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Diodes Incorporated Reports Fiscal 2011 and Fourth Quarter Financial Results
Achieves Record Revenue for 2011 and 21 Consecutive Years of Profitability
Year 2011 Highlights
-
Revenue increased to a record
$635.3 million , an increase of 3.6 percent over the$612.9 million in 2010; -
Gross profit was
$193.7 million compared to$224.9 million in 2010; - Gross margin was 30.5 percent compared to 36.7 percent in 2010;
-
GAAP net income was
$50.7 million , or$1.09 per diluted share, compared to$76.7 million , or$1.68 per diluted share in 2010; achieved 21 consecutive years of profitability; -
Non-GAAP adjusted net income was
$58.0 million , or$1.24 per diluted share, compared to$82.9 million , or$1.82 per diluted share in 2010; -
Excluding
$8.9 million of share-based compensation expense, both GAAP and non-GAAP adjusted net income would have increased by$0.19 per diluted share, the same amount per diluted share by which share-based compensation affected GAAP and non-GAAP adjusted net income in 2010; -
Achieved
$61.7 million cash flow from operations. Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted cash flow from operations was$77 million . Net cash flow was a negative($141.4) due to the retirement of the Convertible Senior Notes; and -
Free cash flow was negative
($19.3) million . Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted free cash flow was negative($4) million .
Fourth Quarter Highlights
-
Revenue was
$143.3 million , a decrease of 12.5 percent over the$163.8 million in the fourth quarter of 2010, and a decrease of 10.8 percent from the$160.6 million in the third quarter of 2011; -
Gross profit was
$35.5 million , compared to$62.6 million in the fourth quarter of 2010 and$45.2 million in the third quarter of 2011; - Gross profit margin was 24.8 percent, compared to 38.3 percent in the fourth quarter 2010 and 28.1 percent in the third quarter of 2011;
-
GAAP net income was
$3.1 million , or$0.07 per diluted share, compared to fourth quarter 2010 of$24.0 million , or$0.52 per diluted share, and third quarter 2011 of$10.0 million , or$0.21 per diluted share; -
Non-GAAP adjusted net income was
$4.0 million , or$0.09 per diluted share, compared to fourth quarter 2010 of$25.3 million , or$0.55 per diluted share, and third quarter 2011 of$12.1 million , or$0.26 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, the same amount per diluted share by which share-based compensation affected GAAP and non-GAAP adjusted net income in fourth quarter 2010; -
Achieved negative
($3.4) million cash flow from operations and$4.6 million net cash flow. Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted cash flow from operations was$12 million ; and -
Free cash flow was negative
($14.5) million . Excluding certain tax accounting adjustments related to the Convertible Senior Notes’ retirement, adjusted free cash flow was$0.5 million .
Commenting on the results, Dr.
“We are closely monitoring the market environment during the first
quarter of 2012 and are continuing to delay capital investments, except
for new product expansion and copper wire conversion. We have also
slowed the pace of the building construction of our
Business Outlook
Dr. Lu concluded, “The first quarter is typically a seasonally down
quarter for our business. However, we expect revenue to be better than
the normal seasonal pattern due to improved distributor order rates in
Fiscal 2011
For the fiscal year 2011, revenue increased to a record
Non-GAAP adjusted net income for 2011 was
Twelve Months Ended | ||||
December 31, 2011 | ||||
unaudited | ||||
GAAP net income | $ | 50,737 | ||
GAAP diluted earnings per share | $ | 1.09 | ||
Adjustments to reconcile GAAP net income | ||||
to Non-GAAP adjusted net income: | ||||
Amortization of debt discount | 3,921 | |||
Amortization of acquisition related intangible assets | 3,319 | |||
Non-GAAP adjusted net income | $ | 57,977 | ||
Non-GAAP adjusted diluted earnings per share | $ | 1.24 | ||
See the tables below for further details of the reconciliation.
Included in fiscal 2011 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 2011 was
For the year ended
Fourth Quarter 2011
Revenue for the fourth quarter of 2011 was
Gross profit for the fourth quarter of 2011 was
Fourth quarter 2011 GAAP net income was
Non-GAAP adjusted net income for the fourth quarter of 2011 was
Three Months Ended | ||||
December 31, 2011 | ||||
unaudited | ||||
GAAP net income | $ | 3,115 | ||
GAAP diluted earnings per share | $ | 0.07 | ||
Adjustments to reconcile GAAP net income | ||||
to Non-GAAP adjusted net income: | ||||
Amortization of acquisition related intangible assets | 865 | |||
Non-GAAP adjusted net income | $ | 3,980 | ||
Non-GAAP adjusted diluted earnings per share | $ | 0.09 | ||
See the tables below for further details of the reconciliation.
Included in fourth quarter 2011 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 2011 was
For the fourth quarter of 2011, net cash provided by operating
activities was a negative
As 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 regarding our expectation that: gross margin continues to be
negatively impacted by the effects of the market softness, including
increased pricing pressure, continued sales of lower margin commodity
products and less than maximum utilization of manufacturing capacity,
despite the increase in our finished goods inventory in advance of the
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, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
NET SALES | $ | 143,313 | $ | 163,767 | $ | 635,251 | $ | 612,886 | ||||||||
COST OF GOODS SOLD | 107,818 | 101,124 | 441,554 | 388,017 | ||||||||||||
Gross profit | 35,495 | 62,643 | 193,697 | 224,869 | ||||||||||||
OPERATING EXPENSES | ||||||||||||||||
Selling, general and administrative | 22,585 | 23,105 | 89,974 | 88,784 | ||||||||||||
Research and development | 6,876 | 6,180 | 27,231 | 26,584 | ||||||||||||
Amortization of acquisition related intangible assets and other | 1,095 | 1,121 | 4,503 | 4,569 | ||||||||||||
Total operating expenses | 30,556 | 30,406 | 121,708 | 119,937 | ||||||||||||
Income from operations | 4,939 | 32,237 | 71,989 | 104,932 | ||||||||||||
OTHER INCOME (EXPENSES) | ||||||||||||||||
Interest income | 175 | 255 | 1,024 | 2,842 | ||||||||||||
Interest expense | (116 | ) | (913 | ) | (3,139 | ) | (5,229 | ) | ||||||||
Amortization of debt discount | - | (1,943 | ) | (6,032 | ) | (7,656 | ) | |||||||||
Other | (940 | ) | 1,465 | (178 | ) | 3,214 | ||||||||||
Total other income (expenses) | (881 | ) | (1,136 | ) | (8,325 | ) | (6,829 | ) | ||||||||
Income before income taxes and noncontrolling interest | 4,058 | 31,101 | 63,664 | 98,103 | ||||||||||||
INCOME TAX PROVISION | 245 | 6,134 | 10,157 | 17,839 | ||||||||||||
NET INCOME | 3,813 | 24,967 | 53,507 | 80,264 | ||||||||||||
Less: NET INCOME attributable to noncontrolling interest | (698 | ) | (1,000 | ) | (2,770 | ) | (3,531 | ) | ||||||||
NET INCOME attributable to common stockholders | $ | 3,115 | $ | 23,967 | $ | 50,737 | $ | 76,733 | ||||||||
EARNINGS PER SHARE attributable to common stockholders | ||||||||||||||||
Basic | $ | 0.07 | $ | 0.54 | $ | 1.12 | $ | 1.74 | ||||||||
Diluted | $ | 0.07 | $ | 0.52 | $ | 1.09 | $ | 1.68 | ||||||||
Number of shares used in computation | ||||||||||||||||
Basic | 45,425 | 44,485 | 45,202 | 44,146 | ||||||||||||
Diluted | 46,599 | 45,867 | 46,713 | 45,546 | ||||||||||||
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, 2011: |
||||||||||
Operating |
Other Income |
Income Tax |
Net Income |
|||||||
GAAP | $ | 50,737 | ||||||||
Earnings per share (GAAP) | ||||||||||
Diluted | $ | 1.09 | ||||||||
Adjustments to reconcile GAAP net income | ||||||||||
to Non-GAAP 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 CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (in thousands, except per share data) (unaudited) |
|||||||||||||
For the fiscal year ended December 31, 2010: |
|||||||||||||
Operating |
Other Income |
Income Tax |
Net Income |
||||||||||
GAAP | $ | 76,733 | |||||||||||
Earnings per share (GAAP) | |||||||||||||
Diluted | $ | 1.68 | |||||||||||
Adjustments to reconcile GAAP net income | |||||||||||||
to Non-GAAP adjusted net income: | |||||||||||||
Amortization of acquisition related intangible assets | 4,425 | (1,239 | ) | 3,186 | |||||||||
Gain on sale of assets | (1,837 | ) | 661 | (1,176 | ) | ||||||||
Impairment of long-lived assets | 144 | (55 | ) | 89 | |||||||||
Amortization of debt discount | 7,655 | (2,679 | ) | 4,976 | |||||||||
Forgiveness of debt | (1,076 | ) | 161 | (915 | ) | ||||||||
Adjusted (Non-GAAP) | $ | 82,894 | |||||||||||
Diluted shares used in computing | |||||||||||||
earnings per share | 45,546 | ||||||||||||
Adjusted earnings per share (Non-GAAP) | |||||||||||||
Diluted | $ | 1.82 | |||||||||||
Note: Included in GAAP and non-GAAP adjusted net income was
approximately
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, 2011: |
||||||||||
Operating |
Other Income |
Income Tax |
Net Income | |||||||
GAAP | $ | 3,115 | ||||||||
Earnings per share (GAAP) | ||||||||||
Diluted | $ | 0.07 | ||||||||
Adjustments to reconcile GAAP net income | ||||||||||
to Non-GAAP 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
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, 2010: |
||||||||||||
Operating Expenses | Other Income (Expense) | Income Tax Provision | Net Income | |||||||||
GAAP | $ | 23,967 | ||||||||||
Earnings per share (GAAP) | ||||||||||||
Diluted | $ | 0.52 | ||||||||||
Adjustments to reconcile GAAP net income | ||||||||||||
to Non-GAAP adjusted net income: | ||||||||||||
Amortization of acquisition related intangible assets | 1,121 | - | (314 | ) | 807 | |||||||
Amortization of debt discount | - | 1,943 | (465 | ) | 1,478 | |||||||
Forgiveness of debt | - | (1,076 | ) | 161 | (915 | ) | ||||||
Adjusted (Non-GAAP) | $ | 25,337 | ||||||||||
Diluted shares used in computing | ||||||||||||
earnings per share | 45,867 | |||||||||||
Adjusted earnings per share (Non-GAAP) | ||||||||||||
Diluted | $ | 0.55 | ||||||||||
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, amortization of debt discount, gain on sale of assets, impairment of long-lived assets and forgiveness of debt, as discussed below. Excluding gain on sale of assets, impairment of long-lived assets, and forgiveness of debt 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.
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
Gain on sale of assets – The
Company excluded the gain recorded for the sale assets. During the
second quarter of 2010, the Company sold assets located in
Impairment of long-lived assets – The Company excluded the impairment of long-lived assets. During the third quarter of 2010, the Company impaired certain assets, which was excluded from management’s assessment of the Company’s core operating performance. The Company believes the exclusion of the impairment of long-lived assets provides investors an enhanced view of a loss the Company may incur from time to time and facilitates comparisons with results of other periods that may not reflect such impairments.
Forgiveness of debt – The
Company excluded the forgiveness of debt related to one of its
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, amortization of debt discount, gain on sale of assets, impairment of long-lived assets, and forgiveness of debt as described above. Excluding gain on sale of assets, impairment of long-lived assets, and forgiveness of debt 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.
CASH FLOW ITEMS
Free cash flow (FCF) (Non-GAAP)
FCF for fiscal 2011 and fourth quarter of 2011 is a non-GAAP financial
measure, which is calculated by taking cash flow from operations less
capital expenditures. For fiscal 2011 the amount was
Adjusted cash flows from operations (Non-GAAP)
For fiscal 2011 and fourth quarter 2011, in accordance with U.S. GAAP,
certain tax items relating to our retirement of Notes have been recorded
in cash flows from operations. Adjusted cash flows from operations is a
non-GAAP financial measure, which is calculated by taking cash flows
from operations and adding back certain tax items relating to our
retirement of Notes. For fiscal 2011 the amount was
Adjusted FCF (Non-GAAP)
Adjusted FCF is a non-GAAP financial measure, which is calculated by
taking FCF and adding back certain tax items in cash flows from
operations related to our retirement of Notes as described above. For
fiscal 2011 the amount was
DIODES INCORPORATED AND SUBSIDIARIES
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 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, | |||||||
2011 | 2010 | ||||||
Net income (GAAP) | $ | 3,115 | $ | 23,967 | |||
Plus: | |||||||
Interest expense, net (1) | (59 | ) | 2,601 | ||||
Income tax provision | 245 | 6,134 | |||||
Depreciation and amortization | 16,382 | 14,036 | |||||
EBITDA (Non-GAAP) | $ | 19,683 | $ | 46,738 | |||
Twelve Months Ended | |||||||
December 31, | |||||||
2011 | 2010 | ||||||
Net income (GAAP) | $ | 50,737 | $ | 76,733 | |||
Plus: | |||||||
Interest expense, net (2) | 8,147 | 10,043 | |||||
Income tax provision | 10,157 | 17,839 | |||||
Depreciation and amortization | 61,431 | 51,796 | |||||
EBITDA (Non-GAAP) | $ | 130,472 | $ | 156,411 | |||
(1) Includes
(2) Includes
DIODES INCORPORATED AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
|
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|
||||||
ASSETS (in thousands) |
||||||
December 31, | December 31, | |||||
2011 | 2010 | |||||
CURRENT ASSETS | unaudited | |||||
Cash and cash equivalents | $ | 129,510 | $ | 270,901 | ||
Accounts receivable, net | 132,408 | 129,207 | ||||
Inventories | 140,337 | 120,689 | ||||
Deferred income taxes, current | 5,450 | 8,276 | ||||
Prepaid expenses and other | 19,093 | 11,679 | ||||
Total current assets | 426,798 | 540,752 | ||||
DEFERRED INCOME TAXES, non current |
26,863 | 1,574 | ||||
PROPERTY, PLANT AND EQUIPMENT, net | 225,393 | 200,745 | ||||
OTHER ASSETS | ||||||
Goodwill | 67,818 | 68,949 | ||||
Intangible assets, net | 24,197 | 28,770 | ||||
Other | 21,995 | 5,760 | ||||
Total assets | $ | 793,064 | $ | 846,550 |
DIODES INCORPORATED AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS |
||||||||
LIABILITIES AND EQUITY (in thousands, except share data) |
||||||||
December 31, | December 31, | |||||||
2011 | 2010 | |||||||
CURRENT LIABILITIES | unaudited | |||||||
Lines of credit and short-term debt | $ | 8,000 | $ | - | ||||
Accounts payable | 66,063 | 70,057 | ||||||
Accrued liabilities and other current liabilities |
30,793 | 37,635 | ||||||
Income tax payable | 4,855 | 15,412 | ||||||
Convertible senior notes | - | 128,261 | ||||||
Total current liabilities | 109,711 | 251,365 | ||||||
LONG-TERM DEBT, net of current portion | ||||||||
Long-term borrowings | 2,857 | 3,393 | ||||||
CAPITAL LEASE OBLIGATIONS, net of current portion | 1,082 | 1,380 | ||||||
OTHER LONG-TERM LIABILITIES | 30,699 | 37,520 | ||||||
Total liabilities | 144,349 | 293,658 | ||||||
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; | ||||||||
45,432,252 and 44,662,796 issued and outstanding at December 31, 2011 and | ||||||||
December 31, 2010, respectively | 30,423 | 29,775 | ||||||
Additional paid-in capital | 263,455 | 231,842 | ||||||
Retained earnings | 375,644 | 324,907 | ||||||
Accumulated other comprehensive loss | (35,762 | ) | (45,080 | ) | ||||
Total Diodes Incorporated stockholders' equity | 633,760 | 541,444 | ||||||
Noncontrolling interest | 14,955 | 11,448 | ||||||
Total equity | 648,715 | 552,892 | ||||||
Total liabilities and equity | $ | 793,064 | $ | 846,550 |
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