Diodes Incorporated Reports Fourth Quarter and Fiscal 2017 Financial Results

Expands Gross Margin Sequentially to 35.9%; Ends Year with Record Revenue, Gross Profit and Cash Flow from Operations

PLANO, Texas — (BUSINESS WIRE) — February 7, 2018 — Diodes Incorporated (Nasdaq: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic, analog and mixed-signal semiconductor markets, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2017.

The impact on Diodes Incorporated of the Tax Cuts and Jobs Act, enacted in December 2017, is estimated to be an approximately $46 million increase in GAAP tax expense, which has been excluded from the fourth quarter and full year 2017 non-GAAP results. The Company does not anticipate this increased tax expense, as a result of the tax law reform, will have a cash impact.

Year 2017 Highlights

  • Revenue grew to a record $1.05 billion, an increase of 11.9 percent over the $942.2 million in 2016 due to continued market share gains in all regions;
  • GAAP gross profit was a record $356.8 million, compared to $286.9 million in 2016, and non-GAAP gross profit for 2017 was $359.5 million;
  • GAAP gross margin improved 330 basis points to 33.8 percent from 30.5 percent in 2016, and non-GAAP gross margin for 2017 was 34.1 percent;
  • GAAP net loss was ($1.8) million, or ($0.04) per diluted share, compared to net income of $15.9 million, or $0.32 per diluted share, in 2016;
  • Non-GAAP adjusted net income increased 80.1 percent to $69.1 million, or $1.37 per diluted share, compared to $38.4 million, or $0.77 per diluted share, in 2016;
  • Excluding $12.1 million, net of tax, non-cash share-based compensation expense, both GAAP net income and non-GAAP adjusted net income would have increased by $0.24 per diluted share; and
  • Achieved $181.1 million cash flow from operations and $70.0 million free cash flow, including $111.2 million of capital expenditures, or 10.5 percent of revenue. Net cash flow was negative ($44.0) million, which includes the pay down of $159.9 million of long-term debt and $8.7 million for the stock buyback.

Fourth Quarter Highlights

  • Revenue was $268.4 million, a decrease of 5.9 percent from the $285.2 million in the third quarter 2017 and an increase of 15.7 percent from the $232.1 million in the fourth quarter 2016;
  • GAAP gross profit was a record $96.4 million, which compares to $96.3 million in the third quarter 2017 and $67.3 million in the fourth quarter 2016;
  • GAAP gross profit margin was 35.9 percent, compared to 33.8 percent in the third quarter 2017 and 29.0 percent in the fourth quarter 2016;
  • GAAP net loss was ($30.7) million, or ($0.62) per diluted share, compared to net income of $14.5 million, or $0.29 per diluted share, in the third quarter 2017 and net income of $1.3 million, or $0.03 per diluted share, in the fourth quarter 2016;
  • Non-GAAP adjusted net income was $21.6 million, or $0.42 per diluted share, compared to $22.6 million, or $0.45 per diluted share, in the third quarter 2017 and $7.7 million, or $0.15 per diluted share, in the fourth quarter 2016;
  • Excluding $3.0 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP diluted earnings per share would have increased by $0.06 per diluted share;
  • Repurchased 300,000 shares of common stock totaling approximately $8.7 million; and
  • Achieved record cash flow from operations of $74.8 million, and $45.5 million free cash flow, including $29.3 million of capital expenditures. Net cash flow was a positive $2.6 million, which includes the pay down of $57.8 million of long-term debt.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “2017 marked a milestone year for Diodes in which we reached our goal of achieving $1 billion in annual revenue combined with the achievement of record revenue and gross profit as well as increased market share. Our solid results reflect continued strength across all of our geographies and target end markets as well as growth from our Pericom products. In fact, we reached record revenue levels in our automotive, industrial and communications end markets, which served as the primary growth drivers in 2017.

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