Win Semiconductors Corp

Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WinSemi's Results Webcast Conference for the first quarter of 2020. My name is Shouzen, the Sportsman and Associate Vice President of Finance in WinSemi. Joining me on today's call is Steve Chen, the General Manager of Corporate Administration in WinSemi. Today's call is organized into three sections. First of all, our general manager, Steve, will comment on the results for the third quarter and provide brief guidance for the fourth quarter. Secondly, I will go through the financials in detail. And after that, we will open to the floor for Q&A. Please freely submit your questions by clicking the question button on the webcast window throughout the conference. Before we begin, I would like to draw your attention to the State Harbor Notice on page 1 of the presentation slide. Please note that this presentation contains forward-looking statements These statements are based on our current expectations. Actual results may differ materially from our expectations and the company undertakes no obligation to update this forward-looking statement going forward. Now, let me hand over the call to Steve for management comments.

Thank you Joe, and welcome everyone. For the fourth quarter of 2020, our revenue and profits both achieved better performance than the same period the previous year. Revenue from the first quarter reached $6.1 billion, in line with our previous expectation of decline of 12%. Quarter-on-quarter and materially increasing by 68% year-on-year. Our capacity utilization rate declined during the quarter, but we were still able to maintain at high levels. Combined with the slightly change in the product. Our growth margin only modestly declined to 43% compared to the previous quarter. Our next topic and EPS for the first quarter reached $1.6 billion and $3.76 billion respectively. Looking at the overall revenue for the first quarter, while all applications in the pandemic declined subsequently due to the seasonal factors. Our first quarter wafer, Siemens, for the whole, for those has higher relative to the 5G, mainly cellular and infrastructure, perform relatively better, and the 5G cellular field account for more than 20% of the overall cellular revenue. We believe that This not only suggests that there is currently no change in the trend for global wireless communication to evolve to 5G, but also indicates that we hold a leading position in the technology and the business development in 5G. Although COVID-19 continues to affect territories around the world and it is Civil Corps who estimates the impact of the economic and the supply chain. We will strengthen our effort in the prevention and supply chain management. Ensure that our R&D progress and the capacity expansion plan will not be interrupted. and to be better prepared for any risk and opportunity in the future. Looking ahead to the second quarter of 2020, we expect revenue to decline low single digit quarter on quarter and gross margin to be around the level of low 40. I will turn the call back over to Joe. Okay.

It's my pleasure to present our financial results for the first quarter of the year 2020. You can also refer the presentation slides. I'm going to start from the page four. Remember to read over the set-up notice. In page four, Q1, the year 2020, we just reached the record high in the last quarter, which is the Q4 2019. And then, seasonally, the revenue went down from 12% to become 60,171 million NT and the YOY was up 68%. The growth margin in Q1 2020 with the stable yield rate and only slight change in the product mix, which we can see that. And the capacity utilization rate went down, but still at a relatively higher level. We still have the 90% of the utilization rate you want. Because of that, the growth margin decreased about 1.2 percentage points and sequentially to around 43%. And also, in fact, the operating margin decreased by 1.8 percentage points to become 31.9%. Net Profit In June 1, year 2020, the net profit was $1,575 million NT. QOQ went down about 14%, and YOY up 945%. So the EPS coming at $3.76 NT. and compared to the quarter before Q4 2019 was 4.4 dollar NT. So after the earnings, now please flip to page six. Page six we talk about free tax flow and the during trend. Although the price was lower than quarter before, and because of the lower operating profit, so free cash flow also declining. But the interest-bearing debt and the ceiling ratio both sequentially declined for three quarters. And so the financial structure and the financial position still remain very healthy. Page 7 is the product mix. The QQ1 2020 Prada Mix standard error is between 40% and 45%. Infrastructure is between 20% and 25%. Wi-Fi is between 15% and 20%. And others, including the 3D sensing, is 15%. So you probably already recognize that the range was pretty much the same as Q4 in 2019. Yes, that's why we say that the product matrix is similar to the last quarter. I think including Steve's management comment and the previous slides, we already pointed out the conclusion, a couple of conclusions. First of all, the problem remains similar, border on border. But the Cellular and the impact factor which is related to 5G are relatively have a better performance than others like Wi-Fi and the 3D sensing. And then also, our 5G satellite still maintains above 20% of the total satellite business. So that means the 5G business is still very solid. And then also, that's the reason why we also believe our technology and development and also the business development is ahead of our competitors. And now, quick to the page eight. We talk about the guidance for Q2. I think Steve has mentioned this, I'm going to repeat. We expect Q2 2020 revenue to be around low single-digit 202. We also expect Q2 2020 the growth margin to be around the level of low 40. So now we can simply to the HCM for the financial statement starting from income statement. Before I begin, I have to remind everybody this is an audited basis. The final results are still up to based on the board approval and the TPA's report. The net revenue Q1 of the year 2020 was $6,771 million. Q2 down 12% and YYY up 68%. The gross profit was $2,600 million. 111 MLM NC CO2 down 14% and YOY up 189%. And growth margin become 43% which is down 1.2 percentage point from last quarter. The last quarter was 44.2%. Operating expense become 673 million NT and the OP ratio is about 11%. So the operating income was 1,936 million which is down 17% and YOR is up 546%. So the OP margin was 31.9%. Zero fuel down 1.8 percentage points. The non-operating income was 2600, I'm sorry, 26 million NT, 26 million NT. The detailed will be in page 11 for your own reference. Income before income tax Income before income tax was $1,965 million and income tax expenses $389 million. But the net income become $1,575,000,000 NTD And QOQ is down 14% And YOY up 945% So the net margin become almost 26% Which is 25.9% and so in this quarter ETS become 3.76 NT, last quarter was 4.4 NT. The equivalent ROE in this quarter is 22%. And approximately utilization rate 90% went down from 100% last quarter. The depreciation was 841 million NT, and then the car tax in this quarter, 1322 million NT. So this is the income statement for Q1. Page 11 will be the non-item detail for your own reference. And so please refer to the page 12 for balance sheets. The balance sheet stated March the 30th, the year 2020, cash and excess equivalents was 4,812,000,000 NT. The total assets, 42,996,000,000 NT. And you may recognize that the significant difference for liability and the equity. As we mentioned it, The interest-bearing gap is going down. So the long-term borrowing is $4,833 million. But the current liability is going up to $9,178 million, which is because the Q3 board meeting approved a dividend for last year. It's $7 per share. cash dividends. So there was a dividend payable in current liabilities. So the total liabilities going up and also the dividend payable was deducted from retained earnings so the total equity going down. The total equity become 28,463,000,000 NT dollars So the first value also going down to 66,073,000,000 NT And because of that, the total ratio also went down to 142% from 228%. The debt ratio, which is compared to total liability to the total asset, becomes 34% also because of dividend payable. Okay. This is a financial statement. Now we can begin the Q&A. Please submit your questions in the info box on the webcast window now.