Q4 2024 Universal Display Corp Earnings Call
Speaker Change: whose crimespacking bill of rights is now upon us. We are so grateful that your people even my people agreed to help, as The Churchill Project backed him in obvious demands. I second their offer and bills now before right men like you are paid toคhe Worldwide abundant membership. But more importantly, the world will rejoice that the First Amendment
Speaker Change: Good day ladies and gentlemen and welcome to Universal Display Corporation's fourth quarter and full year 2024 earnings conference call.
Sherry: My name is Sherry and I will be your conference moderator for today's call.
Speaker Change: At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance...
please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to President and Chief Executive Officer and Brian Millard, Chief Financial Officer and Treasurer. 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.
Speaker Change: 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, February 20, 2025.
Speaker Change: During this call, we may make forward-looking statements based on current expectations.
Speaker Change: 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.
Speaker Change: Universal Display disclaims any obligation to update any of these statements.
Steve Abramson: Now, I would like to turn the call over to Steve Abramson.
Thanks Darice and welcome to everyone on today's call.
Steve Abramson: As we look back on 2024, we are pleased to report record revenues and record earnings.
Steve Abramson: Revenue was 648 million dollars, operating income was 239 million dollars, and net income was 222 million dollars or four dollars and sixty-five cents per diluted share. Brian will take you through the details momentarily.
2024 was a solid growth year for us.
Speaker Change: We cultivated our global partnerships, which included new long-term multi-year agreements with VisionOx, strengthened our leadership position in the OLED ecosystem, and made significant advancements in our operational, strategic, and R&D roadmaps.
Speaker Change: Amid a dynamic market landscape, shifting consumer demands, and a rapidly evolving global economy, we continue to execute and embrace the opportunities that drive our innovation, growth, and industry-leading position.
Speaker Change: Since the inception of our company 30 years ago, we've been at the forefront of the OLED industry. Innovation is the foundation of everything we do. It drives us to push the boundaries of what is possible and to continuously explore new and better ways to solve the challenges of today and tomorrow.
Speaker Change: Our steadfast commitment to innovate and forge new paths has enabled us to stay ahead of the curve and anticipate the needs of the growing OLED market. We repeatedly traverse the complex path from idea to lab, lab to fab, and fab to high-volume commercial production.
leveraging three decades of pioneering know-how and trade secrets.
Speaker Change: Our team of scientists, engineers, and technicians are continuously inventing, developing, and delivering next-generation phosphorescent reds, greens, yellows, and hosts to meet the evolving needs of our customers, the display industry, and the consumer electronics market.
Speaker Change: Regarding blue, we believe we are closer than ever and that the commercialization of phosphorescent blue will represent a significant leap forward in OLED technology.
Speaker Change: We understand the excitement as well as the expectations surrounding it. I want to reassure you that we are on the right path and we are confident in our ability to deliver.
Speaker Change: The journey has been challenging, as all trailblazing breakthroughs are, and our teams continue to work tirelessly.
Speaker Change: Well, not yet at the finish line. We are excited about the strides we are making and continue to believe that the additional time needed to introduce a commercial phosphorescent blue into the market will be measured in months and not years.
Speaker Change: Once commercialized, we believe that our phosphorescent blue can increase the energy efficiency of an OLED display by up to 25%.
Speaker Change: We believe that panel makers and OEMs can leverage the increased efficiency in various ways, such as adding more functionality and performance to a device without sacrificing battery life.
Speaker Change: Frost, Rust, and Blue is slated to be a game-changer for the industry, for consumers, and for us.
Speaker Change: Looking to 2025 and beyond, we are excited about the opportunities ahead.
Speaker Change: and others are continuing to proliferate across the consumer electronics landscape, from smartphones to IT and automotive to TVs and more.
Speaker Change: According to Omdia Research, OLED market growth is expected to rise substantially over the next five years. After reaching more than 50% of the smartphone market in 2024, OLED smartphone displays are expected to grow from 784 million units to 952 million units in 2029.
Speaker Change: OLED IT displays are expected to nearly quadruple from 20.2 million units in 2024 to 77.6 million units in 2029.
Speaker Change: The OLED monitor market, though still in its early stages, already counts gamers among its earliest adopters due to OLED's fast response times, high refresh rates, and superior image quality.
Speaker Change: Units are forecasted to more than double, from 2 million units in 2024 to 5.1 million units in 2029.
Speaker Change: The automotive market holds immense potential as car makers are starting to turn to OLEDs for both interior and exterior applications, driven by demand for enhanced aesthetics, functionality, and safety.
Speaker Change: The flexibility of OLEDs allows for curved, thin, and lightweight form factors.
Speaker Change: Additionally, with the shift toward EVs, the adoption of energy-efficient OLED panels aligns perfectly with EVs' low power consumption needs.
Speaker Change: We believe that the continued proliferation of OLED, especially in a nascent medium sized market is driving a new multiyear capex cycle. We continue to estimate that year end 2025 installed overcapacity as measured in square meters will increase by approximately 10% over year end 2023.
Speaker Change: These forecasts include initial equipment installs from Samsung's 3 billion dollar investment.
Speaker Change: And the first phase of Boe's 9 billion dollar investment for the respective new Gen 846 Fabs.
Speaker Change: Looking beyond this year additional investments in new OLED capacity are expected with phase two boe's. Gen 8.6, Fab vision auctions do 7.7 billion dollar facility and expect the projects that are still in the works.
Speaker Change: As of today, approximately $20 billion has been committed to build a new Gen 8.6, OLED capacity, a new and exciting OLED fab investment cycle has begun and we believe it will fuel the next leg of the growth for the industry and for us.
Speaker Change: Before I hand, the call over to Brian I would like to go over the next phase for M. P. J P technology in December we announced the appointment of global technology veteran John Jordan, There the CEO of our new Singaporean subsidiary Universal Vapour Jet Corporation, which encompasses Uzi J P. While we continue to.
Speaker Change: Believe that Uzi J P could be a cutting edge technology for large area displays manufacturing Oh.
Speaker Change: All of these investments are expected to center on the medium area I T marker for the next few years as a result, John John and his team are exploring new market verticals, where our dry vapor jet printing technology, maybe an enabling platform.
Brian Millard: On that note, let me turn the call over to Brian. Thank.
Brian Millard: Thank you Steve I'm pleased to report that 2024 was a record breaking year of exceptional financial performance, we achieved 12% year over year growth, achieving an all time high of $648 million in revenue.
Brian Millard: By segment materials sales were $365 million royalty and license revenues were $267 million and Odysseus revenues were $15 million.
Brian Millard: Our 2024 revenues included a cumulative catch up adjustment of $11 million consistent with 2023.
Brian Millard: 2020 for total gross margins were 77% for the year flat from 2023.
Brian Millard: 'twenty 'twenty four operating expenses were $260 million compared to $224 million in 2023.
Brian Millard: The fourth quarter of 2024 included $8.9 million of restructuring costs related to the planned closure of the Ob J P, California location and related reorganization that impacted EPS by 15 cents.
Brian Millard: Our 'twenty 'twenty four operating income was $239 million, which translates into operating margins of 37%.
Brian Millard: <unk> 2024, net income was $222 million or $4.65 per diluted share in.
Brian Millard: In 'twenty 'twenty four we recorded $7.2 million of foreign currency exchange losses related to a tax receivable denominated in Korean won that impacted EPS by 12 cents.
Brian Millard: This Korean FX loss and the Ob J P restructuring charges resulted in a combined twenty-seven set reduction in full year 'twenty 'twenty four E. P. S.
Brian Millard: We ended the year with $928 million in cash cash equivalents and investments.
Brian Millard: Moving on to our fourth quarter results revenue for the fourth quarter of 2024 was $162 million up 3% from $158 million in the fourth quarter of 2023.
Brian Millard: Fourth quarter, 'twenty, 'twenty, four and 2023 revenue included a cumulative catch up adjustment of $5 million.
Material sales were $93 million in the quarter compared to $82 million in the fourth quarter of 2023.
Brian Millard: Green emitter sales, which include our yellow green emitters were $67 million in the fourth quarter of 'twenty, 'twenty, four which compares to $63 million in the fourth quarter of 2023.
Brian Millard: Red emitter sales were $25 million, which compares to $18 million in the fourth quarter of 2023.
Brian Millard: As we've discussed in the past material buying patterns can vary quarter to quarter.
Brian Millard: Fourth quarter royalty and license fees were $64 million compared to the prior year's period, a $73 million.
Brian Millard: <unk> revenue for the fourth quarter of 2024 was $4.6 million compared to $3.2 million in the fourth quarter of 2023.
Fourth quarter cost of sales was $37 million translating into total gross margins of 77%.
Brian Millard: This compares to $36 million and total gross margins of 77% in the fourth quarter of 2023.
Brian Millard: Fourth quarter operating expenses, excluding cost of sales were $72 million. This compares to $58 million in the fourth quarter of 2023.
Brian Millard: Operating income was $52 million in the fourth quarter of 2024 translating into operating margin of 32%.
Brian Millard: This compares to the prior year period, a $65 million and operating margin of 41%.
Brian Millard: Due to the previously mentioned a V J P restructuring costs fourth quarter 2024, operating margins were negatively impacted by approximately five percentage points.
Brian Millard: The fourth quarter 2024 income tax rate was 17% net.
Brian Millard: Net income for the fourth quarter was $46 million or 96 cents per diluted share.
Brian Millard: This compares to the fourth quarter of 2023 $62 million or $1 29 per diluted share.
Brian Millard: The O V J P restructuring charges and Korean FX loss resulted in a combined 26 cent reduction to Q4 EPS.
Brian Millard: Now turning to our 2025 outlook, we expect our 2000 and twenty-five revenues to be in the range of 640 million to $700 million, we estimate that our 2025 ratio of materials to royalty and licensing revenues will be in the ballpark of 1.4 to one.
Brian Millard: Total gross margins are expected to be approximately in the range of 76% to 77%.
Brian Millard: Operating expenses are expected to grow at a low single digit percentage rate year over year with R&D expected to remain flat, while SG&A expenses are expected to increase 10% to 15%.
Brian Millard: 2025 operating margins are expected to be in the range of 35% to 40% be.
Brian Millard: We expect the effective tax rate for 2025 to be approximately 19%.
Brian Millard: And lastly, we are pleased to announce that the board of directors has approved an increase to our quarterly cash dividend of.
Brian Millard: A dividend payment of 45 cents per share will be paid on March 31, 2025 to stockholders of record as of the close of business on March 17th 2025.
Steve Abramson: The dividend increase reflects the confidence in our robust future growth opportunities expected continued positive cash flow generation and commitment to return capital to our shareholders with that I'll turn the call back to Steve Thanks, Brian.
Speaker Change: At UDC, we pride ourselves on pushing boundaries exploring new frontiers and delivery solutions that redefine what's possible.
Speaker Change: As we look forward to 2020 five and beyond the road ahead is filled with immense opportunity across the OLED industry product Roadmaps are broadening and leading display makers are investing in new subs to meet the growing OLED demand, especially in the medium sized panel market.
Speaker Change: Coming years are poised to bring meaningful new OLED capacity, new OLED products, New OLED adoptees.
Speaker Change: As a pioneer and leader in the ecosystem, we are well positioned to continue supporting our customers and enabling the industry's demand for higher performance and increased functionality and consumer products with a broadening portfolio of energy efficient high performing phosphorescent materials that OLED technologies.
Speaker Change: We'd like to thank each of our employees for their drive desire dedication and heart in elevating and shape, a universal displays accomplishments and advancements we are committed to being a leader in the OLED ecosystem, achieving superior long term growth and delivering cutting edge technologies and materials for the industry for our customers and for our shares.
Holders and with that operator, let's start the Q&A.
Speaker Change: Thank you Mr events, and we will now be conducting a question and answer session.
Speaker Change: To ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star Kao to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star one moment, while we poll for questions.
Speaker Change: Our first question is from Brian Lee with Goldman Sachs. Please proceed.
Brian Lee: Hey, everyone. Good afternoon, thanks for taking the questions.
Speaker Change: I I I, Oh, let's start off with Blue cause I know blues.
Speaker Change: Obviously, a key focus and as he said Steve at the outset of the call its getting closer than ever.
Speaker Change: You bet he regionally updated the blue timeline and the language in a months not years I think on the August call. We're sitting here now in late February it's still months not years.
Speaker Change: I mean, if we if we kind of dial back to when you first started.
Speaker Change: Using that terminology.
Speaker Change: Presumably mean once not years is 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.
Speaker Change: Here in February months, not years, where you know a months from here it could actually be early 'twenty six.
Brian: Yeah, Hey, Brian.
Yeah. So back in August as you said when we at our Q2 call did announce that we thought it was gonna be months not years that was months not years of a delay beyond 'twenty 'twenty four Akshay previously said, we expected in 2020 Ford have commercial performance of our blue material.
Brian: So you know we're now here in February. So we think this is you know kind of month to so to speak of that timeline.
Speaker Change: As Steve said in his remarks, we continue to be very pleased with the progress that we're making and continue to believe that we're on the right path.
Speaker Change: I just need more time to work internally as well as with our customers to bring it to commercialization.
Speaker Change: Alright fair enough.
Speaker Change: Well, 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 I'm always helpful to get all of those line items.
Speaker Change: 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 second half honestly like all of the quarters were somewhat in the same revenue ballpark.
Speaker Change: As we think about your $640 million to $700 million revenue guidance for the full year 'twenty five.
Speaker Change: As seasonal seasonality coming back to a more normal cadence in 'twenty five as we think about first half second half trends Q1, being kind of a low point for the year or are there reasons drivers you know product cycles et cetera that you have visibility into that would suggest 25 books again like 'twenty four.
Speaker Change: Yeah. It's a good question as you said you know we typically have had second half orientation to our revenues at our plan for this year does it does have second half being stronger than first half at the same time I think there's just a number of different macro uncertainties. This year that caught may cause that to shift but.
Speaker Change: Just on the play and we have as of now it does look like second half is stronger.
Speaker Change: 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.
Speaker Change: I believe it was related to China I don't know if that was L. L GE, China or just other China manufacturers can you kind of update us on what you're seeing out there in terms of inventory status is that all clear.
Speaker Change: Into the early part of 'twenty five or are you seeing any drag from that.
Speaker Change: Thank you guys.
Speaker Change: Yeah, I think the comment that we made back on the Q3 call about inventory was that we had anticipated that Q4 was going to be not as strong as it ended up being we thought our customers may bring some of their inventory levels down heading into the end of the year.
Speaker Change: I think as of now we've seen a fairly normal inventory levels, we havent seen anything out of the ordinary one direction or another at this point.
Speaker Change: Alright, great. Thank you.
Speaker Change: Thanks, Brian question is from Scott Searle with Roth Capital Partners. Please proceed.
Scott Searle: Hey, good afternoon, thanks for taking the questions nice job to end up the year with record results.
Scott Searle: You'll see in terms of looking at your customers I guess following up on Brian's question. It doesn't sound like there is a tremendous amount of inventory that's out there with those customers I Wonder 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.
Scott Searle: I'm wondering if you could just clarify that the sequential progression that you would expect from <unk>.
Scott Searle: I'm going to March for materials, and how the geopolitical situation, particularly from a tower standpoint is expected to impact you guys in 'twenty five.
Scott Searle: Yeah. So on on inventory Scott, we you know.
Scott Searle: As I said, we had expected Q4 was going to be a bit light than it ended up lighter than it ended up being because we had expected inventory draw down heading into the end of the year.
Scott Searle: As of now we've seen you know fairly normal inventory patterns normal buying patterns from our customers.
Scott Searle: You know as I said, though that there is a lot of uncertainty. This year in terms of you know macro factors and how that might weigh in tariffs being one of them.
Scott Searle: And as it relates to tariffs I mean, we have been in the business for three decades I've been doing global trade for that period of time, and our experienced and you know how to successfully navigate and deal with it but.
Scott Searle: But we're you know we're not immune from it either so it's something that we plan for.
Scott Searle: Both in terms of how we source materials and our supply chain as well as our own manufacturing footprint I'm, having Shannon in our footprint is certainly beneficial from a global trade perspective.
It's something that we're planning for a monitoring but yeah. That's about as much as we can share at this point.
Scott Searle: Got you that's helpful and maybe to follow up in terms of the 25 guidance of $640 million to $700 million I'm wondering if you could articulate the swing factors at the low end of the range to the higher end of the range I know its only middle of February at this point in time, but also a blue was include in that I think he passed policy heads up into included in your assumptions.
Scott Searle: And just kind of wondering the cobalt.
Scott Searle: Scott.
Scott Searle: Yeah. So on the factors for the range you know, we certainly have a base case, that's within the range and an upside and downside opportunities off of that just based on really consumer demand as.
Scott Searle: As well as development work at our customers and how that might fluctuate both on Red Green and blue as it relates to Blue we do have blue in our revenue guidance, but it's not projecting significant growth off of this year, because we do anticipate you know, what's really going to be a development quantity this year, which development.
Scott Searle: Development quantities, yeah, a little bit can go a long way as it relates to development. It also tends to be fairly variable quarter to quarter in terms of your development quantities that our customers need to advance their blue work.
Scott Searle: Okay Lastly, if I could.
Just from a capacity addition standpoint I think you said, 10% by the end of 'twenty five versus the end of 'twenty three.
Scott Searle: There are quite a large number of fabs that are expected to ramp into production I think in the second half of 2006.
Scott Searle: So you probably won't get out ahead of your skis in terms of providing projections of 26, but at this point in time would you expect to see an inflection in terms of the growth beyond double digits.
Scott Searle: 10% as we get into 'twenty six month biopsy sample.
Speaker Change: Yeah, I think as you said, we're not in a position right now to give twenty-six guidance other than to say you know certainly these new fabs that are being constructed at Samsung Bowie envision ox.
Speaker Change: Are all positive signs for the years ahead, especially as it relates to the OLED market.
Speaker Change: Great. Thank you.
Scott Searle: Thanks Scott.
Speaker Change: Our next question is from Mehdi Hosseini with FHA. Please proceed.
Scott Searle: Yes.
Mehdi Hosseini: Thanks for taking my question a couple of follow ups for me.
Mehdi Hosseini: On the Blue topic can you help me understand the the depth and diversity of the customers that are evaluating is it just limited to your largest customer or our values customers from different regions are actually evaluating jetblue.
Mehdi Hosseini: Yeah, Hi, <unk>, so we're working with multiple customers across multiple regions on blue. So that's about as much as I can share.
Mehdi Hosseini: Wait.
Mehdi Hosseini: Sure sure and just to.
Mehdi Hosseini: For us to better understand that.
Mehdi Hosseini: The the demand of the stores and the thought process when you say.
Mehdi Hosseini: You are months away from commercialization of years is across the board or is there any customer that is ahead of others.
Mehdi Hosseini: Yeah, we we can't speak to our customers' progress other than to say you know the months not years is E. D C. Achieving commercial design win of blue of our blue material or with a customer.
Mehdi Hosseini: Okay.
Mehdi Hosseini: And then on the last one for me on <unk>.
Mehdi Hosseini: Sticking with the blues topic was there is there anything you can help me understand the R&D.
Mehdi Hosseini: Revenue associated with blue that you're able to generate.
Mehdi Hosseini: 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 either.
Speaker Change: How much of it.
Mehdi Hosseini: <unk> included.
Mehdi Hosseini: So we had $4.6 million of Blue's sales in 2024 and that was a combination of emitter and host revenues.
Mehdi Hosseini: Majority being bidders, but we have been selling hosts and development quantity as well.
Speaker Change: Got it thank you.
Mehdi Hosseini: Thanks.
Speaker Change: Our next question is from James Ricchiuti with Needham <unk> Company. Please proceed.
Speaker Change: Alright. Thanks.
Speaker Change: Don't know if you're going to be in a position to to answer this either but just with respect to.
Speaker Change: The timeline for Blue can you say, whether you are in discussions regarding a glue license agreement with your largest customer.
Speaker Change: Or do you just anticipate this recurring once you have a.
Speaker Change: Our short design win to talk about.
Speaker Change: Yeah, I I can't talk about the status of any negotiations other than to say you know, we're always talking to our customers about a lot of different things on blue and other red and green as well.
Speaker Change: Okay.
Speaker Change: Brian just with respect to the 25, our guidance is there any unusual variations and pricing for your materials versus 'twenty 'twenty four or is this the guide mainly just a function of the.
Speaker Change: We are.
Speaker Change: Uncertain consumer electronics outlook or maybe a combination of both.
Yeah, there's not a significant price pressure at all of our customer contracts. We don't really have any new agreement new significant agreements that are up this year.
Speaker Change: And we do have so its not theres not significant ASP pressure in 2025.
Speaker Change: It tends to be more the latter being just general demand environment, and what that might look like that might drive the higher the low end.
Speaker Change: Got it thank you.
Speaker Change: Our next question is from Krish Shankar with TD Cowen. Please proceed.
Speaker Change: Hi, guys. Thanks for taking my questions. This is Steven calling on behalf of Krish first one if I could on.
Speaker Change: The smartphone end market. Thanks for some of the color earlier in the prepared remarks about <unk>.
Speaker Change: T.
Speaker Change: Estimated number of smartphones to use OLED displays.
Speaker Change: In the coming years, just kind of curious that for those that targets that you mentioned he said market projections.
Speaker Change: Anticipate sort of a linear progression in terms of the the rising penetration rates or might there be.
Speaker Change: It might have been a bit more.
Speaker Change: Weighted towards the outer parts of that forecast period, just given some of the.
Speaker Change: Market share dynamic between.
Speaker Change: Mitch here in an empty chair for films and market.
Speaker Change: Yeah, I think it's hard to predict the exact.
Speaker Change: Hope of the curve or linearity of it other than to say you know old OLED smartphones right now you know greater than greater than 50% penetrated.
Speaker Change: In our IR deck, we do have a deck that project some data from R&D of what they're saying some of the penetration rates might be over the next few years. So that's you know a guidepost that we look to regularly in terms of the progress but.
Speaker Change: Certainly all the premium smartphone today, our OLED <unk> many of the mid tier and we're seeing even some of the low end smartphones adopt OLED displays so there's opportunity across all segments of the smartphone market and we expect to continue to to.
Speaker Change: We gained further adoption in that market.
Speaker Change: Got it.
Speaker Change: And a.
Speaker Change: Quick follow up on operating expenses say, Bryan you mentioned that.
Speaker Change: SG&A will be up this year kind of curious what are some of the drivers for that and I.
Speaker Change: Looking a little further out is that dynamic going to.
Speaker Change: Sort of a fair back to a more normalized at both R&D Amsterdam growing.
Speaker Change: Kind of in tandem going forward after that.
Speaker Change: Yeah. This is I think a little bit of of a one time step up so to speak I mean, we have a very lean organization and we've always operated that way. We will continue to do that but there are certain areas that we want to put additional resource behind to make sure. We're prepared for the growth in the next few years as well as to some degree as well we're looking at are low.
Speaker Change: <unk> support in Asia for our customers and making sure that we're supporting them as much as we can locally so there's some element of SG&A, that's going to that effort.
Speaker Change: Got it.
Speaker Change: If I could squeeze one more in ASO about sort of operating cost.
Speaker Change: With the overly J P operations restructuring and moving movement.
Speaker Change: A good portion of the operations to Singapore was curious like are you able to quantify what that cost savings is aggregate operations in Singapore compared to in California, and any thoughts on sort of the timeline to mature revenues for EM.
Speaker Change: Our strategy from a strategic standpoint for that business. Thanks.
Speaker Change: Yeah. So it is a net savings than the move from California to Singapore.
Speaker Change: And that's part of the reason why our R&D expense is projected to be flat in 2025 off of 20 fours because of the fact that there are some savings due to winding up the California location in terms of revenues for a V J P.
Speaker Change: And UV JC wishes are our Singapore subsidiary.
Speaker Change: Too early to really put any any posts or other than to say, we're very happy to have Shawn drawn under new leadership onboard there.
Speaker Change: We feel very optimistic about their prospects going forward.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thanks.
Speaker Change: As a reminder, the star one on your telephone keypad, if he would like to ask a question. Our next question is from Maher with Oppenheimer and company. Please proceed.
Maher: Alright. Thank you for taking my question a quick follow up on the previous speaker regarding Opex.
Speaker Change: Is there any other cuts are.
Maher: Incremental savings so R&D other than Ob J P for 2025.
Speaker Change: No Vijay piece Martin stands out as the significant area that were just I think it's really just a pivot in our kind of realignment of our efforts there.
Speaker Change: And we're setting up a team in Singapore, it's going to be a smaller team than what we had in California.
Speaker Change: And and Yeah, that's that's really the big area that sort of changed in 25.
Speaker Change: Thanks, Brian.
Speaker Change: Next question is around this year's guidance, how much of your outlook regarding.
Regarding new installed capacity by the end of 'twenty five.
Speaker Change: How much of that is a factor in your guidance more specific to our annual revenue growth.
Speaker Change: A relatively small piece of it relates to certain some of these new fabs coming online and some of the material that may be needed for that I mean, it's a it's not a significant component of the of the growth.
Speaker Change: And and twenty-five off of 'twenty four.
Speaker Change: Got it. Thank you my last question is just confirm your comment on Blue C.
Speaker Change: When you initially said loose delay is in months not years.
Speaker Change: Essentially that clock start ticking in your original intention to start ticking around the beginning of 'twenty five or <unk> 24.
Speaker Change: That's right. So we went back in August when we said we thought it was going to be you know a delay of months not years that delay was beyond 2024. So I'm you know kind of started a month ago. So to speak. So this is it was really.
Speaker Change: As you recall our prior.
Speaker Change: You know expectation and communication had been that we thought in 'twenty four we would have commercial performance.
Speaker Change: Blue and this now is really a months not years beyond 24th.
Speaker Change: Thank you Brian that's it for me.
Speaker Change: Thanks.
Our final question is from.
Speaker Change: <unk> with Citi. Please proceed.
Speaker Change: Hi, Thank you for taking my questions.
Speaker Change: Brian your materials sales the group like 14% last year.
Speaker Change: And you've seen maybe a 4% type growth this year.
Speaker Change: Mark deceleration and 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.
Speaker Change: Yeah. So we are projecting slower growth and twenty-five twenty-three was also down year. So you know, it's a little bit of a the reason why the growth rate in 'twenty four was as high as it was was also coming off of a fairly lower base in 'twenty two 'twenty three.
Speaker Change: And I think if you look at the industry growth rate and what capacity demand as this year.
Speaker Change: Five 6% thereabouts as kind of what a lot of the analysts that follow the industry, you're projecting in terms of square area of growth and if you look at our business historically because of customer efficiencies as well as volume price dynamics and otherwise our growth rates have typically been just shy of the overall industry growth for those reasons.
Speaker Change: And so we think our guidance ranges you know fairly in line with what the industry is projecting.
Speaker Change: Got it and then the Blue emitter.
Speaker Change: Is your understanding that you are you guys are gonna be sole sourced on that or are there is competition. That's also a competing for blue.
We believe that all paths to high efficiency Blue go through our materials and so that's our position we don't believe there's anything competitive to us.
Speaker Change: And then lastly.
Speaker Change: China semiconductor market, they're doubling down on <unk>.
Speaker Change: Materials on the semiconductor side.
Speaker Change: The question comes up with investors in terms of what you're seeing in terms of competition from.
Speaker Change: Local China material suppliers on on these emitter materials again can you update us what what do you see there.
Speaker Change: Yeah, I mean, it is certainly the Chinese market has been one where there are a number of local players on the materials side that you don't have come up in the last few years and it's something we monitor very closely and many of them are focused on areas of the OLED stack that are not competitive to us.
Speaker Change: There are some that are trying to compete in our space. We continue to believe that due to our long standing customer relationships the quality of our materials, our vast patent portfolio that we.
Speaker Change: We can see will continue to be the leader you know for the foreseeable future.
Speaker Change: In this space.
Speaker Change: Great. Thanks.
Speaker Change: Thanks, a lot Jeff.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session.
Speaker Change: I'd like to turn the conference back over to Brian Miller for any additional or closing remarks.
Speaker Change: Thank you for your time today, we appreciate your interest and support.
Speaker Change: Yes.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Speaker Change: Yeah.