Diodes Incorporated Reports Third Quarter Fiscal 2023 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 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.”

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