Diodes, Inc. (DIOD)
Q2 2010 Earnings Call Transcript
August 5, 2010 5:00 pm ET
Leanne Sievers – IR, Shelton Group
Keh-Shew Lu – President and CEO
Rick White – CFO, Secretary and Treasurer
Mark King – SVP, Sales & Marketing
Gary Mobley – The Benchmark Company
Brian Piccioni – BMO Capital Markets
Ramesh Misra – Brigantine Advisors
Christopher Longiaru – Sidoti & Company
Stephen Chin – UBS
Harsh Kumar – Morgan Keegan
John Vinh – Collins Stewart
Scott Hirleman – Robert W. Baird
Joe Wittine – Longbow Research
Previous Statements by DIOD
» Diodes Incorporated Q1 2010 Earnings Call Transcript
» Diodes Inc. Q4 2009 Earnings Call Transcript
» Diodes Inc. Q3 2009 Earnings Call Transcript
Good afternoon, and welcome to Diodes Incorporated second quarter 2010 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. (Operator instructions) As a reminder, this conference call is being recorded today, Thursday, August 5, 2010. I would now like to turn the call to Leanne Sievers of Shelton Group, the Investor Relations agency for Diodes. Leanne, please go ahead.
Good afternoon, and welcome to Diodes second quarter 2010 earnings conference call. I am Leanne Sievers, Executive Vice President of Shelton Group, Diodes' Investor Relations firm. With us today are Diodes' President and CEO, Dr. Keh-Shew Lu; Chief Financial Officer, Rick White; Senior Vice President of Sales and Marketing, Mark King; and Vice President of Finance and Investor Relations, Carl Wertz.
Before I turn the call over to Dr. Lu, I would like to remind our listeners that 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.
In addition, any projections as to the company's future performance represent management's estimates as of today, August 5, 2010. Diodes assumes no obligation to update these projections in the future as market conditions may or may not change. 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 is a reconciliation of GAAP net income to non-GAAP adjusted net income, which provides 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 60 days in the Investor Relations section of Diodes’ website at www.diodes.com.
And now I will turn the call over to Diodes' President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead.
Thank you, Leanne. Welcome, everyone, and thank you for joining us today. Diodes once again achieved the record result in revenue, gross profit, and the gross margin, with strong growth in all regions, including continued growth in North America and Asia. We also experienced sustained improvement in Europe where we reported the second consecutive quarter of record revenue for the region, despite continued weakness in the exchange rate.
Our focus on design win, new product development and the cross-selling from our Zetex acquisition continues to produce material results for our business. Additionally, our achievement of record gross profit and record gross margin is a direct result of the operational efficiencies at our manufacturing facilities combined with continued success on our new product initiatives. During the quarter, we realized better than expected utilization at the wafer fabs and generated record output at all packaging facilities.
Also during the quarter, we announced our entry into the standard logic market, which is a natural fit for Diodes’ strategic focus on high volume standard products. Furthermore, there are strong packaging synergies with our existing analog and the discrete product lines that enable us today with world-class cost-effective assembly facility. Those new products are suitable for use in variety of communication, computing, consumer, and the networking equipment and expand our spend by over 15%.
The expansion into this market provides new revenue opportunities for Diodes, and we expect that it would be an additional strong growth driver in the coming years. As we look into the third quarter, we expect to report our sixth consecutive quarter of sequential revenue growth and to produce record results once again for the company. As I have stated in the past, Diodes has emerged from the downturn as a stronger company, with expanded growth opportunities. And I believe our achievement of consecutive record results is proof of our success.
With that, I would turn the call over to Rick to discuss our second quarter financial results and third quarter guidance in more detail.
Thanks, Dr. Lu. And good afternoon, everyone. As Dr. Lu mentioned, revenue for the second quarter was a record $149 million, an increase of 44% over the $104 million in the second quarter of 2009 and a sequential increase of 9% over the $137 million in the first quarter of 2010.
Gross profit for the second quarter of 2010 was a record $53.5 million or 35.8% of revenue compared to $27.4 million or 26.3% of revenue in the second quarter of 2009 and $47.8 million or 34.9% of revenue in the first quarter of 2010. The sequential increase in gross margin was primarily attributable to better than expected utilization at the wafer fabs, record output at the company’s packaging facilities, and a favorable mix of higher margin new products.