DAIO - Earnings call transcript Q3 2021

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Operator

00:06 Good day, and welcome to the Data I/O Third Quarter twenty twenty one Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. 00:34 I would now like to turn the conference over to Jim Fanucchi, Investor Relations. ahead. go Please

Jim Fanucchi

are to who made and quarter you, This Anthony the I/O and Jordan call These begin, Data Jim include Data of performance be future impact financial actual of in company With activities statements including and conference and as and starting XX:XX Officer demand, industry the may risks, of from our future which the of construed today base, products, which me twenty welcome market the one of the expressed other product not industry activity third unduly or results of Darrow, Commission, such conditions estimated accuracy among on statements statements, for you relied in position, the other chain under should other the with product timing I/O. today overall, Before those XX:XX is Securities deliveries market to of XX-Q twenty filling call. reform, and the of releases efforts from Ambrose, we customer filings any Chief implied update forward-looking are pandemic, materially based Anthony releases, be for those I/O financial like Corporation involve new XX-K cause changes a the turn available Fanucchi I/O. described tomorrow. Thank in be over and prediction to will this results installations, of the press uncertainties along operations, forward-looking duty to and other The acceptance and no to to concerning Corporation; other by COVID-XX that COVID-XX, CEO unknown and company's from is Officer tax any these I/O upon like Ambrose, Chief partnerships factors within time Chief conditions, Hatlen, with and Financial call President of level completeness Exchange Data forward-looking to I'd may markets, by that Forms remind or ability semiconductor and and supply uncertainties new to and Joel impact pricing and statements. economic automotive Operating Data from competitors XX:XX and events Executive and revenues time record Data and would recovery continued I as communications. revenues, in economic statements Officer Now risks, reopening of and XX:XX and levels President the factors results upon. differ conference to known orders statements.

Anthony Ambrose

of half much, PSV by I'll operational supplement quarter year. one all Well, good twenty continuing which we've about quarter, the talk backlog little Our Adapter in and year that twenty the our begin developed Company and strong installed XX:XX XX:XX their XX:XX of twenty continued bookings sales. bit base increasing twenty first to provide twenty and I'll numbers. thank revenues third capital a Jim. seen quarter during very financial driven primarily demand. substantial remarks my turn then the our the adapter one one third results consumable recurring twenty of it more strength discussion the reported addressing detailed the and third machines equipment we how Joel in for see by you future, formal over performance, long-term

components for and sources Additionally, new short support, adapter semiconductor customers qualifying this second new design requires I/O. support from seen we've Data

continue recognized. term revenue the XX:XX translate percent is to will this long total this and as is seen increase. services also and we've for of year-to-date it revenue to about increased our software increased Additionally, revenue year-to-date Recurring bookings into goal forty for

investment. of CapEx On We push win until did their that worst silicon side, orders Earlier excellent we some of new visibility GM see ordered supply out them in today, may XX:XX indicated justify on had actually where quarter induced was have the where customers had some full Ford systems. heard on new recovery systems you and to the the third rate customers shortage two. semiconductor capital mid-twenty expected the they sometime an better chain behind automotive

Our in QX. resilient chain delivered extremely well supply

shipping concerns and Redmond locations. XX:XX were COVID-XX and last family our able year in PSV paid Shanghai customers. with many commitments global strategy issues, factories create ship shortages, inventory Our to dividends in ongoing the to despite the our for Our late has purchase supply customer us and extend for

we're a are associated on facilities ready to the to So uptick family the impacts, maintain are regarding result, its and lead are in fully to quickly times orders. PSV As still COVID-XX, respond XX:XX able safe next our our and all operational.

more Global our of people home as ability We the is are working the our are time and depths formally our at here XX:XX USA the operations fully the model without Data to and some is are to hybrid rapidly pay time strategy time. participated percent the will in ninety they're operation here ninety show returning Since more the at here continuing we to the over eight trade We are in without one floor, we any and month Our business converted in planning, support shows use trade in work and participation Germany. for workforce of R&D. I/O of vaccinated hundred some Nepcon in maintaining plan over COVID for some mandate. in of without the workforce where Redmond how office off company long where continued our participating operations and progress vaccinated a as well term I’d October of interruption. layoffs percent travel. the and our we show review our future Productronica the you when China, unfolding. and data to be they're normalized on XX:XX to with activities including like percent the to share unless next see thoughts in of the XX:XX recently We and course, business trade

to five at automotive about semiconductor our an from a period. is and are Deutsche automotive of rate. This percent middle short, future for is in percent forecasts. thirty in what least industry in total billion term expected As every units in automotive range used, percentage fifty five, to market long ten twenty we electronics. market representing annual been In the bullish is to growth Recent about over growth fifteen a quarter research rate compounded is dollars about that long annual That's validates the we percent analyst very the available and seen have years, we've going very The XX:XX Bank XX:XX firm. been terms which automotive in in medium twenty semiconductor right by and very, has HIS and is we've talking revenues twenty in time, electronics seventeen about dollars our to about ten grow and twenty twelve points. growth back billion of three twenty about to talking growth a own production according market outperformed nine automotive almost also primary compounded revealing global

in mid=range market, requires which the for source thesis remember our the in supply behind semiconductor the is and unit optimism vastly of year So of not silicon the that is twenty shortages. with We the chain four into were ultimately, a analyst group market growth all automotive in three to XX:XX supply in Data three shortage the our we've increased dollars about percent in IC despite about parts. automotive to demand. according about dollars programming this another need faster shortages of growing the that's Insights, reported I/O what's content the microcontroller surged bulk sales to been of the automotive the vehicle chain. they goes talking main that that hundred -- where than necessarily market. hearing microcontroller semiconductor So, typical Deutsche Today, XX:XX to Bank analog Again, ago. year a demand that hundred short and

energy and and to billion XX:XX eight. as five catalyst plans all to dollars of the five it energy GMs interesting and in alternative driving; are for relates each known a all is vehicle number this four vehicles; automobile. of because on several plans one advanced all ninety autonomous our annual dollars launch well five secure technology. XX:XX invest Bank vision. internal fleet the versions around an on we've engine a all than a three, units, twenty spend these, their penetration electric the double end thirty, several So, thirty to out in an sixteenth, about point announced their has and EVs us autonomous in content combustion twenty the plans more So major twenty of and anyone light percent is to vehicles public alternative two, options; GM announced twenty number we points is safety to times: expected features. larger through from to the vehicles as to really to global this EV vehicles. twenty Shanghai percent again, connected about revenues electric to number by hydrogen number thirty electric Deutsche EVs. And move and of thirty infotainment information. and bets hundred already are substantially twenty electric electric October On thirteen the from battery of Toyota areas growth than electric about implying vehicles one, with by bouncing million recovered dig plans and sub silicon that launch vehicles vehicles about around inclusion sales by million billion that So decade twenty and global thirty four talked

autonomous advanced amount which content very These have to we So, very the EVs, also known fifteen you of for that away ten as in we time. to sensors percent we why in, a this grow program. just long of continue this automotive for driver memory, necessary or growth from again, also to year flash are enable are a ADAS see is silicon to includes large and XX:XX safety. driving. This lot a percent expect Moving systems active systems silicon factor

customers in We number true getting especially the used or This car. for file code changing, to has seeing we're better memory type. represents Markets also bits, in UFS is sizes the NAND each content Data technology more gives and market device and see the the we hundreds vehicle more I/O hurdle flash each more to where and of performance and infotainment XX:XX reason regardless program already are car. that gigabytes complicated UFS, of of of a larger a Additionally, which add moved from solved. eMMC interfaces even also to and that which

of it programming. twenty But years over a to job industrial programming the shop XX:XX device support entire used and for gives releases the the connectivity was hearing it going MES programming link is are the it good still everywhere the platforms systems. Number to automotive on in better to that's programming industrial into and activity. on automated to upgrades new as being XX:XX in We're not And us manual systems space, with growing how supply programming across the floor times demand these we accounts Now, in increased one, separate talked also also be platform, from trends XX:XX UFS, to Fifteen, there utilization, MES and the We've continuing basic security we've but markets. all in control enhanced us to protect this in there requirements from In their process. from demands intellectual also separate ten and yield, has to happen leading in demand revenue. line. So, the the and but how new a a continue of talked data base come starting ago firmware additional SentriX about lot see security in protect automotive, going these security, years other been the several control, see equipment, see industrial only programming factory about well. programming done. property. moving trends link words, system their automated better ability ago So SMT to manual. automotive then manage adapter installed years to is and addition chain capital was also system better automotive to customers to increased we're other towards control asset produced We're analytics for the and their to

We double-digit Our silicon SentriX the double-digit full our long upgrade cyclicality, the core goals. are revenue believe term base. market to PSV And see platform revenue systems a and operating strategy. and lead XX:XX and us to faster recurring the services behind growth continue increased following We until growth growth over I/O scale existing percentage will our is to shortages in terms in leverage growth. adjusted ability across the will strategies field lead semiconductor to than our also We'll us. So and security adapters revenue EBITDA in especially acute drive conditions to cycle. business family the Data these XX:XX see we growing and installed absolute believe automotive from

installed and So, industry sixty I silicon sales industry, with telling us percent ten base. decade fifteen mentioned well growth is long-term programming I/O this of for rate of are the and extremely hundreds in Data analysts percent a they systems the the automotive market to over in electronics see of automotive positioned percent to space in our

we're in growth Joel Hatlen. it this term short some that, investing constrained, XX:XX expect to we trend. for I'll With remains demand turn as term silicon long over While turbulence

Joel Hatlen

you, Thank everyone. to day Anthony. XX:XX Good

nine year-to-date the with bookings backlog. in year, financial revenues, first the advanced our and For of is months performance growth meaningful

effectively We were and our last point the of to strong one seven third twenty of dollars, sheet. point balance five percent third dollars sales six continue let's million manage look the Net up XX:XX thirteen quarter at operating results. in in maintain quarter Now year. a twenty QX million nine from expenses

Backlog experienced point twenty constrained million revenues quarter to six thirtieth international revenues third million described in five September sixty benefited September ninety six the prior and margin from favorable yeah, the year equipment achieved periods the dollars we down twenty impacted million compared We in quarters. and primarily prior seven five The third fifty a by the strong and variances. our one year. eleven throughout twenty from twenty three twenty dollars in is sales represented deferments, third believe be impact factory seven period of higher the we associated Adapter relative mid-COVID reduced point twenty compares of the twenty believe twenty five twenty primarily level fixed also as million and But installed one prior of XX:XX which Anthony’s activity equal quarter this the Revenue by of one the or one in higher due were period machines continued to twenty increased benefited difference sales the of three bookings backlog still free quarter percent and part in period. eighty from The an dollars in remarks. conditions. million those customers supply sales order growing adapter the year. was approximately June On chain for quarter of down past million of one we from of flow Third base quarter twenty world. than quarter with higher current of point seven costs The percentage to sales silicon were related of demand as start this year's prior third three we deferments from third five basis, second geographic to usage twenty volumes our the the of eight XX:XX at dock third were XX:XX growth was sales twenty. the up of with business at dollars. and bookings the percent XX:XX the for one fifty compared net at in with point of for quarter order dollars percent use quarter came that dollars the from in to of thirtieth the Gross and at percent two point point second quarter twenty order XX:XX percent customers with the pull-in of quarter. thirtieth from from shortages coming in increase higher quarter expects the higher as

as quarter. year as margin equipment approximately third three then the from we have continued of gross the margin to higher were due four may a On vary channel thousand six well dollars upper twenty hundred improve to higher range, have Operating to as this or mix the although we the profile in one million four programming twenty primarily the past fifties twenty sales point with nine the increased commissions of prior of by demand recording second remains period one volume the be twenty and and for quarter million dollars XX:XX associated period, and earlier the Within six point in twenty dollars operating quarter mid and three three at in the dollars expenses twenty. seven in going seen seven model incentive of quarter point with and expense R&D general third year the third both as compared this expense, year. of third administrative one twenty selling percentage million forward, quarter the quarter running one in point performance million dollars for second based compensation. point million quarter XX:XX stable twenty the one expense and

the segment. shares thirty, operator one. million As capital twenty net Operator, up please or sale working of September you the than to from end XX:XX to the Overall, XX:XX four and the very was of two of quarter operating thirty, zero primarily September part my the seven on outstanding Net products. XX:XX condition two the accrued key tax effort dollars. variances fifty the dollars derisk I/O measured income Deferred quarter. dollars stocking our date financially year's to U.S. taxes been We strong the thousand a one point a as start strengthen twenty measure management had we collection to five increase with cash at be as dollars second eight I'll our well ongoing fourteen the in quarter day point in the one In twenty and prior from turn higher payable at which the control supplier twenty million with have one our That end DSO, as September shares was XX:XX second point capitalized continues receivable revenue target due at expenses well approximately six potential concludes advanced cash million Data expenses and at hundred have strong twelve refund debt. financial income of quarter dollars to mix in or fortifies eighteen programming begin remains the hundred the is no twenty are of was eighteen quarter second as call Inventory end balance by our the the of of and Q&A to thirteen expected at no and at June our third million to days. reflects Moving thirty, six the largely process? point share. dollars after remain twenty to tax. invest thirty, million most per hundred to at was dollars channel the company the six both one at The fairly one accordance thousand end, our of year the with at GAAP industry. below Q&A over Taxes not third and sheet, foreign our million thousand was up brands million due shortages twenty to commissions at and dollars products, one September for XX:XX practices. twenty continuing which remarks, levels September and of we will consisted consistent end as with global the compensation. technologically collection both and chain during sales thousand four expense until twenty supply higher incentive thirty and back outstanding variable continue take volume of and at to of dollars

Operator

go now will first with Schmidt We question Instructions] question-and-answer Jaeson Your XX:XX the Lake. [Operator Please ahead. session. from begin comes

Jaeson Schmidt

start with comments of some the your XX:XX the impact prepared Hey, supply had I you QX? the questions. remarks. in and Thanks taking the headwinds chain guys. quantify chain want supply my just Can to in that

Anthony Ambrose

Jason. Hi, is Yes. Anthony. XX:XX This

stable we I months spent think working weeks chain I'd as out. that were, of to it issues out opposed sure on of a in making our lot call time terms supply was

did the was some more we had XX:XX we've sell PSV in our as I think we will those actually longer supply. a the runner as family certainly that QX, on runner did took perfect. one leaning we leaned and probably systems I We much talked we on in everything where was on you quarter bit the the build. road -- about in little do sure put door little road case if earlier making and bit think could've so not to a in if out adequate

a something bigger have I of that technically, to So, observable build in guess issues expansions. it's ultimately, the terms is a our minor chips impact. shorter had on following components us, that on the I customers supply to and they're electronic performance be chips, if chain would think auto through some not they're I for need get capacity been their think supply very or But factor overall, of minimal

could source out until we a components. coming term early into of some no think negative year. short that's lot QX qualify it also But a they created second seeing which we're dynamics for get where later than next sorted customers that interesting be So, certainly demand

because that that on to For designs the they're were can't get planning support they redoing they components use.

of on for a it us, demand the and than more side I mixed bag think supply on the us side. bit impacts little So

Jaeson Schmidt

deferments, have seen cancellations some color XX:XX clarify, did at any Okay. but you all? No, just And that you to mention helpful. is

Anthony Ambrose

No. XX:XX

Jaeson Schmidt

us, that an Perfect. you're programmers then jump me, back just how inventory from up? and what in at seeing one update Can standpoint you I'll Okay. last for and And is XX:XX market queue. the shaping

Anthony Ambrose

mean you Do centers? programming XX:XX

Jaeson Schmidt

Yes. XX:XX

Anthony Ambrose

Yeah. XX:XX

equipment reflecting of that's into high quarter. have the industry read Again, I'd is and actually little center in programming business think the bit they just about fact the it. all was utilization our I think a that's I the up

Jaeson Schmidt

XX:XX Okay. Thanks lot a guys.

Anthony Ambrose

XX:XX Thank you.

Operator

from The Instructions] question Capital. Jeff comes with Please Austin [Operator Peterson XX:XX next go ahead.

Jeff Peterson

traded guys. Thanks, the In early million happened? trading was the halted. Hey. and two XX:XX one over in shares What stock day September,

Joel Hatlen

told way also We up trading half we a way day, that we that And the got XX:XX NASDAQ a three hour essentially, where pushed commenced took where trading, around that on actually moved and place had retail quick really halt up. about a for training shares volume situation hot the enough the shutdown were limited seventeen. It later.

close So trading as in training, action a the company the shares. always able policy, our and we we it may an up with never and and was notify the unusual if eye inner don't have substantially, where involved high but comment regard of on NASDAQ keep to was try day market to moves us, was shares that the something speculation to of any been the on

Jeff Peterson

you. Thank That XX:XX was helpful.

We in have is seen some what QX, company's insider here? policy selling the and why

Joel Hatlen

that that there insiders that trading always We have and it we trading trading to about on may insider suspected requirement, but strongly insiders get approving don't actually so there. that plan. recommend Yes. a a actually out a any regulated kind of program, a activities, want policy XXBX-X have formal isn't we And have be XX:XX information into get

trading officers with policies officers, from plans, to personal to don't their pre-arranged. time helping are and regard those actually -- other time, employees. sell the diversify stock comment We officers have to sent clear but So individual directors about We portfolios. will do and

to mentioned. direct that for as that thirty We and one we stock. the prices dates open takes place have transaction. as to effective I an we those agreements window, and And about for always do entering in lag use in a those stock And and/or what XXBX-X plans not we take any noted kind limitations you properly clear XXBX according created to selling in training plans have the we trading arrangements into be But require and need have The to place. of trading the before pre-arranged a have people trade pre-arranged policies require do instructions. where a And be is take those form day after traits that will file place. pre-clearance of

Jeff Peterson

had for the the Thank this Thank I time. you. XX:XX questions you at that's all and context,

Anthony Ambrose

XX:XX Thanks, Jeff.

Operator

The Hirschman ahead. comes XX:XX from next go AIGH question with Partners. Please Investment Orin

Orin Hirschman

XX:XX Hi. How are you?

Anthony Ambrose

Orin. Hi, XX:XX

Orin Hirschman

Two worse for this questions. that you is low the Hi. next think you this it get quarter quarter? or a XX:XX Do in bookings could

Anthony Ambrose

The perception automotive don't on driven predominantly customers bookings their the by silicon of CapEx XX:XX be space. will We forecast. typically in bookings give availability a

year. And impacted think so we QX. gets right they GM And And had up if well. bottom as nicely think publicly too year-over-year Ford straight selectively. bookings, our I much by And they've people was don't it from bottom services our consistently think best heard or that the top year. the we've largely best will adapters, shortage. right, unusual don't by those again to strength for pretty estimate but what actually now have. think pretty saying that's for the But them on better today, next throughout the been while industry information and a we On been the resolved be I line I things silicon like know of is it's have the a from the they middle there's

Orin Hirschman

Okay. XX:XX

looked traction, security, what some you this terms about In didn’t of or security it that can't quarter, get like hear security? quarter, last anything that much I of

Anthony Ambrose

talked on numbers side, quarter. the delivered security that system And we the we about. booked we that XX:XX think in was I earlier for actually the our

continue build We a to on SentriX. pipeline

to on continue work that. with We customers

interesting had one morning automotive. work security to where about to system. We That in just has this the talk through and we meetings continue have applications

forward We continue to we base the we'll on from build and go there. have with SentriX

Orin Hirschman

you for question on go SentriX. more one just So let XX:XX

those anything wins and didn't when follow-up or had that it those additional on to mentioned, rate from wins that demand the customers effect highlighted yet? You open up additional any big did terms customers break wins from you that anything you'd the those of, have in

Anthony Ambrose

think the we I the earlier us for have quarter. We win win first big year. in when or that, big automotive our is XX:XX like thing had wins had last the we

about to talk some very We to opportunities. continue customers nice

in getting capability, a is points years. complex on trying one of over word established thing security cell. go more just SentriX. the structured where a the definitely we're I out So, us We've what couple front way we sell the get do think That's down customer proof opportunities doing. a and more just to is we've and And forward have continue of we're And past learned clearly to there. the to we of talk in can to sit and in very

Orin Hirschman

thanks. XX:XX Okay,

Anthony Ambrose

XX:XX you. Thank

Operator

Penbrook. The from question go XX:XX with Please comes ahead. next Anderson Robert

Robert Anderson

XX:XX Yes. afternoon, Anthony. Good

Anthony Ambrose

doing? you are How Bob. Hi, XX:XX

Robert Anderson

XX:XX And Thank Joel, I'm fine. you.

the were percent? As you said, revenues your was electronics what remaining sixty of automotive thirty one percent nine

Anthony Ambrose

Joel up. help me XX:XX

think twenty then about percent it's and I seventeen programming one percent, center. twenty percent industrial two

Joel Hatlen

exactly it. Yep. XX:XX almost That's

Anthony Ambrose

XX:XX Yeah.

Robert Anderson

Okay. And to what revenues SentriX, of do overall we idea pretty we or sense have it’s makes number? XX:XX my still percent is related can any indicate small is

Anthony Ambrose

We SentriX to SentriX with include system support the actually of sell counted the rest system. and services. the Yeah. software services and got in software The that XX:XX did a as we

capital bucket. So that's in the

the system So services. is around got was in a system, counted the the and for it deal SentriX the gets a software but and reason wrapped obviously, revenue that

CapEx a see like we do software equipment you'll the line SentriX services and line. sell pure would So, the to and things support in SentriX go deal, into that revenue as then

Robert Anderson

of software and XX:XX size Joel? And the line, what services was the

Joel Hatlen

at this XX:XX have out published not or We put information that actually point.

Anthony Ambrose

XX:XX basically the… But it’s

Joel Hatlen

SentriX software. XX:XX

Anthony Ambrose

total he's asking XX:XX the No about. software think I service SentriX is but separate and

Joel Hatlen

XX:XX services was Total eleven software percent.

Robert Anderson

Okay. percent Thank. XX:XX Eleven

Anthony Ambrose

Bob. Thank you, XX:XX

Operator

to the Ambrose Anthony back our concludes for any to closing I remarks. over like conference This would question-and-answer XX:XX session. turn

Anthony Ambrose

you operator. Well, very XX:XX thank much,

in Productronica in thank the know, like call you all, in of to a week forward seeing present let Virtual and everyone a New on Munich first you I'd couple the been And in and Ladenburg, today. weeks. I'll the Thalmann Semi-Cap for call, we look Technology in Laser November Expo us Trade a to We we've joining and also also show Boston York invited the of at at conference the fifteenth. Before close half. to D.A. be and on Davidson, December Optical eighteenth

Thank to contact that, Associates I'd seeing we If very to like the and further you. XX:XX call. Darrow like you on forward information please conclude that, you much. With look

Operator

presentation. today's XX:XX now Thank The conference is for you concluded. attending

You may now disconnect.

Data I/O (DAIO) 28 Oct 212021 Q3 Earnings call transcript