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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 March 31, 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 April 29, 2022 was 45,247,261.

 

 

 


 

 

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

 

19

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

26

 

Item 4. Controls and Procedures

 

26

 

Part II – Other Information

 

 

Item 1. Legal Proceedings

 

27

Item 1A. Risk Factors

 

27

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

 

27

Item 3. Defaults Upon Senior Securities

 

27

Item 4. Mine Safety Disclosures

 

27

Item 5. Other Information

 

27

Item 6. Exhibits

 

28

 

Signatures

 

29

 

 

 

 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

March 31,

 

 

December 31,

 

 

2022

 

 

2021

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

303,295

 

 

$

363,599

 

Restricted cash

 

2,710

 

 

 

3,219

 

Short-term investments

 

9,241

 

 

 

6,542

 

Accounts receivable, net of allowances of $5,394 and $4,324 at
  March 31, 2022 and December 31, 2021, respectively

 

362,035

 

 

 

358,496

 

Inventories

 

370,045

 

 

 

348,622

 

Prepaid expenses and other

 

104,763

 

 

 

107,194

 

Total current assets

 

1,152,089

 

 

 

1,187,672

 

Property, plant and equipment, net

 

589,915

 

 

 

582,079

 

Deferred income tax

 

21,755

 

 

 

21,256

 

Goodwill

 

147,968

 

 

 

149,890

 

Intangible assets, net

 

90,451

 

 

 

94,550

 

Other long-term assets

 

163,284

 

 

 

159,048

 

Total assets

$

2,165,462

 

 

$

2,194,495

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Lines of credit

$

28,031

 

 

$

18,068

 

Accounts payable

 

211,365

 

 

 

221,254

 

Accrued liabilities and other

 

167,392

 

 

 

184,649

 

Income tax payable

 

45,603

 

 

 

29,682

 

Current portion of long-term debt

 

11,102

 

 

 

17,381

 

Total current liabilities

 

463,493

 

 

 

471,034

 

Long-term debt, net of current portion

 

192,538

 

 

 

265,574

 

Deferred tax liabilities

 

32,432

 

 

 

32,230

 

Other long-term liabilities

 

116,980

 

 

 

122,933

 

Total liabilities

 

805,443

 

 

 

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
45,231,793 shares and 45,017,774 shares issued and
  outstanding at March 31, 2022 and December 31, 2021, respectively

 

36,338

 

 

 

36,195

 

Additional paid-in capital

 

470,363

 

 

 

471,649

 

Retained earnings

 

1,189,500

 

 

 

1,116,809

 

Treasury stock at cost, 9,272,513 shares at March 31, 2022 and at December 31, 2021

 

(336,894

)

 

 

(336,894

)

Accumulated other comprehensive loss

 

(61,804

)

 

 

(50,517

)

Total stockholders' equity

 

1,297,503

 

 

 

1,237,242

 

Noncontrolling interest

 

62,516

 

 

 

65,482

 

Total equity

 

1,360,019

 

 

 

1,302,724

 

Total liabilities and stockholders' equity

$

2,165,462

 

 

$

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

 

 

March 31,

 

 

2022

 

 

2021

 

Net sales

$

482,123

 

 

$

413,121

 

Cost of goods sold

 

285,426

 

 

 

274,485

 

Gross profit

 

196,697

 

 

 

138,636

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Selling, general and administrative

 

71,443

 

 

 

58,676

 

Research and development

 

28,677

 

 

 

27,659

 

Amortization of acquisition related intangible assets

 

3,862

 

 

 

4,023

 

Other operating expense (income)

 

(343

)

 

 

888

 

Total operating expense

 

103,639

 

 

 

91,246

 

 

 

 

 

 

 

Income from operations

 

93,058

 

 

 

47,390

 

 

 

 

 

 

 

Other (expense) income

 

 

 

 

 

Interest income

 

826

 

 

 

768

 

Interest expense

 

(1,114

)

 

 

(2,864

)

Foreign currency gain (loss), net

 

1,721

 

 

 

(1,279

)

Unrealized (loss) gain on investments

 

(5,548

)

 

 

3,655

 

Other income

 

1,876

 

 

 

2,317

 

Total other (expense) income

 

(2,239

)

 

 

2,597

 

 

 

 

 

 

 

Income before income taxes and noncontrolling interest

 

90,819

 

 

 

49,987

 

Income tax provision

 

16,646

 

 

 

9,434

 

Net income

 

74,173

 

 

 

40,553

 

Less net income attributable to noncontrolling interest

 

(1,482

)

 

 

(1,101

)

Net income attributable to common stockholders

$

72,691

 

 

$

39,452

 

 

 

 

 

 

 

Earnings per share attributable to common stockholders:

 

 

 

 

 

Basic

$

1.61

 

 

$

0.89

 

Diluted

$

1.59

 

 

$

0.87

 

Number of shares used in earnings per share computation:

 

 

 

 

 

Basic

 

45,104

 

 

 

44,408

 

Diluted

 

45,844

 

 

 

45,243

 

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

 

 

March 31,

 

 

2022

 

 

2021

 

Net income

$

74,173

 

 

$

40,553

 

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

 

(1,533

)

 

 

1,894

 

Unrealized gain on swaps and collars, net of tax

 

2,831

 

 

 

3,826

 

Unrealized foreign currency (loss), net of tax

 

(12,585

)

 

 

(3,738

)

Comprehensive income

 

62,886

 

 

 

42,535

 

Less: Comprehensive income attributable to noncontrolling interest

 

(1,482

)

 

 

(1,101

)

Total comprehensive income attributable to common stockholders

$

61,404

 

 

$

41,434

 

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)

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

 

 

 

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, 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

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

72,691

 

 

 

(11,287

)

 

 

61,404

 

 

 

1,482

 

 

 

62,886

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,013

)

 

 

-

 

 

 

-

 

 

 

(1,013

)

 

 

(4,451

)

 

 

(5,464

)

Common stock issued for share-based plans

 

 

214

 

 

 

143

 

 

 

-

 

 

 

-

 

 

 

(59

)

 

 

-

 

 

 

-

 

 

 

84

 

 

 

3

 

 

 

87

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,818

 

 

 

-

 

 

 

-

 

 

 

7,818

 

 

 

-

 

 

 

7,818

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,032

)

 

 

-

 

 

 

-

 

 

 

(8,032

)

 

 

-

 

 

 

(8,032

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 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

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

39,452

 

 

 

1,982

 

 

 

41,434

 

 

 

1,101

 

 

 

42,535

 

Net changes in noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4

)

 

 

-

 

 

 

-

 

 

 

(4

)

 

 

1,007

 

 

 

1,003

 

Common stock issued for share-based plans

 

 

324

 

 

 

216

 

 

 

-

 

 

 

-

 

 

 

538

 

 

 

-

 

 

 

-

 

 

 

754

 

 

 

-

 

 

 

754

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,858

 

 

 

-

 

 

 

-

 

 

 

5,858

 

 

 

-

 

 

 

5,858

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(9,293

)

 

 

-

 

 

 

-

 

 

 

(9,293

)

 

 

-

 

 

 

(9,293

)

Balance, March 31, 2021

 

 

53,860

 

 

$

35,908

 

 

 

(9,260

)

 

$

(335,910

)

 

$

446,697

 

 

$

927,498

 

 

$

(71,624

)

 

$

1,002,569

 

 

$

54,411

 

 

$

1,056,980

 

 

-6-


 

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

Three Months

 

 

March 31,

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

Net income

$

74,173

 

 

$

40,553

 

Adjustments to reconcile net income to net cash provided by operating activities, net of effects of acquisitions

 

 

 

 

 

Depreciation

 

24,729

 

 

 

26,440

 

Amortization of intangible assets

 

3,862

 

 

 

4,023

 

Share-based compensation expense

 

7,902

 

 

 

6,122

 

Deferred income taxes

 

(347

)

 

 

1,012

 

Investment loss (gain)

 

5,518

 

 

 

(3,713

)

Other

 

(1,383

)

 

 

425

 

Changes in operating assets:

 

 

 

 

 

Change in accounts receivable

 

(6,626

)

 

 

(12,993

)

Change in inventory

 

(25,074

)

 

 

6,490

 

Change in other operating assets

 

(2,282

)

 

 

2,899

 

Changes in operating liabilities:

 

 

 

 

 

Change in accounts payable

 

(8,549

)

 

 

11,266

 

Change in accrued liabilities

 

(13,751

)

 

 

(8,310

)

Change in income tax payable

 

16,461

 

 

 

(4,100

)

Change in other operating liabilities

 

(2,316

)

 

 

(1,918

)

Net cash flows provided by operating activities

 

72,317

 

 

 

68,196

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Acquisitions, net of cash received

 

(13,269

)

 

 

-

 

Purchases of property, plant and equipment

 

(38,542

)

 

 

(17,179

)

Proceeds from sale of property, plant and equipment

 

188

 

 

 

886

 

Proceeds from short-term investments

 

3,046

 

 

 

2,085

 

Purchases of short-term investments

 

(5,998

)

 

 

(4,364

)

Other

 

(311

)

 

 

8,173

 

Net cash and cash equivalents used in investing activities

 

(54,886

)

 

 

(10,399

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Advances on lines of credit and short-term debt

 

37,782

 

 

 

2,820

 

Repayments of lines of credit and short-term debt

 

(26,883

)

 

 

(75,696

)

Proceeds from long-term debt

 

45,000

 

 

 

215,000

 

Repayments of long-term debt

 

(123,545

)

 

 

(179,361

)

Net proceeds from issuance of common stock

 

84

 

 

 

754

 

Repayment of and proceeds from finance lease obligation

 

(61

)

 

 

(141

)

Taxes paid related to net share settlement

 

(8,032

)

 

 

(9,293

)

Capital contribution from noncontrolling interests

 

3

 

 

 

1,003

 

Other

 

(207

)

 

 

(499

)

Net cash and cash equivalents used in provided by financing activities

 

(75,859

)

 

 

(45,413

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(2,385

)

 

 

(1,812

)

Change in cash and cash equivalents, including restricted cash

 

(60,813

)

 

 

10,572

 

Cash and cash equivalents, beginning of period, including restricted cash

 

366,818

 

 

 

320,529

 

Cash and cash equivalents, end of period, including restricted cash

$

306,005

 

 

$

331,101

 

 

-7-


 

 

 

Supplemental Cash Flow Information