Diodes Incorporated Reports Second Quarter Fiscal 2024 Financial Results

Note: Included in GAAP and non-GAAP adjusted net income was approximately $13.7 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 $0.30 per share.

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

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.

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.

Insurance recovery for manufacturing facility – The Company recorded gains related to insurance recovery for a manufacturing facility in Asia. The Company believes the exclusion of the insurance recovery provides investors with a more accurate reflection of the continuing operations of the Company and facilitates comparisons with the results of other periods which may not reflect such gains.

Non-cash mark-to-market investment adjustments – The Company excluded mark-to-market adjustments on various equity related investments. 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.

Restructuring charge – The Company recorded restructuring charges related to various locations. These restructuring charges are excluded from management’s assessment of the Company’s operating performance. The Company believes the exclusion of the restructuring charges provides investors an enhanced view of the cost structure of the Company’s operations and facilitates comparisons with the results of other periods that may not reflect such charges or may reflect different levels of such charges.

CASH FLOW ITEMS

Free cash flow (FCF) (Non-GAAP)

FCF for the second quarter of 2024 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the second quarter of 2024, FCF was a negative $3.5 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 Six Months Ended
June 30, June 30,

2024

2023

2024

2023

Net income (per-GAAP)

$

8,000

 

$

82,020

 

$

22,038

 

$

153,170

Plus:
Interest expense, net

 

(3,385

)

 

(35

)

 

(7,467

)

 

325

Income tax provision

 

2,643

 

 

17,224

 

 

6,180

 

 

33,840

Depreciation and amortization

 

33,794

 

 

34,243

 

 

68,649

 

 

67,896

EBITDA (non-GAAP)

$

41,052

 

$

133,452

 

$

89,400

 

$

255,231

DIODES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
June 30, December 31,

2024

2023

Assets
Current assets:
Cash and cash equivalents

$

264,709

 

$

315,457

 

Restricted Cash

 

2,948

 

 

3,026

 

Short-term investments

 

9,188

 

 

10,174

 

Accounts receivable, net of allowances of $12,133 and $5,641 at
June 30, 2024 and December 31, 2023, respectively

 

384,965

 

 

371,930

 

Inventories

 

461,539

 

 

389,774

 

Prepaid expenses and other

 

97,115

 

 

97,024

 

Total current assets

 

1,220,464

 

 

1,187,385

 

Property, plant and equipment, net

 

707,617

 

 

746,169

 

Deferred income tax

 

50,956

 

 

51,620

 

Goodwill

 

145,595

 

 

146,558

 

Intangible assets, net

 

57,391

 

 

63,937

 

Other long-term assets

 

179,034

 

 

171,990

 

Total assets

$

2,361,057

 

$

2,367,659

 

 
Liabilities
Current liabilities:
Line of credit

$

26,343

 

$

40,685

 

Accounts payable

 

156,687

 

 

158,261

 

Accrued liabilities

 

167,436

 

 

179,674

 

Income tax payable

 

9,145

 

 

10,459

 

Current portion of long-term debt

 

1,344

 

 

4,419

 

Total current liabilities

 

360,955

 

 

393,498

 

Long-term debt, net of current portion

 

18,988

 

 

16,979

 

Deferred tax liabilities

 

9,532

 

 

13,662

 

Unrecognized tax benefits

 

34,035

 

 

34,035

 

Other long-term liabilities

 

85,971

 

 

99,808

 

Total liabilities

 

509,481

 

 

557,982

 

 
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; 46,146,009 and 45,938,382, issued and outstanding at June 30, 2024 and December 31, 2023, respectively

 

36,958

 

 

36,819

 

Additional paid-in capital

 

513,309

 

 

509,861

 

Retained earnings

 

1,697,312

 

 

1,675,274

 

Treasury stock, at cost, 9,287,762 and 9,286,862 shares held at June 30, 2024 and December 31, 2023

 

(338,052

)

 

(337,986

)

Accumulated other comprehensive loss

 

(135,172

)

 

(143,227

)

Total stockholders' equity

 

1,774,355

 

 

1,740,741

 

Noncontrolling interest

 

77,221

 

 

68,936

 

Total equity

 

1,851,576

 

 

1,809,677

 

Total liabilities and stockholders' equity

$

2,361,057

 

$

2,367,659

 


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