OIIM - Earnings call transcript Q2 2022

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Operator

Good morning and thank you for joining us today to discuss O2Micro’s Financial Results for the Second Quarter of Fiscal Year 2022.

If you would like a copy of the press release we issued this morning please call Daniel Meyberg at 408-987-5920 extension 8888 and we will email 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 for the next 14 days by visiting the O2Micro website under the heading Investors.

Following the presentation by management, the conference will be opened for questions and answers as time permits. this being note Please Instructions] event recorded. is [Operator you may begin. Gentleman,

Daniel Meyberg

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

Perry Kuo

Dan. you, Thank

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

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

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

was was by $X.X spatial of situation are DSO about of the be mainly QX Net has as to to current $X This compared represents Our QX and million of $XX.X stock-based margin X.X of the expenditure at was to second testers. expenses about expense stock-based equipment Depreciation compensation $X.X XXXX for and in million. to million. managerial is $X R&D excluding is the million. R&D to was million the of one-time in million the are days in $XXX,XXX XX% the the to updated guidance million. end revenues expected expected to of rolling quarter, XX are XXXX. $XX OXMicro provided SG&A of amortization XX% which be market second days account forecast, expenses $X.X XX%. company IT be range be QX. best was for to Net expected in to Hello? in following At quarter the range from projects end employees, Product in the for and million, Capital expected and million excluding gross XXXX, more QX. on the in quarter $XX engineers. Inventory days. XXX $X.X activities had range times the compensation Based of and than XXX operating cash inventory is DSO XX second turnover $XX.X mainly mix. quarter. million inventory the of second are

Operator

We can Yes, sir. hear you.

Perry Kuo

Sorry.

of and the to why. expense to range is Directors I is expected range $XXX,XXX Some be $XXX,XXX. be don’t $XXX,XXX to of compensation expected to $XXX,XXX excluding in foreign expected tax income maximize of to be interruption, yeah, Non-operating $XXX,XXX. our in loss. The team in the of range or of is exchange know to Income shareholder value. Stock-based management the Board gain is goal the $XXX,XXX to

this accomplished by over necessary the million our repurchased to monetizing steps, regards managing assets million. operating which have share In XXXX expenses included program, balance repurchase and shares we for We have sheet. ADS on $XX.X the since taking $XXX.X

As by of the in we selected we demand QX, million $X.X correction in weaker inventory due to had remaining our end of buyback some QX, In market inflation. from authorization. are shared facing

while carefully to second We the will managing and as area. for reported cost also qualify we chains sources additional supply continue inventory,

R&D of complex changes and demand capabilities cost product environment, uncertain carefully watch macro the investing more down. as to capacity we expenses for the in continue and Given manage in needed. we the cost and always are And continuously testing the

have to $XX cost million. QX to continue revenue on based focus we believe is be shareholders the excluding Although, and million very special project be onetime point in current on anticipated $XX Returns we labels, future. in to breakeven current the ready a much will aligned are in to minds, cash our

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

Jim Keim

QX QX will our Thank revenue issues. you, range. everyone. lower revenue Well be due in the Good primarily morning, inventory projected million of Perry. was to $XX.X

power QX the and some into customers of we for As simultaneously remainder and improve. some and to retail battery slowed, have QX partners OEM left management products as inventory like vacuum for mentioned in strategic with This supply that ODMs the inventories, began in demand tools last quarters cases. built commentary, believe chain cleaners sufficient selected their

and slowdown industrial revenue strong. we in Beyond only and two enabled product some areas the a where commit and The good presence we have the is in October. products, higher focused inventory more wafer to includes there to and enabled in base. issues, Key to us including automotive continuing to us and growing automotive, and capability, some China demand consumer where production Simultaneously, outside much past is but early been growth applications, areas, support our where resolve and is of effect, industrial market years. test end we rapidly as expected our resources slowed some limited. automotive industrial R&D overall suppliers shift to has efforts enable design to broaden not consumer have areas, across previous capacity In customer as of to our Taiwan, news. a to to where enabling us remain delinquencies, of production and start we new This us production assembly capacity support are to expansion supply, broader have the market

intelligent end and lighting Our have of Battery industrial new are products design the as leading eased, both well Management including robust. TV. designs lighting, who issues are In as minimal. our automotive products reduced and includes remains capacity inventory in consumer and higher delinquencies suppliers are with earlier activity intelligent customers, for constraints engagement This

monitors a from second successfully Our highest of volume sourced, have partner fab product product that is widely and was second sources with customers us. two enabling to wafer used

remains backlighting products notebook, are monitor XXXX. mini-LED, volume new known in area and into forward to targeted These as and applications. activity TV. In moving and customers design production monitors for be proceeding with tablet both robust in TVs, Our customers and well activities including new in as expect with expansion we're we for high well

Battery expect expanding despite drive forward inventory products, multiple Finally, innovative we and an see also when customers where leader. some customer temporary design applications and issues. and business to In to proceeding an as strong, our base Management fundamental remains we we advanced with industry become new are for system monitor continue activity

that our positioning as our power battery customers higher see The microcontrollers. automotive we've multiple industrial increase production much are We base tools, one wins engaged activity believe our new year. includes we major moving to for carry product drive well market forward later we designs and customers are design high increased business household revenues revenue eScooter, as and forward. management company as strong, to while already subside, fact, R&D remains Even begin tools, products continue encouraging, our experiencing our footprint vacuum garden and to as this with expanding storage them. with products as we we strongly more This energy volume our COVID-XX long-term proceed of with will and In can with our cleaners expansion issues new integrated penetrated systems. expect we e-bike

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

Sterling Du

Thanks Jim.

second released for on of quarter May XXXX a is XXXX. X, revenue with the guidance Our publicly

Management supporting We both Program market. management battery analog the in doing and technology are Advanced lighting high-end Power intelligent

customer our base target top-tier at engaged next-generation customers and product complicated will consumer with only more the New but as development. industrial, well as that expand product markets, not automotive

much to TV TV per large credible TV us a annual for believe entertainment rate witness growth rate. building TV at not such compound medical, performance sector industry is XK in productive short-term reach XXXX market XK years. review compound Grand business by grow in healthy coming visual we in XXXX automotive the the the growth technology. second experience, trend despite which expected inventory correction. XK to participate started by moving The of a rate new opportunity higher frames screen of versus both a to USDXXX reducing action, usage expected TV billion fast per XXXX. the us but TV a annual XK market to The growth report report to frames XXX only Let grow some construction motion period, to We to as due And backlighting from According View, headwinds and size in over consumer give continue healthcare, professional XX XX.X% showed the forecast market at and second double-digit global is XX.X%. XK

look us technology Now at our frontier. let

first technology, array screen which dimming and dominate monitor local TV full The the today. data large

our one with IC. customer ability pathway the rule IC solution design further out one Our different analog system mode function PW simplify two function, the will design the in panel, dimming architect to capture the type either support to TV to process or if dimming through

therefore, second the Mini-LED the of number light. and LED substrate, The between driver. of the technology on the by mini-LED solved the spacing chips big each is and light issue thickness mounting multiplying dye reducing LED source

also the they increase halo be power consumption. number zones, could the reduced can More and effect which of importantly, significantly

Third technology technology. the offers multi-scan

local objects presents smaller could multi-scan, technology the many to crystal smaller size. Mini-LED With display. picture its the easily predefined compose area in with even a clear fast This due moving

last grow in to XX.X% billion to exceeded us in battery from pollution increasing a delivery demand ongoing the XX-watt concern anticipated and were battery the from These Type to let standard toward X, at C to trend. year rate market announced electrical partially it the growth new the Now USB for tool over next impacted the also to power market Back USB price the to is USDXX review to standard. a growth. Type the level. vehicle gasoline power expansion news XXX-watt compound Lithium-ion due C future part, XXXX existing growth surge market power fuel XXXX, will XXXX market level, of and tool has annual expand

Our battery short-term active inventory and design very some wins older despite are correction. sector

operation. sharp it for the dropping sale customer penetrate goal design growing with Also, more are capacity long-term We observe Coast normal driven market higher as our well as need win number quality. freedom share better of existing as by confident the has improving We the battery of activities. the application more

chemistry nickel projected our vehicle electric example, showcase oxide also density and means This the are rising the By ion powertrains and will the rate light battery to higher included power-tool, is faster natural the heating have self battery great, to magnesium resolution For in the for stimulate the range XX% which further density cobalt through market no magnesium battery. energy be cobalt acceptance due segment demand a growth that to Meanwhile, converter a lithium for nickel was vehicles XXXX. application, wide falls higher opportunity. AD oxide needed. higher market of a

bit was high Our analog converter AD designed XX a business a management meet needs. unit acreage to front-end with customer a in

Our performance converter, customer which resolution way of AD new high was the expectation. accuracy fitting beyond

The further battery enrich deployment be all connectivity. power arm-based in power devices. tool XG enable connected the one Our management solution systems an to tool will as IOT

expect situation despite management. the grow inventory We and market the to continue dynamic short-term business to

base recruiting new long-term to experience We engineers watch our our high-margin automotive to view focus address where carefully to business. the projects quality supply management, We more optimistic especially you future momentum. high-performance several control situation. outside to call the shareholder the our in Dan, are entry seconds moment, drive in China. and market like We return on to and We goal started this the I'd chain At thank for dynamic base always for I conference give call to always Dan. the listening current mind, please. back

Daniel Meyberg

Sterling. you, Thank

for We questions. be opening will lines shortly up

questions During any be will not this this on call, addressing we related presentation call.

Limited, Limited press dated Board of per USD as As per International XX, shares all Honor a sorry of $X.XX preliminary disclosed proposal XX Precious received purchase of acquire Limited OXMicro FNOF cash. of ordinary in OXMicro's ADS March price in International March the outstanding has non-binding release to a XXXX, $X.XX the company letter XX, or -- share XXXX from for

filings to the we'd for periodically proposed to and also you requirements does at proposal do SEC proposal special funding Limited to of rules the of independent evaluate has call company's to with engaged The more its only has the receipt committee press questions. point not transaction. made decisions and making the to SEC not transaction legal proposal and so connection evaluation the the of proposal this transaction. committee International indication regulations. advisers. open and any Following financial proposed will like a commitment. and of or and consider formed check International Board We constitute and solely proposed interest OXMicro transaction a consisting filings Limited continuing own proposal of respect The to releases the been directors continue encourage any regarding the proposal the has with and proposed and to Operator, in the SEC information constitutes pursuant proposed and review The and the special and OX proposal preliminary its issuing transaction and has

Operator

will begin We ahead. come [Operator O'Neill session. will question Research. Theodore the And of Please Instructions] go Litchfield now question-and-answer from Hills our first

Theodore O'Neill

Thank you much. very

I the makes on understand. my got to automotive. -- would industrial consumer So, able on focus also and sense the side be that the your question what inventory you've issue that you And it is

out got what supply that comes is happens consumer given back, constraints side question my you've there. So the when

Jim Keim

second this for of assembly the a think is our I lighting Several We're of second and source wafer volume that highest expansion capability. Well, the – We instance wafers in wafer at for of time at address in time our process mentioned same up already we designing we've the other are brought active us that. new test products product into – fab activities. rapidly Jim. go

back-end additional coupled and chain capability, capacity. with of test with we that forward the So feel supply more confident moving

Theodore O'Neill

feeling quarter? whether issues And for continue economic fourth Okay. beyond are a economic to you potential or going – not this do have the

Jim Keim

Well economy TV newer even see our active the we there capability will situations the many in the do one that for some for revenue high-end with see drive reduction pick the it's instance ongoing overall are we us. Currently, to expansion hard occurring. area growth to project is design with products if that into

that So portfolio that of growth the product the all and ongoing company. that some design a is see activity on in new to XXXX believe in be for we'll position going our we

Theodore O'Neill

you very Thank Okay. much.

Operator

next of from The question comes Tore go Please ahead. Stifel. Svanberg

Tore Svanberg

have you timing for happen know like QX? would in going question Yes. normalize and do I'd of the handle correction to Thank then be you sort of QX? that could got just got main the you. Have for your collection around monsoon things to to you potentially the inventory that's by a but quarter customers

Jim Keim

is to answer that The yes. Tore

their them We direct for of We give and we the power ongoing In forecasts run expect list the leaders of cleaner We from the area. understand the inventory their most primarily understand QX. inventories to vacuum magnitude understand tool run majority ongoing and in correction in through cases rate. the be we those rates. from

some move done and to QX. QX any the inventory have as We of don't we next correction expect any have we into So year. issues of in expect to into most significance do

Tore Svanberg

penetration. sort a in question that know in since of production. Very automotive production but it's hard good. now to the been you it you're And I do talk sounds going like about a have on to product

talking So you Maybe give can call seeing initial of color? you the application? us be sense in more or that some Any to the you're are revenue? going any where functionality for about

Jim Keim

probably that But discussed The discuss area is in not a we very that's details the near-term of new production and starting specific slated that. this we we're free want next for QX may at will some early an are product. more to revenue the mention in R&D call drill time have really to customer activities. to but with we that Sterling automotive Tore about

Sterling Du

the We applications. product have multiple automotive go to lines

As functionality that are so-called some you but relate limited that our system. about just related of something is imagine Jim we the not management to only can products management to system, mentioned some driver probably to driver to

do also devices We in other some automotive.

chapter, are introduced have beginning probably the to going new that's early next So mid-term, just we new part year. automotive another

those some the module maker, module So of automotive same of the course how we business that's business reputable those yes. doing are maker go model through is

Tore Svanberg

lighting last a but to [indiscernible] one new of market get next mean like I you now year. consumer the or dynamics revenue, obviously lot weakening question, Just the is delinquencies have the

lighting a to bouncing business even So, the weak is in that it kind fair is say bottom? on of rate the macro

Sterling Du

creative look generation both product high-end and to going [indiscernible] which gaming, have be There's products mini-LED climbing to local that, and production. new going TV at also lines to our is up

at production also we some the back and be metrics the going the question, as have to the driver as expect the and more application the we potential Mini-LED, Mini-LED your we the notebook driver high have I the do we will indicated the the to of it's the and marketplace also multiple And from momentum MarketScan. this products initial weak, bouncing to ICs can Jim will we Then that's a resolution For and phase, MarketScan, for Yes, beginning of we tablet cost -- little be the have back probably new go effective area the the address also notebook TV application. Mini-LED, with the the gamming. we gaming, have market local will the variety combination programmable tablet topology despite to different XXXX. for market way will together mentioned do local

Tore Svanberg

you very helpful. Thank much. Very

Operator

comes Please The Lisa from Zacks question next Investment go ahead. of Research. Thompson

Lisa Thompson

morning. Good

your So would grew kind breakdown now where be I that, of revenue looks be, look thought and that held would well up at that shortfall TVs tools. the actually it and actually like very not I power they

new is So, you when to start are you going that industrial? throw to a shipping be category automotive or going in that to

Sterling Du

I -- be the think think automotive, will it's the it in beginning So industry. it's I

Lisa Thompson

Okay.

where shortfall the is that is all QX? coming so, from And in

Jim Keim

in power all in involves The customers tool where is. in vacuum Lisa shortfall And five whom is and cleaners, that's tools about QX, know that the management two We we in area. hold of And inventory but some know to amount of power it's mentioned the vacuum areas. I battery due the and those cleaner it the most of inventory inventory, significant primarily. the inventory area

Lisa Thompson

China Okay. happening how don't I know in everybody in is looks is holding What's like recession. up TVs are there? with recession And

Jim Keim

we a already design of will that in advanced be down position design on is we as are fact And a lower mentioned, and of Well, is from wins China, the view. TV have the replace with revenue point in to some of some we've the shortfall any position our end. that in although, products seen that projected good market we

year. our even So, this business we with remainder we're year, very optimistic the as and of next lighting look into

Lisa Thompson

gross average how going they the the And initially? or are Okay. on automotive starting higher out? company business is roll margins Are to below

Sterling Du

But after Lisa, six the corporate think developing in the for higher year the at be this stage I the the that months, will than the average lower automotive be the average. beginning, this corporate for will end. than that

Lisa Thompson

I question to that stated and bankers Any And in is when cost in are QX as as idea? Great. lawyers is, going And my going end. guess Okay. QX? fancy process much last to your

Sterling Du

handled pause, is because -- that. think I probably yes, is a to think moment, community why at that I yes. I this special predict the difficult believe So,

you understand. hope I least at So

Lisa Thompson

Thank Okay. to you. information. could just in That's get case ask I my questions. had of one I

Sterling Du

Okay. Yes.

Operator

any are the remarks. over remarks. to like turn And to it Dan there further the in questions for to Dan closing I'd again, turn queue. I'd like to closing no for Once call back over

Daniel Meyberg

that. extension at your me at for with contact attention or follow-up you XXX-XXX-XXXX, you feel Have thank about and and XXXX, a Thank all again great Sorry, and ir@oXmicro.com attention. morning. to this any your time Please questions. for time free day,

Operator

has The and you Thank disconnect. conference now today's now concluded. you may attending presentation for

O2 Micro International (OIIM) 29 Jul 222022 Q2 Earnings call transcript