Diodes Incorporated

Good afternoon and welcome to the DODACE Incorporated second 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 the star key followed by the zero on your touch-tone phone. And as a reminder, this conference call is being recorded today, Thursday, August 8th, 2024. I would now like to turn the call over to Leanne Severs of Shelton Group Investors Relations. Leanne, please go ahead.

Good afternoon, and welcome to Diode's second quarter fiscal 2024 financial results conference call. I'm Leanne Severs, 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 MateDollarWealth. 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 and 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 June 30, 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's estimates as of today, August 8, 2024. DOWS assumes no obligation to update these projections in the future as market conditions may or may not change, except to 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 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 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.

Welcome, everyone. Thank you for joining this conference call today. As reported earlier today, second quarter results exceed our prior expectations as sales demand began to recover from the low point in the first quarter, especially in the computing market in Asia. Additional positive indicators included improvement in distributor inventory levels with a sequential decrease in channel inventory weeks. Demand improvement during the quarter was most prominent in our computing end market. where DIOS is increasingly participating in the growth of AI service. In fact, POS across the 3C market increased significantly over the prior quarter, and DIOS was able to maintain automotive and industrial product revenue at 41% of total due to the content increases in both markets, even though the recovery remains low due to the ongoing inventory adjustments. As we look to the third quarter, we are guiding for strong revenue growth of over 8% at the midpoint, supported by overall POS growth of more than 7% in the second quarter. Our near-term expectation for gross margin continue to reflect factory unloading related to our waiver service agreements, as well as our internal demand. However, we expect to continue market expansion toward our target model of 40% as loading improves combined with the resumption of growth in the automotive and industrial end markets. As global demand strengthens, we remain focused on driving further operational improvements to deliver increased earnings and cash flow. With that, let me now turn the call over to Brett to discuss our second quarter financial results as well as our third quarter guidance in more detail.