Good day, ladies and gentlemen and welcome to the Vicor Earnings Results for the First Quarter Ending March 31, 2016 Conference Call. My name is Lauren and I will be your operator for today. At this time all participants are in listen-only mode. [Operator Instructions] I would now like to turn the conference over to Jamie Simms, CFO. Please proceed.

Thank you, Lauren. Good afternoon and welcome to Vicor Corporation’s conference call for the first quarter ended March 31, 2016. I’m Jamie Simms, CFO and with me here in Andover are Patrizio Vinciarelli, CEO, and Dick Nagel, Chief Accounting Officer. Today we issued a press release summarizing our financial results for the first quarter ended March 31. Press release is available on the Investor Relations page of our website www.vicorpower.com. We also have filed a Form 8-K with the Securities and Exchange Commission in association with issuing this press release. I remind listeners this conference call is being recorded and is the copyrighted property of Vicor Corporation. I also remind you various remarks we may make during this call may constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those explicitly set forth or implied in our statements. Such risks and uncertainties are discussed in the Form 10-K, we filed with the SEC on March 8. Please note the information provided during this conference call is accurate only as of today, Tuesday, April 26. Vicor undertakes no obligation to update any statements made during this call and you should not rely upon such statements after the conclusion of the call. A replay of today’s call will be available beginning at midnight tonight through May 11, 2016. The replay number is 888-286-8010 and the passcode is 95049218. In addition, a webcast replay of today’s call will be available shortly on the Investor Relations page of our website. I’ll start with – start this afternoon’s conversation with a review of our financial performance for the first quarter. And Patrizio will follow with his comments,…

Yes. So, to separate or, say, the book-to-bill for the first quarter was 1.1 to 1.

Right.

Okay. Thank you, Jamie. As Jamie addressed, Q1 itself reflect the assumptions and expectations we communicate to you during our recent call regarding fourth quarter and full-year results. He also spoke to the first quarter receipt of orders for our 48V PRM, BCM, datacenter solution, which is a restructuring demand for these products. These orders for solution meeting the Intel, we have 12.5 standard, represent the precursor of the anticipated shift to the VR 15 solutions. When we have communicated on February 25, I express to you my enthusiast for Vicor’s competitive position. I firmly confident that our strategy, technology, portfolio, and products are enabling us to lead the transformation of the industry. I would repeat what I said to them. Vicor is poised to lead the adoption of the high performance solutions with champion. Now, I’m able to somewhat more freely and specifically address one of the reasons for my statements of enthusiasm – my confidence. As we saw a series of high-profile public indications that Vicor has indeed positioned itself with the right products at the right time. On January 20, in Santa Clara, California the same conference in2016, Vicor participated in a whole discussion with representatives from Google and Intel, focusing on Google’s adoption of and support for, forgive all motherboard architectures. This represented the first time Google is basically acknowledged that use 48V architecturein the server fronts. This public acknowledgement foreshadowed what was to be announced later in the quarter. On March 9, the Open Compute Project Summit in San Jose, Google announced its joining OCB by contributing a 48V server rack specifications as a first step to drive adoption of 48V architecture standard for power distribution in datacenters. Google’s adoption and advocacy of a 48V infrastructure for datacenters by days the long expected uptake of…

[Operator Instructions] Your first question comes from the line of John Dillon. Please proceed.

Hey guys.

Good afternoon.

Hear me okay, yes.

Yes.

Okay, good.

And here forever.

You had cut. Yes, operator was going quiet here.

Yes.

So in the press release you state that the purchase orders for the 48 volt solution meeting Intel’s VR 12.5 standards have resumed. Can you elaborate on that? I mean do you see a big uptick where we were last year at this time or is it going to just kind of creep up or can you give us a little bit more color on what that means for bookings this quarter?

So then receive to substantial levels, I think we have to take – wait and see as with respect to the progression – obviously progress with availability of next-generation solutions will at a point in time in the – not recent future bring about the crossover from demand – ongoing demand for the older generations solutions to new solutions, and the crossover maybe for us by the availability of different capabilities within the channel of Intel VR 15 portfolio. So we have to see what will happen over the next few quarters, I think what can be is certainly stated is that the inventory version that that caused, avoid in demand as being addressed, there have been fresh new artist and we expect that this trend that will bridge the gap toward the VR 15, which I think as you’ve heard from past, the conference call we also bring about expanded opportunities involving greater penetration with existing customers and the short customers.

It make sense, so with this increase by the group resumption of bookings for the VR 12s, I mean would you expect your bookings to ramp this quarter now Q2, but are going to see a slight increase in bookings modest or steep ramp in bookings for the quarter?

We expect to see bookings take positive steps this quarter, next quarter and the quarter after that. So as far as I can see at this point, we have visibility to a same progression of increasing booking and shipments.

I think it would be a modest increase this quarter then or?

I’m not going to get too specific with respect to modestly – modest a particular quarter improvement that might be I think so far and we’re only less than one month within the quarter. We seen an early positive development with respect to the forecast booking trends so the actual orders are coming are consistent in support of the forecast that we made in terms of progression for this quarter and advance of the year.

Okay, great, great. And in regard to the bookings ramping and the positive trends that you see, we’ve talked about the 3/5 plan, I know it’s been set back. But I’m just wondering when do we expect it’s really to start to ramp? Is that a return and is this beginning of the 3/5 plan or is it quarter way or do you have any color on that?

Well, unfortunately 2017 we’ve been talking about for way too long and I feel frankly as you that to comment, and I want to – anyway, but I do believe that we’ve – we’re on our way to achieving that goal and that’s what was meant that by the comments the remarks regarding achieving our long-term strategic vision. I do believe that the level of activity that has been escalating in a very exciting way. In particular, over the last six months for share those a significant growth ahead for us in not just the center market space, but I suggested in the earlier remarks in a multiplicity of end markets with a growing list of marquee customers.

Excellent. So you also talked about the OCP announcements and all the different announcements and obviously that’s very positive for you. But I’m wondering, I mean can you give us a little more color, I mean are you getting new customer inquiries, because of this? Are you seeing more datacenters, coming last few figures or are the phones ringing off the hook, if you’re not ringing off the hook or…?

Well so…

We use speaker phone.

Sorry the phones are not exactly having off the hook. But we have seen a significant step up in the interest, particularly within certain related players within that market segment. So I suggested a moment ago, we’d answered to your earlier question, people by and large have seen over the last year and this has been escalating trend, the increasing activity, it’s really week after week, it’s cutting activity with more and more customers seeking out solutions that are uniquely able to address their density, efficiency and other power system requirements in multiplicity around markets. Specifically in connection with recent announcements, particular by Google that’s for about significant incremental interest within the related market segments and that would be encompassing and not just the center market per se, but also somewhat related customer seen in communications – in the communication space. So that’s something that has made and all this will change for the better we believe and seeing at least in some instances in correlation with the recent announcements. But to beginning, the levels calling activity across the broader front was a ready place and it was reflected in comments I made in the past conference calls late last year, even before this recent announcements that were made. So I think the recent announcements about the – some additional momentum in a particular end market or couple of end markets these are somewhat closely related in terms of their opportunities.

Okay, great. I’ll get back in the queue, but if no one else has questions if you could hang on for a minute, I’ll get back on.

Thank you.

Thank you.

Your next question comes from the line of Jim Bartley. Please proceed.

Yes, could you help me understand why was the Google advantage to share their 48 volt datacenter solutions up with other vendors?

Well, I’m not in a position to answer that question and to the extent. I have visibility. I can really use it to comment on this.

Okay, but regardless that it would be a positive for us and getting others to adopt the technology. But just within Google, they also announced some very substantial increases in new datacenters. Could you help us understand how that new – opening a new datacenters, they are opening new datacenters, how that flows through to the Vicor?

Well, the only comments I can make regarding that is one that would be flat was been publicly disclosed, which is that they are – heading the year of conservative investment in CapEx and infrastructure and I think that some other probably could happen. They are now ready to resume significant incremental investment in the infrastructure for all the opportunities, cloud computing and all the opportunities that they have targeted. And so that’s in fact is in the public domain and also in the public domain is Google’s commitment and sponsorship of a 48-volt infrastructure, with respect to which they have saved it, they played – if you could just well not to their worse, but I think it’s fair to say they played a leading role in advance the state-of-the-art in a way the leads to reduce the cost of ownership is for about by that reduction in power consumption, power dissipation that is present in efficient datacenter. So the metrics that was claimed by Google 25%, the improvements at the level of 30%. I think it’s another mystery that given the large consumption electricity in the growing number of the centers around the globe. A 30% reduction in a necessary waste of electricity is a big deal, not just from the ecological green perspective, but also in terms of the bottom line and in terms of the cost of electricity. So this is something that Google, again for reasons that I can’t comment about as recently decide to share with the world larger through Open Compute, I think it will make for a better infrastructure by a multiplicity of companies around the globe.

Okay, and let me ask you with in the forecast of our profitable second half. You mentioned two things, you mentioned one is your anticipated rebound of the legacy business as well as the opportunities in the new products and help me understand the anticipated rebound in the legacy business why does that happen in the second half?

Well, that’s started to happening, we’ve seen that recently and we see some improvement in the defense space. There’s been improvement I suggested earlier with some of traditional bricks and some of the constant solutions that being part and parcel of the legacy business. But to be clear, the growth opportunities not going to come from those kinds of older generation, lower density, lower efficiency, higher costs per watt products, the opportunity going forward is largely dependent on design wins using VI products in particular when it comes to the space in which Vicor has traditionally played. ZVS that incorporate Chips of those kinds and other kinds of modular system products that we will be introducing at the next starting phase over the last year and a half. The other day there is really not a lot of mystery or magic to these, if the products – you got to have the products and then given the nature of the industry because these knowings sometimes reward. This is just a session period to the designing and [indiscernible] that typically last 9, 12, 18 months depending, in some instance even longer than that depending on the type of application. But again there is no mystery, better products lead to design wins and design wins lead to bookings and bookings lead to revenues and they lead to profits. Yes, and Jamie is writing at that.

Okay, and profits in the second half, what you are returning profitable in the second half?

Yes, just to modules with passions, this is not going to be a year of profitability. I think that we are on the right course and I think with a bit more passions, as we get 2017 and beyond, we should see finally return on the very large investment that we made in VI Chip Technology [indiscernible] and just to set, things of perspective, I’m sure some of you remember some of this data, we are invested to nearly $300 million in the technology and to that portfolio. And as I said in the passed that we believe, we’re going to see a return on that investment is going to be a substantial return over time.

Thank you.

Your next question comes from the line of Don McKenna. Please proceed.

Hi, guys. Here with me, I’ve got a little bit of laryngitis here, but I wanted to ask you again going back to the new IBM Chips, what have you – and you identifying that you have the number one solution if you will vendor for that 48 volt solution. I take that to also say that you’re not the only source for a 48 volt solution. So my question to you is if I read that right, what percentage of the market you expect you might get and can you quantify the size of that market opportunity?

Well, so the market opportunity is we can refer from the earlier comments is expanding and maybe expanding as a more rapid space over the next few years, in part to be close association to share their advances in terms of establishing 48 volt architecture in the datacenter. Regarding share, I can’t this specific with respect to that, but I can tell you that as noted by any times, which is not already in the electronic space and volume formed with respect to assessing around the capabilities. Our solution is far superior to anything else that is other out there or claim to becoming and fundamentally based on our visibility, we think we will something like a Forex for times advantage in terms of density and advantage in terms of efficiency, and advantage in terms of other key attributes of point a little power system with factorized power components that we’ve been continue to improve and evolve to continually increase performance as relevant metric that we share with our customers. We’ve been able to reduce losses at the pace of around 20%, 30% every few years and that’s a trend that is continuing. It’s the trend that – it’s not just meaningful in terms the applied improvements in efficiency, but it related to it, the improvements in the density of the solution because as our density increases – our efficiency increases, our density increases with it. And last, but not least our costs structure goes down also in their proportion to the reduction and loss, because we can make the solution smaller and the small solution costs us money. So I think it’s something that everybody and we felt several on the industry would recognize today, we have a formula of advantage, which is not accidental, it’s a fraction of the major investment we made over a timeframe of 10 years plus measure both in terms of dollars, intellectual property, and the loss went by the lot of people of Vicor.

But is that market opportunity one of $50 million or a $100 million a year or…?

It’s a far, far, far larger market opportunity. I think just in the center space, it’s not the market greater than that. And guess what that did you attribute the set of process – in solution apart from providing out either accept the space. We do same attributes, not surprisingly believe there to commence that advantages in our markets. These issues are fundamentally always the same. And our methodology for addressing these issues is very scalable. So the issues you expect the end market are the same and we have convert a systems one of the – more space, generates either cost no money. And fundamentally every customer would like to that idea power system and present that our solutions are far closer to that ideal objective than anything else. Those advantages play out as well in other end markets. I’ll give you specific example. We’ve been talking for quite some time or should you heard us make reference through the other modest space. Within the last year we made, remarkable advances in that early. We actually now have some initial significant production business coming away from China. We made advances around the globe with respect to components that enable IT of more of these systems to be denser and smaller, more efficient and more cost effective and so when we are looking at its replay of the same issues that have served us well in the center service space. And I could keep on going it’s not just our motive it’s other end markets that we use again the issues of the same. And our methodology is very scalable, because our timeline has been another modular solutions to power system requirements and immanent in the concept of providing modular solutions, which are in effect a Lego approach to power systems is levels, covered body in terms of being able to reconfigure the Lego blocks as need be to agree to address different power system requirements that is really unique in the industry. So it’s not just that we have much better technology, much better power conversion engines, and superior power distribution architectures are provided to Vicor. But we also leverage the engines, the building blocks, the architectures in ways that are very scalable and reusable enabling in effect that the same type of building blocks to be applied with corresponding advantages in very different end markets or the nature of the products is slightly different, but the challenge is for the power system tend to be always the same.

Thank you. I want to ask also as you mentioned the bookings would be positive quarter-to-quarter going forward, with that could I expect that to be equal to or greater than the book-to-bill ratio that we saw this quarter?

I think we expect something in the job ballpark and that’s the plan for the foreseeable future.

Great, and Jamie, can you on the headcount that you gave us; can you break that down for the direct labor?

Not off the top in my head, but what I can tell you is that two elements of that shift were associated with one of the custom power transactions and then also an increase in temporary people in the plant.

Okay.

So it wasn’t there – if you were to look at the individual categories there wasn’t finance move in anything.

Great, thank you. I’ll get back in line as well.

And next question from the line of Alan Hicks. Please proceed.

Alan, are you there?

Check your handset and make sure you’re not on mute. Your next question comes from the line of John Dillon. Please proceed.

Hey, Jamie the last statement you have an increase in temporary people in the plant. Why would you need increase temporary people when your revenue wasn’t up that much?

Yes, we didn’t want to hire full-time.

So okay, I guess I’m just kind of surprised you won’t to be able to meet the demand with the current staff that you have. Are you bringing these people on, because you’re expecting demand to go up more next quarter and you have to train them or do they just come right in and just go I mean – trained?

But it really has to do with mix and steps we had taken in prior quarters.

Okay.

So I don’t want prepared to say it.

Okay, all right. Patrizio you said that the VIA line was complete on and so now you’re ready. So can you give us a just a little bit more color, I know you had some of this, but can you give some more color about how VIA bookings sales and design wins are going?

They’re going well we have a significant design wins and the growing face of customers evaluating the base products VIA packages, the VIA PFM in particular has been very popular, VIA CMs where introduced somewhat more recently, but they’re also getting traction, also that convert this in VIA packages. So we have a number of VIA products in – our given markets that are progressing from the PRC stage to designing stage in some cases actual design wins of that are going to start ramping this year.

So do you see a significant increase in the VIA line coming then I mean it’s…?

Yes, that’s why we made the investment. There was significant investment in other measured line to have the capacity. We expect we’re going to need as the year progresses.

Yes. And you said that sometimes, the design cycle is not quite as long on the VR products. So, are you seeing bookings now for the VR line, or they’re starting to ramp up?

I don’t have the specifics with respect to that. But I can assure you – I tell you that, I’m informed that we have a growing level of activity. And I said by the earlier comments that you’re referencing, which are that because of the measure of the VR product, which is in effect a complete solution. It’s a modular solution I was suggesting earlier. But in a package format, the lens itself to the early getting bolted down to a a sachet, getting wired up, and getting the power season going without further ado, which is quite different from, let’s say, the designing cycle for the point-of-load, PRM and BCM type of products that we’re referencing earlier, which are very long just fashion of peer, because they require the customer –customers to, to go to an extensive design and qualification. And so the time to market for those tends to be a lot longer than it wasn’t affected turnkey solution, which is what VR products provided that are effectively and typically stuff a complete front end that the customer can purchase and use to power up the rest of the season.

Great, great. Can you talk a little bit about VR 13 bookings? Do you still expect those to start this quarter?

Well, so, I think that I suggested earlier, we expect a transition to take place this year. I think we need to be a little careful with respect to which ascertain, because…

Right, right.

I believe, there maybe more than one SKU, and it could be that SQ, I guess, turned on before what was to be the SKU that was originally anticipated to be production in a timeframe that partially for best SKU has moved to the right considerably. So to phrase it in somewhat different words from the visibility we have VR 15 is coming. And the meaning of VR 15 is not a proposition of a particular solution. It may well entail two different kinds solutions early.

Okay. And with the – when the VR 13 start? Is that when you’re also then start getting some memory rails, orders, or those already coming in?

We have design wins that involve memory rails. And we’re getting more traction with more customers that are looking to provide a more complete solution using Factorized Power components. So the evolution of this has been starting with the main rail or rails of a processor or processors on the motherboard, which are the most demanding car loads, which largely represent the greatest opportunity for ROM, a solution such as ours that is – the answer more dynamically capable and better performing. And not surprisingly, customers have initially focused on what you might call it the lowest-hanging fruit, which is the processor. But as they picked those cherries and find them to their liking, we see more and more customers climbing the tree with the memory rails or other lower power rails in this part of the opportunity in terms of increasing the content and the value that we have on motherboards.

And do you expect those memory rail bookings to start this quarter, are they going to be next quarter, or they would be in tandem with when the VR 13 can start?

So, typically, the assumption of demand for VR 12.5, that is devoid of memory rails. And the progress we’ve made that involves memory rails at some accounts that progress is tied to VR 15 type solutions.

Right.

…that are not yet ready for branch or muscular action.

That would make sense, because we’re designing in new computers, so they would design the rails when they are designing the VR 13 solution….

Yes.

…so that makes sense to me, yes, okay. And with the VR 13, we’re really waiting, or is it early, is that the name of the diversion that is really going to be the huge step up, or you going to see revenue from VR 13 before that is announced or before that’s released?

I’m not going to be specific with respect to that. I think there’s some level uncertainty. And so, I think, it’s safe to say that we’re going to see fresh opportunities as VR 15 solutions for the class of applications that we’re discussing. These are not mobile application for the datacenter type of use or supercomputers. There’s another application, which we’ve had success. So those tend to be the more advanced SKUs, and unfortunately the ones that are later coming.

All right. And what about flash in XPoint memory? Are you seeing any design wins in those areas?

Well. So, again, we’re making progress with respect to addressing all the roles and these are natural progression with respect to this. And such that it’s a function of the particular end market. So in certain end markets that are less cost sensitive and more of a demanding in terms of performance, we’ve had earlier uptake. And – but ultimately the measure of our building blocks and their continued evolution and continuing improvements in performance and cost effectiveness, you don’t make them suitable for very broad deals. From Italy, we will have the ability to provide very cost effective extremely high-performance solutions ranging from to enhance all the way effort to under its own peers, or very demanding applications. And that covers a good deal of the landscape of the lows that represent most of the dollar value on a typical law board.

It sounds good. It sounds like, we’re pretty close, and I appreciate everything you’ve done. So thank you very much.

Thank you. If there’s one more question, if not thank you all, and we will be talking in June.

Your next question comes from the line of Dick Feldman. Please proceed.

My question has to do within your press release you mentioned progress in the front end, as one of the things we were optimism. Is that only the VIA, or is it other front end initiatives that you have?