Diodes Incorporated Reports First Quarter 2021 Financial Results

Rhea-AI Summary

Diodes reported record first quarter revenues of $413.1 million, up 18% sequentially and 47% year-over-year. GAAP gross profit also reached a record $138.6 million, with a margin of 33.6%. Net income was $39.5 million, or $0.87 per diluted share, surpassing previous quarters. The company achieved $68.2 million in cash flow from operations and reduced debt by $37.4 million. Looking ahead, revenue for Q2 2021 is projected to reach $434 million, indicating continued growth.

Positive

• Record revenue of $413.1 million, up 18% sequentially
• Record GAAP gross profit of $138.6 million, margin at 33.6%
• GAAP net income increased to $39.5 million, or $0.87 EPS
• Cash flow from operations at $68.2 million, reduced debt by $37.4 million
• Q2 2021 revenue guidance of approximately $434 million, a record

Negative

• None.

Diodes Incorporated (Nasdaq: DIOD) today reported its financial results for the first quarter ended March 31, 2021.

First Quarter Highlights

• Revenue was a record $413.1 million, which included the first full quarter of revenue from the LITE-ON Semiconductor Corporation (LSC) acquisition, increasing 18 percent from $350.4 million in the fourth quarter 2020 and 47 percent from $280.7 million in the first quarter 2020;
• GAAP gross profit was a record $138.6 million, compared to $122.7 million in the fourth quarter 2020 and $95.8 million in the first quarter 2020;
• GAAP gross profit margin was 33.6 percent, or 36.3 percent for Diodes only, compared to 35.0 percent in the fourth quarter 2020 and 34.1 percent in the first quarter 2020;
• GAAP net income was $39.5 million, or $0.87 per diluted share, compared to $29.7 million, or $0.59 per diluted share, in the fourth quarter 2020 and $20.2 million, or $0.38 per diluted share, in the first quarter 2020;
• Non-GAAP adjusted net income was $42.0 million, or $0.93 per diluted share, compared to $37.3 million, or $0.74 per diluted share, in the fourth quarter 2020 and $23.9 million, or $0.46 per diluted share, in the first quarter 2020;
• Excluding $4.8 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.11 per diluted share;
• EBITDA was $81.7 million, or 19.8 percent of revenue, compared to $67.1 million, or 19.1 percent of revenue, in the fourth quarter 2020 and $52.9 million, or 18.9 percent of revenue, in the first quarter 2020; and
• Achieved cash flow from operations of $68.2million and $51.0million of free cash flow, including $17.2 of capital expenditures. Net cash flow was a positive $10.6 million, including the pay down of $37.4 million of debt

Commenting on the results, Dr. Keh-Shew Lu, Chairman, President and Chief Executive Officer, stated, “Revenue set a new record both organically and on a consolidated basis, increasing 18% sequentially and exceeding the high-end of our guidance range, in what has historically been a seasonally down quarter for our business. Our growth was driven by record total POS revenue as a result of records in both Asia and Europe combined with strong growth in North America. We also achieved records in our computing end market, driven by record Pericom product revenue, and the automotive market due to strong organic growth in Diodes’ automotive business. Combined with our expense management and operating efficiencies, we delivered the highest quarter of adjusted earnings per share, which increased 25% sequentially.

“The integration of LSC is also progressing well and ahead of schedule, as we have already begun to harvest the benefit of manufacturing synergies from improved factory loading with both LSC and Diodes’ products. Our global manufacturing footprint is serving as a key advantage at a time when the broader semiconductor industry is challenged by supply and capacity constraints. We have both internal and external capacity to support the increasing demand we are seeing for our products. As a result, we expect to deliver another quarter of sequential growth in the second quarter coupled with a continued expansion in bottom-line profitability.”

First Quarter 2021

Revenue for first quarter 2021 was a record $413.1 million, which included the first full quarter of revenue from LSC, compared to $350.4 million in the fourth quarter 2020 and $280.7 million in the first quarter 2020. Revenue increased sequentially on both a consolidated and an organic basis in the first quarter.

GAAP gross profit for the first quarter 2021 was a record $138.6 million, or 33.6 percent of revenue on a consolidated basis and 36.3 percent for Diodes only. This compares to $122.7 million, or 35.0 percent of revenue on a consolidated basis and 36.0 percent for Diodes only, in the fourth quarter 2020 and $95.8 million, or 34.1 percent of revenue, in the first quarter of 2020.

GAAP operating expenses for first quarter 2021 were $91.2 million, or 22.1 percent of revenue, and on a non-GAAP basis were $86.4 million, or 20.9 percent of revenue, which excludes $4.0 million of amortization of acquisition-related intangible asset expenses and $0.8 million in restructuring costs. GAAP operating expenses in the fourth quarter 2020 were $82.9 million, or 23.7 percent of revenue, and in the first quarter 2020 were $70.0 million, or 24.9 percent of revenue.

First quarter 2021 GAAP net income was $39.5 million, or $0.87 per diluted share, compared to GAAP net income of $29.7 million, or $0.59 per diluted share, in the fourth quarter 2020 and GAAP net income in the first quarter 2020 of $20.2 million, or $0.38 per diluted share.

First quarter 2021 non-GAAP adjusted net income was $42.0 million, or $0.93 per diluted share, which excluded, net of tax, $3.3 million of acquisition-related intangible asset costs, $1.5 million acquisition-related costs, $0.7 million restructuring costs and $2.9 million gain in value of certain LSC investments. This compares to non-GAAP adjusted net income of $37.3 million, or $0.74 per diluted share, in the fourth quarter 2020 and $23.9 million, or $0.46 per diluted share, in the first quarter 2020.

The following is an unaudited summary reconciliation of GAAP net income to non-GAAP adjusted net income and per share data, net of tax (in thousands, except per share data):

				Three Months Ended
				March 31, 2021
GAAP net income				$	39,452
GAAP diluted earnings per share					0.87
Adjustments to reconcile net income to non-GAAP net income:
Amortization of acquisition-related intangible assets					3,280
Acquisition-related costs					1,508
Gain on LSC Investments					(2,924	)
Restructuring Cost					697
Non-GAAP net income				$	42,013
Non-GAAP diluted earnings per share				$	0.93

Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”

(See the reconciliation tables of GAAP net income to non-GAAP adjusted net income near the end of this release for further details.)

Included in first quarter 2021 GAAP net income and non-GAAP adjusted net income was approximately $4.8 million, net of tax, of non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP earnings per share (“EPS”) and non-GAAP adjusted EPS would have increased by $0.11 per diluted share for the first quarter 2021, $0.10 for the fourth quarter 2020 and $0.07 for first quarter 2020.

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in first quarter 2021 was $81.7, or 19.8 percent of revenue, compared to $67.1 million, or 19.1 percent of revenue, in fourth quarter 2020 and $52.9 million, or 18.9 percent of revenue, in first quarter 2020. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

For first quarter 2021, net cash provided by operating activities was $68.2 million. Net cash flow was a positive $10.6 million, including the pay down of $37.4 million of long-term debt. Free cash flow (a non-GAAP measure) was $51.0 million, which includes $17.2 million of capital expenditures.

Balance Sheet

As of March 31, 2021, the Company had approximately $339 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $415 million and working capital was approximately $618 million.

The results announced today are preliminary and unaudited, as they are subject to the Company finalizing its closing procedures and completion of the Company’s 2021 quarterly audit by its independent registered public accounting firm. As such, these results are subject to revision until the Company files its Form 10-Q for the quarter ending March 31, 2021.

Business Outlook

Dr. Lu concluded, “For the second quarter of 2021, we expect revenue to increase to approximately $434 million, plus or minus 3 percent, which represents a record on both an organic and consolidated basis for a combined increase of about 5 percent sequentially at the mid-point. We expect GAAP gross margin on a consolidated basis to be 35.6 percent, plus or minus 1 percent. Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 20.5 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $1.6 million. Our income tax rate is expected to be 19 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the second quarter are anticipated to be approximately 45.7 million.”

Purchase accounting adjustments related to amortization of acquisition-related intangible assets of $3.3 million, after tax, for Pericom and previous acquisitions is not included in these non-GAAP estimates.

Conference Call

Diodes will host a conference call on Thursday, May 6, 2021 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its first quarter financial results. Investors and analysts may join the conference call by dialing 1-855-232-8957 and providing the confirmation code 5947578. International callers may join the teleconference by dialing +1-315-625-6979 and entering the same confirmation code at the prompt. A telephone replay of the call will be made available approximately two hours after the call and will remain available until May 13, 2021 at midnight Central Time. The replay number is 1-855-859-2056 with a pass code of 5947578. International callers should dial +1-404-537-3406 and enter the same pass code at the prompt. Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investors’ section of Diodes' website at http://www.diodes.com. To listen to the live call, please go to the investors’ section of Diodes’ website and click on the conference call link at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Diodes' website for approximately 90 days.

About Diodes Incorporated

Diodes Incorporated (Nasdaq: DIOD), a Standard and Poor’s SmallCap 600 and Russell 3000 Index company, delivers high-quality semiconductor products to the world’s leading companies in the consumer electronics, computing, communications, industrial, and automotive markets. We leverage our expanded product portfolio of discrete, analog, and mixed-signal products and leading-edge packaging technology to meet customers’ needs. Our broad range of application-specific solutions and solutions-focused sales, coupled with worldwide operations of 31 sites, including engineering, testing, manufacturing, and customer service, enables us to be a premier provider for high-volume, high-growth markets. For more information visit www.Diodes.com

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such statements include statements containing forward-looking words such as “expect,” “anticipate,” “aim,” “estimate,” and variations thereof, including without limitation statements, whether direct or implied, regarding expectations of that for the second quarter of 2021, we expect revenue to increase to approximately $434 million plus or minus 3 percent; we expect GAAP gross margin to be 35.6 percent, plus or minus 1 percent; non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 20.5 percent of revenue, plus or minus 1 percent; we expect non-GAAP net interest expense to be approximately $1.6 million; we expect our income tax rate to be 19 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the second quarter are anticipated to be approximately 45.7 million. Potential risks and uncertainties include, but are not limited to, such factors as: the risk that the COVID-19 pandemic may continue and have a material adverse effect on customer demand and staffing of our production, sales and administration facilities; the risk that such expectations may not be met; the risk that the expected benefits of acquisitions may not be realized or that integration of acquired businesses may not continue as rapidly as we anticipate; the risk that the cost, expense, and diversion of management attention associated with the LSC acquisition may be greater than we currently expect; the risk that we may not be able to maintain our current growth strategy or continue to maintain our current performance, costs, and loadings in our manufacturing facilities; the risk that we may not be able to increase our automotive, industrial, or other revenue and market share; risks of domestic and foreign operations, including excessive operating costs, labor shortages, higher tax rates, and our joint venture prospects; the risks of cyclical downturns in the semiconductor industry and of changes in end-market demand or product mix that may affect gross margin or render inventory obsolete; the risk of unfavorable currency exchange rates; the risk that our future outlook or guidance may be incorrect; the risks of global economic weakness or instability in global financial markets; the risks of trade restrictions, tariffs, or embargoes; the risk that the coronavirus outbreak or other similar epidemics may harm our domestic or international business operations to a greater extent than we currently anticipate; the risk of breaches of our information technology systems; and other information, including the “Risk Factors” detailed from time to time in Diodes’ filings with the United States Securities and Exchange Commission.

DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
		Three Months Ended
		March, 31
		2021				2020
Net sales		$	413,121			$	280,717
Cost of goods sold			274,485				184,875
Gross profit			138,636				95,842
Operating expenses
Selling, general and administrative			58,676				42,215
Research and development			27,659				23,678
Amortization of acquisition-related intangible assets			4,023				4,221
Other operating expense			888				(124	)
Total operating expense			91,246				69,990
Income from operations			47,390				25,852
Other income (expense)
Interest income			768				273
Interest expense			(2,864	)			(1,245	)
Foreign currency loss, net			(1,279	)			75
Unrealized Gain (Loss) on Investments			3,655				-
Other income			2,317				1
Total other income (expense)			2,597				(896	)
Income before income taxes and noncontrolling interest			49,987				24,956
Income tax provision			9,434				4,556
Net income			40,553				20,400
Less net (income) loss attributable to noncontrolling interest			(1,101	)			(232	)
Net income attributable to common stockholders		$	39,452			$	20,168
Earnings per share attributable to common stockholders:
Basic		$	0.89			$	0.39
Diluted		$	0.87			$	0.38
Number of shares used in earnings per share computation:
Basic			44,408				51,335
Diluted			45,243				52,422

Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”

DIODES INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
(in thousands, except per share data)
(unaudited)
For the three months ended March 31, 2021:
		COGS		Operating Expenses		Other Income (Expense)			Income Tax Provision			Net Income
Per-GAAP												$	39,452
Diluted earnings per share (Per-GAAP)													0.87
Adjustments to reconcile net income to non-GAAP net income:
Amortization of acquisition-related intangible assets				4,024					(744	)			3,280
Acquisition-related costs		1,908							(400	)			1,508
Gain on LSC Investments						(3,655	)		731				(2,924	)
Restructuring Cost				820					(123	)			697
Non-GAAP												$	42,013
Diluted shares used in computing earnings per share													45,243
Non-GAAP diluted earnings per share												$	0.93

Note: Included in GAAP and non-GAAP net income was approximately $4.8 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP diluted earnings per share would have improved by $0.11 per share.

DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME – Cont.
(in thousands, except per share data)
(unaudited)
For the three months ended March 31, 2020:
			Operating Expenses		Income Tax Provision			Net Income
GAAP net income								$	20,168
GAAP diluted earnings per share								$	0.38
Adjustments to reconcile net income to non-GAAP net income:
Amortization of acquisition-related intangible assets			4,221		(765	)

FAQ

What were Diodes' earnings for Q1 2021?

Diodes reported Q1 2021 earnings of $39.5 million, or $0.87 per diluted share.

How did Diodes perform compared to Q1 2020?

Revenue increased by 47% from $280.7 million in Q1 2020 to $413.1 million in Q1 2021.

What is Diodes' revenue outlook for Q2 2021?

Diodes expects Q2 2021 revenue to be approximately $434 million, plus or minus 3 percent.

What was the EBITDA for Diodes in Q1 2021?

Diodes reported EBITDA of $81.7 million, representing 19.8% of revenue for Q1 2021.

What are the key financial metrics for Diodes in Q1 2021?

Key metrics include record revenue of $413.1 million, gross profit of $138.6 million, and cash flow from operations of $68.2 million.