Universal Display Corporation

Good day, ladies and gentlemen, and welcome to Universal Display Corporation's third quarter earnings conference call. My name is Sherry, and I will be your conference moderator for today's call. All participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anybody needs operator instructions, assistance, 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, Director of Investor Relations. Please proceed.

Thank you, and good afternoon, everyone. Welcome to Universal Display's third 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. 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, October 30, 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'd like to turn the call over to Steve Abramson.

Thanks, Darius, and welcome to everyone on today's call. Our third quarter revenue was $162 million, operating profit and net income were $67 million, and earnings per diluted share was $1.40. 2024 is another year of growth. Growth that positions us for record revenues and record profits. The rate of growth, though, is expected to be more modest than previously projected. The first half of the year started off on a strong note, but as we approach the end of the third quarter, customers lowered their forecast for Q4. Given the downward trend of forecast revisions, we are revising our 2024 revenue forecast range to $625 million to $645 million. While lower than expected fourth quarter sales have tempered this year's pace of growth, we continue to believe in the tremendous trajectory of the OLED market as activity across the consumer electronics landscape expands with new OLED AR, VR devices, smartwatches, smartphones, IT, automotive, and TVs. Near term, we expect the IT market to be the primary driver of growth. Omnia forecasts that mobile OLED PCs are expected to grow to 69 million units in 2028, up more than 150% from an estimated 26 million units in 2024. This growth momentum is driving a new multi-year capex cycle here for the medium-sized OLED market. During the quarter, VisionOx broke ground on its new $7.7 billion Gen 8.6 OLED facility in Hefei. Similar to BOE's $9 billion Greenfield Gen 8.6 OLED plant, VisionOx's new fab will be designed with a monthly capacity of 32,000 plates per month. Add that to Samsung Display's $3 billion, 15,000 plate per month Gen 8.6 OLED IT facility. That brings the current total investments for new Gen 8.6 OLED facilities to approximately $20 billion. And we believe further investments are in the works. New OLED module factories are also on the rise. According to reports, VisiDocs completed the construction of its new $1.6 billion Gen 6 OLED flexible OLED module factory in August, and Samsung Display recently decided to invest $1.8 billion to build a new OLED module production line in Vietnam, mostly to produce IT and automotive OLED modules. Speaking of OLEDs and automotive, during the quarter, myriad automotive makers, including Audi, Lotus, Zeekr, and Hongxi unveiled new car models with OLED screens. And some of those models were designed with both OLED displays and OLED taillights. From OLED's low power consumption, enabled by our phosphorescent materials and technology, to OLEDs being lighter, thinner, and inherently conformable, bendable, and rollable, as well as numerous other benefits, OLEDs are enabling greater design flexibility and energy efficiency with brilliant picture quality and fast refresh in the automotive market. although it's continued to push the form factor and boundaries of consumer electronics products. During the quarter, the world's first tri-fold, the Mate XT, was launched to much fanfare as the first device that transforms from a 6.4-inch smartphone-sized screen into a full 10.2-inch tablet. Tri-foldables are not the only form factor broadening the definition of what a consumer product can be. According to reports, Samsung is progressing with its rollable OLED development project and plans to launch its first rollable smartphone next year. These reports note that Samsung's rollable phone, when fully open, will sport a large 12.4-inch display. UBI research forecasted by 2028, foldable phones will make up almost 10% of total OLED smartphone shipments, up from 5% today. On the R&D front, we continue to collaborate closely with our customers and are developing new OLED materials and technologies to support their growing product roadmaps. We are continuously discovering, developing, and delivering next-generation reds, greens, yellows, and hosts to meet the ever-changing and ever-evolving specifications for color point, energy efficiency, and lifetime. Regarding blue, we continue to make excellent progress on our ongoing development work for a commercial phosphorescent blue emissive system. We continue to believe that the additional time needed to introduce a commercial phosphorescent blue into the marketplace will be measured in months and not years. When a commercial phosphorescent blue is adopted in an OLED device, we believe that the benefits will be significant for the industry, for consumers, and for us. With OVJP, we continue to make progress. We believe that enabling red, green, and blue side-by-side manufacturing of OLED TVs efficiently and with fast tack time can revolutionize the large area OLED landscape. On that note, let me turn the call over to Brian.