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Diodes Incorporated Reports Fourth Quarter and Fiscal 2012 Financial Results
Solid Fourth Quarter Performance with Improved Margins; Agrees to Acquire BCD Semiconductor
Fourth Quarter Highlights
- Agreed to acquire
BCD Semiconductor Manufacturing Limited (“BCD”) for approximately$151 million in cash (BCD 2012 revenue$143 million , net income$8 million ); - Revenue was
$163.3 million , an increase of 14.0 percent over the$143.3 million reported in the fourth quarter of 2011, and a decrease of 2.0 percent from the$166.6 million in the third quarter of 2012; - Gross profit was
$43.2 million , compared to$35.5 million in the fourth quarter of 2011 and$43.6 million in the third quarter of 2012; - Gross profit margin was 26.5 percent, compared to 24.8 percent in the fourth quarter 2011 and 26.2 percent in the third quarter of 2012;
- Operating expenses were
$39.7 million or 24.3 percent of revenue, which included approximately$1.5 million of BCD acquisition; excluding acquisition costs, non-GAAP adjusted operating expenses were$38.2 million , or 23.4 percent of revenue, slightly below the midpoint of the Company’s guidance. - GAAP net income was
$4.1 million , or$0.09 per diluted share, compared to fourth quarter 2011 of$3.1 million , or$0.07 per diluted share, and third quarter 2012 of$8.6 million , or$0.18 per diluted share; - Non-GAAP adjusted net income was
$6.2 million , or$0.13 per diluted share, compared to fourth quarter 2011 of$4.0 million , or$0.09 per diluted share, and third quarter 2012 of$9.5 million , or$0.20 per diluted share; - Excluding
$2.4 million of share-based compensation expense, both GAAP and non-GAAP adjusted net income would have increased by$0.05 per diluted share; - Achieved
$16.4 million cash flow from operations, negative($11.1) million net cash primarily due to$16 million paid to acquire Power Analog Microelectronics (“PAM”), and free cash flow was a$1.1 million , which included$15.3 million of capital expenditures. Capital expenditures included$2.1 million associated with theChengdu assembly test facility construction; - Completed acquisition of PAM; and
- Completed
$300 million Revolving Credit Line.
Commenting on the results, Dr.
“To further capitalize on market expansion opportunities and improve leverage through select acquisitions, we also recently announced the proposed acquisition of BCD Semiconductor, which we expect will greatly enhance our analog product portfolio by expanding our product offerings for standard linear and AC/DC solutions for switch-mode power supply chargers and adaptors. Combining manufacturing synergies and BCD’s established local market position in
Business Outlook
Dr. Lu concluded, “As we look to the first quarter of 2013, we are expecting a slightly better than seasonal quarter with revenue ranging between
Revenue for the fourth quarter of 2012 was
Gross profit for the fourth quarter of 2012 was
Income taxes for the fourth quarter of 2012 was
Fourth quarter 2012 GAAP net income was
Non-GAAP adjusted net income for the fourth quarter of 2012 was
Three Months Ended | |||
December 31, 2012 | |||
unaudited | |||
GAAP net income | $ | 4,075 | |
GAAP diluted earnings per share | $ | 0.09 | |
Adjustments to reconcile GAAP net income | |||
to Non-GAAP adjusted net income: | |||
Amortization of acquisition related intangible assets | 1,131 | ||
Acquisition costs | 959 | ||
Non-GAAP adjusted net income | $ | 6,165 | |
Non-GAAP adjusted diluted earnings per share | $ | 0.13 | |
See the tables below for further details of the reconciliation.
Included in fourth quarter 2012 GAAP and non-GAAP adjusted net income was approximately
EBITDA, which represents earnings before net interest expense, income tax, depreciation and amortization, for the fourth quarter of 2012 was
For the fourth quarter of 2012, cash flow from operations was
As of
Fiscal 2012
For the fiscal year 2012, revenue was
Non-GAAP adjusted net income for fiscal 2012 was
Twelve Months Ended | ||||
December 31, 2012 | ||||
unaudited | ||||
GAAP net income | $ | 24,152 | ||
GAAP diluted earnings per share | $ | 0.51 | ||
Adjustments to reconcile GAAP net income | ||||
to Non-GAAP adjusted net income: | ||||
Amortization of acquisition related intangible assets | 3,682 | |||
Gain on sale of assets | (2,717 | ) | ||
Acquisition costs | 959 | |||
Non-GAAP adjusted net income | $ | 26,076 | ||
Non-GAAP adjusted diluted earnings per share | $ | 0.56 | ||
See the tables below for further details of the reconciliation.
Included in fiscal 2012 GAAP and non-GAAP adjusted net income was approximately
EBITDA, which represents earnings before net interest expense, income tax provision, depreciation and amortization, for fiscal 2012 was
For the year ended
Conference Call
Diodes will host a conference call on
About
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. Such statements include statements regarding our expectation that: to further capitalize on market expansion opportunities and improve leverage through select acquisitions, we also recently announced the proposed acquisition of BCD Semiconductor, which we expect will greatly enhance our analog product portfolio by expanding our product offerings for standard linear and AC/DC solutions for switch-mode power supply chargers and adaptors; combining manufacturing synergies and BCD’s established local market position in
Recent news releases, annual reports and
DIODES INCORPORATED AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | ||||||||||||||||
(unaudited) |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
NET SALES | $ | 163,287 | $ | 143,313 | $ | 633,806 | $ | 635,251 | ||||||||
COST OF GOODS SOLD | 120,040 | 107,818 | 472,220 | 441,554 | ||||||||||||
Gross profit | 43,247 | 35,495 | 161,586 | 193,697 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Selling, general and administrative | 28,661 | 22,585 | 101,363 | 89,974 | ||||||||||||
Research and development | 9,295 | 6,876 | 33,761 | 27,231 | ||||||||||||
Amortization of acquisition related intangible assets | 1,721 | 1,095 | 5,122 | 4,503 | ||||||||||||
Gain on sale of assets | - | - | (3,556 | ) | - | |||||||||||
Total operating expenses | 39,677 | 30,556 | 136,690 | 121,708 | ||||||||||||
Income from operations | 3,570 | 4,939 | 24,896 | 71,989 | ||||||||||||
OTHER INCOME (EXPENSES) | ||||||||||||||||
Interest income | 194 | 175 | 778 | 1,024 | ||||||||||||
Interest expense | (307 | ) | (116 | ) | (876 | ) | (3,139 | ) | ||||||||
Amortization of debt discount | - | - | - | (6,032 | ) | |||||||||||
Gain (loss) on securities carried at fair value | 3,724 | 296 | 7,100 | (1,039 | ) | |||||||||||
Other | (561 | ) | (1,236 | ) | (1,091 | ) | 861 | |||||||||
Total other income (expenses) | 3,050 | (881 | ) | 5,911 | (8,325 | ) | ||||||||||
Income before income taxes and noncontrolling interest | 6,620 | 4,058 | 30,807 | 63,664 | ||||||||||||
INCOME TAX PROVISION | 2,842 | 245 | 4,825 | 10,157 | ||||||||||||
NET INCOME | 3,778 | 3,813 | 25,982 | 53,507 | ||||||||||||
Less: NET INCOME attributable to noncontrolling interest | 297 | (698 | ) | (1,830 | ) | (2,770 | ) | |||||||||
NET INCOME attributable to common stockholders | $ | 4,075 | $ | 3,115 | $ | 24,152 | $ | 50,737 | ||||||||
EARNINGS PER SHARE attributable to common stockholders | ||||||||||||||||
Basic | $ | 0.09 | $ | 0.07 | $ | 0.53 | $ | 1.12 | ||||||||
Diluted | $ | 0.09 | $ | 0.07 | $ | 0.51 | $ | 1.09 | ||||||||
Number of shares used in computation | ||||||||||||||||
Basic | 46,011 | 45,425 | 45,780 | 45,202 | ||||||||||||
Diluted | 46,900 | 46,599 | 46,899 | 46,713 | ||||||||||||
Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”
DIODES INCORPORATED AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME | ||||||||||||
(in thousands, except per share data) |
||||||||||||
(unaudited) |
||||||||||||
For the fiscal year ended December 31, 2012: |
||||||||||||
Operating |
Other |
Income Tax |
Net Income |
|||||||||
GAAP | $ | 24,152 | ||||||||||
Earnings per share (GAAP) | ||||||||||||
Diluted | $ | 0.51 | ||||||||||
Adjustments to reconcile net income | ||||||||||||
to adjusted net income: | ||||||||||||
Amortization of acquisition related intangible assets | 5,122 | - | (1,440 | ) | 3,682 | |||||||
Gain on sale of assets | (3,452 | ) | - | 735 | (2,717 | ) | ||||||
Acquisition costs | 1,475 | - | (516 | ) | 959 | |||||||
Adjusted (Non-GAAP) | $ | 26,076 | ||||||||||
Diluted shares used in computing | ||||||||||||
earnings per share | 46,899 | |||||||||||
Adjusted earnings per share (Non-GAAP) | ||||||||||||
Diluted | $ | 0.56 | ||||||||||
Note: Included in GAAP and non-GAAP adjusted net income was
DIODES INCORPORATED AND SUBSIDIARIES | ||||||||||
CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME | ||||||||||
(in thousands, except per share data) |
||||||||||
(unaudited) |
||||||||||
For the fiscal year ended December 31, 2011: |
||||||||||
Operating |
Other |
Income Tax |
Net Income | |||||||
GAAP | $ | 50,737 | ||||||||
Earnings per share (GAAP) | ||||||||||
Diluted | $ | 1.09 | ||||||||
Adjustments to reconcile net income | ||||||||||
to adjusted net income: | ||||||||||
Amortization of acquisition related intangible assets | 4,503 | (1,184 | ) | 3,319 | ||||||
Amortization of debt discount | 6,032 | (2,111 | ) | 3,921 | ||||||
Adjusted (Non-GAAP) | $ | 57,977 | ||||||||
Diluted shares used in computing | ||||||||||
earnings per share | 46,713 | |||||||||
Adjusted earnings per share (Non-GAAP) | ||||||||||
Diluted | $ | 1.24 | ||||||||
Note: Included in GAAP and non-GAAP adjusted net income was
DIODES INCORPORATED AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME | ||||||||||
(in thousands, except per share data) |
||||||||||
(unaudited) |
||||||||||
For the three months ended December 31, 2012: |
||||||||||
Operating |
Other |
Income Tax |
Net Income | |||||||
GAAP | $ | 4,075 | ||||||||
Earnings per share (GAAP) | ||||||||||
Diluted | $ | 0.09 | ||||||||
Adjustments to reconcile net income | ||||||||||
to adjusted net income: | ||||||||||
Amortization of acquisition related intangible assets | 1,721 | - | (590 | ) | 1,131 | |||||
Acquisition costs | 1,475 | - | (516 | ) | 959 | |||||
Adjusted (Non-GAAP) | $ | 6,165 | ||||||||
Diluted shares used in computing | ||||||||||
earnings per share | 46,900 | |||||||||
Adjusted earnings per share (Non-GAAP) | ||||||||||
Diluted | $ | 0.13 | ||||||||
Note: Included in GAAP and non-GAAP adjusted net income was approximately
DIODES INCORPORATED AND SUBSIDIARIES | |||||||||||
CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME – Cont. | |||||||||||
(in thousands, except per share data) |
|||||||||||
(unaudited) |
|||||||||||
For the three months ended December 31, 2011: |
|||||||||||
Operating |
Other |
Income Tax |
Net Income | ||||||||
GAAP | $ | 3,115 | |||||||||
Earnings per share (GAAP) | |||||||||||
Diluted | $ | 0.07 | |||||||||
Adjustments to reconcile net income | |||||||||||
to adjusted net income: | |||||||||||
Amortization of acquisition related intangible assets | 1,095 | - | (230 | ) | 865 | ||||||
Adjusted (Non-GAAP) | $ | 3,980 | |||||||||
Diluted shares used in computing | |||||||||||
earnings per share | 46,599 | ||||||||||
Adjusted earnings per share (Non-GAAP) | |||||||||||
Diluted | $ | 0.09 | |||||||||
Note: Included in GAAP and non-GAAP adjusted net income was approximately
ADJUSTED NET INCOME (Non-GAAP)
This measure consists of generally accepted accounting principles (“GAAP”) net income, which is then adjusted solely for the purpose of adjusting for amortization of acquisition related intangible assets, gain on sale of assets, acquisition costs and amortization of debt discount, as discussed below. Excluding gain on sale of assets and acquisition costs provides investors with a better depiction of the Company’s operating results and provides a more informed baseline for modeling future earnings expectations. Excluding the amortization of acquisition related intangible assets and amortization of debt discount allows for comparison of the Company’s current and historic operating performance. The Company excludes the above listed items to evaluate the Company’s operating performance, to develop budgets, to determine incentive compensation awards and to manage cash expenditures. Presentation of the above non-GAAP measures allows investors to review the Company’s results of operations from the same viewpoint as the Company’s management and Board of Directors. The Company has historically provided similar non-GAAP financial measures to provide investors an enhanced understanding of its operations, facilitate investors’ analyses and comparisons of its current and past results of operations and provide insight into the prospects of its future performance. The Company also believes the non-GAAP measures are useful to investors because they provide additional information that research analysts use to evaluate semiconductor companies. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results and may differ from measures used by other companies. The Company recommends a review of net income on both a GAAP basis and non-GAAP basis be performed to get a comprehensive view of the Company’s results. The Company provides a reconciliation of GAAP net income to non-GAAP adjusted net income.
Amortization of acquisition related intangible assets – The Company excluded the amortization of its acquisition related intangible assets including developed technologies and customer relationships. The fair value of the acquisition related intangible assets, which was allocated to the assets through purchase accounting, is amortized using straight-line methods which approximate the proportion of future cash flows estimated to be generated each period over the estimated useful lives of the applicable assets. The Company believes the exclusion of the amortization expense of acquisition related assets is appropriate as 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 the amortization expense as there is significant variability and unpredictability across other companies with respect to this expense.
Gain on sale of assets – The Company excluded the gain recorded for the sale assets. During the first quarter 2012, the Company sold an intangible asset located in
Acquisition costs – The Company incurred costs associated with entering into an agreement and plan of merger with
Amortization of debt discount – The Company excluded the amortization of debt discount on its 2.25% Convertible Senior Notes (“Notes”). This amortization was excluded from management’s assessment of the Company’s core operating performance. Although the amortization of debt discount is recurring in nature, the expected life of the Notes is five years as that is the earliest date in which the Notes can be put back to the Company at par value. The amortization period ended
Adjusted Earnings per Share (Non-GAAP) - This non-GAAP financial measure is the portion of the Company’s GAAP net income assigned to each share of stock, excluding amortization of acquisition related intangible assets, gain on sale of assets, acquisition costs and amortization of debt discount as described above. Excluding gain on sale of assets, and acquisition costs provides investors with a better depiction of the Company’s operating results and provides a more informed baseline for modeling future earnings expectations, as described in further detail above. Excluding the amortization of acquisition related intangible assets and amortization of debt discount allows for comparison of the Company’s current and historic operating performance, as described in further detail above. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results and may differ from measures used by other companies. The Company recommends a review of diluted earnings per share on both a GAAP basis and non-GAAP basis be performed to obtain a comprehensive view of the Company’s results. Information on how these share calculations are made is included in the reconciliation table provided.
ADJUSTED OPERATING EXPENSES (Non-GAAP)
This measure consists of generally accepted accounting principles (“GAAP”) operating expenses, which is then adjusted solely for the purpose of adjusting for acquisition costs. Excluding acquisition costs provides investors with a better depiction of the Company’s operating results and provides a more informed baseline for modeling future earnings expectations. Presentation of the above non-GAAP measures allows investors to review the Company’s results of operations from the same viewpoint as the Company’s management and Board of Directors. The Company has historically provided similar non-GAAP financial measures to provide investors an enhanced understanding of its operations, facilitate investors’ analyses and comparisons of its current and past results of operations and provide insight into the prospects of its future performance. The Company also believes the non-GAAP measures are useful to investors because they provide additional information that research analysts use to evaluate semiconductor companies. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results and may differ from measures used by other companies. The Company recommends a review of operating expenses on both a GAAP basis and non-GAAP basis be performed to get a comprehensive view of the Company’s results.
Three Months Ended | ||||
December 31, 2012 | ||||
unaudited | ||||
GAAP operating expenses | $ | 39,677 | ||
Adjustments to reconcile GAAP operating expenses | ||||
to non-GAAP adjusted operating expenses: | ||||
Acquisition costs | (1,475 | ) | ||
Non-GAAP adjusted operating expenses | $ | 38,202 | ||
CASH FLOW ITEMS
Free cash flow (FCF) (Non-GAAP)
FCF for the fiscal and fourth quarter of 2012 is a non-GAAP financial measure, which is calculated by taking cash flow from operations less capital expenditures. For fiscal 2012, the amount was
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA
EBITDA (Non-GAAP)
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 measures, in evaluating our operating performance compared to that of other companies in our industry because 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. 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 | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Net income (GAAP) | $ | 4,075 | $ | 3,115 | |||
Plus: | |||||||
Interest expense, net | 113 | (59 | ) | ||||
Income tax provision | 2,842 | 245 | |||||
Depreciation and amortization | 17,072 | 16,382 | |||||
EBITDA (Non-GAAP) | $ | 24,102 | $ | 19,683 | |||
Twelve Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Net income (GAAP) | $ | 24,152 | $ | 50,737 | |||
Plus: | |||||||
Interest expense, net (1) | 98 | 8,147 | |||||
Income tax provision | 4,825 | 10,157 | |||||
Depreciation and amortization | 64,193 | 61,431 | |||||
EBITDA (Non-GAAP) | $ | 93,268 | $ | 130,472 | |||
(1) Includes
DIODES INCORPORATED AND SUBSIDIARIES | ||||||
CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||
ASSETS | ||||||
(in thousands) |
||||||
December 31, | December 31, | |||||
2012 | 2011 | |||||
CURRENT ASSETS | unaudited | |||||
Cash and cash equivalents | $ | 157,121 | $ | 129,510 | ||
Accounts receivable, net | 152,073 | 132,408 | ||||
Inventories | 153,293 | 140,337 | ||||
Deferred income taxes, current | 9,995 | 5,450 | ||||
Prepaid expenses and other | 18,928 | 19,093 | ||||
Total current assets | 491,410 | 426,798 | ||||
DEFERRED INCOME TAXES, non-current | 36,819 | 26,863 | ||||
PROPERTY, PLANT AND EQUIPMENT, net | 243,296 | 225,393 | ||||
OTHER ASSETS | ||||||
Goodwill | 87,359 | 67,818 | ||||
Intangible assets, net | 44,337 | 24,197 | ||||
Other | 16,842 | 21,995 | ||||
Total assets | $ | 920,063 | $ | 793,064 |
DIODES INCORPORATED AND SUBSIDIARIES | ||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||||
LIABILITIES AND EQUITY | ||||||||
(in thousands, except share data) |
||||||||
December 31, | December 31, | |||||||
2012 | 2011 | |||||||
CURRENT LIABILITIES | unaudited | |||||||
Lines of credit and short-term debt | $ | 7,629 | $ | 8,000 | ||||
Accounts payable | 64,072 | 66,063 | ||||||
Accrued liabilities and other current liabilities | 41,139 | 30,793 | ||||||
Income tax payable | 678 | 4,855 | ||||||
Total current liabilities | 113,518 | 109,711 | ||||||
LONG-TERM DEBT, net of current portion | ||||||||
Long-term borrowings | 44,131 | 2,857 | ||||||
CAPITAL LEASE OBLIGATIONS, net of current portion | 789 | 1,082 | ||||||
OTHER LONG-TERM LIABILITIES | 41,185 | 30,699 | ||||||
Total liabilities | 199,623 | 144,349 | ||||||
COMMITMENTS AND CONTINGENCIES | - | - | ||||||
EQUITY | ||||||||
Diodes Incorporated 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; | ||||||||
46,010,815 and 45,432,252 issued and outstanding at December 31, 2012 and | ||||||||
December 31, 2011, respectively | 30,674 | 30,423 | ||||||
Additional paid-in capital | 280,571 | 263,455 | ||||||
Retained earnings | 399,796 | 375,644 | ||||||
Accumulated other comprehensive loss | (33,856 | ) | (35,762 | ) | ||||
Total Diodes Incorporated stockholders' equity | 677,185 | 633,760 | ||||||
Noncontrolling interest | 43,255 | 14,955 | ||||||
Total equity | 720,440 | 648,715 | ||||||
Total liabilities and equity | $ | 920,063 | $ | 793,064 |
Source:
Company Contact:
Diodes Incorporated
Laura Mehrl
Director of Investor Relations
P: 972-987-3959
E: laura_mehrl@diodes.com
or
Investor Relations Contact:
Shelton Group
Leanne Sievers
EVP, Investor Relations
P: 949-224-3874
E: lsievers@sheltongroup.com