Alpha and Omega Semiconductor Limited

Ladies and gentlemen, thank you for standing by and welcome to the Alpha and Omega Semiconductor Report financial results for the fiscal second quarter 2020 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and an answer session. To ask a question during the session, you will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Soyeon Jeong. You may begin.

Thank you. Good afternoon, everyone, and welcome to Alpha and Omega Semiconductor's conference call to discuss fiscal 2020 second quarter financial results. I am Soyeon Jeong, investor relations representative for the company. With me today are Dr. Mike Chang, our CEO, our CFO, and Stephen Chang, our Executive Vice President. This call is being recorded and broadcasted live over the web and can be accessed for seven days following the call via the link in the Investor Relations section of our website at www.aosmd.com. Yifan will begin with a review of financial results for the quarter, then Mike will review the business highlights, followed by Stephen will provide a detailed segment report. After that, Yifan will conclude the guidance for the next quarter. Then we'll have the question and answer session. The earnings release was disputed by Business Wire today, February 5th, 2020, after the close of the market. The release is also posted on the company's website. Our earnings release and this presentation include certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with the GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. We remind you that during the course of the conference call, we'll make certain forward-looking statements including discussions of business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligation to update the information provided in today's call. Now, I'll turn the call over to our CFO Yifan to provide an overview of the second fiscal quarter financial results. Yifan.

Thank you, Suyang. Good afternoon, everyone, and thank you for joining us. Revenue for the December quarter was $117.9 million, flat when compared to the prior quarter, and up 2.6% from the same quarter last year. In terms of product mix, MOSFET revenue was $101.5 million, up 0.9% sequentially, and up 8.8% year over year. Power IC revenue was $14.7 million, down 6.8% from the prior quarter, and down 24.4% from a year ago. Assembly service revenue was $1.7 million as compared to $1.6 million for the prior quarter and $2.2 million for the same quarter last year. Regarding the segment mix, computing represented 41.3% of the total revenue, consumer 18%, power supply and industrial 21.3%, Communications, 17.9%, and Service, 1.5%. Non-GAAP growth margin for the December quarter was 28.3%, unchanged from the prior quarter, and down from 29.2% for the same quarter last year. Non-GAAP growth margin excluded $0.4 million of share-based compensation charge for the December quarter, as compared to $0.4 million for the power quarter and $0.5 million for the same quarter last year. Down Gap gross margin also excluded $8.5 million of production ramp-up costs related to the Chongqing joint venture for the December quarter as compared to $6 million for the power quarter and $3.5 million for the same quarter last year. Non-GAAP operating expenses for the December quarter were $25.7 million compared to $25.6 million for the prior quarter and $25.1 million for the same quarter last year. Non-GAAP operating expenses excluded $2.1 million of share-based compensation charge as compared to $1.9 million for the prior quarter and $3.9 million for the same quarter last year. Both GAAP and non-GAAP operating expenses included $3 million of digital power team expenses for the quarter as compared to $2.8 million for the prior quarter and $3.1 million for the same quarter last year. Our digital power controller team continues to engage with customers in product designs and is making steady progress toward our product roadmap. Non-GAAP EPS attributable to AOS for the quarter was 23 cents per share as compared to 26 cents for the prior quarter and 30 cents for the same quarter last year. AOS generated $12.5 million operating cash flow in the December quarter as compared to $4.2 million net cash used in operating activities and $22.1 million operating cash flow generated in the same quarter last year. Cash flow used in operations attributable to the JV company was $3.5 million for the December quarter compared to $3 million provided operating by operating activities for the prior quarter and $9.1 million used in operating activities for the same quarter last year. Consolidated EBITDAs for the December quarter was $13.9 million compared to $14.5 million for the prior quarter and $13.5 million for the same quarter last year. EBITDAs attributable to AOS for the quarter was $12.5 million as compared to $13.8 million for the prior quarter and $15.7 million for the same quarter last year. Now let's look at the balance sheet. We completed the December quarter with cash and cash equivalents of $107.2 million, including $86.1 million at AOS, and $21.1 million at the JV Company. This compares to $103.1 million at the end of last quarter, which included $88 million at AOS and $15.1 million at the JV Company. Our cash balance a year ago was $146.6 million, including $93.6 million at AOS, and $53 million at the JVE company. Bank borrowing balance at the end of the December quarter was $148.5 million, including $36.9 million at AOS and $111.6 million at the JVE company. In the December quarter, AOS and the JVE company repaid $4.1 million and $16.4 million of the existing loans respectively. The JV company also borrowed $30.9 million working capital. Net trip receivables were $33.9 million as compared to $39.3 million at the end of last quarter and $33.9 million for the same quarter last year. Day sales outstanding for the quarter was 28 days compared to 25 days in the prior quarter. That inventory was $117.6 million at the quarter end, down from $118.6 million last quarter and up from $103 million in the prior year. Average days in inventory was 114 days for the quarter, as compared to the prior quarter. Net property plant and equipment was $416.1 million as compared to $404 million last quarter and $380.8 million last year. Capital expenditures were $15.4 million for the quarter including $12.1 million at AOS and $3.3 million at the JV company. We estimate that the capital expenditure for AOS core business to stay at 6% to 8% of the total revenue for the fiscal year 2020. Before I turn the call over to Mike, I would like to update you on the progress of our JV company. During the December quarter, The 12-inch fab and assembly and test production continue to make progress as expected. Our goal remains the same, that is, to ramp up the Phase I of the 12-inch fab to approach the target run rate by the September quarter of this calendar year, subject to general and overall market conditions. With that, now I would like to turn the call over to our CEO, Dr. Mac Chen, who will provide the business highlights for the quarter. Mike. Thank you, Yifan.