Good day, ladies and gentlemen, and welcome to Universal Display Corporation's Fourth Quarter and Full Year 2021 Earnings Conference Call. My name is Sherry, and I will be your conference moderator for today's call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. 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 fourth quarter earnings conference call. Joining me on the call today are Steve Abramson, President and Chief Executive Officer; and Sid Rosenblatt, Executive 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, February 23, 2022. During this call, we may make 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. We are pleased to report our fourth quarter and full year 2021 results. 2021 revenue was a record high of $554 million, operating income was $228 million, and net income was $184 million or $3.087 per diluted share. Fourth quarter revenue was $146 million, operating income was $56 million, and net income was $46 million or $0.96 per diluted share. For 2022, we expect the OLED industry to continue to grow with further adoption across a broadening range of consumer products for microdisplays for AR and VR, smartwatches, smartphones, automotive, foldables, and notably IT, where we are seeing a significant increase in interest and product roadmap activity to create beautiful, brilliant TVs. Momentum in the OLED industry continues to grow, and we expect to grow with it. Based upon current estimates and expectations, we believe our 2022 revenues will be in the range of $625 million to $650 million. Sid will provide further details shortly. Looking back on 2021, we continue to build on our strong partnerships, advance our innovation engine, enhance our corporate culture, and fortify our leadership position, all of which bolsters our first-mover advantage in the OLED ecosystem and strengthens our runway of growth. On the customer partnership front, we extended our long-term agreements with LG Display, Visionox Technology, and Tianma Micro-electronics. On the global manufacturing front, we announced with our foundry partner of over 20 years, PPG, the establishment of a new manufacturing site in Shannon, Ireland, for the production of our highly efficient, high-performing universal OLED materials. With the proliferation of OLEDs expected to grow for the foreseeable future, we are increasing our OLED emitter production capacity to meet our customers’ increasing needs. This new site will also broaden and diversify our global manufacturing footprint. 2021 was another year of continued recognition for the company. We're recognized by the Financial Times as one of America's fastest-growing companies and just a few weeks ago, we were named on the Forbes list of America's Best Midsized Companies. For over 2.5 decades, we have focused on cultivating a global culture that promotes inclusion, inventiveness, integrity, and imagination. We are committed to advancing our efforts around sustainability through innovation and continuous improvement. During the year, we were named by Newsweek as one of America's most responsible companies for the second year in a row, awarded a Silver rating for corporate social responsibility from EcoVadis, and recognized again by The Forum of Executive Women as a Champion of Board Diversity. Additionally, we achieved ISO 45001 certification in 2021, an internationally recognized standard that emphasizes the continual improvement of an occupational health and safety management system. This certification, coupled with our other certifications of ISO 9001 and ISO 14001, reinforces our corporate commitment towards best international practices. On the research and development front, we remain at the forefront of energy-efficient OLED solutions and best-in-class enabling OLED technologies. Our team of scientists and engineers are continually imagining, inventing, and commercializing highly efficient and cost-effective OLED material solutions and technologies, including novel device architectures, as well as advancing our groundbreaking OVJP manufacturing platform. On the OVJP front, we are making continued advancements with our trailblazing manufacturing platform. As the OVJP team steadily progresses with constructing the key subsystems of our alpha system design, our potential partnership discussions are evolving and progressing well. While the commercial system is still a few years away, we believe that OVJP will pave the path for high-volume manufacturing of large RGB OLED TV panels and develop into a multibillion-dollar market opportunity. On the materials front, our portfolio of leading-edge, energy-efficient, high-performing phosphorescent materials continues to broaden with next-generation 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. Given recent advancements, we believe that we are on track to meet preliminary target specifications with our phosphorescent blue by year-end, which should enable the introduction of our all-phosphorescent RGB stack into the commercial market in 2024. We believe that the commercial introduction of our full-color emissive stack will unlock a vast array of opportunities for higher energy efficiency and higher performance across a broad range of OLED applications. On the OLED consumer market front, from the introduction of its new Galaxy S22 smartphones and TAB S8 Plus and S8 Ultra tablets two weeks ago to the success of its foldable Galaxy Z Series where sales more than quadrupled year-over-year in 2021, Samsung's portfolio of OLED products continues to broaden, and 2022 is expected to be another year of OLED product expansion. LG Display continues to ramp up its OLED TV production. For 2022, LGD plans to increase its OLED TV shipments to almost 10 million units, up from slightly under 8 million units in 2021. Augmenting their growth will be the commercial introduction of its new 42-inch and 97-inch OLED TV panels. On the small and medium front, LG announced that it was investing in new Gen 6 OLED capacity as the company looks to expand its share in the smartphone, automotive, and IT OLED markets. Towards the end of 2021, BOE began mass production of Phase I in its third OLED fab in Chongqing, which has a monthly output design of 48,000 flexible Gen 6 panels. BOE has also been working closely with ASUS. At CES, ASUS unveiled the world's first 17.3-inch foldable OLED laptop, an OLED IT product with the form factor versatility of being used as a PC monitor, laptop, or tablet using BOE's flexible OLED panel. Last week, Tianma held a production commencement ceremony for its new Gen-6 flexible fab in Xiamen. The total investment of the project is approximately $7.6 billion, which importantly makes it the largest single high-tech investment in Xiamen history. This OLED plant is also designed for 48,000 substrate starts per month. China Star is in the midst of ramping each Gen 6 flexible OLED capacity at Wuhan plant after installing Phase II and Phase III equipment last year, with China Star's first OLED fab now having a monthly installed capacity of 45,000 substrate starts. Visionox's new Gen-6 flexible OLED has been fully ramped and is capable of manufacturing 30,000 plates per month. The proliferation of OLEDs is evident. As OLED penetration in the smartphone market reaches 50% or approximately 675 million units, we believe a significant new wave of capital investment plans for medium and large area OLED displays is beginning to form, where OLED penetration is only 2% in the IT market and about 3% in the TV market today. From an OLED capacity standpoint, year-end 2021 installed base of OLED square meter capacity increased by approximately 40% over year-end 2019. The multiyear CapEx cycle of the last six years has led to a sizable increase in the number of OLED fabs, from less than a handful of manufacturing plants to approximately two dozen OLED plants today, which is an increase of over fivefold. As we look out, we are currently tracking about 10 expansion projects in Korea and China over the coming 24 months. We estimate that these new expansion phases will result in year-end 2023 installed OLED capacity, as measured in square meters, to increase by approximately 20% to 25% over year-end 2021. As panel makers continue to invest in OLED-expansion capacity, a new wave of medium and large area OLED investments is beginning to take shape, driven by an intensifying push from leading OEMs for OLED IT products and increasing strength in the OLED TV market. Last week, the SEC announced that there are 11 different Gen 8.5 and Gen 8.6 IT OLED lines under development. According to a market research firm, IT fab spending is expected to increase every year from 2021 to 2025, with OLED spending peaking in 2024 and 2025. All of this, we believe, translates into the continuation and expansion of the OLED industry's multiyear CapEx cycle. On the lighting front, while we are still in the early commercialization stage, we are seeing advances in OLED lighting for the automotive market. Last month, OLEDWorks showcased its next-generation high brightness and segmentation automotive OLED lighting at CES. According to OLEDWorks, automotive designers can take advantage of the unique characteristics of OLED taillights, which include brightness and color uniformity, lightweight, and ultra-thin form factor. On that note, let me turn the call over to Sid.

Thank you, Steve. And again, thank you, everyone, for joining our call today. Let me review our 2021 results before commenting on our 2022 guidance. 2021 revenues were a record $554 million, up 29% year-over-year. Material sales were $319 million, up 39% year-over-year, and royalty and license revenues were $219 million, up 18% year-over-year. Adesis revenues were $16 million, up 13% year-over-year. 2021 material gross margins were 67%, and our overall gross margins were 79% for the year. 2021 operating expenses, excluding cost of materials, were $211 million, up 13% year-over-year. We are continuing to invest in multiple strategic growth initiatives including next-generation red, green, yellow, and blue emissive materials and OLED technologies, our OVJP manufacturing platform, our global infrastructure, including our new Shannon site, and in our people. Our 2021 operating income was $228 million, up 45% year-over-year, translating into operating margins of 41%. 2021 net income was $184 million or $3.87 per diluted share, up 38% year-over-year. We ended the year with $823 million in cash, cash equivalents, and short-term and long-term investments, or $17.37 of cash per diluted share. Now, moving on to our fourth quarter results. Revenues for the fourth quarter of 2021 were a record high of $146.2 million. Our total material sales were $85.8 million in the fourth quarter, up 13% sequentially from last quarter's $75.6 million and up 37% from the comparable year-over-year fourth quarter of $62.5 million. Green emitter sales in the fourth quarter of 2021, which include our yellow green emitters, were $66.7 million, up 15% sequentially from the third quarter's $57.8 million and up 38% from the comparable year-over-year quarter of $48.2 million. Red emitter sales were $18.9 million in the fourth quarter, up 7% from the third quarter's $17.7 million and up 32% from the comparable year-over-year quarter of $14.3 million. As we have discussed in the past, material buying patterns can vary quarter-to-quarter. Some of the contributing factors include COVID-19 and supply chain issues, as well as consumer product demand cycles, capacity ramp schedules, production loading rates, device recipes, product mix, material ordering patterns, customer inventory levels, and customer production efficiency gains. Since a number of these factors are moving variables for our customers, they are also moving variables for us. Fourth quarter 2021 royalty and license fees were $56 million, which compares to $63.9 million in the third quarter of 2021 and $75 million in the fourth quarter of 2020. Fourth quarter 2021 Adesis revenues were $4.5 million, which compares to $4.1 million in the third quarter of 2021 and $4 million in the fourth quarter of 2020. Cost of sales for the fourth quarter of 2021 were $32.2 million, translating into overall gross margins of 78%. This compares to $31.5 million in gross margins of 78% in the third quarter of 2021 and $27 million in gross margins of 81% in the fourth quarter of 2020. Cost of OLED material sales were $29.2 million, translating into material gross margins of 66%. This compares to 62% in the third quarter of 2021 and comparable year-over-year quarter material gross expense. Fourth quarter 2021 operating expenses, excluding cost of sales, were $57.5 million compared to last quarter's $54.4 million and the year-over-year comparable quarter of $48.8 million. Operating income was $56.5 million in the fourth quarter of 2021 compared to last quarter's $57.7 million and the year-over-year comparable quarter's operating income of $65.8 million. Operating margin was 39% in the fourth quarter of 2021 compared to 40% in the third quarter of 2021 and 46% in the fourth quarter of 2020. The fourth quarter 2021 income tax rate was 19%. Net income for the fourth quarter of 2021 was $45.9 million or $0.96 per diluted share. This compares to last quarter's $46.1 million or $0.97 per diluted share and the comparable year-over-year quarter of $53.9 million or $1.13 per diluted share. Now on to our outlook. 2022 is expected to be another record revenue year. We expect our 2022 revenues to grow to be in the range of $625 million to $650 million. We believe that the 2022 ratio of materials to royalty and license fees will be in the ballpark of 1.4:1. 2022 overall gross margins are expected to be approximately 79%, similar to the gross margins of 2021. Regarding material gross margins, with the increasing complexity of our next-generation materials, growing development material pipeline, and higher iridium costs, we expect our 2022 material gross margins to be in the 65% to 70% range. 2022 operating margins are expected to be in the range of 40% to 45%. Operating expenses of SG&A, R&D, and patent costs in the aggregate are expected to increase by 10% to 15% year-over-year, with R&D estimated to be up 15% to 20% year-over-year, and SG&A expected to be up 5% to 10% year-over-year. We expect the effective tax rate to be approximately 19%. And lastly, we are pleased to announce that the Board of Directors has approved an increase in Universal Display's quarterly cash dividend. A dividend payment of $0.30 per share will be paid on March 31, 2022, to stockholders of record as of the close of business on March 17, 2022. The dividend increase reflects our confidence in our robust future growth opportunities, expected continued positive cash flow generation, and commitment to return capital to our shareholders. With that, I will turn the call back to Steve.

Thanks, Sid. Leveraging our 25-plus years of vision, innovation, and reality, Universal Display Corporation continues to be a leading pioneer in the OLED industry. From the invention of fast-present OLED technology to the continuous discovery, development, and delivery of next-generation OLED materials and technologies, to advancing our groundbreaking proprietary OVJP platform, to spearheading the efficiency and lifetime performance breakthrough of our Plasmonic OLED architecture, we have constructed and fortified a leadership blueprint of innovation, agility, and growth. Our multifaceted strategic approach and game-changing R&D initiatives shape and strengthen our roadmap of enabling our customers and the OLED industry, growing our business, expanding our market opportunities, reinforcing our global intellectual property framework, and amplifying our value proposition in the OLED ecosystem. Our growth story is still in its early chapters and is expected to be further fueled by new OLED products, new OLED spending, and new OLED capacity. We believe that we are well-positioned to continue to participate in the industry's growth due to the strength of our existing industry-leading product offerings and future commercial opportunities presented by our Phosphorescent Blue and OVJP platform, both of which are expected to be substantial and significant. Combined with our global partnerships and global scale, we are excited about the extraordinary opportunities ahead for the company. 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. And with that, operator, let's start the Q&A.

Thank you, Mr. Steve. Our first question is from Brian Lee with Goldman Sachs. Please proceed with your question.

Hi, guys. Good afternoon. Thanks for taking the questions. Maybe first off, just with the new disclosure and commentary around blue, I wanted to dig into that a bit. I know in the past with green commercialization, I think that happened back in like 2013, 2014, you had seen revenue on that new material and developmental pick up quite a bit before the material was actually designed into a commercial product. So in that context, how should we be thinking about blue given your new commentary? Will there be any notable revenue in 2023? And then in terms of commercialization timing in 2024, does that mean you're designed into a product in 2024, or just, kind of, if you can give us a little bit more detail behind the way you're thinking about the ramp over the next couple of years?

So Brian, the way we're looking at it is we are actually currently selling some phosphorescent blue materials in development. We would expect it to pick up a little bit but not move the needle until we get to the commercial level. Today's announcement was really a significant advance announcement on the progress we have been making on our blue phosphorescent material system, and we can see that we're on track to hit target specifications by the end of this year. We're continuing to work with our customers, and we expect that the commercial blue will be in the market in 2024.

That's great. Thanks, Steve, for that color. And I know in the past, you had talked about the blue material as a system. So having both the emitter as well as the host, is that still kind of the plan as you think about the advancements you just made in that end of 2022 specs target in 2024 commercialization?

Yeah. Our R&D teams are working on the phosphorescent blue system, which consists of an emitter-host system. That's what we're focusing on.

Okay. Fair enough. And then maybe one last one, and I'll pass it on. Again on blue. With respect to commercialization, I know you've said this multiple times in the past and Samsung, your largest customer doesn't have a portfolio license, which would mean they don't have access to blue under the current contractual agreement. So with this year being the final year of their contract, are you anticipating that they will just renew with the two-year extension that they have the option for, or are you anticipating that you'll already be talking about incorporating more of a portfolio license agreement now that you have line of sight for having blue ready within the next couple of years? Just wondering what your thought process is around blue as it relates to your largest customer's contractual situation?

Well, Brian, as you know, we've been working with Samsung for 20 years through a lot of developments and advancements on both sides. We expect to continue to work with them for a long time as well. But exactly how that's going to take place, we will have to see as we move forward into the future.

Thanks for the call. I will pass it on. Appreciate it.

Our next question is from C.J. Muse with Evercore ISI. Please proceed with your question.

Yes, good afternoon and thank you for the question. My first inquiry is a follow-up on blue. You've mentioned making excellent progress for several quarters, but it seems there is a change in statement. Could you clarify what the recent advancements have been? Additionally, what key milestones are you focusing on as we move through 2022?

Sure. Well, some of them I can talk about. Obviously, a lot of these are confidential. But we've been making advancements in color point lifetime and efficiency of our phosphorescent blue emissive system. Recently, we've seen not only the continual improvements that we've been making, but some step-level advances that give us additional confidence in hitting the targets.

And as part of that, any milestones that we should be aware of internally in terms of the 2022 positive outcome?

Well, while we clearly have internal milestones, I think we're going to keep those internal for the time being.

All right, it was worth a try. For my follow-up question, can you discuss the revenue outlook for 2022? Before the new accounting framework, you reported $39 million in deferred revenues. You ended 2021 with $157 million. It seems to me that most of that is likely associated with your largest customer due to the fixed royalty. Therefore, deferred revenue should provide significant support in 2022. Is that accurate? What assumptions are you making? Additionally, if you were to extend the agreement with Samsung by two years, how would that impact your deferred revenue assumptions?

Thanks, C.J. As we've noted in the past, as we get closer to the end of customer agreement terms, we recognize more of the customers' deferred revenue based upon our expectations, and we've always expected to have more at the end of the contract than at the beginning. But I can tell you that our largest customer is no longer the majority of our deferred revenue. There are a number of customers that are in there. In addition to that, it is something that we expect we will use the deferred revenue over the life of the agreement. Each of the customers’ agreements has a different lifetime. If we enter into a new one, we will have to see what exactly that is when it occurs and what impact it will or will not have.

Thank you.

Our next question is from Jim Ricchiuti with Needham and Company. Please proceed.

Thanks. Good afternoon. I know putting together the annual guidance is a little bit hard, maybe less science. But if I think about the way you're guiding for the year, the moderation in growth in the context of more foldables, more LG producing many more OLED TV units, and the IT market. I'm just wondering, are you being a little bit more cautious with respect perhaps to the core handset market?

Well, to be honest, Jim, these are our best estimates for the year. As we've noted in the past, we look at this every quarter. But just to add, if you look at the overall market, and based on Omdia Market Research, the OLED market is expected to grow by approximately 50% to $46 billion from 2020 to 2022. If you look at our 2022 revenue guidance, our estimated revenue growth from 2020 to 2022 is expected to be in line with that market growth rate.

Got it. Okay. And just as a follow-up, you talked a little bit more about the OVJP. And I'm wondering if there are any milestones that we need to be thinking about this year, whether it's in the first half. I mean you talked about an alpha tool and the discussions, I assume that you're having some discussions with equipment companies. But just in general, how should we think about some of these milestones this year, or is this something that we should be thinking about more meaningful milestones in 2023?

So Jim, right now, we're focused on developing test stands that will demonstrate the viability of OVJP for large area manufacturing and will act as the foundational elements for the alpha system. These are the primary technical focuses for 2022. On the commercial side, we are continuing discussions with potential equipment suppliers, partners, and customers. These development and commercial activities are what we are concentrating on in 2022.

Steve, is there more interest from the equipment capital?

There's a lot of interest. We've been doing this on a relatively small scale, the six to eight-inch small scale that we've been doing it. We're now scaling up to a much larger size. By showing people that OVJP is really good at the larger sizes, we think that that type of proof of concept is going to generate a lot of excitement.

All right. Thanks a lot.

Our next question is from Krish Sankar with Cowen and Company. Please proceed.

I have a sensitive-related question. I had two of them. So first one on your year revenue guidance, I understand you might not be constrained but your customers might be supply-constrained. So when you look at your guidance for the full year of revenue, where do you think the risk is? Is it more on the smartphone side, or the TV large panel side for you?

Thanks for the question. I mean when we look at our guidance, we look at all the components, and we look at all the information that we get from our customers based on their estimates, and we look at market data. There clearly have been some headwinds, and they still relate to component shortages. There are still some COVID-19 issues. So, I think that those are some of the areas where there is risk. I mean you still hear our customer LG talking about 10 million TVs in 2022, up from about just under 8 million in 2021. So, we do look at all the pieces, but there are still some risks in the system today.

Got it. Fair enough. And then just a follow-up on blue; kind of like a two-part question. One is on the blue side, should we assume that when it gets commercial in 2024, the market is mainly for smartphones versus large panels? And the second part of the question is that how to think about blue? Do you think it actually replaces red? Is that the incremental opportunity? And how do you think about pricing for blue relative to red and green?

The first part of your question, our customers have a wide variety of end users that they want to use blue for. So, we really can't predict which customers are going to use it. It's going to be valuable across the board. We believe the blue opportunity is additive to red and green. So, we're looking to basically replace the fluorescent blue that's currently in use with our phosphorescent blue system.

Got it. And any thoughts on pricing?

Well, as we get closer, we'll figure out what the pricing is going to be.

Our next question is from Sidney Ho with Deutsche Bank. Please proceed with your question.

Hi, this is Jeff Rand on for Sid. You gave an update on your expected square meter growth OLED installation over the next two years, which represents a slowdown versus the 40% you saw in the last two years. Do you see an opportunity for this growth to reaccelerate with the introduction of OVJP in the next few years?

Thank you. When we discuss growth over the next two years, we are also noticing a lot of discussion about the IT capital expenditure cycle. Much of this focus is on the transition from the end of 2023 into 2024. We have heard indications of approximately 10 or 11 facilities being established during this timeframe. Currently, we hold only 2% of the IT market, which we see as a significant opportunity for OLED and for our company.

Great. Thank you. And as my follow-up, with the situation with Russia and Ukraine escalating, are there any risks to your business or your customers' businesses that you're monitoring right now?

To be perfectly honest, I'm not sure I have an answer for that. I do think that, clearly, it's a risk for the world. So for us, there's nothing specific about that that would impact us.

There's no raw materials coming from either of those two countries that would affect our business.

Great, Thank you.

Thank you.

Our next question is from Martin Yang with Oppenheimer & Company. Please proceed with your question.

Hi, good afternoon. Thank you for taking my question. My first question is on blue. Do you think your blue will apply similarly to any applications that currently use fluorescent blues?

Ultimately, we'll pave the way for the blue to work in the initial product. Like everything, the initial first product will be the product that meets basic needs, and then it will continue to improve. But there is interest across the board because of the energy efficiency, the additional brightness, lower panel temperatures, and many other factors that allow for lower power consumption.

Yes. Just to add, as we've talked about in the past, when you have a new phosphorescent material, it does require a redesign to the backplane. These changes will happen over time, but it requires time to adopt across the board.

Got it. My final question is on your installed capacity estimates. By the end of 2023, would you be able to separate how much of our capacity is devoted to IT?

We really just provide an overall outlook. But as we stated, Gen 8.5 and Gen 8.6 technology for IT is really the bulk of it, and it mainly serves the IT and TV markets. The CapEx that's growing is predominantly not for smartphones.

Our next question is from Atif Malik from Citi. Please proceed with your question.

Thanks for taking my questions. First, a quick clarification. In your prepared remarks, you talked about blue hitting some target specifications by the end of this year. Is that specification your internal specification or a customer specification?

That's actually a good question. We're calling it a development specification. We understand what the market is looking for, and so we've developed our own internal specifications for that. This state specification has been used for quite some time.

Okay. And then the second one for Sid, on the gross margin. What are you assuming for the raw material costs like the Iridium for the gross margin this year? Because last year, the gross margins were I think a little bit below that 80% kind of goal for the full year. Just talk about what are you assuming for the puts and takes on the gross margin this year?

We expect our gross margins to be in the 65% to 70% range. We do believe that there are some costs. And without breaking down what is what, we have developmental materials that go into gross margins. We've talked about Iridium going into gross margins and other components, so we really don't break it down. Those are the areas that are impacting our gross margins and we expect them to impact this year.

Our next question is a follow-up from Krish Shankar with Callon & Company. Please proceed with your question.

Yeah, hi. Thanks for taking my follow-up. Sid, I just had a quick math question for you. If you look at the back of the envelope, looking at the midpoint of the revenue guidance and the ratio of materials license of 1.4 to 1. It seems like the license revenue is going to grow faster than the materials this year compared to the opposite last year. A, is that correct? And if so, why is that the case?

We don’t provide a detailed breakdown, but we offer some guidance of 1.4. It really depends on each customer, and when we account for this, we examine each contract. Some customers have fixed license fees while others have royalties or a combination. You estimate sales over the contract's lifetime. The outcome varies based on the ratio of one customer to another.

Got it. All right. Thank you very much.

Thank you.

Our next question is from Andrew Abrams with Supply Chain Market Research. Please proceed with your question.

Hi, guys. Just one quick question on the emitter side. Was there anything on either green or red that was different than normal, meaning typical expansion or typical capacity increases? Meaning is there somebody who was accumulating or anything that might have been out of line with either what you guys had expected or what we might consider normal?

Thanks, Andy. I don't think there's anything abnormal. I think you're leading to whether anyone was buying safety stock or buying excess. But I don't think there's anything like that that occurred year-end.

Great. Okay. Thank you. I appreciate it.

Thank you.

Thank you. This concludes the question-and-answer session. I would like to turn the program back over to Sid Rosenblatt for any additional or closing remarks.

Thank you all for joining the call tonight. We appreciate your interest and hope you have a good night. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.