Universal Display Corp at ROTH Conference Transcript

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

Question: Scott Searle - ROTH Capital Partners - Analyst : So that's a great disclosure because then we will just jump right in on recent comments. So in terms of 2025 guidance, right, the kind of wide range out there, but 3% kind of down the middle. Kind of take us through what's factoring into the guidance right now just from a high level, what you're seeing? And I know there's a range out there kind of high level and low level, the swing factors?

Question: Scott Searle - ROTH Capital Partners - Analyst : So maybe let's jump in on some of those end markets. Historically, smartphone has been a big driver, and you guys are 50-plus percent penetration into that marketplace. So there's growth, but not as much. It's small display size, so not huge in terms of acreage. But IT in general, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 8:00PM, OLED.OQ - Universal Display Corp at ROTH Conference So tablets, monitors, computers have been a big driver. It's getting up to almost, I think, 10% of the mix now in terms of square footage or acreage. How is -- what are the big drivers there? What are you guys seeing on that front in terms of demand? And is that really the big drivers we start to think over the next two to three years?

Question: Scott Searle - ROTH Capital Partners - Analyst : Again, that's Gen 8.6 stuff, so it's IT focus.

Question: Scott Searle - ROTH Capital Partners - Analyst : So in terms of surface area and the one market we didn't hit on is TVs. So the simple math is 100 smartphones equals 1 TV roughly, depending on the size. So a huge, huge opportunity there. But that market has kind of been slow to develop, right? As we look out over the last couple of years, it started to ramp pretty quickly and then sort of -- there's still growth, but it's, I think, tracking below prior expectations. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 8:00PM, OLED.OQ - Universal Display Corp at ROTH Conference So what's kind of behind that? Is it simple pricing in the marketplace? Or is there something else going on?

Question: Scott Searle - ROTH Capital Partners - Analyst : Let me ask you along those lines, OVJP, which enables you to print materials on a much larger substrate. Is that a requirement to open up the TV market or no? It's that's like to get -- drive deep, deep penetration below -- to above 20%, 30% or something like that. Can we get to good growth rates before OVJP?

Question: Scott Searle - ROTH Capital Partners - Analyst : Maybe shifting to the macro for a minute and maybe start with tariffs. Last time around when we saw tariffs go into effect on China, there was a big pre-buying, I think, that occurred ahead of that cycle. Didn't seem like that happened this time. Can you clarify if there was any prebuying? And then maybe what tariffs in general are kind of representing in terms of impact to you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 8:00PM, OLED.OQ - Universal Display Corp at ROTH Conference I know it's not direct in many cases, it's going to be indirect through some of your OEMs. But what are you seeing out there? What are you anticipating?

Question: Scott Searle - ROTH Capital Partners - Analyst : How much capacity do you have in Shannon?

Question: Scott Searle - ROTH Capital Partners - Analyst : And then maybe just on the macro front, there are some high-level concerns. Just wondering if you're seeing that or hearing any concerns from your customers or elevated inventory levels of or anything of that nature?

Question: Scott Searle - ROTH Capital Partners - Analyst : So I'm proud of myself, we talked for 10 minutes without getting to blue. So now it's time to talk about blue emitters. So you guys said in '24 and then more recently in your updated as well, months, not years. So take us through months, not years, right? How do we interpret that just in terms REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 8:00PM, OLED.OQ - Universal Display Corp at ROTH Conference of what you guys are saying and how that translates into time lines of commercial specs and how that flows through ultimately to designs and revenue.

Question: Scott Searle - ROTH Capital Partners - Analyst : But just to clarify, in the months, not years, that time line effectively started December 31. Is that correct?

Question: Scott Searle - ROTH Capital Partners - Analyst : And to just go back to Blue commercial specs, what are the -- what are the gating factors? What are the key elements that your customers are really looking for commercial lifetimes, brightness? What -- where do you need to get to when you're talking about hitting those commercial specs?

Question: Scott Searle - ROTH Capital Partners - Analyst : Do all customers have the same required commercial specs or are you talking about a standard level and then they may vary based on the individual customers?

Question: Scott Searle - ROTH Capital Partners - Analyst : Okay. And then you go back to the timeline. So assuming sometime this year, it's nine months probably until we see commercial product at your customers or commercial product as an end product in the marketplace.

Question: Scott Searle - ROTH Capital Partners - Analyst : So you're talking about in a smartphone at that point in time. So you would see revenue, obviously ahead of that maybe by 6-plus months in terms of selling into your display customers who are then selling to the various smartphone OEMs or whoever the customer base is.

Question: Scott Searle - ROTH Capital Partners - Analyst : And I think you've indicated you're basically engaged with all your major customers on this front. So is that correct, right? There's some level of blue engagement for every meaningful customer that you guys deal with?

Question: Scott Searle - ROTH Capital Partners - Analyst : In terms of the overall market opportunity, I think green is at a $250 million run rate. How realistic is it to think about blue achieving that? Once you hit go from commercial spec, is it going to rival green? Is it going to be bigger than it because there's effectively no competition and you have pricing power. How do you guys think about it? Because your share should be 100% certainly out of the gate.

Question: Scott Searle - ROTH Capital Partners - Analyst : Just in terms of AI, right? So we hear a lot more about that, obviously, in terms of devices at the edge. And if you look at smartphones, it's increasing the power requirements and processing requirements within the device itself. And outside of the processor, the display is the biggest consumer of power. So how important is this in the overall context of shifting more and more AI to mobile devices? Are customers talking about that? Is this a meaningful conversation that you guys are having?

Question: Scott Searle - ROTH Capital Partners - Analyst : Let me ask you about competing technologies. I'll specifically talk about blue and emitters. TADF has been talked about from time to time. Is that or are there any other materials that you're seeing as competitive threats, either to the core red and green business or to blue in the future?

Question: Scott Searle - ROTH Capital Partners - Analyst : What about -- just from a general display standpoint, micro-LED has got a lot of attention a couple of years ago. I think they've run into some scaling issues and otherwise. Are you seeing anything out there that makes you worry from a competitive standpoint in terms of where OLEDs are positioned going forward.

Question: Scott Searle - ROTH Capital Partners - Analyst : Certainly, IT is a driver near term, but our other vertical markets like auto starting to creep into the conversation, where does general lighting fit in? That's always been out on the horizon. Is that something you've been worth talking about now? Or is it too far out there?

Question: Scott Searle - ROTH Capital Partners - Analyst : Capacity has always been a big driver of the performance of Universal Display. I think the number you talked about capacity growth from an industry perspective, growing 10% from '23 to the end of '25. Now that stated, you were talking about some larger fabs. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 8:00PM, OLED.OQ - Universal Display Corp at ROTH Conference There are multiple Gen 8.6 fabs that are supposed to come online in 2026. Is 2026 shaping up to be an inflection year from a capacity growth standpoint, given some of these larger substrate facilities, the potential to add some more in the next couple of quarters?

Question: Scott Searle - ROTH Capital Partners - Analyst : And by the way, I apologize for not catching it earlier, but what percentage of the marketplace is moving towards that type of display technology.

Question: Scott Searle - ROTH Capital Partners - Analyst : Do you know where industry capacity utilization is these days? You said underutilized, but is there a number that goes along with it?

Question: Scott Searle - ROTH Capital Partners - Analyst : Maybe we'll wrap up with a simple financial question. You guys are in the luxury position of having about $1 billion on the balance sheet. You generate a lot of free cash flow. You don't have a lot of capital requirements. How are you thinking about cash utilization and returning that to shareholders? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 18, 2025 / 8:00PM, OLED.OQ - Universal Display Corp at ROTH Conference

Question: Scott Searle - ROTH Capital Partners - Analyst : With that, I think we've reached the end of our time. So Brian, thank you so much for being here. Really appreciate everything.