitor market. OMDIA forecasts that OLED monitor units will grow from less than 1 million units in 2023 to close to 5 million units in 2030. OEMs increasing interest And OLED monitors were evident at last month's CES, where there was a strong showing of new OLED monitors, including a number of models geared for gaming. In the OLED TV market, AMD is forecasting 12 million units in 2030 for a CAGR of 11%, or approaching an estimated 6% penetration of the TV market. The automotive OLED market is a nascent opportunity where momentum is beginning to build. Continental Automotive notes that in addition to being aesthetically pleasing to users because of the brilliant deep black background for contrast, impressive wide color space, 180-degree viewing angle, and slim design, OLED displays are also highly sustainable and energy-saving. Omdia forecasts that OLED shipments for the automotive market will increase to 13 million units in 2030 for a CAGR of 42%. OLEDs are also being designed as car taillights. During CES, OLED Works showcased its latest OLED lighting technology for the automotive industry. From an OLED capacity standpoint, the proliferation of OLEDs in these diverse market verticals is expected to drive utilization rates up and prompt new OLED capacity to be built. We estimate that 2023 installed base of OLED square meter capacity increased by approximately 11% over year-end 2021 as a soft macro weight on install plans. Market research firm DSCC estimates that OLED utilization rates were an average 57% in 2023. As we look out, we estimate that year-end 2025 installed OLED capacity as measured in square meters will increase by approximately 10% over year-end 2023. This forecast includes Samsung's $3 billion investment and the first phase of BOE's $9 billion investment for the respective new Gen 8.6 IT fabs. These new plants are slated to begin production in 2026. We believe that we are embarking on an exciting new multi-year capex cycle and anticipate additional new OLED fab investment announcements. And on that note, let me turn the call over to Brian.