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Diodes Incorporated Reports First Quarter 2020 Financial Results
Strong Automotive Market Share Gains Result in Sequential and Year-over-Year Growth in Automotive Revenue
First Quarter Overview
- Revenue was
$280.7 million as compared to$301.2 million in the fourth quarter 2019; - GAAP gross profit was
$95.8 million as compared to$109.4 million in the fourth quarter 2019; - GAAP gross profit margin was 34.1 percent as compared to 36.3 percent in the fourth quarter 2019;
- GAAP net income was
$20.2 million , or$0.38 per diluted share, as compared to$47.2 million , or$0.90 per diluted share, in the fourth quarter 2019; - Non-GAAP adjusted net income was
$23.9 million , or$0.46 per diluted share, as compared to$33.8 million , or$0.65 per diluted share, in the fourth quarter 2019; - Excluding
$3.7 million , net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by$0.07 per diluted share; - EBITDA was
$52.9 million , or 18.9 percent of revenue, compared to$88.3 million , or 29.3 percent of revenue, in the fourth quarter 2019; and - Achieved cash flow from operations of
$53.7 million and$39.5 million free cash flow, including$14.2 million of capital expenditures. Net cash flow was a positive$11.4 million , which includes the pay-down of$16.6 million of long-term debt.
Commenting on the results, Dr.
“Highlighting the quarter was our continued growth in the automotive end market, in which revenue grew sequentially and year-over-year to 11% of revenue as a result of our increased content gains across an expanding customer base, including a significant new design win in
“We continue to prioritize the safety, health and well-being of Diodes’ employees as we navigate these unprecedented times. The diversification and strength of our business and long-standing relationships with customers continue to serve us well as we focus on carefully managing those factors that are within our control. We currently expect to deliver second quarter revenue and gross margin slightly better than the first quarter at the mid-point, which is notable given the increased uncertainty resulting from COVID-19 and the significant softness in the automotive market.”
First Quarter 2020
Revenue for first quarter 2020 was
GAAP gross profit for the first quarter 2020 was
GAAP operating expenses for first quarter 2020 were
First quarter 2020 GAAP net income was
First quarter 2020 non-GAAP adjusted net income was
The following is an unaudited summary reconciliation of GAAP net income to non-GAAP adjusted net income and per share data, net of tax (in thousands, except per share data):
Three Months Ended | ||||
GAAP net income |
|
|||
GAAP diluted earnings per share |
|
|||
Adjustments to reconcile net income to non-GAAP net income: | ||||
Amortization of acquisition-related intangible assets |
3,456 |
|||
Acquisition related costs |
325 |
|||
Non-GAAP net income |
|
|||
Non-GAAP diluted earnings per share |
|
Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”
(See the reconciliation tables of GAAP net income to non-GAAP adjusted net income near the end of this release for further details.)
Included in first quarter 2020 GAAP net income and non-GAAP adjusted net income was approximately
EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in the first quarter 2020 was
For first quarter 2020, net cash provided by operating activities was
Balance Sheet
As of
The results announced today are preliminary and unaudited, as they are subject to the Company finalizing its closing procedures and customary quarterly review by the Company's independent registered public accounting firm. As such, these results are subject to revision until the Company files its Form 10-Q for the quarter ending
Business Outlook
Purchase accounting adjustments related to amortization of acquisition-related intangible assets of
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 containing forward-looking words such as “expect,” “anticipate,” “aim,” “estimate,” and variations thereof, including without limitation statements, whether direct or implied, regarding expectations of revenue growth, market share gains, increase in gross margin and increase in gross profits in 2020 and beyond; that for the first quarter of 2020, we expect revenue to be approximately
DIODES INCORPORATED AND SUBSIDIARIES |
|||||||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS |
|||||||||
(unaudited) |
|||||||||
(in thousands, except per share data) |
|||||||||
Three Months Ended |
|||||||||
|
|||||||||
|
2020 |
|
|
2019 |
|
||||
Net sales |
$ |
280,717 |
|
$ |
302,293 |
|
|||
Cost of goods sold |
|
184,875 |
|
|
189,882 |
|
|||
Gross profit |
|
95,842 |
|
|
112,411 |
|
|||
Operating expenses | |||||||||
Selling, general and administrative |
|
42,215 |
|
|
43,688 |
|
|||
Research and development |
|
23,678 |
|
|
22,170 |
|
|||
Amortization of acquisition-related intangible assets |
|
4,221 |
|
|
4,484 |
|
|||
Gain on disposal of fixed assets |
|
(124 |
) |
|
(54 |
) |
|||
Total operating expense |
|
69,990 |
|
|
70,288 |
|
|||
Income from operations |
|
25,852 |
|
|
42,123 |
|
|||
Other income (expense) | |||||||||
Interest income |
|
273 |
|
|
875 |
|
|||
Interest expense |
|
(1,245 |
) |
|
(2,145 |
) |
|||
Foreign currency (loss)gain, net |
|
75 |
|
|
(64 |
) |
|||
Other income |
|
1 |
|
|
1,245 |
|
|||
Total other expense |
|
(896 |
) |
|
(89 |
) |
|||
Income before income taxes and noncontrolling interest |
|
24,956 |
|
|
42,034 |
|
|||
Income tax provision |
|
4,556 |
|
|
10,298 |
|
|||
Net income |
|
20,400 |
|
|
31,736 |
|
|||
Less net (income) loss attributable to noncontrolling interest |
|
(232 |
) |
|
(20 |
) |
|||
Net income attributable to common stockholders |
$ |
20,168 |
|
$ |
31,716 |
|
|||
Earnings per share attributable to common stockholders: | |||||||||
Basic |
$ |
0.39 |
|
$ |
0.63 |
|
|||
Diluted |
$ |
0.38 |
|
$ |
0.62 |
|
|||
Number of shares used in earnings per share computation: | |||||||||
Basic |
|
51,335 |
|
|
50,398 |
|
|||
Diluted |
|
52,422 |
|
|
51,462 |
|
Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”
DIODES INCORPORATED AND SUBSIDIARIES |
|||||||||
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME |
|||||||||
(in thousands, except per share data) |
|||||||||
(unaudited) |
|||||||||
For the three months ended |
|||||||||
Operating Expenses |
Income Tax Provision |
Net Income | |||||||
GAAP net income |
$ |
20,168 |
|||||||
GAAP diluted earnings per share |
$ |
0.38 |
|||||||
Adjustments to reconcile net income to non-GAAP net income: | |||||||||
Amortization of acquisition-related intangible assets |
4,221 |
(765 |
) |
|
3,456 |
||||
Acquisition related costs |
408 |
(83 |
) |
|
325 |
||||
Non-GAAP net income |
$ |
23,949 |
|||||||
Diluted shares used in computing earnings per share |
|
52,422 |
|||||||
Non-GAAP diluted earnings per share |
$ |
0.46 |
Note: Included in GAAP and non-GAAP 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 |
|||||||||
Operating |
|
Income Tax |
|
Net Income |
|||||
Per-GAAP |
$ |
31,716 |
|||||||
Diluted earnings per share (Per-GAAP) |
$ |
0.62 |
|||||||
Adjustments to reconcile net income to non-GAAP net income: | |||||||||
Amortization of acquisition-related intangible assets |
4,484 |
(810 |
) |
|
3,674 |
||||
Non-GAAP |
$ |
35,390 |
|||||||
Diluted shares used in computing earnings per share |
|
51,462 |
|||||||
Non-GAAP diluted earnings per share |
$ |
0.69 |
|||||||
Note: Included in GAAP and non-GAAP net income was approximately |
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
The Company’s financial statements present net income and earnings per share that are calculated using accounting principles generally accepted in
Detail of non-GAAP adjustments
Amortization of acquisition-related intangible assets – The Company excluded this item, including amortization of developed technologies and customer relationships. The fair value of the acquisition-related intangible assets is amortized using straight-line methods which approximate the proportion of future cash flows estimated to be generated each period over the estimated useful life of the applicable assets. The Company believes that exclusion of this item is appropriate because 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 this item because there is significant variability and unpredictability among companies with respect to this expense.
Acquisition related costs – The Company excluded expenses associated with the acquisition of Lite-On Semiconductor, which consisted of advisory, legal and other professional and consulting fees. These costs were expensed as they were incurred and as services were received, and in which the corresponding tax adjustments were made for the non-deductible portions of these expenses. The Company believes the exclusion of the acquisition related costs provides investors with a more accurate reflection of costs likely to be incurred in the absence of an unusual event such as an acquisition and facilitates comparisons with the results of other periods that may not reflect such costs.
CASH FLOW ITEMS
Free cash flow (FCF) (Non-GAAP)
FCF for the first quarter of 2020 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the first quarter of 2020, FCF was
CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA
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 and non-GAAP measures, in evaluating our operating performance compared to that of other companies in our industry. 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. For example, our EBITDA takes into account all net interest expense, income tax provision, depreciation and amortization without taking into account any amounts attributable to noncontrolling interest. 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 | ||||||
|
2020 |
|
2019 |
|||
Net income (per-GAAP) |
$ |
20,168 |
$ |
31,716 |
||
Plus: | ||||||
Interest expense, net |
|
972 |
|
1,270 |
||
Income tax provision |
|
4,556 |
|
10,298 |
||
Depreciation and amortization |
|
27,237 |
|
26,641 |
||
EBITDA (non-GAAP) |
$ |
52,933 |
$ |
69,925 |
DIODES INCORPORATED AND SUBSIDIARIES |
||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS |
||||||||
(in thousands) |
||||||||
|
|
|
||||||
|
2020 |
|
|
|
2019 |
|
||
(unaudited) |
|
(audited) |
||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents |
$ |
269,516 |
|
$ |
258,390 |
|
||
Short-term investments |
|
2,859 |
|
|
4,825 |
|
||
Accounts receivable, net of allowances of |
|
243,746 |
|
|
260,322 |
|
||
Inventories |
|
232,184 |
|
|
236,472 |
|
||
Prepaid expenses and other |
|
48,141 |
|
|
49,950 |
|
||
Total current assets |
|
796,446 |
|
|
809,959 |
|
||
Property, plant and equipment, net |
|
456,122 |
|
|
469,574 |
|
||
Deferred income tax |
|
16,994 |
|
|
17,516 |
|
||
|
149,666 |
|
|
141,318 |
|
|||
Intangible assets, net |
|
121,218 |
|
|
119,523 |
|
||
Other long-term assets |
|
79,820 |
|
|
81,494 |
|
||
Total assets |
$ |
1,620,266 |
|
$ |
1,639,384 |
|
||
Liabilities | ||||||||
Current liabilities: | ||||||||
Line of credit |
$ |
13,397 |
|
$ |
13,342 |
|
||
Accounts payable |
|
112,075 |
|
|
122,148 |
|
||
Accrued liabilities |
|
88,327 |
|
|
100,571 |
|
||
Income tax payable |
|
15,642 |
|
|
16,156 |
|
||
Current portion of long-term debt |
|
34,676 |
|
|
33,105 |
|
||
Total current liabilities |
|
264,117 |
|
|
285,322 |
|
||
Long-term debt, net of current portion |
|
46,011 |
|
|
64,401 |
|
||
Deferred tax liabilities |
|
16,348 |
|
|
16,333 |
|
||
Other long-term liabilities |
|
111,501 |
|
|
120,545 |
|
||
Total liabilities |
|
437,977 |
|
|
486,601 |
|
||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock - par value |
|
- |
|
|
- |
|
||
Common stock - par value |
|
35,289 |
|
|
35,111 |
|
||
Additional paid-in capital |
|
427,543 |
|
|
427,262 |
|
||
Retained earnings |
|
810,126 |
|
|
789,958 |
|
||
|
(38,457 |
) |
|
(37,768 |
) |
|||
Accumulated other comprehensive loss |
|
(109,472 |
) |
|
(108,139 |
) |
||
Total stockholders' equity |
|
1,125,029 |
|
|
1,106,424 |
|
||
Noncontrolling interest |
|
57,260 |
|
|
46,359 |
|
||
Total equity |
|
1,182,289 |
|
|
1,152,783 |
|
||
Total liabilities and stockholders' equity |
$ |
1,620,266 |
|
$ |
1,639,384 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200511005811/en/
Company Contact:
Director of Investor Relations
P: 972-987-3959
E: laura_mehrl@diodes.com
Investor Relations Contact:
President, Investor Relations
P: 949-224-3874
E: lsievers@sheltongroup.com
Source: