Diodes Incorporated Reports Second Quarter 2016 Financial Results

Achieves Record Revenue and Gross Profit

PLANO, Texas — (BUSINESS WIRE) — August 9, 2016 — 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 second quarter ended June 30, 2016.

Second Quarter Highlights

  • Revenue was a record $236.6 million, increasing 6.2 percent from the $222.7 million in the first quarter 2016 and 7.8 percent from the $219.5 million in the second quarter 2015;
  • Gross profit was a record $74.8 million, compared to $64.2 million in the first quarter 2016 and $69.4 million in the second quarter 2015;
  • Gross profit margin was 31.6 percent, compared to 28.8 percent in the first quarter 2016 and 31.6 percent in the second quarter 2015;
  • GAAP net income was $5.8 million, or $0.12 per diluted share, compared to a GAAP net loss of $1.7 million, or ($0.04) per share, in the first quarter 2016 and GAAP net income of $15.1 million, or $0.31 per diluted share, in the second quarter 2015;
  • Non-GAAP adjusted net income was $9.8 million, or $0.20 per diluted share, compared to $5.9 million, or $0.12 per diluted share, in first quarter 2016 and $16.6 million, or $0.34 per diluted share, in second quarter 2015;
  • Excluding $3.0 million, net of tax, non-cash share-based compensation expense, GAAP and non-GAAP adjusted net income would have increased by $0.06 per diluted share; and
  • Achieved $16.4 million of cash flow from operations, and $0.9 million of free cash flow, including $15.5 million of capital expenditures. Net cash flow was ($44.5) million, which includes the pay down of $40 million of long-term debt.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “Our second quarter results reflect strong performance across our business, highlighted by the achievement of record revenue and gross profit dollars. The growth was driven by an approximately 7 percent sequential increase in Diodes’ core business, with a modest 1 percent increase in revenue from Pericom. Our industrial market revenue was higher in the quarter reflecting increased sales in both North America and Europe. Revenue from our automotive market also had another solid quarter of growth as this end market continues to outpace the average growth rate of the Company.

“In addition, we achieved a 140 basis point sequential improvement in non-GAAP gross margin, due primarily to increased utilization at our manufacturing facilities and improved product mix. We also continued to generate solid cash flow during the quarter, which enabled us to pay down $40 million of long-term debt, or a total of $73 million since the end of the third quarter 2015. It took approximately three years to pay off the debt from our BCD Semiconductor acquisition, and we anticipate a similar timeframe for Pericom due to Diodes’ strong cash flow generation.

“As we look to the third quarter, we expect revenue to grow 5.6 percent sequentially at the mid-point, representing $250 million in a quarterly revenue run rate, which is an important milestone toward achieving our goal of $1 billion in annual revenue. Additionally, gross margin is expected to improve another 90 basis points at the mid-point of our guidance range of 32.5 percent, with operating expenses decreasing further as a percentage of sales. We are beginning to see improvements in the general market environment and anticipate a more typical seasonal cycle going into the quarter.”

Second Quarter 2016

Revenue for the second quarter 2016 was a record $236.6 million, increasing 6.2 percent from the $222.7 million in the first quarter 2016 and 7.8 percent from the $219.5 million in the second quarter 2015.

Gross profit for the second quarter 2016 reached a record $74.8 million, or 31.6 percent of revenue, compared to the first quarter 2016 of $64.2 million, or 28.8 percent of revenue and the second quarter 2015 of $69.4 million, or 31.6 percent of revenue. The sequential increase in gross profit margin was due primarily to increased capacity utilization and improved product mix.

GAAP operating expenses for the second quarter 2016 were $63.5 million, or 26.9 percent of revenue, and $58.6 million, or 24.8 percent of revenue, on a non-GAAP basis, which excludes $4.9 million of transaction, retention, amortization of acquisition-related intangible asset expenses and employee award costs. This compares to GAAP operating expenses of $62.8 million, or 28.2 percent of revenue, in the first quarter 2016, or 25.5 percent on a non-GAAP basis.

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