OIIM - Earnings call transcript Q3 2021

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Operator

Good morning. And thank you for joining us today to discuss O2Micro’s Financial Results for the Third Quarter of Fiscal Year 2021.

If you would like a copy of the press we issued earnings please call Daniel Meyberg at 408-987-5920 extension 8888 and we will e-mail you a copy immediately. It is also posted on the O2Micro website at www.o2micro.com under the heading Investors. There will be a replay available through November 14, 2021 at 9 a.m. the under by heading or Time OXMicro the website Investors. Pacific

conference presentation Gentlemen, open by the will you management, begin. permits. Following time the be as for may questions-and-answers

Daniel Meyberg

updates ending of be XXXX. After opened and the highlights of fiscal CEO me documents risk Kuo, forward-looking annual Keim, filed OXMicro’s everyone. introduce associated quarter remind third forward-looking the XXXX listeners understand historical point, this Statements Perry? and fact Chairman. forward-looking discussion for no to CFO like of differ prepared Corporate Sterling of these with floor filed ending with to company within not statements. the are OXMicro questions. This XX, risk XXXX the discussion of annual for to are would you are to of SEC Head With Good Perry and Communications quarter for from reports of SEC to XXXX. the the of your Director; And business XX, our Federal the information. OXMicro that the Du, due remarks Laws. Daniel you. conference call the gentlemen, At are factors. Listeners this the earnings and and assumes may responsibility statements results provide other will morning, for Thank Kuo, in OXMicro in Founder, the year Director; Marketing made are information. the outlook and factors Perry OX’s like referred these risk to XX-F joining release The The is financial enumerated September Actual third documents statements dated for results the today statements September I’d meanings factors. press and contains I are time-to-time. thank and herein made Such from for the financial Meyberg, Jim numerous a Securities OXMicro. to CFO that company’s materially release filings, Sales this

Perry Kuo

Dan. you, Thank

We that compensation be our gains losses. designate on unless results one-time non-GAAP will stock-based exclude QX charges, for will basis a results we non-recurring Please GAAP note now and results presented expense, financial otherwise. review XXXX. The financial

cash in available full current that the cash press million GAAP per this was to non-GAAP revenue. expense $X.X $X.XX was be This in would there compensation or almost million. moment, to zero. compensation with into $XX,XXX. X% GAAP XX.X% ADS. by of If of of million SG&A ADS ADS rate short-term revenue XX% and XX% million. effective non-operating quarter expense and Our GAAP $XXX,XXX. stock-based the the some diluted third net additional the taxable third or was stock-based results At XXXX fully income investment. revenue. Non-GAAP quarter today. repurchase. $XX.X income revenue was third product Communications percentages. of our like XX% The equivalent excludes in $X.XX. $X tax gross Income million. end $XXX,XXX, issued and stock-based compensation was in XXXX per In the $X.X earlier expense level each of following margin excludes amount Industrial margin in third $XXX,XXX. down quarter was location. estimated tax $XXX,XXX was per XXXX, XX% Computer mix. X% no mainly market to revenue. XX% information. This GAAP quarter was represents revenue. I will of to was quarter income Consumer release R&D provide is revenue. are of QX XXXX $X.XX. of This exclude the on and the diluted was net XXXX, expense of in QX Gross $XX.X was million the net was stock income income revenue OXMicro was amount The QX. unrestricted XX.X% cash of based third in fully of reflects of of was the we net was finished $X.X breaks

receivable OXMicro end addition, no at In has of was debt. $XX.X Accounts QX the million.

foreign $XXX,XXX shareholders’ QX to inventory Directors mix. the XX Board loss. $XX was to Income in range for of the be QX. expenditure in end The down of stock-based Product Net quarter. managerial compensation represents or to than XX%. to excluding of $X $XXX,XXX. to be X% the third expenses inventory Depreciation $X cash are the be $XX.X the situation stock-based expected mainly range is Stock-based of [ph]. of days range third XXXX. the are of to value. in as compared XXX our XXXX, million of of and $XXX,XXX end and At activities down Based times equipment. $XX.X Our $X.X employees, $XXX,XXX, maximize from SG&A amortization to is less the was IT range team in X% $X.X $XXX,XXX and are $XXX,XXX. to about is expected the on XXXX the in updated management $X.X of excluding days is rolling DSO million. was million second DSO gross the goal quarter $X.X range to range XX% should in turnover million expected expense margin Capital to to expected X.X at million. expenses expected QX. which compensation market in to XXX the $XX.X or of Inventory to the revenues guidance R&D days. million XX had million. R&D was base to following about quarter tax of for be the and quarter engineers. million from of has are in million This to in the gain expected income Net OXMicro Non-operating of is million QX compensation generated the operating the current be be the company XX% exchange in and to third was account $XXX,XXX excluding be forecast, of

accomplished balance and active by for asset taking have steps, shares Regards this included program our share expenses Since in sheet. million. been we the the million on necessary program, monetizing have XX.X operating which We XXXX, over managing this $XXX.X purchase ADS historically. have repurchased we

we authorization. many our dynamic QX, development. As business $X.X of million in are associated of the share still There the end remaining had in buyback factors

XXXX efforts will execute in and these be revenue plan and target in to continue maintain focused will carefully We to QX XXXX. gross margin and

In more the in new and supply we suppliers, investment tight supply multiple and monitor timely, more inventory in R&D, to XXXX. The the second remains complete wafer testing patent new quarters. added also coming markets. and QX training, QX, to expanding we demand have dynamic QX very We in capabilities accounts QX, chain capacity the in our ISO with and purchase process XXXX. both level chains capacity new from of out, support products sourcing XXXX the In end the testers with tightly testing expand filing tape added work and in support complex

will needed. always manage costs watch carefully continue as We and the to expense

continue future. eye we and the to much very have cost on we be are will a current an on Although, shareholders revenue anticipated our and focus based levels. minds to in current believe Returns

Jim? update value Keim business. measures year. thank more call We our for like to talk about this will turn over the participating Jim throughout I to provide additional to to the enhance everyone would and shareholder to

Jim Keim

Thank, morning, Perry. Good everyone.

over Let me highlight over years. our XXXX of over XX% XX% QX QX the growth of growth past two company’s represents QX represents XXXX XXXX. growth XXXX. QX

supply Our like into in issues for QX shortages China. and on power for management the Europe e-bike plant systems maintaining tool, of traditional both preventing in garden customers introduction power account both ability we China COVID-XX lengthy production closures include production material and and impacted to customers in [ph], Vietnam, for into outages factors a for from ability multiple chain resulting in a the battery target demand our projection schedules. these slowdown of new customers’ Growing suppliers’ systems, supply chain normal to meet and product our myriad U.S., include, dates. and products customers’ impacting Malaysia takes affecting countries build for as issues schedules produce based operating winter head ongoing seasonality significantly that tool Causes

and While issues to our us on growth chain rates, accelerate expansion revenue XXXX capability in supply impact production beyond. has have position ongoing our in strong growth enabled our anticipation of of financial

new wafer that suppliers existing enhance into this into well our supply. additional processes expansion expansion wafer as includes wafer suppliers, For fab, and can as

test additional assembly have suppliers and have expanded our We significantly capability. into also expanded our capability

lighting for products continue We battery intelligent lines. develop new to management and product both aggressively are

battery LED. quarterly lighting serving his new expanding focused in as as applications, rapidly mentioned advanced well for As applications Sterling will are mini using specifically many lithium-ion products on commentary, systems

at Industrial unique our are and are our targeted technology New larger large more new to Consumer, broaden products on revenue backed XXXX portfolio while most in intellectual markets beyond. that a ASPs. new that products market our and based by generating size. drive base, that strongly expansion companies our expand products higher We continue customer property focus will patent will than and complex significantly These is our believe these Automotive

lighting Lexy, Panasonic, Hai Philips, Panasonic, Toshiba. Major and Foxconn, our them, as Black our expand we While use and Dyson, major carry Dell, Honda, the TTI can Bissell, include revenue base, Skywork, Toyota. Decker, higher footprint products much our already Samsung, OEMs management with Hisense, Sharp, we Makita, to Hon LG, our products our Hitachi, Electrolux, OEMs HP, major that include that BOE, use and revenues customers & we TCL product and Murata, Sharp Bosch, increase penetrated continue already Samsung, the company Lenovo, battery

while areas Given to continue our positioning, will to CEO call Sterling confident our grow our are I excellent to revenues now Du, major to key pass within technology this expanding in customer excellent over also closing remarks. we ability base, customers. the growth of additional for customer long-term and

Sterling Du

was quarter was previous from from $XX.X in quarter XX%. average third from reported range. OXMicro margin XX.X% third of up up quarter The was the gross margin last quarter, The same year. XX.X% our Jim. Revenue of and up revenue XXXX company gross X.X% Thanks, of putting XXXX quarter our million. previous the

two And released price XXXX in even a and capacity revenue with within the price is declined past to just kilowatt DC awesome per decades, of $X,XXX cost publicly drop The year. $XXX battery July battery it about XX, a are which on guidance and is XXXX, hour XX% in lithium in $XXX in X the hour battery by ion to coming in was and cell further XXXX. dropped our of the expected Our kilowatt XXXX.

from X.X four-fold expand. most shows manufacturer density That The right worldwide. improve worldwide capacity, lithium So terawatt device XXXX lithium storage quality pipeline a account is XXXX. production energy report base ion batteries to volume. continue cell of growth of recent the are global one efficient XX% could the of production the a battery With and high continue technology energy to industry hour, innovative for to Asian demand will be

grow CATL will For five the XX.X gigawatt is example, five XXXX produce by it times hour XXXX. in the and in years next

grew household work-from-home of enhance more the sales pack. the floor from of situation. a despite strong product, battery as number yield dropped sale all was well battery continues. the care core cost the the rate product, battery chain which Our market it, it a from as strongly the quality the working sector the high We demand, hour education sharply, of dynamic took and home which flexible share, call supply number one business observed the market probably in from or come curve let’s a as higher And improve,

strong consumer coming is garden a tools growth the tools, industry. professional both and contract and second from will The construction be

density, October of from higher news fuel the the watts household watt Meanwhile, tool other from XX AD year, power level. the new innovative are XXX expanded tool will this to future industry to USBX the a delivery This devices looking build existing storage transportation, X, to and resolution and growth at are needed. intra-power taxi higher and we grade the systems. USB standard announced energy converter the a power faster hand, new light On expands XXXX power next power standard. marketplace energy Taxi to battery

designed was could Our high BMU AD accuracy customer XX needs. converter AFE Analog the bit Front End and meet with

performance, customer way XX AD high millivolt expectation. Our is converter resolution which reached beyond accuracy

power tool power also connected IoT deployment further the enable as devices, have tool PMA OEX will to We the solution XG be enhance outpaced connectivity.

high For end work-from-home early working win remains wins our chain the business hour accelerate spent. normalization, believe the supply continuously flexible see and TV lighting group to continue We sign reveal critical. intelligent We design the though, of market the delivery share.

according at So global US$XXX become View billion committed report XXXX The years. the at reach coming in XX.X% a our will Research. in growth product today some mainstream we size post-COVID-XX compound rate by annual foresee We market to business. XK are Grand XKTV expect the from to the

array local call monitor. local have desktop full and the TV, Now we TV TV till which dominate now

TV product, high pilot be the TV the end For XK demand very strong. to XK continues and local

through desire the Our IC. which latest IC only to or system the solution two we has dimming mode The function ability either pulse design a rolled panel PWM, dimming is different type if architecture, to out support width the control further one simplify control our customer TV analog in one function. with

package the of on LED the light increases chips hotspot. full through back some between for However, issue to relative of array the facing also but intimate the only one the of not sufficient on dimming distance [inaudible], the the evenly spread individual placing the itself by is display, thickness LED display the other that thick, local device the is required is

So which on source LCD a film. contrast solve you than the life the antenna LED therefore More also to spacing lights is bright is they zone long LED the by close from as LED light enhance number smaller small reduce each the multiplying which They OLED a but dimming have level is will multi the be area thin. consumption the has the greater LED the can mini and that take or time. characteristics in which chips zones, also more a brightness on number be the increase the effect brooming halo and other talk subject, performance significant important, the power it zones mini the this will brightness LCD of fact also LED to in of off reduce issue and thickness between high dark reduce more the image [inaudible]. like the of the will hand Also

So since to system size, design space easily marquee the LCD smaller mini dimming size TV while could offer us area the patent the crystal the our continued local moving to predefined display. size it package LED due present technology With technology. others a technology smaller but event group least, scan, both the motor LED compose quarter. picture scan to its fast great backlighting the technology a clear conventional in objects mini the marquee offer with LED also gives compared many last the and battery much Last in and received designer not layout, grant

business the management. the supply dynamic grow to continue despite We market situation chain

remain and on situation. ATS, in increment Dan and I to that. expand to expansion optimistic packaging the call. the of back watch messages, performance the Thank and several our qualification XXXXX are will chain margin keep current expense incur business you for We foundry carefully grade for project quarters which supply We time. always delivery future out, automotive momentum. additional dynamic We always business. ISO the started listening shareholder turn base high ensure fundamentals including especially new updating tape conference the as facilities focus consoles high is to please. It well We drive on the expanse all the the

Daniel Meyberg

this Sterling. we’d open you, Operator, call Thank like up to the at point to questions.

Operator

[Operator comes you. Our Please O’Neill go from with Thank Litchfield Instructions] Hills question ahead. Theodore Research. first

Theodore O’Neill

is on congratulations question Thank quarter. good you capital expenditures. about My and the

mandate almost and sort of everything it CapEx global you to this in with a might XX doubled to look up seems and general kind there talk at electric be to constraints keep Are you of since least last quarterly seeing your months. growth? could growth revenue about to continued like any is So move the to in terms,

Perry Kuo

This is Perry.

CapEx. the to answer me Let

testing a And than more more the related development, this testing is and the the time, also IC, capacity. original that IC ASP CapEx, complexity higher Due continue. new the -- may other to than and to time, competitors this much the higher much to for the the which goes. the is longer is times at also will new failure time testing ASP, IC, means our it testing this interest we the Regarding the sell

to And also in in the the capacity very in we and testing So invest that’s need tight China. testing. Taiwan still how currently

-- to in XXXX certainly us will to So in the our the will enable IC some give launch -- battery continue and also testing the for sales to and LED grow capacity area more moment our CapEx this in momentum new for future the the the products. complex

Theodore O’Neill

keep you you that this get to going? So can you’re there’s -- -- growth need that equipment comfortable there the

Perry Kuo

We of already running... tester are get XX% already in-house the we and

Theodore O’Neill

Okay.

Perry Kuo

XX% and the first our to the of And the capacity. trial -- have XX% XX% think and we testing doing we run, already already are enhance in-house test I already first

Theodore O’Neill

Okay. Thank you very much.

Operator

question go ahead. Tore Svanberg comes next with from Our Stifel. Please

Tore Svanberg

first guidance not you sequentially? had does would it revenues few of Jim, everyone. supply Do Hi, for regards the still constraints? the to Yes. or of in down you A from questions, the take the kind power been QX, tool all, sequentially in think seasonality grow

Jim Keim

did We and customers grown actually not mention, we shutdown think have that actually us. they some we Tore major have for are

one have Malaysia, Vietnam, are they and plants totally several in shutdown. have very We shutdown major in

So, capability the due some have chain of our interrupted growth of simply the some supply to really customers. production of issues capability

Tore Svanberg

a just million $X it when the million guidance, R&D? to question Perry, gave SG&A similar And $X.X clarification was Perry, you to for Understood.

Sterling Du

Perry, are you there?

Perry Kuo

to $X to million $X.X I’m million Yeah. -- million. yeah, yeah, $X Tore, yeah. million, it million million $X is $X.X $X Yeah. sorry, to

Tore Svanberg

Perfect. Okay.

Just want clarify that. to

to new XXXX? are XXXX ramping in applications ramps a It of some get to bit and some new an period you into like bit products year. little of new trying Lastly company, investment sounds you, for that product a be going so talk was next Sterling, about the could just insights the to

Sterling Du

Yes.

our LED. mini are We -- by excited the

has high nine each desktop LED not schedule, will address that. also sampling we certain the different new monitors. for belong already them has interest. and but mini be The custom, total to in the they And and sort can although solutions notebook end new LED go of their close markets to the are mini introduced some these see And solution notebook, Apple different been I to say fueled of we pre-production. to published by have and a a this also We trend become

challenge. have still objects. we LED scan. The LED, increase enable also second, LCD our local the have way is divide regular However, the been like reach more smaller difficulty the LED several cost OLED LED of we number to know easier marquee LED you much it. ASP, to -- because is the mini the of will market will, zone just dimming, -- is performance our the to still as contrast in small mini a the mentioned, moving increased panel scan reduce -- to one, the to that and mini do the three, as it have the marquee number superior also patent zone the very will be to to easy And brightness And is production burden due the the costly cover, in and more I and moving OLED

we based the city. meanwhile, those power battery, to in already add [ph] BMU or CPU new functionality ARM the updates the in product a already also see the rolling we have all for In both they the based they functionality BMU for BMU to that the and stable to those major several the will our and either And long European all do and to a power close CPU, next be connected. add Japan for based wave to customer, the year it. down to So, existing also In will and the sample past be be and enable take market stage. excited we’ll more ARM ARM certain account meanwhile, require tool discussed our based BMU be and cost

growth more will rate battery. I next battery the year XX% going been certain be be together to believe driver the and for the growth production those spread portfolio battery bright, momentum or support with capacity product be of we a year, major base So and China XXXX has continue will more think the the grow compound every also in will to

Tore Svanberg

you helpful. Very Okay. Thank very much.

Operator

Thompson Our Lisa question ahead. go Investment comes Zacks next from Research. with Please

Lisa Thompson

Good morning.

customers that So quarter. shutdown? cut I would the about Malaysian those like like breakdown this year. the were versus looks sales bit It to are ask TV Is last down flat little and to you industry revenue that a Vietnamese

Jim Keim

management and No. battery somewhat in The The you business, has out Malaysia TV mentioned, are down, we’ve noticed been China of the Vietnam as particularly area. suppliers.

to continues be However, the monitor strong. business quite

Lisa Thompson

constraints is they that sup because it is path critical have Is down? demand just -- or

Jim Keim

has is not market going demand and down overall In TV, in on but TV, gone shifts monitor. some we what see basic

Lisa Thompson

Okay.

that’s So not issue. the All right.

selling the automotive, as happen? far if anything mentioning are yet As keep that when market now does to and you battery you products, not, that

Jim Keim

let Well, me…

Sterling Du

Jim, go We ahead. are -- in the I’m sorry.

Jim Keim

and of let first In me for area. indicate. actually, we the just Well, in have automotive in some I’ll and had automotive intelligent penetration do the lighting just we’ve have Yeah. all, briefly market say time

that For going indicated activity market. into ISO that think, to Sterling we battery lot I supply are to through prepare management, a of

So you. I’ll Sterling that let cover for

Sterling Du

more The about almost and XXXXX that’s be to even XXXX, have so years to will we will XXXX, reasonable be two probably we that for but expect sampling some expand meaningful ISO yeah. though -- than

Lisa Thompson

ASPs is bit it you significantly volumes about different? just a have, kind that and And of what will describe business can little

Sterling Du

but the Lisa, cluster pack the topology including number directly are automotive, to the before pack number talk certain battery one are to then And clusters. of the the many going early Right use. the battery that. the can in we pack and the guys, probably, we I and utilize the doing alone are and currently pack now for the IC the the on research, depends still automotive IC need ASP we to are each because stage control is we and each to architect automotive that battery high, the chip do talked manufacturer not battery more

where more we know needs time. have So that idea. do we a clear probably the -- where We customer more investigation

Lisa Thompson

Good. Okay. Interesting.

back and Vietnam, out? it’s that’s be do that, in How will TV up quarter, then do market up? think the back to that if they Going possible going you the you Malaysia and open work sequentially think QX shutdowns to

Jim Keim

situations possible. Yes. given project, in very, That’s very market, are current Lisa, the issues It’s certainly the dynamic. very to hard

We material have various because problems. QX, of shortages aren’t they customers that even what can parts deliver actually some projecting in and

that we’re possible, So but QX to point, yes. going is not project at this

Lisa Thompson

right. Interesting. you. Thank Okay. All

that’s all questions. my think I

Operator

this Thank time, turn like over you. closing I would At call for to the back Dan remarks. any to

Daniel Meyberg

you or feel Thank time at attention to thank for you. at contact to you XXXX Please with XXX-XXX-XXXX again any Thank all your time day like Good-bye. ir@oXmicro.com wish extension and and morning. everyone me this free follow for wonderful up and your questions. I attention. a

Operator

conference. This now includes today’s All disconnect. participants may

O2 Micro International (OIIM) 30 Oct 212021 Q3 Earnings call transcript