Q3 2024 Universal Display Corp Earnings Call
Good day, ladies and gentlemen and welcome to Universal Display Corporations Third Quitter, earnings conference call. My name is Sherry and I will be a conference moderator for today's call.
All participants are an elicin only mode, a brief question, answer session, we'll 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 Darice Liu, director of Investor Relations, please proceed.
Thank you and good afternoon everyone. Welcome to Universal Displaced 3rd Quarter Irings Conference Call.
Darice Liu: Joining me on the call today, your C. V. Abramson, President Jesus Executive Officer and Brian Millard, Vice President Chief Financial Officer.
Before Steve begins, let me remind you to say he's called the property universal display. Any religious food, retransmission, or re-broadcast of any portion of this call, in any form, without the express right in the consent of universal slaves strictly prohibited.
Further, this call has been webcast live and will be needed available for a period of time a universal displays 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 trial, we may make forward looking statements based on current expectations.
The statements are subject to a number of significant risk and uncertainties, and our actual results may differ materially. These risk and uncertainties are discussed in the company's pre-article reports, filed with the SEC, and should be referenced by anyone considering making any investments in the company's securities.
University of the Supply Disclaims any obligation to update any of these statements.
Now I would like to turn the call over to Steve Abramson.
Steve Abramson: Thanks, Darice, 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 day, Luna Chair was a dollar-fifty.
2024 is another year of growth.
Growth of positions us for record revenues and record profit.
The Rehend of Growth, though, is expected to be more modest and 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.
Steve Abramson: Give an downward trend of forecast revisions where revising our 2024 Revitive Forecast range to $625 million to $645 million.
Steve Abramson: While lower than expected, fourth quarter sales has tempered this year's pace and growth, we continue to believe in the tremendous trajectory of the old-led market as activity across a consumer-electronics landscape.
Expans with new OLED AR VR devices, smart watches, smart phones, IT, automotive and TVs. New York Terms, we expect the IT market to be the primary driver of growth.
Steve Abramson: I'm the A4Kast at Mobile, all that PCs are expected to grow to 69 million units in 2028. Up more than 150% from an estimated 26 million units in 2024.
Steve Abramson: This growth momentum is driving a new multi-year capex cycle here for the medium-sized Olin market. During the quarter, Vision Ox broke rail on its new $7.7 billion Gen 8.6 Olin facility in Hephe.
Simurler to be a weasement, $9 billion Greenfield Gen 8.6 O'er Plan. Vision Ox's new fab will be designed with a monthly capacity of 32,000 plates per month.
Ad that to Samsung just placed $3 billion, $15,000 in play per month, Jen 8.6, all of IT facility. That brings a current total investments for new Jen 8.6, all of the facilities to approximately $20 billion.
and we believe further investments are in the works.
New OLED module factories are also in the rise.
According to reports, Viziox complained the construction of its new $1.6 billion Gen6.
Flexible OLED module factory in August, and Samsung display recently decided to invest 1.8 billion dollars to build a new OLED module production line in Vietnam. Mostly to produce IT and automotive OLED modules.
Speaking of olives and automotive, during the quarter, myriad automotive makers, including Aldy, Lotus, Zeaker and Hongshi, are the new car models of Ola screens. Some of those models will design with both Ola displays and Ola Tail lights.
from Older's Little Power consumption, and naval by our phosphorus at materials and technology.
to a hoax being lighter, thinner, and inherently conformable bendable and rollable. As well as numerous other benefits, all of our enabling greater design flexibility and energy efficiency with brilliant picture quality and fast refresh in the automotive market.
All is continued to push the form factory boundaries of consumer electronics products. During the corner, the world's first trifle, the Mate XT, was launched a much-fant-thair as the first device that transfers from the 6.4-inch smartphone size screen into a full 10.2-inch tablet.
Trice 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 role of an OLED development project, and plans to launch its first role in the smartphone next year.
The report's note that Samsung's rollable phone with fully open will support a large 12.4 inch display.
UBI Research Forecasts by 2028, phone number phones will make up on this 10% of total OLED smartphone shipments up from 5% today.
Speaker Change: On the R&D front, we continue to collaborate closely with our customers and are developing new oil and materials and technologies to support their growing product road maps.
We are continuously discovering, developing and delivering. Next generation, Reds, Greens, Yellows and hosts to meet the ever-changing and every evolving specifications for color point and energy efficiency and lifetime.
Speaker Change: Regarding Blue, we continue to make excellent progress on our ongoing development work for a commercial phosphorus and blue emissances system.
We continue to believe that the additional time needed to introduce a commercial phosphorous bloom into the marketplace will be measured in months and not years.
Speaker Change: When our commercial fast-wrestling blue is a dotted 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 all of the TVs efficiently and with fast tack type can revolutionize the large area of all of the landscape.
On that note, let me turn the call over to Brian.
Thank you Steve and again thank you everyone for joining our call today.
and Steve Shared, we are on track for record revenue and record earnings this year.
A revenue through Q3 is $485 million, up to 16% from the same period last year.
And our net income for the first nine months reached $176 million, up 25% year of year from the first nine months of 2023. For the third quarter of 2024 revenue was $162 million, compared to $141 million in the third quarter of 2023.
Materials sales were $83 million in the third quarter, compared to material sales of $92 million in the third quarter of 2023.
Green and Meter Sales, which include our Yellow Green and Meters, or $62.6 million dollars. This compares to $68.9 million in the third quarter of 2023.
Redder Ministers sales were $20.1 million. This compares to $22.1 million in the third quarter of 2023.
As it has been discussed in the past, material buying patterns can vary according to the
Speaker Change: 3rd Court of Realty and Licence fees were $75 million. Compared to the prior year period of $46 million. The year of your increase was due to customer mix and cumulative catch of adjustment of $5 million.
For the fully year, we now expect a ratio of materials to royalty and license fees to be in the ballpark of 1.4 to 1
A thesis is third quarter revenue was $3.6 million. Compared to $2.7 million from the comparable period in 2023.
Speaker Change: 3rd quarter cost of sales was $36 million, translating it to total gross margins of 78%. This compares to $34 million in total gross margins of 76% in the 3rd quarter of 2023.
We continue to believe our full year torogros margins will be in the range of 76 to 77%.
Third quarter operating expenses, excluding cost of sales, were $59 million. In the third quarter of 2023, it was $58 million. We expect our 2024 OptX to be within the targeted range of a 10 to 15% year-reyear increase.
Speaker Change: operating income with $67 million in the third quarter, translating to an operating margin of 41%.
Speaker Change: This compares the prior year period of $48 million and 34% operating margin.
We continue to believe our full year operating margins will be in the range of 35 to 40%.
The income tax rate was 18% in the third quarter of 2024. We now expect our effective tax rate for the years to be approximately 19%.
3rd quarter 2024 net income was $67 million or $4 per diluted share. This compares to $52 million or $8 per diluted share in the comparable period in 2023.
We ended the quarter with approximately $930 million in cash, cash equivalents, and investments.
Regarding guidance, as Steve discussed earlier, we now expect our 2024 revenues will be in the range of 625 million to 645 million dollars.
and lastly, our Board of Directors approved a 40-set quarterly dividend, which we paid on December 31, 2024, to stockholders of record as of the close of business on December 17, 2024. The dividend reflects our expected continued positive cash flow generation and commitment to return capital to our shareholders.
Speaker Change: with that altering the call back to Steve.
Steve Abramson: Thank you, Brian.
The Pioneer and Leader in the OLED ecosystem. We believe that innovation is the cornerstone of progress.
Steve Abramson: Our significant investments in research and development are a testament to our belief in the power of science to transform lives and industries.
Speaker Change: Last month, we announced the Sherwin Ice-Ellix innovation award. In tribute to our late founder, the sonward was created to inspire and encourage innovation in organic electronics and to recognize groundbreaking advances in that field.
with the founding of this award, we are deepening a commitment to support and nurture the thriving community of scientists and researchers around the world.
224 marks a significant milestone in the OLED industry as the beginning of a new OLED adoption cycle for medium-sized displays, namely IT and Automot.
Speaker Change: with meeting tablet, notebook, monitor, as well as honor OEMs, expected to broaden their product roadmap for OEMs. Significant investments in new OEM facilities are being deployed for these nascent market segments.
We are here to enable and support this long runway of growth.
Our World Class Technology continues to set industry standards, a global partnership's continued to expand and deepen, and we continue to leverage our own parallel expertise of 30 years.
Speaker Change: A company's future is bright and we are excited for the path ahead.
In closing, I would like to thank each of our employees for their drive, desired dedication and heart, and elevating and shaping universal displays of accomplishments and advancements. We are committed to being a leader in the OLD ecosystem.
and Steven Superior, Long Term Growth, and delivering cutting edge technologies and materials for the industry for our customers and for our shareholders.
Speaker Change: and with that operator let's start the Q&A.
Thank you Mr. Abramson.
If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone indicates your line is in the question queue.
You may press star 2 if you would like to remove your question from the queue and for participants using speaker equipment and maybe necessary to pick up the handset before pressing the star key is. One moment will we pull for questions.
Our first question is from Martin Yang with Openheimer and Cup Body. Please proceed.
I think of the good repercussion. Can you give us more context for the quarter cuts? Is it from a single customer?
and the multiple customer and what our exposures are reasons for their cuts.
Speaker Change: Yeah.
Hi Martin. Yeah, so as we mentioned in the written Steve's remarks, as we kind of approached the end of the third quarter, clearly we had a very strong first half of the year and even Q3. But as we got toward the end of the third quarter, we did see customers lower their forecast for Q4 and it was really across the board, not any one particular customer.
A number of things that could be driving that one is certainly certain models and the sell-sells of those essentially being different than prior expectations.
as well as certain geographies in the world having some consumer sentiment and macroeconomic concerns. And then lastly, as we approach year-end, some of our customers also reevaluate their inventory levels and what they're carrying of our material. So it's a combination of things we can't point to any one thing.
We did see across the customer base changes in forecasts as we end a Q3.
Speaker Change: and I thank you. Can you also add any more details you can share about the material, gross margin in the quarter, it feels a little light compared to previous quarters. Any more?
More Contact She Sure With Us.
Speaker Change: You're really just, you know, customer mix and product mix is really the primary drivers. And you know, as we've talked about before, we also believe that total gross margin is a much more useful way of evaluating the profitability of the business because, you know, when we negotiate pricing with customers, we look at really the combined.
Speaker Change: and the pricing between the license side as well as the materials. Total risk margin continues to be within the range that we expect for the year 76-77%.
Now that's it for me. Thank you, Brian.
Speaker Change: Thanks Brian.
Speaker Change: Our next question is from Scott Cier with Rough Capital Partners. Please proceed.
and David. Thank you for taking the questions. Brian, Steve, I know this is kind of hard to quantify, but with some of the customer slowdowns, I'm wondering how far out your visibility is, who start to think about it.
2020, 25, and seasonality into the March quarter. Do you have a good idea of what elevated inventory levels might look like across some of the customer base? Because it seems like it's a little contradictory to what we're seeing in some of the end markets today. You're starting to hear more about small panels starting to recover with smartphones that have gone through inventory corrections. Maybe less so on the TV front, but that seems to be more incremental. I'm wondering what the early thoughts are in terms of, I'll call it seasonality and normalizing inventory.
Yeah, so firstly, we don't believe that this adjustment that we're making to guidance is really indicative of any persistent trend.
Speaker Change: and as it relates to 2025, we're still going through our planning process right now for 2025 so we'll have more to share.
Speaker Change: I want to get to the February call, but we really think this is just kind of temporary adjustments as we close out the year as well as, as I mentioned earlier, some impact from certain OLED models.
Speaker Change: Okay, fair enough. And if I could follow up on Blue Steve, look, we're getting closer again the comment months not years.
Speaker Change: But I'm wondering if you could calibrate the timing and what your expectations are once we get to the point of go.
where we've got all the commercial metrics for blue. How long is it into that process before we see some material sales? Is it taken other than 19 to 12 months from a design standpoint for that to become material? And I guess looking out further on the horizon.
What success two years out is it, you know, 20% of your customers adopting some form of blue and is there a timeline that you're comfortable talking about when blue could possibly get the parity with green. Thanks.
Speaker Change: Scott, all good questions.
and my answer is going to be that we're working closely with our customers to commercialize our fossil-rescent blue and it is an iterative process and as we get closer, I may be able to shed more color on your very important questions.
I think Scott is important to know, you know, working continuing to work on blue development projects with a number of customers.
and making a good progress without a Steve mentioned in his remarks earlier. And once we do hit commercial specs and performance, that will then kick off a cycle of designing that in an ultimately getting to mass production and having an introduced into a device.
and your question on adoption rates. You know, certainly we believe there's significant interest in our blue material from our customers as well as the OEM community as well because of the benefits that it will bring to the device.
But we're really focused at this point on getting to commercial specs and performance and then that enables adoption from there. So it's really hard to predict the slope of an adoption curve as we sit here today.
Gadget Fair enough, I'll get back in the queue, thanks.
Speaker Change: Thanks God.
As a reminder, to star one on your telephone keypad, if you would like to ask a question, our next question comes from non-chem.
Hi, thanks for taking my question.
You know according to news, I think a few months ago, LG display
You know, successfully developed all that panel using blue bus versus material. Try to understand what it means here that it means your blue material, you know, meet certain customers back and ready to ramp one and a day star mass production.
I just try to understand what this ought to mean to universal display. Thank you.
As you said, NAM there was an article back in August, you know, alluding to LG display using our material for some development. We've been working with them as well as others in blue development projects.
Speaker Change: and I think it's just indicative of progress and we obviously can't comment on rumors and speculation that might be out there, but it shows that customers are using our material and a variety of different ways of applications and we view any use of our material as being a positive one and it was...
and the first time I saw this, you know, good to see that result that was published.
Speaker Change: and the other one.
Thank you. This will conclude our question and answer session. I would like to turn the program back to Brian Millard for any additional closing remarks.
Brian Millard: Thank you.
This concludes today's conference you may now disconnect.
Brian Millard: Episode 2
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