Diodes (NASDAQ:DIOD) Q3 2020 Earnings Call

0:00 Good afternoon and welcome to Diodes Incorporated third quarter 2020 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 zero on your touchtone phone. As a reminder, this conference call is being recorded today, Monday, November 9th, 2020. I would now like to turn the call over to Leanne Severs of Shelton Group Investor Relations. Leanne, please go ahead.

0:40 Good afternoon, and welcome to DIODE's third quarter 2020 financial results conference call. I'm Leanne Severs, president of Shelton Group, DIODE's investor relations firm. Joining us today are DIODE's chairman, president, and CEO, Dr. Kexi Liu, who is joining us from Taiwan, Chief Financial Officer, Brett Whitmire, Vice President of Worldwide Sales and Marketing, Emily Yang, and Director of Investor Relations, Laura Merle. Before I turn the call over to Dr. Liu, 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 third quarter 2020.

1:25 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 filing for the SEC, 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, November 9, 2020. DOD 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.

2:12 Additional to the company's press release and management statements during this conference call, we'll 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 Chairman, President, and CEO, Dr. Kei-Shi Liu. Dr. Liu, please go ahead.

2:55 Thank you, Leanne. Welcome, everyone. And thank you for joining us today. Third quarter revenue was better than expected. and increased 7.2% sequentially driven by strong recovery in Asia followed by North America contributing to record revenue in automotive, consumer and computer and markets. Total worldwide point of sale revenue increased 19% sequentially and Rich are record in the quarter, trading by record POS revenue in Asia at 20% and 16% growth in both Europe and North America.

3:53 Our record sales in automotive market grew 18% sequentially and over 5% year-over-year to 11% of total revenue, reflecting Diode's continued success in expanding application opportunities across new and existing customers, while further increasing Diode's semiconductor content per vehicle. Additionally, We continued to gain strong momentum with our Pelcom ICE product in both the automotive and computing markets.

4:43 And we also saw a resurgence in the consumer market, which has increased approximately 30% from the first quarter of this year. In fact, Our total revenue has increased 10% from the first quarter of 2020. At the onset of the pandemic, with net income increasing approximately 35%, demonstrating both the resiliency of our business as well as the solid leverage in our operating model.

5:29 We expect to further extend our growth momentum as we continue to see world-based improvement across our target end market and geographies, which, at the midpoint of our first quarter guidance, represented the highest quarter revenue in the company's history. This expectation excludes any contribution from our proposed acquisition of Nyon Semiconductors that is expected to close at the end of November. With that, let me now turn the call over to Brett to discuss our third quarter financial results. and our fourth quarter 2020 guidance in more detail.

6:29 Thanks, Dr. Liu, and good afternoon, everyone. As part of my financial review today, I will focus my comments on the sequential change for each of the line items and will refer you to our press release for a more detailed review of our results as well as the year-over-year comparisons. Revenue for the third quarter 2020 was $309.5 million, an increase of 7.2% as compared to $288.7 million in the second quarter 2020. Gross profit for the third quarter was $111.1 million, or 35.9% of revenue, an increase of 9.5% Thank you for joining us.

7:48 which excluded $4 million of amortization of acquisition-related intangible expense and $0.3 million of acquisition-related costs. This compares to non-GAAP operating expenses in the prior quarter of $64.5 million, or 22.3% of revenue. Total other expense amounted to approximately $4.6 million for the quarter Thank you for joining us. Turning to income taxes, our effective income tax rate for the third quarter was approximately 17.7%.

8:57 Gap net income for the third quarter 2020 was $27.2 million, or 51 cents per diluted share, compared to gap net income of $21 million, or 40 cents per diluted share, in the second quarter 2020. The share count used to compute GAAP diluted EPS for the third quarter 2020 was 52.7 million shares. Non-GAAP adjusted net income in the third quarter was $32.8 million, or 62 cents per diluted share. We excluded $3.3 million of non-cash acquisition-related intangible expense and $2.4 million of acquisition-related financing and other costs.

9:49 This compares to non-GAAP adjusted net income of $28.6 million, or 54 cents per diluted share, in the previous quarter. EBITDA for the third quarter was $63.3 million, or 20.5% of revenue, compared to $55.3 million, or 19.2% of revenue in the prior quarter. We have included in our earnings release a reconciliation of GAAP net income to non-GAAP adjusted net income and GAAP net income to EBITDA, which provides additional details. Cash flow generated from operations was $39.7 million for the third quarter 2020.

10:39 Free cash flow was $21.9 million for the third quarter, which included $17.8 million of capital expenditures. Net cash flow in the third quarter was a positive $85.2 million, including an additional $105 million drawdown of debt and the paydown of long-term debt by $49.7 million. Turning to the balance sheet, at the end of the third quarter, cash and cash equivalents plus short-term investments totaled approximately $591 million. Working capital was $893 million, and long-term debt, including the current portion, was $346 million.

11:24 Both our cash and debt balances increased in the quarter as a result of actions we took to prepare for our pending acquisition of Lidon Semiconductor, which is expected to close at the end of November. Similar to last quarter, we took advantage of the low interest rate environment and drew down on our credit line as we continued to purchase new Taiwan dollars as a natural hedge against the U.S. dollar. Since the transaction will be funded in new Taiwan dollars. As of the end of the third quarter, we had borrowed and converted the equivalent of US$305 million, resulting in our debt and cash balances increasing accordingly.

12:22 In terms of inventory, at the end of the third quarter, total inventory days increased slightly to approximately 120 in the quarter. compared to 119 last quarter. Finished goods inventory days were 32 compared to 30 in the second quarter of 2020. Total inventory dollars increased $4.5 million to approximately $260.3 million, which reflects a $2.6 million increase in raw materials and a $2.1 million increase in work in process and a $200,000 decrease in finished goods. Capital expenditures on a cash basis for the third quarter 2020 were $17.8 million, or 5.8% of revenue, which remains at the low end of our target model of 5% to 9%.

13:23 Now turning to our outlook. Building on our growth momentum in the third quarter, and record POS results, we expect fourth quarter revenue to increase to a record of approximately $324 million, plus or minus 3%, which at the midpoint represents growth of 4.7% sequentially and 7.6% year over year, which is significantly above typical seasonal results over the past five years of down 4%. These revenue expectations exclude any contribution from light-on semiconductor acquisition, which is expected to close at the end of November.

14:11 We expect GAAP gross margin to be 36%, plus or minus 1%. Non-GAAP operating expenses, which are GAAP operating expenses, adjusted for amortization of acquisition-related intangible assets are expected to be approximately 22% of revenue, plus or minus 1%. We expect non-GAAP net interest expense to be approximately $1.5 million. Our income tax rate is expected to be 18%, plus or minus 3%, and shares used to calculate diluted EPS are are anticipated to be approximately $53 million.

14:58 Please note that purchasing accounting adjustments of $3.3 million after tax for PairCom and previous acquisitions is not included in these non-GAAP estimates. Also not included is $3.3 million of light-on acquisition-related financing costs. With that said, I will now turn the call over to Emily Yang.

15:24 Thank you, Brett, and good afternoon. In the third quarter, revenue increased 7.2% sequentially, which was at the high end of our guidance due to better-than-expected demand recovery in Asia, followed by North America. Of particular note, worldwide POS revenue increased 19% sequentially, led by record POS in Asia at 20%, and up 16% in both Europe and North America. Channel inventory is the lowest since the end of 2018, with distributor inventory in terms of weeks decreasing quarter over quarter and within our defined range of 11 to 14 weeks. We expect distributor inventory to remain within our normal range of 11 to 14 weeks in the near term. Looking at the global sales in the third quarter, Asia represented 79% of revenue, Europe 13%, and North America 8%.

16:24 In terms of our end market, consumer represent 27% of revenue mainly driven by consumer pre-Christmas bills, industrial 22%, communication 21%, computing 19%, and automotive 11% of revenue. We achieved record revenue in automotive, computing, and consumer end markets. Now let me review the end market in greater detail. Beginning with automotive market, as mentioned, DIOS achieved record revenue, increasing 5.2% over the prior year period and 18% sequentially, driven by strong sales growth in Asia, followed by North America and Europe. This growth reflects the success achieved by DIOS total solution sales approach and demand creation efforts in penetrating new and existing automotive customers and applications, in addition to the steadily increasing semiconductor contact per vehicle.

17:24 We're also able to secure several new design wings and grow our automotive business for products including SBR, Zener diodes, switching diodes, power transistors, and TVS, high-demand applications including battery management systems, Powertrain, oil pump, 48-volt battery power, automotive lighting, and lighting controllers, as well as emerging applications like mini electric vehicles and micro-hybrid also drove our growth. Newly released automotive compliance, 40-volt and 5.5-volt DC-DC product family, and LDO has gained increasing market attention with new opportunities and design in for infotainment to add ADAS applications.

18:10 Gate Driver ICs and new data line protection products compressing single, dual, and quad channel TVS in small packages has been successfully designed into various end applications, including infotainment systems, wireless chargers, USB chargers, and user interface systems. Also during the quarter, we continue to gain market share in Brush's DC motor controllers, wireless charging, We are seeing strong momentum on designing for our bipolar junction transistors and LED drivers in LED-based automotive retrofit lamps to replace halogen lamps. We are also seeing BJT design wings in both interior and exterior vehicle lighting with applications ranging from height light to the tail light and mood light modules.

19:05 In the industrial market, revenue increased over 7% sequentially as customer factories began to reopen throughout the quarter in both North America and Europe, but yet still remained below full production output compared to a year ago. One area of focus for diodes in the industrial market is providing innovative solutions to support customers in reducing their carbon footprint. Additionally, our switching diode products continue to be used in personal protective equipment by the first responders and healthcare providers. Similarly, our MOSFETs, diodes, crystals, crystal oscillators have been adopted in a number of medical applications ranging from testing equipment to ventilators, especially those to fight COVID-19.

19:56 Our switching diodes are also being used in many additional industrial applications including smart power, high efficiency HVAC, security and controls, smart energy metering, factory automation, elevators, and moving sidewall control system. In addition, we've seen strong growth for our LDO product family as we continue to see new design wins in industrial, LED lighting, beam meter, and power tool applications. We also secure several new design inks for our linear LED drivers in applications such as Defebrator, ATM UV Light, Factory Automation, and LED Stripe Lighting. Our SBR and gate driver products also saw a high level of design activities in embedded systems and in high-performance fans using telecom power systems, medical equipment, and industrial control systems.

20:52 In the consumer market, we achieved record revenue in the quarter as a result of strong recovery in Asia. We saw strong demand for our boost LED drivers for applications such as earphones, skin-building masks, UV sanitizer boxes, and handheld devices. We also saw tremendous growth for our ACDC products, mainly driven by 25-volt phone chargers, small appliances, and power adapters, as well as new design wings for LDOs, rectifiers, and BJTs in charging, TV, and set-top box applications. We also achieved significant revenue growth for our haptic controllers and headphone amplifier products in portable gaming and consumer-sparred speaker applications.

21:38 We also continue to see strong demand for our TES and switching diodes in the consumer segment, where growth was driven by the white goods, including high-efficiency washing machines, dishwashers, dryers, vacuum cleaners, and stoves. Turning to communication markets, 5G infrastructure continue to be a key focus area and we are continue to see expanding opportunities for our products. Due to 5G's high frequency and limited distance, small cell has become increasingly common to improve the coverage and capacity of the network. Our low jitter, high performance crystal oscillators are needed in certain modules for precision timing needs. In the CPE space, our PCI Express packet switches and clock buffers are finding wide acceptance and many 5G boxes.

22:30 We also saw strong momentum for PMOS in remote radio units and NMOS for 1KV or large boost power in 5G base stations to save power consumption. Low-voltage hall sensors, TVS and LDOs also saw increasing design ins and design wins in smartphone and 5G router applications. Lastly, in the computing market, revenue increased over 7% sequentially and also 14% year over year to retro levels as work from home and shelter in place continue to drive momentum in notebooks, motherboards, surfers and storage applications, in particular for our Paracon product families. This quarter, we released 20 output PCI Express Gen 4 and Gen 5 clock buffers, building up on our previous release family of clock buffers and clock generators and enabling us to now offer the most comprehensive clock solutions for surfer and data center applications. This clock solutions and our frequency control product position us well for the next major surfer platforms with PCI Express GEN4 deployment.

23:39 Momentum for our Paracon product continues in the quarter and revenue remained at the second highest quarterly level since the acquisition. This product continues to dominate in signal integrity space with PCI Express GEN4 redrivers, passive muxes, USB 3.0 Gen 2 interface in PC and motherboard applications. We're also seeing traction for our fully integrated ActiveMods for PCI Express Gen 4 and USB 3.2 Gen 2x2 lead driver solutions for USB Type-C applications. We also continue to increase market shares for switching diodes and TVS products using desktop and notebook applications. As notebook, PC, and Chromebook business continue to be strong, primarily driven by work from home, remote education, and e-learning demands due to COVID-19.

24:33 Our USB power switch product line achieved record high quarterly revenue, and we are seeing more USB Type-C adoption, with many design wins using our popular crossbar switches product. We have also seen growth momentum for SBR, Mosfet, and SKY products in applications like USB Type-C and power delivery and ATX power charging and adapters. In summary, we're very pleased with our other quarter of strong results and continued growth despite the current environment. Our record results in the automotive, consumer, and computing market, combined with record worldwide POS, are setting the stage for Dials to potentially set a new quarterly revenue record next quarter.

25:18 in what is typically a seasonally down quarter. We look forward to reporting our continuous progress and closing our light on semiconductor acquisition at the end of November to further enhance our future opportunities. With that, we now open the floor to questions. Operators. As a reminder, to ask a question, you will need to press star 1 on your touchtone telephone. Again, that's star 1 on your touchtone telephone to ask a question. To withdraw your question, press the pound key. We ask that you please ask one question and one follow-up and fall back into the queue. Please stand by while we compile the Q&A roster. Our first question comes from the line of Gary Mobley of Wells Fargo Securities.

26:05 Your question, please.

26:07 Hey, everyone. Hope all is well. I want to start out asking for a clarification from you, Emily. You mentioned that Point of sale was up 19% versus revenue being up only 7%. But I think you mentioned that distributor channel inventory was up sequentially. I'm just trying to reconcile that difference.

26:29 Right. Gary, good morning. Our definitely POS increased globally 19% and Asia has actually increased 20% and North America and Europe increased 16%. Our channel inventory has actually decreased to our lowest ever since the end of 2018. So it's really at a lower end that we define as a normal range.

26:57 Okay, must have misheard that. All right, and as it relates to your gross margin outlook for the fourth quarter, roughly 36%, and that's on a record quarterly revenue level. And so you've been at... Gary Yu, Gary Yu,

27:36 I would say 2019 Q3, Q2 range. Asia is definitely contributing a lot more. And usually this is the region also have a little bit lower gross margin percentage. And, you know, this also directly impacted pretty much the automotive industrial because automotive industrial usually has maybe more dishes allocated to Europe and also North America. Thank you for that. As the COVID-19 continues to improve, North America and Europe recover more. We believe that will help us.

28:13 That's helpful. Thank you. I'll hop in the queue. Thanks, everyone. Thank you. Our next question comes from the line of Sean Harrison of Loop Capital. Your question, please.

28:25 Hi. Good morning and good evening, everybody. My first question has to deal with distribution. I'm just wondering... If you're getting any signs from distributors, let's say in Asia first and then in the Western world next, if they'd like to add additional inventory, given that you're seeing strong demand. I don't know what your lead times are doing. Maybe you could discuss that. And channel inventory is at the lowest level in two years. So it seems like there's the potential for restocking to occur at some point in time in the near future.

28:59 Hi, Cheryl. Nice to talk to you. So definitely if you look at our channel inventory, it's really more on the lower end. As you can see, based on the Q4 guidance, we actually definitely look closely to our booking trend, to our backlog situation, as well as channel inventory and the POS trend, right? So that's the reason we actually guided Q4, you know, what you're seeing right now. So definitely we'll look closely to all the things combined and take the strategy from there.

29:35 Emily, do you think distributors will continue to work down your inventory in the fourth quarter or will they try to at least hold it steady?

29:43 Our strategy is keeping within the normal range, 11 to 14 weeks. And definitely if the inventory at channel is too low, it's not beneficial to diodes. So we're definitely not planning to lower more of the distribution. Inventory. So again, we try to maintain within the 11 to 14 weeks range that we define as a normal range.

30:08 Great. And then as a follow-up, Brett, if my math is right, I think you said you've borrowed $305 million so far. So is there another, I don't know, $125, $150 million that you still have to borrow from Thank you. Our next question comes from Matt Ramsey of Cohen. Your line is open.

30:53 Thank you very much. Good morning and good evening, everybody. I don't know, for Dr. Liu or for Emily, maybe you could walk us through a little bit in more detail by end market segment, the strength of your fourth quarter guidance. It's up, I think, pretty materially versus where the consensus had modeled it. Obviously, the POS revenue is strong, and you called that out, but maybe you could Walk us through a little bit by division, particularly talking a little bit about automotive where we've seen a market acceleration as that industry's recovered. Thank you.

31:28 Sure. Hi, Matt. Yeah, let me start with automotive, right, segment. We definitely see very strong momentum in Asia, and we definitely see that momentum will continue into our fourth quarter. We also start seeing North America and Europe regions, you know, started with a good momentum of recovering, and we do expect that momentum continues, right? At the same time, We've been working on the contact extension and that will continue to be our strategy to expand our dollar contacts. and then I will go into the industrial. I think overall factory closure in North America and Europe, we start seeing a lot of improvement. We also start seeing the production output getting close to 100% and we also, I mean, from all this data with regional improvement from North America and Europe, we're also pretty upbeat about the industrial for the fourth quarter. And then for communication, Like I explained before, our smartphone is actually in the communication.

32:32 And with a smartphone, especially 5G smartphone market, the cycle shifted a little bit. So we're actually seeing continuous strong momentum into this segment together with 5G infrastructure. We continue to see a really strong designing and also designing momentum in this area. And then for the computing, this is the area, you know, a lot of shelter in place. We're seeing a lot of good results in the fourth quarter, third quarter, and second quarter already. And we do expect some of the momentum will continue to carry through. and for the consumer, right, usually fourth quarter is not a strong quarter, but we also notice, you know, the shelter in place continue to drive some of the gaming consoles I talked about last quarter and also anything related to fitness and health, you know, I think, you know, the IOT related, I would say applications that we're still seeing good results.

33:26 Thank you for the detail there. That's really helpful. I guess the next follow-on question to that is as we go into maybe the first half of next year, and you guys aren't going to guide that yet, obviously, but

33:55 If you can maybe remind us what would normal seasonality look like in the first and second quarters for your business and if there's any particular things given we're still in the recovery from COVID and maybe you could talk a little bit about if there's anything that might be different this year that we should flag for seasonality in the first half of next year. Thank you.

34:18 I think right now it's very difficult to predict the seasonality you know we now we still go ahead assume the similarity like before which is you know one cue will go down you know probably say three to five percent then two cue going back up you know five to ten percent three cue so you know probably five percent then four cue going down we just go ahead assume that normal seasonality. Now, it may be very strange, but like 4Q this year, instead of going down average 4-5%, we actually going up, you know, 4-5%. So if you go to look at it, it's very difficult due to these virus issues.

35:23 and another thing is the Europe and U.S., the virus is not really settled down yet, but Asia looks like it's more settled down. Okay, so at this moment, we're just thinking the seasonality will be the same, but since the majority of our business is in Asia, and therefore, even automotive industry, we still have a lot of business in Asia. Therefore, our thinking will benefit more than our competitors.

36:13 Thank you, Dr. Liu, for that. Just one more quick one from me and then I'll jump back in the queue. I noticed that The folks at Light On have reported their revenue for the September quarter, and I think it's up 3% year over year, maybe 4% sequentially versus the June quarter. For the pieces of the business that you plan on acquiring by the end of the month, Dr. Liu, anything unusual or different to call out in their business conditions? I know it's a volatile time for everyone, so if there was anything unusual there that was worth calling out, we'd appreciate it. Thank you.

36:55 I think, you know, when we acquire LLC, we have certain assumptions and, you know, then, you know, when we see it now, we really didn't see that much of a difference, okay? The one we're looking for more is a long term. I think we, from the synergy point of view, we have much long-term view, which is like market synergy, product synergy, customer synergy, and manufacturing synergies. And from the first three synergies, it takes a long time, much longer time to be able to mature or to get it. Because you are talking about Design Inn, and all those activities, it takes one to two years. Especially automotive, it could be two to three years before we can get that synergy. So the one short-term one we can get the synergy is the loading manufacturing synergies.

38:20 Currently, their manufacturing is We're under loaded, you know, probably 40 to 50 percent loaded. And we are quickly trying to qualify our dial product to be able to manufacture by their manufacturing. And we're thinking that ramping will be stopped from second quarter next year. and probably up to about 70% loaded by the end of next year. So this is a much quicker we can bring the synergy in. But one thing we know their product CP due to the loading issue The GP is about 13-14%, so it really will pull down our total GP next year. But we will try to bring it up, and one thing is it's operative immediately.

39:44 This is the key thing. Even the GP is not. as good as the dialogue GP and the wonderful fact the manufacturing is under loaded but we still hoping or wish you can see there will be breakeven next year at the end or the total year will be breakeven with the improvement of the manufacturing loading and the total, we believe, from the SHIELD purchase back and the interest payment, those two, at the end, we should be able to probably improve our EPS about 30 cents, 2021.

40:51 Thank you, Dr. Liu. Really appreciate the help. You're welcome. Thank you. Thank you once again. To ask a question, please press star 1 on your touchtone telephone. Again, that's star 1 on your touchtone telephone to ask a question. Our next question comes from the line of Tristan Guerra of Baird. Your line is open.

41:12 Quick question on your manufacturing overall. What do you expect your utilization rates to be in queue for and are you looking at acquiring more capacity given the trends that we see, low inventories, you know, some pockets of price increases?

41:35 Can you repeat the question one more time?

41:38 Yeah, so the question is what do you expect your utilization rates to be this coming quarter? and also given the backdrop of very lean distributor inventories and we're also seeing some pockets of price increases for products like MOSFET which all point to strong demand. So are you looking at acquiring potentially more capacity ahead given those trends?

42:16 Okay. So Brett, do you like both?

42:18 Go ahead, Dr. Liu. Well, it's really the growth for next year we're going to focus on is style growth, okay? And the reason is they always see growth margin is very low, okay? So next year we'll focus on design in is for both diode and automotive and LHC product. But for the revenue, we're thinking most of them will be coming from the growth of diode product. We don't think the LHC product will be grow that much, okay? And therefore, the utilization for dyro manufacturing will be improved.

43:20 Because if we see the growth and we see that the dyros manufacturing utilization will be improved. For the AOC manufacturing, what we want to do will be qualify some product are capable produced by LHC, qualified diodes product capable produced by LHC. And majority of the utilization improvement will be coming from non-diodes manufacturers.

44:06 We still have a lot of Wafer, and some AT outside of the diode. And therefore, that is the portion, that would be the product we're going to focus on is bringing in those dolins from outside diodes operation into LC operations to improve their utilization.

44:42 Right, so Tristan, let me add a little bit on top of Dr. Liu's comment, right? So remember we actually acquired GFAB in Scotland, and we're also ramping up additional capacity SFAB 8-inch in-house as well. And in addition to what Dr. Liu just mentioned, LSC, you know, both in the fabrication capacity and also assembly capacity, We believe with all this combined plan that we have in place, it should be really good to support our 2021 target growth year. So that's pretty much our internal capacity strategy for longer term. So it fitted really well with our past few acquisitions and positioned really well for our growth.

45:30 Okay, great. And then a quick follow-up. You mentioned Pericom, who I'm paying in the automotive industry. Are we at the early inning of that ramp, and what's the content and market share implications? Because Pericom has had, over the past, I would say, 18, 24 months, a very successful ramp in servers. So is automotive incremental at this point?

45:53 Yeah, I think, you know, like I mentioned before, all these applications are really at a very early stage of adaption, and a lot of new, you know, applications I talked before related to Paracom product family are more in the, you know, next generation of ADAS infotainment system and stuff like that. So, yes, to answer your question, it's at the beginning of this whole cycle.

46:19 Great. Thank you. Thank you. At this time, I'd like to turn the call over to DIODE's management for any closing remarks.

46:32 Thank you for your participation on today's call. Operator, you may now disconnect. Thank you. Ladies and gentlemen, this concludes the conference call. You may disconnect your lines at this time.