VICR - Earnings call transcript Q2 2021

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Operator

Good day and welcome everyone to the Vicor Earnings Results for the Second Quarter ended June 30, 2021 call hosted by Jamie Schmidt, Chief Financial Officer. My name is Lydia and I am your event manager. [Operator Instructions] I would like to advise all parties that this call is being recorded for replay purposes. And now I would like to hand it over to Jamie Schmidt. Please take it away, sir.

Jamie Schmidt

you. Thank afternoon. Good Vicor ended to call the for And XX, Corporation's XXXX. quarter June second welcome earnings I'm Chief and with Patrizio President Jim in Global Vinciarelli, am Schmidt, of Chief Financial Officer, Executive and Officer Sales Phil Vice I Davies, Marketing. and Andover closed markets a issued results we our June XX. press months the three today, ending summarizing financial the After release for This our website, of press Relations Investor page release has the been posted on www.vicorpower.com.

for statements today and announcements this We this release. at market related the and XXXX. the is Thursday, call of call a and discussed X, call, also XX, any for discussed The current or planned filed after of any XX-K, various XXXX. forward-looking today, replay prove regarding and sales today's are this July forth statements, capacity X-K explicitly Actual made growth, may our purposes call. conference our information of and of to that we information expected differ call, rely current conclusion remarks press the this matters update this and of forward-looking remarks in uncertainties. products, our uncertainties set the contained listeners, Form during assurance to of SEC's as during which call obligation for no opportunities, as Form statements harbor spending face expansion including This set available including management's on The risks call well is the expectations I the potential March customers, events any those provided (XXX) also we potential system In in XXXXXXXX. offer passcode profitability recorded XXXX. property safe I’d risks issuance this statements we call correct. tonight replay from are being A remind not forward-looking Except dial-in and and provisions remind on copyrighted under involving passcode by you XXX-XXXX, uncertainties, statements Reform through of dial-in on during in historical risks XXXX these can with this is will, conference should statement and are document by we any followed such you in X, to Item XA undertakes available only today's no Corporation. statements the Litigation accurate press be the Vicor is this fact, of Private Please be the also and in beginning note materially number light may the results and today. the implied make Securities as forth constitute filed is website. XXXX. Vicor SEC forward-looking will via release. This of midnight August EDGAR Act, upon

In remarks, my In press will our webcast be performance our transcript, the a upcoming or along I'll on now P&L website. to year-over-year of comparisons. the sheet addition, a replay release will quarterly Investor after for for will refer with questions. your review sequential I and change take our QX will balance Form recent to page Phil available mostly of Phil and our Relations call, market review which financial items Patrizio you focus and XX-Q developments, on turn and of a today's shortly

to Exports quarter. revenue sequentially. during prior to an global issues from rose consolidated to XX%, for first approximately allocation rose shipment for the the a recorded XX% Products second up the XX.X% Products quarter shipments. of sequentially revenue stated in sequentially, second supply the million of stocking availability today's Advanced to Brick total continued in Shipments Products. revenue limited revenue to Products from million. semiconductor due quarter. of release, XX% $XX.X quarter first from the decreased press total total was be As basically due Product primarily $XX.X percentage the experienced primarily Quarterly, distributors revenue Brick quarter in component as growth Vicor constrained X.X% quarter unchanged Brick by due decreases of increase to

especially to For Products of believe to Advanced increased comes share to XX% manufacturing share online. percentage as expand total revenue Advanced QX once of a revenue. quarter significantly Products correspondingly will for capacity decreasing total We sales with the first of Products compared XX% XX% Brick revenues, new total

of contrast have the growth our Brick segments with Given AI, and the we XX-volt maturity the serve high we with including to in penetrated segments Products. center automotive technology, data

the margin in was respectively China. sequentially. OpEx of gross receipts in QX’s inventories XX% margin, approximately total from first as Margins $XXX,XXX million. variances goods, QX $XXX,XXX, and efforts totaling turn increase to subject reflecting approximately did dollars of to through quarter. Gross Despite cost QX $XXX,XXX pressure profitability the expenses. R&D $X.X operating essentially approximately and under to to amounts contributed gross as with Higher rose I'll tariff equity-based million, $X.X included expense a The cost in ongoing compensation Turning charges mix for XX.X% due higher tariffs. were of XX.X%. of now to and the and primarily part component QX even XXXX, profit we in we remained of improvements. consolidated reduce yield increased charge Total an to improvement process see recorded expect to high volumes the reduction margin of improved SG&A a QX our increase imports from charge

of in representing income in our increase operational the leverage an of XX% reflects income operating model. we XX%. QX For operating operating margin million, recorded sequential The $XX

effective attributable a provision totaled representing rate based of X.X%. on was diluted net of for QX a per $XXX,XXX, share count million. Net XX,XXX,XXX shares. Turning we tax income $X.XX the $XX.X diluted to of an to for QX quarter for taxes, recorded fully Vicor earnings GAAP income share

at a using and mask to position, negligible. Nevertheless, the when brief three just social distancing cannot workforce, our previously practicing of the have potential of a shifts with financial influence the from extent outside influence update we pandemic, facility. influence absenteeism the our COVID designated about financial such control, now Andover to discussed, manufacturer estimate our due and risk turn manufacturing Cases COVID-XX the Before on our onset of of continuously associated operational we might or such essential COVID-XX and because I is as pandemic our of operated are occur. performance or as much

Capital to million turns flow flow sequentially quarter. of for of quarter of end, receivable days. million net XX.X% cash of balance steady over X.X%. Annualized million a the XX totaled sequential year. the operating at We totaled in the increase $XX leaving cash, for million net investments X.X% short-term equivalents totaled Turning million. spent reserves be at totaled budget receivables, with balance $XX essentially through to Inventories with same $XX remained an approximately million for capital QX at trade increased to construction balances of at our XX.X results, are quarter cash $XX million. ended current. of a increase Accounts cash and $XX.X operating sheet, QX Reflecting QX, X.XX. positive DSOs and All $XXX.X basically expenditures reserves progress scheduled the the our

and continued proceeding increasing QX. budget. Bookings well schedule project in above address with from X one-year and expansion sequentially book-to-bill with and on factory is QX now on I'll Our backlog momentum bookings backlog.

our we third revenue offset outlook an Advanced Turning Brick revenue. increased anticipated expect quarter growth to the Products, in for of Products by in decline XXXX,

profitability. and level forecasting we Further, We margin anticipate gross improvement not in continue product increases expenses. pressure to address are the any meaningful sources operating of do in

will gross integrated await from in factory. improvements new our While substantial production have further margin to vertically

that We overview many you With your of follow-up then Phil expect we and scalability of Patrizio recent that the yourself limit provide respond Phil take as an drive to time questions. given the incremental share, market earnings related developments in revenue operating I as ask will and limited to will a one question our model. can that, per and can of we to available. you so

in Phil? more to please If than back you topic have get queue. one the address,

Phil Davies

thank and joining you for Thank us. Good you, Jim. afternoon

data and hyperscalers. accelerator which bridging to and momentum CPU North power servers generation low XX into address QX next for for applications volt servers of XX XX-volt legacy both American to I'll in point installations showed business, XX and AI First design wins both XX load solutions power at center our continued with factorized rack-based

commitments. to made with delivering excellent in testing as product electrification end our to a also progress units pre-production OEMs QX platforms strategies continued as result with additional AC firmer to front successful adding be in power advance larger DC their new Automotive and R&D modules we'll become our collaboration's of of We initiatives, OEM planned and lead customers. vehicle as development

levels vehicle our management more As visible bring with modules charging new to of we a to our X system. increased new added divisions which the are we new two in Korea, within QX, power are with initiated onboard collaboration collaboration due and high higher with power collaborating, we capabilities seeing major the Tier to projects and OEMs, and in OEMs become advantages density that opportunities realization we Japan with projects partner. electrified an In two power density

of seen of first have and our this At I share our and to market front-end growth five-layers our and on past few quality, significant QX customer we operations, accelerated our with weeks which experience. discussed resources next annual modules add fully-automotive to of acquisition ago, shareholders in strategy, We automotive meeting our to that in years. has year four track a the are teams and qualified progress ship steps reliability continue new the

automotive, shareholders. high dominating XXXX, and billion three conversations layer our growth SAM with are of While markets combined of $XX and with center, data our a AI growth over currently by

The are applications broad legacy builds the opportunities significant. the on emerging on are markets product revenues. building that broad a We our in business markets with focused

for growth solutions. lower-weight challenged customers increased requirements, the as attention power billion With look smaller, in XXXX for SAM higher in performance emerging delivery higher focus power and with Advanced and Products $X and justify markets

and We be our now Patrizio, markets questions. your upcoming will will you. in progress that With Thank the Jim I take updating broad calls. in

Jamie Schmidt

ready we're Operator Okay. for questions.

Operator

already [Operator I Would you we Thank much. of like you as see have receive Instructions] couple very to a questions. And received them? can

Jamie Schmidt

Yes.

Operator

Great. And going from coin one Financial]. out. coming go the And ahead, I'm the [BWS to sir. Hamed first is of you. Please Thank line Khorsand,

Hamed Khorsand

you're backlog compared results, specific being Hi, commentary? in not releases, just lack a anymore. in of your disclosure anymore, to providing around the numbers is, prior earnings not bookings number Why you're here this guidance anymore, change question the time why

Jamie Schmidt

dynamics the indications it's a On a a is help we in our And function the there's directional analysts – and front, community of number on book-to-bill churn. to that is and around business. decided of bookings appropriate are and backlog feeling understand lead investor the the what basis. the just lot bookings It's three-month time

relative a to one, which many with we feel provide. companies other book-to-bill going comparison like dynamic So more it's than and we're is actually of

Hamed Khorsand

And did the to guidance, decide quantitative? why you than more qualitative go

Jamie Schmidt

accelerating talking what think to products, wanted advanced the in decline is we've Bricks see point some are for that I the about time. we there's And revenue going in sequential to Well, we a as growth business. been out

Hamed Khorsand

Okay. you. Thank

Operator

next question. coming line for ahead Company, [Needham much the of very And you Thank sir. the our Bolton. Please go Quinn question & is LLC] from

Quinn Bolton

give Nice my just job up decline I Products? margins. in and the the fairly decline the in do got say talking about you a of I quarter. guidance, revenue the if talked accelerating guys. some on Bricks. Or sequentially Hey, results sense; quarter-on-quarter growth us particularly question. north third which follow wanted I Brick I've in growth will right, gross driven substantial in should the accelerating increase on in advanced look advanced If products, I XX% at Hamed's by grew But to products you overall AP? you're a about numbers Can still think on expect you

Jamie Schmidt

not I think in we're on guidance sequential quarter-to-quarter giving that revenue. change specific

advanced there. get that mission advanced change ramp way products, far clear And relative the is growth say you're in up. not the supply, I'd to think this point our directionally, I ship we quarter-to-quarter component backlog, products. the to off Quinn the at business to accelerate have

which Brick, last is year. success dealing we're the over in the a the there. given So not business with strength surprising is of that And materializing decline

think revenue going but growth, the products. I not net-net advanced guidance we're to give momentum – is specific there on the in

Quinn Bolton

a maybe guess I And Understood. follow-up.

think the meeting it late at June. was in shareholder I

the third Do that's You in it's mentioned how dollar Products still could for that, you basis, the shake out QX? a to exceed advanced going the products quarter. think on Brick

Jamie Schmidt

Could well be.

Quinn Bolton

Got it.

will get the I Okay. back queue. in

Operator

our Jon And coming question. of the for Tanwanteng. much very you Thank Securities] question from is next [CJS go Please ahead line the sir.

now. open is line Your

Jon Tanwanteng

Hi, taking good you afternoon, quarter and guys. great Thank my for question.

going to you look quarter, quarters again through that you were clarify growth Last a X% callers. to you at other revenue do two wanted as had Just with probably said the out sequential capacity driven Is the that ago? of a changed that gave limitations. Has outlook gave the you quantitative end qualitative quarter year, outlook from outlook with the mostly consistent you that? by the

Patrizio Vinciarelli

changed. Nothing has

this in as the recently growth Jim's of able were there. to achieve quarter, I limitation So quarter earlier situation. mean than upper had that mean, sequential very dynamic still we the a to articulated to That's that magnitude. the ended, that a is limitation point, X% slightly year. its the better it's end we I

We have in just perspective. put to different a it

We this are booked quarter quarter. solid for next and

change availability were component demand. So one particularly in where above of not issue. might challenge The above an far bill it's is in levels short accordingly The mix bookings expect. was and component substantially challenge the of is the the environment semiconductor an lack demand. the availability, term The challenge not in X%. is The book

need So we that. through to navigate

year together limit. early sequential compose to limitations still the in are place. growth in terms We're of to in We striving is that

Given integration we vertical component actually constraints considerations do. availability see capacity to we'll to again, the what wait and without have and

Jon Tanwanteng

Thanks, seeing exiting about the talked that year. your that in in I gross you changed XX% other second we're as and chain? the Patrizio. availability all the and that supply target think change And Has issues given it. question, mix Got component last guess quarter I my margins

Patrizio Vinciarelli

idea that year, Products. internally in we're minutes. The last the Advanced and not for But utilizing considerations touched increases has start No. the process upon the given there This sequential the been a remains steps Again, like driving our changed. have that that revenue. goal And at the end as are is challenging beyond we been our that our get of to to for goals goal. in just packaging our few capacity of

of XX% plenty well opportunity have the beyond go We to level.

that I with direction. in on respect we think track are So to progress

goal. within quarters, and that expected anything last been remains couple the if think doing a of our I than better we've little

Jon Tanwanteng

Great I'll Great. get the back queue. quarter. in

Patrizio Vinciarelli

Thank you.

Jamie Schmidt

Thanks.

Operator

you And from the much [D&B John for the coming the Dillon. sir. Thank very one Capital] question. go Please is of next line ahead

John Dillon

Good call guys. the got a question Quinn. then quarter. a response in Phil, a Congratulations. to in question Hi, last follow-up, I from and conference

if next you bit. the technology. mentioned You generation a product on elaborate wanting little I'm can that just

Phil Davies

Sorry, John, and generation of area the sort product what next technology that's we…

John Dillon

but I it not am was think automotive, sure. I an

Phil Davies

Yes.

lot a development. product – I next product generation under of As said, new there's technology

a initiative In lot area, the of terms in think, markets a the automotive, XX big of expanding volt center and AC-DC product development vertical and we've delivery. some I then a is going that industrial SAM of areas. the got markets. we're of now data us, there course, broad segments it's in our innovation power data center, on in bridging the charging conversion area, in targeting both with for the

the going really quite it. it's lot John be middle to a there's So on, and in exciting of

Patrizio Vinciarelli

to so under of the If around hood in you modules. power hood, the look speak, the

level of markets addressing that next frequency of scalability on variety the just modules that all advances capability, to. are the integration, pointed the effectiveness, silicon dynamic performers, We the of power our control converging Phil generation cost

not exciting. development not further silicon science least that's the of key next are speed, but advances It's low So and in of last generation step further power the products cost modules. of packaging will packaging attributes also technology advances just technology core our components noise, quite development and with to control up that enable in density, effectiveness. systems material also efficiency, relevant It's in

John Dillon

Great. Patrizio. Thanks,

everything. your wondering looking moving your competition away advancements? what think with size And with think you in I'm was competition? to are for, it that, I the regards because these yes, that's I you away I Are from still just accelerating had from do to was and

Patrizio Vinciarelli

our when But further are performance what technology, old is refined it So when technology. to dead say two the road system to from our mirror it It that of been it's an limited competing ahead. the comes to be something look with as tends end don't We that future performance perspective, competition see look comes health, in at not pretty we we predicament frankly, our much rearview possible. power conversion to to that's a stage the at of opportunity. in packed

John Dillon

You road? end a mean? Is competition's mean you at what the dead that

Paatrizio Vinciarelli

regard the Certainly, the end. as [indiscernible] is dead competition

John Dillon

Great. queue. in have much. back I some will you But I Congrats the questions. so more got Thank again.

Patrizio Vinciarelli

Thank you.

Operator

for much our question. of very is Capital next ahead, And Management] you the from one Thank line Please the Hicks. go [Ainsley coming Alan sir.

Your is now. open

Alan Hicks

on gross Congratulations Yes. the margins. quarter, the especially

highest the I around think since those are XXXX.

unit, expect still. would fast – you've like you've expect it's markets. part that revenue the you got What think your good a semiconductor big eventually. question I on over been equipment, do some decline not saying I so BBU going kind know know end are of we to of How flatten – is to can my updated want in for you'd it's projects keep markets those time? And decline those I So

Phil Davies

Phil. is This Yes.

average bookings thing tariffs it's and trade China still has three But or terms or are and So it said, very point, bookings sort as because And four so of and in that steady the and and quarters down. going flattens recently, and – and years. macroeconomic just with The been relatively sort of the on, very been the They're of up Brick to whole go and based. two your as years, cyclical. constraints revenue. Brick revenue were. with Brick The lead the and up moving supply forth. revenue time that's out years when of line Brick BBU you with it extensions over time They you down

still good it's So shape. in

of of terms years those its customers are them the advanced us, doing mentioned actually of revenue. and still share declining now. important couple is that convert it's – an going Shareholders new our and I to has been As really Meeting, products, for we with well Annual share to overall But in well although our on working to business a

important and over to I So build that new convert bigger to the them to that legacy want new we talked broad focus on still what customers customer base is and with on is top also about which a us, markets, technologies earlier. of

Alan Hicks

Yes. going would fall actually new if advanced then And advanced still That's were technology. BBU? to what wondering more into products? would those Or under was that it to convert fall you I

Phil Davies

that products, customers. plated molded customers. advanced that They The going It's package. you sort customers. take we're the same those AI well. molded the They're not space. the call legacy in X, the those for call center to a you're products. chip But with pleased and We long. the gestation They're DC/DC they're a that's in products markets And we just see industrial package, the black Yes. while the story once that progress converters, And conversion products. DCMs. of X in data It's making really the the classic periods long legacy technology. quite to time applies I'm move new with are Layer as in long, been Layer

Alan Hicks

Okay.

actually would advanced your products customers existing some to penetration BBU with and [indiscernible]? you say you're with increasing So new

Patrizio Vinciarelli

Yes.

Alan Hicks

Okay.

Patrizio Vinciarelli

base, segments customer several the markets have in market Because those within Yes. legacy been expanded.

to significant For in see train sorts a mean, share with there market products. railway high-performance being all speed bricks. converted we example, our a – of I and more significant the advanced systems to trains, starting electrification for high example, all over That's right? rail we in have had you're of

better wins density were in cost love performance we I as older getting customers bricks and and well. there speak, our it's than and almost great more As because some effective XXX density

So advanced products. proposition convert it's a big to to value

Phil Davies

higher more customer are the Yes. providers. effective considerably There and margins cost to

Alan Hicks

actually but customers. the So your existing those over could revenues line decline time, to revenue BVU you're increasing

Phil Davies

That's correct.

Patrizio Vinciarelli

not just of has the been But to because decades for the now to to products, growth demise forecasted revenue happen. is about of It's new the cyclical. going irrelevant of it's happen which become Yes. line,

Alan Hicks

Okay. Thank you.

Operator

for of Capital much And [Craig-Hallum go our Thank you is Alan the very ahead, next Shannon from the line Group]. one question. Richard. Please coming Richard

Richard Shannon

as talk Maybe you here. question nice guys here so and well, my an quarter. advanced on numbers in the products, taking for acceleration congrats a thanks about on third question Well,

if buckets: center, if you three those about than historically there's the into And HPC. you if can three others of dynamics of extend acceleration, or couple faster in to data buckets slower even any be terms next of and the that kind AI quarters expecting the the kind in talked I maybe you of You great are delineate growing wonder of a there? it'd can hear year, third quarter.

Phil Davies

Phil. Hi this is

So although adding AMD that bridging HPC, side now. there; of end for new $XXX AI, by five some the the the new growth. growth epic rollout being in is well, HPC a the markets us. on the quite as we've in to the And a being years XX CPU's market Intel then in that as driven data substantial talked million seen XX data in projects – CPUs kick that AI here, the center period from into where going XX-volt and used I to centers SAM about as opportunity interim

And now. So is we're that's in those growing and a it. that playing year. of over Intel next get and from AMD as hyperscale starts opportunities into an really these well dominating and as to see this to right AI there but into And data ramp-up the centers, piece piece we'll platforms CPU important will rolled-out in rest is grow continue

Richard Shannon

constraints. My on supply Okay, question follow-up is perfect.

if get you again of And much. this, visibility going to your see gotten when state want update so end on you? the on or for it's a to when this Just is improved do worse

Patrizio Vinciarelli

bigger. So it the doesn't gotten gotten worse has but in constraints the demand terms supply of

is allocation. the with being rapidly And challenge fundamentally so meet growing on some fixed demand while to to components respect a

Richard Shannon

perfect. Thank That's me. for you. all Okay,

Patrizio Vinciarelli

Thank you.

Operator

Quinn from we follow-up of question Bolton line the go Thank ahead, coming [Needham Company]. & you. And had Please sir. a

Quinn Bolton

to today. as where watts Rapids Nvidia you on you're the processors. TDP generation next some maybe for close to opportunity. seeing think XXX standard recently Sapphire I pretty a requirements of on Intel AI, the you XX TDP look I beyond the it's key-up CPU's like And Nvidia was Or do volts. there transition of servicing still a of are actually couple bridging years? mean, higher, going and these longer of standard to GPU's think just going the you takes time? that think I follow-up the drive your be sorry, from forced power how you I over So to do this bridging new of XX opportunity, out and higher that really I'm at wondering that kind is hyperscalers we're on broader the looking server that to that think I convert comments quickly next rollout think see mean, period the do

Phil Davies

So but power those higher the of definitely power centers. in addition seeing the in CPU's – are the obviously the is AI adding to those also data you're rack, what in

those And that of has. see – we of would terms within the generation peaks started converted And to would in to fully would like AI volts that up, that. is above is so or up to XX what XXX XXX-amp overall companies. installed current of fronts. of way, way I've what next the going power GPUs both other I hyperscalers on year terms in programs that other type budget sort getting two over the the TDC XX of The start that range, XXX, are systems in significantly conversion – I within three period the terms to haven't in the volts it's time and internal hyperscalers Google of rack say But expect

their for those initiatives. are that the that XX-volt are guys definitely interface. high So Because for, those workloads their AI-AX all well and as need is own current ongoing developing AI-AX

your lot sense base. makes want the based a own when of with a CPU having XX-volt rack along to So chips system they integrate

Patrizio Vinciarelli

power to And end rack with conversely back [indiscernible] to no to to that's of right, it PowerPoints XX-volt power sense to nauseous. losses up the clearly dilute from boost power distributed end XX from distribution deliver makes front-end devices, only a at load it

Phil Davies

Yes.

Although we're business. take happy the to

Quinn Bolton

server point XX opportunity probably means the Right. standard XX up $X question addition and the the the server the I and if that But of Is billion in standard to an million XX. about retainment GPU's the CPU going load consuming AI is, $XXX you've on to a follow-up a the and guess In know or are in just got to is that's, bridging do more XX-volt likely I at for are see power control volts. AI to have do more load that of the the processors that's shareholder that if the to that's consumption point you that sort talked processors meeting? CPU's? of you rack, XX-volt there power

Patrizio Vinciarelli

for that crunch the but of estimate our to Not products, that a with to And CPU's. greater want our Phil would factors as opportunity. of the because kinds levels trend to combination silicon generational converge silicon Again, towards on back next-generation with pointed earlier its new think I opportunities going scalability up national scalability. earlier power higher opens a and out of rough those

Quinn Bolton

Okay. Thank you.

Operator

Please coming Thank of Jon line you very sir. Tanwanteng much, from is Securities]. one ahead, Quinn [CJS go for the question. next And the our

Jon Tanwanteng

the thanks guys, for follow-up. Hey

you you top ask like The a Evy on story and And obviously one to to success of guys industries a first lot wanted efforts. that satellites, there out I are there. you of for domestic capacity out take of semiconductor funding was, you are about able AI these advantage as are other and the next expansion? something Is there military programs think in step critical the and U.S. these to the

Patrizio Vinciarelli

government We some reached critical watching for representatives, the have go President of want We're were to electrification. closely. local in to company experts U.S. it have act Jon billion, right who child would $XX the to here part Biden by for investment and to you intend said, contacts locally approved The to of and – a we participate house that's hope that, field I through so, pursue. be we the poster infrastructure to the think out us Jon, the in, where that's very we kind of as and has chips certainly we're once

of So get we fully that. our intend share to

Jon Tanwanteng

And money. What kind think it. like that would kind the low is it or that How free of you? should Got would of is rate bring we what strings benefit it? interest of attached just to be

Patrizio Vinciarelli

finding and But of local play we out. of would details stages calls dig well have We've early of kind in that We're had that in here the to with as time. DC. into experts over out how the some

the all through. to get and ask of do to Bill fee passed pressure us get the I'd Let's yes, to our powers best that

lined we in right and So but participate that the up. to contacts we have intend

Jon Tanwanteng

Fair on Okay. good and enough that. luck

Patrizio Vinciarelli

Thanks.

Operator

Thank the our question And much. go is Gus next from of or Securities]. ahead, [Northland comment you coming sir. Richard Please very line

Gus Richard

Yes. questions. my Thanks for taking

little the get or is summer I it aero sure as a able to to of not a a you bit. you're seeing? customer more the Business can parts, no of or attributable Just, down sort slow it slows that bit little Brick make color is seasonality’s is give roll-over want understand being is function I Is to to your just industrial

Patrizio Vinciarelli

did due tariffs on up call XXXX America again It It's off of being end I growth the little mean, sort We of now started at to North down, and China the picking relatively flat, quarter-to-quarter. trade you there is it situation. China quieter. aerospace. defense and a seasonality. some, big XXXX, in the can depending up and and Europe in had

flat. a you but as back very cyclical, average sits So we again, to coming it period it, it very I over call longer relatively seasonal that of as, as want out time, say relatively, it's if business, to it's

Now do one that we for opportunities sense obviously there margins prices to of we take products so. is treating, a have and but those at and the business. those opportunities the the some things increased with looking constantly makes we're pricing strategy while do customer right and way, that better that And older where to looking are obviously for base can we of

Gus Richard

auto my your think and first follow-up, a on see you when been Thank might Got get wondering with was helpful? start manufacturers what per is you. you to it. then for just now. the just for working of while that vehicle, the he business, be I have auto would sort your content And revenue you

Patrizio Vinciarelli

Sure.

on high depends ago. put ongoing. the got now from as healthy collaborations XX hybrid, of the for start at based in which XXXX got about a whether as right of $XXX end you revenue plug-in with electric hybrid look really So quite $X,XXX, above very $XXX together have months rages vehicle high NRE until because up is We've $X,XXX. or we almost But electric revenues, the pure those a to vehicle. performance per OEM content is quite partnership and that mild Content revenue, few first mostly terms we won't

So different but certainly the it varies platforms, healthy. very it's across

Gus Richard

much. it. you Got so Thank

Patrizio Vinciarelli

Welcome.

Operator

Thank you sir. from ahead very question much. And we have coming line Dillon. of a go John follow-up Please the

John Dillon

on that? wondering Again, auto modules that than last it were the talking conference you were to color core, somewhat Phil. able Can give to more and be auto the about by I'm us what just just talking about means. you call you industry. supply on might Hey,

Phil Davies

get business to design looking our not business we’re and some side the we're what at to point. Tier Well, that to the systems reference opportunities is primary supply of and NRE build John systems of early at can instances aiming into some good then take to in full also not point in out for on time, providing and automakers. reference They're is pre-production. at a things Xs this who doing early the meant it. production modules and this provides designs But the

right is partnerships and focus modules Tier and Xs. on OEMs our and So with now working also with direct

John Dillon

and data along And the centers auto? coming how for both licensing is

Patrizio Vinciarelli

So to are we're suggested methodologies key a the and a apply few of discussions, set why consistent past on we in we mind, fronts. Again, as yes, in keep that's in proceeding. need objectives

John Dillon

Okay, great.

Thank Okay. very you much.

Patrizio Vinciarelli

you. Thank

Operator

Thank you John. very much,

Christopher is question from Hillary. line sir. next Our coming go Please ahead, the of

Unidentified Analyst

it I'll but maybe question The way. question, Thank you. different previous my much a was pretty ask

you you contemplate predict? to capacity are might hard As SAM your then licensing the to round markets start next you Do of particularly have of and look agreements like, what expansion have if some these all end your growing.

Patrizio Vinciarelli

correctly, understood So capacity expansion, question your understood Difficulty] if I you and that. licensing I [Technical into how if plays

we able may million yearly of think estimated than So in if out more be to the to expanded get that's the that’s $XXX we what’s a facility. a question, the about in capacity we’ve of happen the on total seller are on to discussed, equipment get Street be Federal side, to basis. now to facility million as $XXX bringing been revenue the I aggregate

again, U.S. preliminary a away. to get be as level. have basis priority. the to top focused on premier facility, – site substantial $XXX states campus I a not there Hampshire, different with step on Federal Street, and at up from We more capacity of still existing now away any been we're We the looking that. is bringing as site a months on regarding level believe that, New both Southern in decision to We in that’s increment at the And capacity to going well or need continue very to far the next capacity fruition on our lot riding of is some a a a million obviously the suffer different very several the right

with take us will necessary to capacity. and a a that care next judicious give the of room us to respect incremental while being the choice make So for

Regarding continuing The OEMs manufacturers, part for products a otherwise need while module of providing that and kinds detract not power otherwise which from pursuing, difficult to modules opportunities it in really infringing supply for own licensing them assurance from your we’re to licensing licensing, enable spot, capabilities. own the incremental with licensing capacity that will think OEMs from of system opportunity is which was could Any licensing for of the very third-party our source I OEMs doesn't modules. put question. makers detract kind from to

interference. So complimentary I kind very would as this developments without view any of

Unidentified Analyst

continuum in solve that Well, press AI would as to trying increasing the set demands may of you're you – thank this if the you challenges you one a for it referenced with new progress? automotive of the your these it the detailed release same a as Is other, answer. describe markets. or create products? I and systems challenges continuing continue the along And Does to in

Patrizio Vinciarelli

that extremes an are respect that's as So and from for power to to with in power of insatiable value respect in and there into with translates time, have panels give in AI, to can, escalating vertical for of point order number the there we've customers willing initiatives is, vast the there are a challenges, you lower would is directly as fundamentally current computing proposition there much me it more I general, performance and current voltages because more and say for appetite of had advanced to delivery, to to components our chips ranging needs. load within for sacking the advances forth. on satisfying their – rationale so go some And and power to so a solutions

demand packaging all equipped it's escalating made not investments the address, terms conversion our or unique the because in AI So uniquely systems, that components we – and our and technology. in of challenges we our particular but facets and technology of for address Vicor key least is of last rapidly think of control developing to equipped to car suspecting in processes, engines,

are have nearly I other think the component the detecting and AI, they common not methodology, in packaging while pressing common is without but are automotive key and our other as challenges components engines, control front, other on power effect that benefits technology. processes in commonly as systems, we

inherent the as in that in is the AI demands same to in – we So particular. opportunity advances to make address

opportunity least markets, the same this applications not developments developments, for is but the We other ways point end be in in of also get time, kinds same where technical in demanding for solutions. challenges of right kinds at at other may the to leverage those as the

Unidentified Analyst

you. Thank

Operator

our one ahead, you Liberman. James line go Thank is Please next coming And Christopher. the of for question, James. from the

Unidentified Analyst

numbers marketplace. evolving you on if altitude Great. could opportunities comment wonder how business terrific and a indication XG you're in satellite road. internet are These wonderful I low of down the the positioned in the the

Patrizio Vinciarelli

Sure.

said first chipset earlier, to we release for that particular engaged with in as press that marketplace. Boeing develop we our So

rolling have So it's Boeing and with the eight roll year out, out, that announced towards they over think this these of participate OXb products companies low putting guys taking the numbers, starting total Leo think the next but the I is due satellites noise obviously constellation market. is meal, lower those I are earth about to networking would for in in is we've to chipset lot density, been at its Boeing family And larger in of And interest platform the to for year. other sensitive actually to and be ASICs. aligned that there the very end that is which the up in satellites early taking constellations same its company been them ship and orbits. higher Leo a that then a product much

collaborations. seeing of for advancing level those really there to good to marketplace look and with customers So performance continuing and engaging customer that we're other other at products we're engagement and the next

make well. can So year. further on early announcements we Hopefully that that's going next

Unidentified Analyst

you Thank That's again. great information.

Operator

Alan our ahead, very last And you from Please now go a coming is in the much. Thank as queue follow-up question sir. Hicks.

Alan Hicks

quick on you your front-end book question had do expect just to products? from a Yes, when revenues significant

Patrizio Vinciarelli

significant booked already products. we revenues front-end So our for

quite is within $XX bit more And have project coming. to next there months. We XX a is million that shipping the be going a

other the earlier, attributes. suggested As product competitive these of merits density offerings from in in again, terms capabilities terms fashion, and apart in selves key of relative dramatic a

and very Again, including – opportunities it to back are coming key comes be AI higher and alternatives. answer front-end more costs solution now to higher particular, opportunities systems requires of and part there drive and competing performance of And our markets management there in solutions about size density, density represent from that's liquid are and levels that that the one us the with was higher our liquid our attractive more ingredients, of to particular, XX systems. very end and cooling, in can computing power a the cooling in front-end – have in that in the solution demanding right particular. packaging So for when terms a high requiring those number of perspective,

Alan Hicks

$XX say you hear I customer? million Did

Patrizio Vinciarelli

and into that’s has out of Yes, It $XX million, three. XX XX, become production months. about started go few one, in next to actually

Alan Hicks

Okay.

would months. the that ship over XX So next

Patrizio Vinciarelli

will all shipped it by July I of Yes, next year. middle the think of

Alan Hicks

Okay. Thank you.

Patrizio Vinciarelli

you. Thank

Jamie Schmidt

conclude. think I to Operator, you. ready we're thank Okay,

Operator

everyone. you Thank

please today, and day. may rest of You enjoy now the for the That call your disconnect. concludes

Patrizio Vinciarelli

Thank you.

Jamie Schmidt

Thank you. Bye-bye.

Vicor (VICR) 23 Jul 212021 Q2 Earnings call transcript