Diodes Incorporated Reports Third Quarter 2017 Financial Results

Free cash flow (FCF) (Non-GAAP)

FCF for the third quarter of 2017 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the third quarter of 2017, FCF was $2.9 million ($40.9 million less $38.0 million). FCF represents the cash and cash equivalents that we are able to generate after taking into account cash outlays required to maintain or expand property, plant and equipment. FCF is important because it allows us to pursue opportunities to develop new products, make acquisitions and reduce debt.

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 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 Nine Months Ended
September 30, September 30,
2017 2016 2017     2016
 
Net income (per-GAAP) $ 14,450 $ 10,648 $ 28,846 $ 14,667
Plus:
Interest expense, net 3,172 3,363 9,501 8,805
Income tax provision 5,052 4,097 11,651 5,941
Depreciation and amortization   24,096   24,371   71,195   74,731
EBITDA (non-GAAP) $ 46,770 $ 42,479 $ 121,193 $ 104,144
 
         
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
 
September 30, December 31,
2017 2016
(unaudited) (audited)
CURRENT ASSETS
Cash and cash equivalents $ 201,226 $ 247,802
Short-term investments 12,737 29,842
Accounts receivable, net 230,460 217,217
Inventories 211,412 193,483
Prepaid expenses and other   45,644     44,438  
Total current assets   701,479     732,782  
 
PROPERTY, PLANT AND EQUIPMENT, net 446,052 401,988
 
DEFERRED INCOME TAXES 64,129 56,047
 
OTHER ASSETS
Goodwill 133,538 129,412
Intangible assets, net 161,122 174,876
Other   34,269     33,447  
Total assets $ 1,540,589   $ 1,528,552  
 
 
CURRENT LIABILITIES
Accounts payable $ 111,689 $ 87,600
Accrued liabilities and other 94,436 71,562
Income tax payable - 11,855
Current portion of long-term debt   19,067     14,356  
Total current liabilities   225,192     185,373  
 
LONG-TERM DEBT, net of current portion 306,687 413,126
DEFERRED TAX LIABILITIES - non current 28,617 28,213
OTHER LONG-TERM LIABILITIES   85,209     81,373  
Total liabilities   645,705     708,085  
 
COMMITMENTS AND CONTINGENCIES
 
EQUITY
Diodes Incorporated stockholders' equity
Preferred stock - par value $1.00 per share; 1,000,000 shares authorized; no shares issued or outstanding
Common stock - par value $0.66 2/3 per share; 70,000,000 shares authorized; 49,091,693 and 48,219,376, issued and outstanding at September 30, 2017 and December 31, 2016, respectively 33,501 32,919
Additional paid-in capital 375,134 354,574
Retained earnings 563,338 530,215
Treasury stock, at cost, 1,157,206 shares held at September 30, 2017 and December 31,2016 (29,023 ) (29,023 )
Accumulated other comprehensive loss   (89,707 )   (112,666 )
Total Diodes Incorporated stockholders' equity 853,243 776,019
Noncontrolling interest   41,641     44,448  
Total equity   894,884     820,467  
Total liabilities and equity $ 1,540,589   $ 1,528,552  

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