VICR - Earnings call transcript Q1 2020

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

Operator

Good day everyone, and welcome to the Vicor Earnings Results for the First Quarter Ended March 31, 2020, Conference Call hosted by Chief Financial Officer, James Simms.

My name is Atila and I’m your Event Manager today. [Operator Instructions] I would like to advise all parties, this conference is being recorded for replay purposes.

And now, I’d like to hand over to James. Please proceed.

James Simms

much. very you Thank welcome ended Corporation’s March and the call first quarter XX, to afternoon earnings Vicor for Good XXXX. Vinciarelli, I’m and Jamie Executive Patrizio with Officer; Officer. Chief me here Simms, in Andover Chief Financial is

we today, for our release website, page results months has closed markets posted three the issued press the our the This release XX. March of on www.vicorpower.com. a ended been financial summarizing press Relations After Investor

today that We release. related conference a also X-K to press recorded listeners Form of Corporation. being copyrighted I issuance is remind the property this Vicor the call this is filed and of

also Except management’s as I of purposes statements call of remarks to forward-looking no products, historical prove sales this in for Reform the matters make risks any for market and are may harbor that planned current announcements, safe all and during uncertainties. as statements Litigation and provisions potential opportunities, under can information on any contained remind this including various the this you call, the Private we fact regarding uncertainties, will call, statements XXXX. spending constitute risks discussed and profitability of forward-looking assurance growth, be forward-looking light In well in events correct. customers, current and potential statement Securities expected and capacity we expectations these involving planned offer expansion for Act

call obligation of conclusion call Thursday, in undertakes the XX, April XA XXXX. XX, upon XX-K, the are only of this statements, differ Form statements and the as no provided may of remarks any accurate face on of you should that the rely filed any is such after update forward-looking not during during statements by including conference results materially made The Actual Please our we Vicor information note this to with today, XXXX call. implied risks set from which our explicitly Item XXXX. uncertainties February or today. those in discussed we SEC and forth

replay The today’s and call be available by today’s again, will X, midnight set passcode XXXX. dial-in beginning dial-in replay is XXXXXXXX. followed also of release. are XXX-XXX-XXXX, at in May forth This passcode XXX-XXXX press A number the tonight through that’s

along replay shortly be take will webcast on And page of our the Relations a transcript start discussion review questions. today’s remarks website. of we I call QX will addition, with performance. with of Investor the Patrizio, by In financial available this afternoon’s after closing a will your our

results, today’s of pandemic. quarter COVID-XX million. sequentially, recorded revenue release, from shipments Beginning the as the the slightly with rose X.X% a QX, due in first prior up small of number $XX.X press in quarter’s million, sequentially. revenue Advanced stated customers Products declined Vicor consolidated we revenue $XX.X to while Late X.X% for requested postponed total product Brick

However, first the on those immaterial. was revenue quarter impact postponed of shipments

macro For as revenue shipments prior Advanced XX.X% to share domestically in for across our Brick declined distributors bookings China Brick XX.X%. of rose represented from stocking Domestic to by to revenue Asia, rose QX, Products Products period weakness rose total revenue, well. XX.X% total of reflecting revenue, influenced X.X%, Export volume Products. while notably

However, to slightly. rose to have OEM our contract customers exports manufacturers building Advanced for Asia Products

of for Advanced from China a margin. sequentially QX’s components ramping of revenue impacted percentage by Products as from XX.X% inefficiencies gross XX.X% margin gross of caused Consolidated shipments declined to Production delayed and QX. volume

of recorded $X.X against charge inbound the up million prior to noncash inventories a High reserve impact QX, million gross raw margin for certain as increase incurred from have quarter. the materials. we continue also tariffs $X.X to We tariffs of for

for the high with drawback duty customs U.S. tariffs, volumes Regarding up applicants program. remains backed of

thirds million tariffs any amount paid of of nearly implementation total Section is XXX exceeds this recover to paid $X.X two amount yet for have since drawback. to tariff we The we amount So, of date. eligible anticipate and

During materials. to mentioned, the their all of mid-March, experience as delays some of in however, we in us. raw of receipt meeting the operational height By commitments in Chinese February, our did, shutdown suppliers were

now rose project-specific meaningfully. I lower rose loss just Total spending. turn expenses. Full-time the million, at XX, the product profitability. with of of the with operating associated other March year-end prototype for headcount level $X.X increase an QX XXX. recorded in XXX in entirely total X%, reflecting OpEx of stood rise at to No line category under operating a with development We quarter operating spend will

full a a Turning although profitability. we We recorded – benefit year taxes. after $XXX,XXX, of to net of income are small QX forecasting for

materially security date. social of affected is The primary provision of us XXXX, to of payable by CARES taxes we reviewed the and the available possible qualify programs, our been to for thoroughly CARES is retention financial not Vicor X.X% temporary of Because have have course, We the might any representing too Act payroll. resources company’s portion and for performance pandemic lending which the benefit. to provision, from large in

based million to XXXX. of attributable XX,XXX,XXX Net on estimate a to This a expense will be P&L $X which to until required year, we we not loss million. as taxes totaled loss share QX the Vicor we will December continue per sheet will to a not item approximately was but shares. share GAAP be $X.X the for repay balance be $X.XX through amount, item, such full count

X.X. $X production. X.X% declined million $X.X correspondingly to $XX.X near-term totaled Accounts net cash reserves equivalents Inventories sheet. at to declined million expenditures capital. receivable, for net for All due working to with QX and outlook quarter materials increasing our swing to Cash unfavorable support net our $XX.X Capital Annualized balances in sequentially to for $XX.X totaled sequentially million to with days. DSOs compared Turning improving and of to are turns trade rose loss raw QX’s as receivables increase current. as balance end, an reserves of million. million the XX

of Absent was Product orders QX booked quarter XXXX. reflects decline X.X% of the QX X% large million the backlog Advanced and Product program in high-end compared I’ll as now bookings for turn At increase to in that XX% a commercial Advanced in backlog. and Brick of order, bookings lighting. year-long end, The quarter’s uncertainties million in sequentially, were declined totaled AI order customers quarter-to-quarter slightly sequential sequentially. prior an with million, of composition COVID-XX large came which with acceleration. $XX.X $XX.X book, associated China. bookings rose Asia, bookings Product expected. the single to $XXX.X entirely almost included across notably

been the predict So that robust. we this have with quarter, continue. will far COVID-XX in uncertainties the given associated cannot pandemic, But bookings this

pandemic, face outlook our halt. Homeland have, of our of uncertainty Before quarter has the declaration I for the industrial manufacturing with in will about I segments Vicor widespread however, emergency in continued which Security Department economy brought critical Since the is without essential came second the role XXXX, under business to to U.S. the address interruption. of March function as supporting our Massachusetts the sectors to challenges given turn state we of the XX, of policies an infrastructure. operations a on considered of

productivity. quarter, the and while the from In extent we to adapted distancing have to workplace second maintaining feasible social in privileges work have home provided the

our function at We continue engineering three shifts continue globally. our to to and manufacturing sales departments and facility Andover administrative operate

forth and We refer our have and safety the XX-Q regarding to taken employees, our the of listeners measures. substantial measures details I protect health will filing, Form pending these to set which

strength. the and future the to results, is Vicor’s that operational strong uncertainty influence our we financial model possibility franchise, relative and power there related COVID-XX operational to pandemic balance our with Although will COVID-XX enable from may sheet us believe flexible system emerge

call to on We remain to fund plans feet disruptions in addition COVID-XX, to expansion the operating Our we second are a anticipate planned investment to Subject track. the profitable. over to to which facilities related Patrizio. With intend forecasting unexpected instruction that, in to Federal capital this and quarter, increased for And from flow. few turn stated, weeks. equipment our I’ll of Street XX,XXX be construction we from cash as square begin expect revenue the

Patrizio Vinciarelli

As times. are Jamie stated, these challenging

I’m with in equipped and suppliers customers. is Vicor to of our efforts our these to challenges employees effectively. our support for grateful their However, deal

enable of new win to the Andover of all manufacture vertical necessary the provide for capacity moving steps for XX,XXX process with foot ahead will new the Advanced we’re square facilities. will And to double to As manufacturing addition win integration us Products. stated, our The the new Advanced a wing establish Products.

Vertical integration major $XXX a is in is of package or investment made housed processes dollars, of years. The large this our to last up the Measured in nearly milestone. XX combination million. a chip converter over investment R&D

by competitor market, addressable engines, terms than no And investment our systems which, investment the is as leadership long an technologies emerging of of multivisit minefield this early minefield a represents greater time. of In be to more we believe characterized will for position able in this a before, aforementioned control three-dimensional patents, investment. protected I’ve will than a strengthen TAM cross comprehensive should property, another This intellectual to relating terms patent be of power packaging. conversion power spans a proprietary and portfolio, in

the In rapidly power package, solutions, requirements of vertical and including and escalating power enable combination, power processors. are path which intelligence these technologies critical proprietary high-density of delivery, on the artificial

of manager competitor to So the from data the technology power service market current high-density other facing Recognition inspiring system for unique power the leadership well-protected to AI, Vicor Vicor electrification. with us project emerge and a vehicle leadership is despite XX-volt on motivates approach of of for this the center and positioned in circumstances, and solutions. every systems performance-enabling side gap our strong and in the engineer unsetting separating expanding pandemic challenges any

well best or listeners offer friends as and We for families, the as and health their well-being wishes colleagues.

take We your now will questions. Operator?

Operator

we from of one in & first And coming LLC]. the queue. already have Company, Instructions] [Needham the Quinn questions line [Operator Bolton And three is

Quinn Bolton

board? in nice press the quarter, the I Advanced give to Is for broad-based pace that sense? accelerators? Products you Hey, in Products? for that it more across Is demand activity that in start Products. of strengthening the Congratulations better release, involved Can I the for AI guess more second while? wanted of for been there a server you’ve for us early motherboard GPU Advanced the a guys. hyperscale Is in activity that the demand you business Advanced talked reflecting on sort How side. is or about

Patrizio Vinciarelli

broad-based. relatively It’s

markets, for medical servers. But it bricks, for in also So of portion equipment. GPU, all ramp hyperscale new old industrial or strong a encompasses it bricks our even includes a the activity early

have the I’ve And what’s it’s not it. I derives I outlined broad. from ago. in would relating questions So asked surprisingly thought moment few it a of ago. that that a nutshell, a number programs Frankly, behind to weeks a

Quinn Bolton

Bricks Or Patrizio, like? follow-up, increasingly environment, you the the given second in Is uncertain do ahead looking want any not And to as on this – or determine to of especially demand really real that trying those buffer your customers environment I whether good there year what knows and inventory, just the is or buy nobody demand business. demand are the think inventory, have to way pretty for half products? is build confidence

Patrizio Vinciarelli

same I and question that programs So, bookings the of generally a are is that what the into and people couple received of asked in I sustained read going I production demand. here. of evidence daily answer And

your significant. trying of up customers anything folks. to without with that we and my sales to in add a question be have to There Now able question, But point, pipeline component been component through uncertain they our that to of could products times. ensure fact, continued own haven’t some

James Simms

Quinn, And see the to patterns as that, sometimes a that not in you complement double susceptible booking businesses. commodity we’re to

Quinn Bolton

correct? customized, Because are most of solutions those

James Simms

extent, yes. some To

Quinn Bolton

and you, does elevated prototype in was the similarly, the that Yes. we supply expense margin And development first some at think QX? in quarter. obviously, continue quick it an in have just Jamie. second And step How first ones down the the in gross to for seen the quarter. inefficiencies gross Does looks hit One, in you just might you Or chain of on by back quarter? was higher that OpEx, two margin do mentioned levels XXXX? level wondering,

James Simms

department, your Patrizio, that’s so…

Patrizio Vinciarelli

Well, I’ll try Okay. to first. answer question your

unique circumstances. I set of QX think rather with in some

look better. at margins think the I looking QX,

ramping products. are We new

immediately not necessarily level going efficiency we of that’s about to the So like. bring

wait We to those with along margins. need new of vertical But it proprietorship to unique immediate we we’re year may greater we given franchise is efficiencies we a that. very focused is in to gratification. much as going the scale, a progress about that team, And think further our it ramps. to factory. achieve accomplishing the I But until expectations, integration one the mitigate brought be economies ways see to product not of we’re the certainly, products, with have, on So the the proposition, growing long-term the that in achieve expansion the of about leads to

get to plan a there. have We

Quinn Bolton

And down? continue? it that any the second on quick comments prototype expense back does quarter? into Does step Or

Patrizio Vinciarelli

Yes.

is intense support a These on quite opportunity So, those both are devices the of for going going product requirements. of of they product stage long-term delivery. activities costly for that vertical a again, of variety strategy given prototype proposition, requiring customers’ general, in of programs. terms standard bit our line very sets lot that offering. one activity a of be a in there’s In developments that, new and used lateral a forward, a power represent can but And

your many Our general applications to significantly, including combination to most will not are products to to handled at that so of faster inherently as be going developments point, in costly. these in shorter standard are leverage and major be. be time extent would cycle time. those and scalable to order possible capabilities There any point time, strategy provide our we that most also most the that just forward customers of minimization ADOC of one projects to are And a with can market. benefits, like intense And

customize for If power so-called power terms So, requirements cells are line. to mindful product we enable that solution, going applications that, of with it. no as flexibility. tailored as to again, often in to still There’s using their extensive level in on it or there’s the provide solution-based year put while customers customized immediacy, the rolling very provide burden a to scaling technology standard we’re needs. particular that be modularity, up in golden to the blocks question their be like that they to system should heavily a a of out R&D, will our shelves. granularity of on of solutions the are profitability change But do, And most effort lot XG off and going Vicor us provide the benefits It’s building progresses. those. about some lessening This of available of

because it is in warrants tens the per program a revenues of dollars year. – We’re of millions the program of

we The still entertain is, revenue levels, will standard can’t going We justify be good it speaking, to generally enough. methodology lower at – the it.

Quinn Bolton

for you, you that detail, Thank Jamie. Understood. Thank Patrizio.

Patrizio Vinciarelli

welcome. You’re

Operator

Tanwanteng line Jon [CJS The from next coming is Inc.]. the question of Securities

Jon Tanwanteng

Or their if My I’m or Good afternoon, talking center we’ve spending. is guys. Thank be large thinking in about some rolling is applications from one it you that seen questions. of already you’ve for orders. out? Any taking heads companies offset by still being that yet your seen my about these Or would some there to first Advanced customers come? they’re hyperscale reports maybe Products is reducing data that wondering new and helpful. now that color you’re

Patrizio Vinciarelli

I’ve But of terms be up those that falling. bookings. number point, any with see we the but see by And second programs, We may been thus demand So, be beginning end the the It We not where this offering by quarter to don’t the Domino’s see And be going the other to smaller I it. that. an of respect above could with that Again, somewhat not weakening that. of belt affected couple that’s don’t visibility happen, later have, that. at a to far, of negated I of are surprised see of in don’t a demand programs would customers. at of the of going on. Jamie’s we may point depending don’t by would the resiliency be on we how the major on, the well I thought say in major we coronavirus tiring

James Simms

terms about I contraction statements we’re seeing of not in the just opportunities. highlight of our spend, Yes. any magnitude would intended Alibaba’s their

Jon Tanwanteng

the help two the it one on strength little than based? stronger in was mentioned Understood, you just as possible? thank just that broad think came level you And deeper Was earlier about customers Can you that actually expected? went Or or were bigger surprised you. orders. at by would what Patrizio, in us or you a

Patrizio Vinciarelli

that holds. surprised. programs be the just revised old to where for good with two long forecast that to been But it’s Products, around bricks. been been certainly, general have answer, earlier We also have But Advanced the would not has see up. also demand are We’ll positive. beginning enough indications Suggesting to ramp major the are demand, but that

So, speaking, it’s, I think broad-based. generally relatively

Jon Tanwanteng

assume for your gross rate? bit I Jamie, that normal just And piggybacking bit thank and one the keep… quarter what and Great, you margin going in that, is guess, hit asked. just a that you the Quinn you. last prototyping I latter above quantify side supply the also on Can to from was, run costs the

Patrizio Vinciarelli

won’t. I I can, but

that hope just we Let’s something it is behind us. characterize as

Jon Tanwanteng

issues general of is in fair in Whether question, any customers maybe or facilities. them of or a contracting liquidity there or by or your are terms Okay, quarantine And issues just shut state solvency maybe then been might have partners? or viruses suppliers down even with your enough. some their

Just wondering could if that? how there’s you for that? are And how then there? any we risk capture planning Or

Patrizio Vinciarelli

So, significant, reduction the that workforce due say. I we’ve experience, in is partner appreciable should coronavirus to had one a

We’re working around.

operations the found the some and this those that I this, There on point work in So But suppliers to directional issues, very they making magic block. to had has right? be certainly, the prepared as from I in our solutions as a quarter partners. quarter and It’s key time, perspective, happen sailing. easy from support all remarks, but stumbling we at think anything to is challenges. next strong for earlier, not represents it keep this Again, are isn’t going challenging suggested said times, seeing progresses. And

Jon Tanwanteng

hopefully, you strength luck Good and much. Got very continues. it. Thank the

Patrizio Vinciarelli

you. Thank

James Simms

Yes. you. Thank

Operator

question & The Inc.]. line McKenna of the is coming Don from next Co., McKenna [DB

Don McKenna

XX bit. times would seem itself, if you month, in increase to bookings of bookings like the which back, in increased the and know beginning weeks, could, upcoming generate from go And XX% to a to quarter. Hi, would the I about a lead guys. for in I wanted of XX I the

that that increase generated you you for see by for in that you If backed be lead would the quarter? demand as any out increased what end a percentage would demand see time, increase

Patrizio Vinciarelli

particularly we speaking, all third to generally month. tend what achieved progression it’s quarter generally in a be So, with acoustic, the that second love progresses the the and I linear bookings in to the we it quarter as and see all is as is as They a within would contribution plan – month expect right? know, strong another

So case the quarter. finish a quarter perspective. made strong a quarter, that very we from in bookings to had And the point, last

This – percentage-wise, a for the quarter, of think it to We’ve bricks example, as thus the had the quarter plan times. to in bookings the for as – far, unrelated were providing ahead to question linear And point, points anytime, play ventilators, the kinds terms for are role. an I of But a the be or to we’ve lead actual programs, actually of other your solutions do point, fill strength such but for sustained examples that appreciably Lead a component. a is times, your whole. plan of as demand. seen

increased to Now, seen times, with with out area, to need semiconductors in lead components combination lead up. times plan of issues we’ve to key runway respect power the of take by component led us more to the able with factory address, lead And navigating four but we’ve extending own been supply the component weeks. particularly could and some lead times suppliers, step our visibility, going That’s the went that, through what recur. again, capacity greater some particularly times

Don McKenna

increased in – But of increase a us the for of because for your way anticipate increased kind you bookings time? because bookings feel a Yes. what of Can the give quarter? of the out the increased if backed you you demand percentage lead or

Patrizio Vinciarelli

quarterly a quarter expect typically things on into fill not quarter, I will, you. So, tell were at of level, by if a XX%, in the linear a the that in linear linear say the the thirds I into at perfectly percentage two XX%. a general to plan typical below level, linear basis, were quarter. XX%, this essentially first month the a basis be ahead going by far – percentage, you I’m would Instead, a terms if of of we’re to on would XXX%

as fact that orders to we’re the question terms new fit when the to of of So to customers, quarter. comes I we they so-called getting. quarter, substantial relate the that to the into of think go enough lead further specifics bookings. what that third differential ramp second into is composition need we the that an earlier programs, of the it just see strategic with back those as And in we Again, ramp, the to rate increased bookings these to when bookings should the get programs of

Don McKenna

Okay. the the But to related other – my current for question was you that kind is of capacity what And Products is have? of that percentage that. Advanced

Patrizio Vinciarelli

doing that are we So, okay in regard.

We capacity the to deal always to be demand. need. like we to We with burst have capacity able have spare

Don McKenna

are or we XX% running at capacity XX%? Or… But of

Patrizio Vinciarelli

number to I don’t have give a accurate you. specific

at running not We’re XXX%.

adjust running dependent not is order We’re effect, is running at we in modelistic somewhere in between. XX% some levers to and clear, be to what on, Capacity, pull it. we’re in

So over why having respect quarters. next And hesitation capacity mindful get to move Advanced decided the we’re need we’re of we the ground in and needed also to we’ve capabilities. capacity. comfortable and But more break of problem a wanted that that spite to uncertainties few that’s Products fact the challenging with going we’re an that of the ahead, the to without our times times, any not expansion

year at of at goal XXXX. of the the actually if equipment of into moving very With this end QX the the of not beginning facility,

Don McKenna

Thank you.

Operator

The Please next Capital]. from proceed. of the John line coming question is Dillon [D&B

John Dillon

Hi, that a is record? Hey, backlog guys. number

Patrizio Vinciarelli

XX. I’m close but it’s to not sure,

James Simms

XX, right.

Patrizio Vinciarelli

Yes.

James Simms

might be. It

John Dillon

COVID the from whatever. it environment. congratulations. guys think I you doing That’s obviously It’s well Anyway, are good new to really is on see.

like what down? Why happened went to a looked curious of go just shares So, they down. I did was stock I of question. there? kind It your had as

Patrizio Vinciarelli

than, to significant for Well, venture you that other I’m not me. to sure question to answer going obviously, the a guess degree. I’m respect can a with

James Simms

of off quarter. the But loss position for remember, working we’re a

called fully be to basic shares to as diluted. used what opposed use we So,

John Dillon

Okay.

dated? buy back So, did or that? shares options had any like you become anything some Or

James Simms

on which $XX.X we that do shares. basic the The No, just share it’s it is million. outstanding count,

John Dillon

just down. went Yes. it like seems It

So I would why was it down. just kind go of curious as

James Simms

from million up went million. to $XX.XXX basic the $XX.XXX Actually,

John Dillon

And diluted down? went

James Simms

Yes. But options are… based again, that it’s on

Patrizio Vinciarelli

That price. to can related the stock

James Simms

Yes.

Patrizio Vinciarelli

Yes.

stock lower price. So,

John Dillon

Okay.

As you’re just saying, okay.

James Simms

based future price. the in immediate exercisable stock They’re on and

John Dillon

Got you.

little you. Okay, about thank was there you Are Patrizio, new picking is engagements wondering GCM Are you. bit a new on any Thank I customers engagements. some if comment that could in significant up going? how you that?

Patrizio Vinciarelli

Yes.

there’s of that a lot So, on activity front.

to the actually As I we engaged customers. earlier, thus major suggested trying if for number while get of two gets far complex, solutions we engagements more to and that that But customers, way complexity We down literally suggested GCMs, extent, it to we are going a earlier, that possible for forward, in GCMs. you scalability. limit stack, the this requests there’s is where as even the path of an triple involve level every key day with because, limit will, going of

solutions customers But which of on amps we to be of a density, we And what major into for modular To many the of that to custom powered. current of millions GCM map to that if a as terms layered pin in tailored with And the adapt tailoring? XXX of entertain and system, comes through is ASIC current In we of you like multiplier power its that adapt amps it A-Cam general kind solution GCM. such custom And requirement the or dollars going is and a detail per where here. GCM. a of And that the us tens other lot requirement. of has made one drives GCM, the to it the be with power power clear state-of-the-art again, or not it aspects we’re XXX level of address custom still the sized current the performance deliver multiplier a without They it involving you a pin current something would imagine. is the audience positive only SoC be ASIC, happen efficiency or also, application. can words, as ballpark. because got X,XXX has year. to little gearbox, Why that the general programs So, technology to processor development as the is is a amps to it’s in of requirement that a that in why of that of With a the high which – multiplier. have the being customer customization, have top will, can call just the got any our to multiplier detail map to us is

Now, current system with multipliers. gearbox, And on of to stacks, is we how we’re two as scalable, is few top car major on more I so-called times earlier, make taken power a triple point, gone more – where through where the there’s there a mentioned opportunities the having a exercise and this learned multiplier. at it there getting is the To the proficient layered it. we’ve of rest

and something terms can the and we they’ve a It encouraged you complex be. broad-based property complete what have solution. opportunities and in custom been we’ve purpose type of developments applications. So, delivery this intellectual done, that general not is opportunities could would technological But of vertical what gotten be better what for exploring doing power weren’t useful

John Dillon

Thank That you. a was great you. Thank explanation.

next So want I’m sure answered think I I clear. that to kind here, into make previous of questions you’ve dovetails question, my which but in

$X mentioned that that about also with was you about had your customer of up. your R&D that like were Or it GCMs? in in they and year, those And a couple drove times? for a were like $XX projects are your SG&A up expenses million was and up $X you million So, engagements involved more you million mentioned specific looked like customers or

Patrizio Vinciarelli

it Yes. entertain always clear case that same to companies other the there’s of development. the see. is are to that Generally necessarily may cases, have potential, it. not In significant their justify we for of a In established if this kind very warrants speaking, where us there companies opportunity threshold, the it’s opportunity areas, in respective

to respect enters in in And to the that. this with amount limit to So, cases, risk we’d investment, but seeing obviously, speaking, generally some judgment it. return on like of

So, level you to [indiscernible]. that is quantify activity going the just of on for

the through variety activities they these R&D root a of developments of and within personnel, concurrent if the were materials and both Just with of and what being half, last month, R&D they a that engineering engagements R&D month with are. were effect, several at and represent all the progressing that’s costs significant expense, in

John Dillon

All at this thank I’ll back in very Thank get the you right, much. time. queue you.

Patrizio Vinciarelli

Thank you.

Operator

[Craig-Hallum coming the question Shannon Capital line Richard of next from is The Group].

Your line is proceed. now open. Please

Richard Shannon

questions. Thanks my for Patrizio taking Well, Jamie. hi and

the levels get there on a can start gross get So, the improving a before kind history that here you how comments, were would to gross looking you a margins. prior of us like based XXs? and the quarters, take your on take give one your ramp of Patrizio, the – in back of to on degree margins It financial like quarter. second a it margins prior for you to XXXX fall up get couple mid-to-high would gross up sense your But some with it you of based back sounded sounded it new maybe let that me on back can some products. back of Is to discussions fast from

Patrizio Vinciarelli

the XXs even $X.X investment crossing XX% quarters. think very XX maybe, So, have by as technology justified this technology, a I technology the of the as a of our to And the in we then IP margins right? beyond is the in been proprietorship, gross XX% few A the on the I is threshold billion a the set so in for that was of investment need based well that sides level level referencing fair kind the in team, given thinking gross that the reasonable in matter going Well, portfolio the developing We be management on higher years. earlier over in the margins XXs. or of not than that. even we’ve last return and XX%,

enable investment. get importantly, cost key part But making we achieve to also, but structure. advantages, on respect solutions being obviously, is of to this to structure with not effectively. to also us that to The able competitive And customers margins, their to do cost return enable as good cost do so happy need they, having margins is only very improving very

So the associated with the of going power for of with volume. and balance required our processes the expansion package, of greater power forward, economies integration, fleet vertical with of scale vertical delivery

structure Given terms reduction Products, have that’s cost that opportunities the in have panel we very this the in currently we that reduce tremendous costs. on of to measure we so-called Advanced we focused in are dramatically cost fixed cost. and And number

a time, are alike ago, in made ago out panels. which the you as one conceived decades know, So, of bricks are chips at – might of made effect, decades

is thicknesses. You X an browning the can different the if Y brownies. in of of dimension of the to, And make we effect, And designed analogy. brownies, them you But make as same. is always brownies think the wide will, factory in and

Just on said like for in a wafer based products. classes are denominator the some they SMC Costs wafers major or common foundry, other foundry. certain of

we getting – as we, continue and by density area product get we in power per economies and of products achieve of the drive function the power how the enables a in assuring down. of manufacture panel many effect, effect, count costs goes number a have and reduce In similar the panel of things: of occupied get chips on number power what chips we to or And chip the our panel. capability fundamentally, power per panel the case, what the structure the the in And is per panel cost is cost metric capability. the a of scale up, a increase density, two power we based us reduced maybe as panels increasing different keeps we that of certain to we that, a

to is down, are certain respect drivers cost the dramatic key reduction, a at up and continuous cost at opportunity chip with costs time, panel same level reduction, the power getting tremendous while per number reducing So, power of chips per these the to costs. getting there

Richard Shannon

from thank I’ll there. me line. the Patrizio, Wonderful. jump on helpful you and two and more answer the or Maybe, for complete one

that Maybe, see referenced, You’ve the your of LPD. referenced, I you if you I maybe next, think one the accelerator opportunity last contributor versions last conference do using modules. the quarter year? for about how specifically OCP that important characterize degree, this this To of what and call as you can the in an to a revenues think year, OEMs, see to

Patrizio Vinciarelli

obviously and Well, and I established to current what apps aspiring XXX,XXX requirements so very a hundred where large few can get a wherever dominant that competitors. up get player there’s of apps, a space lots the is beyond. that’s XXX,XXX, as Again, say beyond they particularly

alternatives, fundamentally number And not. and enabling, Our potentially again, their competitive of solution IP respects, is comparative in proficiency constraints. basic are where highly a very alternatives cap and differentiated

as with feel has being we to competitors of those for a as enabler over for very years. that next due gunning power denominator ourselves opportunity the to it market as a substantially expand see XX grow market system So, very that common that is number five, a solutions. continues We strongly

Richard Shannon

on about today. question the agreements. in me. Fair Okay. you talked of switch space automotive of can hear those Any have to space? a or prepared slowdown that updates engagement two we’ve slowdowns in of didn��t Last give enough. you impacted in anything progress signing there? know that lot from seen quarter, Last discussions remarks the that I any auto your I the sort

Patrizio Vinciarelli

in say, last can’t can’t been to area. the that general other of travel, in potential People automotive quiet relatively couple general just customers, have over visit customers things that space. months, So,

would convergence market. going while have all are vehicles, after of driving believe within node that even I think too we’re that long events and that will further spite secular that that I trends other trend justification impact as a of these So, I to the the because coming going a have wait down, XX-volt cost electrified on on had the lower before central to what see in advances. to of transpires to be recent node accelerate expect

electrified personally area and are for reasons space other continuing on general the obvious of much certainly, driving the autonomous haven’t kinds for the automotive last beyond that for the front. over on on in leaders been And and so activity solutions systems I power that for to cars. followed hard frankly, solutions several But driving AI weeks, having solutions, drive gathered updates recent in autonomous

Richard Shannon

for questions from Okay. That makes sense. the the you. Thank all detail. that’s me. And Thanks

Patrizio Vinciarelli

Thank you.

Operator

Capital question proceed. Hicks The Alan [Ainsley of Management]. is Please line coming next from the

Alan Hicks

center Good everything afternoon. with getting you seeing I What seems Yes. happening turning, a from customers it had service stronger? demand about, your like data are that is question increasing. that’s

Patrizio Vinciarelli

one levels appear So, revenue that focused opportunities as doing suggested earlier, the driving are with I efficiency these been the the for ramps. it’s we’re products fair we I’m customers fact, on, and same new with But that programs potentially, other to that ramps to their create visibility programs I remarkably other. you centers. general holds. Those and far, data and create have, can’t know And in the motivation whether well. get a new be tell to way or accelerate trend that other customers, of thus new don’t particularly the strong.

Alan Hicks

with are how And going things new getting customers?

Patrizio Vinciarelli

very going well. It’s

So again, to when to an engagement you AI, off. of would be it think existing an either kicked any comes or is company engagement waiting

Alan Hicks

interest how how that is Or is increasing? it XX-volt adoption? see – is you – And do Is going? that

Patrizio Vinciarelli

Not where the point, gathering going. a down the clear, this at sense has definitely, It’s it’s is train left everybody it’s it, session. the but on that in deed

as level that drives XX-volt In example. to away. current what to XX-volt. intermediate the of the artificial though, data intelligence and is we Ruby been clearly, requirement realization switch to that This centers, that going to Even to a is of is coming the take a case, XX-volt that XX-volt be notable to GPU data GPUs the XX-volt respect a drove there the the lot of where necessary are that which XX-volt. has the as going become these So solution are the was still in demanded. to support from car know, that particular able node particular XX-volt norm Garner currently with are in more was the case, in crossed the switch XX-volt. exceptions before It a But an centers largely too infrastructure from all long is, exception deployed, GPU

In automotive, all the same through.

every with you in think, there they in at were again, weeks get couple by the happening of may of that trend. green, be I of number anything, is title rationale XX-volt developments. that if a with the China need look to held to And Germany, But conferences Systems recent were the one now, the stronger few for automobiles going of pandemic I made think think before but selling Power measure frequency Automotive. I only for the

advantage advanced the settles advanced for think even will So, more that we become space. I a to in advantage see technologies that order in and this trend taking competitive need of compelling have accelerating after

Alan Hicks

that based going? that you hit on product then products RFM And Okay. your front-end on that how’s technology, XG

Patrizio Vinciarelli

That’s going good.

already solution. going essentially, They RFM to end. order an using Power-on-Package shrink a product. NII engaged customer are we be with of the magnitude that to lead a providing that as solution front a customer, customer of of the So, classical point-of-load technology. we They’re bulky by where end, for will front still have very This a XG be in is size that effect, are able

So to from look that’s that. we space us broaden going to that be a it lead customer and for in

point on engagement. So, this this initial at focused we’re very

Alan Hicks

that have So, you very still with product? high hopes

Patrizio Vinciarelli

yes. yes, Oh, sorry. I’m

Alan Hicks

still high yes. You have hopes,

Patrizio Vinciarelli

do. We Yes.

Alan Hicks

lastly, on supercomputer business? can you update then And your give quick a

Patrizio Vinciarelli

There’s as government programs. in are that programs, well. some There programs space other ramping

had answer coming examples, near-term are I the is supercomputers in earlier with back of the programs, to areas the in to of of production respect one deadlines that one the strength where that’s So mind from and question is coming. the those have requirements in

Alan Hicks

Okay.

sales from you or So, third the that quarter? second expect in

Patrizio Vinciarelli

Yes.

Alan Hicks

Thank you Okay. much. very

Patrizio Vinciarelli

Thank you.

question, the of if at think there I is one we the are more end hour.

Operator

question. We Can introduce more one it? Yes. have I do

Patrizio Vinciarelli

Sure.

Operator

[Bartlett Okay. from proceed. Bartlett It’s Thank Please Jim Investors]. coming you.

Jim Bartlett

of my questions Many been have asked.

the on last Just product. RFM

the you XG six, in that call happened? conference you’d last weeks, have seven said start Has controller and had up. powering it chip You

Patrizio Vinciarelli

address silicon Not that the So, found we’ve the of had issues revision essentially, minor the purposes, to a benchmarking. some for generally A. XG controller Rev that benchmarking a first initial surprisingly, used re-spin some are we requires in

four I Rev it’s have a few now. So, weeks about think which I we in, due is believe, B, weeks, from three, a

power conversion We both DC three expect products of phase, in respect that to scaling – our variety to single go to for AC conversion. with terms front-end capabilities up XG phase, of a RFM, be good PFC, to

Jim Bartlett

well you bookings, what production wins, that And, that the see... design cycle see might and of you when sort bookings,

Patrizio Vinciarelli

Yes.

as XG XXXX. move needle near-term at that So, I is going look being to contributor will RFMs a the in

a after from the mentioned in significant denominator common we you for complementary we the see that hub, which be power that past I should take mains the will, conference opportunities because as initial the we brings to important be calls, year what technology. AC is worldwide happen to as think whatever answer and to complementary, from earlier which available XX-volt I it if in node, It’s to thinking is point-of-load. that your year very question, for capability. next But customers

requirements to is wants XX-volt a suggested have customer in ago, to support to gone we and from that I power systems complete that system lead the sub more that respect much AC to economic has worldwide moment mains. involved. advanced very a a solution with their So, state-of-the-art their And now,

U.S., you way So, be system, source, any from mains, opted another we XXX-volt from our AC their there differentiate in see that as the will truly then state-of-the-art word complementary AC again, point-of-load. a to solutions, and Japan, to there’s source,

Jim Bartlett

order I’m the for very of looking congratulations. the explanation magnitude $XXX the million. much on return forward and you Thank to

Patrizio Vinciarelli

on and few it. be to months. in a a we’d very day. counting Have We’re you talking good Thanks much

James Simms

Good bye, everyone.

Operator

Thank you that your call much. very everyone, conference today. concludes for

of rest may disconnect. your the now Enjoy You joining. Thank for you day.

Vicor (VICR) 23 Apr 202020 Q1 Earnings call transcript