Revenue and Gross Profit Remain at Record Levels, Driving Record EBITDA, Net Income and EPS

PLANO, Texas — (BUSINESS WIRE) — November 4, 2019 — Diodes Incorporated (Nasdaq: DIOD) today reported its financial results for the third quarter ended September 30, 2019.

Third Quarter Highlights

• Revenue was a record $323.7 million, an increase of 0.8 percent from the $320.9 million in the third quarter 2018 and an increase of 0.5 percent from the $322.0 million in the second quarter 2019;
• GAAP gross profit remained a record at $122.0 million, compared to $115.2 million in the third quarter 2018 and $122.0 million in the second quarter 2019;
• GAAP gross profit margin was 37.7 percent, compared to 35.9 percent in the third quarter 2018 and 37.9 percent in the second quarter 2019;
• GAAP net income was a record $38.1 million, or $0.73 per diluted share, compared to $30.9 million, or $0.61 per diluted share, in the third quarter 2018 and $36.3 million, or $0.70 per diluted share, in the second quarter 2019;
• Non-GAAP adjusted net income was a record $41.9 million, or $0.81 per diluted share, compared to $34.5 million, or $0.68 per diluted share, in the third quarter 2018 and $40.0 million, or $0.77 per diluted share, in the second quarter 2019;
• Excluding $4.4 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.09 per diluted share;
• EBITDA was a record $78.3 million, or 24.2 percent of revenue, compared to $72.0 million, or 22.4 percent of revenue, in the third quarter 2018 and $77.1 million, or 23.9 percent of revenue, in the second quarter 2019; and
• Achieved cash flow from operations of $67.2 million and $41.8 million free cash flow, including $25.4 million of capital expenditures. Net cash flow was a negative $17.1 million, which includes the pay-down of $52.6 million of long-term debt.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “Diodes achieved another quarter of record financials, resulting in increased profitability and cash flow from operations. Our nine-month revenue grew 5.4% over the same period last year, while earnings increased over 30%. This growth is especially notable at a time during which our served market was down more than 6.5%. EBITDA also set a new quarterly record and represents the second consecutive quarter to exceed a $300 million annualized run-rate as it approaches 25% of total revenue. Further, gross margin remains solidly above 37% of revenue as product mix continues to benefit from record revenue in the automotive end market as well as our Pericom-branded IC products.

“Overall, I am very pleased with our year-to-date performance as we carefully navigate the seasonal softness and inventory adjustments that are typical of our industry as we approach year-end. Longer-term, Diodes remains well positioned to continue delivering consistent profitability growth with an ongoing focus on content gains in high-growth areas such as connected cars, high-end servers and storage, 5G as well as IoT.”

Third Quarter 2019

Revenue for third quarter 2019 was a record $323.7 million, an increase of 0.8 percent from the $320.9 million in the third quarter 2018 and an increase of 0.5 percent from the $322.0 million in the second quarter 2019.

GAAP gross profit for the third quarter 2019 remained a record at $122.0 million, or 37.7 percent of revenue, compared to the third quarter 2018 of $115.2 million, or 35.9 percent of revenue, and the second quarter 2019 of $122.0 million, or 37.9 percent of revenue. The 180-basis point year-over-year increase was primarily due to record high revenue contribution from the automotive market and the Pericom IC products.

GAAP operating expenses for third quarter 2019 were $73.3 million, or 22.7 percent of revenue, and $68.8 million, or 21.3 percent of revenue, on a non-GAAP basis, which excluded $4.5 million of amortization of acquisition-related intangible asset expenses. GAAP operating expenses in the third quarter 2018 were $69.4 million, or 21.6 percent of revenue, and in the second quarter 2019 were $73.5 million, or 22.8 percent of revenue.

Third quarter 2019 GAAP net income was a record $38.1 million, or $0.73 per diluted share, compared to GAAP net income of $30.9 million, or $0.61 per diluted share, in third quarter 2018 and GAAP net income of $36.3 million, or $0.70 per diluted share, in second quarter 2019.

Third quarter 2019 non-GAAP adjusted net income was a record $41.9 million, or $0.81 per diluted share, which excluded, net of tax, $3.7 million of non-cash acquisition-related intangible asset amortization costs. This compares to non-GAAP adjusted net income of $34.5 million, or $0.68 per diluted share, in the third quarter 2018 and $40.0 million, or $0.77 per diluted share, in the second 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):