DIOD - Earnings call transcript Q3 2018

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Operator

Good afternoon and welcome to Diodes Incorporated Third Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today, Monday, November 4, 2019.

I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. ahead. go please Leanne,

Leanne Sievers

welcome I'm third Shelton Leanne firm. Investor and results Group, XXXX conference Relations call. Sievers, to afternoon quarter Diodes' financial Diodes' Good President of

Dr. Taiwan Vice Whitmire; of of Worldwide Emily President Joining Investor Officer, Marketing, President are and and today Chief Financial from and us CEO, Yang; Keh-Shew Sales Relations, Lu; Brett Mehrl. Diodes' Director Laura

they our to are listeners finalizing procedures the public turn company's I'd Lu, I are company Dr. preliminary, to independent call today subject over as the the the that and to review Before results customary registered announced remind by firm. like closing accounting quarterly the

unaudited company such, Form third XX-Q results are revision to its files and As its the until for these XXXX. subject quarter

remarks risks contained that forward-looking subject of the make Reform Act contain are the your of response may management claims Harbor prepared and statements Private and forward-looking Therefore for which to is statements additional in protection in XXXX. Litigation Safe questions. the to statements addition, Securities In company uncertainties the management's forward-looking

including the XX-Q. refer and differ in Actual we and the therefore and detailed to filings the a discussed more company's with today may from discussion Commission, uncertainties and those Exchange of results Forms you XX-K risks Securities

update addition, not to by required may of these represent to to or projections today, as law. In any the conditions assumes the except as may obligation as in performance, management's the November Diodes applicable estimates projections company's future no X, market change, XXXX. extent future

and which details. release GAAP and the in financial of will to definitions statements non-GAAP this GAAP call measures discussions and reconciliations non-GAAP include of management release press and in or certain additional items, company's terms. Included company's provide during the Additionally, press information conference

We throughout to income. income company's as net to refer call. during and conference GAAP release common net statements stockholders Also attributable management this the press

XX days to Diodes’ www.diode.com. will unable section relations available in the for of you entire recording the a website listen be at via this of time webcast investor to those at For call

President And and now I'll diodes Dr. Lu, Keh-Shew to please ahead. Dr. Lu, CEO, turn the call over go

Keh-Shew Lu

Welcome, flow joining achieved Leanne. everyone, cash record another increased and from you, Thank thank today. you financials operations. us resulting quarter profitability Diodes and in of for

month X.X% year, see last nine total as rate, while same a revenue at increased represent our growth was a notable the the consecutive XX%. it down over set time This approached more EBITDA $XXX especially Our X.X%. grew during XX% run is of period than served revenue. quarter new over earning the market to annual also record quarterly second and million which

XX% market, from above would well of as Lite-On remains remain Semiconductors. product take also on to to mix margin the gross update Further, our continue IC our proposed of which automotive in revenue product. end total of revenue, benefit XX% time like provide revenue, this brand at an as I as Pericom record to acquisition

are waiting closing’s As expected in Lite-On Semiconductor necessary delay the special China, and this time especially, proposed meeting at are feedback April U.S., XXXX. shareholders acquisition announced, and a from October Taiwan China. will at aware we recently that on Diodes’ regular of made the XX. of has any also date filing shareholders In the issues approved not in government a

our servers, our Long-term, believe inventory adjustment with To conclude, navigate year-end. are I approach as the I'm the that carefully very as industry seasonal and pleased of softness year-to-date performance, we we typical connected continue car, positioned areas, growth high-end such ongoing delivering Diodes and high as to as with content remains well well as an XG, storage, in gains IoT. profitability on growth consistent

quarter fourth to financial detail. guidance me discuss results and our With the our turn over in call Brett that, let XXXX now quarter third to more

Brett Whitmire

everyone. Lu, afternoon, good Thanks, and Dr.

the on as would review line comments as As more press I well each of refer our a will year-over-year of to today, you the change detailed review items of my my and the focus comparisons. results, financial release for part our sequential for

XXXX. third quarter in revenue a or a for the quarter million for the million to profit quarter compared of Revenue XXXX of was million Gross remained prior compared revenue. to record record $XXX million third quarter $XXX XX.X% second or the XX.X% $XXX.X of the $XXX

second on operating operating excluded and GAAP GAAP $XX.X XX.X% a basis, XX.X% million, quarter with $X.X revenue XXXX XX.X% compares This XX.X% million, of third of for expenses. revenue million basis. expenses million asset non-GAAP the non-GAAP $XX.X revenue $XX.X revenue the XXXX of of and quarter a expenses which of intangible of of related in or $XX or or on amortization were million, acquisition or

to Total $XXX,XXX the quarter. of $XX,XXX the taxes $XX.X income of and million of by $X.X offset amounted other currency approximately interest the to for interesting losses. in third including expense previous of $XXX,XXX before in million million other interest $XX.X income compared and largely foreign a XXXX million $X record Income non-controlling was time, quarter, quarter

the or net the was diluted record taxes, XX.X income used third XX.X%. shares. to income share quarter in XXXX million, the third $X.XX effective was to approximately of our rate count was Turning or share net $X.XX second million, diluted compute diluted to XXXX. quarter The per tax GAAP third per $XX.X a compared income quarter GAAP EPS million the of income quarter for $XX.X for of share, for XXXX

quarter of for the per of third Non-GAAP million of related, second $XX.X $X.XX million, net million, compared acquisition or quarter to or share, non-GAAP prior asset quarter compares intangible costs. net amortization excluded in the of XX.X% quarter. EBITDA the in non-cash diluted was income or to revenue $XX.X a in $XX income XX.X% of million, $X.XX record revenue, share $XX.X per record diluted third tax or adjusted was $X.X a net This which adjusted million, the XXXX.

$XX.X operations quarter third flow $XX.X in $XX.X third million long-term a XXXX. release, which GAAP adjusted GAAP details. the included net from was cash EBITDA, to our debt. Free $XX.X for capital and additional expenditures reconciliation of includes income generated We've in to of the million, and net million, income, $XX.X negative was earnings provides flow net non-GAAP million net a cash a million income for which flow quarter pay-down included was which of Cash

Turning to the short sheet quarter, approximately and end investments equivalents, portion was of $XXX the million, was totaled cash at plus capital and working debt $XXX the term current $XXX third cash million. including balance million long-term

and last in in or XX expenditures materials, the X% inventory in quarter $X.X of and amounted in to inventory on at revenue compared inventory million, revenue. terms XXX of XX which X.X% inventory of to Total million of was to the total goods increase $X dollars target basis to goods increase a approximately increased in in quarter. days the in reflects days to $XXX.X In raw the quarter, third quarter, end the cash quarter, XXX, third million compared million, increased process. $XXX,XXX within second our or a XXXX $XX.X a Finished for X% quarter work XXXX. Capital finished model,

to turning our Now outlook.

market of quarter, revenue minus which million weak continued X.X%. approximately an fourth plus overall at of our in $XXX expect the the be X%, or to Even served the and For we market. represents outperformance environment annual midpoint growth

margin to be minus gross XX.X% GAAP expect X%. or We plus

intangible to are which related expenses, assets Non-GAAP plus approximately expected adjusted XX% acquisition are be amortization GAAP operating for of X%. revenue or operating of expenses minus

approximately million. to be We expect net $X expense interest

plus EPS to expected income or minus is to tax to diluted anticipated calculate shares the are XX.X fourth XX% X%, be Our be and million. used for approximately rate quarter

Please of in not are note these that adjustments and estimates. included for accounting purchase Pericom non-GAAP after tax, million $X.X previous acquisitions

call over the turn now will I to said, that With Yang Emily

Emily Yang

Thank You, and Brett, afternoon. good

by demand XX is Looking quarter, and third we weeks inventory quarter more revenue remain which in in in was where strong expected of was range to Asia. within XX normal weeks, down Distributor driven closely to near-term. at revenue, terms up our of POS the

sales America of Asia the quarter, Global North and XX% represented X%. Europe for third revenue, XX%

market was our revenue, of once In and XX% of our again XX%, communication at end computing terms of largest automotive XX% representative industrial XX%, XX% consumer end revenue. markets,

markets gain this for market, as another Now, content area key Starting automotive revenue details. traction continue our and in in with the end me Diodes. let focus increasing to reached greater record we review

also portfolio junction transistors, TVS, sensors. introducing protection MOSFETs, products, Diodes, LED products expanded line, Zener including exciting multiple mouse by We SBR and new bipolar product our product crystals, for drivers,

our XRQ grade of frequency one family targeting qualified demand crystal AECQ applications released XXX auto to recently the environments. requirements, also accuracy Diodes under harsh

type assisted Diodes X.X USB Solution and Additionally, signal continue to C and for cluster, automotive solutions integrity infotainment PCI in growth applications like emerging leading driving information. signal maxing Express see instrument and

of with of for is choice has buffers to support. supplier fact variety designed AECQ is Express transmission ambient telematic backbone navigation, to X.X XXXC control clock to the the systems. Diodes two only with products PCI and a protocol. Diodes PCI and In units need engine address generators this infotainment clock of Express offer PCI well ADAS, the positioned become grade temperature support interface Express the

continue market, vehicles system. a range covering see battery infotainment, to success suitable automotive SBR our hybrid power This in of Also for the with MOSFET as and in telematics as and train is applications technology, driving, well wide product designings. ADAS connected conventional we electric proprietary management

phones for saw In equipment new as drivers’ and gate such ICs tablets. for addition, car charging in we wins portable system design for our

and introduced revenue and our systems. wins We applications. filter air multiple array in product multi-chip growth LED and Diodes using test rear in have also ADAS saw also engine and in system cameras light diagnostic our our driver from TVS products for newly design growth

our many industrial, fence, such momentum as largest as win our market DC applications power and e-lock of including appliances as across supply, In with continued design representative tools home end applications. metering, activities new power well

strong pumps, irrigation bridge rectifier Our measurement glass product systems and growth and experienced including system. preservation rectifier in process applications mixers,

discrete continue devices various in of and for quarter IGBT. where as Bipolar be driving In and our the industrial lighting used increased in the voltage revenue regulation commercial applications, gate transistors for they power LED for drivers are and applications. MOSFET often also industrial mode demand linear to such third

our our we by in expanding position package activities PC industrial to with market Additionally, low switch. expand continue PCI power Express X.X designing

position Diodes Our performance [ph] in process expansion leading small com applications. gives port the link low power a

our seeing video the medical image to Type-C for monitor We are in transporting switch equipment also C crossbar USB adoption interface. into with over over type-C design USB-type HDMI

our almost introduced It XXG switch X, during quarter second. high the Super an to USB universal PCI universal gigabit such Express signals per second per also latest X.X, XX Thunderbolt routing to gig as Diodes provides and protocols speed crossbar supports KR. based solution speeds that high XX up Speed the

is of interfaces IoT end protection multiple position design with devices. protection wins across third confirmed data more industry, ESC the Multiple in applications important quarter the ESC Further in adoption in rapid links. speed becoming such more and high Diodes leading for

PC gaming strong market IP saw and applications sequentially Lycos for CSP boost consumer, market. protection both continues to panels. for phone applications, and smart growing continue polarity rectifier devices speakers, GPP product in and leakage wireless Diodes panels, area the battery for this chargers, monitor new such Diodes reverse year-over-year. and protection to various be quarter momentum Schottky power, Also for Turning Low increasingly We notebook SBR increased panels, the used [ph], life. modules to battery protection circuit product panel TV mobile gain in in traction panels as to portable pack are like

design higher baseband In see and expansion applications speed, units power CPE, radio to remote communication cell, reported base as the the like units XG in our improved market for bandwidth density. station, small of last products we continue increased quarter, win and

of switches. portfolio. saw Power management, and actively a engaged has this clocks connectivity products MOSFET wins XG in key density DFN been for applications comprehensive discrete, power XG and footprint one and USB We including design and small concerns in is for CSP with market smartphones Diodes also re-drivers the additional

growth low our for communication from GPP Also rectifier. mobile we Diodes, Tolerance handset Tight voltage leakage in see signal and Zener products applications fast the switching dials, high diodes revenue continue market, fast like recovering to

driven our area, In addition, applications. USB mobile in adoption phone type-C by to products be protection our continue key growth

small high computing TVS Lastly fast applications in market diodes. current Diodes revenue rectifier Tight our in the switching for signal Zener and LDOs, notebook PC growth products, Tolerance

maintain a to position are as well they continue CPU solutions by integrity signal recognized partners. leadership Our

notebook in protection for connectivity engine seeing and as product big the applications, growth this we adoption are the line. next With from our PC type-C USB of area Pericom product and

comments, channel his across record of IC testament achieved selling opportunities Diodes is ability mentioned have once quarter leverage from another our base. of Speaking able to achieve product sales product, as again global cross customer to our a which to in Pericom line, been and we Dr. Lu revenue this our we

data Power We for center. power switches mobile our over also our in and PC increasing design server and breakdown Ethernet, achieved voltage such combined as low applications strong revenue applications wins with products growth for high for

our quarter and achievements year our record which the indicated proposed content and customers. increasing additional third outperformance benefit further acquisition to XXXX, summary, approach evidence execution capacity total further solution fourth at our expect of expansion In our broaden key we well of testament of Diodes’ the guidance, growth. results terms served packaging is opportunities Semiconductor quarter sales from a to to as grow the look in by our support over our as revenue to forward Further, further as full by markets. future X.X% is Lite-On the of continuous We and offering, in product consistent wafer afforded of

With floor the to are open that, now Operator? we questions.

Operator

Securities. with Instructions] Gary [Operator from first you. Thank Wells Fargo Mobley Our question comes

Your line is now open.

Gary Mobley

point gross basis pricing margin start quarter-over-quarter. gross like-for-like asking curious Thanks basis underutilization to about a products? assumption for of Hey, to that the the about how with fourth know I'm decrease for manufacturing everyone. is for on Wanted XXX of versus quarter expected much my margin question. taking to

Keh-Shew Lu

coming under utilization for XX% wafer AT Gary majority module utilizations. AT and to and X% We for X% of now, another Well, probably fab. actually go is from down for our could right XX% probably is we

ASP actually Our quite stable. is

to kind we the remember module the modules. of quarter would at as to same about X.X% rate. X% X% per in we per the quarter, ASP looking X.X% down probably down And You that's are use our

at and within quarter view in so automotive in have for reason high third all I IC and products. the basically Pericom - really they automotive IC the from ASP GP But model can the Pericom more. and also commodity point is from But for if of look be down a record the the

commodity but the - our go within is GP kind from So, of model. the we And yes will product expect the going continue. commodity up that higher area down, or product ASP therefore, therefore

Gary Mobley

Okay.

ask what calendar fiscal first question, So follow first of typically given about in seasonal would X% maybe sequential trends you of the just the quarter, bit calendar and about decline the a want timing How any quarter to I see to whatnot. a demand Year for seasonality the revenues you and year, up relative similar revenue? Chinese call New today trends or to in know you first

the basis. would a OpEx basically that years, whatnot, quarter you of on with in OpEx, trended flat show then respect quarter think to the And taxes in one but and payroll because you've would sequentially an first increase recent in first in sequential

we call you would how So as QX, into Brett? the OpEx change look

Keh-Shew Lu

view Okay, Gary XQ our of from seasonality X%. is a typically a point

not And of can of it point about that of X%. actually operational become it's cost. of to under so expect From this But kind sure drop coming from we market similar year similar see to more view yet. the kind what royalty we drop, costs but the to point view probably we going are that from

July, the in have employee - indirect from the operational GP, and one from for costs of point would is salary Year, in our within that for that Now or - typically the operation of more then it’s January is the is be view operator yes it with manufacturing, the that we of the engineer salary so and July, our direct right July in Xst point then or in for Chinese close the and to more which New like managers XQ. X

that slightly. So, cost operation up operation would one be will down, yes, be

Gary Mobley

Thank you that. for

Operator

from [Operator Research. Sean Longbow instructions] with comes Our question Harrison next

open. now Your is line

Sean Harrison

the strong on congratulations and everybody Hi, results.

Keh-Shew Lu

Yes, thank you, Sean.

Sean Harrison

at for the look the the sequential there the terms December better worse verticals in that you change implied end perform guidance or to of you are If market quarter, anticipate decline? any sequential than

Keh-Shew Lu

in XX% XX%, performed Pericom our be we continue believe and strong this record. going and still far, is We and we have still year, automotive our I and so the even target IC quite Well, okay. to

third in quarters. So,

will still I a to a expect I and reason in see So, strong. weaker Pericom automotive in very we or don't continue trend go IC.

Emily Yang

Right.

a little So more. let just add me bit

So not overall it's definitely automotive growing, quite is slow. market actually and

focusing we've on. of from the majority been So coming is really really expansion coming that content the growth from Diodes

growing overall, result years. really few been But pretty So again, our focus is overall the positive. definitely has last not positive, been driven for market on the focusing by is not definitely that we've

Sean Harrison

the trends, the to just guess, not a in words put but... I and takeaway would little within plus, seasonality, maybe is communications mouth, trying so, your areas would PC market consumer electronics, be And be underperforming weaker

Emily Yang

about assume revenue Okay, you're I guidance? talking sorry, QX the

Sean Harrison

I Correct. if... wondering was

Emily Yang

Okay.

Sean Harrison

end What would be maybe the markets. weaker

Emily Yang

Right.

our actually So mainly if business our revenue at is inventory our better served especially our overall actually North guidance in is down, our right. I is in think overall than by driven POS our XQ Europe usual channel inventory look adjustment, and up But you market, more year than performed we America.

about year much even still estimate growing peers. whole still our which was So our guidance, QX is than X.X%, stronger with

overall, very think, look you actually confident that shape. I we're if in business, at are good So the we

Sean Harrison

helpful. to And decline very as nice the much is follow-up It's we see XX look which decline? further to how here, out then rate has continued over to that can tax XX next months

Brett Whitmire

to expect down full fourth we're that would what see momentum continue continue to gotten quarter haven't It’s model momentum is, hard go continue there. yet. into and We've that some I see into and been a toward as entitlement to to working we expect exactly to we Well, say guiding but of would improvement to I XXXX. that

Sean Harrison

cleared else Okay. or is one here approval to need the the that big the And closed is get I regulatory that missing? just then deal is there to if in may, China I'm you see last something get April,

Keh-Shew Lu

it just will is to We consolidate just that they're China for [ph]. be may they us item to timing. the see going able we not believe don't the be down it might expect. turn the approve antitrust AOC key We to time it

So that is the key.

Brett Whitmire

We us. a asked. matter working just for and that's this keep the basically information. handling to trying timing are that attorneys everybody our process, that. their of provide all updated we're from on addressed just through We understand we been It's what everything That's

Keh-Shew Lu

And requirement. per we applied the

So we per take requirement. apply do order just government action, order,

Brett Whitmire

right. That's

Sean Harrison

thank Okay, you.

Operator

like time. the I'm not call Lu for Thank further I now this at turn back showing any to any over remarks. would you. Keh-Shew further Dr. questions to

Keh-Shew Lu

Thank now you participation you call. may disconnect. Operator, for today's on your

Operator

today's participating. this Ladies you conference and gentlemen, call. concludes for Thank

disconnect. now may You

Diodes (DIOD) 4 Nov 192018 Q3 Earnings call transcript