Diodes Incorporated

Good afternoon, and welcome to DIODES Incorporated's first quarter 2024 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 at any time during the conference call, please press star key followed by the zero on your touchtone phone. As a reminder, this conference call is being recorded today, Thursday, May 9th, 2024. I would now like to turn the call over to Leanne Seavers of Shelton Group Investor Relations. Leanne, please go ahead.

Good afternoon, and welcome to DIODE's first quarter fiscal 2024 financial results conference call. I'm Leanne Seavers, president of Shelton Group, DIODE's investor relations firm. Joining us today are DIODE's president, Gary Yu, chief financial officer, Brett Whitmire, senior vice president of worldwide sales and marketing, Emily Yang, and director of investor relations for Meet Daluo. 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 in 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 files its Form 10-Q for its fiscal quarter ending March 31, 2024. 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 company's future performance represent management assessments as of today, May 9th, 2024. DIODES assumes no obligation to update these projections in the future as market conditions may or may not change, except 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 reconciliations of GAAP to non-GAAP items, which provide additional details. Also, throughout the company's press release and management statements during this conference call, we referred a net income attributable to common stockholders as GAAP net income. For those of you unable to listen to the entire call at this time, our reporting will be available via webcast for 90 days in the investor relations section of Diode's website at www.diodes.com. And now I'll turn the call over to Diode's president, Gary Yu. Gary, please go ahead.

As reported earlier today, first quarter revenue reflects a slower than expected recovery in the consumer, computing, and the communication market, coupled with a typical first quarter seasonality due to the Chinese New Year holiday. However, late in the quarter, we began to see some signs of demand improvement, with distributor inventory levels starting to stabilize, supporting to our belief that the first quarter should be the low point and are guiding for a return to seasonal growth in the second quarter. In the automotive and industrial end markets, first quarter combined product revenue remain above our target model of 40%, but continue to be affected by inventory adjustment and a softness in certain area. More broadly, the slower over demand environment in the quarter contribute to reduced loading at our manufacturing facility. Both internal production as well as from our manufacturing service agreement temporarily impact gross margins. We expect gross margin to resume toward our target of 40% as we increase our factory loading by qualifying more products combined with increasing revenue growth for our higher margin automotive and industrial market. consistent with our historical performance and a long-term growth strategy. In summary, with early evidence of recent pricing pressures of buying, Dials is well positioned with the size and the skill to support a return to growth as global demand and the distributor inventory improves. Across our end markets, we remain focused on operating our manufacturing facility at a high level of efficiency as demonstrated by the steps the company has taken over the past several quarters to further develop our process technology and capabilities while lowering manufacturing costs across our operations. With that, let me now turn the call over to Brett to discuss our first quarter financial results as well as our second quarter guidance in more detail.