Full Year Automotive and Industrial Product Revenue Remained Above Target Model at 46%

PLANO, Texas — (BUSINESS WIRE) — February 6, 2024 — 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):