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 fourth quarter and fiscal year ended December 31, 2013.
Year 2013 Highlights
- Revenue increased to a record $826.8 million, an increase of 30.5 percent over the $633.8 million in 2012;
- Gross profit was $237.8 million compared to $161.6 million in 2012;
- GAAP gross margin was 28.8 percent compared to 25.5 percent in 2012; and non-GAAP gross margin for 2013 was 29.3 percent, which excludes BCD purchase price adjustments;
- GAAP net income was $26.5 million, or $0.56 per diluted share, compared to $24.2 million, or $0.51 per diluted share in 2012;
- Non-GAAP adjusted net income was $50.1 million, or $1.05 per diluted share, compared to $26.1 million, or $0.56 per diluted share in 2012;
- Excluding $8.8 million, net of tax, share-based compensation expense, both GAAP net income and non-GAAP adjusted net income would have increased by $0.18 per diluted share;
- Reduced capital expenditure spending to $44.3 million, or 5.4 percent of revenue, compared to $60.1 million, or 9.5 percent of revenue in the prior year; and
- Achieved $109.9 million cash flow from operations, $39.5 million of net cash flow and $62.8 million free cash flow.
Fourth Quarter Highlights
- Achieved market share gains over third quarter 2013;
- Revenue was $211.0 million, a decrease of 6.0 percent from the $224.5 million in the third quarter 2013, and an increase of 29.2 percent from the $163.3 million in the fourth quarter 2012;
- Gross profit was $60.8 million, compared to $69.6 million in the third quarter of 2013 and $43.2 million in the fourth quarter of 2012;
- Gross profit margin was 28.8 percent, compared to 31.0 percent in the third quarter of 2013 and 26.5 percent in the fourth quarter of 2012;
- GAAP net income was $6.2 million, or $0.13 per diluted share, compared to third quarter 2013 of $13.6 million, or $0.28 per diluted share, and fourth quarter 2012 of $4.1 million, or $0.09 per diluted share;
- GAAP net income was impacted by a $5.3 million non-cash goodwill impairment charge related to the Eris Technology Corporation (Eris) acquisition;
- Non-GAAP adjusted net income was $11.3 million, or $0.24 per diluted share, compared to $15.8 million, or $0.33 per diluted share, in third quarter 2013 and $6.2 million, or $0.13 per diluted share, in fourth quarter 2012;
- Excluding $2.3 million, net of tax, share-based compensation expense, GAAP and non-GAAP adjusted net income would have increased by $0.05 per diluted share; and
- Achieved $32.1 million cash flow from operations and free cash flow was $15.8 million, which consists of $16.3 million of capital expenditures and a reduction in inventory by approximately $13.9 million. Net cash flow was ($7.6) million, mainly due to the pay down of $20 million on our long-term debt.
Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “Diodes ended 2013 achieving 31 percent revenue growth, a 390 basis point improvement in non-GAAP gross margin and a 92 percent increase in non-GAAP net income, which represents our 23rd consecutive year of profitability. During the year, we successfully closed on our acquisition of BCD Semiconductor in March, which was a strong contributor to our revenue growth and market share gains as a result of our expanded analog product portfolio. The integration has been progressing well, and we still have additional cost savings to realize in the coming year as well as increased cross-selling opportunities as design wins ramp throughout the year. BCD, including new Fab 2, negatively impacted our gross margin by approximately 120 basis points in 2013. Diodes’ margin without BCD was 30 percent. Moving forward we expect to capture further synergies over time as we improve loading of the manufacturing facilities and transfer more products internally to maximize operational and cost efficiencies.
“For the fourth quarter, revenue reflected greater than normal seasonality due to weakness in the PC market as well as cautious inventory management at distributors. Despite the prolonged weakness in this market, we have been able to gain market share across our business due to our past design win momentum and new product initiatives. We have a solid pipeline of designs and expanded customer relationships across all regions and product lines. Also during the quarter, we improved our balance sheet by reducing our long-term debt by almost $20 million and inventory by $14 million. When combined with our reduced capital expenditure spending of 5.2 percent of revenue for the quarter, we generated approximately $16 million of free cash flow.
“Looking forward, we remain focused on achieving our goal of $1 billion in annual revenue with model profitability, and the BCD acquisition has brought us one step closer toward achieving this goal.”