VICR - Earnings call transcript Q1 2019

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Operator

Good day, and welcome everyone to the Vicor Earnings Results for the First Quarter Ended March 31, 2019 Conference Call. My name is Christian, and I am your event manager today.

During the presentation your lines will remain on listen-only mode. [Operator Instructions] I would like to advise all parties this conference is being recorded for replay purposes.

Now I would like to hand over to James Simms. go now may you ahead sir. James,

James Simms

with Good earnings of call you. release Investor XXXX. has Chief Jamie month Officer, Executive afternoon Patrizio Andover ended everyone Corporation's website After Vicor March I'm and Financial period our the Chief to press Officer. welcome Simms, here for Vinciarelli, XX, in is XXst. markets Relations been results and financial This March Thank me the quarter we today, our closed release posted ended the on for page a press issued summarizing the www.vicorpower.com. three first

filed related to also the release. Form press this We X-K a issuance today of

on any our we are XX-K, remind only XX, call, including that any provided XA customers, and our forecast as XXXX. remind conference or the note, planned statement, of will, forth information Safe uncertainties, potential fact during from growth, after we Litigation XXXX. materially make statements as you and recorded any listeners I constitute risks expected as Reform call conference described at during in of to SEC this offer those and profitability this matters always, filed call and of this rely through implied market and Please this is the risks historical XXXXXXXX. forward-looking copyrighted February Form uncertainties of statements assurance to expansions, May set is no the face be correct. statements and the this Vicor current differ information forward-looking is call are by of risks made uncertainties. The may XXXX tonight, XXX-XXX-XXXX Vicor regarding spending, we by the In Private of the opportunities, capacity accurate of dial-in prove any today. Actual with The current the and A in may potential Item for which products, events including of April sales purposes remarks being results the Securities and well should is conclusion replay during call, involving these announcements, statements planned Act on also undertakes light XX, beginning contained number we in the can for discussed in various statements As property update of be forward-looking Harbor remarks this no I call, under XXXX. Provisions today, call. Except and such available midnight forward-looking the Tuesday, not obligation followed will you passcode statements X. call upon explicitly replay Corporation.

financial $XX.X of from addition, consolidated of XX.X% revenue our of results, call website. Vicor remarks, and million questions. a after our for from press which representing be of percentage in your replay a recorded quarter the discussion I Investor recorded than XXXX. the revenue as point available with the performance will page will with first quarter, afternoon's a we Beginning webcast for will today's and Patrizio review Relations will of of take this on start follow shortly In his first quarter the less first a decline fourth million, our release, total $XX.X $XX.X for increase sequential with today's the stated million, quarter

revenue flat revenue circumstances, and product QX were and Revenue the an from reflecting into the the from as anticipated, shipments steady reflecting the existing the XX% was and QX in Reflecting Product Product was just within quarter. declined XX% first generally higher XX% rescheduled split and Products. aforementioned backlog XXXX. for first from approximately bookings Advanced other of quarter inventory Advanced Products Advanced lower, but under pause for Brick quarter the As for Advanced Brick was was Products Both categories current sequentially, than revenue QX for rescheduling. QX. demand affected, revenue correction. Advanced reduced the Brick sequentially, sequentially Products backlog associated buildout Products was figure to datacenter XX%

volumes change such flat sequentially, are turns revenue the revenue did sequentially. International Advanced for Brick Products XX% Products percentage XX% decline revenue shipments of international of The from XX% international fell declined the Because quarter-to-quarter. not QX for contract of offshore Our QX. of higher drop materially were to shipped to reflects that although in manufacturers. shipments,

QX favorably potentially tariffs. of XX.X% exposure offset volume, percentage largely improvement lower steady was in decline total from whole The a was to to Although driver reduced as gross over the Advanced XX.X%. Section of tariff distribution which other of brought The an an revenue the primary locations to in QX declined about charges, the Asia XXXX revenue favorable XX% Chinese by as of reduce CMs, Products the to quarter's volume XX%. China $X a a by revenue Pacific lower of revenue for prior this which to absorption, gross current to sequentially, XXX margin projects certain of totaled effort and compares shipped transfer but CMs to an in for from QX's higher million in locations import QX reflects China was increase quarter. Consolidated direct margin mix, of their XX.X% and additional factor and the rose from level

charges We may the resolved. Chinese Section not in XXX the margin expenses the or trade of X.X%. QX XXXX, year-over-year. dispute a if sequentially selling were representing X.X%. an X.X% In our operating an representing and impact of in to continue products margin tariff operating Quarterly operating operating revenue, contrast $X.X operating and $X.X million, to million revenue, decline of income is tariff was quarterly Reflecting the the assess income of flat totaling declined $X.X XX%, price add to prior quarter's million surcharge of

quarterly Vicor diluted XXXX This $X.XX. in for for NOLs which income bulk and Net representing is have Our is reflecting loss continued for estimates quarter, utilization quarter provision our $X.X foreign X%, to Vicor operating $X.XX. with credits. in to EPS and the credits. jurisdictions contrast totaled net rate of of income million attributable our $X.X for of first EPS of does representing tax QX effective state net million, tax diluted was XXXX federal associated the carry-forwards first The not of tax a

For QX XXXX, we recorded net of $X.XX. $X.X income of and EPS diluted million

which approximately listed. registered diluted stock XX.X and count common XXst and share representing million shares as share million fully options, Our common common B of shares, was XX,XX,XXX dilutive March approximately nor are of classes, the registered both neither Class sum XX.X which shares, is

due ending paying a year-over-year basis, and sequentially the associated $XX.X Capital increased substantial were at days On quarter-end, by mostly for recently of days. the finished equipment, down cash balance our to a equivalents investments X% shipments. mentioned, goods to XX not lower decrease net decline WIP The customer of XX million, cash the increased at sequentially million. rising quarter capital as million, formally will associated sheet, million. Turning cash certain QX XXst. first by equipment net March about installed service from additional with production after a $XX.X capital sequentially million in higher $X.X an capacity Trade totaled in expenditures with in was increase sequentially and brought reserves, declined equipment in inventories $X.X X%, placed to receivables, million, for yet totaling the QX $XX.X accounts moment. DSOs in reserves, of rescheduling. much inventory to delayed spending reflects by finished and payable, $XX.X as with cash goods I and return Inventories,

close was to end volume. up prior year-end. at Annualized with XX,XXX for our to inventory X% sequentially. raw our facility. the provide March We from balance X,XXX, XXX believe of foot stood total materials my expansion. Andover headcount to XXst employee Concluding an increased XXX we update as Full-time X,XXX the first the reflecting receiving the turns total the declined approvals lower quarter. addition actually our the and proposed quarter, at Our up capacity headcount I'll to of X.X, from proceed review square fell of now on QX, balance at are

add ground funding Again, break internally addition planned the our installation. and phases both As providing capacity the equipment this of requirements on take necessary anticipate XXXX, existing forecast to to in lines meet XXXX. previously plant plan occupancy the building manufacturing space XXXX in reported, we we and through to to

additional While the Andover on in staying XXXX. an expansion, focused facility factory for we to assess alternatives continue

We pursuing source parties to expand capacity also with Advanced Products manufacturing automotive applications. are to and/or a opportunities acquiring global interested license datacenter into in

weeks Turning speaking you ago, remains near-term outlook, to to eight essentially unchanged. quarter, the second our since

financial results, enter conclude for we Brick recent inventory correction Products the will design for challenges. run While quarter’s remarks, major and second is half demand production demand with course of Advanced resume are pleased in QX the my Products To has the its after wins XXXX. given firm,

operating control. I do sustained We an improved influences growth offered caused time and as flow. by cash for of forecasts and Having guidance, to unanticipated are are limited profitability QX, factors forecasting which this revenue financial listeners, many you, modest change, I'll with subject are with remind and of our speak operating I each outside our

that, to Patrizio the So, turn Vinciarelli. I'll with call over

Patrizio Vinciarelli

you, Thank Jamie.

in increased As for sequentially, improvement to Brick the with likely channel in stated, our bookings Products and Brick Products electronics. XX% defense rise, are as shipments

servers demand for and Products in and correction ahead declined the bookings X% datacenter pause quarterly Advanced inventory a build-out generation reduced next Our reflecting sequentially, from of GPUs.

vertical volt processor initiative to not gaining our transition Advanced with power power We're early of Google's datacenters, accelerators. for volt penetration in supercomputing, for second in convert to follow design volt for momentum, NBMs AI for solutions XX systems. the racks, did years gaining also lateral seeing volt level, the wins their weak, racks density, high choice and traction from While segment. superior vertical to is major lateral the XX In AI and momentum our delivery solutions after or this is other solutions the QX Owing power demand servers, pioneering demanding Products automotive At cloud of power for accelerators half particularly the remains delivery from and production XX architectural hyperscalers entering through. delivery applications, XX year. power and distribution performance, the to are

the driving over comprehensively electrification conversion volt the distribution volt XX stage to power last technologies for volts automotive, with and legacy Power reasons, volt confronted to similar have a necessity infrastructure power and systems within for control typologies, systems, of to power legacy in energy crumble, vehicle set deciding the of trends These Vicor power and GPUs way cloud XX AIs invented to years. and general in volt. corresponding distribution that giving GPUs power requirements, patented years. XX adoption volt other developments recently packaging XX architectures, in convert storage reflect and autonomous few for loads, distribution the where, However, XX XX XX and developments bastions are distribution datacenters to ASICs started broader

Products datacenter power load, our front the broader Vicor ends, we're the performance so-called to in and AC solutions complete competitive continuing As in gain systems. adoption that other Advanced point expand from in gap at multi-markets, sets and of apart the

solid With our of many enabling in to density instances, the high-performance be certain comprehensive rests power and requirements, system for patents roll In that technology bulky out XX Vicor's across drives superior portfolio least market as power and major capabilities, power at competitive a as so-called families, anticipate cannot customers of to Advanced our protecting we're and position Product products, over product. by come advantage supported expanding alternatives. much closest its competitive of Vicor requirements to It effectively our XX their on is technology, solutions a power for kind summary, classes that modules and end-product enable the XG with foundation. which clunky this system

positive into in Products. heading a Brick see near-term to As from of the for resumed Products the progression we with the for outlook, Advanced demand year, and firm second quarter-to-quarter, growth half XXXX

Let's Operator? now open the call.

Operator

[Operator of the Quinn coming question Instructions] is from First Bolton. line

line go is may The You now sir. ahead, open.

Quinn Bolton

A few questions.

Advanced from Products, for early second from you things you'd ago about Have a sort late think or Advanced some give On the into pretty I half the the weeks third QX. out GPUs seen on to could advanced order push of sizable eight first push into this pushing QX Just said first Wondering in mentioned you half into the us you an call, quarter. continued Products? update. given if QX

Patrizio Vinciarelli

point, remarks, We production. seen, chain, what talked, works the opportunities, existing second as since hasn't both pretty that and late There a become with change prepared dramatic So, of We advent time was we starting as supply come suggested this we've believe to demand a in been half a the processors now the that it change the requirements. see of settled remarks. and months as except out through new up with the to we’ve the build-out, the applications confirmation ago. next-generation we datacenter of starting the the of in clear last in GPU last respect see picking in year, as year, suggested at into inventory built of been had couple up itself prepared much

Quinn Bolton

timing talked Patrizio, you you with Do some processors, further out? one customer hyperscalers And you in the think the scale? over opportunity expand in XX of next and a question, that as timeframe about and the the the second AI look for is Thanks. advanced happens or your the the sort or years volts to two GPUs base. datacenter of other it in think opportunity, well rack What both like? growing adopt that do to What's

Patrizio Vinciarelli

we've volts, recently quite to we've entertain and a it's XX been that and So, with couple -- months, is effect time last customer seen to decision we've was infrastructure changing some customer, transition timeframe. seen, -- at very to one what a a recently customer a within for endeavoring entrenched this penetrate large two-year reluctant potential is XX that to the the of what in

the to use density to plays with allows, to which, and GPUs, that in other infrastructure. volt volt AI enables customers serve also -- XX XX a it volts solutions role can discussed reminder, very a XX It's the because prepared XX frankly, volt power XX sources a embracing, source this enable that XX want of that phase. customers the for being it's XX in potential calls. in distribution, multiplicity It to in purpose going which a in it mitigate that plays a dependencies are of effect high single taken seeing up a role that steps a -- in remarks XX way converter other leading XX loads, XX provide to volt we're It direction interested of prior some the it's is NBM have in within a risk. space, from a XX way something Now, the don't customers, referenced to and as was because that in to

Quinn Bolton

last opportunity. development pretty the units vertical I applications? GPU see may the think of to back power initial coming the sorry, just question then, in we XXXX AI in to space, the rapid. it's vertical datacenter know terms prototype the and shipping is in power you processor And the the pace of Do market for

Patrizio Vinciarelli

Yes.

expect mass actually be a XXXX, middle XXXX. We production in to the of in around

different So, we year. middle have for of opportunities we're large at projects, the next production more than one in development, of mass the stages works, seeing that

So, we different engaged a number fronts. of

mentioned next with earlier is remarks, to power the towards vertical a trend Power-on-Package. delivery think the step I as respect natural in

current the the including volt at power that Even to As in of the historically distribution from power power volt, a reminder, X.X distribution power X.X point spite limited largely Intel servers fact that Power-on-Package eliminating a losses devices is less nowadays with operated XXX have losses distribution key substantial. typically or from are these X.X than to down consumptions and are the currents the future X,XXX volt even operate But voltages hundreds XXX, of became to escalating voltages, lower amps. in amps of as to and the at Amperes, going processors, XXX, AI escalated go losses with of reducing have historically at distribution the efficiency servers servers, -- in load. classic to Intel lower that

lateral power up on-motherboard X,XXX with we Power-on-Package, which delivery, working power losses of amperes. substantial week, within dramatically even escalating power amperes. applications up cuts Just for to have the at current, on interconnect the non-Power-on-Package still We're losses. you demand delivery that powered With last a X,XXX device the

of amps, than to form that at these the handicap cut factor power losses of XXX watts. another. vertical quantify can it delivery, you to delivery, or of get XXX you Power-on-Package you single-digit, at better have a XX to solutions, down one XX of can might without relative less the by least With just down watts. With power watts or part So, XX two interconnect in lateral

that low a voltage current, respect the enabling And capabilities. so, respect to AI high envelope very nodes to that huge very push makes with difference with

Operator

is Okay, McKenna. of the next Don from line the question coming

The now You sir. may line ahead, go open. is

Don McKenna

going of about be to that and Am facility for ask a that were at we the of now, up facilities to a the still, run billion million a about think of at, capacity $XXX do $X if needing I is, parabolic, get million, increase you in I coming I'm you you rate said, so quarter, already wanted right new additional and here we $XXX having looking see And from with million, you possibility significant, your year equipment revenues. going with coming memory brought those in next with the this to we'd to had a us I existing in XXXX. two annualized about was see mentioned on, facility back $XXX new you and that the could give that that what I years? such almost and demand in now, fourth

Patrizio Vinciarelli

Yes, capacity we for demand expanding dramatically. see

efficiency to may improvements billion, be of, existing facility worth capability remains the Street of a So, the top within at is closer million be a it that Federal to of Whether billion bring the seen $XXX about may of we're confident revenue $X expansion the facility. of quarter capture. supporting the on existing the of we able a up to $XXX facility. or function million capability, and ends aggregate addition expanded be increased of the will But approximately

as ballpark, two distinct these lag your to to quarters. one progression clear, $XXX in in by forecast for will was of the to that from regarding Going million question be that back the to QX, levels, bookings revenues

Don McKenna

good? And still Okay. that's

Patrizio Vinciarelli

see as good. can far Yes. we still is as That's

Don McKenna

I on for Kyocera? in also, there Is Sony. Sony? XXXX, back with a the still agreement with could know a And with you second signed licensing And you one talk relationship

Patrizio Vinciarelli

me Well, Sony talk so about let first.

think and to market device advantages, So, that with a case Sony of game and the -- dramatically – all no with ahead entry certain Nintendo’s that consume intended power. Sony I had had that changed with the X, opportunity much in that PlayStation with do particular didn't pun in

So, in change the requirements as do relationship, Coming at has Kyocera been key to number power technology. It for release, within time -- to with relationship of with customers a we've present and respect quite clear, we be They’ve -- in played our in engagements our because of have that incorporating not licensing a the I and this nothing closely a press working system far Kyocera customer articulated to PSX. came general ultimately the with that a for the variety of recent role release. what so complete recent a adept packaging press expertise. that's of power with become complements solution, at Power-on-Package system circulated

Operator

John, Dillon. question sir. go next the Okay, John line from may now you is ahead, of

John Dillon

Patrizio, little with like is quarter in I the want equipment question a in the that capacity What and the of equipment bit first $XX.X Don's now existing to installed the fourth capital your go you capital spend. on $X.X back quarter. in to looks bought building? It million all

Patrizio Vinciarelli

happen being. going additional So, with do of to next QX QX, six we're respect good progress, in months. I there's can We'll to equipment, obviously, and in with demand. facility into obviously And make an about that's having expansion and when the time We're space we're because, line the lead the monitoring that. keep to longer that. deploying monitoring through a ready, keep With comes going think it year, proceed we

time of the is production to the wanting with lines production least guard mass pull quarter are the sure equipment make So, for capacity that mind qualified and on lead and we'll relative needs. that to with band, in at a equipment trigger installed the

John Dillon

million installed? that equipment The around dollars you've half now got that capacity is or a current billion $XXX that

Patrizio Vinciarelli

that In that ballpark. In ballpark? Yes.

again, the has not of some So capacity XX/X. at elasticity. terms level of in We're limits

the for we run anywhere ultimate visibility, forward facility. constraint peak without but to the demands of capacity may that flexibility, make come want sense capacity enough constraints reserve close to there's capacity so So, doesn't it to obviously or

question the billion half in the a think summary million existing answer model earlier an the for walls I around revenue $XXX suggested $XXX for think but additional something Whether is to square can overall XX,XXX it capacity I foot and remains striving the within and we're always to we I capacity maximizing than stretch to obviously more million, utilization with efficiency. be seen, expansion.

John Dillon

you're heard $XX Okay. what it you've going I so that I the $XX add is, than was conference Is correct or more installed, thought the million? last And in then you've got but facility just call okay, $XX.X on million. million to new

Patrizio Vinciarelli

We're a be are new construction the order details the total itself, of fine the taken not for of including of that building in too accuracy. million. facility something The to within of budgeting of $XX level

by to the million. thing the million. $X I think of in, change we're all additional in $X million, it's say it's the $XX kind looking lines, could that But ballpark, that easily $XX including let's

John Dillon

includes But Okay. that the building too.

So that's amazing got $XX.X that million. you've

the you've So, think got I in about billion building capacity really do $X.X today I'm is hearing. to the existing what

Patrizio Vinciarelli

of that Yes. never that to seem bricks...right, that some go Obviously mind in is good away… bear old

John Dillon

good. That's

Okay.

Now my answers question. that

Okay.

jump one products. all potential was and So not to an how forecast, the you basically conference potential, me working example This gave your that front-end but you products. company the front-end the calls capacity were company let with had ago this take one a the to several on

and and that to that could fourth do products farther we step in take you gen interested a front-end the the still others in pretty along that on you front-end big products, is were interested production those? a bit still, products the do close up Now front-end also have for little into substantially customer

Patrizio Vinciarelli

Yes.

But -- into or your intermediate AC bus away. the volume With particularly capability, to high XG, I tremendous production question, going its phase for to frankly, I in looking capabilities, we're front-end -- doing the terms -- XX control XX way clear little skipped front-end line, the a rifle-shot DC, generation interest intentionally still that, into respect particularly be volts our say should not raising of refresh a we three in impact bottom XG and control outputs. in systems some AC of and and point, -- power are volts it that is the seeing we without did we're top on think distance point really to front-end a applications at bar front-end capability. because one a of refreshing front-end one capabilities. To load these provide that for with our technology was line on

And So, all our generations front-end high is with about efficiency, XG of that controller, an existing that to magic converters, coming silicon. of we XG voltage already on better of There's derivative be front-ends still out in production, but upgrading effect XG of increase to which density, as of level in And PFC controller control midst a some is in the that valiant solutions. due and we’re RFMs, further technology, speak, actually in that bus now is better comes a this will lower efficiency. fab is of controller, cost the with The eight existing weeks, that it the rely of higher AC-DC will That’s in the capability, cost PRM products, together in density, much a that and part one to key and count, clear, efficiency, front-end two which a effectiveness controller of come which effect, is our developments. XG and the is these by much is now. in card. a what’s enable

start parties. lot half got interested to second the year. those of rolling of in a this out We’ve going we're So,

effectiveness RFM the the in of interested capability a of parties be level going We substantially cost and but and existing front-end XG is improved. of with variety level the have products, to

power you look, it's is, our a RFM seen we an website, it's on tablet. for of call XX tablet, bit kilowatts. size which It size the So, kilowatts of the voltage with more a it the depending a range, we tablet. weighs the process, at instance, to input about that, And XX quite if there you might've tablet, than but

front-ends to molded to the technologies So, going be load a more it more that devices. cost using make to with We're XG point and granular more and going able use have panel within scalable, will we granular. capability. our effective much same we're more for considerably packages, make And packaging of

to in to an going a five solution six we're level competitive. of iPhone. card size And a be So, with the extremely kilowatts have kilowatts cost it's of or the going

John Dillon

Wow.

So, you put obvious, eliminate pins, got there, the on technology save enabling it's you some you load, the the you power, also power together, but closer you've that components point get which makes for can of you? a faster enabling business stuff to front-end a it that's the win computer. on the Is is the card, or of similar cost more piece the really efficiency, going there pretty

Patrizio Vinciarelli

challenges denominator power Well, tend challenges and system not in common point the the the common issues are the of front-end, the opportunities. industry, but very same similar. of as the Obviously, and the opportunities to in necessarily the be load are there requirements denominator

density also key at the front-end customer load be also ends impacts instances accelerators, is an density is differentiator. a important. bills. paying may of enabling, point to its AI front-ends, at utility or load, is or because of it's ownership, in the but power the cost of total It important the point as ASICs speaking, a more because generally efficiency whether of differentiator example, many advanced So, it up obviously Front-end key

solution and solutions are not low So plug the requirements important, amp synergy processors. all entirety service able the with wall is of and what’s from complete the AC to in phase AC There a to from performance, a storage three the to providing all on about the that delivering in from opportunity success of right they great that earlier, X,XXX market the so to necessary dense, the effective, we care at batteries, volt deal for scalable forth. volts in that of as it so Being believe, we to takes and and other stone of for deliver and we the sub discussing last, market. but were cost energy connectivities power noise, And in its mains, front-end is stepping terms a and attributes efficient, is, point all solution with as that and attributes provide reliable, to, in mains load. key one related particular, ability in the least, capabilities believe, XX bringing comes

Operator

The from Alan coming Hicks. next question is

sir. You may go ahead, now

Alan Hicks

Good from question you're unit congratulate I the to of so you is currents through, lot to cross would quarter? afternoon. I and job. doing want BBU good say My was flat on basically it sounds I navigating like think headwinds, a quarter a

Patrizio Vinciarelli

out Yes, through we a BBU it's had had that late from us small from particular, aligned. the terms of really last perspective as a suggested dependent helped fact suggested earlier, would been Jamie revenue. surprisingly in business too Advanced that frankly, we otherwise To point, have what applications number navigate as wouldn't and I more implosion is period. bookings And fundamentally bit It's comments in of make statistically in into of And Again, been and much for yet to made, not strong. difficult Because that. year that that's bookings QX. place of on customers. the an Products, related taking a your

to last unfolded temporary dramatic events change. so, year caused that undergo very a late it And

a because a of the and to Advanced half a or mix of they're going applications. Now, year, on foundation, terms of to statistical, customers and this be applications going are into year get be as on Products we multiplicity more statistical, to of dependency look and at into going much the stronger customers next in their the lot second

a last differentiate thing this Products. kind what type of from significant starting dollar million GPU of That's for Business the see of business So, we a more a within a enjoyed statistical day's long and but second of application. starting that and year, had it have to type in to Unit, -- that we're to of to going see quarter applications. new the customers think But that kinds that time established build And Advanced the Brick coming. mix comes begins yet booking we've this not I we're when the significant in much half

Alan Hicks

QX? any get in did that delayed it Why in was in supposed did to of that QX/QX; ship QX, ship

Patrizio Vinciarelli

Some, bulk going making not there there so XXXX. at we're QX, is contribution for as the substantial, in correction is inventory but of looking the a pretty that more

resume earnest year. to get in as going the towards think end we I there the action of is the

Alan Hicks

order be that delivered? to Is million $X total going

Patrizio Vinciarelli

Yes, it is.

Alan Hicks

you rest And stay year; this to Okay. continue level, it it visibility is have can for some at grow going here? the do the from the BBU, of in to

Patrizio Vinciarelli

an Its there. don't firm, that but for be opportunity we growth we should see clear

along In own cannibalization in classic of big our of doing our fact, products. are well we terms

we're very do well because because much product in line, efficient, we've So, make margins line are transitions done DCMs on than DCMs Bricks which denser. And with bigger we old to from technology, an our and we're ChiP using many seeing customer more DCM packaging are really directly the applications Advanced on happy is they we old products Bricks. much Product

as a to customer's diversified So clear, But not applications. different to are as Bricks to be are they base, remarkably customer converted like stay of we suggested earlier, resilient, it's and have to going Bricks because very time get those got it progresses, Advanced we been literally thousands Products, forever. going

Alan Hicks

into… go that will away, business So it won't converge

Patrizio Vinciarelli

that Advanced – were Products from transition have over being will last four five that been years. business effectively developed products to years ago the or the XX-XX developed No,

Alan Hicks

in say versus Advanced would Brick Products? What Products is capacity you your

Patrizio Vinciarelli

for on product Advanced -- it, and flexible, that floor to substantial of performance. which can modern as ago we platform. Advanced to have thing, converted of are on a DC-DC from, space they nature in older going of converter moment function the the that production effect which DCMs, and smaller We're we more reclaim by in are doing point opportunity Advanced which is, our classic same this on time line team built to fully some also we we products, of going Products. better has the scale particularly, and, out of down the Product efficiency depreciated some get lines it with make to what for more lines, have but Brick are reassign than volume quite their performs -- to at Product they a are been because our a very converters, depreciated call space is we customer more be are keep the DC get kind which this DC of We're the a time, ago, as Bricks capacity suggested been as continue also to over applications older have Bricks, let's this, and So, reclaiming converters, some aware very production happening the

GCMs at devices the can Intelligence While point-of-load MCMs Artificial the make line or we same for same or powering. time on

flexible is fully is to the adding part time, leading to respect over So that to be going of available space with strategy capacity that, redeployed capacity. within Advanced Products

Alan Hicks

just What would you Advanced capacity today? in say is Products your

Patrizio Vinciarelli

it’s Product in close evolving it's growing, $XXX last So, that's pretty half half. we've year figure. a made investment gross rough half on late being been to -- additional that Advanced second of But as million keeps capacity. we've again, and and a the something terms, substantial obviously line investing In

is and So Advanced towards keeps stationary a more more this for number, Products. evolving capacity not it

for to I capacity our think, Bricks. less classic it's going overtime, be

Alan Hicks

And be the any is, is used to telecom; question strong opportunities XG equipment there Vicor coming? in last with new telecom

Patrizio Vinciarelli

so approaching with there X,XXX applications high mean, too -- demands, I amps. yes. are very Oh, current

the only our capabilities control end-markets terms -- in part are different -- denominator there current with front-end of the architecture, strategy the requirements that and leverage certainly general of distribution datacenter power load and this terms So to not to I in in automotive the common of is of and requirements, terms the applying of packaging, some think products XG are selective the across point requirements. also demanding systems is very and or of

common are the driver power is a power across the greater voltages, So needs. and needs density of with a these more lot density denominator silicon lower there escalating, is current, interdependency for that so end-markets

Alan Hicks

customers with these with of new Are you telecom some products? getting traction

Patrizio Vinciarelli

Yes, we are.

Alan Hicks

thank Okay, you much. very

Patrizio Vinciarelli

If there take question, it. is more we'll one

Operator

Doug, go is Doug you sir. question So now ahead, from Campbell. coming may my next

Doug Campbell

manufacturing you if expand just year. I there you and your a you. major in of coming And and -- mean, half Asia. could further anticipating, Are that questions: design discussions said in second we about clarify both, Thank you future Patrizio both regard? in just statement? this that on Jamie, wins for Have Just QX partner quick you QX, two any discussions in been Japanese extending entertaining or talked

Patrizio Vinciarelli

gone across wings companies applications a and these speculation in No, deal other initial with the I our already are designed into multiplicity to is of of variety orders; not for, again, variety with with already applications wins. GPU that there -- leading I -- example started customers gone of mean AI pretty a things space. earlier so a spreading respect chips significant some of great have

because let's these to within of alternate with, to because these respect companies source an these have, U.S. Going geopolitical are to but dependent companies into than Chinese sooner back and half negotiations of single These to the to can't source alternate first need cases, having regarding be company companies really say as, wanting of catalysts on not in two companies sources we're or alternate for details, to about, to for from it do capability must that considerations your with obvious say, for acting to reasons. asked about. of customers an with been where, suffice some we've by their putting effect, are have they bring question, engaged rather so a a pressure in source products Japanese us that because establish in policies later, few go either the general second I bringing source

Doug Campbell

Great.

continuing are hear correctly? So the I Japanese if talks you still partner for a

Patrizio Vinciarelli

Yes.

Doug Campbell

on follow-up the just And wins. design major last

you those press do because those releases, been those get accomplished. you when or I I receive guys like out those? When miss wins, have So already feel put orders you

Patrizio Vinciarelli

we -- automotive, of of datacenter customers be a engagements -- very in space press of to That's in typically demand engineers No, than you way a AI just nine -- require team releases cycle quite so busy. respect we through with support applications. habit that the anything. but we time support. with are, XX get operate, Frankly, be own in six, variety months, a you our These on Well, supporting they again -- very, team haven't the each There’s our a support. to expensive. which is within there the lot applications sure particular, selective opportunity typically goes in we're demand for or can we design-in putting to missed out naming tend of we’re deep, design not when win. not very the which the can choose design-in We're being more least is applications months application we at of cycle in

in it's deploy in every that somewhat something requirements are mentioned, the great looking have because -- all require been opportunity to that the of also as about of how And has and each they tools and there be -- common more as ways bring and to the I but tend demand though mindful keeps respects traits of scalability we and So limitations expanding. support more to process, for -- we're engineers with customer of with progressing capabilities many have -- which they handholding. level we're they even have unique many some can applications

Doug Campbell

a No, be I business. I built think to And clear, get you it. guys have tremendous

As institutional wish more bigger, -- get a more your investors I they I manager, guess and will. know just story portfolio investors, you as I about Wall Street

Patrizio Vinciarelli

It’s right. that. That's as simple as

Operator

you. Thank

Patrizio Vinciarelli

well, -- good three Thank Have you up. with actually be you. evening. thanks in have meeting in months. if not a But And again, to talking there, we'll coming and that, we shareholders a

Operator

Okay.

your call concludes today. that everyone, conference So

nice joining you have You may now and Thank day a for very disconnect. ahead.

James Simms	Corporate VP, CFO, Treasurer & Secretary
Patrizio Vinciarelli	Chairman, President & CEO
Quinn Bolton	Needham & Company
John Dillon	D&B Capital
Alan Hicks	Ainsley Capital Management
Doug Campbell	Podomus Capital Partners

Vicor (VICR) 23 Apr 192019 Q1 Earnings call transcript