DIODES INC /DEL/ Q1 FY2025 earnings call

• Revenue achieved a 10% year-over-year growth due to better-than-seasonal performance in the computing market in Asia, particularly in AI-related applications, and improving conditions in Europe and North America.
• Channel inventory dollars and days continued to decrease, aligning with real demand. However, inventory reduction and Chinese New Year temporarily limited loading at manufacturing facilities, affecting gross margins.
• The company has a hybrid manufacturing model with facilities in the US, China, Taiwan, and the UK, and continues to qualify products in internal facilities to increase loading.
• Announced a $100 million stock repurchase program, reflecting confidence in the business and future growth prospects.

In the first quarter of 2025, Diodes' product revenue was segmented as follows: industrial at 23%, automotive at 19%, computing at 27%, consumer at 17%, and communication at 14%. Automotive and industrial revenue combined totaled 42% of first-quarter product revenue. First quarter revenue was $332.1 million, compared to $302 million in the first quarter of 2024.

• Second quarter 2025 revenue is expected to increase to approximately $355 million, ±3%, representing 11% growth over the prior year period at the midpoint.
• GAAP gross margin is expected to be 31.8%, ±1%.
• Non-GAAP operating expenses are expected to be approximately 28% of revenue, ±1%.
• Net interest income is expected to be approximately $1.5 million.
• Income tax rate is expected to be 18%, ±3%.

• Tariff impacts: US-China tariff increases create economic uncertainty, especially affecting customer demand. Diodes is monitoring the situation but anticipates an immaterial impact due to its hybrid manufacturing model.
• Inventory and manufacturing challenges: Temporary limited loading at manufacturing facilities due to inventory reduction and Chinese New Year affected gross margins in the first quarter.

Q: David Williams asks about demand pull forward and tariff impact on manufacturing strategy.

A: Emily Yang notes that while tariffs create uncertainty, channel inventory has depleted, POS has increased, and backlog and book-to-bill ratios have improved, indicating a recovering period. Gary Yu states the hybrid manufacturing model will continue, with ongoing efforts to port external products to internal wafer fabs regardless of tariffs.

Q: Tristan Gerra inquires about gross margin catalysts and capacity opportunities.

A: Emily Yang mentions margin improvement through internal loading, product mix, and inventory normalization. Gary Yu says the company will continue to invest in capacity where needed, focusing on high-demand areas and consolidating capacity for efficiency. Brett Whitmire notes excess capacity at peers may present opportunities for Diodes' top line.