Diodes Incorporated Reports Second Quarter 2018 Financial Results

Market Share Gains and Increasing Profits Result in Record Revenue, Gross Profit, EBITDA and Net Income with Strong Revenue and Profitability Growth Expected to Continue in the Third Quarter

PLANO, Texas — (BUSINESS WIRE) — August 7, 2018 — Diodes Incorporated (Nasdaq: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic, analog and mixed-signal semiconductor markets, today reported its financial results for the second quarter ended June 30, 2018.

Second Quarter Highlights

Revenue was a record $304.1 million, an increase of 15.1 percent from the $264.2 million in the second quarter 2017 and an increase of 10.8 percent from the $274.5 million in the first quarter 2018;
GAAP gross profit was a record $107.3 million, compared to $90.1 million in the second quarter 2017 and $98.6 million in the first quarter 2018;
GAAP gross profit margin was 35.3 percent, compared to 34.1 percent in the second quarter 2017 and 35.9 percent in the first quarter 2018;
GAAP net income was a record $25.1 million, or $0.49 per diluted share, compared to GAAP net income of $13.2 million, or $0.26 per diluted share, in the second quarter 2017 and GAAP net income of $18.5 million, or $0.37 per share, in the first quarter 2018;
Non-GAAP adjusted net income was a record $29.3 million, or $0.58 per diluted share, compared to $17.8 million, or $0.36 per diluted share, in the second quarter 2017 and $24.2 million, or $0.48 per diluted share, in the first quarter 2018;
Excluding $3.8 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.07 per diluted share;
EBITDA was a record $64.5 million, or 21.2 percent of revenue, compared to $45.8 million, or 17.3 percent of revenue, in the second quarter 2017 and $54.2 million, or 19.7 percent of revenue, in the first quarter 2018; and
Achieved cash flow from operations of $34.4 million and $13.1 million free cash flow, including $21.4 million of capital expenditures. Net cash flow was a negative $30.1 million, which includes the pay down of $36.1 million of long-term debt.

Commenting on the results, Dr. Keh-Shew Lu, president and chief executive officer, stated, “Diodes achieved a number of key milestones in the second quarter, reaching record levels across multiple financial metrics driven by continued revenue growth, market share gains and further traction on our Pericom products. Our exceptionally strong performance reflects record sales in both our automotive and industrial end markets, which contributed to new record revenue levels being achieved across all regions. Our automotive revenue was up 50 percent year-over-year, and our industrial revenue at 27 percent of total revenue was the first time industrial was our largest representative end market.

“Additionally, through revenue growth, we continue to decrease operating expenses as a percentage of revenue, also contributing to our achievement of record EBITDA and record non-GAAP earnings per share in the quarter. In fact, EBITDA increased over 40 percent and non-GAAP net income increased over 60 percent as compared to the prior year period on revenue growth of 15 percent, further demonstrating the significant leverage in our operating model. As a result, we generated strong cash flow that enabled us to further pay-down our long-term debt.

“Also highlighting these solid results is our expectation for continued growth in the third quarter, once again setting new records across our business. Our strong results and growth this year has positioned us to potentially achieve our most profitable year in the Company’s history.”

Second Quarter 2018

Revenue for second quarter 2018 was $304.1 million, an increase of 15.1 percent from $264.2 million in second quarter 2017 and an increase of 10.8 percent from the $274.5 million in the first quarter 2018.

GAAP gross profit for the second quarter 2018 was a record $107.3 million, or 35.3 percent of revenue, compared to the second quarter 2017 of $90.1 million, or 34.1 percent of revenue, and first quarter 2018 of $98.6 million, or 35.9 percent of revenue. The 120 basis point year-over-year increase in gross margin was due primarily to favorable product mix, increased contribution from the Pericom products as well as improved capacity utilization.

GAAP operating expenses for second quarter 2018 were $69.4 million, or 22.8 percent of revenue, and $64.2 million, or 21.1 percent of revenue, on a non-GAAP basis, which excluded $4.7 million of amortization of acquisition-related intangible asset expenses and $0.5 million of restructuring charges associated with the shutdown and relocation of the Company’s wafer fabrication facility located in Lee’s Summit, MO (“KFAB”). GAAP operating expenses in the second quarter 2017 were $66.3 million, or 25.1 percent of revenue, and in the first quarter 2018 were $71.7 million, or 26.1 percent of revenue.

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