Melexis NV IEPER's (MLXSF) CEO Françoise Chombar on Q2 2018 Results - Earnings Call Transcript

Melexis NV IEPER (OTCPK:MLXSF) Q2 2018 Results Earnings Conference Call August 1, 2018 11:00 AM ET

Executives

Françoise Chombar - Managing Director and Chief Executive Officer

Karen Van Griensven - Chief Financial Officer

Analysts

Francois-Xavier Bouvignies - UBS

Janardan Menon - Liberum Capital

Guy Sips - KBC Securities

Jeffrey Osborne - Cowen

Gaspar Ariño - Montanaro Asset Management

Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today's Melexis HY and Q2 2018 results call. I would like to hand the call over to your speakers today, Françoise Chombar and Karen Van Griensven. Please go ahead.

Françoise Chombar

Thank you. Dear audience, we appreciate your attendance to the Melexis earnings conference call for the second quarter and also first half year 2018.

For starters, let me give you brief business perspective update. My name Françoise Chombar. And then, our CFO, Karen Van Griensven, will take over for the financial highlights. And, obviously, we will end with your questions.

So, first, some highlights from the business and market side. Sales for the second quarter of 2018 were €141.8 million. Sales for the first half year of 2018 thus came out at €281.1 million. And that's an increase of 12% compared to the first half of 2017.

Melexis' performance is well in line with our expectations. Excluding strong US dollar currency headwinds, Melexis' first half year sales growth would have been 18%.

This solid growth is related to both existing and new programs ticking all the boxes on electrification, assisted drive and customization of the car.

Melexis thrives thanks to steadily increasing semiconductor content in cars, more so than related to the number of cars produced in the world. The Melexis market fundamentals are sound; and today's customer sentiment continues to be positive.

Geographical spread is virtually the same in half year one 2018 as it was in half year one of the previous year, which is 1% less in the Americas to the benefit of Asia-Pacific.

The portion of standard product, sales has meanwhile grown to 65% of total sales, in line with our long-term strategic intent. Sales growth in adjacent markets moves at virtually the same pace as automotive.

On the same note, I'd like to touch on the Silicon Valley tradeshow that Melexis attended again just a month ago – Sensors Expo & Conference. This is the largest gathering of engineers and engineering professionals involved in sensors and sensing-related technologies.

The 2018 edition attracted 7,000-plus attendees and about 350 exhibitors. The event was held at the McEnery Convention Center in San Jose, California, just down the street from Melexis' newly opened Silicon Valley sales support office.

Sensors Expo provides Melexis with an excellent stage to brand our capabilities and product portfolio, both for automotive and adjacent markets. Especially, our offering for electric vehicles was well received.

We showcased our embedded lighting product, used the opportunity to put our third-generation Triaxis in the spotlights again, and we had our product marketing manager as one of the speakers at a speaker breakout session on sensor fusion.

His talk about our time-of-flight family drove an amazing subsequent traffic to our booth. It was a great place to connect with the local engineers of both our existing and potential customers on the West Coast.

Now looking at our half year one growth drivers, they are as usual broadly based. Three highlights are worth mentioning this time.

First, in embedded lighting, we continue to benefit from existing ambient lighting programs ramping up as well as new programs, which are being added gradually.

Second, the Triaxis products, which form a cornerstone of our magnetic product sensor family, they are being used in many applications, such as steering systems, gear shifters, pedals, transmissions.

High demand for electric power steering and advanced powertrain systems, along with the evolution towards assisted and autonomous vehicles, are key drivers for further growth.

Last, but not least, is our temperature sensors product line, which is one of the speaking examples of technology that can serve both automotive and adjacent market applications.

Our temperature sensor line experienced a growing demand from its distribution customer base. These distributors serve a variety of applications in the areas of consumer, white goods and small appliances, mainly targeted at the Asian markets.

A second growth pillar for the product line is its automotive thermocouple interfaces. These are used in the powertrain and address the growing need for more stringent engine and exhaust thermal management and control.

Going forward, a healthy order book gives us confidence to guide for full year 2018 sales growth of 13% to 14%.

Meanwhile, we are putting everything in place to satisfy the growing demand for our sensor and driver products. We, therefore, invest into enhancing our test capacity with building extensions in Sofia and the smaller also in Ieper, and with our newest wafer test site in Corbeil-Essonnes south of Paris, and into expanding our R&D capabilities gradually everywhere. Also, by setting up new design centers, like the one in Düsseldorf, Germany, which we publicized just earlier this month to be fully operational by year-end.

The future is an exciting place indeed.

Karen, please, can you now go ahead with the financial update?

Karen Van Griensven

Yes. Thank you, Françoise. Good afternoon, ladies and gentlemen. So, sales for the second quarter came out at €141.8 million, as already mentioned by Françoise, an increase of 10%.

The gross margin, on the other hand, was €65.8 million or 46.4% of sales, an increase of 11% compared to the same quarter of the last year and an increase of 4% compared to the previous quarter.

R&D expenses were 13.5% of sales. G&A was at 5.3% of sales. And selling was actually 2.7% of sales.

The operating results was €35.4 million or 25% of sales, an increase of 7% compared to the same quarter of last year and an increase of 3% compared to the previous quarter.

The net result was €28.1 million or €0.70 per share, a decrease of 9% compared to €30.8 million or €0.76 per share in the second quarter of 2017 and a decrease of 2% compared to the previous quarter.

If we look at the first half year, we grew 12% or €281.1 million in sales. The gross margin was €128.9 million, an increase of 11% compared to the same period last year or 46.4% of total sales.

The operating result was almost €70 million compared to €64.6 million in the same half year of the 2017, an increase of 8%.

Net income came out at almost €57 million or €1.41 per share, an increase of 1% compared to €56.2 million or €1.38 per share in the first half year of 2017.

The board again decided on an interim dividend of €1.3 gross per share. So, the shares will start trading ex coupon on October 23. The record date is October 24 and the payment date will be October 25.

We are now open for question-and-answer session. So, please go ahead

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]. So, we have three participants, with – the first question comes from the line of Francois Bouvignies. Please ask your question. Your line is now open.

Francois-Xavier Bouvignies

Hello. Thank you for taking my questions. The first one I had was on your full-year guidance. So, at the midpoint, it remains the same, but you changed the exchange rates. So, if my estimates are correct, it's a 2% impact on the currency. So, my question is, what changed for changing the constant currency full-year guide? What is the main driver for this?

Françoise Chombar

Yeah. Thank you, François. It's, I would say, normal that we reduced spreads in the mid-year because, at the beginning of the year, of course, the currency mix and the forecast as a whole are always much more uncertain. There's always some corrections here and there during the year. But I think what is key to Melexis is that there is no structural change going forward. The market is positive. As I said, Melexis' products tick all the boxes on the market trends. We keep gaining market share and we have a healthy order book. It's just that, yes, we always try to be as realistic as possible using the data that are available to us at the moment we make the guidance, and that's what we've done also today.

Francois-Xavier Bouvignies

Okay, that's clear. Just to clarify one point, so I understand you now have the guidance, but at constant currency, because you took 1.17, it's lower by 2 percentage points. I just wanted to have – is there any specific driver, like cutoff production or delay of contracts? Just to know what is the delta coming from.

Françoise Chombar

No, nothing in particular. I think it's the usual corrections over the year.

Francois-Xavier Bouvignies

Okay, okay. And the second one I had is, again, I asked you last quarter, but the – on your inventory. So, if we look at this quarter, it came up very high compared to your historic. If I remember correctly, in Q1, you said you were comfortable with the level you had in Q1, but it keeps increasing significantly. So, can you help us understand what is really driving this increase in inventories, and maybe to understand what is inside your inventories?

Françoise Chombar

Well, I can tell you that we still feel comfortable with the inventory as it stands right now. It is fully in line with our guidance for further growth in the second half of 2018. And what is important here is that we want to secure the supply to our customers. As you know, and I think it's no secret anymore to anyone, that in today's strained capacity situation, it is, in fact, yes, strategic to build inventory. We don't expect it to move strongly again in the second half. But I think, yes, nothing specific there. Nothing that at least I worry about.

Francois-Xavier Bouvignies

But what I'm trying to understand is, this isn't the first time that Melexis has a 15%, 20% growth going forward, and you never had such level of inventory despite this growth. So, why this time is different? Why do you build so much when the pipeline is not different than previous years?

Françoise Chombar

Because the situation on the market is different than it has been for a long time. The tight capacity situation is one of the reasons.

Francois-Xavier Bouvignies

Even if like – so should we expect maybe like a very strong acceleration in 2019 then? Are you building up for 2019?

Françoise Chombar

Well, that's a good try, Francois, but we only give our guidance for 2019 in February. So, at the full year results.

Francois-Xavier Bouvignies

Okay. So, going forward, this inventory level, should we expect to stay at the same level or going up, down further?

Karen Van Griensven

We expect it, more or less, to stay around this level that we have today. We don't expect it to grow much more, certainly not versus sales over the next months to come.

Francois-Xavier Bouvignies

Okay, thank you. And the last one for me. You talk in the release about autonomous driving as a driver for your magnetic sensors. Can you give us some example of application for ADAS applications, just to have some example of what is driving Melexis for the ADAS market? Just to try to understand some examples.

Françoise Chombar

Yeah. Well, I have multiple examples. But if I stick to the – because you could talk about the more visible things, like 3D cameras and so on, but people always forget that there is a lot hidden in the car. And when you have an autonomous vehicle, then you need the car to understand what is happening, but also the car to react – and react in a very controlled fashion.

So, you have all these closed-loop control systems that need to understand where everything is in the car, what the position is or what the status is of pumps and of flaps and motors and all that kind of stuff, which means that you need the car to sense also its internal. So, not only to be conscious about what is going on externally and be able to react accordingly, but also to understand how moves are being done internally. So, when a car needs to brake by itself, then a whole bunch of systems need to respond in the right manner. But when you then restart the car, then the systems should know, 'ah, that's where I was 5 seconds ago, this is where I have to be now in the next milliseconds.'

So, all these closed-loop systems need a lot of sensors and a lot of drivers to make sure that the functioning is impeccable. And that is something that many people forget that this is needed because it's not as visible as, for example, a camera would be.

I hope that answers your question.

Francois-Xavier Bouvignies

Yes, thank you very much.

Françoise Chombar

You're welcome.

Operator

The next question comes from the line of Janardan Menon. Please ask your question.

Janardan Menon

Hi, good evening. Just a couple of questions from me. One is on your ASIC business itself. Yeah, it's quite a large part of your business, but when I look at the trends over the last quarter or year-on-year, this business is actually not growing. It has actually declined a little bit, both sequentially and year-on-year. Whereas, obviously, the rest of your business is growing very fast. I'm just wondering what is the reason for that. And, more importantly, what is the outlook for that ASIC business? Is it likely to be sort of a drag on your growth rates going forward? Are we going through a temporary phase, which should correct itself, and we should see an acceleration there? Any comment there would be helpful. Thanks.

Françoise Chombar

Okay. Well, I'm not sure if it does not grow at all. I do believe that it still is growing. But our long-term intent is indeed that the ASSPs are taking much more share. It was a target also to make that grow. And what you see on the market is that people or customers are less and less interested in building their own ASICs because it's hugely expensive. And I think that Melexis can cover the needs of the market and the needs of customers with our ASSPs – so with our standard products – and also with the customized ASSPs.

So, we have a bit of best of both worlds in the sense that we have the proven technology, which we adapt to the needs of customers. Not always, because there are standard products that are really standard and are not changed at all, but some of the customer needs are a bit different than others, and we can adapt through, for example, firmware or through one last set change or other types, like package types, et cetera, or test versions.

So, in that sense, yes, we have to make a choice. So, those customized ASSPs, are they to be counted under the ASICs or under the ASSPs We count them under ASSPs because, in fact, they are 95-or-more percent the same. And, yes, just a little tweak is required to advance towards the customer requirements.

So, I would say that it's a normal evolution of our business, and it's one that we welcome.

Janardan Menon

So, does that mean that, within those numbers, there is a trend towards where you're replacing, at your ASIC customer, an ASSP part over the last 12 months or so, which is also contributing to what you're saying?

Françoise Chombar

Yeah, that happens. Yes.

Janardan Menon

Okay. And just moving on to the broader market, there's been quite a few concerns on tariffs and trade wars and things like that. Some of your customers have talked about seeing an effect on their sales. Your OEM customers have talked about that. I was just wondering what exactly you have seen in your order book. Have you seen any of your customers having a slowdown? Is that being compensated by others, which is ensuring that, overall, there's not too much of an impact or have you seen any kind of an overall slightly slower momentum in the last few weeks?

Françoise Chombar

Well, no, we have not. We have not seen an impact on this in our order book at all.

Janardan Menon

Okay. But then, how do you sort of weigh that against comments from the likes of, say, Mercedes or Daimler or Volkswagen that they are either cutting production or they're seeing an impact, et cetera? What do you think is happening in that mismatch between what some of them are saying versus what semiconductor companies like yourselves are seeing in terms of orders?

Françoise Chombar

Well, I think what is important to note is that Melexis is much more driven by the semiconductor content and by new programs coming on board than by number of vehicles sold. So, I'm not saying that there is no impact at all because, of course, if the number of cars produced in the world is reducing, then it will impact somehow our business, but you don't see that necessarily as a pure impact because it is compensated by new programs coming onboard that either we win from the competition or are new programs that come into cars that were not there before, new applications that you need, et cetera.

So, it's a mix between those two.

Janardan Menon

Understood. And the last question is just on the temperature sensors going into the distribution channel. Is that something which you have been pushing harder in terms of expanding your presence in the distribution channel and also to non-automotive customers or is it something that just happened to take place during the quarter where you saw stronger demand from the distribution channel for those products going into these non-automotive products?

Françoise Chombar

Well, it is, as you know, a strategic intent for Melexis to do more in the adjacent markets. Years ago, we were losing percentage-wise on the adjacent markets. Since now two or three years, we are moving – or we are growing the adjacent market portion at the same pace more or less as the automotive, which is the first sign that the strategic intent actions that we have been taking are getting results.

And, yes, also, the action to – or we also made a move towards supporting the distribution sales. We've added a new distributor recently. We've done some changes in the distribution in order to maximize our chances to get, yes, product lines like the temperature sensing line or the latches and switches or the fan drivers that are more suitable, let's say, for smaller volume sales and for sales through distribution. Yes, we have made some efforts to make that happen.

So, we see indeed some first results of that, and that's very good because, if you do actions, you expect results, and that's what we are seeing today. But it's not only temperature sensing. It's several ones. But as temperature sensors, as this product line has good results in the first half of this year, and we noted that one of the reasons was indeed that sales through distribution is picking up.

Janardan Menon

Understood. Thank you very much.

Françoise Chombar

You're welcome.

Operator

Your next question comes from the line of Guy Sips. Please ask your question.

Guy Sips

Yes. I have one additional question. Do you see any impact of changes in buying behavior of some of your OEMs related to new legislation, like the new realized driving tests?

Françoise Chombar

Well, I would say, yes. I think the customers are more open. Well, we don't sell directly to the OEMs, as you know. We do sell to tier 1s. We do have contacts with OEMs, of course, and more and more. It's something we do much more to understand – firsthand – what the trends in the industry are. But, indeed, the real driving test and the new emission legislations, also the PPMS legislation in China, for example, does move as it has over the years. This is not new. Legislation is driving more semiconductor content.

So, yes, I would say, we do see that. Not that it's huge, but, yes, legislation has always driven more business in semiconductors.

Guy Sips

But it's not that it's triggering some postponements recently?

Françoise Chombar

Postponements on what exactly, Guy? What do you mean?

Guy Sips

On order intake? That they're waiting for – yes.

Françoise Chombar

Not really. Not that I know of, no. Not today at least.

Guy Sips

So, it has also no relationship with the question of one of my other analysts related to the inventory buildup. There is no relationship between this and the inventory buildup?

Françoise Chombar

No. No, no, no. No. No, there is no direct relationship to that. As I said, the inventory build is a build that we do for strategic reasons. We want to make sure that our customers are secure as far as their supply is concerned. We've had trouble in the past, let's say, 1 year to 1.5 years. We were in some lines in an allocation that makes customers extremely nervous. And then, you need to, yes, do a little more to gain back their full confidence than what is usually needed. But we are building also to secure the growth in the next couple of months.

And, yes, capacity extensions also mean that you put in some buffers in case your transfer plans are a bit delayed for one or the other reason. You want to have a good buffer stock. So, that's also what I mean with, it's strategic to put in place the right inventories. But, of course, these are inventories that are – yes, we don't just build inventory of everything. We make a good selection of what exactly we want to have as inventory. So, it's not across the board. It's very selected products. I hope that answers your question.

Guy Sips

Can you give us some insight what kind of products those are or is that…?

Françoise Chombar

Sorry, come again?

Guy Sips

Can you give us some insight what kind of products that you're building up inventory or is it…?

Françoise Chombar

At least they are products where we see a long-term – or a longevity. So, no risk of obsolescence and high risk of getting maybe stuck in either a transfer plan delay or a potential raw materials or capacity issue. So, we do contingency planning, and that contingency planning then leads to decisions that sometimes say, okay, let's build some more inventory of that. And then we're secure for the supply.

I would say, those are the criteria that we use in order to build inventory or not, or build more inventory than normal or not. I hope that's clearer now, yes? Okay.

Guy Sips

Perfect, thank you.

Françoise Chombar

Good, thank you.

Operator

Your next question comes from the line of Jeff Osborne. Please ask your question.

Jeffrey Osborne

Yeah, good evening. A couple of questions on my end. Maybe just on the inventory issue again. Sorry to keep harping on that one. But other than capacitors and rectifiers, which there's an industry shortage of, are there any other key components? My understanding is you don't use any silicon carbide, but can you just talk about specifically for what applications you're seeing the component shortages? And then, are you having to go out to 2020 to provide firm visibility to your suppliers for those components?

Françoise Chombar

Well, it's not only about supply of materials. It's also about capacity constraints. The capacitors, that is indeed well known and the whole industry is struggling with that. But there is also other materials. What we've seen is sometimes – and it's very diverse. So, it's not just one big thing. It's very diverse. Sometimes, we come into trouble with lead frames. Sometimes, we come into trouble with mold compounds. Sometimes, it's about, well, we need some special silicon wafer material or we have upsurges that we don't know if the ramp up will happen exactly in that manner; and then, we want to secure at least that we have sufficient capacity plus material.

It's so diverse. It gives us a lot of work. It gives us sometimes a lot of headaches. But it's a bit across the board in the industry. You mentioned silicon carbide; and indeed, we are not into silicon carbide. But the same is true for silicon wafers.

Jeffrey Osborne

Understand. Could you just remind us on the lead time in general, the visibility that your order book gives you? Is that two to three months? Or how firm are the orders with all of the changes going on in the automotive industry? What type of line of sight to revenue growth do you have?

Françoise Chombar

That can also be very diverse, but I would say two, three, four months is what we usually have.

Now, on the previous question you had on the inventory, I must say, the worst is over on – there will be some continuation of capacity, et cetera, but because we have done a lot of work – proactive work – on making sure that we have the necessary capacity either reserved or build up, no matter where it is in the supply chain, it could have been on our end as well, but because of all these actions, yes, the worst, I would say, is over.

Jeffrey Osborne

That makes sense. Two other quick ones here. Do you have a sense of perspective as you shift to Sensata or one of your other tier 1 partners – Continental, et cetera – and then that then is shipped to a car, what that lag time is between the shipment from your fab to the actual production of the vehicle? Just given all the changes on emission assessing in Europe, the new energy vehicle credits in China being reduced, that's been an area of investor concern.

Françoise Chombar

Yeah, that largely depends also on whether we're tier 1 – sorry, whether we are tier 2 or 3 and whether our customer is using subcontractors or not. Usually, I would say, on average, it's probably between four and six months, but don't pin me down on that because it's also extremely diverse.

Jeffrey Osborne

Makes sense. And the last one I had is just with the highlighting of the distribution channel for the non-automotive applications. Is it correct to think about that as potentially lower gross margin, but potentially less OpEx intensity? So, the EBITDA margins are potentially better than your corporate average? Just any puts and takes on the margin for both lines would be helpful to understand.

Françoise Chombar

Well, because distribution is usually lower in volume, the prices are higher. So, the gross profit margin is a bit higher. But that's not the case…

Jeffrey Osborne

Is there higher OpEx intensity for staff to do that as well or no?

Françoise Chombar

No, not really. Not really. Because it's the same knowledge that we need or the same competencies we need for serving direct business as there is for distribution. For distribution, you also need distribution managers. And for serving customers, you need account managers. And for both, you need application engineers that either train the distribution application engineers or that dig deeper into the customer application. So, it's a bit similar, I would say. There is no big difference between one or the other. The biggest difference is in the number of customers that you can reach through distribution, so a much more diverse customer base with lower volumes per customer.

Jeffrey Osborne

Makes sense. I appreciate all the detail. Thank you.

Françoise Chombar

No problem.

Operator

There's no questions at this time. Please continue.

We've got a last question that just came, sorry. The line of Gaspar Ariño. Please ask your question.

Gaspar Ariño

Hi. Good afternoon. Thank you for taking my questions. I have two. So, the first one, over the first half, you reported revenue growth of 12% and 18% on constant currency basis. The automotive sensor market is not growing as fast, and you mentioned that you're gaining market share. So, could you please elaborate on that comment and maybe share with us who is the market share donator or how does the competitive landscape look now? And that's the first one.

And the second one would be, if you could comment on the performance of current sensors? Thank you.

Françoise Chombar

Competitive landscape has not really changed a lot. So, it's pretty much the same as it was. And also, the way we do business and the way we gain market share is gradual by making sure that we make the right products for our markets, that we come out with the right features on our new products.

And the other thing is, if you have a good – if you are incumbent in a customer, then the customer usually tries to maximize also their investment in your product, and they grow organically. Over time, they grow organically whatever they buy from you. So, they put it in more and more platforms.

And our products, I mentioned it before, where you have this best of both worlds, where you customize standard product technology, that also helps because sometimes, they have a different – a slightly different application. They want to use your product, but they need a slight tweak for one or the other OEM. And that's been very easy to do because it's not always easy to do with an ASIC, but it's easy to do with an ASSP. So, that's one.

So, competitive landscape not really changed as such.

And on current sensors, what is exactly your question?

Gaspar Ariño

Just to know how the product family has been doing in the first half. Sometimes, in other quarters, you've commented the performance. And just to know. I know they represent a very tiny part of the portfolio, but I just want to get a sense of how fast are they growing.

Françoise Chombar

Yeah. Well, we don't usually inform on the percentage growth per product line. What we usually do is to give a view on what stood out during the quarter – or during the half year, in this case. So, the ones that are, let's say, performing the best. That does not mean that current sensors is not growing. In fact, all of our products are growing over time. But we do not mention the precise percentage growth. We've never done that, and we don't intend to start doing that neither.

Gaspar Ariño

Okay. That's okay.

Françoise Chombar

You're welcome.

Operator

The next question comes from the line of Beijo Tas [ph]. Please ask your question.

Unidentified Analyst

Yes, hi. Thank you for taking my question. Most of them were already answered, but there's one – two left. The one would be, what is your current visibility for the remainder of the year with the guidance for the full year on the hand? Do you have this usual 12 to 15 weeks or can you already see into the first quarter of 2019 to have a feeling already how this could shape up?

And the second one would be, we get a little bit color around your ADAS/autonomous driving positioning. But I was wondering if you could give color around your weak link [ph] car positioning. So, what are the main products there? Are you engaged in this topics like main inverter and the onboard charger or is it rather centered around this easy part? So, what exactly is your positioning there would be really very helpful. Thank you.

Gaspar Ariño

Okay. On the visibility for the remainder of the year, this is what we've mentioned in the press release. So, I have little to add to that. And indeed, we have the usual, like we said before, two, three, four months of visibility. So, I do not comment on Q1 – or we do not comment on Q1 neither. Yeah.

Unidentified Analyst

Sorry, if I may interrupt. I know it's really not a guidance. But if you see – like, you have the usual order pattern, but also the longer-term projects, so to say. If you would – can you say from this longer project that visibility has not really deteriorated looking into the first half of the year despite all those macro noise, trade tariffs, slowing China auto volumes maybe? Would you say from the bigger orders or larger orders project that everything is still on track?

Françoise Chombar

Yeah, I would say so. In fact, if I – I'm with customers quite a bit, and there is a lot of work to do. There is a lot of change going on in the industry, and customers are really busy with all these trends, electrification, assisted drive, et cetera. So, there is a lot of work to do, and I don't see today a change. That's why also we said in the comments that we see positive customer sentiments.

If that is what you were looking for, yeah. No, we don't see any change. And everybody is hard at work to manage all these, yeah, important changes that are happening in the industry towards more electrified vehicles and more – yeah, than the road towards autonomous drive. I hope that answers your question then? Your first question?

Unidentified Analyst

Yes, Françoise. And the second one, please.

Françoise Chombar

Yeah. On the second one, so you were asking how we are on the electric vehicle. We are doing very well on that because, in general, if you would go to, for example, current sensors, which the previous person has asked for, then the trend of the electrification is, of course, very benign for that product line. And, specifically, in automotive, we are in the inverter for traction motor control. And we have a significant share there also on the onboard charger, but definitely also in the inverter.

Clean cars need a lot of sensors and a lot of drivers. And what you see is that with electrical vehicles or hybrid vehicles, whatever – a hybrid vehicle, of course, is the best of both worlds because it needs a much cleaner – usually than gasoline motor. And in the future, it will be more gasoline than diesel. But in any case, it needs a cleaner motor, which means more sensors and more drivers to be used in that.

And as far as the electric vehicle is concerned, they also need to become much more efficient, and thus they also require much higher sense and drive content than today. In many cases, yeah, if you look at range fear, at the fact that the way of dealing with energy and with consumption of energy in an electrical vehicle is looked at, sometimes what we see is that customers rethink the system completely, not only our direct customers, but also the OEMs. And they are talking to us about this.

To give you another example, the electrification trend will need much more smart valves, for example, for thermal management, but also more dynamic – also more aerodynamic. Again, all of that to improve range performance. So, we are extremely well positioned in that area.

And for the assisted drive and autonomous drive, I think I have answered that question already previously.

Unidentified Analyst

Okay. And if I may, just a quick follow-up, if you take midpoint of your, let's say, the 13% to 14% growth for this year, how much of this growth is really coming from your traditional business and how much of this growth is driven by the new topics, autonomous driving and clean car topic? Can you give a direction for that? And how could that shape up mid-term?

Françoise Chombar

It's very hard to tell. I'm sorry. This is really, really hard to tell.

Unidentified Analyst

Okay, no problem. No problem. Thank you.

Françoise Chombar

Yeah, yeah. I'm sorry for that. But that's…

Unidentified Analyst

I guess it's tough. What is ADAS and autonomous driving, which – yeah. No, I'm fine with that. Thank you very much.

Françoise Chombar

Okay, you're welcome. Sorry for that. Yeah.

Okay. Operator, do we have further questions?

Operator

No, we haven't got no more questions.

Françoise Chombar

Okay. Then, dear audience, thank you for your interest and to-the-point questions. Looking forward to welcoming you at our next earnings conference call, which is on October 24. Or let's say, at our Analyst Day on December 5 later this year. Have a lovely summer. And goodbye.

Operator

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect. Speakers, please standby.