Diodes (DIOD) 9 May 212021 Q1 Earnings call transcript

Good afternoon and welcome to Diodes Inc.

First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today, Thursday May 6th, 2021. to Group, call Investor like Sievers to now Shelton of Relations. would turn over the Leanne I Leanne, please go ahead.

Group Sievers, Good afternoon results of Leanne financial quarter first Relations Shelton President and welcome conference to call. Diodes' Diodes' firm. Investor XXXX I'm

Mehrl. President Emily Diodes Chief Brett President Yu; Groups Yang; Vice Senior today Senior Dr. Worldwide of and Officer, CEO, Investor Gary Chairman Vice us Keh-Shew and Director Relations, Joining Sales Whitmire; President are Lu; Financial and Laura of Marketing, Business

turn over that firm. like results as call I procedures to quarterly by remind the announced preliminary and I'd Before Dr. Lu, closing review to the the to are finalizing subject our the they accounting company's its customary public company independent listeners are today registered

and ending March XXXX. results revision Form As to its files unaudited until XXST, XXXX for company such its quarter XX-Q these subject first the are

a forward-looking and XXXX. and we statements your In to management protection Securities contained discussed and may addition, forward-looking claims the forward-looking with company Safe Reform Commission are those Forms may refer Exchange the including which of today and discussion detailed additional Private XX-K differ XX-Q. the in management's is the in Litigation remarks the prepared the you from risks Harbor and uncertainties results Therefore, Actual statements the statements for response company's filings of of that Act subject to risks more contain in make questions. therefore uncertainties Securities and to

assumes required future except may conditions to these law. change the to or performance XXXX. of company's May represent applicable obligation future management's not the addition, update Diodes as In today the may projections extent as as estimates Xth, by projections in market to any no

Also, Included include Additionally, the terms. management financial common attributable throughout GAAP and the release and this information call provide and in net we income release during additional GAAP statements of to and will as statements non-GAAP the are during call, items company's definitions non-GAAP details. in conference to company's reconciliations measures management release stockholders conference company's net GAAP certain of which income. press discussions and press to this press refer

For unable the XX to Dr. time, the Relations Diodes' in call will section the to be this webcast recording a please call and you via Keh-Shew entire at those available Lu. over to now days at And website Dr. CEO go of listen turn I'll of for ahead. Chairman, President, Investor www.diodes.com. Lu Diodes

new the down and consolidated exceeding everyone in XX% thank range for set quarter Welcome a both quarter been historically Leanne. guidance our first Revenue for a you, seasonally and record on you organically our high-end of in business. sequentially Thank us has a the and joining today. what increasing basis,

of combined was as both Europe record and strong result growth record America. Asia revenue growth POS a with driven total in North Our by in

We LSC of integration from also loading in end telecom efficiencies by with highest with factory due business. quarter also have delivered and Diodes' achieved products. ahead to record operating growth improving automotive schedule to expense we and market benefit management The sequentially. of of is the as XX% synergies Diodes' increased began both our manufacturing organic we record well market which share Combined driven the and product strong in harvest per of progressing earnings LSC's adjusted and automotive already our the computing revenue

when and of our by the is plan. industry manufacturing in has quarter of the Overall, fact, semiconductor target our a at quarters capacity breakeven is advantage serving ahead facility broader at LSC original meaning resulting in the reached as In global this supply challenged two XX% versus loading at footprint facility a XX% operationally constraints. key time

for external internal We our we seeing increasing the are to support and demand needed capacity both products. have

sequential Brett second let of discuss As over in With to quarter continued a call now in in with results me result, a coupled that XXXX quarter guidance our the the growth detail. we to more expansion profitability. turn deliver first quarter our expect another second bottom-line and financial to quarter

and everyone. Lu afternoon good Dr. Thanks

I million in million other interest including million my as As the million for the sequential first our to the $XX.X other expenses the compares focus my operating was and refer non-GAAP approximately first XXXX in quarter of in would of for interest quarter a items full was million of of income million change or of were income, in financial Revenue the record of $X.X a of only. acquisition-related the the quarter $XX was to XX.X% million will a revenue $X increase $XXX.X $X.X in quarter, review asset part were million $X.X compares XX% review basis non-controlling This XXXX or of expense and comments the foreign million as quarter $XX year-over-year of taxes detailed XXXX. loss. you quarter a quarter a costs. partially for amounted first first excludes on XX.X% and basis the today, for which which to compared in expenses line of $XX.X offset and expenses of of million our consolidated included on restructuring to amortization prior record by of release first million, $X million press revenue XX.X% XXXX. intangible XX.X% or XX.X% to comparisons. from the quarter $XX.X $XXX.X and each $XXX.X results more quarter. income also Income at operating revenue. million XX.X% XXXX from $XXX.X non-GAAP of and million on in fourth previous and revenue for before GAAP the the profit LSC $X.X interest currency million or of Total of or quarter for This Gross revenue well for $XXX,XXX Diodes the an fourth revenue

taxes. income Turning to

fourth in share the or $X.XX compared diluted rate million or $XX.X share, the XXXX was diluted net first share for tax income first GAAP quarter for fourth XX.X%. to of GAAP effective was quarter million $XX.X XXXX. approximately count the certain for in XX.X per or and restructuring $X.X tax costs, adjusted the to acquisition-related $X.X $XX per $X.XX per diluted net income $XX.X first approximately million quarter $X.X reduction Our of net EPS million, million The was per $X.XX XXXX income was million share-based of net million Non-GAAP weighted first asset in shares income first a count non-cash from of of net acquisition. the to in in the gain excluded shares, compute $X.XX repurchase was Diodes average net quarter share, Included tax which as quarter due of of acquisition-related quarter costs million the $X.X net intangible of X.X in GAAP the non-GAAP in which million million net share $X.X GAAP diluted reflects part or adjusted costs, LSC used income and diluted quarter income Non-GAAP compensation the expense. LSC of approximately million value income XXXX was adjusted share. investments. XXXX,

compensation for to increased in for or $X.XX million share-based quarter $XX.X share share both by million the the prior and for compared and the have adjusted EPS of XX.X% would XXXX. of fourth non-GAAP Excluding revenue $X.XX per diluted EBITDA first per revenue quarter. quarter quarter XXXX $XX.X expense, first or earnings was GAAP XX.X%

positive adjusted income million million, which for $XX.X a included included release, GAAP to income $XX.X additional operations of flow million in reconciliation net a the first for million net GAAP was to cash capital long-term first included flow have was $XX cash which income Net quarter, our Free and paydown We XXXX. was the $XX.X details. flow of the a of in net quarter expenditures. generated provides debt. $XX.X which quarter million earnings Cash for from non-GAAP EBITDA, first

debt was end long-term $XXX to plus $XXX investments quarter, the balance cash, total restricted cash the million. of Working equivalents, and term Turning sheet. million million. and $XXX approximately At short-term totaled short first including was cash capital

decrease consisted and days work decreased In to first of basis, decreased quarter, XX first a decreased compared in XXXX. approximately $X.X basis the million fourth of the the million in for goods from at dollars process. in $XX.X Finished Total a in million were quarter $X.X goods inventory XX million a Capital to expenditures last in decrease the also terms million. quarter quarter finished raw to $XX.X the a $XX.X approximately increase inventory, Total XXX on materials, inventory million XX revenue. total $XXX to cash of inventory of quarter XXXX inventory consolidated X.X% quarter. as end in in on or days

X% expect model target remain to of the year. for within We X% our to full

Now, turning outlook. to our

for basis midpoint. a For combined quarter a minus approximately to revenue both X%, at an and consolidated organic the expect second of increase sequentially XXXX, $XXX of or increase plus million represents we to on record which the X% a

consolidated minus which a plus We of expected to expect X%. on GAAP operating acquisition-related XX.X% for adjusted are minus GAAP basis of approximately amortization expenses to be gross revenue are XX.X% intangible Non-GAAP assets, or plus be X%. expenses, margin operating or

million. We to $X.X be expect approximately expense net interest

of turn With to included $XX.X to not Yang. shares $X.X these for million the used Pericom said, now million. are in diluted Our approximately over accounting purchasing note or adjustments and tax EPS anticipated expected to rate I Please call for estimates. that be is X% income plus is XX% will previous after-tax acquisitions non-GAAP that Emily be calculate to the minus quarter second and

with normal in decreased XX.X% North The afternoon. below lead increase revenue the by our weeks. combined inventory and up better record revenue the than sequential driven end direct XX% than record of first good to than XX was revenue by range and of and of XX% in records more Brad growth you, terms more in and defined guidance, America. strong the our XX Thank quarter-over-quarter quarter Asia Europe high Distributor POS POS weeks, in increased

sales Looking quarter. first at global in the the

X%. Asia XX%; of represented Europe revenue; North America XX% and the

record computing of market, XX%; automotive, XX%; terms of revenue. of consumer, revenue XX%; which represented was markets, our computing across revenue. regions end the market, and achieved industrial, by driven automotive and communication, revenue; strong the We XX% end record In all in XX% Pericom

in automotive Starting our with review me the let market Now market. end details. greater

growth product market. exposure Our reflects from products an XX% in achieved with increase increase strong minimal automotive this to year-over-year of revenue. contribution organic this revenue total XX% and of to quarter, Diodes for since sequential growth the low driven has record LSC, This by was XX%

portfolio infotainment, to our automotive in our also DASH frequency from Board gain ADAS, expanded product interface as design-ins new We secured contact we ranging automotive Pericom products, the and several applications, control continue telematics for and of with systems.

During IO and we and several XX products the USB expanders new body automotive-grade driving, new connected in-vehicle infotainment products introduced frequency for lighting quarter system, control applications. switches, including the control

lighting, supplies, and LED and introduced and power wins DC-to-DC sensor a automotive instrument with multiple ADAS telematics products over hall clusters, the X-wire customers applications. We in design and XX design-ins also infotainment

also HDMI, we vehicles. DC-DC with applications during drivers, our for additional LED our Higher system protection design devices the links lighting tall data efficiency in gate wins secured LVDS the voltage for drivers MOSFET We product. like MOSFET to two Also fusible saw manufacturers line the wireless electric power quarter, and demand demand. in for car drove new and voltage regulators help strong very demand in automotive for major battery the package released address protection. up and charging, Also

momentum power was product management We computer In very EV continued a from linear SKY prior customers headlight, the minimal industrial the LED to SBR transistor the of market, in year. applications. battery number growth which five portable XX% achieved the automotive product highlights SBR sequentially market. onboard by seven three strong Similar also system, achieve the market the display, new our channel is quarter. and automotive and during car volt Diodes also over released industrial to contribution XX% LSC healthy product drivers, in bipolar bank and and very revenue revenue has growth of we designed-in

saw increasing e-meters, industrial product for wide demand such applications. LDO as range we our and applications quarter, IoT tools, power of the other During family

applications We communication, IT regulators DC mining support of systems. have in design-ins machines, also seen an such number for and fans voltage as to MCUs linear increasing

driver and SBR to continued market product with industrial Trench chipset and DC Diodes' Additionally, design-ins applications continue in MOSFET router, applications success our we like heavy inverter and lighting machinery. saw new projects. in lots Schottky for for more LED design-ins lighting with commercial of share gain

market, market which to In PC X-port/X-Lane reliability and is packet strong the We consumer demand of increase sound we growth. due X.X meet piezo switch our PCI signal bandwidth industrial our driver also released need designed to saw improve performance. to market tracker the Express for

represent and robotic design OEM-ODM applications. We and large activities monitor a doorbells. very vacuum for cleaners design TV continue and BJT also delivery small our products we very business USB win charger wins continue also transistors good to into have for to power decoder our opportunity expand in quick for

continue applications. IoT, In in build addition, home products our to entertainment traction we smart and for

traction our Pericom and routers, market, access radio, saw in satellite remains For ramping size XXX point optical the XG Ethernet over SBR strong the power communication Demand crystal we products for design-ins and from routers Schottky several product oscillator product several Pericom switches. frequency of drove have as high-speed XXX, data gig into processing modules. XXX, connection. ultra-low jitter, the small control family

also for the PSRR sensors and quarter, more wins smartphones. communication design control XX product continue than our frequency to We released LDO achieve devices family in high applications. and during new omnipolar Also in family product design-ins hall

signed be routers IP, would optical application. cams network and into transistors high-voltage saturated low Our

driven quarter-over-quarter with Pericom XX% contribution LSC from by primarily year-over-year in Lastly a revenue record, and initial market XXX% the increased quarterly products. combined record to revenue revenue computing

Type-C New increased existing consumer commercial for demand the released product DP media all high-speed the education along redriver X.X Pericom PC PCs applications. surface our and the design-in product Continuous of and activity propelled volt and In to ReDrivers for driven our continues growth with high-resolution platforms for segment quarter, unit gate by to two displayport in display we three peak. other HDMI HDMI additional across volume drivers PCs. the demand USB including

New switch by solid USB product USB-C strong notebooks. demand and market for port USB-A growth power driven for achieved

growth application. new line charger protection protection and to and year continues Also driver Schottky ESD quarter and new data our we tablet summary, sensor high seasonal Our in power released XXX notebook, by design-in to storage we quarter new lead in line phones, pleased In for first record TVS stage very close products for for power search in strong with applications. USB two the the above bus panels are and power the momentum notebooks, the mobile market, hall during total resulting revenue. Type-C/LED solutions and computing product unipolar start

well POS profitability. and indicate growth low continued as record in Additionally, internal inventory and second with strong quarter channel as a increasing

and we to have for products significant We acquisition floor with the from additional open questions. upside already across by Operator? capitalizing the customers manufacturing end benefit synergies realize begun synergy to opportunities the markets. the that of now LSC the initial With

Instructions] [Operator first Ramsay from line from comes the question Our Cowen. of Matt

please. question Your

now the of LSC? certainly if given to with It's brief us for give You Lu in utilization sure. much, I status afternoon industry. everybody. at mentioned a facilities. of side I very capacity good your have tightness detailed integration Impressive XX% think more the those operations you Thank good results environment prepared comments in might that Dr. on extra a wonder you you're a the in bit upgrade the

couple you us could utilization a trending there little bit an that those of rate see So, give of how the and facilities in next if update quarters? you Thanks. of

Yes.

charge in Gary. to me for integration is the question. He your answer get Let LSC

this Gary. this call. conference Hi, to Yes. is new everybody, I'm

we second our next yes, realization question, will see we usage the in your we facility in third lot quarter. answer quarter. and and do loading by continue And quarters fourth the increased a the see factory the of to will more in And the Okay. the couple improvement

Got it. and thank Welcome detail. to Thanks. you the the for call

be some market foundry maybe little happens be capacity capacity, companies As into out continue calibrate cars or anybody very of my appreciated. but your there that a lot If that impressive position be a strength calibrate the different how tightness is been your end you I same the for there's on growth things Diodes how is affecting industry, points could company market you. other substrates secret have follow-up may is packaging, upside of can supply inorganically, the limitations even of no sell some a and consolidated things of some of may great. to like extra the you Thank devices. wafers, seeing versus the in whole environment would peer both much testing thinking that I'm could question, about deliver? to team, in the us there's that guess it's across you But bit which capacity to that the

acquired of wafer the XXXX, SFABX, fab requirement in that SFABX. of or we GFAB additional Okay. the that big our from most is fortunately, -- is BCD we and are X-inch which getting. another Shanghai requirements the from the The constraint our when provide fab other fortunately And us very capacity. now support. section ramping is a Instrument we wafer the up, fab. fab in half wafer internal internal advantage call Texas we we up another And our GFAB of is wafer ramping are is And And coming capacity call we because we are acquired for the fab the one and is

those addition, LSC Then in is fab So two and fabs for a lot wafer requirement. when the we us LSC purchased helping underloaded. is

just we're talking is acquired we XX% remember you If loading. about when that

So is for or increase already we fab. Gary like XX% to the LSC continue in about up we'll utilization now then that to the XQ, capacity talking it's

see room a so our So utilize our really are by overall, internal fab. more we support good fabs, external in from but growth we revenue our have and can or growth ramp-up get see revenue And to it's more Then yes, constraint, that we year. the able grow severe and future in the us. the -- some us able of since in overall our continued of continue to revenue very continue are to you to rest XQ to to the not XQ support we

our majority factory. of rest the it, then And Okay. again, assembly own since is

our assembly do we expand to continue capacities. So

Diodes a really have minor our we manufacturing to a rest for better competitor due internal constraints. than capability. it limitation revenues. our Therefore, the really performed much see major expansion for we is think lot of I So has a our of the don't And

results jump that. queue. Lu The for you, for Thank themselves. speak in Dr. I'll the

you. Thank

comes next William Securities. the Truist of Our question from from line Stein

please. Your question,

seeing answered Thanks for is are I'm your because about taking other but as companies the all is a capacity maybe It not you more looking question. problematic my -- Great. for clearly -- moment of of it in you more Are very lead was they're in the view. ago, trouble Part so because word your aggregate Are willing customers for are are stretching having lead out forceful sounds the times talking else to Everyone at some a maybe seeing either capacity. far constraints. like the future on maybe company you longer orders we dynamic place delivering internal stretch in parts, And business? or how because that if today? is time?

Right. Hi, This is Emily. William.

me Let answer the question.

we've So ratio. We right? have the very market definitely very, book-to-bill seen overall strong constraint,

strong the just have like very extremely across POS And have as backlog We well. regions. reported, all strong result we I very,

So definitely, bit and imbalance we've supply of in market. demand seen of the a the little

overcoming longer, So closely different make want a it's as we time, about them. actually really to But doing stretching I by sure by -- the bookings, the the we've we're their not been true true understand lead is definitely working I'll lead bottlenecks to been longer. little really People it's What the we customers are seeing that with working customer right? demand, time are I've closely right? emphasizing, understanding say seeing well. is bit very with from demand So

the longer So backlog point view. of visibility for definitely we're seeing

yes. So,

in from about competitors in competitive Yageo potential characterize and couple of and small to other China-based some but the specifically there's last years I One if between manufacturers. the the future market JV Not necessarily of that's think for local competition you. in can. Foxconn generally industry you in Thank entrants An can I And local days a announced sort been about the new produce if new threats discussed is of ICs. semi idea sort China? that specifically,

Right.

nothing competitors I So mean from new. is coming definitely. We -- China new

technology. seen what product before, a low We that the on I see kind Like we haven't of say more for usually while end this competitors situation or already. really would I mentioned the of the

market implemented actually is years strategy areas. So from commodity has Diodes that over a this been deep walking the away

end would to what So drive the right? in higher our really actually improve technology for has the end even continue low having side, been the impact the strategy the doing been Diodes' fitted a competition to big area our we've say business new our product to more is mix because direction continue have that years. actually for I better doesn't So last and few overall with

the product we China have we now and product convert are sales sales Yeah. the big is individual add we sale strong, a our commodity when is very or range. star another -- M&A company total through we And, customer, from approach did very -- to -- wide go And to it past the completed what very I advantage the are the history of not wide new very solution would portfolio. us is few wide words our portfolio portfolio. And or content the we range very all when able the very or they we product strategy of gives company completive therefore, to a to solution. typically of the an or total with

our this competitor the wide out for watch of portfolio. And -- so coming, product range we apply our strength but we

just product for past range I history participate the the customer to this by to our now credit M&A to portfolio. enable solution wide think using us of our of the gives and

on And you. Okay, the results. thank excellent congratulations

Thank you.

you. Thank

Thank you.

of Tristan line the from comes question Gerra Baird. from next Our

please. question Your

question. asking for Thanks the Hi.

manufacturing I currency. that's and in-house analog going to now on more think be years following side that's shutdown. I to increased outsourced the meaningfully ago as is capacity heard notably expecting And production I of between percentage Kansas that GFAB think change mostly about and the Lite-On? your years you of Are in-source over you XX% few next City the have your SFABX,

Chu And and fab and with X-inch X-inch in semi fab ago, also And wafer merged the we have wafer And Hsin [Technical Dr. we mentioned about BCD from acquired TI a just answer let and get Yes. acquired we GFAB X-inch have Taiwan. we Scotland. Keelung years recently, Lite-On SFAB. question. me a we Difficulty] so and wafer But we in Lu your X-inch in from fab

good candidate for future. still capacity are the good we So the internally increase a to with in looking

soon But and our our for very increase So in will we support just that have outside to capacity newer probably maybe the definitely direction reduce and okay. semicon. internal capacity

Okay. Do advantage on products taking some deemphasizing you see or certain And market able basically your gains relative peers versus with? basically are so as analog and you're products some either the supply deemphasizing purpose that serve larger being not then given have you of supply the to given companies peers constrained. share market on

Yeah definitely. whoever When and demand very is the capacity is has strong a capacity company and the very high business. will win the

Right.

just on me little add that. let So a bit top of

expand Tristan expand balancing focusing keep I continue been to about right? we've all really the we expansion, So product change. a but doesn't right? market, the and away continue the strategy right, take think content want an now company. So does right? customer interesting long-term in our mind, to not it's to dynamic our What into is customer it's So, as our focus, base, of

have our is yes, product short-term strategy well take our of clear that and would as our for But reason, very product billion, expansion. the to as away mix that in variations right? say would goal improve continue say, to I XXXX we I continue solution does we So not the So our what the supply that do balance. right? want achieve long-term content demand $X.X improvement there's is mix, total focus sales, actually with a because So by

color. Okay, you. very Thank useful

Loop Williams from David Thank comes next the you. of [Operator Capital. Instructions] line Our question from

please. Your question

the wanted your of if for color guess maybe orders size-up Hey. thanks you and I Good around any maybe I see to and progress. the congrats of through question, maybe the solid could or on backlog quarter. the velocity math afternoon help,

maybe move as orders that, you you've about Just the how And kind quarter? how third of tracking? or this through quarter think we seen into

David, Okay. question. answer me let your Hi.

seeing all view, would on POP So the So, we the higher I seen also we net based more And on we XX%. POS market from than for at based Asia result the across currently the momentum very, strong and and all we direct actually the do I the strong strong the across of backlog POS grow Europe. see say, business, QX point -- also book-to-bill so more overall, very business reported strong grow results we're very ratio, OEM have all in actually much the record well is actually mentioned, continue right, America, I If for as XX%, than have segments. like, look book, data Even North to very, regions as on I than right? the very that strong and we this one.

So segment, strong will definitely industrial seeing the continued we're also momentum we're extra And the to strong. recover. And the to good within continue automotive. continue the very be seeing in computing from strength

I think seeing communication, strong even consumer we backlog well. very as are also

Well, inventory look addition, at you if our in is low. distributor -- the very our from

looking XX weeks for, typically We're Okay. the of below even week. XX and to XX weeks the distributor inventory we are now

although going the future. or a POS, to business indicate addition the strong actually POS inventory be the inventory very So, use strong in in

Thank a are Obviously, rational, just are that thing sense lead But may And a in Okay. maybe little the terms the that being not understanding are and much. line All a from do bookings orders? maybe rational get then, dynamics real you in a you. their fairly sense that more and they're get right. do and in they ordering their orders customers, your placing with are? of double you what becoming, mean times

Yeah.

each rational. I Tier mentioned the we the very going very Tier understand we with we individual to like, X, X, X, see customers closely demand. it. side, have to customer But is, work distribution think Tier the is is through I before, Tier work their not to something X What understand true bandwidth So with the

We resell. at So POS how look we inventory. actually, channel we the measure, it is at look the

say, with this business the strong really overall. solid overall So all I would and data, seems

Great. much. Thanks so

program does management Thank conclude hand the session the to for today's remarks. back I'd further of you. like This any question-and-answer program. to

your for on you now may you disconnect. today's participation call. Thank Operator,

Thank gentlemen, and conclude you. conference. does And thank you ladies program. participation today's the in for your This

disconnect. now may Good You day.