Diodes Incorporated Reports First Quarter Fiscal 2023 Financial Results
Gross Margin Remains Above
First Quarter Highlights
-
Revenue was
, decreasing 3.1 percent from$467.2 million in the first quarter 2022 and down 5.8 percent from$482.1 million in the fourth quarter 2022;$496.2 million -
GAAP gross profit was
, decreasing 1.1 percent from$194.5 million in the first quarter 2022 and down 5.7 percent from$196.7 million in the fourth quarter 2022;$206.2 million - GAAP gross profit margin was 41.6 percent, an increase of 80 basis points from 40.8 percent in the first quarter 2022 and flat compared to 41.6 percent in the fourth quarter 2022;
-
GAAP net income was
, compared to$71.2 million in the first quarter 2022 and$72.7 million in the fourth quarter 2022;$92.1 million -
Non-GAAP adjusted net income was
, compared to$73.4 million in the first quarter 2022 and$80.3 million in the fourth quarter 2022;$79.6 million -
GAAP EPS was
per diluted share, compared to$1.54 per diluted share in the first quarter 2022 and$1.59 per diluted share in the fourth quarter 2022;$2.00 -
Non-GAAP EPS was
per diluted share, compared to$1.59 per diluted share in the prior year quarter and$1.75 per diluted share last quarter;$1.73 -
Excluding
, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by$7.7 million per diluted share;$0.17 -
EBITDA was
, or 26.1 percent of revenue, compared to$121.8 million , or 24.5 percent of revenue, in the first quarter 2022 and$118.2 million , or 26.1 percent of revenue, in the fourth quarter 2022; and$129.6 million -
Achieved cash flow from operations of
and$99.8 million of free cash flow, including$51.8 million of capital expenditures. Net cash flow was a negative$48.0 , including the pay down of$15.2 million of total debt.$60.8 million
Commenting on the results, Dr. Keh-Shew Lu, Chairman, President and Chief Executive Officer, stated, “Our first quarter results were highlighted by continued strength in our gross margin performance, which was at the high-end of our guidance despite the seasonally lower revenue and economic slowdown in the consumer, communications and computing markets. In fact, gross margin has remained over
“Over the past several years, we have taken significant steps to transform our business as well as our customer and market positioning based on a total solutions sales approach, extensive pipeline of new product introductions and design wins. Today, Diodes has a diversified business across product groups, end markets and applications, as well as geographies that are further supported by a flexible manufacturing model and a team that is highly focused on consistent execution and sustainable quarterly performance. These fundamental factors position us well to not only sustain our margin profile during an economic slowdown, but also continue driving even higher profitability and cash flow in more favorable economic environments.”
First Quarter 2023
Revenue for first quarter 2023 was
GAAP gross profit for the first quarter 2023 was
GAAP operating expenses for first quarter 2023 were
First quarter 2023 GAAP net income was
First quarter 2023 non-GAAP adjusted net income was
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, 2023 | ||||||
GAAP net income | $ |
71,150 |
|
|||
GAAP diluted earnings per share | $ |
1.54 |
|
|||
Adjustments to reconcile net income to non-GAAP net income: | ||||||
Amortization of acquisition-related intangible assets |
|
3,145 |
|
|||
Officer retirement |
|
2,262 |
|
|||
LSC investment related |
|
(3,111 |
) |
|||
Non-GAAP net income | $ |
73,446 |
|
|||
Non-GAAP diluted earnings per share | $ |
1.59 |
|
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 2023 GAAP net income and non-GAAP adjusted net income was approximately
EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in first quarter 2023 was
For first quarter 2023, net cash provided by operating activities was
Balance Sheet
As of March 31, 2023, the Company had approximately
The results announced today are preliminary and unaudited, as they are subject to the Company finalizing its closing procedures and completion of the quarterly review 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, 2023.
Business Outlook
Dr. Lu concluded, “For the second quarter of 2023, we expect revenue to be approximately
Amortization of acquisition-related intangible assets of
Conference Call
Diodes will host a conference call on Tuesday, May 9, 2023 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 1-833-634-2590, and international callers may join the teleconference by dialing +1-412-317-6038. A telephone replay of the call will be made available approximately two hours after the call and will remain available until May 16, 2023 at midnight Central Time. The replay number is 1-877-344-7529 with a pass code of 8975900. International callers should dial +1-412-317-0088 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 https://investor.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 automotive, industrial, computing, consumer electronics, and communications 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 32 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 2023, we expect revenue to be approximately
The Diodes logo is a registered trademark of Diodes Incorporated in
© 2023 Diodes Incorporated. All Rights Reserved
DIODES INCORPORATED AND SUBSIDIARIES |
||||||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS |
||||||||
(unaudited) |
||||||||
(in thousands, except per share data) |
||||||||
|
|
|
||||||
Three Months Ended |
||||||||
March 31, 2023 |
||||||||
|
2023 |
|
|
2022 |
|
|||
Net sales | $ |
467,241 |
|
$ |
482,123 |
|
||
Cost of goods sold |
|
272,787 |
|
|
285,426 |
|
||
Gross profit |
|
194,454 |
|
|
196,697 |
|
||
Operating expenses | ||||||||
Selling, general and administrative |
|
70,991 |
|
|
71,443 |
|
||
Research and development |
|
33,232 |
|
|
28,677 |
|
||
Amortization of acquisition-related intangible assets |
|
3,852 |
|
|
3,862 |
|
||
Other operating expense (income) |
|
(48 |
) |
|
(343 |
) |
||
Total operating expense |
|
108,027 |
|
|
103,639 |
|
||
Income from operations |
|
86,427 |
|
|
93,058 |
|
||
Other (expense) income | ||||||||
Interest income |
|
1,772 |
|
|
826 |
|
||
Interest expense |
|
(2,132 |
) |
|
(1,114 |
) |
||
Foreign currency (loss) gain, net |
|
(1,893 |
) |
|
1,721 |
|
||
Unrealized (loss) gain on investments |
|
3,889 |
|
|
(5,548 |
) |
||
Other income |
|
530 |
|
|
1,876 |
|
||
Total other (expense) income |
|
2,166 |
|
|
(2,239 |
) |
||
Income before income taxes and noncontrolling interest |
|
88,593 |
|
|
90,819 |
|
||
Income tax provision |
|
16,616 |
|
|
16,646 |
|
||
Net income |
|
71,977 |
|
|
74,173 |
|
||
Less net (income) attributable to noncontrolling interest |
|
(827 |
) |
|
(1,482 |
) |
||
Net income attributable to common stockholders | $ |
71,150 |
|
$ |
72,691 |
|
||
Earnings per share attributable to common stockholders: | ||||||||
Basic | $ |
1.56 |
|
$ |
1.61 |
|
||
Diluted |
|
1.54 |
|
$ |
1.59 |
|
||
Number of shares used in earnings per share computation: | ||||||||
Basic |
|
45,600 |
|
|
45,104 |
|
||
Diluted |
|
46,161 |
|
|
45,844 |
|
||
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, 2023: |
|||||||||||||||
Operating Expenses |
Other (Income) Expense |
Income Tax Provision |
Net Income | ||||||||||||
Per-GAAP | $ |
71,150 |
|
||||||||||||
Diluted earnings per share (per-GAAP) | $ |
1.54 |
|
||||||||||||
Adjustments to reconcile net income to non-GAAP net income: | |||||||||||||||
Amortization of acquisition-related intangble assets | 3,852 |
(707 |
) |
3,145 |
|
||||||||||
Officer retirement | 2,845 |
(583 |
) |
|
2,262 |
|
|||||||||
LSC investment related | (3,889 |
) |
778 |
|
|
(3,111 |
) |
||||||||
Non-GAAP | $ |
73,446 |
|
||||||||||||
Diluted shares used in computing earnings per share |
|
46,161 |
|
||||||||||||
Non-GAAP diluted earnings per share | $ |
1.59 |
|
||||||||||||
Note: Included in GAAP and non-GAAP net income was approximately |
|||||||||||||||
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, 2022: |
||||||||||||
Operating Expenses |
Other Income (Expense) |
Income Tax Provision |
Net Income | |||||||||
Per-GAAP | $ |
72,691 |
||||||||||
Diluted earnings per share (per-GAAP) |
|
1.59 |
||||||||||
Adjustments to reconcile net income to non-GAAP net income: | ||||||||||||
Amortization of acquisition-related intangible assets | 3,862 |
(706 |
) |
|
3,156 |
|||||||
Acquisition-related costs | 275 |
(57 |
) |
|
218 |
|||||||
LSC Investment Related | 5,548 |
(1,303 |
) |
|
4,245 |
|||||||
Non-GAAP | $ |
80,310 |
||||||||||
Diluted shares used in computing earnings per share |
|
45,844 |
||||||||||
Non-GAAP diluted earnings per share | $ |
1.75 |
||||||||||
Note: Included in GAAP and non-GAAP adjusted net income was approximately |
||||||||||||
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
The Company’s financial statements present net income and earnings per share that are calculated using accounting principles generally accepted in
Detail of non-GAAP adjustments:
Amortization of acquisition-related intangible assets – The Company excluded this item, including amortization of developed technologies and customer relationships. The fair value of the acquisition-related intangible assets is amortized using straight-line methods which approximate the proportion of future cash flows estimated to be generated each period over the estimated useful life of the applicable assets. The Company believes that exclusion of this item is appropriate because a significant portion of the purchase price for its acquisitions was allocated to the intangible assets that have short lives and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both the Company’s newly acquired and long-held businesses. In addition, the Company excluded this item because there is significant variability and unpredictability among companies with respect to this expense.
Acquisition related costs – The Company excluded expenses associated with previous acquisitions of that typically consist of advisory, legal and other professional and consulting fees. These costs were expensed as they were incurred and as services were received, and in which the corresponding tax adjustments were made for the non-deductible portions of these expenses. The Company believes the exclusion of the acquisition related costs provides investors with a more accurate reflection of costs likely to be incurred in the absence of an unusual event such as an acquisition and facilitates comparisons with the results of other periods that may not reflect such costs.
Officer retirement – The Company excluded costs related to the retirement of two executives. These costs represent cash payments and the accelerated vesting of previously issued stock awards. The Company feels it is appropriate to exclude these costs since they don’t represent ongoing operating expenses and will present investors with a more accurate indication of our continuing operations.
LSC investments related – The Company excluded market to market adjustments and the associated tax on certain LSC equity investments. The Company has also excluded certain taxes related to integration and restructuring activities within certain
CASH FLOW ITEMS
Free cash flow (FCF) (Non-GAAP)
FCF for the first quarter of 2023 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the first quarter of 2023, FCF was
CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA
EBITDA represents earnings before net interest expense, income tax provision, depreciation and amortization. Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties, such as financial institutions in extending credit, in evaluating companies in our industry and provides further clarity on our profitability. In addition, management uses EBITDA, along with other GAAP and non-GAAP measures, in evaluating our operating performance compared to that of other companies in our industry. The calculation of EBITDA generally eliminates the effects of financing, operating in different income tax jurisdictions, and accounting effects of capital spending, including the impact of our asset base, which can differ depending on the book value of assets and the accounting methods used to compute depreciation and amortization expense. EBITDA is not a recognized measurement under GAAP, and when analyzing our operating performance, investors should use EBITDA in addition to, and not as an alternative for, income from operations and net income, each as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures used by other companies. For example, our EBITDA takes into account all net interest expense, income tax provision, depreciation and amortization without taking into account any amounts attributable to noncontrolling interest. Furthermore, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments.
The following table provides a reconciliation of net income to EBITDA (in thousands, unaudited): |
||||||
Three Months Ended |
||||||
March 31, 2023 |
||||||
2023 |
|
2022 |
||||
Net income (per-GAAP) | $ |
71,150 |
$ |
72,691 |
||
Plus: | ||||||
Interest expense, net |
|
360 |
|
288 |
||
Income tax provision |
|
16,616 |
|
16,646 |
||
Depreciation and amortization |
|
33,653 |
|
28,594 |
||
EBITDA (non-GAAP) | $ |
121,779 |
$ |
118,219 |
||
DIODES INCORPORATED AND SUBSIDIARIES |
||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS |
||||||||
(in thousands) |
||||||||
March 31 |
|
December 31, |
||||||
|
2023 |
|
|
|
2022 |
|
||
(unaudited) |
|
(audited) |
||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ |
323,146 |
|
$ |
336,732 |
|
||
Restricted Cash |
|
2,761 |
|
|
4,367 |
|
||
Short-term investments |
|
8,768 |
|
|
7,059 |
|
||
Accounts receivable, net of allowances of March 31, 2023 and December 31, 2022, respectively |
|
369,054 |
|
|
369,233 |
|
||
Inventories |
|
341,941 |
|
|
360,281 |
|
||
Prepaid expenses and other |
|
76,101 |
|
|
83,999 |
|
||
Total current assets |
|
1,121,771 |
|
|
1,161,671 |
|
||
Property, plant and equipment, net |
|
755,707 |
|
|
736,730 |
|
||
Deferred income tax |
|
36,185 |
|
|
35,308 |
|
||
Goodwill |
|
145,937 |
|
|
144,757 |
|
||
Intangible assets, net |
|
75,398 |
|
|
79,137 |
|
||
Other long-term assets |
|
150,563 |
|
|
130,709 |
|
||
Total assets | $ |
2,285,561 |
|
$ |
2,288,312 |
|
||
Liabilities | ||||||||
Current liabilities: | ||||||||
Line of credit | $ |
34,651 |
|
$ |
36,280 |
|
||
Accounts payable |
|
143,694 |
|
|
160,442 |
|
||
Accrued liabilities |
|
176,952 |
|
|
214,433 |
|
||
Income tax payable |
|
33,876 |
|
|
19,682 |
|
||
Current portion of long-term debt |
|
1,173 |
|
|
1,693 |
|
||
Total current liabilities |
|
390,346 |
|
|
432,530 |
|
||
Long-term debt, net of current portion |
|
89,636 |
|
|
147,470 |
|
||
Deferred tax liabilities |
|
13,012 |
|
|
12,903 |
|
||
Other long-term liabilities |
|
126,894 |
|
|
112,490 |
|
||
Total liabilities |
|
619,888 |
|
|
705,393 |
|
||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock - par value |
|
- |
|
|
- |
|
||
Common stock - par value |
|
36,661 |
|
|
36,503 |
|
||
Additional paid-in capital |
|
494,598 |
|
|
494,773 |
|
||
Retained earnings |
|
1,519,242 |
|
|
1,448,092 |
|
||
Treasury stock, at cost, 9,281,581 shares held at March 31, 2023 and December 31, 2022 |
|
(337,490 |
) |
|
(337,490 |
) |
||
Accumulated other comprehensive loss |
|
(117,546 |
) |
|
(128,233 |
) |
||
Total stockholders' equity |
|
1,595,465 |
|
|
1,513,645 |
|
||
Noncontrolling interest |
|
70,208 |
|
|
69,274 |
|
||
Total equity |
|
1,665,673 |
|
|
1,582,919 |
|
||
Total liabilities and stockholders' equity | $ |
2,285,561 |
|
$ |
2,288,312 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230509005891/en/
Company Contact:
Diodes Incorporated
Gurmeet Dhaliwal
Director, IR & Corporate Marketing
P: 408-232-9003
E: Gurmeet_Dhaliwal@diodes.com
Investor Relations Contact:
Shelton Group
Leanne Sievers
President, Investor Relations
P: 949-224-3874
E: lsievers@sheltongroup.com
Source: Diodes Incorporated (F)