Universal Display Corp (OLED) 2007 Q1 法說會逐字稿

Good afternoon. My name is Shawana and I will be your conference operator today. At this time I would like to welcome everyone to the Universal Display Corporation First Quarter Conference Call. (Operator Instructions.) Thank you. It is now my pleasure to turn the floor over to your host, [Mr. Joe Corelli]. Sir, you may begin your conference.

Thank you, and good afternoon, everybody. Thanks for joining us today. With us today are Steve Abramson, President and Chief Operating Officer, and Sid Rosenblatt, Chief Financial Officer of Universal Display Corporation.

Let me start by reminding you that this call is the property of Universal Display Corporation. Any redistribution, retransmission, rebroadcast of this call in any form without the express written consent of Universal Display is strictly prohibited. Further, as 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, May 8, 2007.

All statements in this conference 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 forward-looking statements. With that, now I'd like to turn the call over to Steve Abramson, President of Universal Display. Please go ahead, Steve.

Thank you, Joe. And thank you to everyone for joining us for our first quarter 2007 conference call. The first quarter and most recent month of 2007 has seen a number of steps forward for Universal Display and our PHOLED technology. Looking at the display industry, it is exciting to see that our commercial agreements, particularly with Samsung SDI, are yielding full color active matrix OLED displays in the marketplace. What's more, the products utilizing these displays are receiving rave reviews for their exceptional visual quality.

We've highlighted one example in the past - iRiver's Clix MP3 player, which uses the Samsung SDI display screen. First available in Asian markets, and now available in the U.S. via the Internet, this product is noted again and again for the clarity, brightness, and overall quality of its 2.2-inch AMOLED display.

Another product turning heads in Japan is the KDDI cellphone, which showcases a 2.4-inch AMOLED display from Samsung SDI. Different product, similar reviews. The display on the phone has been described as looking alive and exhibiting vivid colors. Clearly, the visual advantages of OLED displays are providing Samsung SDI and its customers with a point of differentiation and show why so many people point to OLED as the display industry's big new innovation. This did not even take into account the form factor and energy efficient advantages of AMOLED displays over current LCDs.

All signs from SDI point to AMOLED display production moving forward. In its first quarter 2007 earnings review, Samsung SDI highlighted the positive feedback they have received on their AMOLED screen and observed that shipments start off to [Big Three players] beginning in third quarter '07 and order increases are expected from Japanese and other customers.

When we spoke less than two months ago, I highlighted our work and contracts to some of the leaders in the display industry. This continues with our recently announced commercial supply agreement with Chi Mei EL Corporation of Taiwan, known as CMEL. The agreement calls for us to provide CMEL with our proprietary PHOLED materials and technology for the manufacture or active matrix OLED display products. CMEL chose our technology because they are confident it will help speed the progress of the AMOLED display front and help make them a player in this burgeoning display market.

As we discussed at the time of the announcement, we are unable to disclose financial terms of the agreement, but we will recognize both commercial chemical sales and license fee revenues under the arrangement. CMEL joins a growing list of customers and partners for UDC.

While commercialization of OLED display stays on course, so do we with continued research and development efforts and innovations. We recently showcased one such innovation, a new bright red PHOLED emitter called RD39 and the exciting collaborative results of combining this new emitter material with Midland Steel Chemical Company's commercial host material called NS11.

We now see these results at the Flat Panel Display RND and Manufacturing Technology Expo and Conference, commonly known as FINETECH in Japan. When combined with NS11, this bright red PHOLED emitter with CIE coordinators of .65 .35 exhibits a luminous efficiency of 24 candelas per amp, corresponding to a 19% external quantum efficiency at 1,000 candelas per meter squared with an operating lifetime of approximately 220,000 hours. These dramatic performance gains represent a 60% increase in luminous efficiency and a five-fold increase in lifetime as compared to our first generation commercial bright red PHOLED emitter.

Turning to our government programs, Universal Display's innovation in the area of white OLED technology was recognized by the U.S. Department of Energy during the first quarter at the Department's Solid State Lighting Workshop. The DOE honored UDC's [Dr. Brian Deandre] and Dr. Mark Thompson of the University of Southern California for their leadership and their respective teams' advances in white OLED technology for lighting. This remains an area of great interest for the Department of Energy as we continue our contract research on this front.

On a personal note, I would like to recognize Dr. Julie Brown, our Chief Technology Officer, who was recently honored by her peers twice. Dr. Brown was selected to the New Jersey High Tech Hall of Fame for her contribution in making New Jersey a leading state in the high tech industry. She was also selected as a Fellow by the IEEE for her outstanding contributions in leadership and developing and commercializing OLED technologies. Dr. Brown leads the team of research scientists and engineers at Universal Display and at our technology partners who are the driving force behind commercialization of our technologies and their continued advancement.

On another front, as the OLED industry grows and commercial products are launched, the unfortunate possibility of patent disputes increases. As you may have noticed in our 10-K and 10-Q, in June of 2006, a patent interference was declared by the United States Patent and Trademark Office between semiconductor energy laboratories and our partners, Princeton University and the University of Southern California.

The dispute concerned a U.S. patent issued to SEL that we believe claimed aspects of our phosphorescent OLED technology, which we exclusively license from Princeton and USC. We saw the ruling by the U.S. Patent and Trademark Office that SEL's patent was invalid because the University invented the technology first. An oral hearing in the matter was held before the Board of Patent Appeals and Interferences of the PTO on April 25, 2007. I am pleased to announce that the following day the Board issued a decision in favor of Princeton and USC. As a result, all claims of the SEL patent were cancelled. SEL has two months to file an appeal from this decision.

Looking ahead, the Annual Society for Information Display, SID, International Symposium Seminar and Exhibition will be held the week of May 20. This is a premier industry event held in the U.S. and this year it is in Long Beach, California. For your information, Universal Display will be located at Booth 1639, and we will highlight our PHOLED technology and materials and the considerable advantages they offer compared to existing display technologies. We will also look forward to demonstrating and discussing advances in our proprietary flexible and white technologies.

We will also give a number of presentations and papers at SID. I will give a talk at the SID Business Conference entitled, "OLED - A Broad Perspective On Their Market Potential," on Monday, May 21. Sid, who is Chairman of the SID Business Conference this year, will present to the investment community on Wednesday, May 23. Two of our scientists, Dr. Raymond Kwong and Dr. Michael Weaver, will also present at the display seminar on the topic of small molecule OLED technology on Monday, May 21. Finally, Dr. Brian Deandre will present a paper entitled, "Efficient White Phosphorescent Organic White Emitting Devices," on Wednesday, May 23.

Looking ahead, the outlook for 2007 remains bright. We continue to identify and collaborate with industry partners to move our technology to the next level, also working with new and existing commercial partners, such as Samsung SDI and CMEL, to help them deliver some of the best displays out there today. We believe 2007 will show advances on all fronts.

With that, I will turn the call over to Sid to review the quarterly financial results in more detail. Sid?

Thank you, Steve. And again, thank you everyone for joining us today. For the first quarter of 2007, revenues totaled approximately $3 million compared to approximately 3.3 million for the same quarter of 2006. Revenue components for the first quarter 2007 when compared to the same quarter of 2006 were as follows. Commercial chemical revenues were 1.3 million, compared to 400,000. The rise in this revenue component is attributable to our sales of commercial OLED materials, the Samsung SDI, as they began ramping up their OLED display production during the quarter. In the same quarter of 2006, we sold commercial chemicals to AU Electronics. We recorded commercial chemical revenue and license fee revenues for the materials we sold to AUO. The increased commercial chemical revenue represents a substantial increase in the quantity of materials shipped in the first quarter of 2007, compared to the same period in 2006.

With Samsung SDI, we had a separate licensing arrangement under which we will receive royalties based on their product sales. This royalty revenue will be recorded as we receive royalty reports from Samsung SDI which occurs after the end of each quarter.

License fee revenues were 127,000 compared to 930,000 for the same quarter a year ago. A large portion of the license fee revenues for the first quarter of 2006 was attributable to an increase in materials shipped to AUO in that quarter. As we've said in the past, AUO has suspended its production of OLED displays. With the Samsung SDI arrangement being different, it is difficult to compare this revenue component on a quarter versus quarter basis.

Under our agreement with Samsung SDI, we received upfront payments of license fees and royalties classified as deferred revenues and deferred license fees. The deferred license fees are being recognized as license fee revenue over the lifetime of the license agreement with Samsung SDI. The deferred royalties will be recognized as licensed products are sold and royalties are earned.

As Steve discussed earlier in the call, we are seeing low volume products in the marketplace that contain AMOLED displays from Samsung SDI. Based on Samsung SDI's first quarter 2007 quarterly report, they will begin larger volume production of these displays in the second half of 2007.

Technology development revenues were 250,000 compared to 730,000 for the same quarter last year. This represents one technology development agreement in the first quarter of 2007 as compared to four of these arrangements in the same period of 2006. The difference is from two of our technology development programs ending in 2006, as well as one of the programs continuing but under modified financial terms. Specifically, under one of the agreements we received a nonrefundable payment for continued technology development work. The payment is creditable against future amounts payable under a license agreement if we enter into one with a technology development partner.

Development chemical revenues were 209,000 compared to 676,000 for the first quarter of 2006. The reduction is due to a decrease in high volume purchases of OLED materials from us for pre-commercial scale-up and test marketing purposes. As we have said many times, we cannot predict the time and frequency of these purchases from customers due to the early stage of the OLED industry and the different pre-commercialization launch strategies of the various OLED manufacturers we are working with.

Contract research revenues were 1.1 million compared to 536,000 for the first quarter of last year. The increase is mainly due to timing of revenue recognition in connection with several new government contracts that began last year. Revenues in this area tend to fluctuate as research work is completed and revenue is realized quarter-to-quarter, which can lead to significant fluctuations quarter-to-quarter.

Given the current stage of the OLED industry and the level of maturation in the market, revenue remains difficult to predict on a quarter-to-quarter basis. However, as Samsung SDI's production of AMOLED displays ramps up, and our recently announced agreement with CMEL begins to bear fruit, we look forward to increased OLED activity in the future.

Turning to expenses, total operating expenses for the quarter were 8.2 million, compared to 7.3 million for the first quarter of 2006. However, on a sequential basis, operating expenses increased marginally from 8.1 million in the fourth quarter of 2006.

This is in line with our stated goal of keeping operating expenses at or near the levels seen in the fourth quarter of 2006. The increase in operating expenses was primarily attributable to a rise in both R&D and G&A costs. A number of the--a number of items contributed to the rise in these areas, including increased staffing and personnel costs associated with our headquarters expansion last year and the hiring of former PPG researchers who joined us in the second quarter of 2006.

For the first quarter of 2007, we reported a net loss of 4.7 million, or $0.15 per diluted share, versus a net loss of 3.5 million or $0.12 per diluted share for the first quarter of 2006. This also compares to a net loss of 4.4 million, or $0.14 per diluted share for the fourth quarter of 2006. The increase in net loss was due to the rise in operating expenses, coupled with a decline in revenues when compared to the first quarter of 2006.

Net cash used in operating activities was approximately 3.3 million for the first quarter of 2007, which was consistent with 3.3 million for the first quarter of 2006. Cash, short-term, and long-term investments remained solid at approximately 47 million as of March 31, 2007, compared to approximately 49 million as of December 31, 2006. The decline was attributable to an increase in operating activities during the quarter, partially offset by proceeds received from stock purchase warrant and stock option exercises.

With that, we'd like to open up the lines to questions at this time. Operator, would you please compile your Q&A roster?

(Operator Instructions.) Our first question is coming from Rob Stone with Cowen and Company. Please go ahead.

Hi, guys.

Hi, Rob.

Hey, Rob.

I wonder if you could comment a little bit on how you see the active matrix OLED displays being positioned in the market. You mentioned that the product reviews characterized them as having a better appearance. But leaving aside the fact that it's also a thinner form factor, and potentially lower power consumption, is this aimed at a premium pricing for both the displays and the devices, or how do you see this unfolding? Or, for example, in the handset space, do you think it's something like video performance that would be a requirement downstream for OEMs? Just trying to get a sense of the relative waiting of the various attributes as your customers talk to you about it.

The short answer is yes, but I think I need to go a little further. Clearly, the visual aspects of the display for video rates, for downloading movies, watching TV shows, that is a very big plus, in addition to the power efficiency. We do believe that the first products and--the first products that they're attempting to enter into, would be a higher end market. I mean, these do cost a little more to manufacture and they're trying to get a premium price.

And I think that they will try to approach the higher end handset, cellphone market initially, and then, eventually, as the volumes go up and the pricing comes down, try to get the much larger market as they're able to produce these. But clearly, what we are hearing and what we are reading about them is just the fact that they look so much better than the other displays is really a big plus at this time.

So Samsung I think on their--or Samsung SDI in their presentation seemed to suggest that they saw something like a 10 million unit opportunity within handset for AMOLED this year. Do you see that as really just the pilot stage, or if we're talking about high-end video-capable handsets, do you have a sense of what proportion of the market that might ultimately represent?

I think that number probably just really represents what they believe their capacity is for the second half of this year as they ramp it up. I don't think I could answer--I don't think we have enough information to answer the other question. It's something you probably really have to speak to them about.

I wasn't so much talking about what Samsung might do, but in other words, if you define across the handset market, which is clearly the biggest unit opportunity for these things, do you think high-end handsets are 5%, 10%? What proportion of the--since it's going to be for some time to come, positioned at a premium price I would expect, what do you think is the potential market size, not just for Samsung SDI, but in general?

Rob, the reviews we're hearing--obviously there is always a balance between the price and performance. The reviews we're hearing frankly is that the displays look so good that people are going to want to buy as many as people can make at this point. And people are looking at that market and saying the more that they can make, the lower the prices can come down and it creates a synergistic effect, so the farther the market is going to be. I can't specifically focus on the percentages because I really think it becomes a synergistic effect on quantity and quality and price.

Great. Finally, a follow-up question with respect to your materials set. And I know you probably don't want to go into or can't go into specifics by customer. But you're not at this point commercially offering blue. Do you see people coming at it in terms of specific attributes for one color, two colors, red having I guess your biggest advantage? Can you characterize where your materials sit relative to the full pallet that the display OEM has to have?

Well, I think--well, red clearly is very important in the industry because it provides the most power efficiency savings. And that's really our initial market opportunity. Ultimately, our customers are looking for a complete phosphorescent solution and we're working very hard to give that to them. We're also working very hard to try to implement the green color in the marketplace as rapidly as we can.

Okay. Thank you very much.

Thank you, Rob.

Thanks, Rob.

Thank you. Our next question is coming from Jim Ricchiuti with Lehman and Company. Please go ahead.

Thank you. Good afternoon. I wonder if there is anything you can tell us with respect to the reports you've seen out of SDI, the royalty reports for the most recent quarter, that might give us some sense as to how you see the commercial revenues ramping in the next quarter for you guys?

The timing of the reports, if we would have received a royalty report for the quarter, we would have included in the Q. We have not seen any royalty reports at this time.

Okay. Sid, when would you expect to see it?

I would expect to see it--our contract is--I believe it's 60 days after the quarter end.

Okay. So at this point, you don't--there's not a lot of light you can shed on what you're hearing out of SDI until after you see that report?

That is correct. I mean, what we know is that the iRiver Clix product and the KDDI cellphone are really small market introductions as they try to ramp their fab up. So I don't anticipate significant revenues from these products. These are really market tests, as they call them.

Sure. And on the Chi Mei agreement, I missed the early part of your call, but I wasn't sure if you alluded to the fact that you might see some commercial chemical sales beginning to impact Q3 from that customer.

We believe the second half of the year is when we will start seeing an impact from the Chi Mei arrangement.

Okay. And if you could just again--I may have missed it if you gave it--just how that agreement is going to be structured? I know there's some confidentiality, but will you be seeing similar type royalty agreements where you might be able to give us some insight as to how the commercial revenues will ramp?

The CML agreement is very similar to our AUL one. It is one where we--a short-term agreement where we provide materials and we record commercial chemical revenue and license fees from the sale of the materials and technology to them. And then, we will enter into at a later date a long-term royalty bearing standard type license agreement.

And lastly, just given the interest level in active matrix OLEDs at the moment, I wonder if you'd comment on just the interest you are seeing from potential new customers, existing customers, that are potentially moving forward with plans to go into commercial production.

From a technology standpoint [inaudible - audio glitch] that there is a lot of interest in OLED technology, AMOLEDs, the fact that SDI is test marketing products and it's getting rave reviews, the Sony product that was shown at the consumer electronics show has generated quite a bit of interest, and we are hearing more and more interest. So there is quite a bit of buzz that's going around about OLED technology at this time.

Okay. Thanks very much.

Thanks, Jim.

Thank you. Our next question is coming from Hugh Mai with First Albany Capital. Please go ahead.

Yes. Can you please update us on I guess acquiring a commercial blue? And do you have internal targets in terms of timeframe?

Hugh, we haven't announced anything in the last quarter on blue. I can tell you that our scientists are working very hard and we're continuing to make very good progress. And we do have internal milestones and targets, but we do not disclose them.

Okay. Got it. And I guess there's a number that's been quoted out there, i.e., that the active matrix OLED would be around 20% of the--I guess 20% penetration of the small form factor displays. Can you comment on that, if that is reasonable, or is it a little bit too aggressive?

Well, I mean, those numbers are display [surge] numbers I think you're talking about 2009, 2010.

Right.

Based upon--from our standpoint and when you see an OLED display in a handset, I can't understand why it wouldn't be 100% because it looks so much better, it gives you a great viewing angle, it gives you quick video rates, and increases your battery. So I don't--I personally believe that it should be a bigger number. Whether or not that number comes to fruition, time will tell. It's how many manufacturers enter the marketplace and how quickly they ramp up. When you look at the display though, there's no reason why it shouldn't take a significant share.

Okay . And should we be expecting an OLED lighting product, I guess, commercial OLED lighting product within the next let's say one or two years?

I think that is fairly aggressive. There will be I think some lighting products which will be very small scale niche products that may be in the marketplace within two years. But I don't really see that market starting to really ramp up. To some extent, it is an easier market. It's not a pixilated display. You don't have a backplane. You just use the materials. There are just large pixels. Lifetimes have to increase and manufacturing has to increase because it does have a very low price point.

And I guess there have been some talks about using OLEDs as backlights in LCD units. But I guess recently I've only seen LEDs being used as backlights. Can you I guess comment on the opportunity for OLED?

Well, Hugh, that relates to the white lighting. One of the things--one of the applications that some companies are looking at - in creation of a white OLED - is using it as a backlight for LCDs.

Oh, so it's further in the future then.

Yes.

Okay. Got it. And I guess those are all my questions. Thank you very much. Congratulations.

Thank you.

Thanks.

Thank you. Our next question is coming from Andrew Abrams with Avian Securities. Please go ahead.

Just a quick question. You delivered no commercial chemicals to CMEL this quarter?

That is correct.

That's correct. And should I ask whether there was an additional sale of commercial chemicals to anyone that you did not sell in the previous quarter?

Pretty much everything in the first quarter--pretty much most of it was to one customer.

Got you. Thank you very much.

Thank you. Our next question is coming from [Andrea Silverstone] with Maxim Group. Please go ahead.

Hi. This is Andrea Silverstone Darice Liu. And I have two questions. And the first one is the [indiscernible - accented] within the active matrix OLED and [indiscernible - accented] continues to grow. And when you look back at the OLED industry, the investment momentum seems to have historically taken two steps forward and then one back and sometimes two steps back. What gives you confidence that this time it's different from the past?

One of the confidence factors that we have is that SDI has spent four or five years ensuring that when they committed to $500 million to the fab, they had a backplane process that they believed was manufacturable and that they have taken their time and have as a passive matrix OLED manufacturer have reported in excess of 95% yields on their passive matrix line.

So we believe that the materials and the technology is mature enough at this point for manufacturers to commit the dollars and to make these and yield these as they start to ramp up. So I--there have been a number of starts and stops, but we believe at this point the material is really moving ahead. You have companies like Sony demonstrating 27-inch high definition TVs and talking about selling [R&D] quantities, 1,000 units a month, of 11-inch TVs, but these are significant advances and these are significant players that are starting to commit to dollars and the effort. So I believe that it is at this time as mature as it could be, and I don't believe you'll have starts and stops as we have.

Okay. Thank you for that. And for the second question, can you provide an update on your progress with your materials and inkjet printing capability?

Well, Andrea, we continue to work with Seiko Epson and Mitsubishi Chemical on the solution processing. All of our materials--and again, the last release we made was I think we had about $14,000 in red and about $8,000 in green. We continue to make some very good progress, but we have not released anything publicly.

Okay. Thank you so much for that.

Thank you, Andrea.

Thank you. (Operator Instructions.) Our next question is coming from Jed Dorsheimer with Canaccord Adams. Please go ahead.

A lot of my questions have been asked. I guess the--what's that?

We're glad to hear that.

The Chi Mei, the materials, does that span the color gamut or is that going to be red and/or green and/or blue?

Well, it--we do not have a commercial blue at this time. And we have been working with them with the materials we do have commercially available. And we're really--we have provided them a number of different materials and as they start to qualify them and ramp up, we'll have a better feel probably over the next couple of months of whether it's one or two colors.

Got you. And what is their plan for capacity at this point in time?

Right now, it is a small line and what we believe that we have read is they are looking at this as pretty much an initial foray in and then at the end of the year make a commitment based upon where they are committing additional dollars to build a much larger generation fab.

So it's just the 200 by 200 [5,000]?

I think it may be a little bit bigger than that, but I'm not real sure.

All right. And then, I was wondering, one of your competitors has made some significant progress with respect to material lifetimes and performance. And I was wondering how that, if at all, is affecting your discussions and commitments to go ahead with long-term royalty-based agreements. And then, I have a follow-up.

We think the more progress that's made in the OLED industry on materials and technology the better. That is, for all industry participants. We're getting a very, very welcome reception from a wide variety of manufacturers who want to move into this business. So we're moving forward and our relationships continue to be very strong and develop very nicely.

Just one addition. We've been working with a number of other companies on host materials. And as Steve reported earlier, we've got hundreds of thousands of hours of some of our materials at significant brightnesses. So there has been a lot of progress on all fronts. And that's why you're finding more and more manufacturers committing at this time.

Got you. And the feeling on Eastman Kodak--I think one of their original patents expires--I think the position from Kodak is that they have woven together many other patents to incorporate that. But I'm curious what the--what you're hearing in the industry from the potential customers that you're talking to as far as whether or not there is a need to license on the blue fluorescent?

Well, what we do is--the patent you are talking about is their fluorescent [doping] patent, which expired in the U.S. in March, which is a key patent for making OLED technology. To be perfectly honest, we don't hear a whole bunch about them.

Got you. And then, last question. The--maybe asked a different way. I usually ask whether or not you expect to sign an additional licensee. So I'm going to ask it a different way this time. How many, if any, by the end of the year do you think from an OEM perspective will decide to take similar steps to SDI and invest over 300 million to actually commercialize active matrix OLEDs, if any? Thanks.

I'm trying to think if I can come up with a different way to answer your question than we normally do. We--there are a number of companies that have publicly stated that they intend to enter the OLED market. We are in discussions and have evaluation agreements with a number of them. I do believe that they are waiting to see what happens, if SDI can really shift significant quantities and pull this off, before they pull the trigger for big bucks. But we do know that there's a lot of them looking at that at this point. And our standard answer is we're going to sign up as many licensees before year-end as we possibly can, and that is still our answer.

Are you willing to commit to a certain number?

No. The only thing I can tell you about that, Jed, as you're aware, any number I give you I'll probably be wrong just because it is really difficult to project the timing of when something will occur. There are companies that we work with that like to do things early, and there are ones who like to do things late. So we're doing everything we can do, obviously.

Fair enough. I'll pass it on. Thank you.

Thanks, Jed.

Thank you. We have a follow-up coming from Hugh Mai with First Albany Capital. Please go ahead.

Yes. Just a quick question on the commercial chemical revenue line. It just seems awfully high I guess given that Samsung's ramping. I guess given my assumptions on display, [indiscernible - accented], capacity, and fees for the chemicals. I guess aside from reviewing those assumptions, do you get a sense that Samsung is ordering more chemicals than they actually need, perhaps because of inefficiencies in their production line or whichever?

We don't know. But obviously, when you are starting up production, it is--there's always issues in dealing with how things work. We believe that they order--their ordering is not anything that gives us a clear view of what it's going to be like as we move forward. And they could be just ordering stuff because they want to have enough on hand once they realize how much they need. It's really very early. And the number went up pretty good from the fourth quarter to the first quarter. So we don't know. Once we see what the second quarter and the third quarter look like, we'll have a better feel whether this is a ramp that they had. But we don't really have answers.

Okay, got it. Thank you.

Thank you.

I would now like to turn the call back over to Management for any closing comments.

We'd like to thank you all for joining in today. All of you know who we are. All of you have our telephone numbers. And if you have any follow-up questions, please feel free to call or send an email and we will be happy to answer any additional questions that you have. And again, thank you for your participation.

Thank you very much. Have a good evening.

Thank you. This does conclude today's teleconference. You may all disconnect, and have a great day.