10-Q 1 diod-20210930.htm 10-Q 10-Q
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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, 2021

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 October 29, 2021 was 45,017,765.

 

 

 


 

 

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

 

24

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

35

 

Item 4. Controls and Procedures

 

35

 

Part II – Other Information

 

 

Item 1. Legal Proceedings

 

36

Item 1A. Risk Factors

 

36

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

 

36

Item 3. Defaults Upon Senior Securities

 

36

Item 4. Mine Safety Disclosures

 

36

Item 5. Other Information

 

36

Item 6. Exhibits

 

37

 

Signatures

 

38

 

 

 

 

 


 

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,

 

 

2021

 

 

2020

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

280,543

 

 

$

268,065

 

Restricted cash

 

4,295

 

 

 

52,464

 

Short-term investments

 

7,364

 

 

 

6,142

 

Accounts receivable, net of allowances of $3,887 and $3,806 at
  September 30, 2021 and December 31, 2020, respectively

 

348,688

 

 

 

320,061

 

Inventories

 

322,088

 

 

 

307,062

 

Prepaid expenses and other

 

100,905

 

 

 

70,193

 

Total current assets

 

1,063,883

 

 

 

1,023,987

 

Property, plant and equipment, net

 

540,520

 

 

 

530,815

 

Deferred income tax

 

52,436

 

 

 

57,841

 

Goodwill

 

149,592

 

 

 

158,331

 

Intangible assets, net

 

98,570

 

 

 

110,591

 

Other long-term assets

 

136,908

 

 

 

97,892

 

Total assets

$

2,041,909

 

 

$

1,979,457

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Lines of credit

$

15,690

 

 

$

140,563

 

Accounts payable

 

195,098

 

 

 

168,045

 

Accrued liabilities and other

 

179,908

 

 

 

160,117

 

Income tax payable

 

35,525

 

 

 

19,177

 

Current portion of long-term debt

 

18,404

 

 

 

21,860

 

Total current liabilities

 

444,625

 

 

 

509,762

 

Long-term debt, net of current portion

 

218,000

 

 

 

288,179

 

Deferred tax liabilities

 

34,729

 

 

 

34,598

 

Other long-term liabilities

 

127,442

 

 

 

130,795

 

Total liabilities

 

824,796

 

 

 

963,334

 

 

 

 

 

 

 

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
45,015,853 shares and 44,276,194 shares issued and
  outstanding at September 30, 2021 and December 31, 2020, respectively

 

36,194

 

 

 

35,692

 

Additional paid-in capital

 

463,748

 

 

 

449,598

 

Retained earnings

 

1,051,296

 

 

 

888,046

 

Treasury stock at cost, 9,272,513 shares at September 30, 2021 and 9,259,858 shares at December 31, 2020

 

(336,894

)

 

 

(335,910

)

Accumulated other comprehensive loss

 

(58,281

)

 

 

(73,606

)

Total stockholders' equity

 

1,156,063

 

 

 

963,820

 

Noncontrolling interest

 

61,050

 

 

 

52,303

 

Total equity

 

1,217,113

 

 

 

1,016,123

 

Total liabilities and stockholders' equity

$

2,041,909

 

 

$

1,979,457

 

 

 

 

 

 

 

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,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net sales

$

471,422

 

 

$

309,459

 

 

$

1,324,991

 

 

$

878,845

 

Cost of goods sold

 

290,191

 

 

 

198,369

 

 

 

845,322

 

 

 

570,421

 

Gross profit

 

181,231

 

 

 

111,090

 

 

 

479,669

 

 

 

308,424

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

67,803

 

 

 

44,651

 

 

 

186,759

 

 

 

132,238

 

Research and development

 

31,458

 

 

 

24,469

 

 

 

89,104

 

 

 

69,469

 

Amortization of acquisition related intangible assets

 

4,056

 

 

 

4,007

 

 

 

12,139

 

 

 

12,249

 

Other operating expense (income)

 

667

 

 

 

108

 

 

 

1,673

 

 

 

(108

)

Total operating expense

 

103,984

 

 

 

73,235

 

 

 

289,675

 

 

 

213,848

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

77,247

 

 

 

37,855

 

 

 

189,994

 

 

 

94,576

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

765

 

 

 

138

 

 

 

2,351

 

 

 

579

 

Interest expense

 

(1,417

)

 

 

(3,745

)

 

 

(6,298

)

 

 

(7,643

)

Foreign currency gain (loss), net

 

805

 

 

 

(2,618

)

 

 

(984

)

 

 

(6,143

)

Unrealized gain on investments

 

5,922

 

 

 

-

 

 

 

14,838

 

 

 

-

 

Other income

 

2,244

 

 

 

1,627

 

 

 

6,398

 

 

 

2,902

 

Total other income (expense)

 

8,319

 

 

 

(4,598

)

 

 

16,305

 

 

 

(10,305

)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and noncontrolling interest

 

85,566

 

 

 

33,257

 

 

 

206,299

 

 

 

84,271

 

Income tax provision

 

14,766

 

 

 

5,871

 

 

 

36,320

 

 

 

15,097

 

Net income

 

70,800

 

 

 

27,386

 

 

 

169,979

 

 

 

69,174

 

Less net income attributable to noncontrolling interest

 

(2,376

)

 

 

(234

)

 

 

(6,729

)

 

 

(821

)

Net income attributable to common stockholders

$

68,424

 

 

$

27,152

 

 

$

163,250

 

 

$

68,353

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.52

 

 

$

0.52

 

 

$

3.65

 

 

$

1.33

 

Diluted

$

1.50

 

 

$

0.51

 

 

$

3.59

 

 

$

1.30

 

Number of shares used in earnings per share computation:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

44,986

 

 

 

51,825

 

 

 

44,689

 

 

 

51,563

 

Diluted

 

45,642

 

 

 

52,729

 

 

 

45,507

 

 

 

52,612

 

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,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

$

70,800

 

 

$

27,386

 

 

$

169,979

 

 

$

69,174

 

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

 

851

 

 

 

288

 

 

 

7,706

 

 

 

(6,563

)

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

 

1,052

 

 

 

212

 

 

 

2,851

 

 

 

(409

)

Unrealized foreign currency (loss) gain, net of tax

 

(4,343

)

 

 

20,887

 

 

 

4,768

 

 

 

18,006

 

Comprehensive income

 

68,360

 

 

 

48,773

 

 

 

185,304

 

 

 

80,208

 

Less: Comprehensive income attributable to noncontrolling interest

 

(2,376

)

 

 

(234

)

 

 

(6,729

)

 

 

(821

)

Total comprehensive income attributable to common stockholders

$

65,984

 

 

$

48,539

 

 

$

178,575

 

 

$

79,387

 

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 2021

 

 

53,994

 

 

$

35,998

 

 

 

(9,263

)

 

$

(336,128

)

 

$

455,683

 

 

$

982,872

 

 

$

(55,841

)

 

$

1,082,584

 

 

$

60,413

 

 

$

1,142,997

 

Total comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

68,424

 

 

 

(2,440

)

 

 

65,984

 

 

 

2,376

 

 

 

68,360

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

167

 

 

 

167

 

Dividends to noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,906

)

 

 

(1,906

)

Common stock issued for share-based plans

 

 

295

 

 

 

196

 

 

 

-

 

 

 

-

 

 

 

2,038

 

 

 

-

 

 

 

-

 

 

 

2,234

 

 

 

-

 

 

 

2,234

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,965

 

 

 

-

 

 

 

-

 

 

 

9,965

 

 

 

-

 

 

 

9,965

 

Deferred compensation plan

 

 

-

 

 

 

-

 

 

 

(10

)

 

 

(766

)

 

 

766

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,704

)

 

 

-

 

 

 

-

 

 

 

(4,704

)

 

 

-

 

 

 

(4,704

)

Balance, September 30, 2021

 

 

54,289

 

 

$

36,194

 

 

 

(9,273

)

 

$

(336,894

)

 

$

463,748

 

 

$

1,051,296

 

 

$

(58,281

)

 

$

1,156,063

 

 

$

61,050

 

 

$

1,217,113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

53,536

 

 

$

35,692

 

 

 

(9,260

)

 

$

(335,910

)

 

$

449,598

 

 

$

888,046

 

 

$

(73,606

)

 

$

963,820

 

 

$

52,303

 

 

$

1,016,123

 

Total comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

163,250

 

 

 

15,325

 

 

 

178,575

 

 

 

6,729

 

 

 

185,304

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(22

)

 

 

-

 

 

 

-

 

 

 

(22

)

 

 

4,174

 

 

 

4,152

 

Dividends to noncontrolling interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,156

)

 

 

(2,156

)

Common stock issued for share-based plans

 

 

753

 

 

 

502

 

 

 

-

 

 

 

-

 

 

 

3,835

 

 

 

-

 

 

 

-

 

 

 

4,337

 

 

 

-

 

 

 

4,337

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

24,103

 

 

 

-

 

 

 

-

 

 

 

24,103

 

 

 

-

 

 

 

24,103

 

Deferred compensation plan

 

 

-

 

 

 

-

 

 

 

(13

)

 

 

(984

)

 

 

984

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(14,750

)

 

 

-

 

 

 

-

 

 

 

(14,750

)

 

 

-

 

 

 

(14,750