diod-8k_20200511.htm
false DIODES INC /DEL/ 0000029002 0000029002 2020-05-11 2020-05-11

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 11, 2020

 

DIODES INCORPORATED

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

002-25577

95-2039518

(State or Other Jurisdiction
of Incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

 

 

4949 Hedgcoxe Road, Suite 200, Plano, TX 

75024

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (972) 987-3900

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $0.66 2/3

 

DIOD

 

The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 Emerging growth company  

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On May 11, 2020, Diodes Incorporated (the “Company”) issued a press release announcing its first quarter 2020 financial results. A copy of the press release is furnished as Exhibit 99.1.

In the press release, the Company utilizes financial measures and terms not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) in order to provide investors with an alternative method for assessing the Company’s operating results in a manner that enables investors to more thoroughly evaluate its current performance as compared to past performance. The Company also believes these non-GAAP measures provide investors with a more informed baseline for modeling the Company’s future financial performance. Management uses these non-GAAP measures for the same purpose. The Company believes that investors should have access to the same set of tools that management uses in analyzing results. 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 similar measures used by other companies. See Exhibit 99.1 for a description and reconciliation with GAAP of the non-GAAP measures used.

The information furnished in this Item 2.02, including the exhibit incorporated by reference, will not be treated as “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or into another filing under the Exchange Act, unless that filing expressly refers to specific information in this Report.

Item 7.01 Regulation FD Disclosure.

The press release furnished in Exhibit 99.1 also provides an update on the Company’s business outlook, that is intended to be within the safe harbor provided by the Private Securities Litigation Reform Act of 1995 (the “Act”) as comprising forward looking statements within the meaning of the Act.

The information furnished in this Item 7.01, including the exhibit incorporated by reference, will not be treated as “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act, or into another filing under the Exchange Act, unless that filing expressly refers to specific information in this Report.

 

Item 9.01. Financial Statements and Exhibits.

 

 

(d) Exhibits.

 

Exhibit Number

Description

99.1

Press Release dated May 11, 2020

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

Dated: May 11, 2020

 

DIODES INCORPORATED

 

 

 

 

 

By

 

/s/ Brett R. Whitmire

 

 

 

 

Brett R. Whitmire

 

 

 

 

Chief Financial Officer

 

diod-ex991_26.htm

Exhibit 99.1

 

 

 

Diodes Incorporated Reports First Quarter 2020 Financial Results

 

Strong Automotive Market Share Gains Result in Sequential and Year-over-Year Growth in Automotive Revenue

 

 

Plano, Texas – May 11, 2020 -- Diodes Incorporated (Nasdaq: DIOD) today reported its financial results for the first quarter ended March 31, 2020.

 

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. Keh-Shew Lu, President and Chief Executive Officer, stated,

“First quarter results were in-line with our original expectations and included the delayed start of our manufacturing production following the extended Chinese New Year holiday.  Our results further reflected the temporary closure of our U.K. wafer fabs in the late part of March in response to the global COVID-19 pandemic. Our operations in China have since gradually returned to full production, with our U.K. facilities also resuming full production as of today. Combined revenue in North America and Europe grew more than 12% sequentially, while revenue in Asia declined 12% because of slower than expected customer manufacturing manpower recovery due to the pandemic. With revenue being only slightly below typical seasonality and limited only by customer demand, our first quarter results serve as further testament to our long track record of successfully managing through challenging environments.

 

“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 Asia. Additionally, our Pericom IC products had the second highest revenue quarter since the 2015 acquisition due to strong demand in the computing end market for our products used in high-end servers, storage, data centers and notebooks. Our close


engagement with customers has enabled us to benefit from the increasing demand for these end equipment applications.

 

“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 $280.7 million, compared to $301.2 million in the fourth quarter 2019 and $302.3 million in the first quarter 2019.

 

GAAP gross profit for the first quarter 2020 was $95.8 million, or 34.1 percent of revenue, compared to the fourth quarter 2019 of $109.4 million, or 36.3 percent of revenue, and the first quarter 2019 of $112.4 million, or 37.2 percent of revenue.

 

GAAP operating expenses for first quarter 2020 were $70.0 million, or 24.9 percent of revenue, and on a non-GAAP basis were $65.4 million, or 23.3 percent of revenue, which excludes, $4.2 million of amortization of acquisition-related intangible asset expenses and $0.4 million acquisition-related costs. GAAP operating expenses in the fourth quarter 2019 were $48.1 million, or 16.0 percent of revenue, which included a $24.3 million pre-tax gain on land sales, and in the first quarter 2019 were $70.3 million, or 23.3 percent of revenue.

 

First quarter 2020 GAAP net income was $20.2 million, or $0.38 per diluted share, compared to GAAP net income of $47.2 million, or $0.90 per diluted share, in fourth quarter 2019 and GAAP net income of $31.7 million, or $0.62 per diluted share, in first quarter 2019.

 

First quarter 2020 non-GAAP adjusted net income was $23.9 million, or $0.46 per diluted share, which excluded, net of tax, $3.5 million of non-cash acquisition-related intangible asset amortization costs and $0.3 million of acquisition-related costs. This compares to non-GAAP adjusted net income of $33.8 million, or $0.65 per diluted share, in the fourth quarter 2019 and $35.4 million, or $0.69 per diluted share, in the first quarter 2019

 

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

 

 

 

 

 

March 31, 2020

 

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

 

 

 

 

3,456

 

 

 

 

 

 

 

 

Acquisition related costs

 

 

 

 

325

 

 

 

 

 

 

 

 

Non-GAAP net income

 

 

 

$

23,949

 

 

 

 

 

 

 

 

Non-GAAP diluted earnings per share

 

 

 

$

0.46

 

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 $3.7 million, net of tax, of non-cash share-based compensation expense.  Excluding share-based compensation expense, both GAAP earnings per share (“EPS”) and non-GAAP adjusted EPS would have increased by $0.07 per diluted share for first quarter 2020, $0.08 for fourth quarter 2019 and $0.07 for first quarter 2019.

 

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in the first quarter 2020 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 $69.9 million, or 23.1 percent of revenue, in the first quarter 2019. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

 

For first quarter 2020, net cash provided by operating activities was $53.7 million. Net cash flow was a positive $11.4 million, including $16.6 million pay-down of long-term debt. Free cash flow (a non-GAAP measure) was $39.5 million, which includes $14.2 million of capital expenditures.

 

Balance Sheet

As of March 31, 2020, the Company had approximately $272 million in cash, cash equivalents and short-term investments. Long-term debt (including the current portion) totaled approximately $80.7 million and working capital was approximately $532 million.

 

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 March 31, 2020.

 

Business Outlook

Dr. Lu concluded, “For the second quarter of 2020, we expect revenue to be approximately $283 million, plus or minus 3 percent. We expect GAAP gross margin to be 35.0 percent, plus or minus 1 percent.  Non-GAAP operating expenses, which are GAAP operating


expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 23.0 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $1.5 million. Our income tax rate is expected to be 18 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the second quarter are anticipated to be approximately 52.8 million.”

 

Purchase accounting adjustments related to amortization of acquisition-related intangible assets of $3.2 million, after tax, for Pericom and previous acquisitions are not included in these non-GAAP estimates.

Conference Call

Diodes will host a conference call on Monday, May 11, 2020 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its first quarter 2020 financial results. Investors and analysts may join the conference call by dialing 1-855-232-8957 and providing the confirmation code 8187119. International callers may join the teleconference by dialing +1-315-625-6979 and entering the same confirmation code at the prompt. A telephone replay of the call will be made available approximately two hours after the call and will remain available until May 18, 2020 at midnight Central Time. The replay number is 1-855-859-2056 with a pass code of 8187119. International callers should dial +1-404-537-3406 and enter the same pass code at the prompt. Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investors’ section of Diodes' website at http://www.diodes.com. To listen to the live call, please go to the investors’ section of Diodes’ website and click on the conference call link at least 15 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 approximately 90 days.

About Diodes Incorporated

Diodes Incorporated (Nasdaq: DIOD), a Standard and Poor’s SmallCap 600 and Russell 3000 Index company, delivers high-quality semiconductor products to the world’s leading companies in the consumer electronics, computing, communications, industrial, and automotive markets. We leverage our expanded product portfolio of discrete, analog, and mixed-signal products and leading-edge packaging technology to meet customers’ needs. Our broad range of application-specific solutions and solutions-focused sales, coupled with worldwide operations of 25 sites, including engineering, testing, manufacturing, and customer service, enables us to be a premier provider for high-volume, high-growth markets. For more information visit 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. 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 $285 million plus or minus 3.0 percent; we expect GAAP gross margin to be 34.5 percent, plus or minus 1 percent; non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 23.0 percent of revenue, plus or minus 1 percent; we expect net interest expense to be approximately $1.5 million; we expect our income tax rate to be 18 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the first quarter are anticipated to be approximately 52.8 million. Potential risks and uncertainties include, but are not limited to, such factors as: the risk that the COVID-19 pandemic may continue and have a material adverse effect on customer demand and staffing of our production, sales and administration facilities; the risk that such expectations may not be met; the risk that the expected benefits of acquisitions may not be realized or that


integration of acquired businesses may not continue as rapidly as we anticipate; the risk that we may not be able to consummate our previously announced acquisition of Lite-On Semiconductor Corporation (“LSC”) on the terms and in the time frame currently contemplated (including the risk that regulatory reviews may delay the acquisition or require significant revisions to the terms and conditions associated with the acquisition); the risk that the cost, expense, and diversion of management attention associated with the LSC acquisition may be greater than we currently expect; the risk that we may not be able to maintain our current growth strategy or continue to maintain our current performance, costs, and loadings in our manufacturing facilities; the risk that we may not be able to increase our automotive, industrial, or other revenue and market share; risks of domestic and foreign operations, including excessive operating costs, labor shortages, higher tax rates, and our joint venture prospects; the risks of cyclical downturns in the semiconductor industry and of changes in end-market demand or product mix that may affect gross margin or render inventory obsolete; the risk of unfavorable currency exchange rates; the risk that our future outlook or guidance may be incorrect; the risks of global economic weakness or instability in global financial markets; the risks of trade restrictions, tariffs, or embargoes; the risk that the coronavirus outbreak or other similar epidemics may harm our domestic or international business operations to a greater extent than we currently anticipate; the risk of breaches of our information technology systems; and other information, including the “Risk Factors” detailed from time to time in Diodes’ filings with the United States Securities and Exchange Commission.

 

Company Contact:

 

Investor Relations Contact:

Diodes Inc.

 

Shelton Group

Laura Mehrl

 

Leanne Sievers

Director of Investor Relations

 

President, Investor Relations

P: 972-987-3959

 

P: 949-224-3874

E: laura_mehrl@diodes.com

 

E: lsievers@sheltongroup.com

 

 

 

 

 

 

 

 

 

 

 



DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 

 

 

Three  Months Ended

 

 

 

March 31,

 

 

 

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 March 31, 2020:

 

 

 

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 $3.7 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP diluted earnings per share would have improved by $0.07 per share.

 

 

 



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 March 31, 2019:

 

 

 

Operating Expenses

 

 

Income Tax Provision

 

 

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 adjusted net income was approximately $3.5 million, net of tax, non-cash share-based compensation expense.  Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.07 per share.

 

 



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 the United States (“GAAP”). The Company’s management makes adjustments to the GAAP measures that it feels are necessary to allow investors and other readers of the Company’s financial releases to view the Company’s operating results as viewed by the Company’s management, board of directors and research analysts in the semiconductor industry. These non-GAAP measures are not prepared in accordance with, and should not be considered alternatives or necessarily superior to, GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names. The explanation of the adjustments made in the table above, are set forth below:

Detail of non-GAAP adjustments

 

Amortization of acquisition-related intangible assetsThe 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 $39.5 million, which represents the cash and cash equivalents that we are able to generate after taking into account cash outlays required to maintain or expand property, plant and equipment. FCF is important because it allows us to pursue opportunities to develop new products, make acquisitions and reduce debt.

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

 

 

 

March 31,

 

 

 

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)

 

 

March 31,

 

 

December 31,

 

 

 

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  $4,855 and $4,866  at

March 31, 2020 and December 31, 2019, respectively

 

 

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

 

Goodwill

 

 

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 $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;  51,450,808 and 51,206,969, issued and outstanding at March 31, 2020 and December 31, 2019,  respectively

 

 

35,289

 

 

 

35,111

 

Additional paid-in capital

 

 

427,543

 

 

 

427,262

 

Retained earnings

 

 

810,126

 

 

 

789,958

 

Treasury stock, at cost, 1,480,840 and 1,457,206  shares held as of March 31, 2020 and December 31, 2019, respectively

 

 

(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