Diodes Incorporated (DIOD) Q22012 Earnings Call August 8, 2012 5:00 pm ET Executives Leanne Sievers - Executive Vice President of Investor Relations, Shelton Group Dr. Keh-Shew Lu - President and Chief Executive Officer Richard White - Chief Financial Officer, Secretary and Treasurer Mark King - Senior Vice President of Sales and Marketing Analysts Steven Chin - UBS Harsh Kumar - Stephens Incorporated Steve Smigie - Raymond James Suji De Silva - ThinkEquity Gary Mobley - Benchmark Vernon Essi - Needham & Company Christopher Longiaru - Sidoti & Company Shawn Harrison - Longbow Research Tristan Gerra - Baird Vijay Rakesh - Sterne, Agee Presentation Operator
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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 8, 2012. 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 are definitions and reconciliations of GAAP net income to non-GAAP adjusted net income, GAAP net income to EBITDA and free cash flow, which provide additional details. Also throughout the company's press release and management's 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. Now, I will turn the call over to Diodes' President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead. Dr. Keh-Shew Lu Thank you, Leanne. Welcome, everyone, and thank you for joining us today. I am pleased to report that revenue in the second quarter grew 10% sequentially. Trading volume improved demand across all our geographies and the end-markets as we continue to gain market share.
The quarter benefit from the launching of new projects for our products used in smartphones and the tablets. Well, Diodes is very well positioned. As you may recall, we achieved, strong and seasonal result last quarter. It proved to be the low point in the demand cycle. These are both market growth as we saw in market share gains and it served as the basis of continued growth in the second and third quarters.Additionally, margins improved in the second quarter as we began to slowly shift our mix to higher margin products while also maintaining from our new product initiatives and the manufacturing efficiency is important. When the demand and pricing environment improves, we can continue to transition available capacity to higher margin products to further enhance our product mix and the margins. At the end of the quarter, we completed the construction of our Chengdu facility. We have begun the process of obtaining final acceptance of the buildings and are now installing power which may take nine to ten months. We play to close our (inaudible) and move it to the new facility and start production in next year. More equipment additions to the building would be met in (inaudible) market requirements. This facility would be an important asset for our future growth and expansion. As we get through the second half of 2012, we are approaching the challenging environment cautiously. As we began to see demand moderate in tune and the growth in China has proven to be softer than expected. That said, we still expect to achieve continuous growth in the third quarter and have met target capital expenditure in our Shanghai facilities to increase capacity for specific package and products. We remain focused on increasing design win activity, capitalizing on the introduction of new products and overall efficiencies.
With that, I will now turn the call over to Rick to discuss our second quarter financial results and the third quarter guidance in more detail.Richard White Thanks, Dr. Lu, and good afternoon, everyone. Revenue for the second quarter of 2012 was $159.2 million, an increase of 10% over the $144.7 million in the first quarter of 2012, and a decrease of 6.2% from the record quarterly revenue of $169.8 million in the second quarter of 2011. Revenue was up sequentially due to continued improvement in demand across all of the company's geographies and end markets. Read the rest of this transcript for free on seekingalpha.com