Diodes Incorporated Reports Record Second Quarter Fiscal 2022 Financial Results

(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 second quarter 2022 GAAP net income and non-GAAP adjusted net income was approximately $6.6 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 $0.14 per diluted share for the second quarter 2022, $0.15 for second quarter 2021 and $0.14 for the first quarter 2022.

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in second quarter 2022 was $130.6 million, or 26.0 percent of revenue, increasing from $99.4 million, or 22.6 percent of revenue, in second quarter 2021 and $118.2 million, or 24.5 percent of revenue, in first quarter 2022. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

For second quarter 2022, net cash provided by operating activities was $85.0 million. Net cash flow was a positive $1.5 million, including capital expenditures and additional borrowings of $35.1 million related to the purchase of the onsemi wafer fabrication facility. Free cash flow (a non-GAAP measure) was $45.5 million, which includes $39.6 million of capital expenditures.

Balance Sheet

As of June 30, 2022, the Company had approximately $316 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $265 million and working capital was approximately $715 million.

The results announced today are preliminary and unaudited, as they are subject to the Company finalizing its closing procedures and completion of the 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 June 30, 2022.

Business Outlook

Dr. Lu concluded, “With our excellent execution and product mix improvements, we are guiding for sequential growth and expect revenue to be approximately $521 million, plus or minus 3 percent, and GAAP gross margin to be 41.5 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 20.5 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $3.0 million. Our income tax rate is expected to be 18.5 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the third quarter are anticipated to be approximately 46.2 million.”

Amortization of acquisition-related intangible assets of $3.2 million, after tax, for previous acquisitions is not included in these non-GAAP estimates.

Conference Call

Diodes will host a conference call on Thursday, August 4, 2022, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its second quarter financial results. Investors and analysts may join the conference call by dialing 1-800-715-9871 and providing the confirmation code 1868940. International callers may join the teleconference by dialing +1-646-307-1963 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 August 11, 2022 at midnight Central Time. The replay number is 1-800-770-2030 with a pass code of 1868940. International callers should dial +1-609-800-9909 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 32 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 third quarter of 2022, we expect revenue to be approximately $521 million plus or minus 3 percent; we expect GAAP gross margin to be 41.5 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 20.5 percent of revenue, plus or minus 1 percent; we expect non-GAAP net interest expense to be approximately $3.0 million; we expect our income tax rate to be 18.5 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the third 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.

The Diodes logo is a registered trademark of Diodes Incorporated in the United States and other countries.

 

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 

Three Months Ended

 

 

 

Six Months Ended

June 30

 

 

 

June 30

2022

 

2021

 

 

 

2022

 

2021

Net sales

$

500,972

 

$

440,448

 

$

983,095

 

$

853,569

 

Cost of goods sold

 

294,446

 

 

280,646

 

 

579,872

 

 

555,131

 

Gross profit

 

206,526

 

 

159,802

 

 

403,223

 

 

298,438

 

 
Operating expenses
Selling, general and administrative

 

69,067

 

 

60,280

 

 

140,510

 

 

118,956

 

Research and development

 

30,762

 

 

29,987

 

 

59,439

 

 

57,646

 

Amortization of acquisition-related intangible assets

 

3,980

 

 

4,060

 

 

7,842

 

 

8,083

 

Other operating expense

 

(3,521

)

 

118

 

 

(3,864

)

 

1,006

 

Total operating expense

 

100,288

 

 

94,445

 

 

203,927

 

 

185,691

 

 
Income from operations

 

106,238

 

 

65,357

 

 

199,296

 

 

112,747

 

 
Other (expense) income
Interest income

 

861

 

 

818

 

 

1,687

 

 

1,586

 

Interest expense

 

(1,590

)

 

(2,017

)

 

(2,704

)

 

(4,881

)

Foreign currency (loss) gain, net

 

1,819

 

 

(510

)

 

3,540

 

 

(1,789

)

Unrealized (loss) gain on investments

 

(7,764

)

 

5,261

 

 

(13,312

)

 

8,916

 

Other income

 

1,647

 

 

1,837

 

 

3,523

 

 

4,154

 

Total other (expense) income

 

(5,027

)

 

5,389

 

 

(7,266

)

 

7,986

 

 
Income before income taxes and noncontrolling interest

 

101,211

 

 

70,746

 

 

192,030

 

 

120,733

 

Income tax provision

 

18,461

 

 

12,120

 

 

35,107

 

 

21,554

 

Net income

 

82,750

 

 

58,626

 

 

156,923

 

 

99,179

 

Less net (income) attributable to noncontrolling interest

 

(2,595

)

 

(3,252

)

 

(4,077

)

 

(4,353

)

Net income attributable to common stockholders

$

80,155

 

$

55,374

 

$

152,846

 

$

94,826

 

 
Earnings per share attributable to common stockholders:
Basic

$

1.77

 

$

1.24

 

$

3.38

 

$

2.13

 

Diluted

$

1.75

 

$

1.22

 

$

3.33

 

$

2.09

 

Number of shares used in earnings per share computation:
Basic

 

45,265

 

 

44,667

 

 

45,185

 

 

44,538

 

Diluted

 

45,841

 

 

45,380

 

 

45,913

 

 

45,327

 

 

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 June 30, 2022:

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

$

80,155

 

 
Diluted earnings per share (Per-GAAP)

 

1.75

 

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

3,980

 

(729

)

 

3,251

 

 
Acquisition-related costs

204

 

(44

)

 

160

 

 
Insurance Recovery for Manufacturing Facility

(3,594

)

719

 

 

(2,875

)

 
Non-cash market-to-market investment adjustments

7,764

(1,553

)

 

6,211

 

 
Non-GAAP

$

86,902

 

 
Diluted shares used in computing earnings per share

 

45,841

 

 
Non-GAAP diluted earnings per share

$

1.90

 

 

Note: Included in GAAP and non-GAAP net income was approximately $6.6 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 $0.14 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 June 30, 2021:

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

$ 55,374

 
Diluted earnings per share (Per-GAAP)

1.22

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

4,060

(709)

3,351

 
Acquisition-related costs

149

(31)

118

 
Gain on LSC investments

(5,262)

1,052

(4,210)

 
Non-GAAP

$ 54,633

 
Diluted shares used in computing earnings per share

45,380

 
Non-GAAP diluted earnings per share

$ 1.20

 

Note: Included in GAAP and non-GAAP adjusted net income was approximately $6.8 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 $0.15 per share.

 

DIODES INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME

(in thousands, except per share data)

(unaudited)

 

For the six months ended June 30, 2022:

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

$

152,846

 

 
Diluted earnings per share (Per-GAAP)

 

3.33

 

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

7,842

 

(1,435

)

 

6,407

 

 
Acquisition-related costs

479

 

(101

)

 

378

 

 
Insurance Recovery for Manufacturing Facility

(3,594

)

719

 

 

(2,875

)

 
Non-cash market-to-market investment adjustments

13,312

(2,856

)

 

10,456

 

 
Non-GAAP

$

167,212

 

 
Diluted shares used in computing earnings per share

 

45,913

 

 
Non-GAAP diluted earnings per share

$

3.64

 

 

Note: Included in GAAP and non-GAAP adjusted net income was approximately $13.0 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 $0.28 per share.

 

DIODES INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME

(in thousands, except per share data)

(unaudited)

For the six months ended June 30, 2021:

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

$

94,826

 

 
Diluted earnings per share (Per-GAAP)

$

2.09

 

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

8,083

(1,413

)

 

6,670

 

 
Acquisition-related costs

2,056

(431

)

 

1,625

 

 
Gain on LSC investments

(8,916

)

1,783

 

 

(7,133

)

 
Restructuring costs

820

(123

)

 

697

 

 
Non-GAAP

$

96,685

 

 
Diluted shares used in computing earnings per share

 

45,327

 

 
Non-GAAP diluted earnings per share

$

2.13

 

 

Note: Included in GAAP and non-GAAP adjusted net income was approximately $11.7 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 $0.26 per share.

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

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