Diodes Incorporated Reports Second Quarter 2018 Financial Results

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 containing forward-looking words such as “expect,” “anticipate,” “sets the stage,” “continuing,” “working diligently to,” “position the company for,” “aim,” “estimate,” and variations thereof, including without limitation statements, whether direct or implied, regarding expectations of revenue growth, market share gains, increase in gross margin and increase in gross profits in 2018 and beyond; that for the third quarter of 2018, we expect strong growth and revenue to range between $313 million and $329 million, or up 2.9 to 8.2 percent sequentially; expect GAAP gross margin to be 35.5 percent, plus or minus 1 percent; non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 21 percent of revenue, plus or minus 1 percent; expect net interest expense to be approximately $2.5 million; expect tax rate to be 29 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the third quarter are anticipated to be approximately 51.4 million; purchase accounting adjustments for Pericom and previous acquisitions of $4.0 million after tax are not included in these non-GAAP estimates; our expectation that we may be positioned to have our most profitable year in the Company’s history in 2018; and other statements identified by words such as “estimates,” “expects,” “projects,” “plans,” “will,” and similar expressions. Potential risks and uncertainties include, but are not limited to, such factors as: the risk that such expectations may not be met: the risk that the expected benefits of acquisitions may not be realized or that integration of acquired businesses may not continue as rapidly as we anticipate; the risk that we may not be able to maintain our current growth strategy or continue to maintain our current performance, costs, and loadings in our manufacturing facilities; the risk that we may not be able to increase our automotive industrial, or other revenue and market share; risks of domestic and foreign operations, including excessive operating costs, labor shortages, higher tax rates, and our joint venture prospects; the risk that we may not continue our share repurchase program; the risks of cyclical downturns in the semiconductor industry and of changes in end-market demand or product mix that may affect gross margin or render inventory obsolete; the risk of unfavorable currency exchange rates; the risk that our future outlook or guidance may be incorrect; the risks of global economic weakness or instability in global financial markets; the risks of trade restrictions, tariffs, or embargoes; the risk of breaches of our information technology systems; and other information, including the “Risk Factors” detailed from time to time in Diodes’ filings with the United States Securities and Exchange Commission.

Recent news releases, annual reports and SEC filings are available at the company’s website: http://www.diodes.com. Written requests may be sent directly to the company, or they may be e-mailed to: diodes-fin@diodes.com.

           
 
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018     2017 2018   2017
NET SALES $ 304,085 $ 264,224 $ 578,597 $ 500,527
 
COST OF GOODS SOLD   196,817     174,085     372,734     336,477  
 
Gross profit 107,268 90,139 205,863 164,050
 
OPERATING EXPENSES
Selling, general and administrative 42,153 39,697 89,303 79,387
Research and development 22,050 19,796 42,250 37,836
Amortization of acquisition-related intangible assets 4,678 4,646 9,445 9,404
Restructuring 526 1,838 206 4,069
Other operating expenses   17     334     (125 )   169  
Total operating expenses   69,424     66,311     141,079     130,865  
 
Income from operations 37,844 23,828 64,784 33,185
 
OTHER INCOME (EXPENSES)
Interest income 443 308 957 603
Interest expense (2,544 ) (3,447 ) (5,301 ) (6,932 )
Foreign currency gain (loss), net 300 (1,628 ) (2,729 ) (5,422 )
Others   377     802     5,012     531  
Total other expenses (1,424 ) (3,965 ) (2,061 ) (11,220 )
 
Income before income taxes and noncontrolling interest 36,420 19,863 62,723 21,965
 
INCOME TAX PROVISION   10,753     6,039     18,536     6,599  
 
NET INCOME 25,667 13,824 44,187 15,366
 
Less: NET INCOME attributable to noncontrolling interest   (599 )   (645 )   (593 )   (970 )
 
NET INCOME attributable to common stockholders $ 25,068   $ 13,179   $ 43,594   $ 14,396  
 
EARNINGS PER SHARE attributable to common stockholders
Basic $ 0.50   $ 0.27   $ 0.88   $ 0.30  
Diluted $ 0.49   $ 0.26   $ 0.86   $ 0.29  
 
Number of shares used in computation
Basic   49,680     48,518     49,509     48,418  
Diluted   50,792     49,944     50,727     49,807  
 

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)

(unaudited)

 

For the three months ended June 30, 2018:

 
COGS

Operating
Expenses

Income Tax
Provision

Net Income
 
Per-GAAP $ 25,068
 
Earnings per share (Per-GAAP)
Diluted $ 0.49
 
Adjustments to reconcile net income to non-GAAP net income:
 
M&A
 
Pericom 2,604
 
Amortization of acquisition-related intangible assets 3,175 (571 )
 
KFAB 447
 
Restructuring 526 (79 )
 
Others 1,228
 
Amortization of acquisition-related intangible assets 1,503 (275 )
 
Non-GAAP $ 29,347
 
Diluted shares used in computing earnings per share   50,792
 
Non-GAAP earnings per share
Diluted $ 0.58
 

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