Good afternoon, everyone. And welcome to Diodes Incorporated Fourth Quarter and Full Year 2025 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, as a reminder, this conference call is being recorded today, Tuesday, 02/10/2026. We would now like to turn the conference call over to Leanne Sievers of Shelton Group Investor Relations. Leanne, please go ahead.

Good afternoon, and welcome to Diodes' Fourth Quarter 2025 Financial Results Conference Call. I'm Leanne Sievers, President of Shelton Group, Diodes' Investor Relations firm. Joining us today are Diodes' President and CEO, Gary Yu; CFO, Brett Whitmire; Senior Vice President of Worldwide Sales and Marketing, Emily Yang; and Vice President of Marketing and Investor Relations, Gurmeet Dalaiwa. 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 and 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 Form 10-K for its year ended 12/31/2025. 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 filings with the Securities and Exchange Commission, including Form 10-Ks and 10-Qs. In addition, any projections as to the company's future performance represent management's estimates as of today, 02/10/2026. Diodes 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. Additionally, the company's press release and management statements during this conference call will 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 the 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 ninety days in the Investor Relations section of Diodes' website at www.diodes.com. And now I'll turn the call over to Diodes' President and CEO, Gary Yu. Gary, please go ahead.

Welcome, and I thank you for joining us on today's conference call. As announced in our press release earlier today, we ended 2025 with fourth-quarter revenue growing 15% year-over-year and a 13% increase for the full year, which is the highest level of annual growth since 2021. Additionally, this quarter represents the fourth consecutive quarter of double-digit growth year-over-year, further highlighting the success of our design win initiative and content expansion over the past year. We have continued to see the main improvement across our target market and geographies, with the most significant growth for the full year driven by a 25% increase in the computing market, primarily for AI server-related applications, as well as double-digit increases in our automotive and industrial end markets. Also, during the quarter, we began to realize initial improvements in gross margin as product mix benefited from growth in the automotive market, which increased 6% sequentially and 24% year-over-year. We also remain focused on increasing manufacturing efficiency and minimizing underloading costs over the next few quarters to further drive future margin expansion. As we look to the coming quarter, we anticipate extending our success by delivering above-seasonal revenue results and our consecutive quarter of double-digit year-over-year growth. As we look back over this past year, the progress that has been made, I want to take this opportunity to discuss my specific near-term financial target after having been in the role of president and CEO for the past two quarters. After reaching $1,000,000,000 in revenue in 2017, our next billion-dollar goal is to reach $2,500,000,000 in revenue and a $1,000,000,000 in gross profit, or 40% in gross margin. I want to emphasize that we remain committed to achieving these long-term goals. In order to help our investors track our progress toward these goals, today, I'm introducing three-year interim financial targets which include achieving $2,000,000,000 in annual revenue with approximately $700,000,000 in gross profit or 35% plus in gross margin. This equates to a revenue CAGR of 10.5% and a 15% CAGR on gross profit dollars. Most notable, when taking into account our improved cost structure, we are expecting to deliver over $4 in non-GAAP EPS, which equals a 50% CAGR over that three-year period. This interim goal highlights the strong operating leverage in Diodes' financial model and the ability to generate significant earnings power and cash flow on each incremental dollar of revenue growth. As mentioned earlier in my remarks, we continue to prioritize product mix improvement by focusing our sales efforts and R&D dollars in key focus areas of automotive, industrial, and computing for AI-related server applications. Content expansion, design win momentum, and new product introductions will continue to be the cornerstones of our growth initiatives, combined with increased manufacturing and cost efficiencies to drive margin expansion. With that, let me now turn the call over to Brett to discuss our fourth-quarter and the full-year financial results as well as our first-quarter guidance in more detail.

Thanks, Gary, and good afternoon, everyone. Revenue for the fourth quarter of 2025 was $391.6 million, an increase of 15.4% over $339.3 million in the fourth quarter of 2024. Full year 2025 revenue increased 13% to $1.5 billion compared to $1.3 billion in 2024. Gross profit for the fourth quarter was $121.9 million, 31.1% of revenue, compared to $110.9 million or 32.7% of revenue in the prior year quarter and $120.5 million or 30.7% of revenue in the prior quarter. For the full year, GAAP gross profit was $462.4 million or 31.3% of revenue compared to $435.9 million or 33.2% of revenue in 2024. GAAP operating expenses for the fourth quarter were $108.7 million or 27.8% of revenue, and on a non-GAAP basis were $104.0 million or 26.6% of revenue. Which excludes $4.7 million amortization of acquisition-related intangible asset cost. This compares to GAAP operating expenses in the fourth quarter of 2024 of $99.0 million or 29.2% of revenue and $108.9 million or 27.8% of revenue in the prior quarter. Non-GAAP operating expenses in the prior quarter were $103.1 million or 26.3% of revenue. Total other income amounted to approximately $1.3 million for the quarter. Consisting of $7.0 million in interest income, $2.9 million in foreign currency losses, $1.3 million in interest expenses, $1.6 million loss on investment, and $100,000 in other income. Income before taxes and non-controlling interest in the fourth quarter of 2025 was $14.5 million compared to income of $12.3 million in the prior year period and $19.0 million in the previous quarter. Turning to income taxes, our effective income tax rate for the fourth quarter was approximately 14.9%. For the full year 2025, the tax rate was approximately 17.6%. For 2026, we continue to expect the tax rate for the full year to remain at approximately…

Thank you, Brett, and good afternoon. As Gary and Brett mentioned, fourth-quarter revenue was up over 15% year-over-year, flat sequentially, and at the high end of our guidance. Mainly driven by strong demand in Asia, especially in Taiwan for the AI server-related computing. Our global POS increased sequentially, led by North America and Europe, followed by Asia. This is a good indication of the overall market recovery in the automotive and industrial market. And our channel inventory decreased again, both in terms of dollars and weeks, which are now within our normal range of eleven to fourteen weeks. I will also highlight that with the recent supply interruption in the market, we have been strategically supporting key customers on new opportunities and orders, specifically in the automotive and communication markets, while also further extending our design momentum across all end markets. Our key focus remains on building a strong win-win partnership with our customers for the long term. Looking at global sales in the fourth quarter, Asia represented 78% of the revenue, Europe 12%, and North America 10%. In terms of our end markets, industrial was 22% of Diodes' product revenue, automotive 20%, computing 28%, consumer 17%, and communication 13% of product revenue. Our automotive and industrial revenue combined was 42%, which is a one percentage point increase compared to last quarter due to stronger demand in Europe. In 2025, we introduced over 650 new part numbers, with approximately 40% of this specifically for the automotive market. We have increased our addressable content to $239 per vehicle from $213 at the end of 2024 and from $160 at the end of 2023. Our content in the AI server applications this year increased to 103 from 90 last year. Now, let me review the end markets in greater detail. Starting with…

Ladies and gentlemen, at this time we'll begin the question and answer session. If you would like to ask a question, please press star and then 1 using a touch-tone telephone. To withdraw your questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up the headset handset to ensure the best sound quality. Once again, that is star and then 1. To join the question queue. We'll pause momentarily to assemble the roster. And our first question today comes from David Williams from Benchmark. Please go ahead with your question.

Hey. Thanks, everyone, and congrats on the really solid results here and the better outlook. Yeah. I guess maybe first, Gary, you gave some pretty aggressive targets there that you've outlined. Can you kind of maybe walk us through the puts and takes and maybe, you know, how you see getting there, maybe just stepping through the trajectory would be helpful. Thank you.

Yes. And, David, I think that's a really, really good question. You know, first, I really want to emphasize again, we're still committed to achieving the $1 billion gross profit long-term goal. Right? And, you know, I do believe since the market is still kind of dynamic, the interim target of $2 billion revenue is an important milestone for investors to understand and model how and when we are going to achieve our long-term $1 billion gross profit target. So as mentioned in my speech, we now continue to drive and gain share in the three key end markets segment like automotive, industrial, and AI server-related applications, and also continue to improve cost structure and product mix enhancement. And the $2 billion represents a 10.5% CAGR with about $700 million in gross profit, which is about a 15% CAGR and a 35% plus gross profit percentage will deliver $4 EPS, which could equate to probably a 50% CAGR for the three-year period. And, also, to make this happen, you know, we are talking about more than a 45% gross profit flow-through for any incremental dollar contributing to our revenue, and that's very important.

That's very helpful. So I get, from the gross margin standpoint, very nice follow-through. Is that simply just the leverage, or are you seeing some of the operational efficiencies that you've worked on in the last several quarters or through the downturn? Is that really beginning to flow through? And then how should we think of the cadence of that gross margin improvement?

Well, actually, you know, that's a very good question too because, you know, we have been working a lot to improve our cost structure, including improving manufacturing efficiency and product mix improvement. And the most important thing is we bring the revenue up, and that's going to try to help our underloading issue in our manufacturing currently.

Right. And just one more, if I may. Just as you think about the growth trajectory through the year, how should we think about that for the full year?

Well, we usually don't talk about the full year, but I do get a good feeling of the market demand getting much better this year. Right, especially in the key segments that we are focusing on. As we continue to drive these kinds of initiatives, including product mix improvement, pushing more cost reduction, and manufacturing efficiency, as well as continuing to qualify NPC or process product to our And this will help minimize the underloading cost impact. So, overall, the margin improvement for 2026, to me, is very promising.

Yeah. I think, David, let me just add a little bit. Right? So if you look at the Q1 guidance, we actually guided a 19% year-over-year growth. Right? So even though we don't really guide the whole year, we usually, you know, say, hey, you show seasonality. If you just plug in the usual seasonality, it kind of would give you a good estimate for the year. Right? So I think you can use that as a reference.

Great. Thanks so much.

And our next question comes from William Stein from Truist Securities. Please go ahead with your question.

Congrats on the good results. Regarding the new targets, I think you said that's a three-year target. Should we contemplate this interim goal as something you plan to achieve in calendar twenty-eight?

Yeah. Definitely. Yes. This is why I committed to the 45% drop-through.

That doesn't sound like it's sort of normal operating leverage. It sounds like it's an underutilization charge going away. Is that the way we should think about that dynamic from here through 'twenty-eight?

Yeah. Definitely. Underloading charge is going to be the key factor for the gross profit percent. But that isn't the only thing we want to improve. Right? Not only the underloading charge, but we also want to improve the product mix, you know, enhancement, and also want to concentrate and focus on high-margin segments like automotive, industrial, and AI-related servers. Altogether, they will contribute more gross profit dollars. And gross profit percent.

One final one if I can. You have these manufacturing services agreements that I think are coming to an end this year or maybe they're diminishing. Can you clarify that for us and help us prepare for any changes that might cause either positive or negative to profitability? Thank you.

Yes. You know, and your assumptions are correct. We cannot disclose too much detail about that. And they are about to actually end this year. And that's the reason we try to, you know, continue reporting our product and processing to the manufacturing in our g-fab and s-p fab. And so far, the progress is quite promising, and we do see that quite a few key customers have already adapted to the product produced from those two wafer fabs. And I will say, probably starting from next year, you'll see the benefit contributing to our gross profit percent on those two wafer fabs.

Thank you.

Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue. And we do have a follow-up question. From David Williams from Benchmark. Please go ahead with your follow-up.

Hey. Thanks for letting me jump back in here. No problem. I get this always rough. Well, you were so efficient in answering my first question. I figured I should throw in a couple more. But, maybe just on the opportunity with Nexperia or the customer that you discussed earlier, can you maybe size the magnitude of that? And then I know that that historically has been lower-margin business. Can you talk about what you're doing to help stabilize the margin and not see the pressure here that you would typically see with that business?

Yeah. So, David, this is Emily. Right? So I've mentioned this before. Anytime there's a supply interruption or market strategic change, direction, or anything, it's always favorable for diodes. Right? So we're not interested in picking up a lot of deep commodity business and stuff like that. But we actually use the opportunity to work with the customer to really deepen the relationship and make it really, I would say, beneficial long-term for both companies. Right? So that's pretty much the approach we're taking. So we are using the opportunity to expand our overall portfolio as well as our print position.

And just one last one. Just kind of thinking about the lunar holiday coming up in Asia. I know that typically drives some seasonality. Are you sidestepping that, or are you just not seeing the impact or maybe talk about anything you're doing there to offset that typical weakness?

Yeah, Chinese New Year is pretty standard, right? Definitely, there's going to be some shutdowns and some of the customers, as well as taking the break, right? So we actually included all these estimates into our numbers. But like I mentioned, we're definitely seeing a really strong backlog, really strong bookings, strong book-to-bill, and everything. So that's the reason we actually guided a very strong Q1 estimate guidance to the street. So like I said, we're seeing a lot of recovery in the market, which is a good indication of the recovery.

Thanks again for the help. Congrats once again.

Thank you. Thanks, David.

And ladies and gentlemen, at this time, we'll be concluding today's question and answer session. I'd like to turn the floor back over to the management team for any closing remarks.

Thank you, everyone, for participating on today's call. We look forward to reporting our progress on next quarter's conference call. Operator, you may now disconnect.

And ladies and gentlemen, we will conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.