Diodes, Inc. Reports Second Quarter 2002 Results; -- Q2 Net Income Triples to $1.6 million, $0.18 per share, Compared to Q2 2001
WESTLAKE VILLAGE, Calif.--July 31, 2002--Diodes Incorporated , a leading manufacturer and supplier of high quality discrete semiconductors, today reported financial results for the second quarter ended June 30, 2002.Second Quarter Highlights:
| -- | Revenue grows 42.6% from Q2 2001 and 11.2% sequentially |
| -- | Gross margin improves 760 basis points from the first quarter to 23.8% |
| -- | $10 million debt restructuring strengthens cash position |
| -- | Launches UDZ series of Zener diodes, the first product series utilizing the Company's high precision, proprietary Zener diode process |
Revenues for the second quarter of 2002 were $29.9 million, a sequential increase of 11.2% from the first quarter of 2002, and an increase of 42.6% from the second quarter of 2001.
Net income for the quarter was $1.6 million, as compared to $525,000 for the three months ended June 30, 2001 and compared to $208,000 in the first quarter ended March 31, 2002. Diluted earnings per share were $0.18 for the second quarter of 2002, as compared to $0.06 for the same period last year.
For the first six months of 2002, the Company earned $1.8 million, or $0.20 per diluted share, on revenues of $56.9 million, compared to net income of $1.0 million, or $0.12 per diluted share, on revenues of $46.7 million for the same period in 2001.
C.H. Chen, Diodes' President and CEO, said, "We are pleased with our performance for the second quarter of 2002. We are especially encouraged by the acceptance of our next-generation discrete products in the marketplace. Worldwide demand for semiconductors is slowly improving and our success in securing record numbers of new design wins over the past several quarters is translating into increased market penetration and higher revenue. This combination of revenue growth and our continued cost containment efforts resulted in a nearly fourfold increase in operating income."
Diodes revenue growth in the second quarter was driven by the strength primarily in the North American markets, which accounted for 54% of sales.
Unit demand was up across all markets year-over-year and showed a 38% increase in total, and increased 8% sequentially. In addition, overall average selling prices have improved 4.5% sequentially. Pricing remained weak in Asia, where prices were down 1% sequentially, but appear to be stabilizing.
Capacity utilization increased sequentially to 80% at the Mainland China facility, Diodes-China, from 58% in the first quarter, and to 73% at our wafer facility, Diodes-FabTech, from 65% in the prior quarter. Increased utilization, which was due to renewed distribution and OEM ordering, led to lower unit costs and a significant improvement in gross profit margin. For the quarter, the gross profit margin was 23.8%, compared to 16.2% in the first quarter of 2002 and 19.3% in the same period last year.
For the quarter, SG&A expenses were $4.4 million, or 14.6% of sales, as compared to $3.3 million, or 15.6% of sales, in the comparable quarter last year, and compared to 14.0% of sales last quarter.
Research and development expenses continue to ramp up based on Diodes multi-year strategy to develop leading next-generation products and to become a dominant semiconductor supplier. For the second quarter, R&D spending increased to $460,000 from $313,000 in the prior quarter.
"Our market share for targeted differentiated products continues to improve and new products now account for approximately 6% of revenue," Mr. Chen continued. "During the quarter, we launched several major new products to support the Company's integrated platform of discrete products including our UDZ series, the first series of Zener diodes using our proprietary technology, and our matched dual transistor arrays. The new UDZ chip technology premiered in the sub-miniature SOD-323 package and is scheduled to be implemented across a range of semiconductor packaging and in conjunction with other discrete technologies."
Diodes generated $9.0 million in positive cash flow from operations in the first six months of 2002, with $4.8 million in the second quarter. The Company ended the second quarter with $6.8 million in cash and cash equivalents, after paying down $3.0 million in term debt and approximately $3.2 million on its revolving credit facility since the beginning of the year. Inventories increased slightly from the first quarter to $15.3 million as industry demand improved, but levels remain conservatively lower than those posted in 2001.
Mr. Chen concluded, "We are cautiously optimistic about the state of the semiconductor industry. After a challenging year, we are seeing renewed distributor ordering but we remain watchful of the end equipment demand. Therefore, for the third quarter, we are projecting revenue to be flat to slightly up, with gross margins expected to increase approximately 100 basis points as we gain from operational efficiencies, improved capacity utilization and sales of higher margin, differentiated products."
About Diodes Incorporated
Diodes Incorporated is a leading manufacturer and supplier of high-quality discrete semiconductor products, serving the communications, computer, industrial, consumer electronics and automotive markets. The Company operates three Far East subsidiaries, Diodes-China (QS-9000 and ISO-14001 certified) in Shanghai, Diodes-Taiwan (ISO-9000 certified) in Taipei, and Diodes-Hong Kong. Diodes-China's manufacturing focus is on subminiature surface-mount devices destined for wireless devices, notebook, flat panel display, digital camera, mobile handset, set top box, DC to DC conversion, and automotive applications, among others. Diodes-Taiwan is our Asia-Pacific sales, logistics and distribution center. Diodes-Hong Kong covers sales warehouse and logistics functions. The Company's 5" wafer foundry, Diodes-FabTech (QS-9000 certified), specializes in Schottky products and is located just outside Kansas City, Missouri. The Company's ISO-9000 corporate sales, marketing, engineering and logistics headquarters is located in Southern California. For further information, visit the Company's Web site 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. Potential risks and uncertainties include, but are not limited to, such factors as fluctuations in product demand, the 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, risks of foreign operations, 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 Web site: http://www.diodes.com. Written requests may be sent directly to the Company, or they may be e-mailed to: diodes-fin@diodes.com.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2002 2001 2002
Net sales $21,001,000 $29,946,000 $46,749,000 $56,870,000
Cost of goods sold 16,957,000 22,815,000 38,584,000 45,387,000
Gross profit 4,044,000 7,131,000 8,165,000 11,483,000
Research and
development expenses 170,000 460,000 309,000 773,000
Selling, general and
administrative
expenses 3,283,000 4,370,000 6,328,000 8,135,000
Total operating
expenses 3,453,000 4,830,000 6,637,000 8,908,000
Income from
operations 591,000 2,301,000 1,528,000 2,575,000
Other income (expense)
Interest income 69,000 16,000 136,000 25,000
Interest expense (570,000) (292,000) (1,310,000) (638,000)
Other 220,000 109,000 123,000 125,000
(281,000) (167,000) (1,051,000) (488,000)
Income before income
taxes and minority
interest 310,000 2,134,000 477,000 2,086,000
Income tax benefit
(provision) 260,000 (473,000) 689,000 (178,000)
Income before minority
interest 570,000 1,661,000 1,166,000 1,908,000
Minority interest in
joint venture
earnings (45,000) (98,000) (119,000) (136,000)
Net income $ 525,000 $ 1,563,000 $ 1,047,000 $ 1,772,000
Earnings per share
Basic $ 0.06 $ 0.19 $ 0.13 $ 0.22
Diluted $ 0.06 $ 0.18 $ 0.12 $ 0.20
Weighted average shares
outstanding
Basic 8,143,318 8,176,025 8,139,501 8,170,704
Diluted 8,896,744 8,874,416 8,970,791 8,824,025
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
December 31, June 30,
2001 2002
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 8,103,000 $ 6,821,000
Accounts receivable
Customers 16,250,000 19,148,000
Related parties 1,486,000 4,033,000
17,736,000 23,181,000
Less: Allowance for doubtful
receivables 343,000 367,000
17,393,000 22,814,000
Inventories 17,813,000 15,334,000
Deferred income taxes, current 4,368,000 4,373,000
Prepaid expenses, income taxes and
other current assets 1,266,000 2,426,000
Total current assets 48,943,000 51,768,000
PROPERTY, PLANT AND EQUIPMENT, at cost, net
of accumulated depreciation and
amortization 44,925,000 44,698,000
DEFERRED INCOME TAXES, non-current 3,672,000 3,213,000
OTHER ASSETS
Goodwill, net 5,090,000 5,090,000
Other 628,000 1,055,000
TOTAL ASSETS $ 103,258,000 $ 105,824,000
The accompanying notes are an integral part of these financial
statements.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30,
2001 2002
(Unaudited)
CURRENT LIABILITIES
Line of credit $ 6,503,000 $ 360,000
Accounts payable
Trade 6,098,000 9,926,000
Related parties 3,149,000 4,273,000
Accrued liabilities 5,062,000 6,498,000
Current portion of long-term debt
Related party 2,500,000 2,500,000
Other 5,833,000 8,094,000
Current portion of capital lease
obligations -- 154,000
Total current
liabilities 29,145,000 31,805,000
LONG-TERM DEBT, net of current portion
Related party 7,500,000 7,500,000
Other 13,664,000 8,399,000
CAPITAL LEASE OBLIGATIONS, net of current
portion -- 2,564,000
MINORITY INTEREST IN JOINT VENTURE 1,825,000 1,962,000
STOCKHOLDERS' EQUITY
Class A convertible 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; 30,000,000 shares
authorized; 9,227,664 and
9,252,164 shares issued and
outstanding at December 31, 2001
and June 30, 2002, respectively 6,151,000 6,167,000
Additional paid-in capital 7,310,000 7,809,000
Retained earnings 39,882,000 41,654,000
53,343,000 55,630,000
Less:
Treasury stock -- 1,075,672
shares of common stock, at cost 1,782,000 1,782,000
Accumulated other comprehensive
loss 437,000 254,000
2,219,000 2,036,000
Total stockholders' equity 51,124,000 53,594,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $103,258,000 $105,824,000
The accompanying notes are an integral part of these financial
statements.