Gross Margin of 37.2% Exceeds Upper End of Guidance, Contributing to Record Net Income and EPS - Both GAAP and Non-GAAP
PLANO, Texas — (BUSINESS WIRE) — May 7, 2019 — Diodes Incorporated (Nasdaq: DIOD) today reported its financial results for the first quarter ended March 31, 2019.
First Quarter Highlights
- Revenue was $302.3 million, an increase of 10.1 percent from the $274.5 million in the first quarter 2018 due to continued market share gains and a decrease of 3.9 percent from the $314.4 million in the fourth quarter 2018;
- GAAP gross profit was $112.4 million, compared to $98.6 million in the first quarter 2018 and $114.2 million in the fourth quarter 2018;
- GAAP gross profit margin was 37.2 percent, compared to 35.9 percent in the first quarter 2018 and 36.3 percent in the fourth quarter 2018;
- GAAP net income was a record $31.7 million, or $0.62 per diluted share, compared to GAAP net income of $18.5 million, or $0.37 per diluted share, in the first quarter 2018 and GAAP net income of $29.5 million, or $0.58 per diluted share, in the fourth quarter 2018;
- Non-GAAP adjusted net income was a record $35.4 million, or $0.69 per diluted share, compared to $24.2 million, or $0.48 per diluted share, in the first quarter 2018 and $33.2 million, or $0.65 per diluted share, in the fourth quarter 2018;
- Excluding $3.5 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.07 per diluted share;
- EBITDA was $69.9 million, or 23.1 percent of revenue, compared to $54.2 million, or 19.7 percent of revenue, in the first quarter 2018 and $70.5 million, or 22.4 percent of revenue, in the fourth quarter 2018; and
- Achieved cash flow from operations of $69.9 million and $51.2 million free cash flow, including $18.6 million of capital expenditures. Net cash flow was a positive $60.5 million.
Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “Diodes once again had an exceptional quarter of solid financial results with increasing profitability. Revenue for the quarter grew 10% over the prior year period on continued market share gains and was down 3.9% sequentially, which was better than typical seasonality. Notably, gross margin increased 90 basis points from the fourth quarter 2018, exceeding the upper end of our guidance range and reaching the highest level since the fourth quarter of 2010, and we expect a further increase in the second quarter. Contributing to this margin expansion was the achievement of record revenue in Europe combined with record revenue in the automotive and industrial end markets. Specifically in the automotive market, revenue grew 7% sequentially and 23% year-over-year as we continued to benefit from past design win activity. Together, these two end markets represented 39% of total revenue, which places us well on track to achieve our long-term target of 40%. Additionally, our Pericom business, excluding frequency control products, reached record revenue levels in the first quarter and contributed to our strong margin performance.
“More recently, on April 1st we announced the closing of the transaction to acquire Texas Instruments’ (TI) wafer fabrication facility and operation located in Greenock, Scotland (GFAB). The ownership transfer has gone very smooth with no interruption to production. We are in the process of aggressively installing Diodes’ processes to fully utilize the additional 8” capacity and capability of the fab, which will support our growth expansion initiatives and future cost reductions. As part of a five-year wafer supply agreement, Diodes is providing foundry services to TI, which is not material to Diodes overall revenue.”
Dr. Lu concluded, “As we look to the second quarter, we expect to extend our growth momentum and market share gains, while further increasing gross margin and lowering operating expenses as a percentage of revenue. Together, these factors will contribute to driving higher profitability and cash flow for Diodes and our shareholders.”
First Quarter 2019
Revenue for first quarter 2019 was $302.3 million, an increase of 10.1 percent from $274.5 million in first quarter 2018 and a decrease of 3.9 percent from $314.4 million in the fourth quarter 2018, which was better than typical seasonality.
GAAP gross profit for the first quarter 2019 was $112.4 million, or 37.2
percent of revenue, compared to the first quarter 2018 of $98.6 million,
or 35.9 percent of revenue, and the fourth quarter 2018 of $114.2
million, or 36.3 percent of revenue. The 90-basis point sequential
increase was primarily due to higher revenue contribution from the
automotive and industrial markets as well as Pericom products.