Vicor(VICR) - 2024 Q3 - Earnings Call Transcript

Financial Performance - Vicor Corporation reported total revenue of $93.2 million for Q3 2024, an increase of 8.5% sequentially from Q2 2024 but a decrease of 13.6% year-over-year from Q3 2023's$ 107.8 million [5] - The gross profit margin for Q3 was 49.1%, a decrease of 70 basis points from the previous quarter, primarily due to a change in product mix [7] - Net income for Q3 totaled $11.6 million, with a GAAP diluted income per share of$ 0.26 based on a fully diluted share count of 45,174,000 shares [7] Business Line Performance - Advanced Products revenue increased 6.5% sequentially to $49.4 million, while Brick Products revenue increased 10.8% sequentially to$ 43.8 million [6] - Shipments to stocking distributors decreased 12.5% sequentially and 22.7% year-over-year [6] - Advanced Products accounted for 53% of total revenue, down from 54% in Q2 2024, while Brick Products' share increased to 47% [6] Market Performance - Exports as a percentage of total revenue increased to approximately 49% from 43.3% in the prior quarter [6] - The company noted continued strength in industrial, aerospace, and defense markets, with temporary weakness in high-performance computing [9][10] Company Strategy and Industry Competition - Vicor is focusing resources on a set of 100 customers globally across four main markets to drive revenue growth towards a target of $1 billion and 65% gross margins [13] - The adoption of a 48V zonal architecture by automotive OEMs is creating significant new opportunities for Vicor, particularly with the introduction of new Gen 5 product families [14] - The company is executing a comprehensive plan to enforce its intellectual property rights against competitors, particularly in the AI market [11] Management Commentary on Operating Environment and Future Outlook - Management indicated that 2024 is a year of uncertainty and opportunity, with a wide range of possible outcomes affecting quarterly and annual results [9] - The company expects improvements in margins as the impact of legacy product mix diminishes in Q4 [44] - Management expressed optimism about the Gen 5 product line, anticipating significant traction as they engage with lead customers [49] Other Important Information - Cash and cash equivalents totaled$ 267.6 million, with accounts receivable at $58.5 million and inventories decreasing 3% sequentially to$ 105.8 million [8] - The company ended the quarter with a backlog of $150.6 million, which decreased by 2.1% from the prior quarter [8] Q&A Session Summary Question: Update on OEM customers using Delta bus converter modules - Management noted that Delta is assuring customers of a workaround, but skepticism exists regarding the feasibility of these claims [16][17] Question: Timeline for Gen 5 product adoption and shipments - Initial shipments of Gen 5 products are expected in the next couple of months, with broader adoption anticipated in late 2025 [20][19] Question: Revenue drivers for the quarter - The increase in revenue was attributed to strong performance in industrial and aerospace markets, despite weakness in high-performance computing [25] Question: Licensing revenue trends - Licensing revenue increased sequentially, contributing positively to overall revenue [39] Question: Future of Gen 5 revenue - Management expects Gen 5 revenue to ramp up significantly in 2025 as they engage with more customers [49]