Return to Seasonal Growth Expected in Second Quarter with First Quarter Representing the Low Point in Market Demand

PLANO, Texas — (BUSINESS WIRE) — May 9, 2024 — Diodes Incorporated (Diodes) (Nasdaq: DIOD) today reported its financial results for the first quarter ended March 31, 2024.

First Quarter Highlights

• Revenue was $302.0 million, compared to $322.7 million in the fourth quarter 2023 and $467.2 million in the first quarter 2023;
• GAAP gross profit was $99.6 million, compared to $112.5 million in the fourth quarter 2023 and $194.5 million in the first quarter 2023;
• GAAP gross profit margin was 33.0 percent, compared to 34.9 percent in the fourth quarter 2023 and 41.6 percent in the first quarter 2023;
• GAAP net income was $14.0 million, compared to $25.3 million in the fourth quarter 2023 and $71.2 million in the first quarter 2023;
• Non-GAAP adjusted net income was $13.0 million, compared to $23.4 million in the fourth quarter 2023 and $73.4 million in the first quarter 2023;
• GAAP EPS was $0.30 per diluted share, compared to $0.55 per diluted share in the fourth quarter 2023 and $1.54 per diluted share in the first quarter 2023;
• Non-GAAP EPS was $0.28 per diluted share, compared to $0.51 per diluted share last quarter and $1.59 per diluted share in the prior year quarter;
• Excluding $4.0 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 $48.3 million, or 16.0 percent of revenue, compared to $58.4 million, or 18.1 percent of revenue, in the fourth quarter 2023 and $121.8 million, or 26.1 percent of revenue, in the first quarter 2023; and
• Cash flow used in operations of $31.1 million and a negative $51.5 million of free cash flow, including $20.4 of capital expenditures. Net cash flow was a negative $47.9 million.

Commenting on the results, Gary Yu, President of Diodes, stated, “Revenue in the quarter reflected the slower than expected recovery in the consumer, computing and communications markets coupled with typical first quarter seasonality due to the Chinese New Year holiday. However, late in the quarter we began to see some signs of demand improvement with distributor inventory levels starting to stabilize, supporting our belief that the first quarter should be the low point and are guiding for a return to seasonal growth in the second quarter.

“In the automotive and industrial end markets, first quarter combined product revenue remained above our target model of 40% but continues to be affected by inventory adjustments and softness in certain areas. More broadly, the slower overall demand environment in the quarter contributed to reduced loading at our manufacturing facilities both internal production as well as from our manufacturing service agreements, temporarily impacting gross margin. We expect gross margin to resume toward our target of 40% as we increase our factory loading by qualifying more products combined with increasing revenue growth from our higher-margin automotive and industrial markets, consistent with our historical performance and long-term growth strategy.

“In summary, with early evidence of recent pricing pressures subsiding, Diodes is well positioned with the size and scale to support a return to growth as global demand and distributor inventory improves across our end markets. We remain focused on operating our manufacturing facilities at a high level of efficiency as demonstrated by the steps the Company has taken over the past several quarters to further develop our process technology and capabilities, while lowering manufacturing costs across our operations.”

First Quarter 2024

Revenue for first quarter 2024 was $302.0 million, compared to $322.7 million in the fourth quarter 2023 and $467.2 million in the first quarter 2023.

GAAP gross profit for the first quarter 2024 was $99.6 million, or 33.0 percent of revenue, compared to $112.5 million, or 34.9 percent of revenue, in the fourth quarter 2023 and $194.5 million, or 41.6 percent of revenue, in the first quarter of 2023.

GAAP operating expenses for first quarter 2024 were $86.6 million, or 28.7 percent of revenue, and on a non-GAAP basis were $87.6 million, or 29.0 percent of revenue, which excludes $3.8 million amortization of acquisition-related intangible asset expenses and $4.8 million insurance recovery for a manufacturing facility. GAAP operating expenses in the fourth quarter 2023 were $91.8 million, or 28.4 percent of revenue and in the first quarter 2023 were $108.0 million, or 23.1 percent of revenue.

First quarter 2024 GAAP net income was $14.0 million, or $0.30 per diluted share, compared to GAAP net income in the fourth quarter 2023 of $25.3 million, or $0.55 per diluted share, and $71.2 million, or $1.54 per diluted share, of GAAP net income in the first quarter 2023.

First quarter 2024 non-GAAP adjusted net income was $13.0 million, or $0.28 per diluted share, which excluded, net of tax, $3.8 million insurance recovery for a manufacturing facility, $3.1 million of acquisition-related intangible asset costs and $0.3 million non-cash mark-to-market investment value adjustment. This compares to non-GAAP adjusted net income of $23.4 million, or $0.51 per diluted share, in the fourth quarter 2023 and $73.4 million, or $1.59 per diluted share, in the first quarter 2023.

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):