Diodes Incorporated Reports First Quarter 2003 Results; Revenue Increases 9.4% to $29.5 Million Due to Growing Penetration in Asian Markets
WESTLAKE VILLAGE, Calif.--April 29, 2003--Diodes Incorporated , a leading manufacturer and supplier of high quality discrete semiconductors, today reported financial results for the first quarter of fiscal year 2003, ended March 31, 2003.First Quarter Highlights:
| -- | Revenue increases 9.4% from 1Q02 to $29.5 million in 1Q03 |
| -- | Net income increased to $1.9 million, or $0.21 per diluted share, up from $208,000, or $0.02 per diluted share, in the same period last year |
| -- | Sales from Asia represent 56% of revenue, reflecting growing regional market share |
| -- | New product revenue accounts for a record 11% of sales |
| -- | Develops breakthrough Schottky barrier process for high efficiency applications |
Revenues for the first quarter of 2003 were $29.5 million, a sequential increase of 2.7% from the fourth quarter of 2002, and an increase of 9.4% from the first quarter of 2002.
Net income for the quarter was $1.9 million, as compared to $208,000 for the three months ended March 31, 2002, and compared to $2.3 million in the fourth quarter ended December 31, 2002. Diluted earnings per share were $0.21 for the first quarter of 2003, as compared to $0.02 for the same period last year.
Commenting on the quarter, C.H. Chen, President and CEO of Diodes Incorporated, said: "We are encouraged by our results in the first quarter. Despite an unprecedented combination of challenging factors, including the inconsistent recovery pattern of the semiconductor industry, seasonal weakness, and geopolitical issues, Diodes maintained our focus on increasing revenue, growing market share and continuing our excellence in manufacturing and customer service. After nearly two years of significant expansion of sales and marketing in the Asia region, we are beginning to realize the benefits of this strategy."
Diodes' growth in the first quarter was driven by the Asian market, which accounted for 56% of sales, up from 47% in the same period last year. Demand for the Company's new products for compact energy-efficient devices, including Powermite(R)3 and Performance Schottky, and the Company's ability to provide better service and support to a growing Asian customer base, enabled Diodes to capture a greater share of this market.
"For the first quarter, our gross profit margin was 24.6%, as compared to 16.2% in the first quarter of 2002, and 25.3% in the prior quarter. Gross margin was impacted by fluctuations in our product mix and competitive pricing on our commodity devices and wafers. However, we expect to see gradual margin expansion going forward, as new products continue to increase as a percentage of sales," stated Mr. Chen.
For the quarter, SG&A expenses were $4.1 million, as compared to $3.9 million in the fourth quarter of 2002, and $3.8 million in the first quarter of 2002. The increase is primarily due to increased insurance costs, selling expenses and incentives, but SG&A expenses as a percentage of sales remained relatively flat at 14.1%.
"Diodes continues to invest in research and development efforts to develop new technology and increase our product range toward higher margin, differentiated products. We expect that our R&D expenditures will increase, and that most of these dollars will be spent at our product development facility at Diodes-FabTech," said Mr. Chen.
"Last year, we began the collaborative development and manufacturing effort between Diodes-FabTech and Diodes-China with the launch of the UDZ series. During the quarter, we announced the development of a breakthrough ultra-low leakage, high voltage Schottky barrier rectifier process. This breakthrough technology, which was developed at Diodes-FabTech, will lead to new products for high efficiency switch-mode power supply (SMPS) applications, such as adaptors, desktops and automotive uses, and allows our customers to boost their power supplies' overall efficiency and gain a competitive edge. We expect to introduce several new higher margin products using this technology over the next two quarters, including a new line of Powermite(R)3 products manufactured at our Diodes-China facility."
At March 31, 2003, Diodes had $8.5 million in cash and cash equivalents, $16.9 million in long-term debt, $6.5 million outstanding on its revolving credit line and $59.9 million in shareholders' equity.
Mr. Chen concluded: "In light of the current economic climate, we remain cautious about predicting the timing of any improvement in the computer and communications markets. Therefore, for the second quarter, we are projecting revenue to be flat to slightly up on a sequential basis. However, as capital spending and PC demand improves and as we continue to introduce new higher margin, proprietary products, we expect the second half of the year to be stronger and to realize the operating leverage in our business."
Conference Call
Diodes Incorporated will hold its first quarter conference call for all interested persons at 8 a.m. PDT (11 a.m. EDT) today to discuss its 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 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 90 days.
About Diodes Incorporated
Diodes Incorporated is a leading manufacturer and supplier of high-quality discrete semiconductor products, primarily to the communications, computing, 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, 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. 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 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.
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
-------------------------
2002 2003
------------ ------------
Net sales $26,924,000 $29,453,000
Cost of goods sold 22,572,000 22,205,000
------------ ------------
Gross profit 4,352,000 7,248,000
Research and development expenses 313,000 260,000
Selling, general and administrative expenses 3,765,000 4,149,000
------------ ------------
Total operating expenses 4,078,000 4,409,000
Income from operations 274,000 2,839,000
Other income (expense)
Interest income 8,000 4,000
Interest expense (346,000) (248,000)
Other 16,000 42,000
------------ ------------
(322,000) (202,000)
Income (loss) before income taxes and
minority interest (48,000) 2,637,000
Income tax benefit (provision) 295,000 (617,000)
------------ ------------
Income before minority interest 247,000 2,020,000
Minority interest in joint venture earnings (39,000) (97,000)
------------ ------------
Net income $208,000 $1,923,000
============ ============
Earnings per share
Basic $0.03 $0.23
============ ============
Diluted $0.02 $0.21
============ ============
Weighted average shares outstanding
Basic 8,165,325 8,314,662
============ ============
Diluted 8,774,016 9,151,496
============ ============
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS
December 31, March 31,
2002 2003
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $7,284,000 $8,536,000
Accounts receivable
Customers 19,387,000 20,161,000
Related parties 3,138,000 1,684,000
------------- -------------
22,525,000 21,845,000
Less: Allowance for doubtful
receivables 353,000 305,000
------------- -------------
22,172,000 21,540,000
Inventories 15,711,000 17,741,000
Deferred income taxes, current 4,338,000 4,339,000
Prepaid expenses, income taxes and
other current assets 1,433,000 1,504,000
------------- -------------
Total current assets 50,938,000 53,660,000
PROPERTY, PLANT AND EQUIPMENT, at cost,
net of accumulated depreciation and
amortization 44,693,000 45,660,000
DEFERRED INCOME TAXES, non-current 3,205,000 2,772,000
OTHER ASSETS
Goodwill, net 5,090,000 5,090,000
Other 1,084,000 1,091,000
------------- -------------
TOTAL ASSETS $105,010,000 $108,273,000
============= =============
DIODES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, March 31,
2002 2003
------------- -------------
(Unaudited)
CURRENT LIABILITIES
Line of credit $3,025,000 $6,543,000
Accounts payable
Trade 9,039,000 9,216,000
Related parties 3,361,000 3,776,000
Accrued liabilities 8,693,000 7,046,000
Current portion of long-term debt
Related party 2,500,000 2,500,000
Other 3,333,000 3,333,000
Current portion of capital lease
obligations 157,000 158,000
------------- -------------
Total current liabilities 30,108,000 32,572,000
LONG-TERM DEBT, net of current portion
Related party 6,250,000 5,625,000
Other 6,333,000 5,500,000
CAPITAL LEASE OBLIGATIONS, net of current
portion 2,495,000 2,441,000
MINORITY INTEREST IN JOINT VENTURE 2,145,000 2,243,000
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;
9,292,764 and 9,483,764 shares issued
at December 31, 2002, and March 31, 2003,
respectively 6,195,000 6,322,000
Additional paid-in capital 8,060,000 8,195,000
Retained earnings 45,684,000 47,607,000
------------- -------------
59,939,000 62,124,000
Less:
Treasury stock -- 1,075,672 shares
of common stock, at cost 1,782,000 1,782,000
Accumulated other comprehensive
loss 478,000 450,000
------------- -------------
2,260,000 2,232,000
Total stockholders' equity 57,679,000 59,892,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $105,010,000 $108,273,000
============= =============