Gross Profit Improved Year-over-Year Due to Cost Reductions and Product Mix

PLANO, Texas — (BUSINESS WIRE) — May 7, 2015 — Diodes Incorporated (Nasdaq: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic and analog semiconductor markets, today reported its financial results for the first quarter ended March 31, 2015.

First Quarter Highlights

• Revenue was $206.2 million, a decrease of 1.8 percent from the $210.0 million in the first quarter 2014, and a decrease of 7.8 percent from the $223.7 million in the fourth quarter 2014;
• Gross profit was $63.9 million, compared to $61.6 million in the first quarter 2014 and $70.7 million in the fourth quarter 2014;
• Gross profit margin was 31.0 percent, compared to 29.3 percent in the first quarter 2014 and 31.6 percent in the fourth quarter 2014;
• GAAP net income was $11.1 million, or $0.23 per diluted share, compared to first quarter 2014 of $10.2 million, or $0.21 per diluted share, and fourth quarter 2014 of $16.7 million, or $0.34 per diluted share;
• Non-GAAP adjusted net income was $12.7 million, or $0.26 per diluted share, compared to $12.4 million, or $0.26 per diluted share, in first quarter 2014 and $18.3 million, or $0.38 per diluted share, in fourth quarter 2014;
• Excluding $2.4 million, net of tax, non-cash share-based compensation expense, GAAP and non-GAAP adjusted net income would have increased by $0.05 per diluted share; and
• Achieved $38.6 million of cash flow from operations, and $15.0 million of free cash flow, including $23.5 million of capital expenditures. Net cash flow was ($20.9) million, which includes the pay down of $23.1 million of long-term debt and a $15.0 million net increase in short-term investments.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “Revenue in the quarter declined sequentially due to greater than expected softness in the computing market in Asia as well as the currency impact from a stronger U.S. dollar versus the Euro. In spite of the lower revenue base, we further enhanced product mix to enable gross profit improvement year-over-year and to sustain gross margin at 31 percent in the quarter. Additionally, our ongoing cost reduction efforts helped to support profit margins and achieve non-GAAP earnings of $0.26 per share.

“Notable in the quarter, revenue in Europe grew almost 14 percent sequentially, despite the headwinds from the weaker Euro as we continued to gain traction on products sold in the region, specifically in the industrial and automotive markets. The North America market also performed well in the quarter.

“Overall, the first quarter demonstrates the leverage and flexibility of our business model by maintaining strong earnings and cash flow, and we expect a return to growth in the second quarter.”

First Quarter 2015

Revenue for the first quarter 2015 was $206.2 million, a decrease of 1.8 percent from the $210.0 million in the first quarter 2014, and a decrease of 7.8 percent from the $223.7 million in the fourth quarter 2014. Revenue was down sequentially due primarily to more than expected softness in the computing market in Asia and the currency impact from a stronger U.S. dollar versus the Euro.

Gross profit for the first quarter 2015 was $63.9 million, or 31.0 percent of revenue, compared to the first quarter 2014 of $61.6 million, or 29.3 percent of revenue, and compared to the fourth quarter 2014 of $70.7 million, or 31.6 percent of revenue. Gross profit margin was up 170 basis points over the prior year quarter, which reflects cost reductions and continued product mix improvements on approximately the same revenue level.

Operating expenses for the first quarter 2015 were $47.0 million, or 22.8 percent of revenue, compared to $47.2 million, or 22.5 percent of revenue in the first quarter 2014 and $48.6 million, or 21.7 percent of revenue in the fourth quarter 2014.

First quarter 2015 GAAP net income was $11.1 million, or $0.23 per diluted share, compared to first quarter 2014 of $10.2 million, or $0.21 per diluted share, and fourth quarter 2014 of $16.7 million, or $0.34 per diluted share.

First quarter 2015 non-GAAP adjusted net income was $12.7 million, or $0.26 per diluted share, which excluded, net of tax, $1.5 million of non-cash, acquisition related intangible asset amortization costs. This compares to non-GAAP adjusted net income of $12.4 million, or $0.26 per diluted share, in the first quarter 2014 and $18.3 million, or $0.38 per diluted share, in the fourth quarter 2014.