Diodes Incorporated Reports Fourth Quarter and Fiscal 2020 Financial Results

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 fourth quarter 2020 GAAP net income and non-GAAP adjusted net income was approximately $5.1 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 $0.10 per diluted share for fourth quarter 2020, $0.08 for fourth quarter 2019 and $0.09 for third quarter 2020.

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in the fourth quarter 2020 was $67.1 million, or 19.1 percent of revenue, compared to $88.3 million, or 29.3 percent of revenue, in the fourth quarter 2019, which included a $19.2 million gain on the sale of land, and $63.3 million, or 20.5 percent of revenue, in the third quarter 2020. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

For fourth quarter 2020, net cash provided by operating activities was 60.8 million. Net cash flow was a negative $319.3 million, which included the purchase of Lite-On Semiconductor during the quarter for approximately $453.4 million. Free cash flow (a non-GAAP measure) was $33.5 million, which includes $27.3 million of capital expenditures.

Balance Sheet

As of December 31, 2020, the Company had approximately $327 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $451 million and working capital was approximately $514 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 2020 annual audit by its independent registered public accounting firm. As such, these results are subject to revision until the Company files its Form 10-K for the year ending December 31, 2020.

Business Outlook

Dr. Lu concluded, “For the first quarter of 2021, we expect revenue to increase to approximately $400 million, plus or minus 3 percent, which represents a record on both an organic and consolidated basis for a combined increase of about 14 percent sequentially at the mid-point. This guidance represents organic growth significantly better than typical seasonality of sequentially down 5 percent on average in the same prior two-year periods. We expect GAAP gross margin on a consolidated basis to be 33.6 percent, plus or minus 1 percent, which includes an approximately 3 percent impact due to a full quarter of LSC. Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 22.0 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $3.3 million. Our income tax rate is expected to be 18 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the first 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 Tuesday, February 16, 2021 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its fourth quarter and full year 2020 financial results. Investors and analysts may join the conference call by dialing 1-855-232-8957 and providing the confirmation code 8035448. 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 February 23, 2021 at midnight Central Time. The replay number is 1-855-859-2056 with a pass code of 8035448. 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 revenue growth, market share gains, increase in gross margin and increase in gross profits in 2020 and beyond; that for the first quarter of 2021, we expect revenue to be a record and increase to approximately $400 million plus or minus 3 percent; we expect GAAP gross margin to be 33.6 percent, plus or minus 1 percent which includes an approximately 3 percent impact due to a full quarter of LSC.; non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 22.0 percent of revenue, plus or minus 1 percent; we expect non-GAAP net interest expense to be approximately $3.3 million; we expect our income tax rate to be 18 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the first 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

 

 

Twelve Months Ended

December 31, 2020

 

 

December 31, 2020

2020

 

2019

 

 

2020

 

2019

Net sales

$

350,370

 

$

301,157

 

$

1,229,215

 

$

1,249,130

 

Cost of goods sold

 

227,673

 

 

191,795

 

 

798,094

 

 

783,323

 

Gross profit

 

122,697

 

 

109,362

 

 

431,121

 

 

465,807

 

 
Operating expenses
Selling, general and administrative

 

52,829

 

 

44,199

 

 

185,067

 

 

181,343

 

Research and development

 

24,819

 

 

21,951

 

 

94,288

 

 

88,517

 

Amortization of acquisition-related intangible assets

 

4,012

 

 

4,502

 

 

16,261

 

 

18,041

 

Loss (gain) on disposal of fixed assets

 

214

 

 

(24,271

)

 

106

 

 

(24,429

)

Other operating expense

 

1,067

 

 

1,727

 

 

1,067

 

 

1,727

 

Total operating expense

 

82,941

 

 

48,108

 

 

296,789

 

 

265,199

 

 
Income from operations

 

39,756

 

 

61,254

 

 

134,332

 

 

200,608

 

 
Other income (expense)
Interest income

 

487

 

 

409

 

 

1,066

 

 

2,189

 

Interest expense

 

(4,019

)

 

(1,730

)

 

(11,662

)

 

(7,893

)

Foreign currency loss, net

 

(3,671

)

 

(2,355

)

 

(9,814

)

 

(3,737

)

Other income

 

3,517

 

 

2,022

 

 

6,419

 

 

7,079

 

Total other income (expense)

 

(3,686

)

 

(1,654

)

 

(13,991

)

 

(2,362

)

 
Income before income taxes and noncontrolling interest

 

36,070

 

 

59,600

 

 

120,341

 

 

198,246

 

Income tax provision

 

6,015

 

 

12,046

 

 

21,112

 

 

44,131

 

Net income

 

30,055

 

 

47,554

 

 

99,229

 

 

154,115

 

Less net (income) loss attributable to noncontrolling interest

 

(320

)

 

(364

)

 

(1,141

)

 

(865

)

Net income attributable to common stockholders

$

29,735

 

$

47,190

 

$

98,088

 

$

153,250

 

 
Earnings per share attributable to common stockholders:
Basic

$

0.60

 

$

0.92

 

$

1.92

 

$

3.02

 

Diluted

$

0.59

 

$

0.90

 

$

1.88

 

$

2.96

 

Number of shares used in earnings per share computation:
Basic

 

49,340

 

 

51,086

 

 

51,004

 

 

50,787

 

Diluted

 

50,418

 

 

52,144

 

 

52,133

 

 

51,860

 

 

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 December 31, 2020:

 
COGS Operating
Expenses
Other
Income
(Expense)
Income Tax
Provision
Net Income
Per-GAAP

$

29,735

 

 
Diluted earnings per share (Per-GAAP)

 

0.59

 

 
Adjustments to reconcile net income to non-GAAP net income:
 
 
Amortization of acquisition-related intangible assets

4,012

(742

)

 

3,270

 

 
Acquisition-related financing costs

3,277

 

(721

)

 

2,556

 

 
Acquisition-related costs

306

1,397

59

 

(290

)

 

1,472

 

 
Reverse Gain on LSC Investments

(2,143

)

429

 

 

(1,714

)

 
Restructuring Cost

2,471

(462

)

 

2,009

 

 
Non-GAAP

$

37,328

 

 
Diluted shares used in computing earnings per share

 

50,418

 

 
Non-GAAP diluted earnings per share

$

0.74

 

 

Note: Included in GAAP and non-GAAP net income was approximately $5.1 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 $0.10 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 December 31, 2019:

Operating
Expenses
Income Tax
Provision
Net Income
Per-GAAP

$

47,190

 

 
Diluted earnings per share (Per-GAAP)

$

0.90

 

 
Adjustments to reconcile net income to non-GAAP net income:
 
Amortization of acquisition-related intangible assets

4,502

 

(813

)

 

3,689

 

 
Acquisition related costs

1,192

 

(254

)

 

938

 

 
Land sale inspection extension fee

(125

)

26

 

 

(99

)

 
Gain on land sale

(24,305

)

5,104

 

 

(19,201

)

 
Loss on impairment

1,624

 

(341

)

 

1,283

 

 
Non-GAAP

$

33,800

 

 
Diluted shares used in computing earnings per share

 

52,144

 

 
Non-GAAP diluted earnings per share

$

0.65

 

 

Note: Included in GAAP and non-GAAP adjusted net income was approximately $4.1 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.08 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 twelve months ended December 31, 2020:

COGS Operating
Expenses
Other
Income
(Expense)
Income Tax
Provision
Net Income
Per-GAAP

$

98,088

 

 
Diluted earnings per share (Per-GAAP)

$

1.88

 

 
Adjustments to reconcile net income to non-GAAP net income:
 
Amortization of acquisition-related intangible assets

16,261

(2,991

)

 

13,270

 

 
Acquisition-related financing costs

9,395

 

(2,064

)

 

7,331

 

 
Acquisition-related costs

306

2,521

59

 

(520

)

 

2,366

 

 
Restructuring Cost

2,471

(462

)

 

2,009

 

 
Board-member retirement costs

1,705

(358

)

 

1,347

 

 
Reverse Gain on LSC Investments

(2,143

)

429

 

 

(1,714

)

 
Non-GAAP

$

122,697

 

 
Diluted shares used in computing earnings per share

 

52,133

 

 
Non-GAAP diluted earnings per share

$

2.35

 

 

Note: Included in GAAP and non-GAAP adjusted net income was approximately $18.6 million, net of tax, non-cash share-based compensation expense, excluding officer severance. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.36 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 twelve months ended December 31, 2019:

Operating
Expenses
Income Tax
Provision
Net Income
Per-GAAP

$

153,250

 

 
Diluted earnings per share (Per-GAAP)

$

2.96

 

 
Adjustments to reconcile net income to non-GAAP net income:
 
Amortization of acquisition-related intangible assets

18,040

 

(3,261

)

 

14,779

 

 
Acquisition related costs

1,663

 

(349

)

 

1,314

 

 
Land sale inspection extension fee

(425

)

89

 

 

(336

)

 
Gain on land sale

(24,305

)

5,104

 

 

(19,201

)

 
Loss on impairment

1,624

 

(341

)

 

1,283

 

 
Non-GAAP

$

151,089

 

 
Diluted shares used in computing earnings per share

 

51,860

 

 
Non-GAAP diluted earnings per share

$

2.91

 

 

Note: Included in GAAP and non-GAAP adjusted net income was approximately $16.2 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.31 per share.

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

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