AOSL - Earnings call transcript Q1 2019 | Alpha and Omega Semiconductor Limited

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Operator

Good afternoon. My name is Ra and I will be your conference operator today. At this time I would like to welcome everyone to the Alpha and Omega Semiconductor Fiscal Q1 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

Investor may of your Relations Jeong begin you conference. So-Yeon

So-Yeon Jeong

call results. via over welcome Good at seven is is for the broadcasted after live release Alpha quarterly was also me The web days Jeong, today Relations wire Investor afternoon, our XXXX, company. you. be and www.aosmd.com. business call market Mike November and today, for website. release to Relations fiscal website is representative Investor link for accessed everyone, first the are posted call Thank section This With the conference can earnings Yifan and and distributed our on the the by closed. company's Liang, the being the CFO. X, in following So-Yeon recorded Semiconductor’s and of XXXX Chang, Dr. The This CEO; our Omega our

certain forward-looking materially and would measures involve measures actual useful results from to non-GAAP included measures. our are by statements, and We comparable Our These we could will and based you differ including provide. presentation to financial outlook should expectations be the that make that GAAP conjunction on current risks discussions during statements such We of earnings investors release. provide of reconciliation cause A is they earnings we like projections. to financial forward-looking this non-GAAP measures remind GAAP believe management's considered in non-GAAP course conference call, uncertainties of expectations. in include the with business use information performance measures we that the this and that our operating release these about because

our information please subsequent of and in uncertainties, current the today's with no update SEC. obligations detailed these the provided more refer description a assume We and call. For to filings risks to

the provide financial quarter overview I’ll the results. Yifan? to to Yifan, CFO, an over our first Now, turn discussion of fiscal

Yifan Liang

begin, who our I After will us. the will thank Then company’s and the Mike, highlights. for the the follow-up for review quarter. turn discuss Good So-Yeon. I’ll our CEO, you, results will you quarter. I with next to Thank guidance for financial To that joining business afternoon over call

reserve we’ll was on prior was introduce record September of demand and driven an X.X% an solid increase that a from million, $XXX.X Mike for new, Revenue X.X% products quarter questions-and-answers. the shortly. of we by time The quarter quarter year. same value higher will from Finally, growth revenue for the elaborate for the increase last regularly. the

for million, million X.X% XX.X% $X.X compared ago. In year terms to last year. same prior was from million, of $XX.X up X.X% up revenue was $X.X $X.X and million the up revenue year-over-year. Service sequentially Power quarter and was product $XX.X quarter the a IC mix, from for quarter revenue MOSFET XX.X% prior and million as up the

of and increase Venture XX.X% Regarding Chongqing mix, last and year. million Non-GAAP $XX.X also prior in as for XX.X%, compared Non-GAAP million quarter September to the million, expenses to $XX.X quarter quarter’s Power of prior the and for XX.X%, segment prior excluded expenses same million margin million Supply year. as Chongqing $X.X XX.X% operating as for year. in X.X%. operating prior and the compared compared $X.X as margin million our by quarter-over-quarter quarter quarter quarter quarter September and Joint pre-production Venture, also Communications $X.X operating others and year. in $XX.X compensation the for quarter prior gross the expenses year. this were basis the Non-GAAP of total compared the represented and last to Joint the million quarter, the for year. million quarter $X.X production excluded quarter $X.X margin Non-GAAP million share-based Consumer expenses was same $X.X quarter. charge, $X expenses in gross for excluded for expense the of last driven to $X.X million same operating Non-GAAP related the the improved Non-GAAP for XX.X%, to XX.X% share-based million margin mix. last team product for $X quarter for million for million $X gross X.X% segment the the same compensation the compared the of same power ramp-up prior digital the primarily was and $X.X Computing quarter points Non-GAAP Service the last last XXX the to to quarter of costs revenue, as for charge related million quarter $X.X $X.X excluded September for same included XX.X%, of to quarter, for controller quarter Industrial compared The the gross the

was year. quarter for customers more to per the had prior XXXX, roadmap. hiring profitability. controller $X.X completed been with quarter toward for As digital earning as we $X.X largely Non-GAAP for the quarter to for quarter compared million last million to for quarter attributable prior the the progress $XX.X was we for earnings was share and remaining quarter September to million team. same to for $X.XX million flows share compared per for to $X.X million in Venture expense million $XX.X prior cash same quarter same flow quarter-over-quarter for compared the quarter the attributable variable to in EBITDAS Cash in making cash EPS $X.XX AOS for operating as and the to steady same and million share $XX was attributable of $XX.X designs, compared last mainly Income our for for operating used and compensation In quarter, the prior million million prior of million has last $X.X quarter, to Chongqing $X.XX million accrual for September AOS, quarter year. per quarter the continued million because the product was the and same September XX, is and AOS the to year. compared $X.X the tax generated year. our higher engaging year. $X.X quarter operations as quarter the of last increase generate The $XX.X Joint earnings quarter team positive product September $XX.X the due flow. the The last the power for expenses the

the million of quarter the balance including Chongqing at balance on equivalents completed to with to Joint balance $XX.X including quarter end at our at venture. Venture, million cash cash cash $XXX.X cash as Moving last sheet. $XXX.X the September We of $XX the million, compared and joint million balance

balance including million $XX.X Chongqing the was Joint million ago Venture. Our $XXX.X at a year cash

fab During $XX.X end from the drew balance million of line. With at June quarter, the end the our quarter, compare that, at down further the the of AOS quarter. debt our as to million $XX.X Oregon the of September million $XX.X was equipment

the the and XX million the million About million quarter inventory were quarter. XX Net trial compared generate including was million and million for Outstanding Day positive mass prior during the flow, compared property, $XX.X Sales AOS. Joint to preparation days quarter-end, continue $XX.X as quarter XXX in AOS net to from quarter quarter million, million was the quarter. fab. end cash from in and we at year. was for last last $XXX.X million Net trade from quarter, for grow in increase joint inventory Venture the the $X.X $XX assembly compared the $XX.X As our production of at receivables and Chongqing for the was the and cash days million, expect Capital test the prior of inventory to to were the balance XX-inch last prior venture of position days and days, same $XX.X were to equipment $XX.X to year. $XXX.X million December the as of million days XXX from and in we from million prior production the Average compared $XX.X up from quarter for $XXX.X plant the quarter Net the $XX.X million expenditures last year. for $XX.X quarter.

from expenditures to the be to of fiscal total X% AOS in of revenue We the range expect in year XXXX. capital X%

million XXX,XXX program. approximately repurchase shares During quarter, of $X.X share existing our our we the repurchased under September stock for

Before commenced progress I brief Chongqing the production update a quarter and September Joint me expect mass had the review, up XX-inch test on at financial of on small our Venture. fab progress ramp We quarters. to add the let The in conclude for two during is the track. assembly and next the

gradually wafers who the would business during trial expect and XXXX. quarter year will up turn the December Mike? now to quarter. to highlights Mike our the I With We CEO, throughout for over ramp the Dr. call that, like calendar of to production Chang, provide XX-inch start

Mike Chang

afternoon. good Yifan, thank you and

in AOS notably, quarter, Most migrating another the revenue XXXX. and battery start great as cycle and non-GAAP significant have been record a to to especially excellent This gross that breaking increased demand industry progress time high an reached margin since macro year with quarterly highest higher products range, all-time and strong the There reflects gross is driven uncertainty. product year. delivered by have of XX.X%, high-end off the last since above products fiscal market some management the improvement new third are of quarter. guidance we in our of September quarter the The was improving in which Vcore mix. results reached smartphone overall board, XXXX our across margin our the value We continued for in applications. financial record-breaking in revenue September headwinds concerns

did smartphone home In see we in some and appliance in China. fact, softness applications

material has primarily geographic two, terms to base allocation trend higher customer to with demand we well One, this are across of diversified applications. in have most two reasons. impact do a portfolio near-term product our expect And However, regions. in we not and the on been still due

believe remain performance there can completely growth market the long-term execution have own one our confident which no in didn’t and the to fundamental we factors sustainability. and our AOS-specific, about sustainability past. behind we We nonetheless While be are that impact, are business that immune

current other are The applications revenue the in Undoubtedly, point footings established target. factor breadth we is than unmatched exemplified what history. in in the company’s our depth we our a have by as the solid first has Today, product growth, and portfolio. any So, position recent healthier changed? of we

major voltage to for applications with our From past smartphones, few where and IC high-end gaming, adding as years. notebook have as new as category of and our products long design industrial been all We interactions. required business. that product for these new derive can IGBT steadfastly quick in the well we mid, growth. innovative customer-friendly and Many Power crossed time disciplined such entered volume capacity DMOS were low, tools high-end computing, we our our With the demand and high home appliances, still line some which to technology them a product ranging forms continues cycle ramp-up. platforms, execution, diversified and from AOS technology power have already customer high-performance, market outstrips large have opportunities products platforms scale upgrading of new diligent The chargers for across strengthen, date, thresholds far good some our production our to base

heightened second The position. our factor is market

new past brought few years, been well new significant the has customers brand names. as With design-wins new customers. products, securing as we and have with many customers the innovative existing in including AOS world-renowned design-ins In

More enhanced in leap positioning importantly, we a relationship. bolstered our customer taken have market by

and $X.XX million of are times to share. and and $XXX a earnings success. years. we non-GAAP Recently, ODMs with in by through per alternative in partner. unwavering definition, has increase financial with scalable cycles XXXX design transformation in EPS meaningful in finished awards, involvement gratefully non-GAAP worldwide presenting earlier partnership forms visibility. our of We The was then, only This on also our from the emerged revenue but OEMs our allows Since year good effort reflected product strategic grew we fiscal are a performance. bad, with customers, in deeper in their opportunities our results many and not better with by always, orders. engagement this XX-fold committed XX% us of major vendors with small of our course, acknowledged one two focus customer AOS whether As revenue only leading to an support or

way to of for another the continue achieve paves revenue to growth goal We XX% in revenue. our mid-term year expect fiscal million us in $XXX XXXX, which

let this Power of will the segment fundamentally stronger fluctuation. segment with X.X% the posted was starting XX.X% represented in as segment the many that review, sequential and card structure and engagement beyond this Internet our high-growth and outperformance me well more industry growth products into transformation, as semiconductor Central we has Computing force continued Big portfolio Vcore that, Data resilient such We increasing this product customer us share segments the enhanced year-over-year. The graphics also the space, personal IC revenue as in DrMOS AOS in business have in computing expanding a to to is to upgraded in applications. total quarter. power gain to Computing. today a driver believe our a with the make years. our advancement of Intelligence, increase cultivated as Things. for include market turn The September XX.X% It With Artificial main is We that

area, technologies. of of management stay our we As power computing on a have sharpening been evolving in capability leader continuously to forefront especially the the

healthier have in the position the AOS growth December strengthened and ranking As expect we market, a quarter. in Computing

a for by applications appliance market softness on increased Consumer. shipment but It strength XX.X% offsetting the home of year-over-year. X.X% decreased in sequentially, TV Second, was XX.X% quarter-over-quarter total The seasonal the China. grew in revenue. It the

that You be XXXX year the recall crossed seasonality in the growth outlook expect quarter. about IGBT to for expand had calendar the quarter, annual year our we in December expect offerings. appliance line next typical for XX% $XX line our we our as TV, soft to product Even home XXXX. threshold this IGBT may revenue With with product market we achieve in year-over-year the million Chinese calendar segment down

quarter total was but the by Supply the to Turning down Industrial Power which last XX.X% sequentially, year. by Segment. was X.X% and from It of same up X.X% revenue,

performance our market with with the gain of and shares We chargers. our medium voltage products, position superior to footed in continued are quick firmly

sequentially. medium With we higher segment further be well and to charger PD, high-performance charger us this of technology into as positioned and PD power expect charger adoption investment has grow Our voltage are enabled to USB quick quick to USB moving output. applications

healthy the product production quarter’s this demonstrated Lastly, Communications XX.X% our segment revenue. of segment. smartphone of ramp the year-over-year, It XX.X% September and for a by represented application, respectively. of Fueled and sequentially XX.X%, management line AlphaDFN battery growth

in the I mentioned Chinese smartphone slowing saw we earlier, down As overall demand market.

the offsetting production to in now have confidence the dedication new customer the past high-end at is new customers, brand, our this we gross including opened Fortunately, door global Chinese in nearly the our margin. pleased in quarterly with others, this growth slight quarter only sequential the success OEMs customer decline December has and to a at revenue segment. In we closing, of The including smartphones softness healthy ramp so expect the increased improved are of a strength and us. results,

the yielding Our strategic to a over effort years within is AOS few relentless execute force our industry. is results. transformation our on now past stronger

with confidence customer All and We in improvements with brands. resilience portfolio better and business our model. the deeper more more are these diverse global a armed of partnerships give us product

to XXXX our for turn Yifan and made build our plan fiscal have over up in With continue progress profitability We great call year will momentum toward will in the to guidance. now and the I and growth that, onward. the

Yifan Liang

non-GAAP of we and operating expected $XX gross $X.X to look or revenue the to Joint between or the charge million estimated expenses production pre-production Tax relating relating costs an charge of expense million. $XXX million. XX.X% gross On estimated Both expenses X%. million. this to million approximately to and be million expected approximately plus team. the $X.X expenses estimated joint to around to GAAP controller venture, million. million power the be million minus margin approximately Non-GAAP approximately to of million margin second $X.X to to ramp-up to Operating of expenses XX% minus and million compensation excluding include and ramp-up non-controlling range $XXX expenses $X $X.X to be $XX is be relating compensation minus be expenses to $X.X our digital of million, to $X.X plus be interest XXXX, to estimated expected Chongqing As estimated share-based $X Venture. $X expenses the in of margin gross is a of million. fiscal non-GAAP operating to joint costs or and the production plus range pre-production million Non-GAAP plus quarter estimated $X year in million Non-GAAP attributable share-based are venture million. excludes exclude expect be item X%. minus we Non-GAAP $X.X to forward operating or relating $X.X of Loss approximately basis, be

floor With As part questioning. assuming this will update our information. the not obligations open that, to up normal of practice, we are Operator? any for we

Operator

Stifel, [Operator your question Jeremy Instructions] from And from the of first comes line Nicolaus. Kwan

Your line open. is

Jeremy Kwan

congratulations and on afternoon good record the quarter. Yes,

Mike Chang

you. Thank

Yifan Liang

you. Thank

Jeremy Kwan

talk your better now before? My stand lead you been picture just a of it can they've guys where time, I first have. question terms that want little in visibility of the they seek where you about and is bit

Mike Chang

cannot but one before. you okay, time, tell can I our just lead that that thing as you I give as time lead long

Yifan Liang

still this is point demand now capacity today. Jeremy, at This And still overall our in strong our exceeding most applications. right of demand the across is

right allocation. now we’re so still on And

isn't as point. So, I for mean, the same quarter at situations us this prior

Mike Chang

I to – so all are actually, products cannot rule, because really times have give so sometimes you many we I you there. to And one. want The different, lead apologize okay, different

Jeremy Kwan

think sounds you and down come that fair the the CapEx capacity talk like is past you about Can quick in the about support. a where stands then, done the couple maybe appreciate have bit level there update revenue Can give that quite the us today? next talked over in quarters. of – I a you you can going it's it mostly I of capacity expansion totally this the I Oregon can guess terms at to at that. fab? That's point. It

Yifan Liang

sure. Okay,

reflected a compared the current We quarter the the primarily in reflected much Our capacity, our million guided our slightly decline has December of to mid-point – holiday $XXX current for guidance. capacity quarter's situation as revenue situation last in pretty reflected impact. backlog and

be season. quarter will holiday Next the

by So, point, pretty still the constrained at this supply. much we’re

get into when expect next the would year, quarter, March we So, we situation. similar a

Jeremy Kwan

last I give And the question before guess. queue, Great. up I

In help looks a fluctuated quite the less on understand quarter. to and operating just than Can to forward? see have you this like $X.X bit. million down going cash come there see terms what's has it that the going JV, burn nice things at it – you flow of to where It's us cash that

Yifan Liang

sure. Okay,

Jeremy Kwan

For the JV?

Yifan Liang

now mass our I we assembly a I right quarter. piece in September production mean, just small the for – yeah, joint venture and started and mean, test

we’ll expect next in it we quarters. ramp the So of up couple

For the XX-inch production view. prior in and up we start fab, then ramp of next calendar December and to expect the that's our throughout quarter year current

cash have In that the to its to It those we terms operating cash equipments. import fab last because million. $XX value-added [indiscernible] the was XX-inch quarter, tax out of flows, flow, of was pay

was most imported were So in June down June one-time quarter, pretty impact it the and the the cash that's the machines in of much quarter. flow so

the September So bit. a was quarter reduced quite

Jeremy Kwan

it's expect can point close and cash quarters? the coming going in breakeven that forward So we to maybe generate this even pretty eventually at

Yifan Liang

wouldn’t we’re Well, support. it that because but generate ramping started capital then of that expect we working cash, when it I capital. fluctuate need Generally some I expect working can would can our productions,

Jeremy Kwan

thank Great, you.

Yifan Liang

Thank you.

Operator

[Operator of comes from next Edgar Roesch Instructions] the question from Sidoti. line Your

Your line is open.

Edgar Roesch

and you're industrial with home I a hearing you check quarter. on from bit nice business? of wanted things slowing appliance little and in or leading down hi, in the charge side are the Yeah, they what your them and the about to distributors

Yifan Liang

it’s has we channel low even. months overall inventory. now, channel our I very of three below end the then had range. our Right Sure. level And two a targeted to below target in right low our now, target even range inventory mean,

our now So still supplies. at is right just by this constrained business point, all

new market home is mainly I in one will over housing so we the – there. be new kind mean appliances of the housing because home situations down, of in feel slowing mainly, China, just because apartments a no or China overall when started consumed in buildings – So, they house the have of lot appliances

Edgar Roesch

that. appreciate then I for Okay, other question And you. one

more? if things reach trying just or outlook I'm get two? can this long might at MOSFETs is industry tight in any generally, tight as not to on it as little within if point. is generally insights you understand as balance you a And when or Is have to see? the just it to quarter still Just Or a bit in is remain the

Yifan Liang

two – never too can It’s We you'll still see. to far, it’s tight, quarters, able But be okay. yeah. or one

Edgar Roesch

I mean… And

Mike Chang

[indiscernible] changing wise. we think order And are see but I can of what is course

Yifan Liang

I I most we mean people strong. the overall demand of very but across overall think are applications the for other own products still didn’t our

So we a very backlog now. right have strong

Edgar Roesch

glad hear Great, guys. to Thanks it.

Yifan Liang

you. Thank

Mike Chang

you. Thank

Operator

call were Omega there questions time. over further at Alpha for to the and turn remarks. back Semiconductor I this no some closing will And

Yifan Liang

AOS, Thank to you. This for concludes and your interest our you quarter. look forward to in we talking again earnings Thank call next today. you

Mike Chang

Thank you.

Operator

This conference concludes today's call.

disconnect. You may now

Alpha and Omega Semiconductor Limited (AOSL) 1 Nov 182019 Q1 Earnings call transcript