Diodes(DIOD) - 2025 Q2 - Quarterly Results

Second Quarter Highlights Diodes Incorporated achieved better-than-expected revenue in Q2 FY2025, marking the third consecutive quarter of year-over-year growth, indicating continuous market and demand improvement - Company revenue exceeded expectations, achieving third consecutive quarter of year-over-year growth, indicating continuous market and demand improvement[3][5] - Point-of-sale (POS) grew sequentially in all regions, with double-digit growth in Asia[5] - Channel and internal inventory days further reduced[5] - Strong growth in the consumer end market led to an unfavorable product mix, with high-margin automotive and industrial markets' percentage of total revenue remaining largely flat[6][7] - Channel inventory consumption limited manufacturing facility load increase, causing underutilized capacity costs to hinder gross margin expansion[7] - Non-GAAP adjusted net income grew nearly 70% sequentially through strict expense management[7] Key Financial Data for Q2 FY2025 | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Sequential Change (vs Q1 2025) | Year-over-Year Change (vs Q2 2024) | | :-------------------------------- | :--------------- | :--------------- | :-------------------------------- | :-------------------------------- | | Revenue | $366.2 | $319.8 | +10% (vs $332.1M) | +14% | | GAAP Gross Profit | $115.3 | $107.4 | +10.12% (vs $104.7M) | +7.36% | | GAAP Gross Margin | 31.5% | 33.6% | 0.0 ppt (vs 31.5%) | -2.1 ppt | | GAAP Net Income | $46.1 | $8.0 | Significant improvement (vs -$4.4M) | +476.25% | | Non-GAAP Adjusted Net Income | $15.0 | $15.4 | +70.45% (vs $8.8M) | -2.6% | | GAAP Diluted EPS | $0.99 | $0.17 | Significant improvement (vs -$0.10) | +482.35% | | Non-GAAP Diluted EPS | $0.32 | $0.33 | +68.42% (vs $0.19) | -3.03% | | EBITDA | $84.5 | $41.1 | +222.5% (vs $26.2M) | +105.6% | | Cash Flow from Operations | $41.5 | N/A | N/A | N/A | | Free Cash Flow | $21.1 | N/A | N/A | N/A | | Net Cash Flow | -$18.2 | N/A | N/A | N/A | Business Outlook (Q3 2025 Guidance) Diodes anticipates continued strong growth in Q3 2025, with revenue projected to increase 7% sequentially and 12% year-over-year, driven by robust demand from AI-related computing applications, consumer electronics, and the Chinese EV market in Asia - Q3 2025 revenue is projected to reach approximately $392 million (±3%), with the midpoint representing a 12% year-over-year increase, marking the fourth consecutive quarter of YoY growth[8][19] - Growth is primarily driven by strong demand from AI-related computing applications, consumer electronics, and the Chinese electric vehicle market in Asia[8] Q3 2025 Financial Guidance | Metric | Expectation | | :-------------------------------- | :-------------------------------- | | Revenue | Approximately $392 Million (±3%) | | GAAP Gross Margin | 31.6% (±1%) | | Non-GAAP Operating Expenses as % of Revenue | Approximately 26.0% (±1%) | | Net Interest Income | Approximately $1.0 Million | | Income Tax Rate | 18.0% (±3%) | | Shares for Diluted EPS Calculation | Approximately 46.5 Million Shares | Detailed Financial Results This section provides a comprehensive overview of Diodes Incorporated's financial performance, including GAAP and non-GAAP metrics, cash flow, and balance sheet highlights Q2 2025 Financial Performance Diodes Incorporated reported revenue of $366.2 million in Q2 2025, with GAAP gross profit of $115.3 million and a gross margin of 31.5% Q2 2025 GAAP Financial Data | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Q1 2025 (Million USD) | | :------------------- | :--------------- | :--------------- | :--------------- | | Revenue | $366.2 | $319.8 | $332.1 | | GAAP Gross Profit | $115.3 | $107.4 | $104.7 | | GAAP Gross Margin | 31.5% | 33.6% | 31.5% | | GAAP Operating Expenses | $105.9 | $103.7 | $103.4 | | GAAP Operating Expenses as % of Revenue | 28.9% | 32.4% | 31.1% | | GAAP Net Income | $46.1 | $8.0 | -$4.4 | | GAAP Diluted EPS | $0.99 | $0.17 | -$0.10 | Non-GAAP Adjusted Net Income and EPS Non-GAAP adjusted net income for Q2 2025 was $15.0 million, with diluted EPS of $0.32, excluding $23.4 million in non-cash unrealized investment mark-to-market gains, $12.7 million in gain on disposition of a subsidiary, and $4.8 million in acquisition-related intangible asset amortization Q2 2025 Non-GAAP Adjusted Net Income and EPS | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Q1 2025 (Million USD) | | :------------------- | :--------------- | :--------------- | :--------------- | | Non-GAAP Adjusted Net Income | $15.0 | $15.4 | $8.8 | | Non-GAAP Diluted EPS | $0.32 | $0.33 | $0.19 | - Non-GAAP adjustments excluded $23.4 million in non-cash unrealized investment mark-to-market gains, $12.7 million in gain on disposition of a subsidiary, and $4.8 million in acquisition-related intangible asset amortization[12] - Includes approximately $4.6 million (after tax) of non-cash share-based compensation expense, which would increase GAAP and non-GAAP diluted EPS by $0.10 if excluded[14] EBITDA EBITDA (a non-GAAP metric) for Q2 2025 was $84.5 million, representing 23.1% of revenue, showing significant growth compared to both the prior year and previous quarter EBITDA Performance | Metric | Q2 2025 (Million USD) | Q2 2024 (Million USD) | Q1 2025 (Million USD) | | :----- | :--------------- | :--------------- | :--------------- | | EBITDA | $84.5 | $41.1 | $26.2 | | EBITDA as % of Revenue | 23.1% | 12.8% | 7.9% | Cash Flow and Balance Sheet Summary In Q2 2025, net cash flow from operating activities was $41.5 million, and free cash flow was $21.1 million Q2 2025 Cash Flow | Metric | Amount (Million USD) | | :------------------- | :--------------- | | Net Cash Flow from Operations | $41.5 | | Free Cash Flow | $21.1 | | Net Cash Flow | -$18.2 | | Capital Expenditures | $20.4 | - Net cash flow was negative $18.2 million, primarily including approximately $49.2 million in increased equity investments and $10 million for the stock repurchase program[16] Key Balance Sheet Data as of June 30, 2025 | Metric | Amount (Million USD) | | :------------------- | :--------------- | | Cash, Cash Equivalents, Restricted Cash, and Short-Term Investments | Approximately $333 | | Total Debt | Approximately $54 | | Working Capital | Approximately $871 | Corporate Information This section provides essential corporate details, including information on the conference call, an overview of Diodes Incorporated, a safe harbor statement, and contact information for investor relations Conference Call Diodes Incorporated held a conference call on August 7, 2025, to discuss its second-quarter financial results, providing dial-in information and webcast details for investors and analysts - The conference call was held on August 7, 2025, at 4:00 PM CT (5:00 PM ET)[20] - Dial-in information and a webcast link were provided, with a telephone replay service available until August 14, 2025[20][21] About Diodes Incorporated Diodes Incorporated is a provider of high-quality semiconductor products for automotive, industrial, computing, consumer, and communications markets, leveraging its extensive analog and discrete power solutions and advanced packaging technologies - Diodes Incorporated, an S&P SmallCap 600 and Russell 3000 Index company, supplies high-quality semiconductor products to leading global companies in the automotive, industrial, computing, consumer, and communications markets[22] - The company leverages its expanded analog and discrete power solutions product portfolio and leading-edge packaging technologies to meet customer needs[22] Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 This statement warns investors that forward-looking statements in the report involve risks and uncertainties that could cause actual results to differ materially from expectations, including market, acquisition, operational, and economic factors - Forward-looking statements in the report involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements[23] - Potential risks and uncertainties include: failure to achieve expectations, failure to realize anticipated benefits of acquisitions or slower-than-expected integration, inability to maintain current growth strategies or performance, inability to increase automotive, industrial, or other revenue and market share, risks of domestic and international operations, cyclical downturns in the semiconductor industry, changes in end-market demand or product mix, unfavorable exchange rates, inaccurate future outlook or guidance, global economic weakness or unstable financial markets, trade restrictions, and vulnerabilities in information technology systems[24] Company and Investor Relations Contact Information Provides detailed contact information for Diodes Incorporated's company contact (Gurmeet Dhaliwal, Director of Investor Relations and Corporate Marketing) and investor relations contact (Leanne Sievers, President of Shelton Group) - Company Contact: Gurmeet Dhaliwal (Director, Investor Relations and Corporate Marketing), Phone: 408-232-9003, Email: Gurmeet_Dhaliwal@diodes.com[27] - Investor Relations Contact: Leanne Sievers (President, Shelton Group), Phone: 949-224-3874, Email: lsievers@sheltongroup.com[27] Supplemental Financial Information This section provides detailed consolidated financial statements, including statements of operations, reconciliations of GAAP to non-GAAP metrics, and balance sheets, offering a comprehensive view of the company's financial position and performance Consolidated Condensed Statements of Operations This section presents Diodes Incorporated's consolidated condensed statements of operations, detailing GAAP financial data for the three and six months ended June 30, 2025 and 2024, including net sales, cost of sales, gross profit, operating expenses, and net income Consolidated Condensed Statements of Operations (Unaudited, in Thousands of USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Net Sales | $366,212 | $319,771 | $698,325 | $621,743 | | Cost of Sales | $250,888 | $212,385 | $478,307 | $414,773 | | Gross Profit | $115,324 | $107,386 | $220,018 | $206,970 | | Operating Expenses | $105,935 | $103,678 | $209,333 | $190,314 | | Operating Income | $9,389 | $3,708 | $10,685 | $16,656 | | Other Income (Expense) | $43,834 | $9,096 | $39,771 | $14,954 | | Income Before Income Taxes and Noncontrolling Interests | $53,223 | $12,804 | $50,456 | $31,610 | | Income Tax Expense | $9,063 | $2,643 | $9,083 | $6,180 | | Net Income | $44,160 | $10,161 | $41,373 | $25,430 | | Net Income Attributable to Common Stockholders | $46,098 | $8,000 | $41,661 | $22,038 | | Diluted EPS | $0.99 | $0.17 | $0.90 | $0.48 | Reconciliation of Net Income to Adjusted Net Income This section provides detailed reconciliations of GAAP net income to non-GAAP adjusted net income, outlining various adjustments made across different reporting periods to offer a clearer view of operational performance For the three months ended June 30, 2025 This reconciliation details adjustments for acquisition-related intangible asset amortization, acquisition-related costs, restructuring charges, gain on disposition of a subsidiary, unrealized investment gains, and board member retirement benefits for the three months ended June 30, 2025 Q2 2025 Reconciliation of Net Income to Adjusted Net Income (Unaudited, in Thousands of USD) | Metric | Amount | | :------------------------------------- | :--------------- | | GAAP Net Income | $46,098 | | Diluted EPS (GAAP) | $0.99 | | Adjustments: | | | Acquisition-related intangible asset amortization | $4,805 | | Acquisition-related costs | $61 | | Restructuring charges | $54 | | Gain on disposition of a subsidiary | $(12,693) | | Unrealized investment gains | $(23,383) | | Board member retirement benefits | $92 | | Non-GAAP Adjusted Net Income | $15,034 | | Non-GAAP Diluted EPS | $0.32 | For the three months ended June 30, 2024 This reconciliation for the three months ended June 30, 2024, primarily includes adjustments for acquisition-related intangible asset amortization, executive retirement benefits, restructuring charges, and unrealized investment gains Q2 2024 Reconciliation of Net Income to Adjusted Net Income (Unaudited, in Thousands of USD) | Metric | Amount | | :------------------------------------- | :--------------- | | GAAP Net Income | $8,000 | | Diluted EPS (GAAP) | $0.17 | | Adjustments: | | | Acquisition-related intangible asset amortization | $3,147 | | Executive retirement benefits | $509 | | Restructuring charges | $7,244 | | Unrealized investment gains | $(3,480) | | Non-GAAP Adjusted Net Income | $15,420 | | Non-GAAP Diluted EPS | $0.33 | For the six months ended June 30, 2025 This reconciliation for the six months ended June 30, 2025, includes adjustments for acquisition-related intangible asset amortization, acquisition-related costs, restructuring charges, impairment of equity investment, gain on disposition of a subsidiary, unrealized investment gains, and board member retirement benefits H1 2025 Reconciliation of Net Income to Adjusted Net Income (Unaudited, in Thousands of USD) | Metric | Amount | | :------------------------------------- | :--------------- | | GAAP Net Income | $41,661 | | Diluted EPS (GAAP) | $0.90 | | Adjustments: | | | Acquisition-related intangible asset amortization | $9,598 | | Acquisition-related costs | $196 | | Restructuring charges | $280 | | Impairment of equity investment | $4,849 | | Gain on disposition of a subsidiary | $(12,693) | | Unrealized investment gains | $(20,157) | | Board member retirement benefits | $92 | | Non-GAAP Adjusted Net Income | $23,826 | | Non-GAAP Diluted EPS | $0.51 | For the six months ended June 30, 2024 This reconciliation for the six months ended June 30, 2024, includes adjustments for acquisition-related intangible asset amortization, executive retirement benefits, restructuring charges, unrealized investment gains, and manufacturing facility insurance proceeds H1 2024 Reconciliation of Net Income to Adjusted Net Income (Unaudited, in Thousands of USD) | Metric | Amount | | :------------------------------------- | :--------------- | | GAAP Net Income | $22,038 | | Diluted EPS (GAAP) | $0.48 | | Adjustments: | | | Acquisition-related intangible asset amortization | $6,258 | | Executive retirement benefits | $509 | | Restructuring charges | $7,244 | | Unrealized investment gains | $(3,776) | | Manufacturing facility insurance proceeds | $(3,843) | | Non-GAAP Adjusted Net Income | $28,430 | | Non-GAAP Diluted EPS | $0.61 | Explanation of Adjusted Net Income and Adjusted EPS This section explains the various adjustments made to calculate non-GAAP adjusted net income and EPS, including acquisition-related intangible asset amortization, board member retirement benefits, acquisition-related costs, manufacturing facility insurance proceeds, unrealized investment gains, restructuring charges, gain on disposition of a subsidiary, and impairment of equity investment, along with their rationales - The company excludes acquisition-related intangible asset amortization to ensure comparability of operating results between newly acquired and long-held businesses, and to eliminate the significant variability and unpredictability of this expense across companies[39] - Excludes board member retirement-related costs (cash payments and accelerated vesting of equity awards) as they do not represent ongoing operating expenses[40] - Excludes acquisition-related costs (consulting, legal, and other professional fees) to more accurately reflect costs without special events like acquisitions and to facilitate comparison with periods without such costs[41] - Excludes manufacturing facility insurance proceeds to more accurately reflect the company's ongoing operations[42] - Excludes unrealized mark-to-market adjustments for various equity-related investments, as they do not reflect ongoing operations[43] - Excludes restructuring charges to provide an enhanced view of the company's cost structure and to facilitate comparison with periods without such charges[44] - Excludes gain on disposition of a subsidiary, as it does not reflect ongoing operations[45] - Excludes impairment of equity investment, as it does not reflect ongoing operations[46] Cash Flow Items This section defines Free Cash Flow (FCF) as a non-GAAP financial measure and provides FCF data for Q2 2025, highlighting its role in supporting new product development, acquisitions, and debt reduction - Free Cash Flow (FCF) is a non-GAAP financial measure calculated by subtracting capital expenditures from cash flow from operations[48] - Q2 2025 FCF was $21.1 million, representing the cash and cash equivalents the company can generate after cash expenditures required to maintain or expand property, plant, and equipment[48] Consolidated Reconciliation of Net Income to EBITDA This section provides a reconciliation of GAAP net income to EBITDA (a non-GAAP metric) and explains EBITDA's utility as a tool for evaluating company profitability and operational performance, especially when comparing with other companies in the industry - EBITDA, representing earnings before interest, taxes, depreciation, and amortization, is considered useful by management for investors as it is frequently used by securities analysts, investors, and financial institutions to evaluate companies within the industry and provides further clarity on profitability[50] Reconciliation of Net Income to EBITDA (Unaudited, in Thousands of USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Net Income (GAAP) | $46,098 | $8,000 | $41,661 | $22,038 | | Add: | | | | | | Net interest expense | $(6,518) | $(3,385) | $(11,864) | $(7,467) | | Income tax expense | $9,063 | $2,643 | $9,083 | $6,180 | | Depreciation and amortization | $35,895 | $33,794 | $71,813 | $68,649 | | EBITDA (Non-GAAP) | $84,538 | $41,052 | $110,693 | $89,400 | Consolidated Condensed Balance Sheets This section presents Diodes Incorporated's consolidated condensed balance sheets, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Consolidated Condensed Balance Sheets (Unaudited, in Thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------- | :--------------- | :--------------- | | Assets: | | | | Cash and cash equivalents | $317,049 | $308,671 | | Short-term investments | $10,285 | $7,464 | | Accounts receivable, net | $313,492 | $325,517 | | Inventories | $482,701 | $474,948 | | Total current assets | $1,244,614 | $1,224,153 | | Property, plant and equipment, net | $680,042 | $684,259 | | Goodwill | $185,292 | $181,555 | | Intangible assets, net | $56,328 | $67,397 | | Total assets | $2,471,555 | $2,386,281 | | Liabilities: | | | | Line of credit | $27,562 | $31,429 | | Accounts payable | $148,269 | $133,765 | | Total current liabilities | $373,633 | $375,596 | | Long-term debt, net | $24,865 | $19,563 | | Total liabilities | $537,384 | $517,334 | | Stockholders' Equity: | | | | Common stock | $37,142 | $37,083 | | Retained earnings | $1,760,959 | $1,719,298 | | Treasury stock | $(348,104) | $(338,100) | | Total stockholders' equity | $1,877,103 | $1,795,301 | | Noncontrolling interests | $57,068 | $73,646 | | Total equity | $1,934,171 | $1,868,947 | | Total liabilities and stockholders' equity | $2,471,555 | $2,386,281 |