Revenue Exceeds Expectations, Increasing 7.2% Sequentially Driven by Record Revenue in Automotive, Computing and Consumer End Markets

PLANO, Texas — (BUSINESS WIRE) — November 9, 2020 — Diodes Incorporated (Nasdaq: DIOD) today reported its financial results for the third quarter ended September 30, 2020.

Third Quarter Highlights

• Revenue was $309.5 million, an increase of 7.2 percent compared to $288.7 million in the second quarter 2020;
• Gross profit was $111.1 million, an increase of 9.5 percent compared to $101.5 million in the second quarter 2020;
• Gross profit margin increased 70 basis points to 35.9 percent from 35.2 percent in the second quarter 2020;
• GAAP net income was $27.2 million, or $0.51 per diluted share, as compared to $21.0 million, or $0.40 per diluted share, in the second quarter 2020;
• Non-GAAP adjusted net income was $32.8 million, or $0.62 per diluted share, as compared to $28.6 million, or $0.54 per diluted share, in the second quarter 2020;
• Excluding $5.0 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.09 per diluted share;
• EBITDA was $63.3 million, or 20.5 percent of revenue, compared to $55.3 million, or 19.2 percent of revenue, in the second quarter 2020; and
• Achieved cash flow from operations of $39.7 million and $21.9 million free cash flow, including $17.8 million of capital expenditures. Net cash flow was a positive $85.2 million, which includes an additional draw-down of debt as a partial currency hedge associated with the anticipated close of the Lite-On acquisition at the end of November as well as a pay-down of long-term debt.

Commenting on the results, Dr. Keh-Shew Lu, Chairman, President and Chief Executive Officer, stated, “Third quarter results were better than expected due to a strong recovery in Asia followed by North America, contributing to record revenue in our automotive, consumer and computing end markets. Total worldwide point of sale (POS) revenue increased 19% sequentially and reached a record in the quarter, driven by record POS revenue in Asia at 20% and 16% growth in both Europe and North America. Our record sales in the automotive market grew 18% sequentially and over 5% year-over-year to 11% of total revenue, reflecting Diodes continued success in expanding application opportunities across new and existing customers while further increasing Diodes semiconductor content per vehicle. Additionally, we continued to gain strong momentum with our Pericom IC products in both the automotive and computing markets, and we also saw a resurgence in the consumer market, which has increased approximately 30% from the first quarter of this year.

“In fact, our total revenue has increased 10% from the first quarter of 2020 at the onset of the pandemic with net income increasing approximately 35%, demonstrating both the resiliency of our business as well as the solid leverage in our operating model. We expect to further extend our growth momentum as we continue to see broad-based improvements across our target end markets and geographies, which at the mid-point of our fourth quarter guidance represents the highest quarterly revenue in the Company’s history. These expectations exclude any contribution from our proposed acquisition of Lite-On Semiconductor that is expected to close at the end of November.”

Third Quarter 2020

Revenue for third quarter 2020 was $309.5 million, compared to $288.7 million in the second quarter 2020 and $323.7 million in the third quarter 2019.

GAAP gross profit for the third quarter 2020 was $111.1 million, or 35.9 percent of revenue, compared to the second quarter 2020 of $101.5 million, or 35.2 percent of revenue, and the third quarter 2019 of $122.0 million, or 37.7 percent of revenue.

GAAP operating expenses for third quarter 2020 were $73.2 million, or 23.7 percent of revenue, and on a non-GAAP basis were $68.9 million, or 22.3 percent of revenue, which excludes $4.0 million of amortization of acquisition-related intangible asset expenses and $0.3 million of acquisition-related costs. GAAP operating expenses in the second quarter 2020 were $70.6 million, or 24.5 percent of revenue and in the third quarter 2019 were $73.3 million, or 22.7 percent of revenue.

Third quarter 2020 GAAP net income was $27.2 million, or $0.51 per diluted share, compared to GAAP net income of $21.0 million, or $0.40 per diluted share, in second quarter 2020 and GAAP net income of $38.1 million, or $0.73 per diluted share, in third quarter 2019.

Third quarter 2020 non-GAAP adjusted net income was $32.8 million, or $0.62 per diluted share, which excluded, net of tax, $3.3 million of non-cash acquisition-related intangible asset amortization costs of acquisition-related costs and $2.4 million of acquisition-related financing and other costs. This compares to non-GAAP adjusted net income of $28.6 million, or $0.54 per diluted share, in the second quarter 2020 and $41.9 million, or $0.81 per diluted share, in the third quarter 2019

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):