UNIVERSAL DISPLAY CORP \PA\ Q4 FY2024 earnings call

• 2024 was a record year with $648 million revenue, $239 million operating income, and $222 million net income. - Cultivated global partnerships, including new long-term agreements with Visionox. - Made advancements in operational, strategic, and R&D roadmaps. - Progress on phosphorescent blue: closer to commercialization, with belief it will be months, not years, away, and could increase OLED display energy efficiency by up to 25%. - OLED market projections: significant growth expected in smartphones, IT, automotive, and TVs with increased capacity and adoption. - OVJP technology: Appointment of new CEO for Singaporean subsidiary, focusing on medium area IT market in next few years.

In 2024, revenue was $648 million. By segment, material sales were $365 million (56.3% of total revenue), royalty and license revenues were $267 million (41.2% of total revenue), and Adesis' revenues were $15 million (2.3% of total revenue). For the fourth quarter of 2024, revenue was $162 million. Material sales were $93 million, with green emitter sales at $67 million and red emitter sales at $25 million. Royalty and license fees were $64 million, and Adesis' revenue was $4.6 million.

• 2025 revenue expected to be in the range of $640 million to $700 million. - Total gross margins expected to be approximately 76% to 77%. - Operating expenses expected to grow at low-single-digit percentage rate, with R&D flat and SG&A increasing 10% to 15%. - Operating margins expected to be in the range of 35% to 40%. - Effective tax rate expected to be approximately 19%. - Board of Directors approved an increase in quarterly cash dividend to $0.45 per share.

• Market dynamics and shifting consumer demands pose uncertainties. - Geopolitical factors like tariffs could impact operations. - Uncertainties in the timeline for commercializing phosphorescent blue, though progress is being made. - Competition from local China material suppliers in the OLED materials space.

Q: Brian Lee from Goldman Sachs asked about the timeline for phosphorescent blue commercialization and if it's months not years before end of 2025.

A: Brian Millard said back in August it was months not years of delay beyond 2024, and they continue to believe it's months away.

Q: Scott Searle from ROTH Capital Partners asked about the 2025 revenue guidance swing factors and blue inclusion.

A: Brian Millard said factors include consumer demand, customer development work, and blue development quantities being variable.

Q: Mehdi Hosseini from SIG asked about the depth of blue customer evaluation and milestones.

A: Brian Millard said working with multiple customers across regions, and months not years refers to UDC achieving a commercial design win of blue.

Q: James Ricchiuti from Needham and Company asked about blue license agreements with largest customer.

A: Brian Millard said can't talk about specific negotiations but are always talking to customers about blue and other materials.

Q: Steven Chin from Needham and Company asked about operating expenses drivers and OVJP cost savings.

A: Brian Millard said SG&A has a one-time step up for local support and OVJP move to Singapore is a net savings.

Q: Martin Yang from Oppenheimer & Company asked about R&D cuts other than OVJP and blue timeline.

A: Brian Millard said OVJP is the main R&D change and blue delay is months beyond 2024.

Q: Atif Malik from Citi asked about OLED materials market growth and blue emitter competition.

A: Brian Millard said slower growth expected in 2025, belief UDC's blue is sole-sourced, and monitors local China competitors but believes in UDC's leadership.