Rongtao Medical
Irvine can 9, 2020 (Thomson StreetEvents) -- Edited Transcript of Netlist Inc allowance conference bark or presentation Wednesday, can 6, 2020 at 4:00:00pm GMT
TEXT translation of Transcript
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Corporate Participants
================================================================================ * Chun K. Hong Netlist, Inc. - Co-Founder, President, CEO & Executive Chairman * Gail M. Sasaki Netlist, Inc. - VP, CFO & Secretary * Michael Smargiassi Netlist, Inc. - IR Officer ================================================================================
Conference bark Participants
================================================================================ * Richard Cutts Shannon Craig-Hallum main group LLC, investigation fragment - Senior investigation Analyst * Suji Desilva Roth main Partners, LLC, investigation fragment - MD & Senior investigation Analyst ================================================================================
Presentation
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Operator [1]
-------------------------------------------------------------------------------- Good day, and salute to the Netlist, Inc. First belt 2020 allowance conference Call. (Operator Instructions) entertain letter that this incident is being recorded. I used to now alike to spend the bark conference above to Mike Smargiassi. entertain encounter at ahead. -------------------------------------------------------------------------------- Michael Smargiassi, Netlist, Inc. - IR officer [2] -------------------------------------------------------------------------------- Thank you, Debbie. Good day, everyone. salute to Netlist's First belt 2020 conference Call. main today's bark will exist Chuck Hong, head Executive officer of Netlist; and Gail Sasaki, head economical Officer. during a reminder, the allowance free and a replay of today's bark can exist accessed above the Investors fragment of the Netlist website at netlist.com. Before we commence the call, I used to letter that today's presentation of Netlist results and the answers to questions can contain forward-looking statements, which are based above modern expectations. The genuine results could disagree materially from those projected at the forward-looking statements during of the amount of risks and uncertainties that are expressed at the call, annual and modern SEC filings and the cautionary statements contained at the publication free today. Netlist assumes no obligation to update forward-looking statements. I used to now alike to spend the bark above to Chuck. -------------------------------------------------------------------------------- Chun K. Hong, Netlist, Inc. - Co-Founder, President, CEO & Executive Chairman [3] -------------------------------------------------------------------------------- Thanks, Mike, and hello, everyone. I wish everyone's doing strong and strong at this environment. We had an splendid first belt with revenue increasing almost twofold from a year ago epoch and end to 60% above a consecutive basis. We either delivered a significant improvement at entire utilize and reduction at operating expenses, which translated to a decreased net loss. This economical encounter at is a govern arise of the healthy traction because Netlist's enterprise SSD manufacture row at the information middle markets, where we digest to deliver follow-on orders to a main cloud services provider and a main server oem. The amount of qualifications either digest to enlarge over the SSD manufacture row because the AIC and the U.2 revolve factors. Also, impartial final month, we began sampling the new M.2 revolve factor, and we're above speed to finish qualifications above the coming months with little storaGE machinery oems at the high-performance computing space, and these to perform to manufacture orders at the second half. Industry ask because enterprise SSDs surplus healthy during the surGE at far career is propelling ask because storaGE and cloud and information middle applications. because the modern quarter, the impartial continues to exist at relatively tight supply. Netlist's genius to source, construct and deliver products, across with our industry-leading action offered at multiple capacities and revolve factors, permit us to fill furnish gaps either during encounter the demanding technical requirements of customers at the high-performance segments.
Story continues
The memory module commerce is either starting to bark on good activity during we dine recently received orders because VLPs and other specialty DIMMs from a amount of long-standing customers at the military, Medical and quiz instrument segments. after shutting down early at the year, our mill at Suzhou, China, resumed manufacture at March and is now experience to sum operational capability. The furnish tie because PCB and other key components, where we experienced some delays at Q1, is either GEtting experience to customary at condition of availability and perform times. The analysts and main memory producers are projecting continued energy at the memory impartial at the coming apartment with DRAM and NAND furnish expected to remain constrained. However, during with many businesses, visibility because the second half of the year surplus limited with the uncertainties looming at the global economic surroundings and the shock above memory and SSD demand. That said, we trust that the sales momentum GEnerated above the past 3 apartment and the related qualifications will location us at a good location to digest to construct out our business. Now turning to HybriDIMM. The standardization efforts above the protocol digest within JEDEC. above the past year, we dine grown the membership to above 60 industry companies that dine joined the efforts to standardize NVDIMM-H. Our discussion with latent partners dine been limited because of the shutdown, specially our attach at China, who is based at Wuhan. We scheme to digest these discussions with them either during other U.S.-based companies at the coming months. With the emerGEnce of high-speed DDR5 and tall center calculate CPUs, system memory bandwidth will exist stretched beyond anything that the industry has seen. These trends will perform to increasing ask because high-capacity DIMMs, which already allowance above $1,000, and digest to encounter at up at price. Our technique enables low-cost NAND to substitute these high-cost DRAM-based DIMMs at a piece of the allowance cabin delivering alike performance. We trust the technique will garner immense utilize from information middle operators, who, today, expend hundreds of millions annually above purchases of high-density DRAM-based DIMMs. On the R&D front, we are now turning our attention to DDR5 and, above the coming months, scheme to ramp up the development pains because controller design, including the RTL level coating and architectural simulation and validation. Needless to say, we are identical excited almost the prospects of this technique and the allowance action tax it can spend to the industry. Turning now to intellectual property. above April 7, we received the ITC's final determination, which overturned the administrative regulation judGE's findings issued at the mind of initial resolution at October. This was a significant disappointment and a legal non-sequitur during the initial determination's finding deliver over an extensive and methodical ITC process that construct Netlist's '907 patent to exist valid and infrinGEd by hynix's LRDIMM server memory. at the final determination, the committee chanGEd the ask construction, which was decided during the proceedings, and overturned the findings of the ALJ. The committee essentially chanGEd the rules of the sport after the sport was over, and, thus, invalidated the findings of the initial determination. We detect the changing of the ask construction and the final journal staGE of the ITC process troubling, specially during the material of those chanGEs emerge to exist legally incoherent. In coordination with legal counsel, we dine started preparations to line a mind of plead with the United States stadium of Appeals because the federal Circuit. We dine 60 days from the issuance of the final resolution to file, which we both -- after which both parties will comply briefs, and hearing will exist scheduled. In March, we filed new legal proceedings because patent infrinGEment against SK hynix at the U.S. belt stadium because the Western belt of Texas. This expanded the actions against hynix and furthers efforts to spend them to justice. The belt stadium provides a jury test and the genius to explore both an injunction and damaGEs, the latter of which was unavailable to us at the ITC. The arise of the recently decided example at the Federal Circuit entitled TCL versus Ericsson, any damaGEs will exist decided by the jury. We are asserting 2 new patents, the '218 and the '595 continuations of existing patent families that read above hynix's RDIMM and LRDIMMs. because the local rules at this district, we expect these proceedings to encounter at a rapid speed and are optimistic because a Markman ruling by the purpose of this year or early 2021. The Markman defines the claims of the patent and normally provides good insight into the substantive issues of infrinGEment and validity at hand. after the Markman, the proceedings used to encounter to discovery and a test with an expected conclusion sometime late next year. In the Google dispute, we expect the plead proceedings to wrap up at the third belt of this year with oral arguments at the Federal Circuit currently scheduled because June 5. during a reminder, Google has been challenging the Netlist's '912 patent because the past decade, and it is now challenging the U.S. Patent test and Appeals Board's final resolution above validity at Netlist's favor because this patent. We digest to expect the federal circuit to affirm PTAB's resolution at Netlist's favor, at which point we used to shift because the linger to exist lifted and the '912 infrinGEment lawsuit against Google at the U.S. belt stadium because the Northern belt of California to encounter forward. We dine always viewed IP enforcement efforts during a broad war over multiple venues. We trust at the inherent tax of our IP portfolio and remain undeterred at our commitment to defending it in spite of the modern setback at the ITC. With a farther buildout of Netlist's patent families because DDR4 server memory either during the emerging DDR5 and hybrid memory, we dine extra patents at the portfolio that we are examining because enforcement. I will now spend the bark above to Gail because the economical review. Gail? -------------------------------------------------------------------------------- Gail M. Sasaki, Netlist, Inc. - VP, CFO & Secretary [4] -------------------------------------------------------------------------------- Thanks, Chuck. Revenues because the first belt ended March 28, 2020, were $14.6 million compared to revenues of $5.1 million at the year ago period, a growth of end to 3x. above a consecutive belt basis, revenue increased by 56%. The significant year-over-year and sequential enlarge at the peak row was because of overall growth over manufacture lines, and follow-on manufacture orders because Netlist NVMe SSDs from a main cloud computing vendor and a main oem. First belt manufacture entire utilize percentaGE ago manufacturing costs increased to 17% compared to 12.4% because Q1 '19 and compared to 20.7% consecutively. after manufacturing costs, the net entire margins were 14.4% because the modern belt and 5.5% because final year's quarter. The improvement at entire border percentaGE was largely driven by the manufacture mix, which, during famous earlier, continues to contain an enlarge at the sale of Netlist NVMe SSD products. though we don't guide, we entered the second belt with a hard backlog. And given the modern speed and mix of bookings, we hope second belt revenue and entire utilize dollars to exist at row with the first quarter. We digest to closely overhear the COVID-19 tell and its latent shock above Netlist's commerce globally. during Chuck noted, the mill surplus fully operational, and we experienced identical limited question disruption at manufacture or the furnish chain. We ended the first belt with money and money equivalents and restricted money of $8.6 million compared to $11.7 million at the purpose of 2019. We digest to proactively manaGE the operational money cycle, which, because Q1 '20, included improvement at appointment sales outstanding, offset by a decrease at days payable and decreased inventory turns, during we paid because inventory about 10 days sooner than we sold it because of the shortage to grow inventory at a tight market. We digest to affirm a $5 million working main row of belief with Silicon Valley bank to experience working main and revenue growth and dine access to a 3-year equity row of belief with a remains of $24 million over Lincoln Park Capital. Operator, we are now ready because questions. ================================================================================
