Press Release
Back to Press Room
Diodes Incorporated Reports Record Second Quarter Results
WESTLAKE VILLAGE, Calif., Aug 02, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Diodes Incorporated (Nasdaq: DIOD), a leading manufacturer and supplier of high-quality discrete and analog semiconductors, today reported record financial results for the second quarter ending June 30, 2006.
Second Quarter Highlights:
* Revenues increased 63% YOY and 12.4% sequentially to a record
$82.7 million.
* Gross profit increased 57% YOY and 13% sequentially to $27.4 million.
* Pro forma net income increased 68% YOY to a record $12.9 million,
or $0.45 per share, up from $7.7 million, or $0.32 per share, in the
second quarter of 2005, versus $0.38 in the first quarter of 2006.
* Net income increased 22% sequentially to $11.4 million, or $0.41 per
share, up from $9.3 million or $0.34 per share, in the first quarter
of 2006.
* Cash flow from operations increased 80% YOY to $18 million.
Revenues for the second quarter of 2006 increased 63.5% year-over-year, and 12.4% sequentially, to a record $82.7 million. Pro forma net income increased 68% year-over-year to a record $12.9 million, or $0.45 per share, up from $7.7 million, or $0.32 per share, in the second quarter of 2005, versus $0.38 in the first quarter of 2006. Pro forma results are included because under FAS 123(R), the Company began expensing stock options in the first quarter of 2006, and therefore, equivalent share-based compensation expense was not reflected in the 2005 periods. Pro forma net income and earnings per share exclude approximately $1.5 million in non-cash, net share-based compensation expense (see table for a reconciliation of the impact of pro forma net income to GAAP net income). Net income increased 22.3% sequentially to $11.4 million, or $0.41 per share, compared to $9.3 million, or $0.34 per share, in the first quarter of 2006.
For the first six months of 2006, revenues increased 58% to $156.3 million, compared to $99.2 million in the same period last year. Net income for the first half of 2006 was $20.7 million, or $0.74. Pro forma net income for the first half of 2006, which excludes $2.9 million of share-based compensation, increased 58% to $23.6 million, compared to $14.9 million in the same period in 2005. Pro forma earnings per share grew to $0.82 for the first six months of 2006, compared to $0.62, for the same period last year.
Commenting on the quarter, Dr. Keh-Shew Lu, President and CEO of Diodes Incorporated, said: "During the second quarter, Diodes' revenues and net income achieved new record highs, as we continued our long-term trend of significant year-over-year growth. Innovative new products like our new PowerDI(TM)323 platform are helping to drive customer demand and improve our margins. We are also very pleased with customer acceptance of our standard analog products, and expect to see continued margin expansion as we internalize a higher percentage of these products."
End-Markets
"Our strong second quarter top-line growth was driven by better than expected sales in the computer segment and customer uptake of our analog product line. We are extremely pleased at the positive customer reception to our broader product line following the acquisition of Anachip, resulting in attractive cross selling opportunities and new product development initiatives combining analog and discrete circuits. Our discrete market share rose to an all time high during the quarter, driven by a broad range of end equipment categories, including LCD monitors, wireless LAN and battery chargers. For the second quarter of 2006, computer and consumer electronics made up 36% and 35% of total sales, respectively, with telecom contributing a healthy 14%," commented Mark King, Sr. Vice President of Sales and Marketing.
"Asia contributed 70% of our second quarter revenues, with the help of better than expected sales in the computer segment and robust growth in our analog product line. At 26% of total revenues, North American sales exceeded expectations, with distributor point of sale achieving record highs. Sales in Europe contributed 4% of total sales, reflecting a sales increase of 138% from the second quarter of 2005," said Mr. King. "We experienced gains in all regions during the second quarter for our discrete products, and in Asia, we reached an all-time high in market share."
Design Wins and New Products
Design activity remained very strong in the second quarter. On the discrete side, the Company saw robust interest in its PowerDI, Array (standard and customer specific) and sub-miniature platforms.
"In regards to our analog products, demand for our switchers and LDO's was robust. We received several wins on over fifty accounts in the second quarter, from a broad list of end equipment. Notable discrete wins included those for our recently announced PowerDI(TM)323 Schottky device on the most recent digital audio platform and for our PowerDI(TM)5 in multiple notebook platforms. On the analog side, notable wins included those for switchers in multiple LCD TV and settop box designs, portable and combo DVD players, as well as wireless LANs," Mr. King commented.
As mentioned above, Diodes recently launched the PowerDI(TM)323 product platform, with the release of new Schottky Rectifiers and Zener products. This platform features increased miniaturization and energy efficiency and is among the smallest power packages ever introduced to the power rectifier market. Applications include portable media and entertainment devices, mobile phones, and digital cameras and camcorders. Diodes, Inc. plans to expand this package platform to include TVS devices and additional Schottky products by the end of 2006.
Sales of new products reached a record 24.9% of total sales, compared to 15.7% a year ago, and 23.3% last quarter, which represented growth including the contribution of the Anachip acquisition. New product revenue was driven by products in our small outline, QFN, and PD platforms, as well as our analog product lines. Diodes released 63 products covering 19 product families in the second quarter.
Additional Financial Highlights
Gross profit for the second quarter of 2006 increased 57% to $27.4 million, or 33.2% of revenue, compared to the same period last year. This increase in gross profit was due to improved product mix, increased sales volume, and efficient utilization of the Company's manufacturing capacity, as it progresses in moving production of analog products to its highly productive packaging facility.
For the quarter, SG&A expenses were $11.7 million or 14.2% of revenue, versus $7.2 million, or 14.2% of revenue, in the comparable quarter last year. Included in second quarter SG&A expenses were $1.4 million in non-cash, share-based compensation. For comparable purposes, excluding the share-based compensation, SG&A for the second quarter of 2006 would have been 12.4% of sales (see table for a reconciliation of the impact of share-based compensation expense to reported results).
Investment in research and development grew to $2.1 million, or 2.5% of revenue, compared to $850,000, or 1.7% of sales, in the second quarter of 2005.
Capital expenditures for the current quarter were $17 million and $27 million year to date. In the second quarter the Company purchased an office building in Taipei, Taiwan to accommodate and consolidate its operations relating to the tremendous growth of its Asia operations, including its newly acquired analog division. Excluding this non-production related $6 million building purchase, year-to-date capital expenditures were at approximately 13% of revenue, slightly ahead of its 10-12% full-year estimate. Depreciation expense for the quarter was $4.9 million and $9.6 million year to date.
At June 30, 2006, Diodes had $100 million in total cash and short-term investments, $140.9 million in working capital, $4.0 million in long-term debt and unused and available credit facilities of $45 million. For the first six months of 2006, shareholder equity increased 13.2% to $255 million.
Business Outlook
"Coming off our 5th consecutive record revenue performance, including our 12% sequential growth this quarter, and with a book-to-bill ratio above one, we currently expect to see sequential revenue growth in the 4-7% range, with comparable gross margins, for the third quarter of 2006. Over time, as we continue to introduce innovative new discrete and analog products and internalize packaging of our analog products, we expect to see gradual expansion in our gross margins," stated Dr. Lu. "We are very encouraged by the strong interest in our new value-added products and excited about the opportunities to continue to expand our growth horizons through customer- driven innovation.
Conference Call
Diodes Incorporated will hold its second quarter conference call for all interested persons at 8:00 a.m. Pacific Time (11 a.m. Eastern Time) on August 2, 2006 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 60 days.
About Diodes Incorporated
Diodes Incorporated (Nasdaq: DIOD) is a leading manufacturer and supplier of high-quality discrete and analog semiconductor products, primarily to the communications, computing, industrial, consumer electronics and automotive markets. The Company's corporate sales, marketing, engineering and logistics headquarters is located in Southern California, with two manufacturing facilities in Shanghai, China, a wafer fabrication plant in Kansas City, Missouri, engineering, sales, warehouse and logistics offices in Taipei, Taiwan and Hong Kong, and sales and support offices throughout the world. Diodes, Inc. recently acquired Anachip Corporation, a fabless analog IC company in Hsinchu Science Park, Taiwan.
Diodes, Inc.'s product focus is on subminiature surface-mount discrete devices, analog power management ICs and Hall-effect sensors all of which are widely used in end-user equipment such as TV/Satellite set top boxes, portable DVD players, datacom devices, ADSL modems, power supplies, medical devices, wireless notebooks, flat panel displays, digital cameras, mobile handsets, DC to DC conversion, Wireless 802.11 LAN access points, brushless DC motor fans, and automotive applications. For further information, including SEC filings, 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, availability of tax credits, and other information detailed from time to time in the Company's filings with the United States Securities and Exchange Commission.
CONTACT:
Carl Wertz, Chief Financial Officer, Diodes Incorporated
(805) 446-4800
e-mail: carl_wertz@diodes.com
or
Crocker Coulson, President, CCG Investor Relations,
(310) 231-8600, Ext. 103
e-mail: crocker.coulson@ccgir.com
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.
CONSOLIDATED CONDENSED INCOME STATEMENT and BALANCE SHEET FOLLOWS
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2006 2005 2006
Net sales $50,598,000 $82,712,000 $99,198,000 $156,301,000
Cost of goods
sold (1) 33,101,000 55,279,000 65,105,000 104,654,000
Gross profit 17,497,000 27,433,000 34,093,000 51,647,000
Selling and general
administrative 7,196,000 11,716,000 13,888,000 23,000,000
expenses (2)
Research and
development
expenses (3) 850,000 2,077,000 1,750,000 4,043,000
Loss (gain) on
disposal of fixed
assets -- -- (105,000) 120,000
Total operating
expenses 8,046,000 13,793,000 15,533,000 27,163,000
Income from
operations 9,451,000 13,640,000 18,560,000 24,484,000
Other income (expense)
Interest income 39,000 1,004,000 43,000 1,738,000
Interest expense (118,000) (133,000) (277,000) (273,000)
Other 12,000 12,000 (21,000) (195,000)
(67,000) 883,000 (255,000) 1,270,000
Income before income
taxes and minority
interest 9,384,000 14,523,000 18,305,000 25,754,000
Income tax
provision (4) (1,461,000) (2,885,000) (2,903,000) (4,575,000)
Income before
minority interest 7,923,000 11,638,000 15,402,000 21,179,000
Minority interest
in joint venture
earnings (258,000) (253,000) (497,000) (482,000)
Net income $7,665,000 $11,385,000 $14,905,000 $20,697,000
Earnings per share
Basic $0.35 $0.45 $0.69 $0.81
Diluted $0.32 $0.41 $0.62 $0.74
Number of shares
used in
computation
Basic 21,628,229 25,521,144 21,478,374 25,434,880
Diluted (5) 24,314,477 27,994,117 24,107,135 27,861,940
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO PRO FORMA NET INCOME
Pro forma consolidated statements of income are presented because we use
it as an additional measure of our operating performance. Pro forma net
income and pro forma net income per share should not be considered as
alternatives to net income, earnings per share or other measures of
consolidated operations and cash flow data prepared in accordance with
accounting principles generally accepted in the United States of America,
as indicators of our operating performance, or as alternatives to cash
flow as a measure of liquidity. Pro forma consolidated statements of
income are intended to present our operating results, excluding items
described below, for the periods presented.
Pro forma net income
and earnings per share reconciliation
Three Months Ended Six Months Ended
June 30, June 30,
2005 2006 2005 2006
GAAP net income $7,665,000 $11,385,000 $14,905,000 $20,697,000
Pro forma
adjustments:
Share-based
compensation
expense
included in cost
of goods sold: -- 133,000 -- 266,000
Share-based
compensation
expense included
in selling and
general
administrative
expenses: -- 1,441,000 -- 2,757,000
Share-based
compensation
expense included
in research and
development
expenses: -- 146,000 -- 293,000
Total
share-based
compensation
expense -- 1,720,000 -- 3,316,000
Income tax benefit
related to
share-based
compensation -- 202,000 -- 407,000
Pro forma
net income $7,665,000 $12,903,000 $14,905,000 $23,606,000
Diluted shares
used in
computing
Pro forma
earnings
per share 24,314,477 27,994,117 24,107,135 27,861,940
Incremental
shares
considered to
be outstanding: -- 768,919 -- 790,187
Adjusted diluted
shares used in
computing
Pro forma
earnings
per share 24,314,477 28,763,036 24,107,135 28,652,127
Pro forma earnings
per share
Basic $0.35 $0.51 $0.69 $0.93
Diluted $0.32 $0.45 $0.62 $0.82
1) For the quarter and six months ended June 30, 2006, includes $133,000
and $266,000 of share-based compensation expense, respectively.
2) For the quarter and six months ended June 30, 2006, includes $1,441,000
and $2,757,000 of share-based compensation expense, respectively.
3) For the quarter and six months ended June 30, 2006, includes $146,000
and $293,000 of share-based compensation expense, respectively.
4) For the quarter and six months ended June 30, 2006, includes $228,000
and $433,000 of income tax benefit related to share-based compensation
expense, respectively.
5) For the quarter and six months ended June 30, 2006, 804,745 and 821,528
fewer shares are considered to be outstanding under FAS123R,
respectively.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA
EBITDA represents earnings before net interest expense, income tax
provision, depreciation and amortization. Our management believes EBITDA
is useful to investors because it is frequently used by securities
analysts, investors and other interested parties in evaluating companies
in our industry. In addition, our management believes that EBITDA is
useful 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 and income taxes and the accounting
effects of capital spending, which items may vary for different companies
for reasons unrelated to overall operating performance. As a result, our
management uses EBITDA as a measure to evaluate the performance of our
business. However, EBITDA is not a recognized measurement under generally
accepted accounting principles, or 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 of other companies. Furthermore, EBITDA is not
intended to be a measure of free cash flow for our management's
discretionary use, as it does not consider certain cash requirements such
as a tax and debt service payments.
The following table provides a reconciliation of Net Income to EBITDA:
Three Months Ended
June 30,
(in thousands) 2005 2006
Net Income $7,665 $11,385
Plus:
Interest expense, net 79 871
Income tax provision 1,461 2,885
Depreciation and amortization 3,903 4,935
EBITDA $13,108 $20,076
Six Months Ended
June 30,
(in thousands) 2005 2006
Net Income $14,905 $20,697
Plus:
Interest expense, net 234 1,465
Income tax provision 2,894 4,575
Depreciation and amortization 7,813 9,608
EBITDA $25,846 $36,345
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
ASSETS
December 31, June 30,
2005 2006
CURRENT ASSETS (unaudited)
Cash and equivalents $73,288,000 $48,915,000
Short-term investments 40,348,000 51,417,000
Total cash and short-term
investments 113,636,000 100,332,000
Accounts receivable
Customers 48,348,000 57,885,000
Related parties 6,804,000 5,590,000
55,152,000 63,475,000
Less: Allowance for doubtful
receivables (534,000) (670,000)
54,618,000 62,805,000
Inventories 24,611,000 43,241,000
Deferred income taxes, current 2,541,000 3,432,000
Prepaid expenses and other current
assets 5,326,000 6,216,000
Total current assets 200,732,000 216,026,000
PROPERTY, PLANT AND EQUIPMENT, at cost,
net of accumulated depreciation and
amortization 68,930,000 88,988,000
DEFERRED INCOME TAXES, non current 8,466,000 7,540,000
OTHER ASSETS
Equity investment 5,872,000 --
Goodwill 5,090,000 24,564,000
Other 425,000 2,829,000
TOTAL ASSETS $289,515,000 $339,947,000
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30,
2005 2006
(unaudited)
CURRENT LIABILITIES
Line of credit $3,000,000 $4,861,000
Accounts payable
Trade 18,619,000 32,656,000
Related parties 7,921,000 11,535,000
Accrued liabilities 19,782,000 24,136,000
Current portion of long-term debt
Related party -- --
Other 4,621,000 1,870,000
Current portion of capital lease
obligations 138,000 139,000
Total Current Liabilities 54,081,000 75,197,000
LONG-TERM DEBT, net of current portion
Related party -- --
Other 4,865,000 4,043,000
CAPITAL LEASE OBLIGATIONS,
net of current portion 1,618,000 1,538,000
MINORITY INTEREST IN JOINT VENTURE 3,477,000 3,989,000
STOCKHOLDERS' EQUITY
Common stock - par value $0.66
2/3 per share; 30,000,000 shares
authorized; 25,258,119 and
25,541,588 shares issued at
December 31, 2005 and June 30, 2006,
respectively 16,839,000 17,059,000
Additional paid-in capital 94,664,000 103,078,000
Retained earnings 114,659,000 135,295,000
Less: 226,162,000 255,432,000
Accumulated other comprehensive
gain (loss) (688,000) (252,000)
Total Stockholders' equity 225,474,000 255,180,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 289,515,000 339,947,000
SOURCE Diodes Incorporated
Carl Wertz, Chief Financial Officer of Diodes Incorporated, +1-805-446-4800, carl_wertz@diodes.com; or Crocker Coulson, President of CCG Investor Relations, +1-310-231-8600 ext. 103, crocker.coulson@ccgir.com, for Diodes Incorporated
http://www.prnewswire.com
