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Diodes, Incorporated Reports Fourth Quarter 2003 Results with Record Revenue; New Product Sales, Strong Markets Drive 52% Year-over-Year Net Income Growth
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Feb. 3, 2004--Diodes, Incorporated (Nasdaq:DIOD), a leading manufacturer and supplier of high-quality discrete semiconductors, today reported financial results for the fourth quarter and fiscal year 2003 ended December 31, 2003.
Fourth Quarter Highlights:
-- Revenue increased 36.8% year-over-year and 12.2% sequentially
to a record $39.2 million
-- New product revenue grew to 11.5% of sales, from 8.4% in the
year-ago quarter
-- Gross margin improved 330 basis points sequentially to 29.5%
-- Net income increased 52% to $3.4 million, or $0.23 per share,
up from $2.3 million, or $0.17 per share, in 4Q02
Revenues for the fourth quarter of 2003 were a record $39.2 million, a sequential increase of 12.2% from the third quarter of 2003, and an increase of 36.8% from the fourth quarter of 2002. Net income for the quarter increased 52% to $3.4 million, compared to $2.3 million for the three months ended December 31, 2002, and rose 34.1% sequentially. Diluted earnings per share were $0.23 for the fourth quarter of 2003, as compared to $0.17 for the same period last year.
For the full year 2003, the Company earned $10.1 million, or $0.70 per share, as revenues grew 18.2% to a record $136.9 million, as compared to net income of $5.8 million, or $0.44 per share, on revenues of $115.8 million for 2002.
Commenting on the quarter, C.H. Chen, President and CEO of Diodes, Incorporated, said, "We are very pleased to deliver another quarter and year of outstanding top- and bottom-line results. Sales of new value-added products pushed Diodes' share of the addressable market to an all time high and greatly expanded gross margins. For the full year 2003, Diodes' revenues grew at more than two times the Semiconductor Industry Association's 2003 growth of 8.1% for the overall discrete market."
Diodes' revenue growth in the fourth quarter was driven by strong sales in both Asia and North America, which accounted for 57% and 41% of total revenues, respectively, and vigorous demand for the Company's new industry-leading space- and power-saving subminiature devices. Sales to the personal computing end-markets were particularly strong in the quarter.
"During the fourth quarter, adoption of our most advanced discretes and arrays broadened from Asia to the North American marketplace," Chen continued. "In Asia, we experienced very strong demand from the computing segment, where Diodes' performance devices are on the latest-generation notebooks, PDAs and flat-panel displays. And we continued to make solid progress in Europe during the quarter, with our first mobile handset design wins for a top-tier European OEM."
Overall, sales of new products in the quarter grew to 11.5% of total revenue, up from 8.4% in the fourth quarter of 2002. While total fourth quarter new product revenue was in-line sequentially, thus off slightly as a percentage of revenues from the 13% reported in the third quarter, the overall sales mix continued to be very favorable, with arrays, performance Schottky, and performance Zener selling very well. "Based on our very active product development initiatives in recent quarters, we expect new product sales to continue to grow in 2004 towards our goal of 20% of revenue. We have heightened our emphasis on building our core intellectual property and processes that will enable us to bring whole new families of proprietary devices to market," Chen added.
Gross profit for the fourth quarter of 2003 increased to $11.6 million, or 29.5% of sales, compared to $9.2 million, or 26.2% of sales, in the third quarter of this year and $7.4 million, or 25.9%, in the fourth quarter of 2002. The sequential increase of 330 basis points was due to a higher capacity utilization rate at both Diodes-China and Diodes-FabTech, a stable pricing environment, and higher selling prices from the Company's new differentiated products.
For the quarter, SG&A expenses were $5.5 million, as compared to $3.8 million in the comparable quarter last year. In 2003, the Company has been expanding its sales and marketing footprint in both Asia and Europe and is providing increased selling incentives associated with the higher revenue. Therefore, SG&A expenses as a percentage of sales trended higher in the year to 14.0% in the fourth quarter from 13.1% in the prior-year quarter. Research and development expenses climbed to $0.7 million, or 1.8% of revenue, from $0.2 million, or 0.8%, in the fourth quarter of 2002, as the Company continues to increase its focus on bringing new products to market.
Operating margins, negatively impacted by a non-cash $0.7 million reserve for asset valuation write-downs reflecting obsolete equipment that had not fully depreciated, decreased slightly to 11.7% in the fourth quarter, compared to 12.1% generated in the fourth quarter of 2002. Operating income for the full year 2003 increased to $13.9 million, or 10.1% of sales, compared to $8.9 million, or 7.7%, for 2002.
Interest expense declined to $0.2 million in the fourth quarter, from $0.3 million in the year-ago quarter, aided by a $5.8 million reduction in long-term debt, as well as lower interest rates.
Capital expenditures and depreciation expense for the current quarter were $4.0 million and $2.9 million, respectively, while full-year 2003 capital expenditures and depreciation were $15.7 million and $11.1 million, respectively. Capital expenditures are expected to run $3 million-$5 million in the first quarter of 2004, and depending upon market demand, $14 million-$17 million for the full year as new products are brought into production.
At December 31, 2003, Diodes had $12.8 million in cash and cash equivalents, $27.2 million in working capital, $12.6 million in long-term debt, $8.5 million outstanding on its revolving credit line, $30.7 million in available credit facilities, and $71.5 million in shareholders' equity. Cash flow from operations was $5.1 million for the current quarter and $17.6 million for the year.
Mr. Chen concluded, "Demand for discrete semiconductors is continuing to show strength globally. We believe that our disciplined focus on our key strategic initiatives has positioned Diodes to outpace the growth of the overall discrete market during the current recovery and well into the future. As we finished 2003 with three consecutive quarters of record revenues our outlook for 2004 is positive.
"Entering the first quarter, shipments and orders for delivery are strong in both Asia and North America and our book-to-bill ratio is above one. Order cycles are lengthening and inventory at our distributors remains low. Despite our record fourth quarter revenue, we expect first quarter revenues to be in-line to slightly up sequentially, and gross margins should run in the 28-30% range, with continued earnings per share improvement."
Conference Call
Diodes, Incorporated will hold its fourth quarter conference call for all interested persons at 8 a.m. PST (11 a.m. EST) today to discuss its results. This conference call will be broadcast live over the Internet and can be accessed by all interested parties on the investor section of Diodes' website at www.diodes.com. To listen to the live call, please go to the Investor section of Diodes' website and click on the Conference Call link at least fifteen 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 90 days.
About Diodes, Incorporated
Diodes, Incorporated (Nasdaq:DIOD) is a leading manufacturer and supplier of high-quality discrete semiconductor products, primarily to the communications, computing, industrial, consumer electronics, and automotive markets. The Company operates three Far East subsidiaries, Diodes-China (QS-9000 and ISO-14001 certified) in Shanghai, Diodes-Taiwan (ISO-9000 certified) in Taipei, and Diodes-Hong Kong. Diodes-China's manufacturing focus is on subminiature surface-mount devices destined for wireless devices, notebook, flat-panel display, digital camera, mobile handset, set-top box, DC-to-DC conversion, and automotive applications, among others. Diodes-Taiwan is our Asia-Pacific sales, logistics, and distribution center. Diodes-Hong Kong covers sales, warehouse, and logistics functions. The Company's 5" wafer foundry, Diodes-FabTech (QS-9000 certified), specializes in Schottky products and is located just outside Kansas City, Mo. The Company's ISO-9001:2000 corporate sales, marketing, engineering, and logistics headquarters is located in Southern California. For further information, including SEC filings, visit the Company's website at 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. Potential risks and uncertainties include, but are not limited to, such factors as fluctuations in product demand, the introduction of new products, the Company's ability to maintain customer and vendor relationships, technological advancements, impact of competitive products and pricing, growth in targeted markets, risks of foreign operations, and other information detailed from time to time in the Company's filings with the United States Securities and Exchange Commission.
Recent news releases, annual reports, and SEC filings are available at the Company's website: http://www.diodes.com. Written requests may be sent directly to the Company, or they may be e-mailed to: diodes-fin@diodes.com.
DIODES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------- ---------------------------
2002 2003 2002 2003
------------ ------------ ------------- -------------
Net sales $28,665,000 $39,202,000 $115,821,000 $136,905,000
Cost of goods
sold 21,238,000 27,643,000 89,045,000 100,377,000
------------ ------------ ------------- -------------
Gross profit 7,427,000 11,559,000 26,776,000 36,528,000
Selling, general
and
administrative
expenses 3,762,000 5,490,000 16,155,000 19,586,000
Research and
development
expenses 241,000 691,000 1,472,000 2,049,000
Impairment of
fixed assets -- 700,000 -- 1,000,000
Loss (gain) on
disposal of
fixed assets (46,000) 93,000 217,000 37,000
------------ ------------ ------------- -------------
Total
operating
expenses 3,957,000 6,974,000 17,844,000 22,672,000
Operating
income 3,470,000 4,585,000 8,932,000 13,856,000
Other income
(expense)
Interest
expense, net (288,000) (189,000) (1,183,000) (860,000)
Other (39,000) (32,000) 102,000 (5,000)
------------ ------------ ------------- -------------
(327,000) (221,000) (1,081,000) (865,000)
Income from
operations
before income
taxes and
minority
interest 3,143,000 4,364,000 7,851,000 12,991,000
Income tax
provision (780,000) (775,000) (1,729,000) (2,460,000)
------------ ------------ ------------- -------------
Income from
operations
before minority
interest 2,363,000 3,589,000 6,122,000 10,531,000
Minority
interest in
joint venture
earnings (101,000) (151,000) (320,000) (436,000)
------------ ------------ ------------- -------------
Net income $2,262,000 $3,438,000 $5,802,000 $10,095,000
============ ============ ============= =============
Earnings per
share
Basic $0.18 $0.27 $0.47 $0.79
Diluted $0.17 $0.23 $0.44 $0.70
============ ============ ============= =============
Weighted average
shares
outstanding
Basic 12,309,954 12,954,320 12,276,899 12,730,808
Diluted 13,456,008 14,932,341 13,297,490 14,406,054
============ ============ ============= =============
DIODES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
December 31, December 31,
2002 2003
---------------- ----------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $7,284,000 $12,847,000
Accounts receivable
Customers 19,387,000 27,010,000
Related parties 3,138,000 3,938,000
---------------- ----------------
22,525,000 30,948,000
Less: Allowance for
doubtful receivables 353,000 375,000
---------------- ----------------
22,172,000 30,573,000
Inventories 14,916,000 16,164,000
Deferred income taxes, current 4,338,000 5,547,000
Prepaid expenses, income taxes
and other current assets 2,228,000 2,702,000
---------------- ----------------
Total current assets 50,938,000 67,833,000
PROPERTY, PLANT AND EQUIPMENT, at
cost, net of accumulated
depreciation and amortization 44,693,000 47,893,000
DEFERRED INCOME TAXES, non-current 3,205,000 1,816,000
OTHER ASSETS
Goodwill 5,090,000 5,090,000
Other 1,084,000 1,163,000
---------------- ----------------
TOTAL ASSETS $105,010,000 $123,795,000
================ ================
DIODES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 31,
2002 2003
---------------- ----------------
(Unaudited)
CURRENT LIABILITIES
Line of credit $3,025,000 $8,488,000
Accounts payable
Trade 9,039,000 14,029,000
Related parties 3,361,000 3,453,000
Accrued liabilities 8,693,000 8,715,000
Current portion of long-term
debt
Related party 2,500,000 2,500,000
Other 3,333,000 3,333,000
Current portion of capital lease
obligations 157,000 161,000
---------------- ----------------
Total current
liabilities 30,108,000 40,679,000
LONG-TERM DEBT, net of current
portion
Related party 6,250,000 3,750,000
Other 6,333,000 3,000,000
CAPITAL LEASE OBLIGATIONS, net of
current portion 2,495,000 2,334,000
MINORITY INTEREST IN JOINT VENTURE 2,145,000 2,582,000
STOCKHOLDERS' EQUITY
Class A convertible preferred
stock - par value $1.00 per
share; 1,000,000 shares
authorized; no shares issued
and outstanding -- --
Common stock - par value $0.66
2/3 per share; 30,000,000
shares authorized; 13,939,146
and 14,627,284 shares issued at
December 31, 2002, and December
31, 2003, respectively 6,195,000 6,502,000
Additional paid-in capital 8,060,000 11,192,000
Retained earnings 45,684,000 55,779,000
---------------- ----------------
59,939,000 73,473,000
Less:
Treasury stock - 1,613,508
shares of common stock, at
cost 1,782,000 1,782,000
Accumulated other
comprehensive loss 478,000 241,000
---------------- ----------------
2,260,000 2,023,000
Total stockholders'
equity 57,679,000 71,450,000
---------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $105,010,000 $123,795,000
================ ================
CONTACT: Diodes, Incorporated
Carl Wertz, 805-446-4800
carl_wertz@diodes.com
or
CCG
Crocker Coulson, 818-789-0100
crocker.coulson@ccgir.com
SOURCE: Diodes, Incorporated
