Earnings Call: Q1 2020

Apr 29, 2020

Welcome everyone to Chroma's 2020 first quarter earnings conference call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please download the instructions given at that time if you wanted to ask the question. For your information, a webcast replay will be available within an hour after the conference is finished. Please visit www.chroma. Com. Attwinvestorindex under the Investor Relations section. And now I would like to introduce the CFO, Paul Hing, And, Mister Ng, please begin. Thank you, Jason. Hi, everyone. This is Poying from Chroma I'm the CFO of Chroma and welcome to the, first quarter of, 2020, financial release. Well, I think we have sent the order information to the website, and I I think you can you can finish up from the website. Let's go to the, slide number 10. This is the condensed, consolidated income statement for promo for the first quarter of of 2020. And you can see from this page, the first quarter of 2020, the consolidated and net sales reached to, 3.3, 71,000,000,000. And this is, 23% growth, compared to, first quarter of 2019. And in there, you can see that, you also can see that, from the, consolidated sales, of testing, equipment for that business, it's, 26% growth on a year over year base. Well, on the other side, the, mas, operates it, shows that 30 35 percent drop. And for the Sales of the new material. For material business, you can also can see that it reaches that the 5, 559 $1,000,000, and they represent a 42% growth on a year over year, year base. Overall, you can see that, And the gross margin of the first quarter of, of 2020, it's, reached to $1,700,000,000. And this is, 33% growth compared to the, last year first quarter. And at the same time, I would like to, identify that the, the 52 percent of the gross margin is the, first time on the, consolidated income statement that Chroma Group reached. So this is a pretty good, records. Well, I think the major reason, is still the the product mix of the high margin portions like the apparent company, shows a big portion of that. And after deduct the, expenses, you also can see that operating income reached to $548,000,000. And it represents a 90% growth compared to the last year. So in there, you you can see that the net net income before tax, it's, reached at the 600, and a 7,000,000 NT dollars, and this is a 68 percent, gross compared to last year first quarter. And, and net income after tax, it reached to $486,000,000. And compared to last year's first quarter, this is a 64% gross So it gave us the, basic, earning per share, reached to 1.13 dollars and compared to last year, Again, this is a 57% growth. So on the balance sheet side, you also can see that the the, there's a a little bit that grows on the, on the, inventory, mainly from the apparent company. And the, and the cash. And it's kind of like a a wash of the, of the, short term debt. Drop, and the long term debt, grow. So in there, you can see that, the inventory turnover a little bit older than last year, December. But, at the same time, accounts receivable turnover date is almost the same. And net debt took equity pretty much at the same level, and then same same thing as the, return on equity and return on assets. And for the, free cash flow, for the first quarter of the, 2020 reaches up to, $442,000,000. Well, let's go to the, quality highlight. You can see from the next slide, the, first quarter of the parent company, the sales revenue reached to, $2,053,000,000. This is a 20% down on a q over q base, but this is a 33% growth on a year over year base. And the gross margin also reached to, not only above the 50%, but reached at the 55%, which is also a very good record. And the operating margin reaches to 25 percent. And net income, again, it's reached to 471,000,000 Although, this is a down by, 22% on a q over q base. Well, last year, fourth quarter, we did a very good job on the, reaching to, $2,500,000,019 at the top line. But compared to last year, 1st quarter, this is a 59% gross. And for the first quarter of 2020, the major growth is, contributed from the semiconductor and photonics sectors. And this represents a growth of 4% on q over q. And 78%, year over year growth, respectively. And as to the, parent companies, In constant statement, you can see from this page that the first quarter, where, again, the net sales compared to last year fourth quarter, And this is a 20% drop, but compared to last year first quarter, this is a 33% gross. And again, the gross, margin at the 1st quarter is 55%, and, similar to the last year first quarter, but a lot a lot better than the last year fourth quarter. And reached to a 1.124, $1,000,000. And, for the, operating income, we reached at the, a little bit over 500,000,000, to 504,000,000 and compare compared to last year's 4th quarter. This is a 9% drop, but compared to last year's 1st quarter, this is a 74% grows. So again, for the income, before tax, we reached at the 567, $1,000,000 compared to last year 4th quarter, it's a 24% drop, but compared to last year, 1st quarter, it's a 66% gross. Again, on the net income after tax, and we reached at the $471,000,000, and this is, again, this is a 22%, drop compared to last year's 4th quarter, but 59% growth on the last year's first quarter. So again, the, earning per share basic, the basic and earning per share reached to $1.13.80 compared to last year, 1st quarter, 0.72 dollars. This is a 57% gross. And for the balance sheet side, again, for the cash, and the inventory is still growing. Again, the short term and the long term debt is kind of like a wash compared to last year, December. And for the, inventory turnover, a little bit over simply because the inventory is still growing, and we're trying to keep more inventory the future productions. And also, the precaution for the broken chain for the supply, chain kind of, procurement. So this is, mainly, due to that kind of reason. And for the accounts receivable, is pretty similar to last year, December. And net debt to equity is pretty on the same level. Return on equity and return on assets is also similar to the last year, December. And, again, for the free cash flow, the parent company first quarter, we reached somewhere like $120,000,000. Well, for the first quarter, product mix and the consolidated sales breakdown, you can see from this page that the first quarter, our traditional test instrument and the, automatic, testing system, ATS, reached at the 1.168, uh,000,000 NT dollars, Compared to last year, 4th quarter, this is a, 11% drop, but compared to 1st quarter of last year on a year over year basis, This is a 24, 24% gross. Well, we all know that the, last year, 4th quarter we pretty much made the, record high, on the top line already. And, for the semiconductor and tonic, testing solutions, you can see that, first quarter, of this year, we make a $682,000,080. And this represents a 4% growth on a on a q over q base and the 78% growth on a year over year base. And Turkey Solutions is something that, well, for the first quarter, due to a lot of reasons, some, like their coronavirus and, due to the, Chinese New Year, it makes, somewhere like, 55,000,000. And this is we present a 87% drop on a q over q base and a 45% drop on a year over year simply because Last year, fourth quarter, we made up, we deliver a big, project, to United States. That makes the difference. So that makes the, consolidated testing, equipment business reached at the at 2 point 5, 57,000,000,000 NT dollars. This is is then a 25% drop on that q over q base and the 26% growth on the year, year over year basis. For AMAS, again, for the first quarter, they made somewhere like a $177,000,020 and shows a 43% drop on a q over q base. And a 35%, drop on a year over year basis. For mature of it, for mature of it in a business, This is, a $559,000,000 on the top line and shows a 16% drop on the q over base and a 42%, gross on the, year over year base. That makes the total consolidated sales 3 point, uh,371,000,000,000 and $2, and shows, again, 25% drop on a year, q over q base and 23% growth on a year over year basis. And this is the, the financial result and also the, the performance for the first quarter of a chroma group. And for the 2020, business outlook, starting from, 2nd quarter, well, we still, presume that rapidly development of the AIoT, it's an AI and IoT kind of, combination increase the the demand of the high performance such CPU and a GPU sensors and RF connections, etcetera. Which will be continuously, driving the, sales growth in semiconductor, photonics, testing solutions, particularly from the, several areas like the hybrid ability testing solutions, brewing testing, or, SLT test. And also for the, Excel and the top, testing for 3 d sensing, and also optical fiber communication of Fc testing. Another application will be integrated wireless RF and MCU testing solutions for the TWS, stands for the, true wireless stereo. And the test instruments and the ATS for power testing solutions will be focused on green energy, including EV related components, battery module, battery pack, and a small grid on 5 g and server related power testing. And also, the inline, nano particle monitoring system. This is a breakthrough technology developed by innovative nanotech, which could precisely detect the particle down to 3 nanometer and have started to deliver to foundry customers right now. Okay. This is the, the highlight for the 2020 And now, I'm open to any questions.