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Diodes Incorporated Reports Record Second Quarter Fiscal 2022 Financial Results

Achieves 6th Consecutive Quarter of Record Revenue, Gross Profit and Earnings

Diodes Incorporated (Diodes) (Nasdaq: DIOD) today reported its financial results for the second quarter ended June 30, 2022.

Second Quarter Highlights

  • Successfully closed the acquisition of the onsemi wafer fabrication facility on June 3, 2022;
  • Revenue was a record $501.0 million, increasing 13.7 percent from $440.4 million in the second quarter 2021 and 3.9 percent from $482.1 million in the first quarter 2022;
  • GAAP gross profit was a record $206.5 million, increasing 29.2 percent from $159.8 million in the second quarter 2021 and 5.0 percent from $196.7 million in the first quarter 2022;
  • GAAP gross profit margin was a record 41.2 percent, an increase of 490 basis points from the 36.3 percent in the second quarter 2021 and 40 basis points from 40.8 percent in the first quarter 2022;
  • GAAP net income was a record $80.2 million, compared to $55.4 million in the second quarter 2021 and $72.7 million in the first quarter 2022;
  • Non-GAAP adjusted net income was a record $86.9 million, compared to $54.6 million in the second quarter 2021 and $80.3 million in the first quarter 2022;
  • GAAP EPS was a record $1.75 per diluted share, a 43.4 percent improvement from the $1.22 per diluted share in the second quarter 2021 and a 10.1 percent increase compared to $1.59 per diluted share in the first quarter 2022;
  • Non-GAAP EPS was a record $1.90 per diluted share, a 58.3 percent improvement from the $1.20 per diluted share in the prior year quarter and an 8.6 percent increase from the $1.75 per diluted share last quarter;
  • Excluding $6.6 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.14 per diluted share;
  • EBITDA was $130.6 million, or 26.0 percent of revenue, compared to $99.4 million, or 22.6 percent of revenue, in the second quarter 2021 and $118.2 million, or 24.5 percent of revenue, in the first quarter 2022; and
  • Achieved cash flow from operations of $85.0 million and $45.5 million of free cash flow, including $39.6 of capital expenditures. Net cash flow was a positive $1.5 million, including capital expenditures and additional borrowings of $35.1 million related to the purchase of the onsemi wafer fabrication facility.

Commenting on the results, Dr. Keh-Shew Lu, Chairman, President and Chief Executive Officer, stated, “Our achievement of the sixth consecutive quarter of record revenue, gross profit and earnings is a strong testament to our team’s continued execution, especially considering the COVID-related quarantine in China and Taiwan that constrained production during the quarter. In the Shanghai area and other major locations, we shifted our manufacturing facilities to closed-loop operations for two months in the quarter, yet still delivered results above the mid-point of our guidance. Notably, second quarter revenue grew approximately 14% year-over-year, while adjusted earnings per share grew 58% over the same period.

“Our execution was also evidenced by our achievement of 41.2% gross margin, which was the fifth consecutive quarter of improvement and the second consecutive quarter above our target model of 40% largely due to product mix improvements. Contributing to this improvement was our industrial and automotive end markets reaching a combined total of 41% of revenue for the first time, which exceeds our 2025 business model target of 40%. The automotive market, which represented a record 14% of revenue in the quarter, remains a key focus area for Diodes as we continued to gain strong traction with both new and existing customers in all regions.

“Also during the quarter, we successfully closed our acquisition of onsemi’s South Portland, Maine wafer fabrication facility (SPFAB), which provides additional available capacity to support our future growth, especially in the automotive and industrial end markets. We were pleased to welcome the SPFAB workforce to the Diodes’ family as we continue to maintain operational efficiency and fully integrate this facility into our global manufacturing operation. With our third quarter expectations indicating our 10th consecutive quarter of revenue growth and overall record results, Diodes has solidly positioned itself not only as a reliable supplier and partner to our customers, but also a consistent performing investment for our shareholders.”

Second Quarter 2022

Revenue for second quarter 2022 was a record $501.0 million, increasing 13.7 percent from $440.4 million in the second quarter 2021 and 3.9 percent from $482.1 million in the first quarter 2022.

GAAP gross profit for the second quarter 2022 was a record $206.5 million, or a record 41.2 percent of revenue, increasing from $159.8 million, or 36.3 percent of revenue, in the second quarter of 2021 and $196.7 million, or 40.8 percent of revenue, in the first quarter 2022.

GAAP operating expenses for second quarter 2022 were $100.3 million, or 20.0 percent of revenue, and on a non-GAAP basis were $99.7 million, or 19.9 percent of revenue, which excludes $4.0 million of amortization of acquisition-related intangible asset expenses, $0.2 million of acquisition-related costs and a $3.6 million gain on insurance recovery. GAAP operating expenses in the second quarter 2021 were $94.4 million, or 21.4 percent of revenue, and in the first quarter 2022 were $103.6 million, or 21.5 percent of revenue.

Second quarter 2022 GAAP net income was a record $80.2 million, or $1.75 per diluted share, compared to GAAP net income in the second quarter 2021 of $55.4 million, or $1.22 per diluted share, and GAAP net income of $72.7 million, or $1.59 per diluted share, in the first quarter 2022.

Second quarter 2022 non-GAAP adjusted net income was a record $86.9 million, or $1.90 per diluted share, which excluded, net of tax, $6.2 million non-cash mark-to-market adjustment of investments, $3.3 million of acquisition-related intangible asset costs, $0.2 million of acquisition-related costs and a $2.9 million gain on insurance recovery. This compares to non-GAAP adjusted net income of $54.6 million, or $1.20 per diluted share, in the second quarter 2021 and $80.3 million, or $1.75 per diluted share, in the first quarter 2022.

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):

       

Three Months Ended

       

June 30, 2022

Per-GAAP      

$

80,155

 

         
Diluted earnings per share (Per-GAAP)      

$

1.75

 

         
Adjustments to reconcile net income to non-GAAP net income:        
         
Amortization of acquisition-related intangible assets      

 

3,251

 

         
Acquisition-related costs      

 

160

 

         
Insurance Recovery for Manufacturing Facility      

 

(2,875)

 

         
Non-cash market-to-market investment adjustments      

 

6,211

 

         
Non-GAAP      

$

86,902

 

         
Non-GAAP diluted earnings per share      

$

1.90

 

 
 

Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”

(See the reconciliation tables of GAAP net income to non-GAAP adjusted net income near the end of this release for further details.)

Included in second quarter 2022 GAAP net income and non-GAAP adjusted net income was approximately $6.6 million, net of tax, of non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP earnings per share (“EPS”) and non-GAAP adjusted EPS would have increased by $0.14 per diluted share for the second quarter 2022, $0.15 for second quarter 2021 and $0.14 for the first quarter 2022.

EBITDA (a non-GAAP measure), which represents earnings before net interest expense, income tax, depreciation and amortization, in second quarter 2022 was $130.6 million, or 26.0 percent of revenue, increasing from $99.4 million, or 22.6 percent of revenue, in second quarter 2021 and $118.2 million, or 24.5 percent of revenue, in first quarter 2022. For a reconciliation of GAAP net income to EBITDA, see the table near the end of this release for further details.

For second quarter 2022, net cash provided by operating activities was $85.0 million. Net cash flow was a positive $1.5 million, including capital expenditures and additional borrowings of $35.1 million related to the purchase of the onsemi wafer fabrication facility. Free cash flow (a non-GAAP measure) was $45.5 million, which includes $39.6 million of capital expenditures.

Balance Sheet

As of June 30, 2022, the Company had approximately $316 million in cash and cash equivalents, restricted cash, and short-term investments. Total debt (including long-term and short-term) amounted to approximately $265 million and working capital was approximately $715 million.

The results announced today are preliminary and unaudited, as they are subject to the Company finalizing its closing procedures and completion of the quarterly review by its independent registered public accounting firm. As such, these results are subject to revision until the Company files its Form 10-Q for the quarter ending June 30, 2022.

Business Outlook

Dr. Lu concluded, “With our excellent execution and product mix improvements, we are guiding for sequential growth and expect revenue to be approximately $521 million, plus or minus 3 percent, and GAAP gross margin to be 41.5 percent, plus or minus 1 percent. Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 20.5 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $3.0 million. Our income tax rate is expected to be 18.5 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the third quarter are anticipated to be approximately 46.2 million.”

Amortization of acquisition-related intangible assets of $3.2 million, after tax, for previous acquisitions is not included in these non-GAAP estimates.

Conference Call

Diodes will host a conference call on Thursday, August 4, 2022, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its second quarter financial results. Investors and analysts may join the conference call by dialing 1-800-715-9871 and providing the confirmation code 1868940. International callers may join the teleconference by dialing +1-646-307-1963 and entering the same confirmation code at the prompt. A telephone replay of the call will be made available approximately two hours after the call and will remain available until August 11, 2022 at midnight Central Time. The replay number is 1-800-770-2030 with a pass code of 1868940. International callers should dial +1-609-800-9909 and enter the same pass code at the prompt.

Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investors’ section of Diodes' website at http://www.diodes.com. To listen to the live call, please go to the investors’ section of Diodes’ website and click on the conference call link at least 15 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 90 days.

About Diodes Incorporated

Diodes Incorporated (Nasdaq: DIOD), a Standard and Poor’s SmallCap 600 and Russell 3000 Index company, delivers high-quality semiconductor products to the world’s leading companies in the consumer electronics, computing, communications, industrial, and automotive markets. We leverage our expanded product portfolio of discrete, analog, and mixed-signal products and leading-edge packaging technology to meet customers’ needs. Our broad range of application-specific solutions and solutions-focused sales, coupled with worldwide operations of 32 sites, including engineering, testing, manufacturing, and customer service, enables us to be a premier provider for high-volume, high-growth markets. For more information visit 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 containing forward-looking words such as “expect,” “anticipate,” “aim,” “estimate,” and variations thereof, including without limitation statements, whether direct or implied, regarding expectations of that for the third quarter of 2022, we expect revenue to be approximately $521 million plus or minus 3 percent; we expect GAAP gross margin to be 41.5 percent, plus or minus 1 percent; non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 20.5 percent of revenue, plus or minus 1 percent; we expect non-GAAP net interest expense to be approximately $3.0 million; we expect our income tax rate to be 18.5 percent, plus or minus 3 percent; shares used to calculate diluted EPS for the third quarter are anticipated to be approximately 46.2 million. Potential risks and uncertainties include, but are not limited to, such factors as: the risk that the COVID-19 pandemic may continue and have a material adverse effect on customer demand and staffing of our production, sales and administration facilities; the risk that such expectations may not be met; the risk that the expected benefits of acquisitions may not be realized or that integration of acquired businesses may not continue as rapidly as we anticipate; the risk that the cost, expense, and diversion of management attention associated with the LSC acquisition may be greater than we currently expect; the risk that we may not be able to maintain our current growth strategy or continue to maintain our current performance, costs, and loadings in our manufacturing facilities; the risk that we may not be able to increase our automotive, industrial, or other revenue and market share; risks of domestic and foreign operations, including excessive operating costs, labor shortages, higher tax rates, and our joint venture prospects; the risks of cyclical downturns in the semiconductor industry and of changes in end-market demand or product mix that may affect gross margin or render inventory obsolete; the risk of unfavorable currency exchange rates; the risk that our future outlook or guidance may be incorrect; the risks of global economic weakness or instability in global financial markets; the risks of trade restrictions, tariffs, or embargoes; the risk that the coronavirus outbreak or other similar epidemics may harm our domestic or international business operations to a greater extent than we currently anticipate; the risk of breaches of our information technology systems; and other information, including the “Risk Factors” detailed from time to time in Diodes’ filings with the United States Securities and Exchange Commission.

The Diodes logo is a registered trademark of Diodes Incorporated in the United States and other countries.

 

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

             
   

Three Months Ended

 

 

 

Six Months Ended

   

June 30

 

 

 

June 30

   

2022

 

2021

 

 

 

2022

 

2021

Net sales  

$

500,972

 

 

$

440,448

 

     

$

983,095

 

 

$

853,569

 

Cost of goods sold  

 

294,446

 

 

 

280,646

 

     

 

579,872

 

 

 

555,131

 

Gross profit  

 

206,526

 

 

 

159,802

 

     

 

403,223

 

 

 

298,438

 

                     
Operating expenses                    
Selling, general and administrative  

 

69,067

 

 

 

60,280

 

     

 

140,510

 

 

 

118,956

 

Research and development  

 

30,762

 

 

 

29,987

 

     

 

59,439

 

 

 

57,646

 

Amortization of acquisition-related intangible assets  

 

3,980

 

 

 

4,060

 

     

 

7,842

 

 

 

8,083

 

Other operating expense  

 

(3,521)

 

 

 

118

 

     

 

(3,864)

 

 

 

1,006

 

Total operating expense  

 

100,288

 

 

 

94,445

 

     

 

203,927

 

 

 

185,691

 

                     
Income from operations  

 

106,238

 

 

 

65,357

 

     

 

199,296

 

 

 

112,747

 

                     
Other (expense) income                    
Interest income  

 

861

 

 

 

818

 

     

 

1,687

 

 

 

1,586

 

Interest expense  

 

(1,590)

 

 

 

(2,017)

 

     

 

(2,704)

 

 

 

(4,881)

 

Foreign currency (loss) gain, net  

 

1,819

 

 

 

(510)

 

     

 

3,540

 

 

 

(1,789)

 

Unrealized (loss) gain on investments  

 

(7,764)

   

 

5,261

 

     

 

(13,312)

 

 

 

8,916

 

Other income  

 

1,647

 

 

 

1,837

 

     

 

3,523

 

 

 

4,154

 

Total other (expense) income  

 

(5,027)

 

 

 

5,389

 

     

 

(7,266)

 

 

 

7,986

 

                     
Income before income taxes and noncontrolling interest  

 

101,211

 

 

 

70,746

 

     

 

192,030

 

 

 

120,733

 

Income tax provision  

 

18,461

 

 

 

12,120

 

     

 

35,107

 

 

 

21,554

 

Net income  

 

82,750

 

 

 

58,626

 

     

 

156,923

 

 

 

99,179

 

Less net (income) attributable to noncontrolling interest  

 

(2,595)

 

 

 

(3,252)

 

     

 

(4,077)

 

 

 

(4,353)

 

Net income attributable to common stockholders  

$

80,155

 

 

$

55,374

 

     

$

152,846

 

 

$

94,826

 

                     
Earnings per share attributable to common stockholders:                    
Basic  

$

1.77

 

 

$

1.24

 

     

$

3.38

 

 

$

2.13

 

Diluted  

$

1.75

 

 

$

1.22

 

     

$

3.33

 

 

$

2.09

 

Number of shares used in earnings per share computation:                    
Basic  

 

45,265

 

 

 

44,667

 

     

 

45,185

 

 

 

44,538

 

Diluted  

 

45,841

 

 

 

45,380

 

     

 

45,913

 

 

 

45,327

 

 
 

Note: Throughout this release, we refer to “net income attributable to common stockholders” as “net income.”

                     

DIODES INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME

(in thousands, except per share data)

(unaudited)

 

For the three months ended June 30, 2022:

                     
        Operating
Expenses
  Other
Income
(Expense)
  Income Tax
Provision
  Net Income
Per-GAAP                  

$

80,155

 

                     
Diluted earnings per share (Per-GAAP)                  

 

1.75

 

                     
Adjustments to reconcile net income to non-GAAP net income:                
                     
Amortization of acquisition-related intangible assets  

3,980

 

     

(729)

 

 

 

3,251

 

                     
Acquisition-related costs      

204

 

     

(44)

 

 

 

160

 

                     
Insurance Recovery for Manufacturing Facility      

(3,594)

 

     

719

 

 

 

(2,875)

 

                     
Non-cash market-to-market investment adjustments      

7,764

 

(1,553)

 

 

 

6,211

 

                     
Non-GAAP                  

$

86,902

 

                     
Diluted shares used in computing earnings per share                

 

45,841

 

                     
Non-GAAP diluted earnings per share                  

$

1.90

 

 
 

Note: Included in GAAP and non-GAAP net income was approximately $6.6 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP diluted earnings per share would have improved by $0.14 per share.

                       

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME – Cont.

(in thousands, except per share data)

(unaudited)

 

For the three months ended June 30, 2021:

                       
      COGS   Operating
Expenses
  Other
Income
(Expense)
  Income Tax
Provision
  Net Income
Per-GAAP                    

$ 55,374

                       
Diluted earnings per share (Per-GAAP)                    

1.22

                       
Adjustments to reconcile net income to non-GAAP net income:                
                       
Amortization of acquisition-related intangible assets    

4,060

     

(709)

 

3,351

                       
Acquisition-related costs    

149

         

(31)

 

118

                       
Gain on LSC investments            

(5,262)

 

1,052

 

(4,210)

                       
Non-GAAP                    

$ 54,633

                       
Diluted shares used in computing earnings per share                  

45,380

                       
Non-GAAP diluted earnings per share                    

$ 1.20

                       

Note: Included in GAAP and non-GAAP adjusted net income was approximately $6.8 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.15 per share.

                   

DIODES INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME

(in thousands, except per share data)

(unaudited)

   

For the six months ended June 30, 2022:

 
                   
      Operating
Expenses
  Other
Income
(Expense)
  Income Tax
Provision
  Net Income
Per-GAAP                

$

152,846

 

                   
Diluted earnings per share (Per-GAAP)                

 

3.33

 

                   
Adjustments to reconcile net income to non-GAAP net income:          
                   
Amortization of acquisition-related intangible assets  

7,842

 

     

(1,435)

 

 

 

6,407

 

                   
Acquisition-related costs    

479

 

     

(101)

 

 

 

378

 

                   
Insurance Recovery for Manufacturing Facility    

(3,594)

 

     

719

 

 

 

(2,875)

 

                   
Non-cash market-to-market investment adjustments      

13,312

 

(2,856)

 

 

 

10,456

 

                   
Non-GAAP                

$

167,212

 

                   
Diluted shares used in computing earnings per share              

 

45,913

 

                   
Non-GAAP diluted earnings per share                

$

3.64

 

                   

Note: Included in GAAP and non-GAAP adjusted net income was approximately $13.0 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.28 per share.

                       

DIODES INCORPORATED AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME

(in thousands, except per share data)

(unaudited)

For the six months ended June 30, 2021:

                       
      COGS   Operating
Expenses
  Other Income
(Expense)
  Income Tax
Provision
  Net Income
Per-GAAP                    

$

94,826

 

                       
Diluted earnings per share (Per-GAAP)                    

$

2.09

 

                       
Adjustments to reconcile net income to non-GAAP net income:                      
                       
Amortization of acquisition-related intangible assets        

8,083

     

(1,413)

 

 

 

6,670

 

                       
Acquisition-related costs    

2,056

         

(431)

 

 

 

1,625

 

                       
Gain on LSC investments            

(8,916)

 

 

1,783

 

 

 

(7,133)

 

                       
Restructuring costs        

820

     

(123)

 

 

 

697

 

                       
Non-GAAP                    

$

96,685

 

                       
Diluted shares used in computing earnings per share                    

 

45,327

 

                       
Non-GAAP diluted earnings per share                    

$

2.13

 

                       

Note: Included in GAAP and non-GAAP adjusted net income was approximately $11.7 million, net of tax, non-cash share-based compensation expense. Excluding share-based compensation expense, both GAAP and non-GAAP adjusted diluted earnings per share would have improved by $0.26 per share.

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

The Company’s financial statements present net income and earnings per share that are calculated using accounting principles generally accepted in the United States (“GAAP”). The Company’s management makes adjustments to the GAAP measures that it feels are necessary to allow investors and other readers of the Company’s financial releases to view the Company’s operating results as viewed by the Company’s management, board of directors and research analysts in the semiconductor industry. These non-GAAP measures are not prepared in accordance with, and should not be considered alternatives or necessarily superior to, GAAP financial data and may be different from non-GAAP measures used by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures, even if they have similar names. The explanation of the adjustments made in the table above, are set forth below:

Detail of non-GAAP adjustments

Amortization of acquisition-related intangible assets – The Company excluded this item, including amortization of developed technologies and customer relationships. The fair value of the acquisition-related intangible assets is amortized using straight-line methods which approximate the proportion of future cash flows estimated to be generated each period over the estimated useful life of the applicable assets. The Company believes that exclusion of this item is appropriate because a significant portion of the purchase price for its acquisitions was allocated to the intangible assets that have short lives and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both the Company’s newly acquired and long-held businesses. In addition, the Company excluded this item because there is significant variability and unpredictability among companies with respect to this expense.

Acquisition related costs – The Company excluded expenses associated with the acquisition of LITE-ON Semiconductor, which consisted of advisory, legal and other professional and consulting fees. These costs were expensed as they were incurred and as services were received, and in which the corresponding tax adjustments were made for the non-deductible portions of these expenses. The Company believes the exclusion of the acquisition related costs provides investors with a more accurate reflection of costs likely to be incurred in the absence of an unusual event such as an acquisition and facilitates comparisons with the results of other periods that may not reflect such costs.

Non-cash mark-to-market investment adjustments – The Company excluded market to market adjustments on various equity related investments, including certain LSC equity investments. The Company believes this is not reflective of the ongoing operations and exclusion of this provides investors an enhanced view of the Company’s operating results.

Restructuring costs – The Company has recorded restructuring charges related to the shutdown and relocation of one of our assembly and test facilities located in Chengdu, China, restructuring at other China sites, and restructuring of select European entities. These restructuring charges are excluded from management’s assessment of the Company’s operating performance. The Company believes the exclusion of the restructuring charges provides investors an enhanced view of the cost structure of the Company’s operations and facilitates comparisons with the results of other periods that may not reflect such charges or may reflect different levels of such charges.

Insurance Recovery for Manufacturing Facility – The Company has recorded gains related to insurance recovery for a manufacturing facility in Asia. The Company believes the exclusion of the insurance recovery provides investors with a more accurate reflection of the continuing operations of the Company and facilitates comparisons with the results of other periods which may not reflect such gains.

CASH FLOW ITEMS

Free cash flow (FCF) (Non-GAAP)

FCF for the second quarter of 2022 is a non-GAAP financial measure, which is calculated by subtracting capital expenditures from cash flow from operations. For the second quarter of 2022, FCF was $45.5 million, which represents the cash and cash equivalents that we are able to generate after taking into account cash outlays required to maintain or expand property, plant and equipment. FCF is important because it allows us to pursue opportunities to develop new products, make acquisitions and reduce debt.

CONSOLIDATED RECONCILIATION OF NET INCOME TO EBITDA

EBITDA represents earnings before net interest expense, income tax provision, depreciation and amortization. Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties, such as financial institutions in extending credit, in evaluating companies in our industry and provides further clarity on our profitability. In addition, management uses EBITDA, along with other GAAP and non-GAAP measures, in evaluating our operating performance compared to that of other companies in our industry. The calculation of EBITDA generally eliminates the effects of financing, operating in different income tax jurisdictions, and accounting effects of capital spending, including the impact of our asset base, which can differ depending on the book value of assets and the accounting methods used to compute depreciation and amortization expense. EBITDA is not a recognized measurement under 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 used by other companies. For example, our EBITDA takes into account all net interest expense, income tax provision, depreciation and amortization without taking into account any amounts attributable to noncontrolling interest. Furthermore, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments.

The following table provides a reconciliation of net income to EBITDA (in thousands, unaudited):

   

Three Months Ended

 

 

 

Six Months Ended

   

June 30

 

 

 

June 30

   

2022

 

2021

 

 

 

2022

 

2021

Net income (per-GAAP)  

$

80,155

 

$

55,374

     

$

152,846

 

$

94,826

Plus:                    
Interest expense, net  

 

729

 

 

1,199

     

 

1,017

 

 

3,295

Income tax provision  

 

18,461

 

 

12,120

     

 

35,107

 

 

21,554

Depreciation and amortization  

 

31,301

 

 

30,727

     

 

59,895

 

 

61,402

EBITDA (non-GAAP)  

$

130,646

 

$

99,420

     

$

248,865

 

$

181,077

         

DIODES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

         
   

June 30,

 

December 31,

   

2022

 

2021

   

(unaudited)

 

(audited)

Assets        
Current assets:        
Cash and cash equivalents  

$

299,868

 

 

$

363,599

 

Restricted Cash  

 

7,679

 

 

 

3,219

 

Short-term investments  

 

8,833

 

 

 

6,542

 

Accounts receivable, net of allowances of $4,936 and $4,324 at
June 30, 2022 and December 31, 2021, respectively
 

 

401,196

 

 

 

358,496

 

Inventories  

 

371,351

 

 

 

348,622

 

Prepaid expenses and other  

 

125,686

 

 

 

107,194

 

Total current assets  

 

1,214,613

 

 

 

1,187,672

 

Property, plant and equipment, net  

 

671,654

 

 

 

582,079

 

Deferred income tax  

 

20,189

 

 

 

21,256

 

Goodwill  

 

145,898

 

 

 

149,890

 

Intangible assets, net  

 

86,071

 

 

 

94,550

 

Other long-term assets  

 

146,619

 

 

 

159,048

 

Total assets  

$

2,285,044

 

 

$

2,194,495

 

         
Liabilities        
Current liabilities:        
Line of credit  

$

25,907

 

 

$

18,068

 

Accounts payable  

 

219,329

 

 

 

221,254

 

Accrued liabilities  

 

205,152

 

 

 

184,649

 

Income tax payable  

 

40,253

 

 

 

29,682

 

Current portion of long-term debt  

 

9,336

 

 

 

17,381

 

Total current liabilities  

 

499,977

 

 

 

471,034

 

Long-term debt, net of current portion  

 

229,912

 

 

 

265,574

 

Deferred tax liabilities  

 

31,541

 

 

 

32,230

 

Other long-term liabilities  

 

106,155

 

 

 

122,933

 

Total liabilities  

 

867,585

 

 

 

891,771

 

         
Commitments and contingencies        
         
Stockholders' equity        
Preferred stock - par value $1.00 per share; 1,000,000 shares authorized; no shares issued or outstanding  

 

-

 

 

 

-

 

Common stock - par value $0.66 2/3 per share; 70,000,000 shares authorized; 45,288,669 and 45,017,774, issued and outstanding at June 30, 2022 and December 31, 2021, respectively  

 

36,376

 

 

 

36,195

 

Additional paid-in capital  

 

478,374

 

 

 

471,649

 

Retained earnings  

 

1,269,655

 

 

 

1,116,809

 

Treasury stock, at cost, 9,272,513 shares held at June 30, 2022 and December 31, 2021  

 

(337,112)

 

 

 

(336,894)

 
Accumulated other comprehensive loss  

 

(93,974)

 

 

 

(50,517)

 

Total stockholders' equity  

 

1,353,319

 

 

 

1,237,242

 

Noncontrolling interest  

 

64,140

 

 

 

65,482

 

Total equity  

 

1,417,459

 

 

 

1,302,724

 

Total liabilities and stockholders' equity  

$

2,285,044

 

 

$

2,194,495

 

 

Company Contact:
Diodes Incorporated
Gurmeet Dhaliwal
Director, IR & Corporate Marketing
P: 408-232-9003
E: Gurmeet_Dhaliwal@diodes.com

Investor Relations Contact:
Shelton Group
Leanne Sievers
President, Investor Relations
P: 949-224-3874
E: lsievers@sheltongroup.com