Diodes Inc. Q1 Revenue up 16.2% & Gross Profit up 33.4%
Diodes Incorporated today reported its financial results for the first quarter ended March 31, 2018, including: revenue for first quarter 2018 was $274.5 million, an increase of 16.2 percent from $236.3 million in first quarter 2017 and an increase of 2.3 percent from the $268.4 million in the fourth quarter 2017. Revenue increased in the quarter due primarily to strength in the automotive and industrial end markets, contributing to the achievement of record revenue in Europe.
GAAP gross profit for the first quarter 2018 was a record $98.6 million, or 35.9 percent of revenue, compared to the first quarter 2017 of $73.9 million, or 31.3 percent of revenue and fourth quarter 2017 of $96.4 million, or 35.9 percent of revenue. The 460 basis point year-over-year increase in gross margin was due primarily to favorable product mix, increased contribution from the Pericom products as well as improved capacity utilization.
GAAP operating expenses for first quarter 2018 were $71.7 million, or 26.1 percent of revenue, and $64.7 million, or 23.6 percent of revenue, on a non-GAAP basis, which excluded $4.8 million of amortization of acquisition-related intangible asset expenses, $2.6 million of expenses related to officer retirement and a credit of $0.3 million related to the KFAB restructuring. GAAP operating expenses in the first quarter 2017 were $64.6 million, or 27.3 percent of revenue, and in the fourth quarter 2017 were $72.9 million, or 27.2 percent of revenue.
First quarter 2018 GAAP net income was $18.5 million, or $0.37 per diluted share, compared to net income of $1.2 million, or $0.02 per diluted share, in first quarter 2017 and a net loss of ($30.7) million, or ($0.62) per share, in fourth quarter 2017 which includes $45.9 million tax expense associated with the tax law reform.
First quarter 2018 non-GAAP adjusted net income was $24.2 million, or $0.48 per diluted share, which excluded, net of tax, $3.9 million of non-cash acquisition-related intangible asset amortization costs and $2.0 million of officer retirement expenses. This compares to non-GAAP adjusted net income of $7.0 million, or $0.14 per diluted share, in the first quarter 2017 and $21.6 million, or $0.42 per diluted share, in the fourth quarter 2017.
Commenting on the results, Dr. Keh-Shew Lu, president and chief executive officer, stated, “First quarter revenue was at the high-end of guidance primarily driven by strong growth in the consumer, automotive and industrial markets, complemented by revenue in Europe reaching record levels. In fact, our automotive end market reached 9 percent of revenue in the quarter as we continue to benefit from our successful customer and content expansion efforts.
“Since implementing our automotive strategy in 2013, we have achieved a compound annual growth rate of 27 percent in this business, reflecting our expanded customer base, increasing pipeline of design wins and growing content across multiple applications.
“The quarter was also highlighted by gross profit dollars reaching a record, growing 33 percent year-over-year -- twice the rate of our revenue growth and contributing to an almost 3.5 times increase in non-GAAP earnings per share over the same time period.
“Additionally, EBITDA in the first quarter reached a record $54.2 million, or 20 percent of revenue. The operating leverage in our business model positions Diodes to deliver increasing profits and cash flow in the coming quarters, as revenue continues to increase at a faster rate than operating expenses and approach our target model of 20 percent of revenue.
“Looking to the second quarter, we expect to extend our growth momentum with continued strength across our target geographies and end markets, which we anticipate will result in the achievement of new quarterly records for both revenue and gross profit,” Dr. Keh-Shew Lu concluded.
First Quarter Highlights
- Revenue was $274.5 million, an increase of 16.2 percent from the $236.3 million in the first quarter 2017 and an increase of 2.3 percent from the $268.4 million in the fourth quarter 2017;
- GAAP gross profit was a record $98.6 million, compared to $73.9 million in the first quarter 2017 and $96.4 million in the fourth quarter 2017;
- GAAP gross profit margin was 35.9 percent, compared to 31.3 percent in the first quarter 2017 and 35.9 percent in the fourth quarter 2017;
- GAAP net income was $18.5 million, or $0.37 per diluted share, compared to net income of $1.2 million, or $0.02 per diluted share, in the first quarter 2017 and a net loss of ($30.7) million, or ($0.62) per share, in the fourth quarter 2017;
- Non-GAAP adjusted net income was $24.2 million, or $0.48 per diluted share, compared to $7.0 million, or $0.14 per diluted share, in the first quarter 2017 and $21.6 million, or $0.42 per diluted share, in the fourth quarter 2017;
- Excluding $5.0 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.10 per diluted share;
- EBITDA was a record $54.2 million, or 20 percent of revenue, compared to $28.6 million, or 12 percent of revenue, in the first quarter 2017 and $47.0 million, or 18 percent of revenue, in the fourth quarter 2017; and
- Achieved cash flow from operations of $54.0 million and $22.3 million free cash flow, including $31.6 million of capital expenditures. Net cash flow was a negative $21.3 million, which includes the pay down of $46.5 million of long-term debt.