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Silicon Motion Technology Corporation (SIMO)
Q1 2019 Results Earnings Conference Call
May 3, 2019, 08:00 AM ET
Chris Chaney - Director of Investor Relations and Strategy
Wallace Kou - President and Chief Executive Officer
Riyadh Lai - Chief Financial Officer
Conference Call Participants
Karl Ackerman - Cowen & Co
Craig Ellis - B. Riley & Co., LLC
Anthony Stoss - Craig-Hallum Capital Group LLC
Mehdi Hosseini - Susquehanna Financial Group
Ari Shusterman - Needham & Company, LLC
Donnie Teng - Nomura International Limited
Charlie Chan - Morgan Stanley Research
Suji Desilva - ROTH Capital Partners
Gokul Hariharan - J.P. Morgan
Previous Statements by SIMO
» Silicon Motion Technology Corporation's (SIMO) CEO Wallace Kou on Q4 2018 Results - Earnings Call Transcript
» Silicon Motion Technology Corporation (SIMO) CEO Wallace Kou on Q3 2018 Results - Earnings Call Transcript
» Silicon Motion Technology Corporation (SIMO) CEO Wallace Kou on Q2 2018 Results - Earnings Call Transcript
This conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 as amended.
Such forward-looking statements include, without limitation, statements regarding trends in the semiconductor industry and our future results of operations, financial condition and business prospects. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them.
These statements involve risks and uncertainties and actual market trends and our results may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, continued competitive pressure in the semiconductor industry and the effect of such pressure on prices; unpredictable changes in technology and consumer demand for multimedia consumer electronics; the state of and any change in our relationship with our major customers; and changes in political, economic, legal and social conditions in Taiwan.
For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements, which apply only as of the date of this conference call.
I must advise that this conference is being recorded today Friday, 3rd of May, 2019.
And I would like to hand the conference over to your first speaker today, Mr. Chris Chaney, Director of Investor Relations and Strategy. Thank you. Please go ahead, sir.
Thank you, Amber. Good morning, everyone, and welcome to Silicon Motion’s first quarter 2019 financial results conference call and webcast.
My name is Chris Chaney, Director of Investor Relations. With me here is Wallace Kou, our President and CEO; and Riyadh Lai, our Chief Financial Officer.
Following my comments, Wallace will give a review of our key business developments and then Riyadh will discuss our first quarter results and our outlook. We’ll then conclude with a question-and-answer period.
Before we get started, I’d like to remind you of our Safe Harbor policy, which was read at the start of this call. For a comprehensive overview of the risks involved in investing in our securities, please refer to our filings with the US SEC.
For more details on our financial results, please refer to our press release, which was filed on Form 6-K after the close of market yesterday. This webcast will be available for replay on our website at www.siliconmotion.com for a limited time.
To enhance investors' understanding of our ongoing economic performance, we will discuss non-GAAP information during this call. We use non-GAAP financial measures internally to evaluate and manage our operations. We have, therefore, chosen to provide this information to enable you to perform comparisons of our operating results in a manner similar to how we analyze our own operating results. The reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued yesterday. We ask that you review it in conjunction with this call.
With that, I will now turn the call over to Wallace.
Thank you, Chris. Hello, everyone, and thank you for joining us today. I will first update you on our business and then Riyadh will review our financials and provide outlook later on this call.
For the first quarter, our sales from continuing operation of $89million declined 23% sequentially. Including FCI, our sales were $95 million and had also declined 23% sequentially. Earnings per ADS for the quarter were $0.42.
Let me start with an update of our SSD controller. This quarter, our SSD controller sales were flat sequentially, in line with what we had communicated to you three months ago.
As previously discussed, while NAND prices have been falling sharply, which triggered an increase in demand for SSD. The reaction is not immediate, especially with OEM where design qualification and testing processes will be extensive.
Separately, when NAND prices are falling sharply, module makers face increased financial risk and so become more conservative in procuring NAND flash components and related controllers.
This situation is now changing. Procurement of controllers for our NAND Flash customers is beginning to step up as SSD for new OEM programs are starting to move into productions.
Also, procurement of controller for our module maker customer is increasing as they are now receiving NAND Flash from their supplier at more attractive terms, which is leading to a rebound in their business activity.
As we have been saying, ever since NAND supply and demand dynamic has started shifting from shortage to surplus and NAND pricing has reverted to its long-term declining trend, our business now biased [ph] toward growth, with the benefit of price elasticity of demand.