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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, 2024

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 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

 

 

 

 

 

Depreciation

 

60,961

 

 

 

60,211

 

Amortization of intangible assets

 

7,664

 

 

 

7,668

 

Share-based compensation expense

 

9,318

 

 

 

17,467

 

Deferred income taxes

 

48

 

 

 

(298

)

Investment gain

 

(4,733

)

 

 

(16,003

)

Gain on disposal of property, plant, and equipment

 

(4,954

)

 

 

(151

)

Interest income forwards and collars

 

(4,602

)

 

 

(737

)

Other

 

(1,469

)

 

 

323

 

Changes in operating assets:

&#