Q3 2020 Diodes Inc Earnings Call
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As a reminder, this conference call is being recorded today Monday November nine 2020.
I'd now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations Ma'am. Please go ahead.
Good afternoon, and welcome to diodes third quarter 2020 financial results Conference call.
Leanne Sievers President of Shelton Group diodes, Investor Relations firm joining us today are diodes, chairman President and CEO Dr. takes you lose who is joining us from Taiwan, Chief Financial Officer, Bret Whitmire, Vice President of worldwide sales and marketing and we'll Yang and director of Investor Relations, Laura moral before I turn the call over to Dr. Lu I'd like to.
I remind our listeners that the results announced today are preliminary as they were subject to the company finalizing its closing procedures and customary quarterly review by the company's independent registered public accounting firm as such these results are unaudited and subject to revision until the company filed its form 10-Q for third quarter 2020. In addition.
Management's prepared remarks contain forward looking statements, which are subject to risks and uncertainties and management may make additional forward looking statements in response to your questions. Therefore, the company claims the protection of the Safe Harbor for forward looking statements that is contained in the private Securities Litigation Reform Act of 1995 actual results may differ from those discussed.
Today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the Companys filings with the FCC, including forms 10-K and 10-Q. In addition, any projections as to the Companys future performance represent managements estimates as of today November nine 2020.
Does it seems no obligation to update these projections in the future as market conditions may or may not change except to the extent required by applicable Law addition.
Additionally, the company's press release and management statements. During this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms included in the company's press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details.
Also throughout the company's press release and management statements. During this conference call. We refer to net income attributable to common stockholders as GAAP net income for those of you unable to listen to the entire call. At this time, a recording will be available via webcast for 90 days in the Investor Relations section of diodes website at Www Dot diodes Dot com and now I'll turn.
On the call Liberty, Dods, Chairman, President and CEO Dr. Kay She Lu Dr. Lee. Please go ahead.
Security and.
Welcome everyone.
Thank you for joined Us today.
So quarter Raymond.
Very good and expected.
And the increased 7.2% sequentially.
Hmm by strong recovery in nature.
For what the by North America.
Contributing to recur way, meaning in automobile coal Shimon and computing end markets.
Total worldwide Ponto Frio write me.
Increased 19% sequentially.
And to reach a record quarter.
Treaty in bike recruit people, it's rave union issue.
And people are saying.
And 16% growth in.
Both Europe and no somebody.
Our risk because sales.
In the automotive market.
Cool, 18% sequentially.
And over 5% year over year to be done person all told already.
Reflecting.
Continued sales.
Brendan <unk>.
[laughter] girls, new and existing customers.
While we're increasing style semiconductor congrats.
Additionally.
We continued to gain strong momentum we saw appeal com I see poor though.
It was both delta promote can you.
You wouldn't be in markets.
And we also so I resiliency theme of course, you're more market, which has increased approximately 30% from the fourth quarter will be CEO.
In fact.
Our total revenue.
We used 10% formed it was quadrupled who sold important.
At the onset of the.
Let me Weve net income increasing approximately 35%.
The most routine bolt the refinancing Oh pitching is awesome.
As well as the stores they've reached Oh put anything more.
We spent four.
Then how gross momentum as we continue to see.
World basis improvement.
Oh, cool Oh hockey in market and the geography.
Reach into the mid 0.04th quarter guidance.
Represented the highest quarterly revenue in the Companys history.
[laughter] expectation you scoot any contribution from Oh, Paul could you ship off guidance I mean conductus Doug.
He's expected accruals at the.
Until November.
With that let.
Let me know no coal over to Brian to discuss our so called though financially so.
And Oh fourth quarter 2020 guidance in more detail.
Thanks, Dr. Lu and good afternoon, everyone as.
As part of my financial review today, I will focus my comments on the sequential change for each of the line items and will refer you to our press release for a more detailed review of our results as well as the year over year comparisons.
Revenue for the third quarter, 2020 was $309.5 million, an increase of 7.2% as compared to $288.7 million in the second quarter 2020.
Gross profit for the third quarter was $111.1 million or 35.9% of revenue an increase of 9.5% or 70 basis points compared to the second quarter 2020 at the $101.5 million or so.
35.2% of revenue.
GAAP operating expenses for the third quarter, 2020 were $73.2 million or 23.7% of revenue and on a non-GAAP basis were $68.9 million or 22.3% of revenues, which excluded.
At $4 million, the amortization of acquisition related intangible expense.
Zero point $3 million of acquisition related costs.
This compares to non-GAAP operating expenses in the prior quarter of $64.5 million or 22.3% of revenue.
Total other expense amounted to approximately $4.6 million for the quarter, including 2.6 million in foreign currency loss and 3.7 million interest expense.
Partially offset by 1.6 million of other income and $138000 of interest income.
Income before taxes and non controlling interest in the third quarter 2020 was $33.3 million compared to $26.1 million in the previous quarter.
Turning to income taxes, our effective income tax rate for the third quarter was approximately 17.7%.
GAAP net income for the third quarter, 2020 was $27.2 million or 51 cents per diluted share.
Compared to GAAP net income of $21 million or 40 cents per diluted share in the second quarter 2020.
The share count used to compute GAAP diluted EPS for the third quarter 2020 was 52.7 million shares.
Non-GAAP adjusted net income in the third quarter was $32.8 million or 62 cents per diluted share.
We excluded 3.3 million of non cash acquisition related intangible expense.
And 2.4 million of acquisition related financing and other costs.
This compares to non-GAAP adjusted net income of $28.6 million or 54 cents per diluted share in the previous quarter.
EBITDA for the third quarter was $63.3 million or 20.5% of revenue.
Compared to $55.3 million or 19.2% of revenue in the prior quarter.
We have included in our earnings release, a reconciliation of GAAP net income to non-GAAP adjusted net income.
And GAAP net income to EBITDA, which provides additional details.
Cash flow generated from operations was $39.7 million for the third quarter 2020.
Free cash flow was $21.9 billion for the third quarter, which included $17.8 million of capital expenditures.
Net cash flow in the third quarter was a positive $85.2 million, including an additional $105 million drawdown of debt.
And the pay down of long term debt by $49.7 million.
Turning to the balance sheet.
At the end of the third quarter cash and cash equivalents plus short term investments totaled approximately $591 million.
Working capital was $893 million.
And long term debt, including the current portion was $346 million.
Both our cash and debt balances increased in the quarter as a result of actions we took to prepare for our pending acquisition of light on semiconductor, which is expected to close at the end of November.
Similar to last quarter, we took advantage of the low interest rate environment and drew down on our credit line as we continue to purchase new Taiwan dollars as a natural hedge against the U.S. dollar since the transaction will be funded in new Taiwan dollars.
As of the ended the third quarter, we had borrowed and converted the equivalent of 305 million U.S. dollars, resulting in our debt and cash balances increasing accordingly.
In terms of inventory at the end of the third quarter total inventory days increased slightly to approximately a 120 in the quarter.
Compare to 119 last quarter.
Finished goods inventory days were 32 compared to 30 in the second quarter 2020.
Total inventory dollars increased $4.5 million to approximately $260.3 million, which reflects a 2.6 million dollar increase in raw materials, and a $2.1 million increase in work in process and a $200000 decrease in.
Finished goods.
Capital expenditures on a cash basis for the third quarter 2020 were $17.8 million or 5.8% of revenue, which remains at the low end of our target model, a 5% to 9%.
Now turning to our outlook building on our growth momentum in the third quarter and record POS results, we expect fourth quarter revenue to increase to a record of approximately $324 million plus.
Plus or minus 3%.
Which at the midpoint represents growth.
4.7% sequentially and.
And 7.6% year over year.
Which is significantly above typical seasonal results over the past five years of down 4%.
These revenue expectations exclude any contribution from light on semiconductor acquisition, which is expected to close at the end of November.
We expect GAAP gross margin to be 36% plus or minus 1%.
Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition related intangible assets are expected to be approximately 22% of revenue plus or minus 1%.
We expect non-GAAP net interest expense to be approximately $1.5 million.
Our income tax rate is expected to be 18%.
Plus or minus 3%.
And shares used to calculate diluted EPS for the fourth quarter are anticipated to be approximately 53 million.
Please note that purchasing accounting adjustments of $3.3 million aftertax for Pericom and previous acquisitions is not included in these non-GAAP estimates.
Also not included is $3.3 million of light on acquisition related financing costs.
With that said I will now turn the call over to Emily Yang.
Thank you Brad and good afternoon.
In the third quarter revenue increased 7.2% sequentially, which was at the high end of our guidance due to better than expected demand recovery Asia, followed by North America.
Particular note why U.S. revenue increased 19% sequentially netback record Pos in Asia at 20% and up 16% in both Europe and North America.
Channel inventory in the low as being in the end of 2018 with this shouldn't their inventory in terms of weeks increasing quarter over quarter and within our implied range of 11 to 14 weeks.
We expect issue, but their inventory to remain within our normal range of 11 to 14 weeks in the near term looking at the global sales in the third quarter Asia represented 79% of revenue Europe, 13% and North America, 8%.
In terms of our end markets consumer represented 27% RASM you may need to them by consumer pre Christmas builds industrial 22% communication, 21% COVID-19, and automotive 11% revenue, we achieved record revenue in automotive computing and consumer end Mark.
Okay.
Now, let me review the end market in greater detail.
Beginning with automotive market as mentioned guidance achieved record revenue, increasing 5.2% over the prior year period, and 18% sequentially driven by strong sales growth in Asia, followed by North America and Europe. This growth reflects the success achieved by diet.
The solution sales approach and demand creation efforts in penetrating new and existing automotive customers and applications. In addition to the that'd be increasing semiconductor content.
We're also able to secure several new design win and grow our automotive business for products, including FBR, you know diodes switching diet power transistors, and TBS, hi, email applications, including battery management system power train oil power 48 volt.
Now to me power automotive lighting, and lighting controllers as well as emerging applications like Muni electric Nicole and Michael hybrid Awesome drill Park World.
Newly released automotive compliant what do you vote and five point I wont be CPC product family and L.D.O. heskey, increasing market attention when new opportunities and decitabine infotainment to act data applications.
Okay driver IC and Neil data line protection products compressing single do and Quad channel TV ads in small package has been successfully keysight into various applications, including infotainment system wireless Chargers, you ask the charger and user interfaces.
Also during the quarter, we continued to gain market share in brushless DC motor controllers wireless charging reverse battery and protect it most switching application we are seeing strong momentum coffee, citing swap bipolar junction transistors, and LCD driver testing based automotive retrofit Len.
To me place Hino, Jim that we are also seeing between T. sanguine in both interior and exterior <unk> me a co lighting with applications ranging from Hite light to to tell like and moved like modules.
In the industrial market revenue increased over 7% sequentially as customers actually speaking to the open throughout the quarter in both North America and in Europe, but yet still remain below full production output compared to a year ago, one area of focus with iOS in industrial market is providing innovative.
A motion to support customers in reducing our carbon footprint.
Additionally, our switching diode products continue to be used in personal protective equipment by the first week sponsors and health care providers. Similarly, our mosfets diode Crystal Crystal oscillator testing adopted in a number of medical applications ranging from testing equipment to them.
And then they trust, especially those too, but I couldn't 19.
Our switching guidance are also being using many additional industrial applications, including smart power heightened efficiency H., we AC security and control Smart energy metering factory automation elevators, and moving sidewalk control system.
In addition, we see strong growth for our LTL product family as we continue to see good design wins in industrial output, the lighting meter and power to application.
We also secured several new d., citing for our linear drivers in applications, such as evaporator ATM you'd be like factory automation and I'll eat the strike lighting, our SBR and gate driver product.
Also saw a high level at these high activity in <unk> and <unk>.
This system and the high school funding sense, using telecom power systems medical equipment industrial control system.
In the consumer market, we achieved record revenue in the quarter as a result of strong recovery in Asia, We saw strong demand for our booth that we drive first the application such as yeah yeah.
MBT Mac you lease on the Tyson or Boston and handheld devices. We also saw tremendous growth for AC DC products, mainly driven by 25, well phone Chargers small appliances and power adapters as well as new design wins.
Oh, rectifiers, and Jane Keith in charging TV and set top box applications.
We also achieved significant revenue growth, while our haptics controllers and hassle amplifier products in portable gaming and consumer Smart applications. We also continue to see strong you math works, yes, and switching guidance in the consumer segment, whereas we're all well driven by the white goods, including higher.
Efficiency washing machines dish washer dryers vacuum cleaners and stuff.
Turning to communication market Fiveg infrastructure continue to be a key focus area and we are continuing to see expanding opportunities for our products due to fiveg is high frequency and limited distance small cell has become increasingly common to improve the coverage and capacity up in that way are low.
She's her hypothalamus crystal oscillator are needed in certain modules for precision timing in the CPG space RPC I expressed packet switches and crop buffer assigning why effective in many fiveg boxes.
We also saw strong momentum for Pima, the remote radio units and Edmar four one k. <unk> or large blues power in Fiveg base stations to save power consumption.
No that would be tossed answers T V S and L. O is also saw increasing design ins and Keysight leasing sparkle and Fiveg Walter applications.
Lastly, in the computing market revenue increased over 7% sequentially and also 14% year over year to record levels at work from home and shouting. Please continue to drive momentum in notebooks motherboard servers and storage application in particular for our Pericom product family. This quarter we were.
At least 20 output PC ice press Gen four and Gen. Five club buffers building up all our previous release family of Cop buffers and clock generators and enabling us to now offer the most comprehensive cost solutions for server and data center applications. This clock solutions and our frequency control products.
Position us well for the next major suffer platforms with PC ice press Jansport employment.
Momentum for Pericom product continues in the quarter and revenue remained at the second highest quarterly level. It seems the acquisition. This product continued to dominate in Sunoco integrity space with PCR Expressjet, what redriver pests in Boston, Yes easily dot won't change you interface in PC and.
The boy application were also seeing traction for our fully integrated active Moscow PC extra Gen four and yes, the seat out to Gen. Two by two each driver solution, but U.S. the type C application we.
We also continue to increase market share switching diodes and T V S products using desktop and notebook applications.
Notebook PC and crumbles business continued to be strong primarily driven by work from home Hemo education and learning demand due to cobot 90.
Are you must be power switch product line achieved record high quarterly revenue and we are seeing more yes. The type C adoption with many design wins using our popular cross bar switches product. We have also seen growth momentum for FBR, My fat and S. T Y Prada inc. applications like yet be type <unk>.
Power delivery and ATM, how are charging adopters in summary were very pleased with another quarter of strong results and continued growth. Despite the current environment. Our record results in the automotive consumer and computing markets combined with record worldwide. Pos are setting the stage with ice.
To potentially set a new quality revenue record next quarter in what is typically a seasonally down quarter. We look forward to reporting our continued progress and closing our layoffs semiconductor acquisition at the end of November to further enhance our future opportunities with that we now.
The floor to questions operators.
As a reminder to ask a question you will need to press star one on your Touchtone telephone again Thats Star one on your Touchtone telephone to ask a question to withdraw your question.
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We ask that you. Please ask one question and one follow up then fall back into the queue. Please stand by while we compile acuity roster.
Our first question comes from the line of Gary Mobley of Wells Fargo Securities. Your question. Please.
[noise], everyone Hope all is well want to start out asking them for clarification from you Emily you mentioned that.
Point of sale was up 19% versus revenue being up only 7%, but you you mentioned that just distributor channel inventory was up sequentially I'm, just trying to reconcile that difference.
Right, Gary and good morning.
Our definitely Pos increased globally, 19% and Asia is actually increased 20% in North America, and Europe increased 16% our channel inventory is actually decrease to our you know our lowest.
Lowest ever seen at the end of 2018, so it's really at that lower and that we'd be fine as a normal range.
Okay. That's missed heard that right in as it relates to your gross margin outlook for the fourth quarter roughly 36%.
And that's on a record quarterly revenue level and so youve been.
37, or 38% gross margin in the past and at a lower revenue level. So I'm wondering what the difference is there is it lower utilization is at a lower mix of industrial.
Gary Let me address this question right. So if you really look at the you know Regis shift from the racial point of view changed a little bit they compare to I would say 2019 Q3, its utility range Asia is definitely contributing a lot more.
And he usually this is the region also have a little bit lower gross margin percentage and I. You know this also directly impacted pretty much the automotive industrial because automotive industry and usually a healthy eating more at the shit allocated to Europe and also in North America.
So for that as a as a COVID-19 continue to improve North American and Europe. We cover more we believe that that will help us.
That's helpful. Thank you I'll hop in the queue. Thanks, everyone.
Thank you. Our next question comes the line of Shawn Harrison of loop capital. Your question. Please.
Hi, Good morning, and good evening everybody. My first question has to deal with distribution I'm, just wondering if you're getting any signs from distributors, let's say in Asia first and then you know in the Western World next if they'd like to add additional inventory given that you're you're seeing.
Strong demand I don't know what your lead times are doing maybe you could discuss that and channel inventory is at the lowest level in two years. So it seems like there's the potential for restocking to occur some point in time in the near future.
Hi, John Nice to talk to you. So definitely if you look at our channel inventory is really more on the lower end as you can see based on our Q4 guidance. We actually are definitely look closely to our booking trend to our backlog situation as well as channel inventory and the Pos trends.
Right. So that's the reason, we actually guidance Q4, Oh, well you know what you're seeing right now so definitely it will look closely to all those things combined under you know.
I'll take the strategy from that.
Emily do you think distributors will we'll continue to work down your inventory in the fourth quarter will they try to at least hold it steady.
Our strategy is keeping within the normal range of 11 to 14 weeks and I you know definitely if the inventory a channel was too low it's not beneficial to diodes. So we definitely not planning to lower more off the distribution inventory. So again, we try to maintain with things like 11 to 14 weeks range that would be fine.
As a a normal range.
Great and then as a follow up for it. This is my math is right I think you said use.
Borrowed 305 million. So far so is there another I don't know 120 550 million that you still have to borrow.
Our transfer over the deal to close and that's what we should based kind of the go forward interest expense off of.
Yeah, Sean that's right Yeah, you got it exactly right. So.
100, or 150, sorry, yeah, Yeah, Yeah. It's 150 is what we expect to borrow in fourth quarter.
Okay. Thank you.
Thank you. Our next question comes from Matt Ramsay of Cowen Your line is open.
Thank you very much <unk>, good morning, and good evening everybody.
I don't know for sure Dr. Lu our friendly maybe you could walk us through a little bit in more detail by end market segment. The strength of your fourth quarter guidance, it's up pretty materially versus where [noise].
The consensus had modeled it obviously the POS revenue was strong and you called that out, but maybe you could walk us through a little bit by division, particularly talking a little bit about automotive, where we've seen a market acceleration that industries recover. Thank you sure.
Sure Hi, Matt Yeah, Let me start with automotive Ray said, no. We definitely see a very strong momentum in Asia, and we definitely see that momentum will continue into our fourth quarter. We also starting in North America and Europe. We just you know start it with a good momentum off recovery and that we do expect.
That momentum continues right at the same time, we've been working all the contacts fashion and that will continue to see our strategy to expand our dollar content and then I will go into the industrial I think overall factory closure in North America, and Europe, we start seeing a lot of interest in that well also see.
He is starting to production output it getting close to 100% and we also have a from August stayed out West region No improvements on North America Europe, we all feel pretty upbeat about the industrial for the fourth quarter and therefore communication.
Like I explained before our smartphone its actually in the communication and the with a smartphone, especially five key smartphone market the psycho shifted a little bit better. So we actually see in continuous strong momentum into this outside and then together with five key infrastructure. We continue to see a really strong deciding and also.
The family momentum in this area and therefore the computing. This is the area you know a lot of shelter in place we've seen a lot of good resell into fourth quarter third quarter and second quarter already and we do expect somewhat the momentum we continue to carry through and that's what the consumer right usually fourth quarter is.
A strong quarter, but we also notice you know the shelter in freight continue to drive some of the gaming console as I talk about last quarter and also anything related to a fitness and health you know I think you know the I O T related I would say applications that we're still seeing good you know growth momentum in this area.
So across the board we've seen almost every single and markets that are showing some Ah you know momentum two girls and also across all the regions.
Thank you for the detail there that's really helpful. I guess that the the next follow on question to that.
As we go into maybe the first half of next year and we wouldn't.
You guys are going to guide that yet obviously, but if you can maybe remind us what.
Normal seasonality look like in the first and second quarters for your business and if there's any particular thing is given we're still.
In the recovery from Covidien and.
Maybe you could talk a little bit about if there's anything that might be different this year that we should flag for for seasonality in the first half of next year. Thank you.
[laughter].
I know, it's very difficult.
Right.
Seasoned Arctic.
You know we now we still go ahead I assume the seasonality that could be full suite you. So no one to go down.
Paul what we say, 3% to 5% then to go back up you know five.
10%.
So be careful so you know the ball Wi Fi policy and four to go and we just go ahead I assume the normal seasonal or.
No it maybe.
Strange Becca take a full Q.
This year instead of gold on average four or 5%.
We actually going up.
On a full 5%. So if you go to look at it.
Very difficult due to these the vitesse issues and.
And.
The other thing is that Europe, and U.S. the virus not really settled on this yet.
But issue look today is more a simple no okay. So.
At this moment, we just thinking this is a known as he will be just said, but since that die all the joy.
Oh pitching is you know is in English.
And do we you know us even automotive industrial we still have adult business in Asia due fool all syncrude.
Benefit mall.
In our competitors.
Thank you Dr. Lu for that just one more quick one from me and then I'll jump back in the queue.
I noticed that the folks that light on have a reported that revenue for the September quarter, and I think it's up.
3% year over year, maybe 4% sequentially versus the June quarter for.
For for the pieces of the business that you plan on acquiring bomb by the end of the month Dr. Lu anything unusual or different to call out in their business conditions. Just I know, it's a volatile time for everyone. So I just if there was anything unusual there that was worth calling out a we'd appreciate it. Thank you.
I think you know when we acquire Oh I always see we have set the assumption.
And you know Dan.
You don't want to we see no we didn't see that much offer different.
Okay. The the one we took him for mall isn't going to uptick we formed up from the synergy point of view, we have much Golden don't view switches dike.
Mark its energy.
<unk> products energy Oh.
Customer synergy.
And manufacturing synergies.
And from the flow story synergy it pick up all the time so.
So much you don't good time to be able to.
Oh, I'm a tool to to get it okay. Because you know you're talking the ball designed in and the old rules activity pick up one to two years, especially automotive it could be get two to three years before we can get that soon.
Sure.
So bill one show them, what we can get the synergy is that Gordon manufacturing synergies. If you you know climbed 30 billion minutes section is well under the old days you know Paul.
Paul.
People should keep us that go with it.
And.
Well, yeah, Cody twice to qualify our diode portal to.
To be able to and assessed by Doom infection and.
We think that ramping well be style from second quarter next year.
And Paul we were up to about 70 70, plus goal would be by the end of next years.
Okay. So you know this is a much quicker we can we've.
Synergy.
But one thing you know.
We know they or the Twaddell GP due to the Golden age they're part of the GP is a ball so to 14%.
So it really pulled up our total GP next year, but.
But we will try to bring it to go up and the one thing is it's a pretty active duty.
This is the key thing.
Even the CP is no that's good that's it.
Oh GP and.
But.
Wonderful so where are the men infection is under the old it.
But you know, we still hoping Oh, which you can see they will be breakeven.
Next year.
Oh, the total he will be.
Would be breakeven with the improvement of them and such in Dolby and you know the portal we believe the from the the she'll purchase is bad.
In the interest payment dose to Uh huh.
We should be able to you know a proactive probably improve out just as a ball. So these things to solve and couldn't do one.
Thank you Dr. Lu really appreciate the help.
Youre welcome. Thank you. Thank you once again to ask a question. Please press star wanting your touch tone telephone again Thats star one on your Touchtone telephone to ask a question.
Next question comes from the line of Kristen Good era of Baird. Your line is open.
A quick question on your manufacturing out or what do you expect your utilization rates to be in Q4 and are you looking at acquiring more capacity given.
The trends that we see Louise.
Low inventories.
On the buckets of price increases.
Can you repeat the question one more time.
Yeah. So the question is what do you expect your utilization rates to be this coming quarter.
And also given the backdrop the baby distributor inventories and you know we're also seeing some pockets of price increases you know for products like much faster.
Which all point to the strong demand. So are you looking at to acquiring potentially more capacity.
Ahead, given those trends.
Okay. So Brett do you feel like Oh go ahead Dr. Lu.
Well they.
It is.
It's really.
The girls.
For next year, we're going to focus on.
He's style grill.
Okay and that's the reason.
He's always see girls and watch it but he's old.
So next year.
Well focus will be sun in it.
He's full bolt style and.
Automotive and I always see Florida for the really knew was thinking most of them will be coming from the grille. All I will report, we don't think they always see poor, though will be grill.
Much okay, and do fall, though.
Well today the issue.
Fourth title manufactured will.
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For the agency multi section.
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Some Florida.
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Oh us quantify titles, Florida typical produce but it was seen.
And majority of that you have today should improve but will become meaningful.
John di all manufactures we still have.
Adult though.
Oh wafer.
And it's some.
18 outside of the title and dual fuel does.
That is the polls should oh, that's what would be the Florida, we're going to focus on is we eat doses Doughty fall.
All sides styles operation.
In two AOCI corporations to even pool due to that age.
Right. Okay. So let me [laughter], Yeah, let me add a little bit that on top of that Dr. Louis Commnet right. So remember, we actually acquired GE five in Scotland and are we also ramping up additional capacity S. Fab eight inch in house as well and addition to walk up who just mentioned.
I see I, you know both into fabrication capacity and also assembly capacity, we'd be leave where all this combined our plans that we have in place a should be really good to support our 2021 target real here you know so that's pretty much our internal capacity our strategy for longer term.
So it fits really well with our POS a few acquisitions and positioned really well florock Ralph.
Okay, Great and then a quick follow up you mentioned pericom when king in the automotive are we a d. already eating up that trap and what's the content and market share and implications because pericom has had over the past Uh huh.
18, 24 months. The Navy successfully went servers, who is the automotive incremental at this point.
Yeah, I think you know like I mentioned before all this applications are really at a very early stage of adoption and a lot of new Ah you know application I talked to before related to telecom product family are more in the you know the next generation of a bath infotainment system and stuff like that so yes.
So your question is at the beginning of Fatherless Oh cycle.
Great. Thank you.
[noise] [noise]. Thank you at this time I'd like to turn the call over to diodes management for any closing remarks.
Thank you for your participation on today's call.
Thank you ladies and gentlemen. This concludes the conference call you may disconnect your lines at this time.
[music].