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 third quarter 2021 GAAP net income and non-GAAP adjusted net income was approximately $8.0 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 $0.18 per diluted share for the third quarter 2021, $0.09 for third quarter 2020 and $0.15 for the second quarter 2021.

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in third quarter 2021 was a record $114.5 million, or 24.3 percent of revenue, increasing from $63.3 million, or 20.5 percent of revenue, in third quarter 2020 and $99.4 million, or 22.6 percent of revenue, in second quarter 2021. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

For third quarter 2021, net cash provided by operating activities was $98.9 million. Net cash flow was a negative $10.1 million, including the pay down of $49.7 million of total debt. Free cash flow (a non-GAAP measure) was $57.8 million, which includes $41.1 million of capital expenditures.

Balance Sheet

As of September 30, 2021, the Company had approximately $292 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $252 million and working capital was approximately $619 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 2021 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 September 30, 2021.

Business Outlook

Dr. Lu concluded, “For the fourth quarter of 2021, we expect revenue to increase to approximately $476 million, plus or minus 3 percent, which represents a record on both an organic and consolidated basis for a combined increase of about 1 percent sequentially at the mid-point, which is better than typical seasonality of down 5 percent. We expect GAAP gross margin on a consolidated basis to be 38.7 percent, plus or minus 1 percent. Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 21.0 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $1.2 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 fourth quarter are anticipated to be approximately 46.2 million.”

Purchase accounting adjustments related to amortization of acquisition-related intangible assets of $3.4 million, after tax, for previous acquisitions is not included in these non-GAAP estimates.

Conference Call

Diodes will host a conference call on Wednesday, November 3, 2021, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its third quarter financial results. Investors and analysts may join the conference call by dialing 1-855-232-8957 and providing the confirmation code 6125039. 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 November 10, 2021 at midnight Central Time. The replay number is 1-855-859-2056 with a pass code of 6125039. 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 that for the fourth quarter of 2021, we expect revenue to increase to approximately $476 million plus or minus 3 percent; we expect GAAP gross margin to be 38.7 percent, plus or minus 1 percent; non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 21.0 percent of revenue, plus or minus 1 percent; we expect non-GAAP net interest expense to be approximately $1.2 million; we expect our income tax rate to be 18 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the fourth quarter are anticipated to be approximately 46.2 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										Nine Months Ended
		September 30										September 30
			2021				2020						2021				2020
Net sales		$	471,422			$	309,459					$	1,324,991			$	878,845
Cost of goods sold			290,191				198,369						845,322				570,421
Gross profit			181,231				111,090						479,669				308,424
Operating expenses
Selling, general and administrative			67,803				44,651						186,759				132,238
Research and development			31,458				24,469						89,104				69,469
Amortization of acquisition-related intangible assets			4,056				4,007						12,139				12,249
Other operating expense			667				108						1,673				(108	)
Total operating expense			103,984				73,235						289,675				213,848
Income from operations			77,247				37,855						189,994				94,576
Other income (expense)
Interest income			765				138						2,351				579
Interest expense			(1,417	)			(3,745	)					(6,298	)			(7,643	)
Foreign currency loss, net			805				(2,618	)					(984	)			(6,143	)
Unrealized Gain (Loss) on Investments			5,922				-						14,838				-
Other income			2,244				1,627						6,398				2,902
Total other income (expense)			8,319				(4,598	)					16,305				(10,305	)
Income before income taxes and noncontrolling interest			85,566				33,257						206,299				84,271
Income tax provision			14,766				5,871						36,320				15,097
Net income			70,800				27,386						169,979				69,174
Less net (income) loss attributable to noncontrolling interest			(2,376	)			(234	)					(6,729	)			(821	)
Net income attributable to common stockholders		$	68,424			$	27,152					$	163,250			$	68,353
Earnings per share attributable to common stockholders:
Basic		$	1.52			$	0.52					$	3.65			$	1.33
Diluted		$	1.50			$	0.51					$	3.59			$	1.03
Number of shares used in earnings per share computation:
Basic			44,986				51,825						44,689				51,563
Diluted			45,642				52,729						45,507				52,612

Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”