Diodes Incorporated Reports Third Quarter 2013 Financial Results

Achieves Record Revenue with Continued Margin Improvement

PLANO, Texas — (BUSINESS WIRE) — November 12, 2013 — Diodes Incorporated (Nasdaq: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic and analog semiconductor markets, today reported its financial results for the third quarter ended September 30, 2013.

Third Quarter Highlights

  • Revenue was $224.5 million, an increase of 4.7 percent from the $214.4 million in the second quarter 2013, and an increase of 34.7 percent from the $166.6 million in the third quarter 2012;
  • Gross profit was $69.6 million, compared to $61.3 million in the second quarter of 2013, that included a $3.7 million inventory valuation adjustment related to the BCD acquisition, and $43.6 million in the third quarter of 2012;
  • Gross profit margin was 31.0 percent, compared to 28.6 percent in the second quarter of 2013 and 26.2 percent in the third quarter of 2012;
  • GAAP net income was $13.6 million, or $0.28 per diluted share, compared to second quarter 2013 of $8.6 million, or $0.18 per diluted share, and third quarter 2012 of $8.6 million, or $0.18 per diluted share;
  • Non-GAAP adjusted net income was $15.8 million, or $0.33 per diluted share, compared to $15.5 million, or $0.33 per diluted share, in second quarter 2013 and $9.5 million, or $0.20 per diluted share, in third quarter 2012;
  • Excluding $2.3 million, net of tax, share-based compensation expense, GAAP and non-GAAP adjusted net income would have increased by $0.05 per diluted share; and
  • Achieved $16.7 million cash flow from operations and $9.6 million of free cash flow. Net cash flow was $(9.3) million, primarily due to the $22 million purchase of short-term investments and a $7 million pay down on a revolver.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “Our third quarter was highlighted by the continued achievement of record quarterly revenue, increased market share gains, and solid operational performance across our business. Our past design win momentum and strength in the TV market and at certain major OEM customers were able to offset the continued weakness in the PC market. We also further improved our gross margin through our cost reduction efforts and improved BCD wafer fab loadings. Additionally, we reduced our operating expenses on a dollar basis, and as a percentage of revenue, demonstrating further progress towards achieving our target model of 20 percent of revenue.

“These achievements are even more notable when considering the weakness of the U.S. dollar relative to most of the currencies where we have operations, in particular the British Pound and the Euro. Our improved operational efficiencies and cost reductions were able to mostly offset this currency impact and allowed us to exceed our operational expectations for the quarter.

“As we look to the fourth quarter, it is shaping up to be weaker than our normal seasonality due to a broad based market weakness, especially the continued weakness in the PC market. However, we believe we are well positioned in the coming year to benefit from ongoing operational improvements as we leverage our broadened product portfolio and additional cost savings from transferring BCD products into our packaging facilities, and eventually off-loading our analog foundry wafer loadings into BCD’s wafer fabs.”

Third Quarter 2013

Revenue for the third quarter 2013 was $224.5 million, an increase of 4.7 percent over the $214.4 million in the second quarter 2013 and 34.7 percent from the $166.6 million in the third quarter 2012. Revenue was up sequentially primarily due to continued ramping of past design wins and strength at certain major OEM customers.

Gross profit for the third quarter 2013 was $69.6 million, or 31.0 percent of revenue, compared to the second quarter 2013 of $61.3 million, or 28.6 percent of revenue, which included a $3.7 million inventory valuation adjustment related to the BCD acquisition, and compared to the third quarter 2012 of $43.6 million, or 26.2 percent of revenue. Gross profit margin improved as a result of the Company’s cost reduction efforts and improved BCD wafer fab loadings.

Third quarter 2013 GAAP net income was $13.6 million, or $0.28 per diluted share, compared to second quarter 2013 GAAP net income of $8.6 million, or $0.18 per diluted share, and third quarter 2012 GAAP net income of $8.6 million, or $0.18 per diluted share.

Third quarter 2013 non-GAAP adjusted net income was $15.8 million, or $0.33 per diluted share, which excluded, net of tax, $1.5 million of non-cash amortization of intangible asset costs and $0.7 million of acquisition-related employee retention accruals. This compares to non-GAAP adjusted net income of $15.5 million, or $0.33 per diluted share, in the second quarter 2013 and $9.5 million, or $0.20 per diluted share, in the third quarter 2012.

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