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Diodes Incorporated Reports First Quarter 2015 Financial Results
Gross Profit Improved Year-over-Year Due to Cost Reductions and Product Mix
First Quarter Highlights
- Revenue was
$206.2 million , a decrease of 1.8 percent from the$210.0 million in the first quarter 2014, and a decrease of 7.8 percent from the$223.7 million in the fourth quarter 2014; - Gross profit was
$63.9 million , compared to$61.6 million in the first quarter 2014 and$70.7 million in the fourth quarter 2014; - Gross profit margin was 31.0 percent, compared to 29.3 percent in the first quarter 2014 and 31.6 percent in the fourth quarter 2014;
- GAAP net income was
$11.1 million , or$0.23 per diluted share, compared to first quarter 2014 of$10.2 million , or$0.21 per diluted share, and fourth quarter 2014 of$16.7 million , or$0.34 per diluted share; - Non-GAAP adjusted net income was
$12.7 million , or$0.26 per diluted share, compared to$12.4 million , or$0.26 per diluted share, in first quarter 2014 and$18.3 million , or$0.38 per diluted share, in fourth quarter 2014; - Excluding
$2.4 million , net of tax, non-cash share-based compensation expense, GAAP and non-GAAP adjusted net income would have increased by$0.05 per diluted share; and - Achieved
$38.6 million of cash flow from operations, and$15.0 million of free cash flow, including$23.5 million of capital expenditures. Net cash flow was($20.9) million , which includes the pay down of$23.1 million of long-term debt and a$15.0 million net increase in short-term investments.
Commenting on the results, Dr.
“Notable in the quarter, revenue in
“Overall, the first quarter demonstrates the leverage and flexibility of our business model by maintaining strong earnings and cash flow, and we expect a return to growth in the second quarter.”
First Quarter 2015
Revenue for the first quarter 2015 was
Gross profit for the first quarter 2015 was
Operating expenses for the first quarter 2015 were
First quarter 2015 GAAP net income was
First quarter 2015 non-GAAP adjusted net income was
The following is a 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, 2015 | |||||
GAAP net income | $ | 11,132 | |||
GAAP diluted earnings per share | $ | 0.23 | |||
Adjustments to reconcile net income to adjusted net income: | |||||
Retention costs | 70 | ||||
Amortization of acquisition related intangible assets | 1,527 | ||||
Non-GAAP adjusted net income | $ | 12,729 | |||
Non-GAAP adjusted diluted earnings per share | $ | 0.26 | |||
(See the reconciliation tables of net income to adjusted net income near the end of the release for further details.)
Included in the first quarter of 2015 GAAP 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, for the first quarter 2015, was
For the first quarter 2015, net cash provided by operating activities was
Balance Sheet
As of
Business Outlook
Dr. Lu concluded, “For the second quarter of 2015, we expect revenue to range between
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: we expect a return to growth in the second quarter; for the second quarter of 2015, we expect revenue to range between
Recent news releases, annual reports and
DIODES INCORPORATED AND SUBSIDIARIES |
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS |
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(unaudited) |
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(in thousands, except per share data) |
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Three Months Ended | |||||||||||
March 31, | |||||||||||
2015 | 2014 | ||||||||||
NET SALES | $ | 206,182 | $ | 209,986 | |||||||
COST OF GOODS SOLD | 142,269 | 148,405 | |||||||||
Gross profit | 63,913 | 61,581 | |||||||||
OPERATING EXPENSES | |||||||||||
Selling, general and administrative | 31,731 | 32,330 | |||||||||
Research and development | 13,309 | 12,920 | |||||||||
Amortization of acquisition related intangible assets | 1,922 | 1,981 | |||||||||
Loss (gain) on fixed assets | 48 | 7 | |||||||||
Total operating expenses | 47,010 | 47,238 | |||||||||
Income from operations | 16,903 | 14,343 | |||||||||
OTHER INCOME (EXPENSES) | |||||||||||
Interest income | 298 | 397 | |||||||||
Interest expense | (1,064 | ) | (1,260 | ) | |||||||
Gain (loss) on securities carried at fair value | 71 | (256 | ) | ||||||||
Other | (244 | ) | (231 | ) | |||||||
Total other expenses | (939 | ) | (1,350 | ) | |||||||
Income before income taxes and noncontrolling interest | 15,964 | 12,993 | |||||||||
INCOME TAX PROVISION | 4,187 | 2,547 | |||||||||
NET INCOME | 11,777 | 10,446 | |||||||||
Less: NET INCOME attributable to noncontrolling interest | (645 | ) | (244 | ) | |||||||
NET INCOME attributable to common stockholders | $ | 11,132 | $ | 10,202 | |||||||
EARNINGS PER SHARE attributable to common stockholders | |||||||||||
Basic | $ | 0.23 | $ | 0.22 | |||||||
Diluted | $ | 0.23 | $ | 0.21 | |||||||
Number of shares used in computation | |||||||||||
Basic | 47,667 | 46,699 | |||||||||
Diluted | 48,978 | 47,996 | |||||||||
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) |
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(unaudited) |
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For the three months ended March 31, 2015: |
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Operating |
Income Tax |
Net Income | ||||||||||
Per-GAAP | $ | 11,132 | ||||||||||
Earnings per share (Per-GAAP) | ||||||||||||
Diluted | $ | 0.23 | ||||||||||
Adjustments to reconcile net income to adjusted net income: | ||||||||||||
Retention costs | 83 | (13 | ) | 70 | ||||||||
Amortization of acquisition related intangible assets | 1,922 | (395 | ) | 1,527 | ||||||||
Adjusted (Non-GAAP) | $ | 12,729 | ||||||||||
Diluted shares used in computing earnings per share | 48,978 | |||||||||||
Adjusted earnings per share (Non-GAAP) | ||||||||||||
Diluted | $ | 0.26 | ||||||||||
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) |
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(unaudited) |
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For the three months ended March 31, 2014: |
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Operating |
Income Tax |
Net Income |
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Per-GAAP | $ | 10,202 | ||||||||||
Earnings per share (Per-GAAP) | ||||||||||||
Diluted | $ | 0.21 | ||||||||||
Adjustments to reconcile net income to adjusted net
income: |
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Retention costs | 690 | (104 | ) | 586 | ||||||||
Amortization of acquisition related intangible assets | 1,981 | (416 | ) | 1,565 | ||||||||
Adjusted (Non-GAAP) | $ | 12,353 | ||||||||||
Diluted shares used in computing earnings per share | 47,996 | |||||||||||
Adjusted earnings per share (Non-GAAP) | ||||||||||||
Diluted | $ | 0.26 | ||||||||||
Note: Included in GAAP and non-GAAP adjusted net income was approximately
ADJUSTED NET INCOME and ADJUSTED EARNINGS PER SHARE (Non-GAAP)
This consists of generally accepted accounting principles (“GAAP”) net income and earnings per share, which are then adjusted solely for the purpose of adjusting for amortization of acquisition-related intangible assets and retention costs. Excluding the above items provides investors with a better depiction of the Company’s operating results and provides a more informed baseline for modeling future earnings expectations. The Company excludes the above items to evaluate the Company’s operating performance, to develop budgets, 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 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 and earnings per share on both a GAAP and non-GAAP basis to obtain a comprehensive view of the Company’s results. The Company provides a reconciliation of GAAP net income and GAAP earnings per share to non-GAAP adjusted net income and non-GAAP adjusted earnings per share.
Retention costs – The Company excluded costs related to the employee retention plan in connection with the acquisition of
Amortization of acquisition-related intangible assets – The Company excluded this item, including developed technologies and customer relationships. The fair value of the acquisition-related intangible assets, which was recognized 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 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.
CASH FLOW ITEMS
Free cash flow (FCF) (Non-GAAP)
FCF for the first quarter 2015 is calculated by subtracting capital expenditures from cash flow from operations. For the first quarter 2015, 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 and 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, | |||||||||
2015 | 2014 | ||||||||
Net income (per-GAAP) | $ | 11,132 | $ | 10,202 | |||||
Plus: | |||||||||
Interest expense, net | 766 | 863 | |||||||
Income tax provision | 4,187 | 2,547 | |||||||
Depreciation and amortization | 19,172 | 19,176 | |||||||
EBITDA (Non-GAAP) | $ | 35,257 | $ | 32,788 | |||||
DIODES INCORPORATED AND SUBSIDIARIES | |||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS | |||||||||
ASSETS | |||||||||
(in thousands) |
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March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
CURRENT ASSETS | |||||||||
Cash and cash equivalents | $ | 222,113 | $ | 243,000 | |||||
Short-term investments | 26,722 | 11,726 | |||||||
Accounts receivable, net | 177,628 | 188,248 | |||||||
Inventories | 187,379 | 182,026 | |||||||
Deferred income taxes, current | 11,301 | 11,295 | |||||||
Prepaid expenses and other | 46,455 | 50,510 | |||||||
Total current assets | 671,598 | 686,805 | |||||||
PROPERTY, PLANT AND EQUIPMENT, net | 325,278 | 309,931 | |||||||
DEFERRED INCOME TAXES, non-current | 32,556 | 32,550 | |||||||
OTHER ASSETS | |||||||||
Goodwill | 79,665 | 81,229 | |||||||
Intangible assets, net | 42,663 | 45,028 | |||||||
Other | 23,270 | 23,614 | |||||||
Total assets | $ | 1,175,030 | $ | 1,179,157 | |||||
DIODES INCORPORATED AND SUBSIDIARIES | |||||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS | |||||||||||
LIABILITIES AND EQUITY | |||||||||||
(in thousands, except share data) |
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March 31, | December 31, | ||||||||||
2015 | 2014 | ||||||||||
(unaudited) | |||||||||||
CURRENT LIABILITIES | |||||||||||
Lines of credit | $ | 973 | $ | 1,064 | |||||||
Accounts payable | 84,017 | 79,390 | |||||||||
Accrued liabilities | 62,513 | 60,436 | |||||||||
Income tax payable | 8,047 | 8,381 | |||||||||
Total current liabilities | 155,550 | 149,271 | |||||||||
LONG-TERM DEBT, net of current portion | 117,734 | 140,787 | |||||||||
OTHER LONG-TERM LIABILITIES | 78,918 | 78,932 | |||||||||
Total liabilities | 352,202 | 368,990 | |||||||||
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; 47,963,677 and 47,591,092 issued and outstanding at March 31, 2015 and December 31, 2014, respectively |
31,977 | 31,729 | |||||||||
Additional paid-in capital | 324,023 | 314,942 | |||||||||
Retained earnings | 501,138 | 490,006 | |||||||||
Accumulated other comprehensive loss | (76,873 | ) | (68,402 | ) | |||||||
Total Diodes Incorporated stockholders' equity | 780,265 | 768,275 | |||||||||
Noncontrolling interest | 42,563 | 41,892 | |||||||||
Total equity | 822,828 | 810,167 | |||||||||
Total liabilities and equity | $ | 1,175,030 | $ | 1,179,157 |
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