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Diodes Incorporated Reports Fourth Quarter and Year-End 2002 Financial Results
-- 2002 Revenue Increases 24.3% to $115.8 Million -- 2002 Net Income Rises to $5.8 Million, or $0.65 Per Diluted Share
Diodes Incorporated (Nasdaq: DIOD), a leading manufacturer and supplier of high quality discrete semiconductors, today reported financial results for the fourth quarter and year ended December 31, 2002.
Diodes 2002 Highlights: -- Revenue increases 24.3% from FY 2001 and 12.7% from Q4 2001 -- Gross margin percentage improves 780 basis points to 23% for 2002 -- Net income of $5.8 million, or $0.65 per diluted share, up from $124,000, or $0.01 per diluted share last year -- Generated over $19 million in cash flow from operations -- Debt reduced by $14.5 million, while unused credit facilities exceeded $30 million
Revenues for the fourth quarter were $28.7 million, a 12.7% increase from fourth quarter 2001 revenues of $25.4 million, but a 5% sequential decrease from third quarter 2002 revenues. Fourth quarter net income increased to $2.3 million, as compared to a loss of $76,000 for the same period last year and net income of $1.8 million for the third quarter of 2002. Diluted earnings per share increased to $0.25 for the fourth quarter as compared to a loss of $0.01 for the same quarter last year and $0.20 in the third quarter of 2002.
Total revenues for the year 2002 increased 24.3% to $115.8 million from $93.2 million for the year 2001. Net income for year 2002 was $5.8 million, or $0.65 per diluted share, as compared to $124,000, or $0.01 per diluted share, for year 2001.
C.H. Chen, President and CEO of Diodes Incorporated said, "We are pleased to report a year of superior performance in 2002, with strong revenue growth, meaningful improvements in profitability and significant cash flow generation. In what continues to be a challenging market for semiconductors, we achieved our 12th consecutive year of profitability and we again continued to outperform the industry. For the year, income from operations increased to $8.8 million due to the success of our new, higher-margin discrete products, expanding market penetration, and tight cost discipline."
"In the coming years, Diodes, Inc. will continue to focus on positioning the Company as an innovator and performance leader in discrete technologies and on capturing emerging market opportunities. We plan to continue to expand our customer base and establish a stronger foothold in the growing Far East marketplace. We will continue to introduce new, higher-margin, differentiated products and look to expand our product offerings into adjacent technologies to increase revenue and profitability."
Diodes' revenue growth was driven by the Far East market, where a combination of increased demand from the consumer electronics sector and better sales and management capabilities throughout the region helped to boost unit sales. In 2002, the Far East market accounted for 48% of the Company's total sales, up from 45% in 2001.
Total unit sales grew 25% in 2002 as demand for semiconductor products improved. However, sequentially for the fourth quarter, unit sales increased a modest 4% and the Company experienced some pricing pressure. Average selling prices (ASPs) in the fourth quarter for core discrete products decreased 3% sequentially and 4% from the same quarter last year, while ASPs decreased 8% for the year.
New products accounted for a record 9% of sales in the fourth quarter, up from 5% a year ago. New products combined with increased capacity utilization at both our China and North America manufacturing facilities led to year-over-year margin improvements. For the fourth quarter, the Company's gross profit margin was 25.3%, compared to 14.1% in the same period last year. For year 2002, Diodes gross profit margin was 23.0%, up from 15.2% in year 2001.
Despite a major expansion of Diodes' sales organization, particularly in Asia, during 2002, SG&A expenses were reduced as a percentage of sales to $16.3 million, or 14.1% of sales, as compared to $13.7 million, or 14.7% of sales in 2001 due to continued expense controls. For the quarter, SG&A represented 13.4% of sales, as compared to 14.5% of sales in the comparable quarter last year.
Research and development spending increased to $1.5 million for the year ended December 31, 2002, as compared to $592,000 in 2001, as the Company continues to invest in developing leading next-generation products.
With the SBM1040 Schottky Barrier Rectifier, the Company launched the groundbreaking POWERMITE(R)3 series, the first of many new product lines introduced in 2002. With its compact profile and significant performance advantages, the SBM1040 is ideal for the escalating mobile device market that depends on compact, energy-efficient devices. Another launch in 2002 was the UDZ series, the first of the next-generation discrete technology breakthroughs from Diodes-FabTech, and the first to capitalize on the Company's innovative new high-precision zener diode process for developing sub-miniature SOT and SOD surface-mount packages.
"Building a product development platform was one of the primary drivers of our acquisition of FabTech at the end of 2000," commented Mr. Chen. "In the past two years, we have seen that strategy pay off in a stream of innovative devices and proprietary technology that delivers greater value to our customers and provides higher margins for Diodes. In 2002, we introduced a record number of products and this momentum continues to build as we strengthen our pipeline of new products for niche and high-volume end markets."
Diodes continued to improve its financial position, generating positive operating cash flow of over $19 million in 2002, while paying down $11 million in long-term debt and $3.5 million on its revolving credit facilities. At December 31, 2002, the Company had $7.3 million in cash and cash equivalents, $18.5 million in long-term debt, and $57.7 million in shareholders' equity.
Mr. Chen concluded, "We have worked hard to deliver value to our customers and shareholders and are pleased with the progress made in 2002. During the year, we made major strides on our strategic goal of repositioning Diodes from a commodity player into an emerging technology leader for discrete devices. We expanded our geographic reach and market penetration, improved our profitability and rebuilt and strengthened our balance sheet. We have also demonstrated our ability to acquire and integrate a complementary business, enhancing both our near-term profitability and long-term growth strategy."
"While we expect 2003 will continue to provide challenges and opportunities, we think that we are well-positioned to continue to outperform the industry and to establish Diodes as the company our customers turn to for discrete semiconductor devices. Over the course of 2003 we expect Diodes' revenue and net income will continue to improve. Despite the uneven pace of the semiconductor industry recovery, we are projecting that first quarter 2003 revenues will be in line or show modest improvement as compared to fourth quarter 2002."
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, Missouri. The Company's ISO-9000 corporate sales, marketing, engineering and logistics headquarters is located in Southern California. For further information, visit the Company's website at http://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,
2001 2002 2001 2002
Net sales $ 25,434,000 $ 28,671,000 $ 93,210,000 $115,828,000
Cost of goods
sold 21,839,000 21,411,000 79,031,000 89,218,000
Gross profit 3,595,000 7,260,000 14,179,000 26,610,000
Research and
development
expenses 142,000 241,000 592,000 1,472,000
Selling, general
and
administrative
expenses 3,679,000 3,852,000 13,712,000 16,300,000
Total
operating
expenses 3,821,000 4,093,000 14,304,000 17,772,000
Income from
operations (226,000) 3,167,000 (125,000) 8,838,000
Other income
(expense)
Interest income 10,000 7,000 59,000 38,000
Interest expense (404,000) (295,000) (2,133,000) (1,221,000)
Other 276,000 264,000 778,000 196,000
(118,000) (24,000) (1,296,000) (987,000)
Income (loss)
before income
taxes and
minority
interest (344,000) 3,143,000 (1,421,000) 7,851,000
Income tax
benefit
(provision) 318,000 (780,000) 1,769,000 (1,729,000)
Income (loss)
before minority
interest (26,000) 2,363,000 348,000 6,122,000
Minority interest
in joint
venture
earnings (50,000) (101,000) (224,000) (320,000)
Net income (loss) $ (76,000) $ 2,262,000 $ 124,000 $ 5,802,000
Earnings (loss)
per share
Basic $ (0.01) $ 0.28 $ 0.02 $ 0.71
Diluted $ (0.01) $ 0.25 $ 0.01 $ 0.65
Weighted average
shares
outstanding
Basic 8,149,426 8,206,636 8,144,090 8,184,599
Diluted 8,620,762 8,970,672 8,880,603 8,864,993
Net sales and cost of goods sold for the three- and twelve-months
ended December 31, 2001 have been reclassified to conform to the 2002
financial statement presentation. Gross profit and net income were
unaffected.
The accompanying notes are an integral part of these financial
statements.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
December 31, December 31,
2001 2002
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 8,103,000 $ 7,284,000
Accounts receivable
Customers 16,250,000 19,159,000
Related parties 1,486,000 3,382,000
17,736,000 22,541,000
Less: Allowance for
doubtful receivables 343,000 353,000
17,393,000 22,188,000
Inventories 17,813,000 15,711,000
Deferred income taxes, current 4,368,000 4,375,000
Prepaid expenses, income taxes
and other current assets 1,266,000 2,132,000
Total current assets 48,943,000 51,690,000
PROPERTY, PLANT AND EQUIPMENT,
at cost, net of accumulated
depreciation and amortization 44,925,000 44,693,000
DEFERRED INCOME TAXES, non-current 3,672,000 2,450,000
OTHER ASSETS
Goodwill 5,090,000 5,090,000
Other 628,000 1,084,000
TOTAL ASSETS $ 103,258,000 $ 105,007,000
The accompanying notes are an integral part of these financial
statements.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 31,
2001 2002
(Unaudited)
CURRENT LIABILITIES
Line of credit $ 6,503,000 $ 3,025,000
Accounts payable
Trade 6,098,000 8,802,000
Related parties 3,149,000 3,050,000
Accrued liabilities 5,062,000 9,203,000
Current portion of long-term debt
Related party 2,500,000 2,500,000
Other 5,833,000 3,368,000
Current portion of capital lease
obligations -- 157,000
Total current liabilities 29,145,000 30,105,000
LONG-TERM DEBT, net of current portion
Related party 7,500,000 6,875,000
Other 13,664,000 5,708,000
CAPITAL LEASE OBLIGATIONS,
net of current portion -- 2,495,000
MINORITY INTEREST IN JOINT VENTURE 1,825,000 2,145,000
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; 9,227,664 and 9,292,764
shares issued at December 31, 2001
and December 31, 2002, respectively 6,151,000 6,195,000
Additional paid-in capital 7,310,000 8,060,000
Retained earnings 39,882,000 45,684,000
53,343,000 59,939,000
Less:
Treasury stock
-- 1,075,672 shares of common
stock, at cost 1,782,000 1,782,000
Accumulated other comprehensive loss 437,000 478,000
2,219,000 2,260,000
Total stockholders' equity 51,124,000 57,679,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 103,258,000 $ 105,007,000
The accompanying notes are an integral part of these financial
statements.
CONTACT: Diodes, Incorporated
Carl Wertz, 805/446-4800
or
Coffin Communications Group
Crocker Coulson, 818/789-0100
crocker.coulson@coffincg.com
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