Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”

(See the reconciliation tables of GAAP net income to non-GAAP adjusted net income near the end of this release for further details.)

Included in second quarter 2021 GAAP net income and non-GAAP adjusted net income was approximately $6.8 million, net of tax, of non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP earnings per share (“EPS”) and non-GAAP adjusted EPS would have increased by $0.15 per diluted share for the second quarter 2021, $0.11 for the first quarter 2021 and $0.09 for second quarter 2020.

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in second quarter 2021 was a record $99.4 million, or 22.6 percent of revenue, increasing from $81.7 million, or 19.8 percent of revenue, in first quarter 2021 and $55.3 million, or 19.2 percent of revenue, in second quarter 2020. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

For second quarter 2021, net cash provided by operating activities was $93.9 million. Net cash flow was a negative $36.2 million, including the pay down of $114.2 million of total debt. Free cash flow (a non-GAAP measure) was $66.0 million, which includes $27.9 million of capital expenditures.

Balance Sheet

As of June 30, 2021, the Company had approximately $302 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $301 million and working capital was approximately $582 million.

The results announced today are preliminary and unaudited, as they are subject to the Company finalizing its closing procedures and completion of the Company’s 2021 quarterly review by its independent registered public accounting firm. As such, these results are subject to revision until the Company files its Form 10-Q for the quarter ending June 30, 2021.

Business Outlook

Dr. Lu concluded, “For the third quarter of 2021, we expect revenue to increase to approximately $467 million, plus or minus 3 percent, which represents a record on both an organic and consolidated basis for a combined increase of about 6 percent sequentially at the mid-point, which is better than typical seasonality. We expect GAAP gross margin on a consolidated basis to be 37 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 20.0 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $1.2 million. Our income tax rate is expected to be 18 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the third quarter are anticipated to be approximately 45.8 million.”

Purchase accounting adjustments related to amortization of acquisition-related intangible assets of $3.4 million, after tax, for Pericom and previous acquisitions is not included in these non-GAAP estimates.

Conference Call

Diodes will host a conference call on Thursday, August 5, 2021 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its second quarter financial results. Investors and analysts may join the conference call by dialing 1-888-771-4371 and providing the confirmation code 50198105. International callers may join the teleconference by dialing +1-847-585-4405 and entering the same confirmation code at the prompt. Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investors’ section of Diodes' website at http://www.diodes.com. To listen to the live call, please go to the investors’ section of Diodes’ website and click on the conference call link at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Diodes' website for approximately 90 days.

About Diodes Incorporated

Diodes Incorporated (Nasdaq: DIOD), a Standard and Poor’s SmallCap 600 and Russell 3000 Index company, delivers high-quality semiconductor products to the world’s leading companies in the consumer electronics, computing, communications, industrial, and automotive markets. We leverage our expanded product portfolio of discrete, analog, and mixed-signal products and leading-edge packaging technology to meet customers’ needs. Our broad range of application-specific solutions and solutions-focused sales, coupled with worldwide operations of 31 sites, including engineering, testing, manufacturing, and customer service, enables us to be a premier provider for high-volume, high-growth markets. For more information visit www.Diodes.com

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,” “aim,” “estimate,” and variations thereof, including without limitation statements, whether direct or implied, regarding expectations of that for the third quarter of 2021, we expect revenue to increase to approximately $467 million plus or minus 3 percent; we expect GAAP gross margin to be 37.0 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 20.0 percent of revenue, plus or minus 1 percent; we expect non-GAAP net interest expense to be approximately $1.2 million; we expect our income tax rate to be 18 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the third quarter are anticipated to be approximately 45.8 million. Potential risks and uncertainties include, but are not limited to, such factors as: the risk that the COVID-19 pandemic may continue and have a material adverse effect on customer demand and staffing of our production, sales and administration facilities; 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 the cost, expense, and diversion of management attention associated with the LSC acquisition may be greater than we currently expect; 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 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 that the coronavirus outbreak or other similar epidemics may harm our domestic or international business operations to a greater extent than we currently anticipate; 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.

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
		2021				2020						2021				2020
Net sales		$	440,448			$	288,669					$	853,569			$	569,386
Cost of goods sold			280,646				187,177						555,131				372,052
Gross profit			159,802				101,492						298,438				197,334
Operating expenses
Selling, general and administrative			60,280				45,372						118,956				87,587
Research and development			29,987				21,322						57,646				45,000
Amortization of acquisition-related intangible assets			4,060				4,021						8,083				8,242
Other operating expense			118				(92	)					1,006				(216	)
Total operating expense			94,445				70,623						185,691				140,613
Income from operations			65,357				30,869						112,747				56,721
Other income (expense)
Interest income			818				168						1,586				441
Interest expense			(2,017	)			(2,653	)					(4,881	)			(3,898	)
Foreign currency loss, net			(510	)			(3,600	)					(1,789	)			(3,525	)
Unrealized Gain (Loss) on Investments			5,261				-						8,916				-
Other income			1,837				1,274						4,154				1,275
Total other income (expense)			5,389				(4,811	)					7,986				(5,707	)
Income before income taxes and noncontrolling interest			70,746				26,058						120,733				51,014
Income tax provision			12,120				4,670						21,554				9,226
Net income			58,626				21,388						99,179				41,788
Less net (income) loss attributable to noncontrolling interest			(3,252	)			(355	)					(4,353	)			(587	)
Net income attributable to common stockholders		$	55,374			$	21,033					$	94,826			$	41,201
Earnings per share attributable to common stockholders:
Basic		$	1.24			$	0.41					$	2.13			$	0.80
Diluted		$	1.22			$	0.40					$	2.09			$	0.78
Number of shares used in earnings per share computation:
Basic			44,667				51,527						44,538				51,431
Diluted			45,380				52,569						45,327				52,517

Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”