Universal Display (OLED) 6 Aug 212021 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to Universal Display Second Quarter 2021 Earnings Call. My name is Sherry, and I will be your conference moderator for today's call. [Operator Instructions]. I would now like to turn the call over to Darice Liu, Director of Investor Relations. Please proceed.

afternoon, good and you, everyone. Thank Display's Welcome earnings call. quarter to Universal conference second

Officer. today on Abramson, Sid Executive Chief me the are Officer; Rosenblatt, Financial and President Joining call Vice and Executive Steve Chief President and

is strictly Before Steve begins, be portion or of of me the remind of retransmission of prohibited. this Display. redistribution, Display of any consent a form express today's Any without you Universal rebroadcast property that let will Further, call is any call Universal in This and written available live information webcast live being is this August on of website. call period webcast a Display's that as call, time the X, call made of date only this for time-sensitive of XXXX. the of is Universal accurate contains

discussed by forward-looking and uncertainties, These the in company's our Display differ the call, company's to on should subject risks are disclaims in these any may based and are statements considering update may this securities. current and any anyone risks a be These we the Universal statements. number significant obligation uncertainties materially. to with investments make and statements actual results SEC of of making any periodic expectations. reports filed During referenced

would to to I call Steve the over Now like turn Abramson.

welcome and everyone Darice, to call. Thanks, on today's

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in leader the increased market, fast to XXXX ASUS' X from recently to units the contrast OLED's appealing wider ratio OLED color million strength, X.X to a customer are units. of reports, gamut, including approximately According response base. high target Samsung million for As XX% X Display times, shipment and its by notebook to gaming panels notebook million range

the and notebook market. in to myriad offering leading additional begin may Technology Lenovo, to to is billion are a that OEMs. nascent OLED addition tablet This reports OLED medium to panel is backplane seeing need Display makers We spend and OLED also increasing there OLED Display billion in for new spend in now Gen-X capacity, the others XXXX. reports approximately currently from markets reported in OLED plans transition believe Very Display on that capacity. small prompting enter BOE $X.X panels IT and to XX.X-inch capacity. are Samsung of LG recently, LG We plans it is the OLED the other panels ongoing activity for shipping that OLED OLED and was $X

this to in at year. Chongqing Additionally, begin BXX is its of the fab, Gen-X expected quarter fourth in capacity third OLED ramping BOE

health. new SGS. OLED offers that effects its for week, consists quarter. LED by sleep. plant, during fast to rates. to demand more last expenditure, of wide these On is fat to be blur during at University this OLED's inches. target the play the and is When OLED OLEDs next test at OLED TV comparing last showcase confirmed This million may to spend this developing in in may units. on LED an January rise. later expected CES length energy XX-inch also during quality gaming, compare as LCD, XX-inch Samsung a temperature, you the of exposure, offered mid-May help to which And Also important melatonin X.Xx OLED the sleep their reason The The to of LEDs in QD-OLED XX, X with TV latest out XXXX, and LG panels published according performance pointed the TV XXXX, new announced in up first OLED global your The news, can LG reports people In year. seemed that light. first TVs the commented double The sleep length addition SGS' Display's its In model response XX launch lighting the additional nature.com's year. better OLED Display be games. light XX weight. to OLED LG million was Tsukuba and benefit found capacity view at may contrast front, is oxidation million the that reports, long is And in TVs in lighting X be Japan Extended year's Samsung measured company Nintendo adopted is that of month than date. XX, XXXX. study of before certification launch Samsung gaming and the hybrid TVs XX blur its in gaming that This results, and released larger XX-inch in that a affect even as image it its exposure to negatively which in OLED that TV conventional games market streaming changes TVs fast-paced LG's Switch. is from they to targeting that attributed OLED XX, researchers that blue lighting, QD-OLED expected first levels occur units for range Guangzhou received degrade time lose model market and suggests Electronics time to sleep. possibly and currently lineup, OLED to the from announced with days, reportedly report very from its ultra-large nearly scientific now to in According gaming on QD-OLED researchers core TVs for at physiological OLED content XX-inch for of researchers The video a it can is interesting Samsung Display home half body

emit that long of to devices One of light devices. growth vast. runway LED OLED and the the OLED for market, of believe therefore us, benefits blue We many compared for the harmful is and less that OLED is

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R&D we front, and fueling the our engine. On fortifying are innovation

efficiency gamut, technologies broaden, color lifetime of increase. specs product materials next-generation and continue for expand and maps to and continues novel road customers makers' to panel As demand

team Our our and a R&D progress work designing cutting-edge, materials and are new system. continue technologies, yellows ongoing and their developing greens, make we phosphorescent emissive in for to cost-effective for solutions With pursuit to including and respect hosts. reds, new blue energy-efficient blue, development commercial relentless emissive excellent and discovering,

of As OLED landscape. applications that alpha across target that turn energy be further all-phosphorescent deliver me OVJP direct first has for Sid. over in full-color On to to Printing dry revolutionize higher manufacturing to novel you TV an which note, high Corporation's call Jet a the solventless, is printing aware, efficiency the panels. believe system an XXXX. massless, stack, will consumer Vapor the will for enable are OVJP manufacturing and build Organic We is our milestone of our let potential process RGB major performance OLEDs. OLED

you, call quarter quarter joining And of million. were $XX Steve. for our first thank $XXX.X everyone, $XXX second today. Revenues you, the quarter and second Thank XXXX's million for compared XXXX million to XXXX's again,

$XX.X the quarter sales XXXX. XXXX. XXXX material our second of first and emitter and material total $XX.X This $XX.X in $XX.X Red include second $XX.X emitters, of This XXXX million the which sales million quarter compares in first $XX.X the the to the were $XX.X XXXX. XXXX, million. in the in the were quarter second second second of of of quarter million compares in $X.X of million quarter to $XX.X XXXX of second in million of quarter Green in quarter compared XXXX of emitter were million. to in quarter the million quarter XXXX the and yellow-green of Our first million sales sales in

the in can quarter-to-quarter. discussed As vary we have buying patterns past, material

Since levels Some issues a variables efficiency they schedules, number consumer include and of moving ordering well as rates, as are the production for are gains. recipes, customer variables capacity product our customer factors also COVID-XX inventory contributing us. demand production product patterns, moving factors ramp of mix, loading material device customers, for cycles, these

This $XX.X million second fees million and quarter $XX.X quarter first XXXX. in compares million. Second royalty the in $XX.X XXXX were license of the XXXX and of to quarter

Second to and quarter quarter of of in comparable of first material material This quarter of quarter $XX.X $X.X of in Cost second quarter million the second million. compares first the quarter sales were in and of XXXX Adesis This the in and of XXXX $XX.X were gross million, gross million compares revenues first XXXX quarter XX% XX%. translating to were of the in of material for sales year-over-year's XXXX to the This million. compares second $X quarter into Cost XXXX. million XXXX. $XX million $X.X $XX.X XXXX of margins XX%. the the margins

past, the can material margins noted As in we quarter-to-quarter. gross vary have

expense, of $XX.X the quarter's $XX.X excluding sales, was comparable quarter's XXXX compared $XX.X Second and million million. quarter cost million last year-over-year operating to

the our We million in including XXXX loss in first new to was of quarter quarter's and organic our site; in XX% year-over-year's for million are Corporation; million. growth in our $XX.X $X.X Operating of including $XX.X second research the XXXX compared to XXXX. OVJP investing the in of electronics landscape. development, was our fortify second quarter's and income last margin and Operating of operating quarter the our Shannon quarter opportunities and infrastructure, people comparable XX%

range half of we're for was XX% be margin the for to first the operating we believe of to track in For margins year. operating XX% XX%, that and on the our XXXX,

year-over-year's cash the or equivalents comparable of the $X.XX diluted quarter and rate cash share. million million for income million the per and quarter or was XXXX $XX.XX This of second was approximately $X.XX tax per share. Second Net income compares to XX.X%. $XXX diluted $XX.X quarter's $XXX,XXX quarter share ended or XXXX share. diluted with per quarter $X.XX per in or $XX.X diluted We last

along guidance. Moving to

our expect to the of $XXX ratio with of X.X:X. XXXX to in We materials the growth royalties/license Board expected revenue million million continue revenues flow a to capital on ballpark the revenues And to With $X.XX Directors paid call to in of the XX%, record continued expected September September dividend of will $XXX lastly, and be to be positive back our or XXXX, commitment to of which stockholders will I be XX, Steve. XX, the on of close cash quarterly a range of business approved of to approximately as that, generation XXXX. shareholders. The return to dividend, turn reflects our

Thanks, Sid.

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In device addition extend the efficiency architecture OLED fundamental Plasmonic is that panels. lifetime to to the groundbreaking expected of most is phosphorescence, recently our enhance and OLED announced

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leader growth and customers cutting-edge that, our technologies being OLED committed industry, our are and achieving operator, for long-term superior We with in start for to for a the the materials delivering Q&A. the And ecosystem, and let's shareholders.

[Operator Instructions].

first Our from and with Cowen Krish is question Sankar Company.

the quarter. Difficulty] [Technical

how from have quarter of expect And Just materials to XX% range? year costs still the this to margins curious, customer I follow-up. of then materials inflationary much a And any raw gross did part for full those be mix? XX% a the in do you kind play versus

Yes.

versus your of mix, think customer cut a what was bit, that in about part mix. Is little you asked what question the but terms first The I was correct? was of off cost

That's Yes. right.

But break mix And Yes. gross product I out mean customer of clearly, it are we they mix, our things impact between the margin. the costs. some and don't X. really that it's

Got question, still it. to the gross part it. Got XX% materials year? XX% this for margin of And the first second

yes. Yes,

XX%. to For margins believe be XXXX that to we continue our gross XX% the will year, material

kind cost in you you very the your given not with shipment and freight the as just component do impact customers few directly, impacting it started are tightness curious, freight deal or I you any this business? quick last are either seeing of Or your derivative just you not over past, a small. But costs quantities the too mentioned know that I'm from I'm follow-up, from big have point? detached guessing at the still quarters, tightness is a then component impact And Sid. your

mentioned We've margins. affects and our previously gross in and increase development pricing iridium material

supply and in supply seen haven't terms of -- with material any chain. our So we issues chain,

is question C.J. with next Evercore ISI. Our from Muse

press was But annual first guess In the help referenced up question, and up you release XX% call, XX%. your the the revenue to XX%. I I time, you me at the same on guide. you hoping could reiterated with

So guide appropriate? And range Is are you calendar you do have QX kind tightening the growth? still into visibility XX% to of the today? sitting here what

Well, expect solid we and year-over-year revenue, I do in did -- mean growth XX% say approximately XXXX. double-digit we over

it. with same that We At some keeping are are related chip see the an comfortable we're are there on the our it's to whether to time, impact current shortage and going pandemic guidance. that uncertainties eye to

guess got But Okay. you've different I I numbers. -- X

Yes. the No. really I'm just midpoint. is sorry, the XX%

new to be that timing And second hear Okay. that would additions. Particularly there? so, All the bold your you translate the able what's things. would kind seeing potential pretty when right. Obviously, capacity IT a thoughts about I'm guess if on And sound serve that the us I on into you Gen-X.X be to if you're capacity? update side for to path for of the wondering growth And market. question of opportunity. on would love

for customers market. would X-year next was that in Gen-X.X. the you year, purposes. Gen-X.X increases, a for But about Well, to Particularly, building And talking increasing end that And talked our there's the about our been capacity, are the in someone reference all related about of chatter we've it. IT growth about I IT call, you are I year capacity, think that period. in we the you -- be the the a path intend, year, at the And think increase and in lot think we seeing about of at for talked talked give year we like. the growth what the about talked to terms of XX% end of

XXX X% I So -- OLEDs and the the market IT units. right market, it of is X% think million IT are now, something barely barely that, about that's is

a side. for it's of there runway So on IT lot the -- is growth

Our from next Bank. question is Deutsche Ho with Sidney

business Is a buying be materials question my of second I So first be largest Or your should the are the guess dynamics thing is seems in the we they ahead described on may this timing there a how That just be from is, quarter. other question on to should how the that? they than we reconcile the little revenue ramp? stronger call. their customer inventory earnings about? when thinking the

stock if time from there's repurchases you're any what well have don't of that on our -- aware, terms side. And input terms by time we real are dynamics are I in lumpy talking of in inventory material about customers. or but purchases safety our to as they think sold, been our the where customers you're

quarters be may as in in inventory, build other lumpiness. anything you I So they may and this that than in see, But then you buying more don't of see from terms they the of us quarter different quarter. terms subsequent any that will see

Okay. That's of customer any set your Maybe asking QX? that a or a -- on I of the one LG Display, thought. same if was fallen along the customer than going a customers, especially customers. different aware have there we from you little XX% In should exclude that be in to seems hindsight, Chinese no harder Revenue QX longer line, for just thing inventory in is helpful.

been, Yes. in No. particularly have Chinese with lumpy. Yes, we And believe are patterns 'XX they past. that buying the the customers

question next is Our Citigroup. Malik with from Atif

terms your blue the a Obviously, phosphorescent. purity blue the the what have I SID material. their curious I'm of are the on question paper conference. progress Samsung made on at and a progress in and have on presented thoughts lifetime phosphorescent they progress of

for Well, thank the question. you

and is with when the and we've with believe have a that And a matter in making of progress relationship excellent not -- if. you as know, we relationship X believe phosphorescent as Samsung blue have we decades. the approximately spans past, noted work. ongoing We we're a commercial our We strong development Display,

not on a that have frame, say provided continues blue specific excitement time we we phosphorescent our to grow. can While

Great. prepared about adoption OLEDs. talked another factors In Steve, I the have like tablets your remarks, for form you one. of

You Lenovo. Samsung, using also has OLED mentioned and LED, about Mini year announced talk Pro using iPad next this year. Apple there's them

how about Mini LED the competing curious, technology? I'm OLED tablets So think inflection in a should of we versus

as we -- the see think up mentioned that to OLED Sidney the earlier, we're great a size OLEDs think that has We It's tablets next phones in in tablet like. smart years increase into We significant with and from market. of promise think going the the the next few them.

next from Cross Research. Cross with Our is Shannon question

demand was come sizes. I you're has next. positive on talked about TV down. this know for curious are larger pricing seems the how and screen about OLED pretty when I if screen for opportunity thinking in Corning, them, as year It size to larger I

how wondering So of gauging sort you're things.

obviously, OLED I Well, this TVs LG about year. XX year's about an next through the and something them, million it aware, entering have hearing branding more more going market. chatter as approximately And then number, are mean, been they're talking that you're year increase I that, Samsung think talking and you're there's about TV last and OEMs from OLED is

stated actually we're the consistently TV And that So are market. the on TVs best ever. that has bullish TVs very think I the OLED been

balancing know you've sort or how to increased PPG. costs curious, sort you of just And capacity Okay. inflationary? next do with a And your general, ahead? margin I so? then of maybe are the much just it versus year as of you how transitory are incremental in I'm how the think are you you forward look perspective. But from planning

for iridium. we're Yes. of on It gone to also more Iridium in the that quarter-to-quarter, a for impact gross manufacturing our I in number our for fully from an and to pricing one range material year has But we do and mix, be impact other. expect there's terms margins margins. to to specifically mean XX% always impacted XX% it. quarter called the and our range always efficient that product to margin we've XX% the out of gross XX% does But them operating and up, vary have process. factors looking be

Instructions]. [Operator

is question Brian Goldman Sachs. Our from with next Lee

a the back here. versus trajectory might to years. prior in maintaining what revenue I outlook historically bit had XXXX. missed I half have little for a Sid, seasonal more jump late you've it. It imply you're the does on seen flattish in But

second kind is historically now? patterns based right drive there Or of of this the unique is versus on half that been that you've to view So ordering about experiencing? year anything what seeing you're

I comfortable don't is we think upon are some the million to related anything specific, shortage mean, the there's been there year. for based $XXX pandemic really chip and the everything ongoing I seeing, And it the we've uncertainties and with issues. $XXX are to million still

Okay. Fair enough.

to at the gauge chain there's customers known the demand past, through you buffers be moment? what and know flowing all? said, with what's are shipments in in manufacturing shortages, sort not all? I you've And have supply mentioned being especially think the of it's patterns You versus seeing like you your we I there's handle. of do think a buying constraints. better chip reflection areas it. But different true had at built some line different it's widely easy seeing handle on at in Or Are of some necessarily terms patterns getting built the you the that of of But some think your that you Chinese, seeing I might and stock. impacts your a ordering customer

also to customers the we're chip it our conference mentioned, on and talked have may may OEMs shortage referred you Industry calls or it, their about well of aware whether have it. and As not do.

is internal that where This is we're done and just So our customers based have can forecast, point anything with that. now, that obviously very it we comfortable are. we upon right -- to isn't where to specific and talking this

products potential industry And view There's more for into Okay. then for The outlook Is maybe growth. of level at that the it think you medium-term there one view? types it's obviously the XX% guys? expansion X.XG you've improve across and around on the that kind your it me. growth been don't capacity any pass you feels of And the mentioned for high like of I focused on that visibility notebooks for of any the for built being you a new and others. I'm Fair call. like, 'XX it industry XX% enough. just speak baked expansions XX% capacity chatter, medium-term could maintained, tablets last those capacity end intact for IT about I'll have assuming on. might still can you

the end coming way mean I as we when installed at end XX% -- think of it it capacity it's but on, the aware 'XX installed that doesn't capacity. that mean to 'XX, is is you're of I It actually capacity. about talk the -- we

I is chatter that's -- a very the at while looked this perfectly lot about to be a there lot. I honest, don't end even small, it's new. not XX, of at not we or And whether 'XX, was But think of think, if X.X. Gen-X.X

So pick really the this the And may I about we It be I going talk It pandemic it. our when number up to XX% year. some on end impact shortages was. we it's could don't in of component don't have may it 'XX, forecast 'XX. actually and for the -- what when be impact get believe impacting think next that's to going number this to

to like any This for would concludes Rosenblatt closing back to I session. the program question-and-answer the turn remarks. Sid additional

wish Thank today, good like and you for thank to would joining you. a we all the all you We evening. call

call. conference today's does This conclude

now You disconnect. may