Diodes(US:DIOD)2022-11-08 04:12Financial Data and Key Metrics Changes - Revenue for Q3 2022 was a record $521.3 million, an increase of 4.1% from $501 million in Q2 2022 [16] - Gross profit for Q3 was also a record at $217.8 million, representing 41.8% of revenue, increasing 5.5% from $206.5 million or 41.2% of revenue in Q2 2022 [16] - GAAP net income for Q3 2022 was a record $86.4 million or $1.88 per diluted share, compared to $80.2 million or $1.75 per diluted share in Q2 2022 [18] - Non-GAAP adjusted net income in Q3 was a record $92.2 million or $2 per diluted share, representing a 5.3% improvement from the previous quarter [19] - EBITDA for Q3 was a record $141.9 million or 27.2% of revenue, compared to $130.6 million or 26% of revenue in the prior quarter [20] Business Line Data and Key Metrics Changes - Automotive business represented 16% of product revenue for the first time, reflecting ongoing success in customer initiatives and market share gains [12] - Industrial end market revenue grew approximately 30% year-over-year and 6% sequentially, marking a sixth consecutive quarter of growth [30] - Computing market showed resilience despite softness in the PC market, focusing on cloud servers and SSD applications [31] Market Data and Key Metrics Changes - Asia represented 73% of revenue, Europe 15%, and North America 12% in Q3 [26] - Automotive and industrial end markets combined accounted for 44% of product revenue, exceeding the 2025 target by 4 percentage points [26] Company Strategy and Development Direction - The company is on track to meet its 2025 financial target of $2.5 billion in revenue and $1 billion in gross profit [13] - Continued focus on automotive and industrial markets, with a strategy to qualify new products for automotive applications [52] - Emphasis on adapting to market changes and reallocating manufacturing capacity to meet demand [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges, including COVID-related disruptions in China [40] - The company anticipates revenue for Q4 2022 to be approximately $494 million, in line with typical seasonality [23] - Management noted strong demand in automotive markets and ongoing design wins, indicating a positive outlook for future growth [35] Other Important Information - Total inventory days at the end of Q3 were approximately 113, with finished goods inventory days remaining flat at 32 [21] - Cash flow generated from operations was $132.2 million for Q3 2022, with free cash flow of $62.4 million [20] Q&A Session Summary Question: Insights on industrial market visibility - Management indicated that the backlog remains strong, with no significant changes in overall strength despite some adjustments in specific applications [38] Question: Geopolitical risks and operational adjustments in China - Management expressed confidence in handling operational disruptions due to COVID-19 lockdowns, utilizing a closed-loop operation strategy [40] Question: Changes in customer order lead times and manufacturing capacity flexibility - Management reported no significant changes in lead times and confirmed the ability to quickly adjust manufacturing capacity across markets [45] Question: Sustainability of automotive growth and potential market shifts - Management highlighted strong ongoing demand in the automotive sector, with a consistent growth trajectory supported by design wins [50][52] Question: Pricing environment and non-cancelable orders - Management noted that the pricing trend remains unstable, with no significant changes expected in the near term regarding non-cancelable orders [58] Question: Update on South Portland fab progress - Management confirmed that the South Portland fab acquisition is progressing well, with plans to develop and qualify new processes [69][70]