Diodes Incorporated reported its financial results for the fourth quarter and fiscal year ended December 31, 2014, including: Revenue grew to a record $890.7 million, an increase of 7.7 percent over the $826.8 million in 2013; Gross profit was a record $277.3 million compared to $237.8 million in 2013; GAAP gross margin was 31.1 percent compared to 28.8 percent in 2013; GAAP net income was $63.7 million, or $1.31 per diluted share, compared to $26.5 million, or $0.56 per diluted share in 2013; Excluding $9.2 million, net of tax, share-based compensation expense, both GAAP net income and non-GAAP adjusted net income would have increased by $0.19 per diluted share; and Achieved $134.3 million cash flow from operations and $76.5 million free cash flow, including $57.8 million of capital expenditures. Net cash flow was $46.4 million, which includes the pay down of $42.7 million of long-term debt.
Fourth Quarter highlights include: Revenue was $223.7 million, an increase of 6.0 percent from the $211.0 million in the fourth quarter 2013, and a decrease of 4.3 percent from the $233.8 million in the third quarter 2014; Gross profit was $70.7 million, compared to $60.8 million in the fourth quarter of 2013 and $74.7 million in the third quarter 2014; Gross profit margin was 31.6 percent, compared to 28.8 percent in the fourth quarter 2013 and 32.0 percent in the third quarter 2014; GAAP net income was $16.7 million, or $0.34 per diluted share, compared to fourth quarter 2013 of $6.2 million, or $0.13 per diluted share, and third quarter 2014 of $19.4 million, or $0.40 per diluted share; Excluding $2.4 million, net of tax, share-based compensation expense, GAAP and non-GAAP adjusted net income would have increased by $0.05 per diluted share; and Achieved $26.9 million of cash flow from operations, and $6.3 million of free cash flow, including $20.7 million of capital expenditures. Net cash flow was $6.2 million, which includes the pay down of $6.8 million of long-term debt.
Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “Diodes once again achieved another year of solid results with record revenue and gross profit driving the highest net income and earnings per share since 2010. 2014 concluded Diodes’ 24th consecutive year of profitability. Gross margin increased 230 basis points over 2013, while operating expenses as a percentage of revenue decreased 200 basis points. Together, these factors resulted in GAAP net income increasing $37 million, or more than double 2013 results, and non-GAAP net income improving $20 million, or 40 percent.
“BCD’s margins improved from 2013 to 2014, but still impacted our gross margin by approximately 160 basis points in 2014 as compared to approximately 120 basis points in 2013. Margins for Diodes without BCD more than offset this impact as we continue to make progress with loading and performance improvements at our manufacturing facilities and expect utilization to gradually improve our margins over time, especially as we further ramp BCD’s fabs and transition the manufacturing in our Chengdu assembly-test facility from pilot-line to full production mode in second half 2015.
“Also during the year, we strengthened our balance sheet by reducing long-term debt by approximately $42 million. When combined with our reduction in capital expenditures to 6.6 percent of revenue for the year, we generated approximately $76 million of free cash flow in 2014. Looking forward to the coming year, we remain focused on generating profitable growth by further refining product mix to maximize gross profit and deliver increased earnings and cash flow,†Lu concluded.
