Vicor(US:VICR)2023-02-24 05:00Financial Data and Key Metrics Changes - Vicor recorded total revenue for Q4 2022 of $105.5 million, up 2.3% from Q3 2022 and up 16.8% from Q4 2021 [7] - Revenues for the year ended December 31, 2022, increased 11.1% to $399.1 million from $359.4 million in the prior year [7] - Gross margin for Q4 was 46.6%, a 100 basis point increase from the prior quarter, while the full year gross margin declined to 45.2% from 49.6% in the prior year [9] - Operating income for Q4 was $8.1 million, representing an operating margin of 7.7%, while for the full year 2022, operating income totaled $27.2 million or 6.8% of revenue, down from $55.6 million or 15.5% in the prior year [10][11] - Net income for Q4 was $8.1 million, with GAAP diluted earnings per share of $0.18, while full year net income decreased to $25.5 million from $56.6 million in the prior year [11] Business Line Data and Key Metrics Changes - Advanced Product revenue rose 7.3% sequentially, while Brick Products revenue declined 4.4% from the third quarter [7] - Advanced Products accounted for 60.2% of total revenue in Q4, up from 57.4% in Q3, while Brick Products' share decreased to 39.8% [8] Market Data and Key Metrics Changes - Shipments to stocking distributors increased 16.4% sequentially and 3.4% year-over-year [8] - Exports as a percentage of total revenue decreased sequentially to approximately 59.8% from 70.1% in the prior quarter, but increased year-over-year to approximately 67.6% from 67% [8] Company Strategy and Development Direction - The company is focused on bringing its in-house vertically integrated advanced products factory fully online to improve manufacturing efficiency and reduce cycle times [14] - Vicor is targeting high growth markets driven by electrification, automation, and autonomy, with expectations for revenue growth in industrial and defense sectors [18] - The company anticipates significant opportunities in the battery ecosystem, including forming, testing, and recycling, with early revenues expected in 2023 [19] - Vicor aims to achieve $1 billion in revenues and 65% gross margins as part of its long-term strategic goals [20] Management's Comments on Operating Environment and Future Outlook - Management noted that low order rates in Q4 were influenced by customers digesting long lead time orders and concerns about supply ramp-up [22][23] - The company expressed confidence in its competitive position in high-performance computing (HPC) and automotive markets, with expectations for revenue growth driven by design wins [18][20] - Management indicated that the first quarter of 2023 is expected to be approximately flat compared to Q4 2022, with modest declines in operating expenses [15] Other Important Information - The company reported a significant decline in backlog, with Q4 book-to-bill coming in below 1 and a backlog decrease of 18.1% from the prior quarter [13] - Cash and cash equivalents totaled $190.6 million at the end of Q4, with accounts receivable at $65.4 million and inventories increasing by 7.5% sequentially [12] Q&A Session Summary Question: Can you provide more color on the low orders and cancellations in Q4? - Management indicated that long lead times and customer concerns about product availability contributed to low orders and cancellations [22][23] Question: What is Vicor's market share in the 5-nanometer AI GPU compute space? - Management stated that several companies are ramping with 5-nanometer nodes in 2023, and Vicor is engaged with customers to optimize their architectures for better performance [24][25] Question: When will the new manufacturing facility be fully operational? - Management expects the last major piece of equipment to be installed by April 2023, with the facility becoming largely independent of outsourced providers by mid-2023 [36][62] Question: What is the outlook for automotive opportunities? - Management anticipates that the ramp for automotive orders will occur towards the end of 2023, with significant growth expected in 2024 and beyond [59] Question: How is the company addressing legal issues? - Management reported no significant updates on legal matters, stating they are going through post-trial briefings [49] Question: What is the expected impact of the new 5G technology? - Management expressed optimism about the 5G technology's potential to significantly expand the market, with expectations for product launches and customer engagement in 2023 [73][78]