Diodes (DIOD) 6 Feb 232022 Q4 Earnings call transcript

Good afternoon. And welcome to Diodes Incorporated Fourth Quarter and Fiscal 2020 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]

conference being this February today, reminder, XXXX. X, a call recorded is Monday, As like the to Leanne now would I turn Shelton Investor Sievers call Group Relations. of to over ahead. Leanne, please go

quarter And XXXX am to Sievers, Shelton Relations of Diodes’ President afternoon. Good Diodes Leanne financial conference call. welcome results I Investor firm. Group, fourth

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

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

subject As revision XX, for full such, fiscal to year Form until the unaudited results December XX-K are files its its these ended and company XXXX.

remarks which of Therefore, Harbor the additional statements the addition, response contained forward-looking questions. forward-looking your contain make Private is In of Litigation the the to Securities protection forward-looking in statements may that to prepared are risks company Act uncertainties, management statements, for management’s in and and Reform Safe subject claims XXXX.

differ XX-K including to the may company’s Commission, with those a results filings the Exchange from therefore, and XX-Q. you and Forms in uncertainties Actual Securities more discussed of we refer today, risks detailed discussion and the and

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

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

you to listen at recording section Investor at via XX those the webcast days For of entire this to the in www.diodes.com. for time, available be Diodes Relations of call will website a unable

And call now, turn I please President go Lu. the Lu, and to over Dr. will Chairman, Diodes Dr. CEO, ahead. Keh-Shew

COVID-related the you, XX.X% revenue record and everyone, report with in thank us power for I economic XXXX, Even performance Welcome, well Thank you over throughout joining growth today. am the as outage and slowdown. pleased dug in down the considering the year XXXX. Leanne. when global to as China,

ninth represented In the our growth. consecutive fourth fact, of year-over-year quarter quarter

were to our to to points $X.XX margin and basis XXXX power non-GAAP operating and EPS significantly to highlighted Additionally, GAAP cash increased XX.X%, earning also expansion points margin XX% and XX.X% XXX in to gross $X.XX. basis XXX expanding EPS with generation growing XX%

$XXX We record operating also for cash of million. achieved flow

revenue Underpin market, XXXX with for reached XX% in the increased automotive which the was continued product growth company XX% over strong end of our an and year. performance, automotive

strong growth year. The We products Pericom growth model XX% represent the exceeding expansion end our the contributed product throughout margin our in end our continued which markets also and also efforts, our target of through industrial of ongoing gross with of revenue XX%. to automotive market industrial our to in market drive increase end and combined our ongoing contributed expansion those content to

in billion $X team. mix revenue As a part and achievement of the improvements, reaching level meaningful was significant Diodes product of the XXXX, our entire

for million grew the profit gross the With XX% $XXX to year.

consistently of goal financial our in annual deliver am billion large ability towards growth gross I the both giant targets in to topline step proud significantly shareholders. next our our expand profit. a for the earnings $X our We achieve very XXXX have accomplishments and and taken

quarter our me discuss now year the Brett and to and quarter detail. let that, over to call turn With financial full guidance more first results XXXX fourth in our

good quarter a and from in Revenue XXXX and over everyone. Lu, million, the in Dr. the $X.X $XXX.X increasing XXXX. X.X% of billion, quarter X.X% XXXX the $XXX.X fourth for the $X an grew year revenue was in XX.X% fourth XXXX. quarter down from afternoon, $XXX.X Thanks, third the increase XXXX million million to Full billion record

of of prior XX.X% was $XXX.X increasing revenue from quarter or of $XXX.X XX.X% from in million profit or the and $XXX.X million Gross in prior the for quarter. XX.X% down million revenue, fourth revenue quarter the or year

For gross full gross over $XXX.X year, points XXXX XX.X%. margin improved increase record XX.X% a basis a million, GAAP XXX GAAP record the profit to a was and

million expenses were compares XX.X% fourth to for or in or million XX.X% fourth $XXX.X which revenue XX.X% in quarter This were in GAAP on million the amortization asset of of of of $XXX.X a prior quarter quarter revenue. of revenue. excludes and the basis million operating or $XXX.X and operating the expenses Non-GAAP GAAP revenue $XXX.X XXXX non-GAAP expenses operating XX.X% revenue, XX.X% intangible third $X.X of quarter acquisition $XXX.X the million XXXX related of expenses. million or of were of or

$XXX,XXX $X.X $X.X loss $X.X of approximately $XXX,XXX a and quarter, Total income, in other million the expense expense, other income. interest for million of amounted of million interest currency foreign to consisting

prior non-controlling compared in and and the $XXX.X million, the in quarter. $XXX.X the taxes in million to before fourth quarter XXXX previous Income year $XX.X million quarter interest was

taxes. income to Turning

the was tax approximately approximately XX.X%, fourth non-GAAP XX.X%. XXXX, tax basis, income rate tax X.X%, rate non-GAAP the was the includes to for for effective a non-GAAP Our for full rate year was and quarter On quarter related taxes approximately the fourth which the items.

XXXX was or the million income XXXX diluted to $X.XX and the $XX.X $XX.X compared in for fourth per $X million fourth per third share million XXXX. quarter net share, diluted the per GAAP diluted share or of $X.XX or $XX.X quarter quarter in

record XX% from was $XXX.X XXXX the for million fourth shares a full income $X for GAAP or million share year. the The share XX For million or XX.X XXXX. to the and compute in was EPS GAAP a per used diluted which per quarter diluted shares net $X.XX $XXX.X million the increase full approximately diluted count record was year share, XXXX,

Non-GAAP of diluted compares net $XX.X which the in was and million diluted $XX.X per million million share of acquisition per $X.XX in to tax or This diluted net fourth quarter quarter. excluded quarter intangible share, costs. fourth prior $X.XX $XX.X $X income the per the or adjusted million related XXXX or share in asset

million net diluted share record increase the an full adjusted $X.XX in the a income For was per year, of or diluted per record XXXX. $X.XX share, XX% million from $XXX.X or non-GAAP $XXX a approximately

expense non-GAAP of compensation the $X.XX the full share-based by non-cash EPS share, have diluted increased earnings tax GAAP and Excluding share and for $XX.X respectively. fourth million of per share $X.XX diluted would adjusted both net per for quarter per and year,

the quarter. to in million XX.X% revenue, in million We revenue a of and compared EBITDA or fourth prior the XXXX had million the in that quarter and in fourth for investment gain $XXX.X of $XXX.X XX.X% that benefited XX.X% or of quarter was XXXX fourth $XXX of revenue quarter. or EBITDA quarter of the on

in compared a the of million For to revenue XXXX. to XX% $XXX.X XX.X% year, XX.X% of record EBITDA $XXX.X revenue, full million or improved or

details. GAAP earnings GAAP income which a included net provides to to additional reconciliation in EBITDA, adjusted release We our income income of net have and non-GAAP net

$XXX.X fourth and Free year, including generated record which for million $XXX.X for million, Cash cash was $XX.X million from million flow was million, included flow operations quarter a for cash $XXX.X flow $XX.X the expenditures, free full capital $XXX.X for CapEx. and was XXXX. million for the

$XXX of paydown total Net negative $XX.X cash net for negative a including of the total was cash debt. million net the the debt, million, $XXX.X includes million flow and of was of flow $XX.X full paydown which year, million, a

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

quarter. In inventory, Finished days the end inventory approximately terms the compared fourth to to XX last XXX, were XX, as of last of were XXX total quarter, days quarter. compared goods at inventory

from prior raw a goods, million increase process. in in million work decreased quarter approximately the Total Total a and $X.X $XX.X million decrease million $X.X inventory in million. dollars inventory $XX.X to in in a the quarter of materials consisted decrease $XXX.X finished

have to on remain million expansion Science fab fourth and model expenditures $XX.X revenue. the XX.X% or was million in of year in investment, Without to quarter, $XXX.X within a in approximately to year, cash year. higher JK would been due this we target for our of Taiwan. basis range of X% target CapEx expect were full model and Capital our our this we Hsinchu for Full the X% than targeted this Park wafer

to our outlook. Now turning

XX.X% expected and decrease be comparable approximately to gross we the or plus XX%. and first model X%. margin quarter X%. is with million expect the gross above our of our loading of Even the For be target to minus we or margin revenue the last GAAP effectively expect revenue to quarter, minus maintain first XXXX, $XXX quarter plus in to

of which minus revenue expenses, expenses related are operating of adjusted Non-GAAP are X%. approximately to intangible expected or GAAP operating plus acquisition amortization for assets, be XX.X%

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

million estimates be of quarter rate to tax shares XX% for approximately included calculate after for $XX.X non-GAAP first million. previous minus EPS be used expected these X% Not to income to acquisitions. plus anticipated is Our tax or amortization are and the $X.X in is

the turn now over Emily call Yang. will I to said, that With

Thank you, Brett, good and afternoon.

Brett our Lu Fourth guidance and Diodes year above all seasonality. was was than record financial of which typical our across X.X% XXXX is metrics. midpoint quarter Dr. slightly revenue better our As mentioned, and sequentially, a for down

well range closely quarter-over-quarter, Distributor anticipation COVID POS revenue labor Looking terms XX due China of anticipation in recovery Chinese normal around New inventory our Year. mainly the is demand in than -- increased higher which more shortage defined to a related softness of weeks. of QX, XX normal our at and in in as weeks to record as is our This fourth quarter Europe. COVID was increase of to weeks

response regions, Overall market markets. demand potential remains position impact end more to recovers. especially automotive, all for minimize stable We and backlog product industrial once the and quick the across

the fourth at represented global in revenue, XX%. Asia Looking Europe quarter, XX% North the and America, of XX% sales

our of automotive end communications terms market revenue, a our product XX%, XX%, XX% revenue. market, end XX% of In and industrial consumer Diodes computing represented record reach product

which end allocation quarter, revenue the combined totaled our ability PC high XX% further our is Diodes’ capacity markets automotive segments Our XXXX quickly and above industrial X industrial. automotive, end points consumer demonstrate consecutive like smartphone adjust demand and target quarter. product fourth low-end to for percentage the of to from XX% This for about market and

review in the me detail. let greater end markets Now

both a market and the quarter for XX records revenue to setting and quarter automotive year, in be Our highlight full continued XXXX. consecutive XX% for the growing

creation demand customers. ongoing growth in market as strong new efforts, can be consistent contributed our and Our market across existing gains well this as to share

Our continue diodes momentum connected real smart in in converters, see telematic design electrification. C focused and driving; analog our application and our safety; driving, comfort, cockpit, ReDrivers, LDOs, applications. entertainment, Zener controllers, the type for win Diodes continues to instrument connected increased which we USB interest In ADAS, style three and TVS estate is and DC/DC of infotainment, cluster areas

USB We video for communication our in increased switches multiple telematic switches in by saw system designing also and used EP, customers. DisplayPort

In linear and were LED lighting and into comfort, LED style safety, next-generation designed converters application. DC/DC drivers

Our control lock, and lifters including by window steering, pumps. sensors water driven business covers, significantly electronic grew applications, refueling

into SBR High-voltage automotive air hybrid quality for applications. grew HVAC and Diodes safety the power in automotive primarily quarter, in the our designed and Several switching applications. and sensors Zener electric products vehicles were plug-in vehicles also of battery Diodes

a We charging USB for of charging in-vehicle controllers also wins devices. number design USB new secured for

our high-speed were into the and product expanders Lastly, IO in in into unit electric XX-bit data designed designed TVS vitro vehicles display our EV line electrification, vehicles. for control

growth Our battery diagnostic in also production including control, has product strong systems. applications, onboard lean

applications while up WiFi system across voltage for in customers, a of and low releasing the we MOSFET product ramped number Additionally, new managed application. battery multiple MOSFET product different our several

of industrial our market, representing growth. the sixth quarter consecutive set revenue In also other record,

CPUs and package in industrial X.X enable switch as the Express continued traction applications performance they gain by the connecting PCI enhance to automation SoCs endpoint. to Our

industrial IoT smart demand the high-voltage our electric meters. very devices for Additionally, experienced strong

to LED Similarly, applications. conditions, our continued up power business LED traction tools, the in And power power gain industrial washing industrial in motors commercial LED controllers and air supply DC stand machine the lighting. for our sensor

while widely industrial MOSFET also smart, diodes, for secure to our over being Additionally, automation including film, processing Also support green fast used to applications inspection and we continue Zener elevators efficient, scanners. switching LED product AOI SBR battery and like our new rectifier our wins scanners, factory and wafer been check applications, has drivers equipment. PCB, power Diodes sensors, Power product diodes, helping metering, traction CIS in Ethernet, applications. image cameras, in recovery design in

low-end our expanders market, and MOSFET notebook wins and level the momentum softness In cloud IXC for product IO bus and application. in designs. server PC continued in the numerous despite design current We switches, TVS, the TVS FM computing secured shifters, the switching, SBR, in for protection applications, monitoring analog tablet

Additionally, our and graphic are ReDrivers, adopted EDP second notebooks in Max per being EDP DP XX-gigabit gaming car the ReDrivers X.X and in applications.

type communication the In expanders, drivers C in into peripheral CPE in product while into continue applications. traction chargers. was [ph] designed and LED to wireless devices, our high and networking switches MOSFET Express see our were TVS market, to buffers our XG smartphone phone a be switches, product PCI family effect our including USB into we Also, audio continue Schottky for and products, applications designed IO WiFi designs series XG of designed clock mobile

consumer embedded modules in XX-bit our switches to limit in saw consoles. increased current our USB gaming see high-speed card of continue from power multimedia we the adoption market, power Lastly, applications solid and demand MOSFET

keys, TVS USB power cable X.X next-generation power adopted security applications USB and war-mounted our decoders were CSP USB-C retimers cameras, and well in XX-gigabit wearables as Our switches, protection portable, delivery were as SBR application. designed bidirectional television, products products also and socket active into sports

improvement achievement to highlighted well results higher end profitability. success the markets increased product XXXX our as drive and Diodes of initiatives, summary, In products our margin once expansion customer focus record on of mix ongoing as again in towards

significant and market to continue forward in momentum further the result strategic expansion is year. actions. in direct coming of We automotive our the to Our the end industrial a look growth expanding and progress

the to we Operator? floor that, open With questions. now

you Truist. Today’s William with Please from very Thank go [Operator much. first ahead. Instructions] Stein question comes

I review for Great. Thank again. channel am inventory can the my question. taking you hoping trends you

it in to the to hear expect the quarter in you the in mentioned you I as what to want distribution? prepared quarter but briefly think the I clarification Thank happen just remarks, and happened the in channel I want -- will current you. what in

This Will. is Hi, Emily.

I right? have things. actually quarter-over-quarter. the this is quarter the up -- We in some inventory at than But a change mean, the the couple we Let a softness of me main during then due the XCs channel recovery an with from normal definitely started higher and channel little few of question, reason see anticipation this or answer I to It COVID moment. that like rebalancing bit did some was mention China talked fourth is of our the So they range quarters. for inventory we last also before, of the inventory this

the as during a of there’s there’s labor recovery, Chinese as that Year New shortage well So a timeframe.

so some we channel strategically all increased with inventory. So dynamic this combined, actually situation of also the

the So that support customers change. or we way can demand better minute last

talk you And quarter? about the you. your can end Thank by coming Great. market for outlook

Sure. Yeah.

overall. year strength look grow, engagement to a seeing automotive, the a our just or of automotive think, year, the still still lot if to at QX, by enrich is our and end the really, continue exciting. year-over-year are I So whole Also I we plus, quarter-over-quarter right? continue record still look and of XX% if us for comparison, at that’s growth we really whole pipeline quarter

others. little Industrial, than it’s a are end for I certain application then the softer And bit mixed. think, There

would inventory we stable But still rebalancing some together, seeing moment. really when also at are take say, We going everything this I on. market a

seeing recovering, but about mentioned, started I a two, probably, And are or softness so there’s also, then in we an going of anticipation last beginning computing, we inventory rebalancing quarter right? of we talked it, on, QX year, probably still like

China still from on the especially once I then do side, the communications on softness, they level, rebalancing so is market. certain And a some right, inventory seeing recovery. still we think, the some -- ongoing. again, are we to smartphone, Consumer, still But expect get

relative what have last we to an quarter shouldn’t divergent sounds in the correct, similar in we or sounds relative ongoing is coming pivot quarter trend seen over or any we if like what can, It QX? a QX it we the to that two -- interpret have any in like performance seen

Yeah.

market to us change applications, So is right, the leverage continue I focus for the key strong say, end mix markets significant view. of industrial focus improvement, the end demand right? the continue there’s point for slow would automotive, support on capacity our well our the to no But to as from product thing end and market lower supporting as like

in get queue. Great. you. Thank back I will

with Ramsay go Matt from comes question Please ahead. next Cowen. The

and taking I question. for Hi. up Joshua Will’s to follow on the This results is question. of Matt. on Buchalter on my behalf Congrats you wanted thank stellar

channel if taking I of correctly? XX-week you. for of anticipation the to I I factory range little know their is you typical I correctly, XX-week So the sure to typical and comfortable just the so am understanding am but want mean down, are range Thank loading you while above does -- make running sort running above understanding that recovery, are a in

Yeah.

mention probably of Josh, shortage right? a with due China, anticipation as as Chinese think, lot labor the situation in Year, I the recovery softness the of little bit well around during QX still quarter. New on the earlier, to did COVID, especially some the a I There’s going dynamic

combination are range. we channel inventory actually higher the the So situation, normal of okay with than inventory all with our this defined

is other product look the it’s So the about on also the the quality the angle the The on only we weeks of it is shelf. the quality not at number of right? of inventory, shelf,

very feel confident numbers. actually we So the stand behind

single-digit mid revenue loadings it to for I like of you. I quarters follow-up, factory two marginally lower ask as sort down my Thank declines about It’s margin. it’s it shift driving your Thank only gross of guess between through strength sounds wanted color or products, a Understood. Okay. is you. straight well. super And continued in mix despite helpful? resiliency the end what’s any margin would gross so much Can pricing environment, markets walk line, there be in and you

It’s sales. for a good we emphasize really the is question, on solution really Definitely. Yeah. total actually things. One look two if at right? last few you So years the

XXXX look XX%. is combined on really the if automotive more achieved product a mix to from us. year-over-year results, about XX% improvement rate right, then XXXX, thing earlier, second right? openly key we or mentioned the The talk just overall, industrial you we is than And focus initiative automotive, within we I So and annual growth the -- growth at

the is definitely actually success mentioning. a So definitely, it’s consistency great worth and

with think combined, of QX the XX%. I QX biggest results, actually that out total our our end of actually it’s segment industrial, with end industrial market total based the on with of XX% represented actually again, revenue, whole year the and auto even our actually XX% by right? the So products, the is of

talked achieve end by segment So about for we is of XX%. XXXX to openly about we actually a provided the the want we guidance

have As can you consistently see, fourth target. we above this quarter

good a this initiative. of So, product again, is really the improvement demonstration mix

other So growth the is have again, is good we we and right? The margin this deliver about talking family, overall -- been of actually consistently really attractive, really, right? product segments, product the example Pericom market

So that with can our established higher QX, revenue model guidance than margin our XX%. we the still around seasonality with XX% even see the actually combined, XXXX slightly for down of you but guidance significantly

So of product I demonstration a this focus improvement. can our strong actually hope is you really mix of see actually

the efficiency, our with which company. is the of manufacturing strength coupled it always course, Of

model, are confident gross So and I our on the billion goal, track and defined right, profit so. is we right which path that together, $X.X towards combined billion are right actually think $X revenue we XXXX with all

results. Yeah. and on congratulations again the Super helpful

for Company. David this turn Benchmark go in open. the ahead. queue, I no David, Seeing question session. back [Operator like our over open. Instructions] to Please questions the your The is further is next closing your from line Once question-and-answer with concludes further again, Lu David, The Dr. comes remarks. would conference line Williams to any

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

has for you. you Thank concluded. now The conference presentation. attending Thank today’s

You disconnect. may now