Achieves Record Revenue and Gross Profit; Guides to Continued Growth and Margin Improvement in the Third Quarter
PLANO, Texas — (BUSINESS WIRE) — August 8, 2017 — Diodes Incorporated (Nasdaq: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic, analog and mixed-signal semiconductor markets, today reported its financial results for the second quarter ended June 30, 2017.
Second Quarter Highlights
- Revenue was $264.2 million, an increase of 11.8 percent from the $236.3 million in the first quarter 2017 and an increase of 11.7 percent from the $236.6 million in the second quarter 2016;
- Gross profit was $90.1 million, compared to $73.9 million in the first quarter 2017 and $74.8 million in the second quarter 2016;
- Gross profit margin was 34.1 percent, compared to 31.3 percent in the first quarter 2017 and 31.6 percent in the second quarter 2016;
- GAAP net income was $13.2 million, or $0.26 per diluted share, which included approximately $3.8 million of non-cash acquisition-related intangible asset amortization costs and $0.8 million of restructuring cost related to KFAB closure accruals, compared to $1.2 million, or $0.02 per diluted share, in the first quarter 2017 and $5.8 million, or $0.12 per diluted share, in the second quarter 2016;
- Non-GAAP adjusted net income was $17.8 million, or $0.36 per diluted share, compared to $7.0 million, or $0.14 per diluted share, in the first quarter 2017 and $9.8 million, or $0.20 per diluted share, in the second quarter 2016;
- Excluding $4.8 million, net of tax, non-cash share-based compensation expense, both GAAP net income and non-GAAP adjusted net income would have increased by $0.07 per diluted share; and
- Achieved $19.8 million of cash flow from operations, and ($5.0) million free cash flow, including $24.8 million of capital expenditures. Net cash flow was $1.5 million, which includes the pay down of $15.7 million of long-term debt.
Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “The second quarter was highlighted by the achievement of record revenue and gross profit as we continue to capitalize on the strength in global markets and gain market share. All of our targeted end markets and geographies grew sequentially, resulting in record sales in both Asia and Europe. In addition, Pericom attained its highest quarterly revenue and gross profit since the acquisition, further contributing to Diodes’ strong growth and gross margin improvement in the quarter. In fact, consolidated gross margin exceeded 34 percent in the second quarter, which is the highest level since the first quarter of 2011. Next quarter, we expect to approach our target model of 35 percent gross margin on continued improvements in product mix and utilization across our manufacturing facilities. Additionally, our KFAB facility is on schedule to be closed November 15th with all production transfers efficiently in process.
“As a result of this quarter’s solid performance, we have surpassed the $500 million revenue mark for the first half of the year, positioning Diodes to achieve our billion dollar revenue goal in 2017. This quarter also brings us one step closer to our target operating model of 20 percent operating expenses (SG&A plus R&D) and gross margin of 35 percent. As we look to the second half of the year, we remain focused on expanding revenue and improving gross margin during this growth cycle as we benefit from our increased operating leverage and further expand earnings.”
Second Quarter 2017
Revenue for second quarter 2017 was $264.2 million, an increase of 11.8 percent from the $236.3 million in the first quarter 2017 and an increase of 11.7 percent from $236.6 million in second quarter 2016. Revenue in the quarter increased sequentially reflecting continued strength across the Company’s target end markets and geographies combined with higher growth of Pericom products, collectively resulting in market share gains in the quarter.
Gross profit for second quarter 2017 was $90.1 million, or 34.1 percent of revenue, compared to first quarter 2017 of $73.9 million, or 31.3 percent of revenue, and the second quarter 2016 of $74.8 million, or 31.6 percent of revenue. The sequential increase in gross profit margin was due primarily to regional strength in North America and Europe, improved utilization and product mix, including higher contribution from Pericom products.
GAAP operating expenses for second quarter 2017 were $66.3 million, or
25.1 percent of revenue, and $59.8 million, or 22.6 percent of revenue,
on a non-GAAP basis, which excludes $4.6 million of amortization of
acquisition-related intangible asset expenses, $1.7 million of KFAB
restructuring charges and $0.2 million of retention costs. GAAP
operating expenses in the first quarter 2017 were $64.6 million, or 27.3
percent of revenue, and $57.3 million, or 24.2 percent of revenue, on a
non-GAAP basis.
