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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 June 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 August 1, 2022 was 45,481,026.

 

 


 

 

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

 

20

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

28

 

Item 4. Controls and Procedures

 

28

 

Part II – Other Information

 

 

Item 1. Legal Proceedings

 

29

Item 1A. Risk Factors

 

29

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

 

29

Item 3. Defaults Upon Senior Securities

 

29

Item 4. Mine Safety Disclosures

 

29

Item 5. Other Information

 

29

Item 6. Exhibits

 

30

 

Signatures

 

31

 

 

 

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

June 30,

 

 

December 31,

 

 

2022

 

 

2021

 

 

(Unaudited)

 

 

 

 

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:

 

 

 

 

 

Lines of credit

$

25,907

 

 

$

18,068

 

Accounts payable

 

219,329

 

 

 

221,254

 

Accrued liabilities and other

 

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 (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
45,288,669 shares and 45,017,774 shares 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 at June 30, 2022 and at 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

 

 

 

 

 

 

 

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

 

 

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 (income)

 

(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 gain (loss), 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

 

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

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income

$

82,750

 

 

$

58,626

 

 

$

156,923

 

 

$

99,179

 

Unrealized gain on defined benefit plan, net of tax

 

7,133

 

 

 

4,961

 

 

 

5,600

 

 

 

6,855

 

Unrealized gain (loss) on swaps and collars, net of tax

 

2,063

 

 

 

(2,027

)

 

 

4,894

 

 

 

1,799

 

Unrealized foreign currency (loss), net of tax

 

(41,366

)

 

 

12,849

 

 

 

(53,951

)

 

 

9,111

 

Comprehensive income

 

50,580

 

 

 

74,409

 

 

 

113,466

 

 

 

116,944

 

Less: Comprehensive income attributable to noncontrolling interest

 

(2,595

)

 

 

(3,252

)

 

 

(4,077

)

 

 

(4,353

)

Total comprehensive income attributable to common stockholders

$

47,985

 

 

$

71,157

 

 

$

109,389

 

 

$

112,591

 

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, March 31 2022

 

 

54,504

 

 

$

36,338

 

 

 

(9,273

)

 

$

(336,894

)

 

$

470,363

 

 

$

1,189,500

 

 

$

(61,804

)

 

$

1,297,503

 

 

$

62,516

 

 

$

1,360,019

 

Total comprehensive income (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

80,155

 

 

 

(32,170

)

 

 

47,985

 

 

 

2,595

 

 

 

50,580

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

(971

)

 

 

(971

)

Common stock issued for share-based plans

 

 

58

 

 

 

38

 

 

 

-

 

 

 

-

 

 

 

18

 

 

 

-

 

 

 

-

 

 

 

56

 

 

 

-

 

 

 

56

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,607

 

 

 

-

 

 

 

-

 

 

 

8,607

 

 

 

-

 

 

 

8,607

 

Deferred compensation plan

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(218

)

 

 

218

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(832

)

 

 

-

 

 

 

-

 

 

 

(832

)

 

 

-

 

 

 

(832

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

152,846

 

 

 

(43,457

)

 

 

109,389

 

 

 

4,077

 

 

 

113,466

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,014

)

 

 

-

 

 

 

-

 

 

 

(1,014

)

 

 

(5,419

)

 

 

(6,433

)

Common stock issued for share-based plans

 

 

272

 

 

 

181

 

 

 

-

 

 

 

-

 

 

 

(41

)

 

 

-

 

 

 

-

 

 

 

140

 

 

 

-

 

 

 

140

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16,426

 

 

 

-

 

 

 

-

 

 

 

16,426

 

 

 

-

 

 

 

16,426

 

Deferred compensation plan

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(218

)

 

 

218

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-