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 2023 GAAP net income and non-GAAP adjusted net income was approximately $4.7 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 the third quarter 2023, $0.13 for the second quarter 2023 and $0.18 for third quarter 2022.

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in third quarter 2023 was $90.6 million, or 22.4 percent of revenue, compared to $133.5 million, or 28.6 percent of revenue, in second quarter 2023 and $141.9 million, or 27.2 percent of revenue, in third quarter 2022. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

For third quarter 2023, net cash provided by operating activities was $50.1 million. Net cash flow was a negative $27.1 million, which includes the pay-down of $35.3 million of total debt. Free cash flow (a non-GAAP measure) was $11.6 million, which includes $38.5 million of capital expenditures.

Balance Sheet

As of September 30, 2023, the Company had approximately $308 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $53 million and working capital was approximately $768 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 September 30, 2023.

Business Outlook

Dr. Lu concluded, “For the fourth quarter of 2023, we expect revenue to be approximately $325 million, plus or minus 3 percent. GAAP gross margin is expected to be 35.0 percent, plus or minus 1 percent, primarily due to higher underutilization costs on the lower expected revenue combined with less favorable product mix from a reduced contribution of automotive and industrial revenue. Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 26.5 percent of revenue, plus or minus 1 percent. We expect net interest income to be approximately $2.0 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 46.6 million.”

Amortization of acquisition-related intangible assets of $3.1 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 8, 2023 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 1-833-634-2590, and international callers may join the teleconference by dialing +1-412-317-6038. A telephone replay of the call will be made available approximately two hours after the call and will remain available until November 15, 2023 at midnight Central Time. The replay number is 1-877-344-7529 with a pass code of 4599148. International callers should dial +1-412-317-0088 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 https://investor.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 automotive, industrial, computing, consumer electronics, and communications 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 fourth quarter of 2023, we expect revenue to be approximately $325 million plus or minus 3 percent; we expect GAAP gross margin to be 35.0 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 26.5 percent of revenue, plus or minus 1 percent; we expect net interest income to be approximately $2.0 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 46.6 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.

© 2023 Diodes Incorporated. All Rights Reserved

DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
		Three Months Ended								Nine Months Ended
		September 30, 2023								September 30, 2023
			2023				2022				2023				2022
Net sales		$	404,647			$	521,273			$	1,339,040			$	1,504,368
Cost of goods sold			248,771				303,455				793,334				883,327
Gross profit			155,876				217,818				545,706				621,041
Operating expenses
Selling, general and administrative			62,964				68,545				201,455				209,055
Research and development			34,068				32,787				101,911				92,226
Amortization of acquisition-related intangible assets			3,808				3,938				11,476				11,780
Restructuring cost			2,566				-				2,566				-
Other operating (income) expense			(1,404	)			102				(1,570	)			(3,762	)
Total operating expense			102,002				105,372				315,838				309,299
Income from operations			53,874				112,446				229,868				311,742
Other (expense) income
Interest income			4,507				862				8,503				2,549
Interest expense			(898	)			(2,724	)			(5,219	)			(5,428	)
Foreign currency gain(loss), net			1,314				(1,008	)			(2,796	)			2,532
Unrealized gain(loss) on investments			401				(2,648	)			16,462				(15,960	)
Other income			1,309				2,218				3,237				5,741
Total other income (expense)			6,633				(3,300	)			20,187				(10,566	)
Income before income taxes and noncontrolling interest			60,507				109,146				250,055				301,176
Income tax provision			10,674				20,172				44,514				55,279
Net income			49,833				88,974				205,541				245,897
Less net (income) attributable to noncontrolling interest			(1,113	)			(2,588	)			(3,651	)			(6,665	)
Net income attributable to common stockholders		$	48,720			$	86,386			$	201,890			$	239,232
Earnings per share attributable to common stockholders:
Basic		$	1.06			$	1.90			$	4.41			$	5.28
Diluted		$	1.05			$	1.88			$	4.36			$	5.21
Number of shares used in earnings per share computation:
Basic			45,936				45,475				45,758				45,283
Diluted			46,320				46,014				46,296				45,938

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