Universal Display Corporation

Good day, ladies and gentlemen, and welcome to Universal Display Corporation's first quarter 2024 earnings conference call. My name is Sherry, and I will be your conference moderator for today's call. If anybody needs 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 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 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 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. 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 2nd, 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 are pleased to report strong results for our first quarter of twenty twenty four. Revenue was $165 million, operating profit was $63 million, and net income was $57 million, or $1.19 per diluted share. With a strong start to the year and OLED momentum continuing to build, we are raising the low end of our annual guidance range. We now believe that our 2024 revenues will be in the range of $635 million to $675 million. As we look to the industry, OLEDs continue to play a more significant role in shaping the future of displays. One nascent segment that is poised for significant growth is the OLED IT market. Since the beginning of the year, several device makers announced new OLED IT products, including ASUS, HP, Acer, Dell, Razer Blade, and MSI. And there are a number of expected new product introductions on the horizon. According to Omnia market research, OLED tablets are expected to increase by more than threefold year over year, growing from 3.7 million units in 2023 to 12.1 million units in 2024. The market researcher also forecast that OLED notebook units will grow 50% year over year, from 3.4 million units in 2023 to 5.1 million units in 2024. This translates into total mobile OLED PC units growing from 7.1 million units in 23 to 17.2 million units in 2024, and is expected to reach 72.3 million units by 2028, which represents just 14% of the total mobile PC display market. Supporting this strong growth is new OLED capacity. In early March, Samsung Display held a ceremony for the commencement of construction of the world's first Gen 8.6 OLED IT production line in ASAN. According to reports, Samsung plans to begin equipment installation this year and start mass production in 2026. The 15,000 plates per month OLED IT line is estimated to be capable of producing an equivalent of 10 million laptop panels per year. Also held in March was BOE's groundbreaking ceremony for its Gen 8.6 OLED IT fab in Chengdu. This greenfield fab is designed for 32,000 plates per month and is expected to begin production in the fourth quarter of 2026. With reports that other panel makers are preparing for new investments as well, we believe that this is just the beginning of a multi-year OLED CapEx growth cycle. The many benefits of OLEDs continue to fuel the continued penetration in the smartphone market. DSCC market research expects OLED smartphone units to increase by 11% year-over-year in 24, with flexible OLED increasing 9% year-over-year and rigid OLEDs increasing 17% year-over-year. The innovative designs, coupled with the versatility and convenience of foldable smartphones and tablets, continue to garner significant interest from OEMs, panel makers, and consumers. UBI research forecasts that foldable OLED shipments will grow 25% year-over-year to 27.4 million units in 2024 and will almost double by 2028, reaching 52.7 million units. The popularity of conformable, foldable, and rollable OLEDs was evident at Mobile World Congress. At the show, fans of foldable technology could see how OLEDs are enabling innovative devices, displays that could be folded both in and out, rollable panels that can wrap around your wrist as well as roll out from a smartphone display into a tablet, and foldable and slidable IT products that extend the screen size. OLED TVs are also expected to grow this year. According to Omdia, OLED TV shipments will increase by more than 30% year over year, from 5.3 million units in 2023 to 7.2 million units this year. Another segment of the OLED market that is beginning to take off is aviation. Last month, Panasonic Avionics announced that it shipped the first batch of its Astrova 4K OLED in-flight entertainment monitors. These monitors will be installed in one of Icelandair's forthcoming Airbus aircraft beginning in the fourth quarter of this year. Qantas, United Airlines, Egypt Air, Saudi Arabia Airlines, and Qatar Airways are also planning to adopt Panasonic's new 4K OLED screens. According to Panasonic Avionics, the image quality of the 4K OLED is sharper, clearer, and with infinite contrast ratio, it delivers a similar quality image and perfect black. Panasonic also noted that it provides a better viewing experience than has ever been available before on a commercial aircraft. We are excited for the extraordinary opportunities in enabling the OLED products of today and the future. As we look to our company, innovation has been the cornerstone of our ethos. It is the engine that reinforces our leadership position, expands our reach, and propels us forward. Our commitment to innovation is steadfast. Our R&D teams are continuously inventing, designing, developing, and commercializing next generation reds, greens, yellows, and hosts to meet the ever changing and ever evolving customer specifications. Regarding 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 introduce a phosphorescent blue that meets commercial specifications into the market in 2024. We believe that 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. Regarding OVJP, we continue to make advancements with our organic vapor jet printing manufacturing technology for direct printing OLED TVs without the need for masks or solvents. The OVJP team continues to focus on scaling our novel technology platform. This year's SID Display Week is less than two weeks away. To learn more about UGC, please visit our booth in San Jose. On that note, let me turn the call over to Brian.