Universal Display Corp Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Lee - Goldman Sachs & Co. LLC - Analyst : Hey, everyone. Good afternoon. Thanks for taking the questions. I want to start off with blue because I know blue is obviously a key focus. And as you said, Steve, at the outset of the call, it's getting closer than ever. You originally updated the blue timeline in the language, months not years, I think, on the August call. We're sitting here now in late February. It's still months, not years. If we kind of dial back to when you first started using that terminology, it would presumably mean months, not years, before the end of calendar 2025. Are you willing to commit to that type of finite timeline, or are you starting the clock over here in February, months, not years, where months from here could actually be early '26?

Question: Brian Lee - Goldman Sachs & Co. LLC - Analyst : Okay, fair enough. We'll keep tracking the progress on that. I guess, question for you, Brian, maybe just on kind of the modeling for this year. I appreciate all the moving pieces. Always helpful to get all those line items. Last year was kind of one of the more linear revenue growth years we've seen for you guys. There was not a lot of seasonality from first half to second half. Honestly, all the quarters were somewhat in the same revenue ballpark. As we think about your $640 million to $700 million revenue guidance for the full year '25, is seasonality coming back to a more normal cadence in '25 as we think about first half, second half trends, Q1 being kind of a low point for the year? Or are there reasons, drivers, product cycles, et cetera, that you have visibility into that would suggest '25 looks, again, like '24?

Question: Brian Lee - Goldman Sachs & Co. LLC - Analyst : Okay, great, and then last one and I'll pass it on. I think last quarter you guys had mentioned a little bit of inventory. I believe it was related to China. I don't know if that was LG China or just other China manufacturers. Can you kind of update us on what you see out there in terms of inventory status? Is that all clear into the early part of '25? Are you seeing any drag from that to start the year? Thank you, guys. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. FEBRUARY 20, 2025 / 10:00PM, OLED.OQ - Q4 2024 Universal Display Corp Earnings Call

Question: Brian Lee - Goldman Sachs & Co. LLC - Analyst : Okay, thank you. Thanks, Brian.

Question: Scott Searle - ROTH Capital Partners LLC - Analyst : Hey, good afternoon. Thanks for taking the questions. Nice job to end up here with the record results. Hey, Steve, in terms of looking at your customers, I guess tolling off on Brian's question, it doesn't sound like there's a tremendous amount of inventory that's out there with those customers. I'm wondering if you could elaborate on that a little bit. Looking through the geographic mix, it doesn't seem like there were any major pre-buys or otherwise ahead of potential tariffs. So I'm wondering if you could just clarify that, the sequential progression that you would expect from December into March for materials, and how the geopolitical situation, particularly from a tariff standpoint, is expected to impact some guys in 2025.

Question: Scott Searle - ROTH Capital Partners LLC - Analyst : That's it. That's helpful. And maybe to follow up in terms of the '25 guidance, $640 million to $700 million, I'm wondering if you could articulate the swing factors at the lower end of the range to the higher end of the range. I know it's only middle of February at this point in time. But also, if blue is included in that, I think your past policy has not been to include it in your assumptions. I'm just kind of wondering if the current thought patterns are all backed up. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. FEBRUARY 20, 2025 / 10:00PM, OLED.OQ - Q4 2024 Universal Display Corp Earnings Call

Question: Scott Searle - ROTH Capital Partners LLC - Analyst : Okay. Lastly, if I could, just from a capacity addition standpoint, I think you said 10% by the end of 2025 versus the end of 2023. But there are quite a large number of fabs that are expected to ramp into production, I think, in the second half of 2026. I know you probably won't get out ahead of your schemes in terms of providing projection to 2026. But at this point in time, would you expect to see an inflection in terms of the growth beyond double digits or beyond 10% as we get into 2026 from a capacity standpoint? Thanks.

Question: Mehdi Hosseini - Susquehanna International Group, LLP - Analyst : Yes, thanks for taking my question. A couple of follow ups for me. On the blue topic, can you help me understand the depth and diversity of the customers that are evaluating? Is that just limited to your largest customer, or are those customers from different regions are actually evaluating the blue?

Question: Mehdi Hosseini - Susquehanna International Group, LLP - Analyst : Sure, sure. And just to -- for us to better understand the milestones and the thought process, when you say you are months away from commercialization, not years, is that across the board? Or is there any customer that is ahead of others?

Question: Mehdi Hosseini - Susquehanna International Group, LLP - Analyst : Okay. And then the last one for me, actually sticking with the blue topic, was there -- is there anyone who can help me understand the R&D revenue associated with blue that you're able to generate? I'm assuming that you're still able to generate a little bit of revenue from the host. So if I just take your material revenue, the rest outside of emitter, how much of R&D blue is included?

Question: Mehdi Hosseini - Susquehanna International Group, LLP - Analyst : Got it. Thank you.

Question: James Ricchiuti - Needham & Co. LLC - Analyst : All right, thanks. I don't know if you're going to be in a position to answer this either, but just with respect to the timeline for blue, can you say whether you are in discussions regarding a blue license agreement with your largest customer, or do you just anticipate this occurring once you have a commercial design one to talk about?

Question: James Ricchiuti - Needham & Co. LLC - Analyst : Okay. Brian, just with respect to the '25 guidance, is there any unusual variations in pricing for your materials versus 2024? Or is this, the guide, mainly just a function of the weak, uncertain consumer electronics outlook or maybe a combination of both?

Question: James Ricchiuti - Needham & Co. LLC - Analyst : Thank you. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. FEBRUARY 20, 2025 / 10:00PM, OLED.OQ - Q4 2024 Universal Display Corp Earnings Call

Question: Steven Chin - TD Securities (USA) LLC - Analyst : Hi. Thanks for taking my questions. This is Steven calling on behalf of Krish. First one, if I could, on sort of the smartphone market. Thanks for some of the color earlier and the prepared remarks about, I guess, the estimated number of smartphones to use OLED displays in the coming years. Just kind of curious, for those targets that you mentioned, or at least market projections, do you anticipate sort of a linear progression in terms of the rising penetration rates? Or might there be -- might that be a bit more weighted towards the later parts of that forecast period,

Question: Steven Chin - TD Securities (USA) LLC - Analyst : Got it. Thanks. And a quick follow up on operating expenses. So Brian, you mentioned that SG&A will be up this year. Kind of curious, what are some of the drivers for that? And I guess looking a little further out, is that dynamic going to sort of refer back to a more normalized, like both R&D and SG&A growing kind of in tandem going forward after that?

Question: Steven Chin - TD Securities (USA) LLC - Analyst : Got it. If I could squeeze one more in, also about operating costs. Just with the OVJP operations restructuring and movement of a big portion of the operations to Singapore, I was curious, are you able to quantify what that cost savings is by moving operations to Singapore compared to in California? And any thoughts on timeline to mature revenues from a strategic standpoint for that business? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. FEBRUARY 20, 2025 / 10:00PM, OLED.OQ - Q4 2024 Universal Display Corp Earnings Call

Question: Steven Chin - TD Securities (USA) LLC - Analyst : Okay, great. Thank you.

Question: Martin Yang - Oppenheimer & Co., Inc. - Analyst : All right, thank you for taking my question. A quick follow up on the previous speaker regarding OpEx. Is there any other cuts or incremental savings on R&D other than OVJP for 2025?

Question: Martin Yang - Oppenheimer & Co., Inc. - Analyst : Thanks, Brian. My next question is around this year's guidance. How much of your outlook regarding new installed capacity by the end of '25? How much of that is a factor in your guidance, more specifically in your annual revenue growth?

Question: Martin Yang - Oppenheimer & Co., Inc. - Analyst : Thank you. My last question is just to confirm your comment on blue. So when you initially said blue's delay is in months, not years, essentially, that clock starts ticking -- in your original intention, starts ticking from the beginning of '25 or end of '24.

Question: Martin Yang - Oppenheimer & Co., Inc. - Analyst : Thank you, Brian. That's it for me.

Question: Atif Malik - Citigroup Global Markets, Inc. - Analyst : Hi. Thank you for taking my questions. Brian, your materials sales, they grew 14% last year, and you're seeing maybe a 4% type growth this year, so marked deceleration. Can you just help us out? How did the market do last year, the OLED materials market last year? And what are your expectations for the market this year?

Question: Atif Malik - Citigroup Global Markets, Inc. - Analyst : Got it. And on the blue emitter, it's your understanding that you guys are going to be sole sourced on that, or there's competition that's also competing for blue?

Question: Atif Malik - Citigroup Global Markets, Inc. - Analyst : Great. And lastly, China semiconductor market, they're doubling down on materials on the semiconductor side. And the question comes up to the investors in terms of what you're seeing in terms of competition local China material suppliers on these materials. Can you update us? What do you see there?

Question: Atif Malik - Citigroup Global Markets, Inc. - Analyst : Great, thanks.