Good day, ladies and gentlemen, and welcome to Universal Display Corporation's third quarter 2023 earnings conference call. My name is Sherry, and I will be your conference moderator for today's call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Darice Liu, Senior Director of Investor Relations. Please proceed. Thank you, and good afternoon, everyone. Welcome to Universal Display's third- quarter earnings conference call. Joining me on the call today are Steve Abramson, President and Chief Executive Officer, and Brian Millard, Vice President and Chief Financial Officer. 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. 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, November 2nd, 2023. During this call, there may be forward-looking statements based on current expectations. 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. Universal Display disclaims any obligation to update any of these statements. Now, I would like to turn the call over to Steve Abramson. Thanks, Darice, and welcome to everyone on today's call. For the third quarter of 2023, we reported revenue of $141 million, operating profit of $48 million, and net income of $52 million or $1.08 per diluted share. For the year, we are further narrowing our revenue guidance range. Our updated range is $565 million-$590 million. As we look ahead, the OLED industry has multiple market verticals driving its long-term growth path. A significant shift in the world of technology is occurring with the introduction of conformable, foldable, and rollable consumer electronics, and OLEDs are fueling this form factor revolution. Since our inception, UDC has envisioned a future where OLEDs enable flexible displays to become part of the everyday life of consumers around the world. OLEDs are inherently flexible, bendable, and stretchable, making them the ideal display technology across a vast array of applications. With more devices using flexible OLED displays, consumers are seeing more adaptable products with fresh designs and new productivity features and functions. Foldable phones have been a bright light in this year's smartphone market. Market research firm DSCC estimates that as more brands enter the foldable market and existing brands introduce more foldable products, 36 different foldable phones will ship this year compared to 19 in 2022. Some of those brands include Samsung, Google, Huawei, Vivo, Honor, and OPPO. DSCC forecasts that foldable phones will increase 28% year-over-year to 16.4 million units in 2023. According to Counterpoint Research, foldable smartphone shipments are expected to exceed 100 million units by 2027. In addition to foldable smartphones, panel makers are developing foldable IT panels. In late September, LG Display announced it would start mass-producing 17-inch foldable IT panels for notebooks. Initial products include the LG Gram Fold and HP Spectre Fold. Speaking of IT, with OLEDs only about 2% of the IT market today, this market segment offers a tremendous opportunity for growth. We believe that a significant new OLED IT adoption cycle will begin next year. UBI Research forecasts that OLED IT shipments of tablet PCs, notebooks, and monitors will more than double from this year's 7.9 million units to 18.8 million units in 2024, and will reach 31.3 million units in 2027, translating into an average annual growth rate of 41% over the four-year period. UBI also recently reported that Samsung Display is expected to start production of its Gen 8.6 line for IT devices in the first half of 2026. The market research firm also noted that LG Display and BOE are expected to invest in Gen 8.6 for IT. Moving up the scale to OLED TVs, which are only about 3% of the total TV market, growth in this segment is expected to resume in 2024. DSCC forecasts that OLED TV units will grow at a 13% CAGR from 2023 to 2027 to 9.2 million units. Consumer Reports once again ranked OLED TVs as the best TVs in the market. With their brilliant color, fast refresh rate, 180-degree viewing angle, high contrast ratio, thin form factor, and other benefits, it's not surprising that OLED TVs are considered the best of the best. Another exciting and emerging opportunity for OLEDs is the automotive industry. During the quarter, Audi unveiled that its upcoming 2025 Q6 e-tron EV SUV will include two OLED displays, an 11.9-inch gauge cluster, and a 14.5-inch infotainment touchscreen. In the 2025 Mini Cooper EV, a 9.4-inch circular OLED interface display is centered on the dash. Leading Chinese EV maker BYD, through its sub-brand Yangwang, launched the U8 Premium Edition EV SUV that features a 12.8-inch OLED central screen on its dash. Hyundai unveiled a newly redesigned Genesis GV80 SUV with a 27-inch OLED display that integrates the instrument panel and central display screen. Market research firm TrendForce notes that automotive displays, including rear seat entertainment screens, passenger side displays, central information displays, and digital clusters, are evolving into a more powerful communication media. Additionally, to integrate the various independent functions found in a traditional cockpit, larger screens and more flexible spatial designs are vital. TrendForce forecasts that OLED automotive panels will continue to grow and could capture approximately 10% of the automotive display market by 2026. Why the growing interest in OLEDs for the automotive market? Well, automotive OLED displays are lighter and more flexible than traditional displays. OLED displays, using our energy-efficient phosphorescent materials, require less power, which makes OLEDs the ideal displays for electric vehicles. OLEDs can also be designed into various shapes and form factors, have a wider temperature range, and provide exceptional clarity, whether it's day or night. OLEDs in the automotive market also encompass OLED lighting. Audi featured OLED taillights in its A8 and smaller Q5 crossover, and most recently, Audi expanded OLED taillights to its 2024 Q8 SUV. As OLED activity continues to expand across the consumer display and lighting landscapes, we remain steadfast in our commitment to advancing a robust OLED materials and technology leadership. We continuously push the boundaries of what we can achieve, and our unwavering dedication to delivering best-in-class products to our customers is our guiding light. With our deep and extensive experience and cutting-edge know-how of nearly 30 years of pioneering research, we are innovating, inventing, and introducing new OLED phosphorescent emissive materials, including new reds, greens, yellows, and hosts. With respect to blue, we continue to make excellent progress in our ongoing development work for a commercial phosphorescent blue emissive system. We continue to believe that we are on track to introduce our all-phosphorescent RGB stack into the commercial market in 2024. We believe that the introduction of our full suite of red, green, and blue phosphorescent emissive materials will unlock a vast array of opportunities for higher energy efficiency and higher performance across a broad range of OLED applications. We also continue to make notable progress with constructing the key subsystems for the OVJP alpha system design. The completion of these subsystems is a crucial step in our commercialization roadmap. While the commercial launch of OVJP is still a few years away, we believe that OVJP represents a groundbreaking platform towards a low-cost, highly efficient, dry- printed RGB side-by-side OLED TV manufacturing platform. On that note, let me turn the call over to Brian. Thank you, Steve, and again, thank you, everyone, for joining our call today. Our third- quarter revenue was $141 million, compared to $161 million in the third quarter of 2022. Material sales were $92 million in the third quarter, compared to material sales of $84 million in the third quarter of last year. Green emitter sales, which include our yellow-green emitters, were $69 million. This compares to $64 million in the third quarter of 2022. Red emitter sales were $22 million. This compares to $20 million in the third quarter of 2022. As it has been discussed in the past, material buying patterns can vary quarter to quarter. Third quarter royalty and license fees were $46 million, compared to the prior year period of $71 million. The year-over-year $25 million decline was due to a few primary factors. One is customer mix. Additionally, the cumulative catch-up adjustments, the majority of which are recorded to royalty and license fees, decreased by $8 million between periods. And finally, Q3 this year had a lower average contract royalty and license fee per gram for certain customers as a result of an increase in estimated demand over the remaining lives of their contracts. For the full year, we continue to expect the ratio of material sales to royalty and license fees to be in the ballpark of one and a half to one. to one. Adesis's third- quarter revenue was $2.7 million, compared to $4.9 million from the comparable period in 2022. Third- quarter cost of sales in 2023 was $34 million, compared to $37 million in the third quarter of 2022. This translates into total gross margins of 76% in the third quarter of 2023, compared to 77% in the third quarter of 2022. Third- quarter OLED material gross margins were 66%. This compares to material gross margins of 60% in the third quarter of 2022. For the full year of 2023, we now expect total gross margins to be approximately in the range of 76%-77%. Third quarter operating expenses, excluding cost of sales, were $58 million. In the third quarter of 2022, it was $55 million. For the full year of 2023, we now expect operating expenses to be up by a low single-digit percentage year over year. Operating income was $48 million in the third quarter, translating into an operating margin of 34%. This compares to the prior year period of $68 million and an operating margin of 43%. The third quarter income tax rate was 4.4%. This lower tax rate was primarily due to a recent change in IRS regulations that now allow certain foreign withholding taxes to be credited against U.S. income for 2022 and 2023. For the full year of 2023, we now expect our tax rate for the year to be in the range of 17%-19%. Third quarter 2023 net income was $52 million or $1.08 per diluted share. This compares to $53 million or $1.12 per diluted share in the comparable period in 2022. During the quarter, we purchased our Shannon manufacturing site for $14 million. For the year, our capital expenditures are expected to be approximately $60 million. We ended the quarter with approximately $779 million in cash, cash equivalents, and investments. Regarding our 2023 guidance, as Steve mentioned, we are revising our revenue forecast by narrowing guidance to a range of $565 million-$590 million. Lastly, our board of directors approved a $0.35 quarterly dividend, which will be paid on December 29th, 2023, to stockholders of record as of the close of business on December 15th, 2023. The dividend reflects our 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. Innovation, collaboration, inclusion, and sustainability are the primary pillars that drive UDC and our people. Innovation is part of the company's DNA. It's what propels us forward, opens the door to new opportunities, and reinforces our position as a leader in the OLED industry. We foster a culture of continuous innovation, and innovation thrives on collaboration. UDC's diverse and talented team works together to provoke and exchange ideas and solutions. With our growing portfolio of new and next-generation energy-efficient materials and technologies, we are making a positive impact towards a sustainable future. In recent months, we have been recognized for these principles. We were awarded a silver rating for corporate social responsibility from EcoVadis, a leading provider of business sustainability ratings. We were named to Newsweek's 2024 list of America's Greenest Companies, placing UDC among the top 300 companies in the U.S. for its commitment to being a good steward of the environment. We're also recognized by the Forum of Executive Women and the Executive Women of New Jersey for board diversity. Led by our corporate culture that celebrates inventiveness, integrity, inclusion, and imagination, we are proud of the diverse and dynamic global UDC team. I would like to thank each of our employees for their drive, desire, dedication, and heart in elevating and shaping Universal Display's 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 shareholders. With that, operator, let's start the Q&A. Thank you. If you would like 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 two if you would like to remove your question from the queue, and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions. Our first question is from Brian Lee with Goldman Sachs. Please proceed. Hey, everyone. Good afternoon. Thanks for taking the questions. Sorry if I missed this, but I think if I go back into blue, maybe you just stated it outright, but blue was $1.5 million of revenue in the quarter. Is that correct, number one? And then, I know you've been saying it's gonna be lumpy until you get to full commercialization scale. What would you expect kind of near-term trends? Are we gonna see that kind of start to pick up off the level you saw here in Q3? Yeah. Thanks. Thanks, Brian. Yeah, as you indicated, blue sales for Q3 were $1.5 million, so that brings the total for the year -to- date to $4.3 million. So certainly, you know, a positive trend over the course of the year, but it is gonna be variable quarter to quarter as we continue to move forward closer to the commercial launch. So, no specific guidance to give, but it's gonna be a variable, you know, result from here to commercialization. Okay, fair enough. And then I guess the. You kind of headed it off in your prepared remarks, Brian, but just trying to unpack the mix between materials and royalty and license. A couple of questions there. I guess, first off, this was a record quarter for you guys in terms of materials revenue. Seasonally speaking, the past couple years, you've seen Q4 up off of Q2, you know, Q4 off of Q3, but I know in the past you've talked about, you know, seasonal downticks. So is this more of a normal year where you expect materials revenue to kind of be seasonally down into Q4, and was there maybe any pull forward that helped the number be so strong in Q3? Yeah. So thanks, Brian. I think, as you said, there were, you know, the ratio for the third quarter in terms of the materials to royalty and licensing, it was two-to-one, which is, you know, much higher than it's been in prior periods. A couple of factors there. One is customer mix, as I said in my prepared remarks, that we just had a different customer mix this period. We also had a situation that as we went through the quarter, on the royalty and license side, we had a larger volume expectation over the remainder of certain customer contracts, and so that has an impact of, you know, lowering the average, the ASP on, on the royalty and license side per unit. And then on the material side, we also had a situation where we had an expectation that some newer kind of next generation materials will be used by our customers over the remainder of their contract, so that has a favorable ASP increase on the material side. So those are a number of factors kind of going the same direction that caused the ratio to fluctuate a bit this period. Okay. Then maybe just a couple last ones, then I'll pass it on. You mentioned the ratio should get back to one and a half to one. Is that starting in Q4 or is that more of a 2024 comment? Yeah, that was a 2023 comment. So we expect for the full year to be one and a half to one. to one. And on a year-to-date basis through Q3, it is one and a half to one, and we expect Q4 to be similar in terms of one and a half to one. Understood. And then last one for me. Just if I know you've talked about this in the past in terms of ASC 606 accounting and how, you know, the royalty and license rev rec is tied to materials expectations. So is this volume projections under those material purchase contracts just moving out into the right, or did you actually take volume expectations up in some of these contracts, and some of that volume is just kind of in the latter half of those contracts, and that's why the upfront royalty licensing recognition is smaller here in the quarter? Just understanding whether this is just timing or there's also volume in aggregate also in question. Yeah, so it was really a change in estimate from what we had estimated, you know, at Q2 relative to Q3. So, an increase in our estimate of volumes over certain customer contracts over the remaining term of their agreements. Okay, fair enough. I will pass it on. Thank you. Thanks. Our next question is from Krish Sankar with TD Cowen. Please proceed. Hey, guys. This is Eddy for Krish. I have a question on the OLED tablet ramp. I'm wondering if you can lend a hand and guide us through the linearity of revenues coming from that product next year. Like, will it be back-half weighted or more evenly spread out? And wondering if you can give us any color about the incremental revenue opportunity from that product next year. Yeah, I think certainly, you know, we've been saying for a number of quarters now that we think 2024 is a pivotal year for the IT market. Certainly, tablets are a key part of that segment. So we expect a positive trend heading into next year in that area. Hard to put an exact, you know, percentage or dollar figure to it at this point, but we know there's positive momentum behind the IT segment as we go into 2024. Got it. I understand you won't be guiding for 2024, but wondering whether you think consensus estimates of up high teens for revenues is reasonable given the tablet and the blue product ramp next year? Yeah, I mean, I think, we're, you know, we'll give full guide on 2024 when we get into February and do our year-end call with you guys. But we'll give full guidance at that point. I think at this stage, you know, the best information we can say is that we expect 2024 to be a growth year and to be up relative to 2023, but we'll give more info in February on that. I understand. That's helpful. Just last thing, looking at deferred revenues, it seems they were up $37 million quarter-over-quarter, like, they more than doubled. Can you share some reasons behind that? Is it related to blue or the tablet, or is there any other reason? That's it for me. Thank you. Thanks. Yeah, yeah, we had an increase in both accounts receivable and deferred revenue in the period, and that's due to a milestone that we hit on one of our contracts, so that was a billing milestone. So we increased AR and increased deferred revenue, as that amount was uncollected as of the end of the period. Got it. Thank you. Thanks. Our next question is from Jim Ricchiuti with Needham & Company. Please proceed. Hi, good afternoon. This is Chris Grenga on for Jim. You had mentioned that one of the tailwinds for material sales was the product mix for new generation. I'm just curious, are new generation materials a majority of material sales at this point? And then, do you have any visibility into whether those types or that generation of emitters is going to be used in IT and automotive applications, or will that be one of the former generations? Any insights that you could provide there would be helpful. Thank you. Hi, Chris. Yeah. So we have a. I guess the comment we were making was more about as we introduce next generation materials, as our customers introduce new materials into their product portfolios, you know, that tends to start at a higher price once it's commercially launched, and then, and then work its way down as they purchase additional volumes. So I think that was more just a matter of, you know, and that's across a variety of applications, not unique to one particular segment. Got it. And I guess it was reported recently that one of your larger customers is looking to adopt a maskless process in the production of panels. I'm just curious, does maskless have any meaningful impact on the amount of material consumed versus existing processes? And is OVJP technology something that could potentially fit that description, for a maskless process? Thank you. Well, when a new manufacturing technology is introduced, we'd have to take a look and see what the effect would be on the material consumption. And so we'll have to see how that plays out. In general, everybody wants to use our materials, whatever their production technology is. OVJP is a printing technology, so yes, it would be maskless. Got it. Thank you very much. As a reminder, just star one on your telephone keypad if you would like to ask a question. Our next question comes from Sidney Ho with Deutsche Bank. Please proceed. Great. Thanks, guys. Thanks for taking the question. This is Jamal calling for Sidney. First question on gross margin. Brian, maybe if you can walk us through some of the puts and takes on gross margin for next quarter. And then just to follow up, how do you get back to that sort of long-term target range of 77%-78% for gross margin? We did update slightly our expectation for the year. Now we expect 76%-77% for the year, and that's largely due to we had $2.5 million of inventory provisions that we had to put up in Q3 due to, as we went through our evaluation of inventory on hand. So that's really what resulted in the tweak this quarter. We always are identifying opportunities, cost reduction opportunities, and making sure that we're being, you know, thoughtful as we go through contract negotiations in terms of gross margins. So we're always doing everything we can to increase it. I think that as volumes continue to increase in the years ahead, we also have the impact of volume pricing dynamics, as well as certain input costs to our materials that have, you know, varied and increased in certain areas over the course of time, but it's something we focus a lot of attention on. Okay. That's, that's very clear. Thanks. And then my second question is on, I guess, tandem OLED. We've been hearing a little bit more about the adoption within certain IT devices. Can you just walk us through sort of the implications on your business, given the potential adoption of this two-stack structure? It's certainly an incremental opportunity, you know, because of the increased volumes of our material that would be needed in a tandem structure. It's hard to say right now, you know, what the multiplier is there. It's somewhere between one and two times, but we really won't know till we see some of those products come closer to market and be able to provide some insight on that. That's fair. Thanks, guys. Thanks. Our next question is from Martin Yang with Oppenheimer & Co. Please proceed. Hi, thank you for taking my question. First question on contract research revenues. Can you maybe talk about how, you know, what contributed to the volatility in that revenue, and why was it down versus the past few quarters? Yeah. So, those are our Adesis revenues, our Adesis subsidiary. Their performance in the quarter was a little bit variable. There were just some timing issues that impacted that business in Q3. We do expect for Q4 for them to kind of get back on track with the recent run rate. And for 2024, we also expect them to have, you know, growth off of where they are this year. Got it. Thanks. And, second question is, can you talk about the impact on utilization charges for Shannon after that facility is purchased? Would that, will we, should we expect no more similar charges after the acquisition is done? The acquisition didn't have an impact on the utilization or underutilization of the site. But independent of the acquisition, we actually were able to utilize Shannon to a greater degree in Q3, and we also expect in Q4 to utilize it to a greater degree. The underutilization for all of Q3 was $2 million, which is, you know, much less than it's been in other recent quarters. A follow on that, would you say that the utilization or underutilization at Shannon during 3Q was less compared to 2Q? So did Shannon perform better than expected? Yes. Yes, absolutely. The underutilization costs that we recorded in Q3 were $2 million, and in the prior quarter, they were approximately, I believe, slightly over $4 million. So it is a decreasing trend. And as we head into next year, we also expect to be able to continue to utilize Shannon to a greater degree next year, as well as in the years beyond that. It's a great capability, you know, an excellent part of our manufacturing network, and we expect to be able to utilize it to a greater degree as our business continues to grow. Got it. Thank you, Brian. That's all for me. Thanks, Martin. Thank you. This will conclude the question and answer session. I would like to turn the call back over to Brian Millard for any additional or closing remarks. Thank you for your time today. We appreciate your interest in.