Diodes(US:DIOD)2022-08-06 03:06Financial Data and Key Metrics Changes - Diodes achieved record revenue of $501 million in Q2 2022, a 3.9% increase from $482.1 million in Q1 2022 [17] - Gross profit reached a record $206.5 million, representing a gross margin of 41.2%, up from 40.8% in Q1 2022 [18] - GAAP net income was a record $80.2 million or $1.75 per diluted share, compared to $72.7 million or $1.59 per diluted share in Q1 2022 [21] - Non-GAAP adjusted net income was a record $86.9 million or $1.90 per diluted share, reflecting a 58.3% increase year-over-year [22][23] - EBITDA for Q2 was $130.6 million or 26% of revenue, up from $118.2 million or 24.5% in the previous quarter [24] Business Line Data and Key Metrics Changes - Automotive market revenue reached a record 14% of total revenue, growing 36% year-over-year [36] - Industrial market revenue also set a record, increasing 43% year-over-year [42] - Consumer market revenue remained strong despite lockdowns, with notable design wins in smart home applications [50] - Computing market showed strength in enterprise SSDs and cloud computing, despite softness in low-end PCs [45][62] Market Data and Key Metrics Changes - Asia represented 74% of total revenue, Europe 14%, and North America 12% [33] - Worldwide POS revenue was slightly down due to euro weakness, but demand in Asia remained strong [32] - Distributor inventory increased slightly but remained within the normal range of 11 to 14 weeks [32] Company Strategy and Development Direction - Diodes continues to focus on expanding its automotive and industrial markets, which are higher margin segments [73] - The company aims for $2.5 billion in revenue and $1 billion in gross profit by 2025 [54] - The acquisition of onsemi's wafer fab facility is expected to enhance capacity and support growth in automotive and industrial markets [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong demand despite pockets of weakness in certain consumer and computing segments [61][85] - The company anticipates approximately $521 million in revenue for Q3 2022, indicating continued growth [29] - Management highlighted the importance of product mix improvements and operational efficiency in driving future margin growth [72] Other Important Information - Cash flow from operations was $85 million, with free cash flow of $45.5 million [26] - Total inventory increased slightly, with total inventory days at approximately 115 [27] Q&A Session Summary Question: What percentage of demand exceeds supply currently? - Management indicated that overall demand remains stronger than supply, particularly in automotive and industrial markets, despite some softness in low-end PCs and smartphones [55][56] Question: What is the company's exposure to IGBT and plans for silicon carbide technology? - Diodes does not have IGBT products but is actively working on developing silicon carbide technology, with potential market release by the end of the year [57] Question: How is the automotive market trending over time? - The automotive market has shown consistent growth, with a compounded annual growth rate of 30% from 2013 to 2021, and a 36% year-over-year growth in Q2 2022 [69] Question: What is the impact of macroeconomic conditions on margins and capacity? - Management believes that product mix improvements and operational efficiency will continue to support margin growth, even in the face of potential macroeconomic slowdowns [70][72] Question: How are customer relationships developing post-pandemic? - Diodes is expanding relationships with new customers and increasing dollar content within existing accounts, maintaining strong momentum [78][80] Question: What are the trends expected in each segment for Q3? - Automotive and industrial markets are expected to remain strong, while computing may stabilize and consumer demand varies by application [82][84]