CASH FLOW ITEMS
Free cash flow (FCF) (Non-GAAP)
FCF for the first quarter of 2017 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the first quarter of 2017, FCF was $26.5 million ($45.6 million less $19.1 million). FCF 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 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, | |||||||||
| 2017 | 2016 | ||||||||
| Net income (per-GAAP) | $ | 1,217 | $ | (1,733 | ) | ||||
| Plus: | |||||||||
| Interest expense, net | 3,190 | 2,056 | |||||||
| Income tax provision | 560 | (552 | ) | ||||||
| Depreciation and amortization | 23,664 | 25,079 | |||||||
| EBITDA (non-GAAP) | $ | 28,631 | $ | 24,850 | |||||
| DIODES INCORPORATED AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||||||
| March 31, | December 31, | |||||||||
| 2017 | 2016 | |||||||||
| (unaudited) | (unaudited) | |||||||||
| CURRENT ASSETS | ||||||||||
| Cash and cash equivalents | $ | 265,119 | $ | 247,802 | ||||||
| Short-term investments | 32,524 | 29,842 | ||||||||
| Accounts receivable, net | 204,972 | 217,217 | ||||||||
| Inventories | 191,301 | 193,483 | ||||||||
| Prepaid expenses and other | 45,333 | 44,438 | ||||||||
| Total current assets | 739,249 | 732,782 | ||||||||
| PROPERTY, PLANT AND EQUIPMENT, net | 405,247 | 401,988 | ||||||||
| DEFERRED INCOME TAXES | 61,559 | 56,047 | ||||||||
| OTHER ASSETS | ||||||||||
| Goodwill | 131,059 | 129,412 | ||||||||
| Intangible assets, net | 170,180 | 174,876 | ||||||||
| Other | 33,711 | 33,447 | ||||||||
| Total assets | $ | 1,541,005 | $ | 1,528,552 | ||||||
| CURRENT LIABILITIES | ||||||||||
| Accounts payable | $ | 90,780 | $ | 87,600 | ||||||
| Accrued liabilities | 74,866 | 71,562 | ||||||||
| Income tax payable | 6,282 | 11,855 | ||||||||
| Current portion of long-term debt | 15,938 | 14,356 | ||||||||
| Total current liabilities | 187,866 | 185,373 | ||||||||
| LONG-TERM DEBT, net of current portion | 400,493 | 413,126 | ||||||||
| DEFERRED TAX LIABILITIES - non current | 28,225 | 28,213 | ||||||||
| OTHER LONG-TERM LIABILITIES | 80,242 | 81,373 | ||||||||
| Total liabilities | 696,826 | 708,085 | ||||||||
| 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; 48,348,953 and 48,219,376, issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 33,006 | 32,919 | ||||||||
| Additional paid-in capital | 361,390 | 354,574 | ||||||||
| Retained earnings | 535,708 | 530,215 | ||||||||
| Treasury stock, at cost, 1,157,206 shares held at March 31, 2017 and December 31,2016 | (29,023 | ) | (29,023 | ) | ||||||
| Accumulated other comprehensive loss | (101,841 | ) | (112,666 | ) | ||||||
| Total Diodes Incorporated stockholders' equity | 799,240 | 776,019 | ||||||||
| Noncontrolling interest | 44,939 | 44,448 | ||||||||
| Total equity | 844,179 | 820,467 | ||||||||
| Total liabilities and equity | $ | 1,541,005 | $ | 1,528,552 | ||||||
