Full Year Automotive and Industrial Product Revenue Remained Above Target Model at 46%
Diodes Incorporated (Diodes) (Nasdaq: DIOD) today reported its financial results for the fourth quarter and year ended December 31, 2023.
Year 2023 Overview
- Revenue was $1.7 billion, compared to $2.0 billion in 2022;
- GAAP gross profit was $658.2 million, compared to $827.2 million in the prior year;
- GAAP gross profit margin was 39.6 percent , compared to 41.3 percent in 2022;
- GAAP operating income was $250.6 million, or 15.1 percent of revenue, compared to $408.2 million, or 20.4 percent of revenue, in 2022;
- GAAP net income was $227.2 million, compared to the $331.3 million last year;
- Non-GAAP adjusted net income was $222.8 million, compared to $339.0 million in 2022;
- GAAP EPS was $4.91 per diluted share, compared to $7.20 per diluted share in 2022;
- Non-GAAP EPS was $4.81 per diluted share, compared to $7.36 per diluted share in 2022;
- Excluding $24.4 million, net of tax, non-cash share-based compensation expense, both GAAP net income and non-GAAP adjusted net income would have increased by $0.53 per diluted share;
- EBITDA was $404.2 million, or 24.3 percent of revenue, compared to $520.4 million, or 26.0 percent of revenue in 2022; and
- Achieved $280.9 million cash flow from operations and $130.1 million of free cash flow, including $150.8 million of capital expenditures. Net cash flow was a negative $22.6 million, which includes the net pay-down of $124.3 million of total debt.
Commenting on the results, Gary Yu, President of Diodes, stated, “This past year proved to be challenging as the consumer, computing and communications markets experienced an extended slowdown, coupled with inventory rebalancing in the industrial market late in the year as well as softness in certain areas of the automotive market. Despite this global weakness, we made notable progress on improving the quality and mix of our product portfolio as we continued to focus on the automotive and industrial markets through expanding design wins and increased investment in new product development, which resulted in over 350 new automotive-compliant products. The combined revenue from these two markets expanded to 46% of product revenue in 2023 compared to 42% last year.
“Our product mix improvements were especially evident in our ability to maintain full year gross margin near 40%, meeting our target model despite the lower annual revenue. Throughout the year, we continued to drive manufacturing cost reductions and operating efficiencies, while also further developing our process technology for expansion of our internal facility utilization. Overall, we maintained strong cash generation in 2023 that enabled us to reduce total debt by $124 million to $62 million, maintain a solid cash position over $315 million and increase total cash less debt by 67% to approximately $253 million. Additionally, we renewed and expanded our lines of credit to approximately $315 million to provide added financial flexibility.”
Mr. Yu concluded by stating, “As we look to 2024, we remain focused on driving further improvements in the quality and mix of our portfolio with our analog and power discrete products, including our newly introduced SiC product family, especially targeted at the automotive and industrial markets. We believe our total solutions sales approach that has been successful in the past, along with further emphasis placed on key account development, will continue to deliver increasing content opportunities, design wins and profitable growth in the future.”
Fourth Quarter 2023
Revenue for fourth quarter 2023 was $322.7 million, compared to $404.6 million in the third quarter 2023 and $496.2 million in the fourth quarter 2022.
GAAP gross profit for the fourth quarter 2023 was $112.5 million, or 34.9 percent of revenue, compared to $155.9 million, or 38.5 percent of revenue, in the third quarter 2023 and $206.2 million, or 41.6 percent of revenue, in the fourth quarter of 2022.
GAAP operating expenses for fourth quarter 2023 were $91.8 million, or 28.4 percent of revenue, and on a non-GAAP basis were $89.0 million, or 27.6 percent of revenue, which excludes $3.8 million amortization of acquisition-related intangible asset expenses and $1.0 million in restructuring cost gains. GAAP operating expenses in the third quarter 2023 were $102.0 million, or 25.2 percent of revenue and in the fourth quarter 2022 were $109.7 million, or 22.1 percent of revenue.
Fourth quarter 2023 GAAP net income was $25.3 million, or $0.55 per diluted share, compared to GAAP net income in the third quarter 2023 of $48.7 million, or $1.05 per diluted share, and $92.1 million, or $2.00 per diluted share, of GAAP net income in the fourth quarter 2022.
Fourth quarter 2023 non-GAAP adjusted net income was $23.4 million, or $0.51 per diluted share, which excluded, net of tax, $3.1 million of acquisition-related intangible asset costs, $2.8 million gain on investments, $1.4 million non-cash mark-to-market investment value adjustment and a $0.7 million gain on restructuring costs. This compares to non-GAAP adjusted net income of $52.5 million, or $1.13 per diluted share, in the third quarter 2023 and $79.6 million, or $1.73 per diluted share, in the fourth quarter 2022.
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):
| Three Months Ended | |||
| December 31, 2023 | |||
| GAAP net income |
$ |
25,292 |
|
| GAAP diluted earnings per share |
$ |
0.55 |
|
| Adjustments to reconcile net income to non-GAAP net income: | |||
| Amortization of acquisition-related intangible assets |
|
3,108 |
|
| Non-cash mark-to-market investment value adjustments |
|
(1,444) |
|
| Investment gain |
|
(2,794) |
|
| Restructuring Cost |
|
(738) |
|
| Non-GAAP net income |
$ |
23,424 |
|
| Non-GAAP diluted earnings per share |
$ |
0.51 |
|
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 fourth quarter 2023 GAAP net income and non-GAAP adjusted net income was approximately $5.9 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 $0.13 per diluted share for the fourth quarter 2023, $0.10 for the third quarter 2023 and $0.16 for fourth quarter 2022.
EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in fourth quarter 2023 was $58.4 million, or 18.1 percent of revenue, compared to $90.6 million, or 22.4 percent of revenue, in third quarter 2023 and $129.6 million, or 26.1 percent of revenue, in fourth quarter 2022. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.
For fourth quarter 2023, net cash provided by operating activities was $38.4 million. Net cash flow was a positive $20.9 million. Free cash flow (a non-GAAP measure) was $11.1 million, which includes $27.3 million of capital expenditures.
Balance Sheet
As of December 31, 2023, the Company had approximately $329 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $62 million and working capital was approximately $794 million.
The results announced today are preliminary and unaudited, as they are subject to the Company finalizing its closing procedures and completion of the quarterly review by its independent registered public accounting firm. As such, these results are subject to revision until the Company files its Form 10-K for the year ending December 31, 2023.
Business Outlook
Gary Yu further commented, “For the first quarter of 2024, we expect revenue to be approximately $305 million, plus or minus 3 percent. GAAP gross margin is expected to be 34.0 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 28.7 percent of revenue, plus or minus 1 percent. We expect net interest income to be approximately $2.0 million. Our income tax rate is expected to be 18.0 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the first quarter are anticipated to be approximately 46.5 million.”
Amortization of acquisition-related intangible assets of $3.1 million, after tax, for previous acquisitions is not included in these non-GAAP estimates.
Conference Call
Diodes will host a conference call on Tuesday, February 6, 2024 at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its fourth quarter and full year financial results. Investors and analysts may join the conference call by dialing 1-833-634-2590, and international callers may join the teleconference by dialing +1-412-317-6038. A telephone replay of the call will be made available approximately two hours after the call and will remain available until February 13, 2024 at midnight Central Time. The replay number is 1-877-344-7529 with a pass code of 5233965. International callers should dial +1-412-317-0088 and enter the same pass 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 Investor Relations section of the Company’s website. 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 32 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 first quarter of 2024, we expect revenue to be approximately $305 million plus or minus 3 percent; we expect GAAP gross margin to be 34.0 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 28.7 percent of revenue, plus or minus 1 percent; we expect non-GAAP net interest income to be approximately $2.0 million; we expect our income tax rate to be 18.0 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the first quarter are anticipated to be approximately 46.5 million. 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 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.
The Diodes logo is a registered trademark of Diodes Incorporated in the United States and other countries.
Automotive-compliant – AEC qualified, manufactured in IATF certified facilities supporting PPAP documentation
© 2024 Diodes Incorporated. All Rights Reserved.
|
DIODES INCORPORATED AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data) |
||||||||||||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||||
|
December 31, |
|
December 31, |
||||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
||
| Net sales |
$ |
322,699 |
|
$ |
496,212 |
|
$ |
1,661,739 |
|
$ |
2,000,580 |
|
||||
| Cost of goods sold |
|
210,223 |
|
|
290,016 |
|
|
1,003,557 |
|
|
1,173,343 |
|
||||
| Gross profit |
|
112,476 |
|
|
206,196 |
|
|
658,182 |
|
|
827,237 |
|
||||
| Operating expenses | ||||||||||||||||
| Selling, general and administrative |
|
56,484 |
|
|
71,822 |
|
|
257,939 |
|
|
280,877 |
|
||||
| Research and development |
|
32,957 |
|
|
34,090 |
|
|
134,868 |
|
|
126,316 |
|
||||
| Amortization of acquisition-related intangible assets |
|
3,806 |
|
|
3,830 |
|
|
15,282 |
|
|
15,610 |
|
||||
| Restructuring cost |
|
(983) |
|
– |
|
|
1,583 |
|
|
– |
|
|||||
| (Gain)loss on disposal of fixed assets |
|
(489) |
|
4 |
|
|
(2,045) |
|
(3,651) |
|||||||
| Other operating (income) expense |
|
(2) |
|
(1) |
|
(16) |
|
(108) |
||||||||
| Total operating expense |
|
91,773 |
|
|
109,745 |
|
|
407,611 |
|
|
419,044 |
|
||||
| Income from operations |
|
20,703 |
|
|
96,451 |
|
|
250,571 |
|
|
408,193 |
|
||||
| Other (expense) income | ||||||||||||||||
| Interest income |
|
4,835 |
|
|
1,123 |
|
|
13,338 |
|
|
3,672 |
|
||||
| Interest expense |
|
(481) |
|
(2,892) |
|
(5,700) |
|
(8,320) |
||||||||
| Foreign currency gain(loss), net |
|
(2,468) |
|
(410) |
|
(5,264) |
|
2,122 |
|
|||||||
| Unrealized gain(loss) on investments |
|
1,805 |
|
|
(554) |
|
18,267 |
|
|
(16,514) |
||||||
| Other income |
|
3,484 |
|
|
1,046 |
|
|
6,721 |
|
|
6,787 |
|
||||
| Total other income (expense) |
|
7,175 |
|
|
(1,687) |
|
27,362 |
|
|
(12,253) |
||||||
| Income before income taxes and noncontrolling interest |
|
27,878 |
|
|
94,764 |
|
|
277,933 |
|
|
395,940 |
|
||||
| Income tax provision |
|
2,771 |
|
|
1,406 |
|
|
47,285 |
|
|
56,685 |
|
||||
| Net income |
|
25,107 |
|
|
93,358 |
|
|
230,648 |
|
|
339,255 |
|
||||
| Less net (income) attributable to noncontrolling interest |
|
185 |
|
|
(1,307) |
|
(3,466) |
|
(7,972) |
|||||||
| Net income attributable to common stockholders |
$ |
25,292 |
|
$ |
92,051 |
|
$ |
227,182 |
|
$ |
331,283 |
|
||||
| Earnings per share attributable to common stockholders: | ||||||||||||||||
| Basic |
$ |
0.55 |
|
$ |
2.02 |
|
$ |
4.96 |
|
$ |
7.31 |
|
||||
| Diluted |
$ |
0.55 |
|
$ |
2.00 |
|
$ |
4.91 |
|
$ |
7.20 |
|
||||
| Number of shares used in earnings per share computation: | ||||||||||||||||
| Basic |
|
45,938 |
|
|
45,470 |
|
|
45,803 |
|
|
45,330 |
|
||||
| Diluted |
|
46,245 |
|
|
46,111 |
|
|
46,311 |
|
|
46,036 |
|
||||
|
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 December 31, 2023: |
|||||||||
| Operating Expenses |
Other (Income) Expense |
Income Tax Provision |
Net Income | ||||||
| Per-GAAP |
|
|
|
$ |
25,292 |
|
|||
|
|
|
|
|
||||||
| Diluted earnings per share (per-GAAP) |
|
|
|
$ |
0.55 |
|
|||
|
|
|
|
|
||||||
| Adjustments to reconcile net income to non-GAAP net income: |
|
|
|
|
|||||
|
|
|
|
|
||||||
| Amortization of acquisition-related intangible assets |
3,806 |
|
|
(698) |
|
3,108 |
|
||
|
|
|
|
|
||||||
| Non-cash mark-to-market investment value adjustments |
|
(1,805) |
361 |
|
|
(1,444) |
|||
|
|
|
|
|
||||||
| Investment gain |
|
(2,794) |
|
|
(2,794) |
||||
|
|
|
|
|
||||||
| Restructuring Cost |
(984) |
|
246 |
|
|
(738) |
|||
|
|
|
|
|
||||||
| Non-GAAP |
|
|
|
$ |
23,424 |
|
|||
|
|
|
|
|
||||||
| Diluted shares used in computing earnings per share |
|
|
|
|
46,245 |
|
|||
|
|
|
|
|
||||||
| Non-GAAP diluted earnings per share |
|
|
|
$ |
0.51 |
|
|||
|
Note: Included in GAAP and non-GAAP net income was approximately $5.9 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP diluted earnings per share would have improved by $0.13 per share. |
|
DIODES INCORPORATED AND SUBSIDIARIES CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME – Cont. (in thousands, except per share data) (unaudited)
For the three months ended December 31, 2022: |
|||||||
|
Operating |
Other |
Income Tax |
Net Income |
||||
| Per-GAAP |
$ |
92,051 |
|
||||
| Diluted earnings per share (Per-GAAP) |
$ |
2.00 |
|
||||
| Adjustments to reconcile net income to non-GAAP net income: | |||||||
| Amortization of acquisition-related intangible assets |
3,830 |
(700) |
|
3,130 |
|
||
| Loss on sale of manufacturing facilities |
264 |
(40) |
|
224 |
|
||
| LSC investment related |
554 |
(16,386) |
|
(15,832) |
|||
| Non-GAAP |
$ |
79,573 |
|
||||
| Diluted shares used in computing earnings per share |
|
46,111 |
|
||||
| Non-GAAP diluted earnings per share |
$ |
1.73 |
|
||||
|
Note: Included in GAAP and non-GAAP adjusted net income was approximately $7.6 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.16 per share. |
|
DIODES INCORPORATED AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (in thousands, except per share data) (unaudited)
For the twelve months ended December 31, 2023: |
||||||||
| Operating Expenses |
Other (Income) Expense |
Income Tax Provision |
Net Income | |||||
| Per-GAAP |
|
|
|
$ |
227,182 |
|
||
|
|
|
|
|
|||||
| Diluted earnings per share (per-GAAP) |
|
|
|
$ |
4.91 |
|
||
|
|
|
|
|
|||||
| Adjustments to reconcile net income to non-GAAP net income: |
|
|
|
|
||||
|
|
|
|
|
|||||
| Amortization of acquisition-related intangible assets |
15,282 |
|
(2,803) |
|
12,479 |
|
||
|
|
|
|
|
|||||
| Officer retirement |
2,788 |
|
(571) |
|
2,217 |
|
||
|
|
|
|
|
|||||
| Non-cash mark-to-market investment value adjustments |
|
(18,267) |
1,690 |
|
|
(16,577) |
||
|
|
|
|
|
|||||
| Investment gain |
|
(3,931) |
227 |
|
|
(3,704) |
||
|
|
|
|
|
|||||
| Restructuring Cost |
1,583 |
|
(396) |
|
1,187 |
|
||
|
|
|
|
|
|||||
| Non-GAAP |
|
|
|
$ |
222,784 |
|
||
|
|
|
|
|
|||||
| Diluted shares used in computing earnings per share |
|
|
|
|
46,311 |
|
||
|
|
|
|
|
|||||
| Non-GAAP diluted earnings per share |
|
|
|
$ |
4.81 |
|
||
|
Note: Included in GAAP and non-GAAP adjusted net income was approximately $24.4 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.53 per share. |
|
DIODES INCORPORATED AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (in thousands, except per share data) (unaudited)
For the twelve months ended December 31, 2022: |
||||||||
| Operating Expenses |
Other Income (Expense) |
Income Tax Provision |
Net Income | |||||
| Per-GAAP |
$ |
331,283 |
|
|||||
| Diluted earnings per share (Per-GAAP) |
$ |
7.20 |
|
|||||
| Adjustments to reconcile net income to non-GAAP net income: | ||||||||
| Amortization of acquisition-related intangible assets |
15,610 |
|
(2,857) |
|
12,753 |
|
||
| Acquisition-related costs |
607 |
|
(127) |
|
480 |
|
||
| Insurance recovery for manufacturing facility |
(3,594) |
719 |
|
|
(2,875) |
|||
| Loss on sale of manufacturing facilities |
677 |
(102) |
|
575 |
|
|||
| LSC investment related |
16,514 |
(19,771) |
|
(3,257) |
||||
| Non-GAAP |
$ |
338,959 |
|
|||||
| Diluted shares used in computing earnings per share |
|
46,036 |
|
|||||
| Non-GAAP diluted earnings per share |
$ |
7.36 |
|
|||||
|
Note: Included in GAAP and non-GAAP adjusted net income was approximately $28.7 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.62 per share. |
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
The Company’s financial statements present net income and earnings per share that are calculated using accounting principles generally accepted in the United States (“GAAP”). The Company’s management makes adjustments to the GAAP measures that it feels are necessary to allow investors and other readers of the Company’s financial releases to view the Company’s operating results as viewed by the Company’s management, board of directors and research analysts in the semiconductor industry. These non-GAAP measures are not prepared in accordance with, and should not be considered alternatives or necessarily superior to, GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names. The explanation of the adjustments made in the table above, are set forth below:
Detail of non-GAAP adjustments
Amortization of acquisition-related intangible assets – The Company excluded this item, including amortization of developed technologies and customer relationships. The fair value of the acquisition-related intangible assets is amortized using straight-line methods which approximate the proportion of future cash flows estimated to be generated each period over the estimated useful life of the applicable assets. The Company believes that exclusion of this item is appropriate because a significant portion of the purchase price for its acquisitions was allocated to the intangible assets that have short lives and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both the Company’s newly acquired and long-held businesses. In addition, the Company excluded this item because there is significant variability and unpredictability among companies with respect to this expense.
Officer retirement – The Company excluded costs related to the retirement of two executives. These costs represent cash payments and the accelerated vesting of previously issued stock awards. The Company feels it is appropriate to exclude these costs since they don’t represent ongoing operating expenses and will present investors with a more accurate indication of our continuing operations.
Acquisition related costs – The Company excluded expenses associated with previous acquisitions of that typically consist of advisory, legal and other professional and consulting fees. These costs were expensed as they were incurred and as services were received, and in which the corresponding tax adjustments were made for the non-deductible portions of these expenses. The Company believes the exclusion of the acquisition related costs provides investors with a more accurate reflection of costs likely to be incurred in the absence of an unusual event such as an acquisition and facilitates comparisons with the results of other periods that may not reflect such costs.
Insurance recovery for manufacturing facility – The Company recorded gains related to insurance recovery for a manufacturing facility in Asia. The Company believes the exclusion of the insurance recovery provides investors with a more accurate reflection of the continuing operations of the Company and facilitates comparisons with the results of other periods which may not reflect such gains.
Gain/Loss on sale of manufacturing facilities – The Company sold a manufacturing subsidiary and as part of the transaction, there are working capital adjustments that are recorded as gains or losses in the statement of operations. The Company believes this is not reflective of the ongoing operations and exclusion of this provides investors an enhanced view of the Company’s operating results.
Non-cash mark-to-market investment adjustments – The Company excluded mark-to-market adjustments on various equity related investments. The Company believes this is not reflective of the ongoing operations and exclusion of this provides investors an enhanced view of the Company’s operating results.
Restructuring costs – The Company recorded restructuring charges related to various international locations. These restructuring charges are excluded from management’s assessment of the Company’s operating performance. The Company believes the exclusion of the restructuring charges provides investors an enhanced view of the cost structure of the Company’s operations and facilitates comparisons with the results of other periods that may not reflect such charges or may reflect different levels of such charges.
LSC investments related – The Company excluded mark to market adjustments and the associated tax on certain LSC equity investments. The Company has also excluded certain taxes related to integration and restructuring activities within certain Taiwan subsidiaries including LSC. The Company believes this is not reflective of the ongoing operations and exclusion of this provides investors an enhanced view of the Company’s operating results.
CASH FLOW ITEMS
Free cash flow (FCF) (Non-GAAP)
FCF for the fourth quarter of 2023 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the fourth quarter of 2023, FCF was $11.1 million, which 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 amounts 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 |
|
Twelve Months Ended |
||||||||||||
|
December 31, |
|
December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
||
| Net income (per-GAAP) |
$ |
25,292 |
|
$ |
92,051 |
$ |
227,182 |
|
$ |
331,283 |
||||
| Plus: | ||||||||||||||
| Interest expense (income), net |
|
(4,354) |
|
1,769 |
|
(7,638) |
|
4,648 |
||||||
| Income tax provision |
|
2,771 |
|
|
1,406 |
|
47,285 |
|
|
56,685 |
||||
| Depreciation and amortization |
|
34,644 |
|
|
34,363 |
|
137,367 |
|
|
127,776 |
||||
| EBITDA (non-GAAP) |
$ |
58,353 |
|
$ |
129,589 |
$ |
404,196 |
|
$ |
520,392 |
||||
|
DIODES INCORPORATED AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) |
||||||||
|
December 31, |
|
December 31, |
||||||
|
|
2023 |
|
|
|
2022 |
|
||
|
(unaudited) |
|
(audited) |
||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents |
$ |
315,457 |
|
$ |
336,732 |
|
||
| Restricted Cash |
|
3,026 |
|
|
4,367 |
|
||
| Short-term investments |
|
10,174 |
|
|
7,059 |
|
||
| Accounts receivable, net of allowances of $5,641 and $5,852 at December 31, 2023 and December 31, 2022, respectively |
|
371,930 |
|
|
369,233 |
|
||
| Inventories |
|
389,774 |
|
|
360,281 |
|
||
| Prepaid expenses and other |
|
97,024 |
|
|
83,999 |
|
||
| Total current assets |
|
1,187,385 |
|
|
1,161,671 |
|
||
| Property, plant and equipment, net |
|
746,169 |
|
|
736,730 |
|
||
| Deferred income tax |
|
51,620 |
|
|
35,308 |
|
||
| Goodwill |
|
146,558 |
|
|
144,757 |
|
||
| Intangible assets, net |
|
63,937 |
|
|
79,137 |
|
||
| Other long-term assets |
|
171,990 |
|
|
130,709 |
|
||
| Total assets |
$ |
2,367,659 |
|
$ |
2,288,312 |
|
||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Line of credit |
$ |
40,685 |
|
$ |
36,280 |
|
||
| Accounts payable |
|
158,261 |
|
|
160,442 |
|
||
| Accrued liabilities |
|
179,674 |
|
|
214,433 |
|
||
| Income tax payable |
|
10,459 |
|
|
19,682 |
|
||
| Current portion of long-term debt |
|
4,419 |
|
|
1,693 |
|
||
| Total current liabilities |
|
393,498 |
|
|
432,530 |
|
||
| Long-term debt, net of current portion |
|
16,979 |
|
|
147,470 |
|
||
| Deferred tax liabilities |
|
13,662 |
|
|
12,903 |
|
||
| Unrecognized tax benefits |
|
34,035 |
|
|
31,594 |
|
||
| Other long-term liabilities |
|
99,808 |
|
|
80,896 |
|
||
| Total liabilities |
|
557,982 |
|
|
705,393 |
|
||
| Commitments and contingencies | ||||||||
| 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; 45,938,382 and 45,469,722, issued and outstanding at December 31, 2023 and December 31, 2022, respectively |
|
36,819 |
|
|
36,503 |
|
||
| Additional paid-in capital |
|
509,861 |
|
|
494,773 |
|
||
| Retained earnings |
|
1,675,274 |
|
|
1,448,092 |
|
||
| Treasury stock, at cost, 9,286,862 shares held at December 31, 2023 and 9,281,581 shares held at December 31, 2022 |
|
(337,986) |
|
(337,490) |
||||
| Accumulated other comprehensive loss |
|
(143,227) |
|
(128,233) |
||||
| Total stockholders’ equity |
|
1,740,741 |
|
|
1,513,645 |
|
||
| Noncontrolling interest |
|
68,936 |
|
|
69,274 |
|
||
| Total equity |
|
1,809,677 |
|
|
1,582,919 |
|
||
| Total liabilities and stockholders’ equity |
$ |
2,367,659 |
|
$ |
2,288,312 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240206302560/en/
Company Contact:
Diodes Incorporated
Gurmeet Dhaliwal
Director, IR & Corporate Marketing
P: 408-232-9003
E: Gurmeet_Dhaliwal@diodes.com
Investor Relations Contact:
Shelton Group
Leanne Sievers
President, Investor Relations
P: 949-224-3874
E: lsievers@sheltongroup.com