DIODES INC /DEL/ [DIOD] Filings

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

10-Q 1 diod-20240630.htm 10-Q 10-Q

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, 2024

☐ 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:

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 2, 2024 was 46,331,581.

DIODES INCORPORATED AND SUBSIDIARIES

Table of Contents


		Page
Part I – Financial Information
Item 1. Financial Statements (Unaudited)		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		30
Item 4. Controls and Procedures		30
Part II – Other Information
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3. Defaults Upon Senior Securities		31
Item 4. Mine Safety Disclosures		31
Item 5. Other Information		31
Item 6. Exhibits		32
Signatures		33

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)


	June 30,			December 31,
	2024			2023
Assets
Current assets:
Cash and cash equivalents	$	264,709		$	315,457
Restricted cash		2,948			3,026
Short-term investments		9,188			10,174
Accounts receivable, net of allowances of $12,133 and $5,641 at June 30, 2024 and December 31, 2023, respectively		384,965			371,930
Inventories		461,539			389,774
Prepaid expenses and other		97,115			97,024
Total current assets		1,220,464			1,187,385
Property, plant, and equipment, net		707,617			746,169
Deferred tax assets		50,956			51,620
Goodwill		145,595			146,558
Intangible assets, net		57,391			63,937
Other long-term assets		179,034			171,990
Total assets	$	2,361,057		$	2,367,659

Liabilities
Current liabilities:
Lines of credit	$	26,343		$	40,685
Accounts payable		156,687			158,261
Accrued liabilities and other		167,436			179,674
Income tax payable		9,145			10,459
Current portion of long-term debt		1,344			4,419
Total current liabilities		360,955			393,498
Long-term debt, net of current portion		18,988			16,979
Deferred tax liabilities		9,532			13,662
Unrecognized tax benefits		34,035			34,035
Other long-term liabilities		85,971			99,808
Total liabilities		509,481			557,982

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 46,146,009 shares and 45,938,383 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		36,958			36,819
Additional paid-in capital		513,309			509,861
Retained earnings		1,697,312			1,675,274
Treasury stock, at cost, 9,287,762 shares and 9,286,862 shares at June 30, 2024 and December 31, 2023, respectively		(338,052	)		(337,986	)
Accumulated other comprehensive loss		(135,172	)		(143,227	)
Stockholders' equity		1,774,355			1,740,741
Noncontrolling interest		77,221			68,936
Total equity		1,851,576			1,809,677
Total liabilities and stockholders' equity	$	2,361,057		$	2,367,659

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,
	2024			2023			2024			2023
Net sales	$	319,771		$	467,152		$	621,743		$	934,393
Cost of goods sold		212,385			271,776			414,773			544,563
Gross profit		107,386			195,376			206,970			389,830

Operating expenses
Selling, general, and administrative		58,467			67,500			112,202			138,491
Research and development		33,189			34,611			67,153			67,843
Amortization of acquisition related intangible assets		3,854			3,816			7,664			7,668
(Gain) on disposal of fixed assets		(82	)		(105	)		(4,954	)		(153	)
Restructuring charge		8,250			-			8,250			-
Other operating income		-			(13	)		(1	)		(13	)
Total operating expense		103,678			105,809			190,314			213,836

Income from operations		3,708			89,567			16,656			175,994

Other income (expense)
Interest income		4,237			2,224			8,851			3,996
Interest expense		(852	)		(2,189	)		(1,384	)		(4,321	)
Foreign currency gain (loss), net		799			(2,217	)		1,771			(4,110	)
Unrealized gain on investments		4,350			12,172			4,720			16,061
Other income		562			1,398			996			1,928
Total other income (expense)		9,096			11,388			14,954			13,554

Income before income taxes and noncontrolling interest		12,804			100,955			31,610			189,548
Income tax provision		2,643			17,224			6,180			33,840
Net income		10,161			83,731			25,430			155,708
Less net income attributable to noncontrolling interest		(2,161	)		(1,711	)		(3,392	)		(2,538	)
Net income attributable to common stockholders	$	8,000		$	82,020		$	22,038		$	153,170

Earnings per share attributable to common stockholders:
Basic	$	0.17		$	1.79		$	0.48		$	3.35
Diluted	$	0.17		$	1.77		$	0.48		$	3.31
Number of shares used in earnings per share computation:
Basic		46,133			45,733			46,083			45,667
Diluted		46,324			46,243			46,320			46,263

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,
	2024			2023			2024			2023
Net income	$	10,161		$	83,731		$	25,430		$	155,708
Unrealized gain (loss) on defined benefit plan, net of tax		2,290			(627	)		3,938			2,079
Unrealized gain on derivative instruments, net of tax		1,981			1,663			10,795			(1,679	)
Unrealized foreign currency gain (loss), net of tax		9,630			(22,594	)		(6,678	)		(11,271	)
Comprehensive income		24,062			62,173			33,485			144,837
Less: Comprehensive income attributable to noncontrolling interest		(2,161	)		(1,711	)		(3,392	)		(2,538	)
Total comprehensive income attributable to common stockholders	$	21,901		$	60,462		$	30,093		$	142,299

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, 2024		55,401	$	36,936		(9,287	)	$	(337,986	)	$	509,401		$	1,689,312	$	(149,073	)	$	1,748,590		$	76,221		$	1,824,811
Total comprehensive income		-		-		-			-			-			8,000		13,901			21,901			2,161			24,062
Net changes in noncontrolling interest		-		-		-			-			-			-		-			-			(1,161	)		(1,161	)
Common stock issued for share-based plans		33		22		-			-			(22	)		-		-			-			-			-
Share-based compensation		-		-		-			-			4,214			-		-			4,214			-			4,214
Deferred compensation plan		-		-		(1	)		(66	)		66			-		-			-			-			-
Tax related to net share settlement		-		-		-			-			(350	)		-		-			(350	)		-			(350	)
Balance, June 30, 2024		55,434	$	36,958		(9,288	)	$	(338,052	)	$	513,309		$	1,697,312	$	(135,172	)	$	1,774,355		$	77,221		$	1,851,576

	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, December 31, 2023		55,225	$	36,819		(9,287	)	$	(337,986	)	$	509,861		$	1,675,274	$	(143,227	)	$	1,740,741		$	68,936		$	1,809,677
Total comprehensive income		-		-		-			-			-			22,038		8,055			30,093			3,392			33,485
Net changes in noncontrolling interest		-		-		-			-			-			-		-			-			4,893			4,893
Common stock issued for share-based plans		209		139		-			-			(139	)		-		-			-			-			-
Share-based compensation		-		-		-			-			9,263			-		-			9,263			-			9,263
Deferred compensation plan		-		-		(1	)		(66	)		66			-		-			-			-			-
Tax related to net share settlement		-		-		-			-			(5,742	)		-		-			(5,742	)		-			(5,742	)
Balance, June 30, 2024		55,434	$	36,958		(9,288	)	$	(338,052	)	$	513,309		$	1,697,312	$	(135,172	)	$	1,774,355		$	77,221		$	1,851,576

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

-6-

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONT.)

(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, 2023		54,988	$	36,661		(9,282	)	$	(337,490	)	$	494,598		$	1,519,242	$	(117,546	)	$	1,595,465		$	70,208		$	1,665,673
Total comprehensive income		-		-		-			-			-			82,020		(21,558	)		60,462			1,711			62,173
Net changes in noncontrolling interest		-		-		-			-			-			-								(3,821	)		(3,821	)
Common stock issued for share-based plans		44		29		-			-			(29	)		-		-						-			-
Share-based compensation		-		-		-			-			7,531			-		-			7,531			-			7,531
Deferred compensation plan		-		-		(1	)		(180	)		180			-		-			-			-			-
Tax related to net share settlement		-		-		-			-			(978	)		-		-			(978	)		-			(978	)
Balance, June 30, 2023		55,032	$	36,690		(9,283	)	$	(337,670	)	$	501,302		$	1,601,262	$	(139,104	)	$	1,662,480		$	68,098		$	1,730,578

	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, December 31, 2022		54,751	$	36,503		(9,282	)	$	(337,490	)	$	494,773		$	1,448,092	$	(128,233	)	$	1,513,645		$	69,274		$	1,582,919
Total comprehensive income		-		-		-			-			-			153,170		(10,871	)		142,299			2,538			144,837
Net changes in noncontrolling interest		-		-		-			-			-			-					-			(3,714	)		(3,714	)
Common stock issued for share-based plans		281		187		-			-			(187	)		-		-			-			-			-
Share-based compensation		-		-		-			-			17,183			-		-			17,183			-			17,183
Deferred compensation plan		-		-		(1	)		(180	)		180			-		-			-			-			-
Tax related to net share settlement		-		-		-			-			(10,647	)		-		-			(10,647	)		-			(10,647	)
Balance, June 30, 2023		55,032	$	36,690		(9,283	)	$	(337,670	)	$	501,302		$	1,601,262	$	(139,104	)	$	1,662,480		$	68,098		$	1,730,578

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

-7-

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended
	June 30,
	2024		2023
Cash flows from operating activities
Net income	$	25,430	$	155,708
Adjustments to reconcile net income to net cash flows from operating activities, net of effects of acquisitions

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