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UDC Q4 CC notes 2/23/17

UDC Q4 CC notes 2/23/17

- FY16 revenue $198.9M. 2017 guidance $230M-$250M, including $90M Samsung fixed fee.

- Introduced .03/sh quarterly dividend, later called "a good place to start".

- Highest level of pipeline activity in the company's 23 year history. $6.9M in developmental materials in Q4.

- Introduction and adoption of new red and green emitters in Q4. In a later statement he mentioned red only, then in a third statement said new red and green in 2017.

- Significant progress in their new red, green, yellow, and blue emitters.

- Ramp of BOE's Gen6 fab will be in 2H2017. Later said they do not see significant revenue growth from BOE and TIanma in 2017, but they will see growth.

- Total emitter revenue $98M in 2016 vs. $101M in 2015, down due to product mix. Volume was up in 2016.

- Green $16.8M in Q4 vs $14.1M in Q3 and $14.3M in Q42015

- Red $5.5M in Q4 vs. $5.6M in Q3 and $7.8M in Q42015.

- Material GM's 69% in Q4, 74% for the year. Expect return to 70%-75% in 2017.

- +$40M in free cash flow in Q4, ended year with $343M in cash.

- Opex up 10-15% in 2017, primarily R&D.

- When new capacity turns up is the most significant variable to revenue guidance estimates.

- Majority of Q4 material revenue was existing emitters, they will see a mix of new and old in 2017, both red & green.

- Linearity question? They will clearly see new capacity come online throughout 2017, but it will be somewhat weighted to 2H.

- Very confident in guidance. It is their best guess right now.

- Nothing particular about the timing of the PPG expansion, other than to say they continue to look out for the next expansion.

- Adesis growth? It will grow in 2017, but not enough to move the needle.

- Tax rate was 30% in Q4, Q4 is always impacted by a true-up of the rate for the year. In years 2018-2020 the rate should decline, it will be lower than 30%


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