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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

Or

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission file number: 002-25577

 

DIODES INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

95-2039518

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

4949 Hedgcoxe Road, Suite 200, Plano, Texas

 

75024

(Address of principal executive offices)

 

(Zip code)

(972) 987-3900

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $0.66 2/3

 

DIOD

 

The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

The number of shares of the registrant’s Common Stock outstanding as of November 3, 2022 was 45,469,713.

 

 


 

 

Table of Contents

 

 

 

Page

 

Part I – Financial Information

 

 

 

Item 1. Financial Statements

 

3

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

29

 

Item 4. Controls and Procedures

 

29

 

Part II – Other Information

 

 

Item 1. Legal Proceedings

 

30

Item 1A. Risk Factors

 

30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

30

Item 3. Defaults Upon Senior Securities

 

30

Item 4. Mine Safety Disclosures

 

30

Item 5. Other Information

 

30

Item 6. Exhibits

 

31

 

Signatures

 

32

 

 

 

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

September 30,

 

 

December 31,

 

 

2022

 

 

2021

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

378,996

 

 

$

363,599

 

Restricted cash

 

6,836

 

 

 

3,219

 

Short-term investments

 

6,909

 

 

 

6,542

 

Accounts receivable, net of allowances of $5,356 and $4,324 at
  September 30, 2022 and December 31, 2021, respectively

 

377,549

 

 

 

358,496

 

Inventories

 

374,811

 

 

 

348,622

 

Prepaid expenses and other

 

131,460

 

 

 

107,194

 

Total current assets

 

1,276,561

 

 

 

1,187,672

 

Property, plant and equipment, net

 

698,452

 

 

 

582,079

 

Deferred income tax

 

17,718

 

 

 

21,256

 

Goodwill

 

141,175

 

 

 

149,890

 

Intangible assets, net

 

81,619

 

 

 

94,550

 

Other long-term assets

 

147,039

 

 

 

159,048

 

Total assets

$

2,362,564

 

 

$

2,194,495

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Lines of credit

$

35,258

 

 

$

18,068

 

Accounts payable

 

196,543

 

 

 

221,254

 

Accrued liabilities and other

 

220,496

 

 

 

184,649

 

Income tax payable

 

49,985

 

 

 

29,682

 

Current portion of long-term debt

 

9,259

 

 

 

17,381

 

Total current liabilities

 

511,541

 

 

 

471,034

 

Long-term debt, net of current portion

 

251,174

 

 

 

265,574

 

Deferred tax liabilities

 

30,095

 

 

 

32,230

 

Other long-term liabilities

 

107,050

 

 

 

122,933

 

Total liabilities

 

899,860

 

 

 

891,771

 

 

 

 

 

 

 

Commitments and contingencies (See Note 9)

 

 

 

 

 

 

 

 

 

 

 

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; and
45,468,133 shares and 45,017,774 shares issued and
  outstanding at September 30, 2022 and December 31, 2021, respectively

 

36,501

 

 

 

36,195

 

Additional paid-in capital

 

485,350

 

 

 

471,649

 

Retained earnings

 

1,356,041

 

 

 

1,116,809

 

Treasury stock, at cost, 9,281,581 shares at September 30, 2022 and 9,272,513 shares at
  December 31, 2021

 

(337,490

)

 

 

(336,894

)

Accumulated other comprehensive loss

 

(144,480

)

 

 

(50,517

)

Total stockholders' equity

 

1,395,922

 

 

 

1,237,242

 

Noncontrolling interest

 

66,782

 

 

 

65,482

 

Total equity

 

1,462,704

 

 

 

1,302,724

 

Total liabilities and stockholders' equity

$

2,362,564

 

 

$

2,194,495

 

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

-3-


 

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

$

521,273

 

 

$

471,422

 

 

$

1,504,368

 

 

$

1,324,991

 

Cost of goods sold

 

303,455

 

 

 

290,191

 

 

 

883,327

 

 

 

845,322

 

Gross profit

 

217,818

 

 

 

181,231

 

 

 

621,041

 

 

 

479,669

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

68,545

 

 

 

67,803

 

 

 

209,055

 

 

 

186,759

 

Research and development

 

32,787

 

 

 

31,458

 

 

 

92,226

 

 

 

89,104

 

Amortization of acquisition related intangible assets

 

3,938

 

 

 

4,056

 

 

 

11,780

 

 

 

12,139

 

Other operating expense (income)

 

102

 

 

 

667

 

 

 

(3,762

)

 

 

1,673

 

Total operating expense

 

105,372

 

 

 

103,984

 

 

 

309,299

 

 

 

289,675

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

112,446

 

 

 

77,247

 

 

 

311,742

 

 

 

189,994

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (expense) income

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

862

 

 

 

765

 

 

 

2,549

 

 

 

2,351

 

Interest expense

 

(2,724

)

 

 

(1,417

)

 

 

(5,428

)

 

 

(6,298

)

Foreign currency gain (loss), net

 

(1,008

)

 

 

805

 

 

 

2,532

 

 

 

(984

)

Unrealized (loss) gain on investments

 

(2,648

)

 

 

5,922

 

 

 

(15,960

)

 

 

14,838

 

Other income

 

2,218

 

 

 

2,244

 

 

 

5,741

 

 

 

6,398

 

Total other (expense) income

 

(3,300

)

 

 

8,319

 

 

 

(10,566

)

 

 

16,305

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and noncontrolling interest

 

109,146

 

 

 

85,566

 

 

 

301,176

 

 

 

206,299

 

Income tax provision

 

20,172

 

 

 

14,766

 

 

 

55,279

 

 

 

36,320

 

Net income

 

88,974

 

 

 

70,800

 

 

 

245,897

 

 

 

169,979

 

Less net income attributable to noncontrolling interest

 

(2,588

)

 

 

(2,376

)

 

 

(6,665

)

 

 

(6,729

)

Net income attributable to common stockholders

$

86,386

 

 

$

68,424

 

 

$

239,232

 

 

$

163,250

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.90

 

 

$

1.52

 

 

$

5.28

 

 

$

3.65

 

Diluted

$

1.88

 

 

$

1.50

 

 

$

5.21

 

 

$

3.59

 

Number of shares used in earnings per share computation:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

45,475

 

 

 

44,986

 

 

 

45,283

 

 

 

44,689

 

Diluted

 

46,014

 

 

 

45,642

 

 

 

45,938

 

 

 

45,507

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

-4-


 

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

$

88,974

 

 

$

70,800

 

 

$

245,897

 

 

$

169,979

 

Unrealized (loss) gain on defined benefit plan, net of tax

 

(391

)

 

 

851

 

 

 

5,209

 

 

 

7,706

 

Unrealized gain on swaps and collars, net of tax

 

4,939

 

 

 

1,052

 

 

 

9,833

 

 

 

2,851

 

Unrealized foreign currency (loss) gain, net of tax

 

(55,054

)

 

 

(4,343

)

 

 

(109,005

)

 

 

4,768

 

Comprehensive income

 

38,468

 

 

 

68,360

 

 

 

151,934

 

 

 

185,304

 

Less: Comprehensive income attributable to noncontrolling interest

 

(2,588

)

 

 

(2,376

)

 

 

(6,665

)

 

 

(6,729

)

Total comprehensive income attributable to common stockholders

$

35,880

 

 

$

65,984

 

 

$

145,269

 

 

$

178,575

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

-5-


 

 

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands)

 

 

 

Common stock

 

 

Treasury stock

 

 

Additional
 paid-in

 

 

Retained

 

 

Accumulated
 other comprehensive

 

 

Total Diodes
 Incorporated stockholders'

 

 

Noncontrolling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

earnings

 

 

loss

 

 

equity

 

 

interest

 

 

equity

 

Balance, June 30, 2022

 

 

54,562

 

 

$

36,376

 

 

 

(9,273

)

 

$

(337,112

)

 

$

478,374

 

 

$

1,269,655

 

 

$

(93,974

)

 

$

1,353,319

 

 

$

64,140

 

 

$

1,417,459

 

Total comprehensive income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

86,386

 

 

 

(50,506

)

 

 

35,880

 

 

 

2,588

 

 

 

38,468

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

54

 

 

 

54

 

Common stock issued for share-based plans

 

 

188

 

 

 

125

 

 

 

-

 

 

 

-

 

 

 

(126

)

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

(1

)

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,140

 

 

 

-

 

 

 

-

 

 

 

10,140

 

 

 

-

 

 

 

10,140

 

Deferred compensation plan

 

 

-

 

 

 

-

 

 

 

(9

)

 

 

(378

)

 

 

378

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,416

)

 

 

-

 

 

 

-

 

 

 

(3,416

)

 

 

-

 

 

 

(3,416

)

Balance, September 30, 2022

 

 

54,750

 

 

$

36,501

 

 

 

(9,282

)

 

$

(337,490

)

 

$

485,350

 

 

$

1,356,041

 

 

$

(144,480

)

 

$

1,395,922

 

 

$

66,782

 

 

$

1,462,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

54,290

 

 

$

36,195

 

 

 

(9,273

)

 

$

(336,894

)

 

$

471,649

 

 

$

1,116,809

 

 

$

(50,517

)

 

$

1,237,242

 

 

$

65,482

 

 

$

1,302,724

 

Total comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

239,232

 

 

 

(93,963

)

 

 

145,269

 

 

 

6,665

 

 

 

151,934

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,014

)

 

 

-

 

 

 

-

 

 

 

(1,014

)

 

 

(5,365

)

 

 

(6,379

)

Common stock issued for share-based plans

 

 

460