DIODES
INCORPORATED
FOR IMMEDIATE RELEASE
Diodes Incorporated Reports Record Fourth Quarter and Fiscal 2007
Financial Results
Annual Revenue Increased 17 percent to a Record $401 Million
Fourth Quarter Gross Margin Increased 110 Basis Points
DALLAS, TEXAS - February 13, 2008 -- Diodes Incorporated (NASDAQ:DIOD), a
leading global manufacturer and supplier of high-quality application specific
standard products within the broad discrete and analog semiconductor markets,
today reported financial results for the fourth quarter and fiscal year ended
December 31, 2007.
Fiscal 2007 Highlights:
o Revenue increased 17 percent to a record $401.2 million o Adjusted net income
increased 22 percent to $64.9 million o Adjusted EPS increased 20 percent to
$1.50 per share o Generated $91 million in cash flow from operations
Fourth Quarter Highlights:
o Revenue increased 13.9 percent over the prior year period to a record
$107.6 million
o Gross profit margin increased 110 basis points sequentially to 33.5
percent
o Adjusted net income increased 18 percent to a record $18.6 million, or
$0.43 per share, up from $15.8 million, or $0.37 per share, in the fourth
quarter of 2006
For the fiscal year 2007, revenue increased 16.9 percent to a record $401.2
million, compared to $343.3 million for fiscal 2006. Gross profit increased 14.5
percent to $130.4 million, or 32.5 percent of revenue, compared to $113.9
million, or 33.2 percent, last year. Net income increased 23.9 percent to $59.7
million, or $1.41 per diluted share, compared to $48.1 million, or $1.16 per
share, in 2006. Adjusted net income, which excludes $4.3 million of net
share-based compensation and $1.0 million in net restructuring charges in 2007,
increased 21.5 percent to $64.9 million, or $1.50 per diluted share, compared to
$53.4 million in 2006.
Revenue for the fourth quarter of 2007 increased 13.9 percent to $107.6 million,
compared to $94.4 million reported in the fourth quarter of 2006. Sequentially,
revenue were 2.2 percent higher due to a 1.2 percent increase in units sold and
a more favorable product mix.
Gross profit for the fourth quarter of 2007 increased 14.2 percent to $36.0
million, or 33.5 percent of revenue, as compared to $31.5 million, or 33.4
percent of revenue, in the prior year quarter and 32.4 percent in the third
quarter of 2007.
Commenting on the results, Dr. Keh-Shew Lu, President and CEO of Diodes
Incorporated, said, "We are pleased to once again report record results for both
the quarter and the year. Most notably in the quarter, we achieved strong gross
margin improvements as a result of the benefits associated with internalizing
our analog manufacturing as well as a shift in product mix towards our new,
higher margin products. We also continued to make significant progress with our
new product road map and overall design activity remained strong, in particular
with our Hall sensors for cell phones and notebook computers. Additionally, Asia
sales volume further expanded in the quarter with solid demand in the consumer
and computer markets."
Dr. Lu further commented, "These quarterly results conclude another outstanding
year for Diodes with record revenue and profit for 2007. Our 17 percent top-line
growth once again outpaced the semiconductor market, which grew approximately
3.2 percent for the year. Our consistent performance is a direct result of our
history of execution in broadening our market focus, aggressively introducing
new products and gaining share in our high growth markets. Overall, our
strategic initiative to become a broad-based supplier is widely accepted by our
customers and continues to drive increased market share in the discrete and
analog space. Our business and financial successes further validate our ability
to deliver profitable growth, which has consistently outperformed the industry.
We also continue to realize incremental operational efficiencies that will
contribute to improved results and margins over time, as evidenced by our fourth
quarter."
Fourth quarter net income was $18.3 million, or $0.43 per diluted share,
compared to $14.7 million, or $0.35 per share, in the fourth quarter of 2006 and
$16.1 million, or $0.38 per share, in the prior quarter.
Adjusted net income for the fourth quarter of 2007, which excludes $1.3 million
of SFAS 123R stock option expense and a $0.7 million credit due to lower actual
restructuring charges, was a record $18.6 million, or $0.43 per diluted share,
an increase of 18.1 percent compared to the $15.8 million, or $0.37 per share,
reported in the prior year quarter and an increase of 8.9 percent compared to
the $17.1 million, or $0.40 per share, reported in the third quarter of 2007.
As of December 31, 2007, Diodes had approximately $380 million in total cash and
short-term investments, $452 million in working capital, $237 million in
long-term debt (including the convertible note) and unused and available credit
facilities of $59 million.
Business Outlook
"As we look to the first quarter of 2008, we expect revenue to be in the range
of $95 million to $101 million with gross margin comparable to the fourth
quarter," stated Dr. Lu. "Our estimated first quarter revenue reflects
seasonality combined with the impact of the overall weakening economy, in
particular on key targeted end-equipment in the consumer and computing markets,
as well as our foundry and subcontracting business, which is showing greater
weakness than our core revenue drivers. Over the longer-term, we believe that
Diodes' history of execution in significantly outperforming the industry,
combined with our focus on customer-centric innovation and efficient
manufacturing, will return us to our historical growth rates and will continue
to deliver positive results for our shareholders. Additionally, we remain
focused on evaluating synergistic, accretive acquisition targets in the coming
quarter and beyond to further drive increased value and profitable growth for
Diodes."
Conference Call
Diodes will host a conference call on Wednesday, February 13, 2008 at 10:00 a.m.
Central Time (11:00 a.m. Eastern Time) to discuss its fourth quarter and fiscal
2007 financial results. This conference call will be broadcast live over the
Internet and can be accessed by all interested parties on the Investor section
of Diodes' website at http://www.diodes.com. To listen to the live call, please
go to the Investor section of Diodes website and click on the Conference Call
link at least fifteen 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 60 days.
About Diodes Incorporated
Diodes Incorporated (Nasdaq: DIOD), an S&P SmallCap 600 Index company, is a
leading global manufacturer and supplier of high-quality application specific
standard products within the broad discrete and analog semiconductor markets,
serving the consumer electronics, computing, communications, industrial and
automotive markets. Diodes' products include diodes, rectifiers, transistors,
MOSFETs, protection devices, functional specific arrays, power management
devices including DC-DC switching and linear voltage regulators, amplifiers and
comparators, and Hall-effect sensors. The Company has its corporate offices in
Dallas, Texas, with a sales, marketing, engineering and logistics office in
Southern California; design centers in Dallas, San Jose and Taipei; a wafer
fabrication facility in Missouri; two manufacturing facilities in Shanghai; a
fabless IC plant in Hsinchu Science Park, Taiwan; engineering, sales, warehouse
and logistics offices in Taipei and Hong Kong, and sales and support offices
throughout the world. With its acquisition of APD Semiconductor, a privately
held U.S.-based fabless semiconductor company, Diodes acquired proprietary
SBR(R) technology. Diodes, Inc.'s product focus is on high-growth end-user
equipment markets such as TV/Satellite set-top boxes, portable DVD players,
datacom devices, ADSL modems, power supplies, medical devices, wireless
notebooks, flat panel displays, digital cameras, mobile handsets, DC to DC
conversion, wireless 802.11 LAN access points, brushless DC motor fans, and
automotive applications. For further information, including SEC filings, visit
the Company's website at http://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 regarding our expectation that:
we will continue to focus on gross margin improvements by internalizing our
analog manufacturing and shifting product mix towards our new and higher margin
products; we continue to make significant progress with our new product road
map; our overall design activity continues to be strong, particularly with our
Hall sensors for cell phones and notebook computers; Asia continues to expand
sales volume; we continue to broadening our market focus, aggressively
introducing new products and gaining share in our high growth markets; our
customers continue to accept our strategic initiative to become a broad-based
supplier and such strategic initiative continues to drive increased market share
in the discrete and analog space; our ability to deliver profitable growth
continues to consistently outperform the industry; we continue to realize
incremental operational efficiencies to improve earnings results and gross
margin; we expect our first quarter gross margin to be comparable to the fourth
quarter 2007's gross margin; we expect our estimated first quarter revenue
reflects seasonality combined with the impact of the overall weakening economy,
in particular on key targeted end-equipment in the consumer and computing
markets, as well as our foundry and subcontracting business; we will return to
our historical growth rates and will continue to deliver positive results for
our shareholders based on our execution in significantly outperforming the
industry and our focus on customer-centric innovation and efficient
manufacturing; we continue to focus on evaluating synergistic and accretive
acquisition targets to further increase Company's value and its profitable
growth. Potential risks and uncertainties include, but are not limited to, such
factors as the Company's business strategy, the introduction and market
reception to new product announcements, fluctuations in product demand and
supply, the continue introduction of new products, the Company's ability to
maintain customer and vendor relationships, technological advancements, impact
of competitive products and pricing, growth in targeted markets, successful
integration of acquired companies and/or assets, the Company's ability to
successfully make additional acquisitions, risks of foreign operations,
availability of tax credits, and other information detailed from time to time in
the Company's filings with the United States Securities and Exchange Commission.
Recent news releases, annual reports, and SEC filings are available at the
Company's website: http://www.diodes.com. Written requests may be sent directly
to the Company, or they may be e-mailed to: diodes-fin@diodes.com.
Company Contact: Investor Contact:
Carl Wertz Leanne Sievers
Chief Financial Officer EVP, IR
Diodes, Inc. Shelton Group
(805) 446-4800 (949) 224-3874
carl_wertz@diodes.com lsievers@sheltongroup.com
CONSOLIDATED CONDENSED INCOME STATEMENT and BALANCE SHEET FOLLOW
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve months ended
December 31, 2007, December 31, 2007,
--------- --------- --------- ---------
2006 2007 2006 2007
--------- --------- --------- ---------
Net sales $ 94,432 $ 107,591 $ 343,308 $ 401,159
Cost of goods sold 62,883 71,567 229,416 270,780
--------- --------- --------- ---------
Gross profit 31,549 36,024 113,892 130,379
Selling, general and administrative 13,063 14,778 47,945 55,461
expenses
Research and development expenses 2,332 3,860 8,317 13,515
Restructuring costs and fixed asset impairment - (767) 152 1,003
--------- --------- --------- ---------
Total operating expenses 15,395 17,871 56,414 69,979
Income from operations 16,154 18,153 57,478 60,400
Other income (expense)
Interest income 3,891 5,085 6,699 18,117
Interest expense (1,218) (1,704) (1,582) (6,831)
Other 225 (155) (1,474) (225)
--------- --------- --------- ---------
2,898 3,226 3,643 11,061
Income before income taxes and minority interest 19,052 21,379 61,121 71,461
Income tax provision (3,911) (2,306) (11,689) (9,428)
--------- --------- --------- ---------
Income before minority interest 15,141 19,073 49,432 62,033
Minority interest in joint venture earnings (466) (775) (1,289) (2,376)
--------- --------- --------- ---------
Net income $ 14,675 $ 18,298 $ 48,143 $ 59,657
========= ========= ========= =========
Earnings per share
Basic* $ 0.38 $ 0.46 $ 1.25 $ 1.51
Diluted* $ 0.35 $ 0.43 $ 1.16 $ 1.41
========= ========= ========= =========
Number of shares used in computation
Basic* 38,925 40,113 38,443 39,601
Diluted * 41,829 42,702 41,502 42,331
========= ========= ========= =========
* Adjusted for the effect of a 3-for-2 stock split in July 2007.
Three Months Ended Twelve months ended
December 31, 2007, December 31, 2007,
-------- -------- -------- --------
2006 2007 2006 2007
-------- -------- -------- --------
Net income $ 14,675 $ 18,298 $ 48,143 $ 59,657
======== ======== ======== ========
Adjustments to reconcile net income to adjusted net income:
Stock option expense
included in cost of goods sold: 70 54 469 273
Stock option expense
included in selling and general
administrative expenses: 1,283 1,144 5,394 4,824
Stock option expense
included in research and
development expenses: 164 108 603 463
Total stock option expense 1,517 1,306 6,466 5,560
Restructuring costs - (709) - 1,061
Other adjustments - - - 55
Income tax benefit related to
stock option expense, restructuring costs and other adjustments 406 251 1,170 1,384
Adjusted net income $ 15,786 $ 18,644 $ 53,439 $ 64,949
======== ======== ======== ========
Diluted shares used in computing
earnings per share 41,829 42,702 41,502 42,331
Incremental shares considered
to be outstanding:* 801 790 949 836
-------- -------- -------- --------
Adjusted diluted shares used in computing
Adjusted earnings per share 42,630 43,492 42,451 43,167
======== ======== ======== ========
Adjusted earnings per share
Basic* $ 0.41 $ 0.46 $ 1.39 $ 1.64
Diluted* $ 0.37 $ 0.43 $ 1.26 $ 1.50
======== ======== ======== ========
* Adjusted for the effect of a 3-for-2 stock split in July 2007.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA
EBITDA represents earnings before net interest expense, income tax provision,
depreciation and amortization. Our management believes EBITDA is useful to
investors because it is frequently used by securities analysts, investors and
other interested parties in evaluating companies in our industry. In addition,
our management believes that EBITDA is useful in evaluating our operating
performance compared to that of other companies in our industry because the
calculation of EBITDA generally eliminates the effects of financing and income
taxes and the accounting effects of capital spending, which items may vary for
different companies for reasons unrelated to overall operating performance. As a
result, our management uses EBITDA as a measure to evaluate the performance of
our business. However, EBITDA is not a recognized measurement under generally
accepted accounting principles, or 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 of
other companies. Furthermore, EBITDA is not intended to be a measure of free
cash flow for our management's discretionary use, as it does not consider
certain cash requirements such as a tax and debt service payments.
The following table provides a reconciliation of net income to EBITDA (in
thousands, unaudited):
Three Months Ended
December 31, 2007,
-------- --------
2006 2007
-------- --------
Net Income $ 14,675 $ 18,298
Plus:
Interest expense, net (2,673) (3,692)
Income tax provision 3,911 2,306
Depreciation and amortization 7,012 7,916
-------- --------
EBITDA $ 22,925 $ 24,828
-------- --------
Twelve Months Ended
December 31, 2007,
-------- --------
2006 2007
-------- --------
Net Income $ 48,143 $ 59,657
Plus:
Interest expense, net (5,117) (12,538)
Income tax provision 11,689 9,428
Depreciation and amortization 21,065 28,333
-------- --------
EBITDA $ 75,780 $ 84,880
-------- --------
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
(in thousands, except share data)
December 31, December 31,
2006 2007
--------- ---------
CURRENT ASSETS (unaudited)
Cash and cash equivalents $ 48,888 $ 56,179
Short-term investments 291,008 323,472
--------- ---------
Total cash and short-term investments 339,896 379,651
Accounts receivable
Customers 72,175 84,638
Related parties 6,147 5,405
--------- ---------
78,322 90,043
Less: Allowance for doubtful receivables (617) (465)
--------- ---------
77,705 89,578
Inventories 48,202 53,031
Deferred income taxes, current 4,650 5,174
Prepaid expenses and other current assets 8,393 10,576
--------- ---------
Total current assets 478,846 538,010
PROPERTY, PLANT AND EQUIPMENT, at cost, net
of accumulated depreciation and amortization 95,469 123,407
DEFERRED INCOME TAXES, non current 5,428 3,241
OTHER ASSETS
Intangible assets 10,669 9,643
Goodwill 25,030 25,135
Other 6,697 6,929
--------- ---------
TOTAL ASSETS $ 622,139 $ 706,365
========= =========
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands, except share data)
December 31, December 31,
2006 2007
-------- --------
(unaudited)
CURRENT LIABILITIES
Accounts payable
Trade 40,030 42,010
Related parties 12,120 13,135
Accrued liabilities 24,966 27,841
Income tax payable 3,433 1,732
Long-term debt, current portion 2,802 1,345
Capital lease obligations, current portion 141 145
-------- --------
Total current liabilities 83,492 86,208
LONG-TERM DEBT, net of current portion
2.25% convertible senior notes due 2026 230,000 230,000
Others 7,115 5,815
CAPITAL LEASE OBLIGATIONS, net of current portion 1,477 1,331
OTHER LONG-TERM LIABILITIES 1,101 6,249
MINORITY INTEREST IN JOINT VENTURE 4,787 7,164
-------- --------
Total liabilities 327,972 336,767
STOCKHOLDERS' EQUITY
Preferred stock - par value $1.00 per share;
1,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock - par value $0.66 2/3 per share;
70,000,000 shares authorized; 38,941,901 and 40,172,491
shares issued and outstanding at December 31, 2006
and December 31, 2007, respectively (1) 17,308 26,782
Additional paid-in capital 113,449 121,412
Retained earnings 162,802 220,504
Accumulated other comprehensive gain 608 900
-------- --------
Total stockholders' equity 294,167 369,598
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $622,139 $706,365
======== ========
(1) Adjusted for the effect of a 3-for-2 stock split in July 2007