VICR - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome everyone to the Vicor Earnings Results for the Second Quarter Ended June 30, 2019 Conference Call hosted by Dr. Patrizio Vinciarelli and James Simms. My name is Matt and I am your event manager. [Operator Instructions] I'd like to advise all parties that this conference is being recorded for replay purposes.

And with that, I'd like to hand it over to James. sir. ahead, go Please

James Simms

here Good the welcome XX, second Chief with Jamie Matt. Chief Patrizio earnings Officer. Executive XXXX. Vicor call Simms, me and Officer for quarter Financial Andover afternoon you, is to Vinciarelli, and Corporation's I'm in Thank ended June

the today, the release press vicorpower.com. a our has posted on we After Relations press financial page our website, This summarizing market's June the for XX. close Investor of results X-month issued release period ended been

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

I and Act provisions remind statements forward-looking you this of the under XXXX. I listeners being that during of this conference Litigation harbor constitute remind is Vicor for Private call Securities is the also various recorded make may property remarks purposes we the of Reform copyrighted call safe Corporation. the

for contained Except forecast planned and customers, spending on risks profitability and expected the this regarding matters and sales products, events including call, and potential current involving discussed forward-looking this current well any are as and expansion potential as statements opportunities, planned information call uncertainties. statements, growth in market capacity historical announcements,

In light offer statement filed assurance in be by SEC of can the in uncertainties, discussed of and forward-looking our from uncertainties to XA may Item our XXXX. which with any are any correct. XX, implied face set of risks we or Form fact, prove results differ remarks and forth today. risks on we The in XXXX we February will, XX-K, Actual that materially no explicitly these those

conclusion Vicor statements, forward-looking not this this and call. today, as call conference to statements, made the is such update Thursday, of should any the only including note, Please this obligation during you upon July after XXXX. XX, no provided statements of during rely call undertakes information accurate

X. passcode through replay dial-in midnight call by XXXXXXXX. The XXX-XXXX followed the available today's August will beginning (XXX) A tonight of is replay be at number

call review with with performance today's the after Investor our which our remarks, questions. on will your webcast will discussion the be of available replay follow I'll Relations second Patrizio In a of financial page of take will his afternoon's addition, a website. this and shortly quarter we for start

providing ask an In do you wants limit the everyone we a to who follow-up. and question and ask opportunity so, a to time of yourselves to one question interest related that

you If may queue. return the you questions, more to have

period visibility, a major data Near-term center serving or shipments sequentially his quarter, in Brick on manufacturers had Products revenue and Beginning to Advanced further reschedule in Advanced X.X% representing we in second results, the consolidated million, second press a Vicor stated QX $XX.X quarter from total expected was revenue with as contract sequential decline today's but improved of to revenue a million represented China, in XX.X% for from Patrizio comment whether to revenue XXXX million remarks. 'XX Products will release, of this late remains of $XX.X $XX.X first $X quarter clouded. the decline have recorded customers. our OEM our Products over for million. the in the of quarter

the comparison increased revenue. declined and In XXXX. Reflecting second quarter these QX lower sequentially level meaningful Turns were QX in Brick was a circumstances, contrast, unchanged the XXXX. the for volumes 'XX XX% quarterly with second of total for Advanced was quarter 'XX Product contributor than Products to not the sequentially recorded revenue XX.X% revenue and essentially approximately X% for

Products, to first Advanced the revenue For in Products was split the XX% the for Brick quarter. second XX-XX and contrast quarter, Brick-Advanced XX%

largely decline to from QX Japan. and of XX% as XX% tariff revenue and International offshore margin The percentage QX due XXX for reflects lower fell reduced International to revenue XX.X% float charges. absorption declined to activity for revenue for gross XX% for Consolidated reflecting decline continued revenue XX.X% QX. QX a to production QX. Section declined Products sequentially, Advanced of the from manufacturers shipped in in contract

We expecting some assist of before have a program retained consultants functioning to are this and us occurring with degree shortly be tariff to rebate program in year-end. duty establishing draw-back we

of the to $X.X operating was QX 'XX, contrast sequentially of quarter's Quarterly to representing gross operating our the an in or XXXX operating approximately expenses declined of X% income million, merit operating an the though were operating for quarter. prior lower revenue quarterly flat were in million, income annual and X.X% $X.X implemented margin during even revenue, expenses, QX than increases compensation representing decline and X.X%. $X.X Reflecting margin margin, XX.X%. million In

Our stands $X.XX. effective $X.X income attributable X% tax quarter, of to EPS contrast million for income of to is diluted XXXX Net a second which QX. of through rate the This totaled from year-to-date at QX EPS representing down million, $X.XX. in represented X.X%, diluted $X.X Vicor

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

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

$X.X DSO all and balance cash net end, rose spending I down $XX.X will million at offs cash pause million capacity for sequentially and our equivalents a sheet, XX moment. current. to to at in quarter capital which balances sequentially in a due expenditures, largely with X% totaled return the to $XX.X receivables Turning days million, just capital reserved quarter. steady Trade a to totaled and

sequentially reserves of reflecting with $XX.X finished associated Inventories net shipments. roughly increased to delayed inventories goods million, X% higher the

lower reflecting sequentially X% total balance just X%. and balance turns X to quarter, actually materials Annualized volume. the Our declined raw for under another increased inventory fell the and WIP declined

of have the revenue from inventory quarter-end. substantial deliveries from we associated July portion so improved a recognized the customer have metrics in rescheduled with However, our June,

end for X, part-time reflecting XXX total production temporary QX, of of quarter, down while headcount my of the the headcount as XX from Full-time employee at activity. declined June at X,XXX, XXX for slowed Concluding from review quarter. and headcount stood the second up X,XXX prior was QX,

I'll now capacity our speak expansion. to

abatement, have Andover We our proceed pursuing X-year before an Andover, facility secured to a expansion foot with a existing expand in and approvals a the have the down in road. XX,XXX to in which to tax factor larger square approximately was deciding facility capacity addition our

have today's As committed acquire adjacent land close release, press stated shortly. Andover that in to we to purchase expect to and our facility

the parking will The occupancy purchase acquired both meeting the plan before, already and internally installation. paved for approximately in million addition. equipment as We it us and X needs expedite of phases for to the stated anticipate price some funding to is allow the take $X.X our land, and building XXXX of Plan parking, construction

to ready transitioning to our business operations and one to for reflected to integrated completed in next want have organizational week. quarter we years, categories, business product we with and a be be which two also recent I will highlight, Brick Advanced XX-Q second Products simplified one transition segment expected In filing have structure, structure, consolidated our our and Products. and

months, this activities we operating We XX VI numerous last and into parent, our improve merged Picor Chip, financial consolidating ERP and the the believe subsidiaries, one. two efficiency. streamlining organizations and will reporting into have integrating functions Over separate and

X.X shares merger, be the In SX Form Vicor that the stock which for options expect As file options distant the with level VI million option a awarded the to the SEC, the subsidiary we of registering issuance VI common exercise available under plan. the future, upon assumed of approximately will Chip and year, too merger the Picor plan stock was case last not VI assumed with thereunder. Chip Vicor XX, closed Chip's XXXX, all the on June with outstanding

of While assumed half that transfer restrictions, the be the for sold available just any under of year. the option are vested, options call of plan can in which to limiting single volume be shares to to terms these the shares the subject are fully shares multiyear

influence center tariffs we Turning in about spending but to the our are negative of anticipated business regarding near-term quarter, and remain disputes prospects, in timing and China. the our recovery the the cautious trade third positive on of data

land on We for remain and profitability we growth for based cash should I'll with expect sizeable volumes. checks to the With flow construction. call writing are to Operating Patrizio. but start stable, forecasting do turn over higher some that, revenue improvement QX

Patrizio Vinciarelli

Thank you, Jamie.

said vertical application lateral every As we release, with demanding artificial today's solutions. or winning in are press Power-on-Package intelligence ASIC

data into by the of mitigate impact dispute We're tariffs of have trade with working growth affected remedy China. bookings and on our been remains to visibility profitability. revenues and standing our However, clouded the these center issues and

for $XX.X Bookings totaled million, decline. second the quarter representing XX% a sequential

[indiscernible]. manufacturers for Bookings Chinese and New some relocated [indiscernible] orders contract which Products. and center both sequentially programs, data Brick customers' of declined Advanced significantly, for being are from distributors primarily for AI

with and offsetting Brick industrial, is As applications for declines Jamie in electronics and mentioned, Products Asia care gains communications, defense health for Europe. steady, U.S. partially the activity in across

long-term in in electronics position supercomputers, our next-generation will accelerators, volt there. stockholders' growth remarkable which last meeting near progress communicated a long-term drive automotive early we confident at we're of opportunities. servers, making month, we're our of and very evidence The opportunity promising believe AI and XX is As

challenging in and Brick alone headwinds stability not pursuing to We're feverish The steps China we to activity outlook. to in the cash conditions. business from there. generating long-term of strategies Advanced Products a for adapt regain taking bodes volatile well the market established and with pace world, provides design-in We're while to Chinese momentum serve our have we're facing

end, market companies with like markets. products, expand disclosed the system automotive those while second-source vertical technologies by licenses also solutions our being with technology. approached presence To discussing opportunities to parties hosted accelerating factorized in Power-in-Package that established global interested partner providing licensing Asian from of have an we as power to markets, recently visits companies have adoption previously in our capacity. We which our in with addressable We're proprietary such served for interested Vicor will important in in vertical

challenges for recent AI in emerging conclude applications. my centers, and remarks, XX transition data we prepared uncertainty, well-positioned to the volt To uniquely near-term supercomputing despite are and

customers for that unprecedented us to to look power and strategies. with products their have necessary enable We momentum performance their system the

for for Brick alternative. list outlook which there half demand steady for Products the expanding of competitive second applications is an AI demand from a for no Our of and Products resumption Advanced reflects viable

shareholder the both Davies of annual our I refer other question-and-answer on descriptions are the presentation provide you Investor recent strategy. the page available market of both our and as to the session, Phil recording website, our which and opportunity they of meeting of Relations at

Let's now open call. the

follow-up related that a question question. As yourself one Operator? you stated, ask and we to limit

Operator

the [Operator from Instructions] is coming Your question line Kruber]. of [John first

Unidentified Analyst

power power Good afternoon. chip, My new on the the on the is supply question vertical delivery.

When with, what this the expect close some agreements in call. on do it When Intel? area? close agreements in we some on to but we addressed expect you do to auto, AMD, mentioned licensing You about

Patrizio Vinciarelli

the to or no So, licensing opportunities. regarding there is connection Intel AMD

capabilities. in but to the include are achieve involve an Power-in-Package an CPUs interest of remarks, have other their in As that who companies solutions, vertical providing Customers Asian or types with opportunity of our greater general we're provides in users devices. because may XPUs. these it of two source prepared mentioned the having integration an likes discussions themselves, and of include ASICs and OEMs Intel, for solutions That AMD in alternate

Unidentified Analyst

been And you've when some of do expect, working get could agreements on? these you licensing we

Patrizio Vinciarelli

to I uncertain. respects say and fair quite stick to may they would developments take the bit is kinds It's These we're involved discussions. of timing. neck remiss that time. with outcome also a many out are And to that inherently holding of my respect in

believe to precise least one but I not to there at later is that So going timing that. of I'm be sooner going or the predict agreement,

Unidentified Analyst

volt, two be, certain you, months the XX a in the would Where follow-on into they beating Monolithic made you volt they're has Thank Power out XX in do areas. in landscape? fit equation my whole of this lot about their now noise

Patrizio Vinciarelli

carefully competitive that. respect And available viable a they Based with on choosing not do to words I'm my alternative. to have information us,

to of be to application does has of a it's alternative viable, any issues. got to that And not to stand the free It an requirements. way IP For work. performance have in has it level of be

And viable this can say that I is so is alternative. what no point at there

are all us again solutions viable. trip big the ASIC perhaps are requirements And We next-generation XX is five volt, West the reflection And you is us to with to relying experience their solutions that alternatives way the Coast. XX no these There for in days the current best names, the because a on alternative. think are to of. all customers. viable up the had X,XXX of will not last names going within all amps. visited the that They're just with competitive These some of

Unidentified Analyst

$X what the customer one to And didn't last shipped you and of did clarification, ship that point in million you July? early Is that said? the that

Patrizio Vinciarelli

delivery the us. manufacturers Yes, the the had now They so delivery contract received product. a end not the of effectively second the and took products before are quarter. take we shipped those The from days quarter, few manufacturer, end the shipped contract of did after

Operator

line question of from is the Tanwanteng. coming next The Jon

Jon Tanwanteng

Thank that to as to kind it for one, improve? trade year-over-year, Did relations what QX taking up. first sequentially or the it Chinese expect to My you be with that making or and you mentioned, assumptions my are you need questions. you Is of stable about happen? you mean does U.S. for the

Patrizio Vinciarelli

it to near term, a that certainly expecting the not a performance. quarter in make not We're very on improve would positive in impact third way

with double-digits. that working pretty is year. level in a at baseline quarter the China depressed So very With we're relative opportunity that at assumption low appreciable which this as looking to as increase revenue in for time for near the in this a term, the last China,

James Simms

clear, sequentially. And to be

Patrizio Vinciarelli

Sequentially, yes.

Jon Tanwanteng

into I will in be of what customer you helpful. ASICs data as those is, still you. bubbles if you in center discussions? your confirmed annual which had in optimistic, and designs you, Great, pretty aspirational XX wins which question, or well, Page on it's confirm for can GPUs regarding and second front of that and some Heading and meeting one slide, are thank one color Any design guess, XXXX, my then in

Patrizio Vinciarelli

to mention So not recent visit Coast. to going West point I'm the to the I'll names. specific the Again, example,

in, naming most We're I current say advanced will in will. production remarkably early to capability with of a the the the you implementation, that demanding first And names, as those with of may current most already the if the limited one so XXXX. programs that deliver And requirements again that one, to second-generation production without one can actually it's a go customer. implementation, doubles about which first-generation go respect half for into as

not the at At we respect in looking spectrum programs into the 'XX-XX field, time week, we're the the visited are production customers to other end going until the last with of FPGA that frame.

opportunity, In production space, somewhere early into a longer-term XXXX. it's So later but year, a AI one. with that's very frames, time substantial XXXX early ASICs, those going between more of other the next in GPU in ones other or some

my it's time a to keeping of one. But certainly there's range the I'm depending eye specifics application. and the the is that big be. going So lines, That's of a action on on where ball

Jon Tanwanteng

improvement, either $X expected QX Okay, pushout, if and if didn't may have the have that just would you on a year-over-year? you quick sequential or still million increase sequentially clarification to

Patrizio Vinciarelli

to calls, that be there over fond It's increase. in the few is disappointing Jamie been of an obvious. QX, as customer to million state that did quarters. but I precursor I'm in that by still up ship was So, the just conference the book-to-bill said past it has be would the going early not that, and actually think the increase ended would revenue much $X appreciable QX effect, QX without QX; in are but repeatedly physically mystery a last in till the without saying, shipped received Bookings not lower, revenues. in in our

half higher built very the last to been that year, book-to-bill backlog bookings We up I very what expected start still fourth can substantial a revenues in in been had be quarter. to a is we will working up higher that The of substantial been up had a Bookings down and quarter. degree. to very backlog second that, note that leading some bookings backlog. strong. very strong. We again And have even We've stepping think precursor are this position. the to

Operator

is question the of Richard. Gus next from line The coming

Gus Richard

You're A sort per amps. range do for would get on revenue of you socket per the typically at you What unit Could fine. AI help basis, instance, in that a get? ASIC? be revenue XXX chip powering characterize you

Patrizio Vinciarelli

of characterize system. not close competitive system. $XX,XXX load range cents in At per per value field, is there earlier, to Yes, broad in quantify of content the amp. was systems so other there I AI usually spectrum, one what the reasons, point referencing per the I'm end going for say we in one of of ways at as will just our the that to requirements a is

few could dollars. a At the the hundred be end it of spectrum, other

wide on system. or opportunity there's of So very per specifics the of a the in revenue chip depending system, terms range of

speak, other that of XXX low be current At of of something to command bigger end, obviously that Some spectrum, the amperes. so for at output. requirement, the the amps of end could have tens overall solutions a are primary ones systems like price-tag. are to the which a the the thousands of those we range And

Gus Richard

very how in paid? per how for you all then fee Is does that's royalty straight licensing economics sale, work? And a can through it you me you, terms licensing get and the walk Thank just just of you helpful. or a deal,

Patrizio Vinciarelli

Well, it the function of a of phase will license. be the

early aiming to the which the licensee are may Vicor part balance. providing achieve to We capability, solution, a involve the providing an

in the investment we opportunity is phase generally from in different And speaking, so very in follow-on technology. one opportunity the the have But a substantial phases.

enabling driving know, that you need and a each at in their be to XXX space aiming in fields, is in to other and equal developing to particular, technology autonomous point AI of patent compete XX-XX point the this years realize patents, we've around As portfolio capabilities. in in to in order customers at in without have million last $XXX with areas this invested proven over the and other like other technology

big and licensee and the there market growing with a expand is licensees, big associated market to think, I a partnership there and And a is, a value significant in very with opportunity that enjoy or opportunity.

don't licensees right licensee. of the in We for the entering kind opportunity that and Vicor for interested provide are not into

Operator

The from is coming John next Dillon. of question line the

John Dillon

$XXX was targeting for it quarter bookings think I number a the that fourth you Patrizio, a last mentioned million quarter. couple, you're

and or us pushed that is color you could is or give that on little bit that? a on So out a still two, I'm of if wondering, quarter

Patrizio Vinciarelli

Yes, balance in what's so months, several the the revised given target of for the we've last transpired down. year our

the in XXs the the not bookings front. looking at even events. enough we're term, QX. improving That's dependent going to an If short surprised couple unfold, as they we impact have the obviously could to be it pleasantly We of improving that situation on next on expect in though for quarters, again on China be low in quickly to be or

like also, center from variety There's the our meeting by CPUs other to a our factors high-volume of transition been and factors, significant generation power slowdown that with caused applications, availability some one there's next. of a of certain requirements data

the will that's of [indiscernible] So those factors QX. quarter for relieve themselves over into and And quarter. next starting part improvement this

With respect a something what China of last to to $XXX couple at I half part of a that. we happen to that with attitude we to bookings, months the the this obviously in the But getting and XXXX center a million happened market obviously going expect to take space. respect point also milestone respect has ways in XXXX. bit has of cloud of with is particularly wait-and-see the with data in in the is or need to Because conditions, high-volume first it's with applications mean this different been some computing several is surprise. respect with of a to

of effect become for to number to we to now on, is activity with of Advanced With a have, our the in going going business. forward, Brick that part point the predict because of some space, XXXX significant on going that in which small to the base, words business in into all do do the other our as designing at I had past foundation the referenced it, which lack we'll we've statistical it's to time, time, change and And has this business another quite and up to dependency as applications. There's is had Products we relatively going a developments statistical point in as beyond. easier much bookings that a get with

very past growth having the more but the And It quarters lot With mature a Obviously the it's recent It's a opportunity, and applications. of And lot give with had unpredictability with. more doesn't needs point technological going we've offer statistical. Products, we're Advanced the a Brick growth will match-up AI, a capabilities, it field opportunity. is level dealt way obviously very there's tremendous business unique to at this business. its level, of our customers, deal customer be is peak is base. in for emerging us the to which very by great

specific a front-end longer us market of In programs, front. automotive like give significant specific along products. solutions, some high-voltage great blocks, DNBM We're our and more on term, of type base. the strides that We're with one than also will making the with far building specific very customer,

a statistic more get a to So patient happens, little But growth very we're Products. respect that of I think from need Advanced to business base to a with much with going we Advanced be both Products. building once significant coming predictable

John Dillon

what can don't question you've for think fourth follow-up number how more expecting what the mentioned us quarters. quarter a you color backlog? your fourth I to call to is revenue? demand is you fourth going that to forecasting. take in fourth my bookings Can follow that we are Well go would revenue quarter mentioned you the X of eating for the million on little going that And some you're the the quarter? to target and quarter. going your out up before revenue be Great, But the indicate Are is turns this a $XX-plus the sometimes in the for or and what for be give you're that's if

Patrizio Vinciarelli

historically very earlier So suggesting the is us. is expecting we're Part question, quarter above further a of the position. for this in it and high ballpark. a you're slightly we're to an We've expecting in XX-XX%, in backlog And had step-up QX. XX%, $XXX million, in asked step-up that close which as low-teens,

John Dillon

Thank good. you. That's

the to two are? what quarters XX% for it's is expectations XX% the next So

Patrizio Vinciarelli

that's I current our quarter think for the forecast. present

Operator

from line coming the Alan is question Hicks. next Your

Alan Hicks

flow to applications. order wanting was know about supercomputing your I for

Patrizio Vinciarelli

bookings The be and have for some space look eminent have works to and strong only they're programs of had that And It's technology including time initiatives. and programs been us needs. supporting more very of we the to respect government in areas and because enabling U.S. We've that me the quite fruition, their coming us appears demanding one let quite other some specific the for is the strong. with unique be to that. demand where type really supercomputing where to customers

to AI, I significant behind huge general. market is well data space be But for a to going us, which the in would a rank, Eventually the we of terms generally aligned very technical market. be of requirements speaking, supercomputing would center capabilities in very are automotive supercomputers.

Alan Hicks

Well, do you expect XX the order flow next, to pick supercomputing? XX say, up on in to the months

Patrizio Vinciarelli

Yes, programs have you we going very I that production significant early with key are year. whose this names into recognize think next late year, customers

bookings So to begin we in to flow but in and will bookings programs, XXXX. QX We've come some this Larger relatively level. later in year one of increments a earnest. these initial expect to with small had see

Operator

The line from question of coming next the is John Dillon.

John Dillon

expecting I get wasn't this to back quick. on

and off if the So, products? little wonder talk a can those get bit you you shipping When both you I'll the the I talk I will NBMs here. start and production on if speakerphone about wonder NBMs. you can RFMs about Patrizio, more.

Patrizio Vinciarelli

number in shipping a are production We different to of applications.

automotive the use we an a XX to NBMs next-generation started XX to will automobiles. multiplicity convert of that to developing large recently within volt back Going opportunities, opportunity have

With the power in see very can website. RFMs So NBM opportunities very that's particular. for you tablet, we exciting the which large a on have program with our

phone the tablet smaller akin size, scalable. more of power our more will reflective of XG in device, of that much per a high up cost that's a something in generation powering much or might actually into efficiency, terms advanced implementation second the terms control I past, lower to turn As lighter, We're cents efficient, more system. now XG mentioned much in have watt,

system control huge particularly chip X-phase as PFC that more XX ends in open control volt well. super front implementation, automotive data the for advanced and market potentially in expect up in center We will us computing, powertrain fourth systems and ends, in front the for the space, again with generation opportunities

John Dillon

before and customer take customer your be any wondering if product, that one mentioned all the this RFMs On visited that might all. that on the you've actually there's on if could there you capacity. at update iPhone-sized recently basically I'm

Patrizio Vinciarelli

quoting XX/XX, we're fourth size, is quoting quoting these the think XX X volume so millimeter RFM. with we're for iPhone the to tablet, which existing I Yes, generation customers X also by speak. device we, kilowatt so high one of the That's We're so-called capability. fact power XX the the - millimeter

volume respect production these think with full still adaptation capabilities. advantage I They distance some RFM solutions, away. to require, in of a we're quite the effect, of to take architectural

still advanced But implementations, power several accounts we are power control advanced out else generation anything making on progress there. of relying in than achieving with in existing with an again, to system, tablet, the marketplace older more early at else particularly the terms smaller but very times relative anything in density

So lower those are the volume opportunities.

the we opportunities, SM-Chip powertrain to particularly customers sampling start advanced Some and have for on be that packages. as But we more opportunities, advanced generation we relate of lot to generally leverage as RFMs, devices fourth the take control cryptocurrency may, a can it that type with see that of which we I'm packaging And sure bank. the our not speaking, implementation.

John Dillon

what about order getting that, big products on how in really; do the we've your talked have? customers are new you the with the customers new customers? products, total growing total I the of many customers. base the follow-up lot and number a new is customer in mean new all to $XX,XXX base the things? up type But your statistical Well Are you about you the $XX,XXX

Patrizio Vinciarelli

we more can support. frankly we opportunities So than have

do the solutions what engineering a willing they're these have recently we do that, of engagements can We've for to practice of with that and many non-recurring fact products And to skin customers support our selective. being system. in customers, requiring we're So the instituted the to want their because because game. of of

a in of ensure that's enabling solutions the investing likelihood turning have that volumes. good significant way effect, a And we're into that to, in

no have of we have we contrary, infrastructure. our far with opportunities. shortage we more To than So the opportunities properly current support can

support, engineering, in own of end far that day, very building of we so architecting the both solutions of the in solutions making on own do all by on is good of development solution the can issue the with their scaling application application technical modular will our using focused the terms all much on our capabilities of as scalability long, up their our too go enabling terms of before more in not to leveraging And itself, tools, without customers implementing have, very that focus at which the scalability scalable So progress of the blocks. in this with customers way right?

Operator

line next Kruber]. The question is [John from coming of the

Unidentified Analyst

the question. very old Intel of beats disconnect, same reports is the a few But for issues expectations why they're pedestrian Vicor Instruments, tonight, established huge guidance. the you thing you subject some expectations. Yet, are? company, to This company; a Why ago do beats doesn't. Same days Texas see

Patrizio Vinciarelli

So, companies statistical both those customers of of base and don't. very have applications. large We and I think

So an as when an suggested our the it has been of far growth comes thus in small. Advanced our answer Products, to to question, applications customers' earlier relatively

that then if are cold a at issue that least respect the the in being way significant And doing months last us. data it up that of those the and unique and centers that in scaling in with available had we've CPUs time a the X we customers stand catch any requirements, at to have with issues to meet happen their or point

there the very So Intel, whereas statistical isn't of business. because exposure base with of Texas or Instruments the

but the Intel close we've effect that trade the perhaps the extent both imagine Chinese and seen have may to not Instruments to or seen it. the extent Texas situation, Now I of

Operator

question the line next coming Tanwanteng. from of is The Jon

Jon Tanwanteng

looked the had follow-up a of orders on quick questions were couple would after then one? number Just And QX, or what have pushed the margins made that like housekeeping earnings into that. into out that if quarter, it a

Patrizio Vinciarelli

the $X have you been part the increment that dropped was received have the been had same. associated apply received So, that that the some not had revenue, margin revenue if would given amount to million incremental the expense shipped operating obviously with and have the line, the revenues, but would with of margins bottom higher those that largely pre-tax, if QX been been would and by

math So the pretty simple. is

Jon Tanwanteng

metrics? consolidate the results will that future to been still the operations. mentioned a your about and Advanced breakout you Okay, And breakout Can work of the fair calls? operating of doing talking you we just enough. be expect In then Q's in a you've lot

Patrizio Vinciarelli

a Yes, technological development, [indiscernible] a And The we developed. for absolutely. past fundamental, respective had separate the Vicor Products of years because IP and that are product VI are the strategy. Yes, entities capability our within the portfolio in purpose, Chip Advanced business many percent, the to a the percent. line focus, of through core the broad as R&D contribute we competencies in fundamental future. good Bricks that's and terms Obviously

to couple last that years, it in of terms VI for the terms [indiscernible] within it a both Picor, became as this starting providing and year with efficiency a evident of Chip. company, liquidity last and and done. Chip, consolidate But with path make last in to Picor in of that's would sense within And the we've operational all months our VI and what few

in aligned shareholders. company's of say goods, So their the key at our appropriate interests happy revenues, make line the the deliver interest individual point, bottom this have all the I it's employees grow we grow to think and with that to

Jon Tanwanteng

you And we EBITDA? out then so great. and depreciation break calculate the amortization that the just could quarter, Okay, in can

Patrizio Vinciarelli

So of to a I'll stack busily that who's through Jamie, turn paper. looking over

James Simms

We had was X.X notebook. Depreciation just for the quarter. closed my

Jon Tanwanteng

you so thank much. Great,

Operator

the The Gus question is next of coming from Richard. line

Gus Richard

the are Just to then about products? gross to impacts Advanced Products, terms like you power, can role just you And Advanced margins of margins there when any quickly, early ramp? talk versus the in vertical new of ramp Brick your

Patrizio Vinciarelli

Products. a generally new is, substantial effect impact, a in amount speaking, impact still a The in ramping that is cost, impact, from absorbing first of fixed it to have we yet cost order fixed come positive is the to of not to scale suffers enough large when we products Their to close model support because have supporting Advanced comes particularly infrastructure a Products. Advanced

So in result line. improved up and will Products bottom Advanced margins in general, scaling improved

volume products, production. said usually It as that, yields takes not get the immediately with to months of all Having new a high do few XXs.

relatively line. is for the very could And the the scale-up the is bottom inefficiencies. of for experience. beginning total our itself quickly greater of share new dominant gross But in effect of a margins utilizing our capacity thing at So that good a some product, and works be a there out the

is one question this there If we before call? more close

Operator

line from Alan coming the of question Yes, the last is Hicks.

Alan Hicks

you? you're new little talk that aerospace brand for I these satellite do Yes, high military could business? a commercial you you that Is But are a and know in a bit constellation for about applications long new business? the time. get to expect percentage of

Patrizio Vinciarelli

start won expected initial margin be applications going in to It's business. program. the Yes, to We aerospace so high year. into an of we're fourth solutions shipping this quarter

are for that space. opportunities in now looking We general other

different in undergoing the much your a to capabilities. requirements space and with and devices satellite or to other different changes in suggests, of relating capabilities global with come, to question years of is As internet going sizes some quantity scale-up support larger market fundamental different up orbits

Our requirements of look a particularly the noise again to very high very their made And of significant some we attribute. attributes, years high and noise; products, satellite significant low over that low electronics, tooling are well-suited the where for preparing particularly from. efficiency, we've application power in because having next distinguishing a once contribution several is the density, scenario in investment for

they by clear, our be there in with without support capabilities to opportunities we But there systems; in the far, technology, data properly year control be our is have the [indiscernible] with opportunities in pursue from center over of dollars have attributes in space may required space way high margin. it the commercial automotive terms constellation distinguishing time, far, particular some good markets. To our scale per tens in share And satellite engines, of volume them and far. or by AI the this much-higher because to of, the of particular, an on opportunity the fits millions by the opportunity packaging not up mix, a in to detracting the our

it's part we be. the So larger aspire company will make the not to of what much mix, Vicor

months. And and to with Have talking day. in be good you, thank X a you we'll that,

Jon Tanwanteng	CJS Securities
Gus Richard	Northland Securities, Inc
John Dillon	D&B Capital
Alan Hicks	Ainsley Capital Management

Vicor (VICR) 28 Jul 192019 Q2 Earnings call transcript