Diodes Incorporated Reports First Quarter Fiscal 2023 Financial Results

The Company’s financial statements present net income and earnings per share that are calculated using accounting principles generally accepted in the United States (“GAAP”). The Company’s management makes adjustments to the GAAP measures that it feels are necessary to allow investors and other readers of the Company’s financial releases to view the Company’s operating results as viewed by the Company’s management, board of directors and research analysts in the semiconductor industry. These non-GAAP measures are not prepared in accordance with, and should not be considered alternatives or necessarily superior to, GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names. The explanation of the adjustments made in the table above, are set forth below:

Detail of non-GAAP adjustments:

Amortization of acquisition-related intangible assetsThe Company excluded this item, including amortization of developed technologies and customer relationships. The fair value of the acquisition-related intangible assets is amortized using straight-line methods which approximate the proportion of future cash flows estimated to be generated each period over the estimated useful life of the applicable assets. The Company believes that exclusion of this item is appropriate because a significant portion of the purchase price for its acquisitions was allocated to the intangible assets that have short lives and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both the Company’s newly acquired and long-held businesses. In addition, the Company excluded this item because there is significant variability and unpredictability among companies with respect to this expense.

Acquisition related costs The Company excluded expenses associated with previous acquisitions of that typically consist of advisory, legal and other professional and consulting fees. These costs were expensed as they were incurred and as services were received, and in which the corresponding tax adjustments were made for the non-deductible portions of these expenses. The Company believes the exclusion of the acquisition related costs provides investors with a more accurate reflection of costs likely to be incurred in the absence of an unusual event such as an acquisition and facilitates comparisons with the results of other periods that may not reflect such costs.

Officer retirement – The Company excluded costs related to the retirement of two executives. These costs represent cash payments and the accelerated vesting of previously issued stock awards. The Company feels it is appropriate to exclude these costs since they don’t represent ongoing operating expenses and will present investors with a more accurate indication of our continuing operations.

LSC investments related – The Company excluded market to market adjustments and the associated tax on certain LSC equity investments. The Company has also excluded certain taxes related to integration and restructuring activities within certain Taiwan subsidiaries including LSC. The Company believes this is not reflective of the ongoing operations and exclusion of this provides investors an enhanced view of the Company’s operating results.

CASH FLOW ITEMS

Free cash flow (FCF) (Non-GAAP)

FCF for the first quarter of 2023 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the first quarter of 2023, FCF was $51.8 million, which 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 amounts 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

March 31, 2023

2023

 

2022

Net income (per-GAAP)

$

71,150

$

72,691

Plus:
Interest expense, net

 

360

 

288

Income tax provision

 

16,616

 

16,646

Depreciation and amortization

 

33,653

 

28,594

EBITDA (non-GAAP)

$

121,779

$

118,219

 

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

 

March 31

 

December 31,

 

2023

 

 

 

2022

 

(unaudited)

 

(audited)

Assets
Current assets:
Cash and cash equivalents

$

323,146

 

$

336,732

 

Restricted Cash

 

2,761

 

 

4,367

 

Short-term investments

 

8,768

 

 

7,059

 

Accounts receivable, net of allowances of $5,861 and $5,852 at
March 31, 2023 and December 31, 2022, respectively

 

369,054

 

 

369,233

 

Inventories

 

341,941

 

 

360,281

 

Prepaid expenses and other

 

76,101

 

 

83,999

 

Total current assets

 

1,121,771

 

 

1,161,671

 

Property, plant and equipment, net

 

755,707

 

 

736,730

 

Deferred income tax

 

36,185

 

 

35,308

 

Goodwill

 

145,937

 

 

144,757

 

Intangible assets, net

 

75,398

 

 

79,137

 

Other long-term assets

 

150,563

 

 

130,709

 

Total assets

$

2,285,561

 

$

2,288,312

 

 
Liabilities
Current liabilities:
Line of credit

$

34,651

 

$

36,280

 

Accounts payable

 

143,694

 

 

160,442

 

Accrued liabilities

 

176,952

 

 

214,433

 

Income tax payable

 

33,876

 

 

19,682

 

Current portion of long-term debt

 

1,173

 

 

1,693

 

Total current liabilities

 

390,346

 

 

432,530

 

Long-term debt, net of current portion

 

89,636

 

 

147,470

 

Deferred tax liabilities

 

13,012

 

 

12,903

 

Other long-term liabilities

 

126,894

 

 

112,490

 

Total liabilities

 

619,888

 

 

705,393

 

 
Commitments and contingencies
 
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; 45,706,798 and 45,469,722, issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

36,661

 

 

36,503

 

Additional paid-in capital

 

494,598

 

 

494,773

 

Retained earnings

 

1,519,242

 

 

1,448,092

 

Treasury stock, at cost, 9,281,581 shares held at March 31, 2023 and December 31, 2022

 

(337,490

)

 

(337,490

)

Accumulated other comprehensive loss

 

(117,546

)

 

(128,233

)

Total stockholders' equity

 

1,595,465

 

 

1,513,645

 

Noncontrolling interest

 

70,208

 

 

69,274

 

Total equity

 

1,665,673

 

 

1,582,919

 

Total liabilities and stockholders' equity

$

2,285,561

 

$

2,288,312

 


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