Q3 2022 Diodes Inc Earnings Call
[music].
Good afternoon, and welcome to diodes incorporated third quarter 2022 financial results Conference call.
At this time all participants are in a listen only mode.
At the conclusion of today's conference call instructions will be given for the question and answer session.
If anyone needs assistance.
Any time during the conference call. Please press the Star key followed by the zero on your Touchtone phone.
As a reminder, this conference call is being recorded today Monday November seven 2022, I would now like to turn the conference over to Leann Sievers Shelton Group Investor Relations Liane. Please go ahead.
Good afternoon, and welcome to diodes third quarter 2022 financial results Conference call I'm Leanne Sievers, President of Shelton Group diodes Investor Relations firm.
Joining us today from Taiwan are diodes, chairman and President and CEO , Dr case, Ya Li Chief Financial Officer, Brett Whitmire, Senior Vice President of worldwide sales and marketing Emily Yang Senior Vice President of business groups are you and director of Investor Relations for meat dollar well.
Before I turn the call over to Dr. Lu I'd like to remind our listeners that the results announced today are preliminary as they are 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 2022 fiscal quarter ending September 32022. 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 company's filings with the Securities and Exchange Commission, including forms 10-K and 10-Q.
In addition, any projections as to the Companys future performance represent managements estimates as of today November 7th 2022.
<unk> assumes 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.
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 reconciliation of GAAP to non-GAAP items, which provide additional details also throughout the company's press release and management statements. During this call.
This call we refer to net income attributable to common stockholders as GAAP net income.
But 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 the call over to Dow's, Chairman President and CEO , Dr tissue bed. Dr. Lu. Please go ahead.
Thank you Dee Ann.
Welcome everyone.
Hello, Thank you for joining us today.
I'm very pleased to be reporting today.
Oh goodness.
Second quarter, all three core gross margin.
And the seventh consecutive quarter of recur.
Adjusted earnings per share and the Remy.
Oh, a record result.
Or do you mean by outstanding execution by the team.
Especially close sooner than in the pool, but we do deduct them in Nepal, Oh Gee.
Certain region of China.
So part of the court.
Oh so.
Contributing to our strong performance awards.
Koopman break or revenue.
The motive.
Sure Mark.
Together totaled 44% of product revenue, we achieved full percentage points above our 2025 talking model and about 40% of the third consecutive quarter.
I also automotive beaches.
Zane did 16% of product revenue for <unk>.
The first time.
The French team the ongoing success of our customer.
Okay expansion in newspapers.
So we are sure gain in this market.
Over the past several quarters.
I always consistent three pools.
E D.
The all in one automotive chip supplier.
The pricing environment.
The industry has experienced and we're still able to do depot multiple consecutive quarter of record result.
Expanding margin.
And increased profitability.
When looking back over the past two years.
Our revenue grew 68%.
Gross margin expanded by 190 basis point.
And it just.
Puts tier increased over 220%.
Gross acumen, Judy said dial a part though.
Just then operator through tie both life fitness.
And economic involvement.
We are oil Oh wait what or who sell run 25 financial target of two 5 billion in revenue.
One peer in dollar or in gross profit.
With that let me now turn the call over to Brett to discuss our third quarter financial results and our fourth quarter 2022 guidance in more detail.
Thanks, Dr Lu and good afternoon, everyone.
As part of my financial review today, I'll focus my comments on the sequential change.
For each of the line items and would 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 2022 was a record $521 $3 million, an increase of four 1% from $501 million in the second quarter 2022.
Gross profit for the third quarter was also a record at $217 8 million, representing a record 41, 8% of revenue, increasing five 5% or 60 basis points from $206 5 million or 41 two.
Percent of revenue in the second quarter 2022.
GAAP operating expenses for the third quarter of 2022 were $105 4 million or 22% of revenue and on a non-GAAP basis were $101 3 million or 19, 4% of revenue, which excludes three.
$9 million of amortization of acquisition related intangible asset expenses, and zero point $1 million of acquisition related costs.
This compares to non-GAAP operating expenses in the prior quarter of $99 7 million or 19, 9% of revenue.
Total other expense amounted to approximately $3 $3 million for the quarter.
This thing of $2 6 million of unrealized loss on investments $2 7 million and interest expense and a $1 million foreign currency loss $2 2 million of other income.
And the 862000 of interest income.
Income before taxes and Noncontrolling interest in the third quarter, 2022 was $109 $1 million compared to $101 2 million in the previous quarter.
Turning to income taxes, our effective income tax rate for the third quarter was approximately 18, 5%.
GAAP net income for the third quarter 2022 was a record $86 4 million or $1.88 per diluted share compared to GAAP net income of $82 million or $1 75 per diluted share and second quarter.
2022.
GAAP earnings per share in the quarter increased 25, 3% year over year from $1 50 per diluted share in the third quarter 2021 share count used to compute GAAP diluted EPS for the third quarter 2022 was 46 million shares.
non-GAAP adjusted net income in the third quarter was a record $92 $2 million or $2 per diluted share, which excluded net of tax $3 2 million of acquisition related intangible asset cost.
$2 1 million in noncash mark to market investment adjustments.
0.1 million of acquisition related costs, and a 0.4 million gain on sale of investments.
This represents a five 3% improvement from last quarter of $1.90 per diluted share or $86 $9 million and a 36, 1% improvement from $1.47 per diluted share or 67 $3 million in third quarter.
<unk> 2021.
Excluding noncash share based compensation expense of $8 $1 million net of tax for third quarter, both GAAP earnings per share and non-GAAP adjusted EPS would've increased by 18 cents per diluted share for the third quarter.
EBITDA for the third quarter was a record $141 $9 million or 27, 2% of revenue.
<unk> $136 million or 26% of revenue in the prior quarter on a year over year basis, EBITDA increased 23, 9% from $114 $5 million in the third quarter 2021, highlighting our continued improvements over the past year.
Sure.
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 $132 $2 million for the third quarter 2022.
Free cash flow was $62 4 million, which included $69 $8 million for capital expenditures.
Net cash flow was a positive $78 $3 million.
Turning to the balance sheet at the end of the third quarter cash cash equivalents restricted cash plus short term investments totaled approximately $393 million working capital was $765 million in total debt, including long term and short term was $296 million.
In terms of inventory at the end of the third quarter total inventory days were approximately 113 as compared to 115 last quarter finish.
Finished goods inventory days were 32, which was flat to 32 last quarter total inventory dollars increased $3 $5 million from the prior quarter to approximately $374 $8 million total inventory in the quarter consisted of $8 $3 million increase in finished goods.
A $6 $7 million increase in raw materials, and an $11 $5 million decrease in work in process.
Capital expenditures on a cash basis were $69 $8 million for the third quarter and for the first nine months approximately $148 million or nine 8% of revenue.
The year to date Capex is higher than our target model due to our assembly test and wafer fab capacity expansions, but we still expect to be within our target model of 5% to 9% for the full year.
Now turning to our outlook for the fourth quarter of 2022, we expect revenue to be approximately $494 million plus or minus 3% in line with typical seasonality.
GAAP gross margin is expected to be 41.0% 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 21.0% of revenue plus or.
This 1%, we expect net interest expense to be approximately $4 million. Our income tax rate is expected to be 19% plus or minus 3% and shares used to calculate EPS for the fourth quarter are anticipated to be approximately $46 5 million not included in these non-GAAP .
<unk> is amortization of $3 2 million after tax for previous acquisitions with that said I will now turn the call over to Emily Yang.
Thank you Brett and good afternoon in the third quarter revenue increased four 1% sequentially, reflecting our achievement of record revenue in the automotive and industrial end markets. That's also contribute to that.
Our revenue in North America and Europe .
Additionally, our U S revenue with Iraq.
With our inventory in terms of weeks increased slightly quarter over quarter and its one thing I'd define normal range of 11 to flexible week, Oh, frothiness and backlog remain strong across all regions.
Looking at Global South Inc. Third quarter Asia represented 73% of revenue Europe , 15% and North America trial per se.
In terms of our end markets industrial represented 28% of diodes product revenue computing, 23%, that's been there, 18% communication, 15% and our automotive end market reached a record 16% I'll call it resume our automotive and industrial.
End markets combined total of 44% of product revenue.
It's what percent point about our 'twenty to 'twenty, five target and about 40% for the third consecutive quarter.
Now, let me review, what the end market in greater detail.
Beginning with automotive revenue increased 48% year over year and 17% sequentially.
Other quarterly record, which is our ninth consecutive quarter.
Our consistent growth has been driven by our ongoing demand creation efforts as well as market share gains.
In connected driving which consist of eight deaths telematics and infotainment system. We continue to see increased interest for USB type C V drivers in rear seat entertainment and smart cockpit applications.
Also our video switches fund me P display power and USB, three <unk> and our U S east and they'll and analog switches are also leaning besides infotainment smart cockpit applications.
D C D C Cutler to Cmos Ldl's switching diodes power switches and Guy who controllers experian strongly as well.
Well count for Stylus, Stacy, we secured increasingly defined by D. C. D. C I kind of walked us bipolar transistors and L E drive throughs.
Here, you see lighting, a lot without booster controllers vignette L E D drivers and seen a guy of interior and exterior lighting.
Extra vacation and mobility system.
Clutter, our gateway for IC with these sites into wireless charging.
Our low voltage MOSFET wouldn't be signed for automotive, yes, the car Chargers and power source no switch applications. In addition, our operational amplifiers with the site into armed Black Hawk is D. C. D. C. Cologuard tests battery management system Hum FX position sensors.
And occupancy detection systems.
In powertrain, which coffers conventional hybrid electric vehicles, we secure increasing besides for automotive I O Expanders, it's like E V Central control unit as well as design wins for our bipolar power transistors and diodes and the power modules.
Sure take patients with them.
Additionally, our T V S devices excuse me a strong people like EV battery protection D. C fan motor controllers generator sets Doctor applications. We also saw solid demand in automated transmission and powertrain application as we added seven new automotive grade products.
Two our protection portfolio.
In the industrial end market revenues reached a record and grew approximately 30% year over year and 6%.
Good question.
Presenting a sixth consecutive quarter of growth our PCI express shoot out, let's see Doe packet switches and SBR product with the site into a multiple power over Ethernet adopters.
He already has sebelius applications, which is an area that HDMI six gigabit per second and trough gigabit per second B Jackfish I also people use as well.
We also saw healthy demand from RK driver IC P. B S diode senior diet.
Diodes D C. D C outcome, there tourists L E D dry first meaning it rapidly tourists and MOSFET products in various applications like energy storage power distribution system D. C fifth power supply air condition oil pump applications.
Also our why we LDL product families continue to enjoy solid demand from the power tools and E meter applications.
We also continue to see strong demand for our application specific multi chip circuits.
Gotcha.
And blood glucose monitoring system.
In the computing market, although with a P C and helpful and crumbled market was soft we continue to focus on cloud so first storage and SSD applications.
As I mentioned last quarter, our ability to quickly adjust our support from slowing market. So high demand markets seven its a strong testament to our team's execution and also has been a contributor to our consistent growth.
In terms of design wins during the quarter, we continue to secure the site for our U S. Eastern no switches in the enterprise SSD applications as well as new wings for S N, but ice where C level shipped her family and cloud software products are customized senior diode product.
Also being used in car computing platforms.
Also remain well positioned to support call computing and data center customers with a complete timing offering.
Clothing, Crystal oscillators, PCI express clock generators, and PCI Express clock buffers.
Also during the quarter, we continued to see adoption of our embedded display port we drive first and that is it's quite white boxes.
Applications and our newly released PCI Express five got old crop up first family and now able to support 468 and trough output.
Lastly, our current limit power switches continue to see solid uptake from U S. P. A USB C power source applications in notebook desktop and docking station.
In the communication market our F. B R. E. S. P products continued to gain traction in the low Earth orbit cyclists and five G applications and our shop. She products are being designed into <unk> Wi Fi application set for all diodes switching and senior Guy has also continued to grow.
Momentum in the mobile phone service.
He used applications, including peripheral such as quick Chargers.
And finally in consumer market, we continue to drive increased adoption of our HDMI six gigabit per second and 12 gigabit per second drivers and display port HDMI switches and projectors and digital still camera applications.
D C D C Buckhorn workers and audio amplifier also have solid demand from home appliance market for monitor and interactive storytelling devices.
We also continued to gain traction for our current limit power switches and USB C power delivery controllers from USB power applications, and gaming Council and smart speakers.
And our LD MOSFET E. S. P N L E D. Dry first one sacro decisive wearables portable devices like Hell sport watches wireless ear falls and keyboard.
In summary, with achievement of our seventh consecutive quarter of record result, Dio continues to prove our ability to consistently execute and quickly adjust our support from slowing end market to Heikki med market segment.
Additionally, the ongoing success of our customer and contact expansion initiatives as well as share gains in both the automotive and industrial market has greatly increased our revenue contribution and mix, which has also contributed to our consistent margin improvement we'd be.
We are well positioned to continue driving future growth and expansion to work our 'twenty 'twenty five target of $2 5 billion in revenue and $1 billion in gross profit.
With that we now open the floor to questions operator.
I will now begin the question and answer session.
I ask a question you May press Star then one on your telephone keypad.
If you are using a speaker phone please pick up your handset before pressing the keys.
It was drawing a question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
And our first question will come from Matt Ramsay of Cowen. Please go ahead.
Hey, guys. Thanks for taking my question and congrats on the awesome results.
I wanted to ask a bit a little bit about your end markets.
I mean, we've seen all through this earning season consumer and computing from your some of your peers has come in weaker and there are some signs of industrial softening, but your results don't seem to indicate that on the industrial side could you just help us understand what you're seeing in industrial and in particular, how good you feel about visibility into that market in the next couple of quarters and what Youre seeing in.
The channel Thank you.
Yeah, Hi, Matt.
Afternoon.
Industrial overall, the backlog and everything's still seems a lot of strength overall, we do see some specific applications, where specific and oh devices that adjusting their forecast here and there, but if you take the overall picture is still strong.
And from the visibility point of view you know, we still have pretty good backlog in place that we you know not definitely seeing a significant change overall.
Understood. Thank you and I just wanted to ask you about.
Geopolitics a little bit.
I know you guys have a pretty material footprint over in China, and your products and your manufacturing Shouldnt fall under any of the restrictions as they're written now but.
I guess are you anticipating any future potential disruptions or I guess, how are you thinking about potential risk as we've seen some ancillary disruptions across the supply chain as there's been more of a crackdown in China.
And whatnot. Thank you.
Okay.
Okay Man.
Judy.
We have been doing well even.
Do you mean not this year.
Sure.
With China.
Different.
The year after that.
And so we know how to handle it.
So for you to see.
<unk>.
Second quarter in Shanghai area, they have done for two months.
And we see Wolfcamp and even the third quarter.
We see a T tend to.
Hey, Paul for all of them and we have Oh.
Again, the COVID-19 shutdown all of them, but are we still able to.
You somewhat alteration to Shanghai.
Paul.
What almost one month after the shutdown so we are.
We know how to handle.
Disciplined.
The patients.
Operational shutdowns.
We call close loop closer to operation.
And.
We are able to move firewall.
Formation.
Second due to Shanghai or diversity or even moved to some other.
Under the fixed.
So I really not too much concern.
Yes.
Yeah.
Understood. Thank you for all the color.
Yeah.
Our next question comes from Gary Mobley of Wells Fargo Securities. Please go ahead.
Hello, everybody. Thanks for taking my question I wanted to double click on your response Doctor Lou was 82.
Now you're operating your business over in China.
Just a backdrop of a bunch of Covid Lockdowns I under.
Stan that you're able to operate those facilities in Chengdu in Shanghai.
Closed loop working environment.
And it seems to be from what were hearing over here in the U S that there seems to be a bit of an employee backlash in it.
At least in some parts of the country. So I'm curious to know how you're managing that and.
Well, let's just start with there.
Yeah.
Well, maybe let me make a comment first right. So you know when what's going to happen next is something hard to predict the market overall the situation in China is still pretty dynamic right I think got to Louis point is with our experience and our expertise in manufacturing site in <unk>.
How to operate during the crisis I think.
Definitely give us confident that no matter, what's going to happen next would be able to adjust our strategy and our solution to best support our customers. So I think that's pretty much. We don't know what's going to happen next but I think we're ready wherever it's going to happen.
Okay. Thanks Emily.
Just a couple of follow up questions any notable change in customer order lead times, whether that'd be overall or by market, where there is still long and then as well I wanted to ask how truly fungible is your manufacturing capacity.
Whereby you can reallocate.
Manufacturing four end markets that still remains strong.
Is that truly possible in end markets like automotive, where you need automotive grade qualification or whatnot. That's it for me. Thank you.
Yeah. So I think let me answer the first question about the time Oh for all there's really no significant changes are being taught a lot you've been doing the last two years, we've been focusing on understanding the true customers female and making adjustments I think the second part of your question is really about our pellets our ability.
To quickly adjust our capacity and support from one market segment or the others right. I think you know the Q3, we saw a it's a good testament of our.
IP. So we did actually quickly adjusted from a slow demand markets like the low N P C consumers or to smartphone and to the automotive and industrial our customer base right. So all our factory is automotive qualified and our you know so that give us the capability to.
Quickly adjust so not only the second Q3, but also the second quarter I think we talk about the same thing as well. So I hope that would give you guys. The confidence that we do have the capability and the flexibility to quickly adjust our support.
Thanks Emily.
Yeah.
Our next question comes from David Williams of Benchmark. Please go ahead.
Hey, good afternoon, and congratulations on really solid results, especially in this in this macro.
Thank you. Thank you.
Just first maybe you just kind of thinking about the automotive growth.
You are clearly seeing a lot of traction and you've had this this.
<unk> to really drive that the content and the share gains there.
Wondering it seems like you've had really solid growth over the last several quarters and this quarter, particularly but just are you seeing anything maybe being pulled in or is this really just.
Because of the demand that youre seeing in the new design wins or is there anything there that we should be thinking about in terms of maybe slowing later on.
The automotive side.
Yeah. So you know.
David If we look at every saw Ray so youre absolutely right for Q3, we actually achieved 16%, which is definitely a record for automotive if we compare year over year, that's 48% growth and even quarter over quarter about 17% growth, so, but I want to also point your attention.
Not just for the third quarter. So we'd be open are you talking about from 2013 through 2020. One we actually have a compounded annual growth rate of 30%. So this is not just a one quarter or a few quarter, but consistently over many years. So we establish automotive focused you know years back you know what we see.
It's actually a significant change from the topology and design structure point of view, so I've been talking about it the excitement if we start seeing a lot of new protocol cost expand into different areas. So one. Good example is paragon product family right. We start seeing PCI Express a gigabit Ethernet being adopted.
And this adoption is the beginning of the adoption.
Give us a lot of confidence about the growth in the future. We also look at our design pipeline. So it continued to grow significantly. So that's a reason to support our ongoing growth quarter over quarter and year over year.
Yes, David.
We can prevent a policy.
Activities.
All the new Florida.
If possible need to be automotive.
Great.
Equal to pop so most of our new Florida.
We focused on.
Paul.
And do full.
We have announced of design.
And you know the automotive big part.
The ramp up.
Jordan Cove Shimon.
Other market.
It ticked off to use for the Pos to what the new Florida to be ramped up okay.
And so if you did get weaker.
We've been consistently.
Year over year quarter over quarter.
To.
Kris.
Pursuing after Jamie industrial another key measurement, we used to be.
Automotive segment.
Oh, the total Remy and you can see now we are.
Getting to 16%.
Amy is coming from automotive.
So this is not a very strict.
This is the norm.
<unk> and.
So.
I don't see that growth would be it might be happy.
But you won't be go to addiction.
As a percent of the revenue.
Okay.
Okay.
Thanks for the color there.
And then maybe maybe last one for me just a broader question, but was there anything maybe in the quarter that surprised you either from demand shifting or maybe things that are stronger than you would've anticipated everything that you should be or maybe we should think about in terms of.
The next few quarters, where we could see some some shifting around or any caution.
Yeah, I would say you know definitely the demand from automotive side still very very strong.
That's really a positive news and it gave us the opportunity to balance with some of the other slow demand markets I think the second practices surprises is really the power constraint in Chengdu, but again, we demonstrated our strong capability to manage through the crisis as well right.
And did you say you are asking for any surprise you can see we still meet our guidance and do full you know.
We could see much clear.
It may not be two three quarters to date, but indeed, even though.
Third quarter, when we met at the third quarter guidance, we should see much Korea and now you're in the fourth quarter.
We can see much clear in the fourth quarter.
This is mark.
Thanks, so much I appreciate the help.
Yes.
Yeah.
The next question comes from Tristan <unk> of Baird. Please go ahead.
Hi, good afternoon, Oh good morning.
Given that the.
The commentary about automotive.
Automotive.
Upsetting pockets of weakness in some other end markets, which has been well advertised with this earning season, how sustainable it is the pricing environment.
And also would you.
Do you expect.
Theres been a lot of noncancelable orders to this geez you know for the rest of this year.
For the second half of this year plus P. As you would you expect those noncancelable orders to be.
In place in the first half of next year or are we going to see cannot see normalization of the.
Contracts have made with our customers.
Yeah, Hi, Kristen overall pricing trend is still unstable. So we don't expect any significant change in the coming short term and then from the N. C. N are noncancelable not returning policy. We also not making significant change we implement that a you know a few.
Quarters back again, we don't expect that to be significantly changed over all for first half or the second half of the year.
Great and then as my follow up question.
So we know China is weak.
So some.
Q3 specific items in terms of the lockdown and the power constrained so.
Uh huh.
Lantis I you know the nonrecurring portion of that weakness that happened in Q3, even as China continues to be weak in Q4 and in the outer quarters, how much of a potential recovery, we get from assuming there is no additional lockdowns fun versus what happened in Q3.
Yeah.
Well I think Tristan overall, the market is still extremely dynamic.
I think it's difficult for us to predict what excites me is going to happen or the recovery, but one thing. We did is actually we'd look at all different factors and we put the backlog information direct or P. S. P. O S resolved by the end of the Q3 everything together.
And we come out with the Q4 guidance right. So I would say you know we did our best based on our best knowledge, we put everything into our estimate it you know our guidance already.
It's a little bit difficult for us to really predict when the recovery is going to happen in China.
But if you look at it.
Even.
In China situation that you Mitch Okay, we still.
You know we.
Wish you well.
Tony.
Our poor Remy.
Yes.
So typically in.
In the fourth quarter.
Typically down.
Net of minority wife, 5% right.
And a good time, we maybe be better than 5%.
And then even this year.
We have a difficulty.
We say the market has a different we see guy Oh fourth quarter based on where I'm wrong.
5% mhm so.
Yes.
Yes, the market is very dynamic very unstable, but we still were able to guide.
And surrounding our business Uh-huh very close to the season.
Hi, Paul.
Oh multiples right I think one more thing I want to add is the China local a local business from the consumer portion of it.
It's actually a very small proportion of the diodes over all business.
Yes.
Okay, that's very useful thank you.
Once again, if you would like to ask a question. Please press Star then one.
And our next question will come from William Stein of Truest Securities. Please go ahead.
Great. Thanks for taking my question and I want to add my congratulations on that.
Good results and outlook I think I want to sort of distill. This to what I think is the big.
Sort of.
Point of contention between investors and many companies right now.
We're seeing we've already seen some of these consumer end markets weakened pretty significantly.
We've seen that in your model for the last couple of quarters even.
And I think the consensus among investors is look this is a downturn and it's just rolling across end markets from one to the next and when we think about industrial and automotive, it's just a matter of time.
What we're hearing from some companies is that well, it's not really right that the downturn is really just in a couple of bad end markets and then you have automotive and industrial which are holding up pretty well and we don't think they're going to move.
But I wonder which of those scenarios diodes sees as likely to play out in the next few quarters are you expecting automotive and industrial to sort of take their punishment just like the other end markets have or do you anticipate these are gonna remains strong. Thank you.
Well first of all we don't really forecast more than a quarter and provide guidance I think you know what what I'll, maybe I'll just share my personal view of it is I think you know consumer computing and communications is definitely seeing a bigger adjustment what I'm seeing.
Really more I call the inventory rebalancing right so over the quarter its appeal of certain inventory they need to adjust that and then reset it I'm sorry.
So you know with the industrial and the automotive I'm you know, we we've been seeing some adjustments already it's not like we haven't seen them, but it just a skill it's a little bit different right. So you know I'm I would let stopped her go to make a few more comments, that's what I see okay.
Absolutely.
Romney depleted.
Right.
Is much important.
Sure.
Sure Okay.
For example, automotive.
Actually you did 20 tons.
Automotive.
This increase is not going down.
And therefore.
The only point of view.
Doug.
Or is.
You should continue going up.
Okay.
Quarter after.
Yeah.
So our strategy.
Paul.
But in this market and we spent that commission.
Our new Florida.
To be automotive coating.
And we spent a lot of time to sale as a total solution.
And this is the way how do we do.
The market softness.
Continue Hello.
Strength in them.
The industrial and even consumer communication.
You used to simulate what for example.
We.
Focus more fond of computing, we focus more and higher MPC Civil data Center, if you suck focus more in that area then yes.
P C area could be slowed down but.
The high end P shiel suitable and data center it could be picked it up okay. So that gives you.
Do you feel that as well.
Yeah.
The Buck.
So that's the way why.
We are able to continue growing and we are able to.
Our guidance.
Guidance, because we have Bruce.
Hum.
Consumer.
Hi, Dorothy.
Hum.
Communication five G Hi, Ann dose is one how do we balance.
How do we improve our margins.
The market softness.
We handle.
Okay.
I appreciate that if I can ask one follow up.
You might give us an update on how the south Portland Fab is progressing is progressing under your ownership.
I forget if you're already manufacturing and selling product out of this facility or if that's more.
More of a future plan and any other update you can offer us that would be helpful. Thank you.
Well, yes.
<unk> is.
If we just.
Acquire in June this year.
And so we are.
Well, we have the the.
Tom just a poll.
The man right.
Okay.
We picked it up.
That opportunity.
Who did fail.
Gross.
But all in Florida.
It takes time.
So for example.
The BCD process.
That's right.
Sure.
Morning.
One year, it would probably take one year to implement and Dave.
Corning.
Yes.
Yes.
And then probably take a while.
Yeah to wrap it up.
So yes, we.
We had a tough time.
Virtually we have.
40, 200, well I should know Sal.
[laughter] well to support them.
For the existing.
Toyota will do neat.
Okay. So.
Yeah. So I would say everything is on track based on our plan is progressing well.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Dr. Kane for any closing remarks.
Thank you for your participation on today's call.
Operator, you may now disconnect.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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