Universal Display's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Universal Display Corp. (PANL)

Q2 2012 Results Earnings Call

August 8, 2012 5:00 PM ET

Executives

Joe Hassett – Investor Relations

Steve Abramson – President and CEO

Sid Rosenblatt – Executive Vice President and CFO

Analysts

Andrew Abrams – Avian Securities

Jim Ricchiuti – Needham & Company

Brian Lee – Goldman Sachs

Carter Shoop – Keybanc

John Bright – Avondale Partners

Rob Stone – Cowen And Company

Darice Liu – National Securities

Jon Dorsheimer – Canaccord

Hendi Susanto – Gabelli & Company

Craig Irwin – Wedbush Securities

Vishal Shah – Deutsche

Vasanth Mohan – Piper Jaffray

Presentation

Operator

Please standby. Good day, everyone. And welcome to the Universal Display Corporation Second Quarter 2012 Earnings Conference Call. Today’s conference is being recorded.

At this time for opening remarks, I’d like to turn the conference over to Mr. Joe Hassett, Investor Relations. Please go ahead.

Joe Hassett

Thank you, and good afternoon, everyone. With us today are Steve Abramson, President and Chief Executive Officer; and Sid Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display Corporation.

Let me begin today by reminding you that this call is the property of Universal Display. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Universal Display is strictly prohibited.

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, August 8, 2012.

All statements in this call that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements regarding Universal Display’s beliefs, expectations, hopes or intentions regarding the future.

It is important to note that these statements are subject to risks and uncertainties that could cause Universal Display’s actual results to differ from those projected. These risks and uncertainties are discussed in the company’s periodic reports filed with the SEC. Universal Display disclaims any obligation to update any of these statements.

Now, I’d like to turn the call over to Steve Abramson, President and CEO of Universal Display. Steve?

Steve Abramson

Thank you, Joe. And welcome to everyone listening today. We reported record results for the second and the first half of 2012. Our revenues more than doubled over last year and we are in $0.23 per share in the second quarter. Sid will go through the detail shortly.

We also recently concluded two important strategic partnerships that will help position us strongly for future growth. We purchased Fujifilm world OLED patent portfolio of over 1,200 patents and application for $105 million. This acquisition strengthen our position in both of our core businesses, OLED technology licensing and OLED material sales.

Fujifilm has had strong research team working in OLEDs for more than a decade. This acquisition will expand, broaden and deepen our patent portfolio. Their strong benefit for both our patent licensing business and our material supply business.

Since over 90% of their portfolio is less than 10 years old, most extend beyond the exploration of our fundamental FOLED patent at the end of this decade. Helping sustaining grow our patent licensing business.

About half of the patents are issued and about half of them are pending. About 50% of their portfolio relates to device architecture, covering many important aspects of OLED devices. Such as how they can be build to ensure high efficiency and long life time. These are patents that we license to display lighting manufacturers.

The other half of their portfolio covers numerous OLED materials. It covers many broad classes of host and transport materials enabling us to expand their material supply business.

It also include many classes of phosphorescent emitters, particularly pertaining to the use of iridium and platinum molecule. The addition of this portfolio will give us additional design freedom as we develop the next-generation of red, green, yellow and blue material systems and technologies.

About 25% of their patents were in the U.S. and about 45% of their patents are filed in Japan. So as a collateral benefit of this acquisition, we have bolstered our patent position in Japan regardless of the final decision in the pending and validation precedings.

Second key partnership was a $4 million investment and a new three-year joint development agreement with Plextronics, a company with which we have been working for eight years. This partnership is focused on accelerating our material technology for injet and other solution-based OLED printing manufacturing system.

Plextronics works in materials complementary to our emissive layer technology. They work in hole injection and hole transport materials. The combination should provide a more complete solution, more quickly to display and lighting manufacturers who are interested in solution-based printing manufacturing processes.

Back to the present, there’ve been no slowdown in the pace of which the market for our product and technology continues to expand. DisplaySearch recently reported that the global AMOLED market grew a substantial 93% in the second quarter and its now over 20% of the smaller mid-sized display market compared to just 11% a year ago. The latest projection are for AMOLED market revenues of $5.93 billion in 2012.

Smartphones remained a dominate OLED application, oled-info.com recently reported that 261 million OLED smartphones are expected to be shipped in 2013, a 48% compared to 176 million units expected to be produce this year.

Samsung continues to dominate the OLED market and Samsung Galaxy S3 is the number one selling phone in the world. With over 10 million sold to date, Samsung has extended their lead over Apple in the share of the smartphone market.

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