Diodes Incorporated Reports First Quarter 2014 Financial Results

Continued Margin Improvement; Revenue and Gross Margin Above Mid-Point of Guidance

PLANO, Texas — (BUSINESS WIRE) — May 8, 2014 — Diodes Incorporated (Nasdaq: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic and analog semiconductor markets, today reported its financial results for the first quarter ended March 31, 2014.

First Quarter Highlights

Revenue was $210.0 million, a decrease of 0.5 percent from the $211.0 million in the fourth quarter 2013, and an increase of 18.6 percent from the $177.0 million in the first quarter 2013, which included one month of revenue from BCD Semiconductor;
Gross profit was $61.6 million, compared to $60.8 million in the fourth quarter of 2013 and $46.2 million in the first quarter of 2013;
Gross profit margin was 29.3 percent, compared to 28.8 percent in the fourth quarter of 2013 and 26.1 percent in the first quarter of 2013;
GAAP net income was $10.2 million, or $0.21 per diluted share, compared to the fourth quarter of 2013 of $6.2 million, or $0.13 per diluted share, and the first quarter of 2013 GAAP net loss of ($1.9) million, or ($0.04) per share;
Non-GAAP adjusted net income was $12.4 million, or $0.26 per diluted share, compared to $11.3 million, or $0.24 per diluted share, in the fourth quarter of 2013 and $7.5 million, or $0.16 per diluted share, in the first quarter of 2013;
Excluding $2.1 million, net of tax, of share-based compensation expense, GAAP and non-GAAP adjusted net income would have increased by $0.04 per diluted share; and
Achieved $46.1 million cash flow from operations, including an approximately $4.0 million reduction in inventory, and $34.3 million of free cash flow, including $11.8 million of capital expenditures. Net cash flow was $15.0 million, which includes the pay down of $17.3 million on long-term debt.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “During the quarter, revenue was essentially flat despite the Chinese New Year slowdown due to shipping inventory that we had strategically built-up during the fourth quarter. Most notably, gross margin improved by 50 basis points sequentially and 320 basis points year-over-year as a result of improved wafer fab performance, especially at BCD Fab 2 where the ramp-up is going smoothly, combined with an overall improvement in product mix.

“Also during the quarter, we improved our balance sheet by reducing long-term debt by approximately $17 million, which followed a reduction of almost $20 million last quarter. With our reduced capital expenditure spending, we generated approximately $34 million of free cash flow.

“As we look to the second quarter, we expect revenue to increase sequentially, highlighted by continued gross margin improvement as well as an ongoing commitment to cost controls that we expect to drive further profitability and cash generation.”

First Quarter 2014

Revenue for the first quarter 2014 was $210.0 million, a decrease of 0.5 percent from the $211.0 million in the fourth quarter 2013, and an increase of 18.6 percent from the $177.0 million in the first quarter 2013, which included one month of revenue from BCD Semiconductor. Revenue was essentially flat sequentially despite the Chinese New Year slowdown, which included fewer working days in the quarter as well as the associated workforce shortage.

Gross profit for the first quarter 2014 was $61.6 million, or 29.3 percent of revenue, compared to the fourth quarter 2013 of $60.8 million, or 28.8 percent of revenue, and compared to the first quarter 2013 of $46.2 million, or 26.1 percent of revenue. The increase in gross profit margin was primarily due to improved wafer fab performance, especially at BCD Fab 2, combined with an overall improvement in product mix.

Operating expenses for the first quarter 2014 were $47.2 million, or 22.5 percent of revenue, compared to $52.8 million, or 25.0 percent of revenue, in the fourth quarter 2013 and $42.4 million, or 24.0 percent of revenue in the first quarter 2013. Non-GAAP operating expenses, excluding non-cash acquisition related intangible asset amortization costs, were $45.2 million, or 21.5 percent of revenue, in the first quarter 2014.

First quarter 2014 GAAP net income was $10.2 million, or $0.21 per diluted share, compared to fourth quarter 2013 GAAP net income of $6.2 million, or $0.13 per diluted share, and a first quarter 2013 GAAP net loss of ($1.9) million, or ($0.04) per share.

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