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s4444wNN

29.9

 

 

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 September 30, 2020

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 November 4, 2020 was 52,041,963.

 

 

 


 

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

  

22

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

  

36

 

Item 4. Controls and Procedures

  

36

 

Part II – Other Information

  

 

Item 1. Legal Proceedings

 

37

Item 1A. Risk Factors

 

37

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

 

38

Item 3. Defaults Upon Senior Securities

 

38

Item 4. Mine Safety Disclosures

 

38

Item 5. Other Information

 

38

Item 6. Exhibits

 

39

 

Signatures

  

40

 

 

 

 


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

DIODES INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

September 30,

 

 

December 31,

 

 

2020

 

 

2019

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

587,643

 

 

$

258,390

 

Short-term investments

 

3,014

 

 

 

4,825

 

Accounts receivable, net of allowances of $3,056 and $4,866 at

  September 30, 2020 and December 31, 2019, respectively

 

261,782

 

 

 

260,322

 

Inventories

 

260,289

 

 

 

236,472

 

Prepaid expenses and other

 

101,961

 

 

 

49,950

 

Total current assets

 

1,214,689

 

 

 

809,959

 

Property, plant and equipment, net

 

453,487

 

 

 

469,574

 

Deferred income tax

 

23,566

 

 

 

17,516

 

Goodwill

 

155,492

 

 

 

141,318

 

Intangible assets, net

 

114,306

 

 

 

119,523

 

Other long-term assets

 

71,112

 

 

 

81,494

 

Total assets

$

2,032,652

 

 

$

1,639,384

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Line of credit

$

70,746

 

 

$

13,342

 

Accounts payable

 

127,315

 

 

 

122,148

 

Accrued liabilities and other

 

103,259

 

 

 

100,571

 

Income tax payable

 

5,235

 

 

 

16,156

 

Current portion of long-term debt

 

14,978

 

 

 

33,105

 

Total current liabilities

 

321,533

 

 

 

285,322

 

Long-term debt, net of current portion

 

330,766

 

 

 

64,401

 

Deferred tax liabilities

 

14,445

 

 

 

16,333

 

Other long-term liabilities

 

114,857

 

 

 

120,545

 

Total liabilities

 

781,601

 

 

 

486,601

 

 

 

 

 

 

 

 

 

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;  51,945,299 and 51,206,969, issued and outstanding

  at September 30, 2020  and December 31, 2019,  respectively

 

35,628

 

 

 

35,111

 

Additional paid-in capital

 

440,944

 

 

 

427,262

 

Retained earnings

 

858,311

 

 

 

789,958

 

Treasury stock at cost, 1,494,080 and 1,457,206,  at

  September 30, 2020 and December 31, 2019, respectively

 

(39,205

)

 

 

(37,768

)

Accumulated other comprehensive loss

 

(97,105

)

 

 

(108,139

)

Total stockholders' equity

 

1,198,573

 

 

 

1,106,424

 

Noncontrolling interest

 

52,478

 

 

 

46,359

 

Total equity

 

1,251,051

 

 

 

1,152,783

 

Total liabilities and stockholders' equity

$

2,032,652

 

 

$

1,639,384

 

 

 

 

 

 

 

 

 

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

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

$

309,459

 

 

$

323,674

 

 

$

878,845

 

 

$

947,973

 

Cost of goods sold

 

198,369

 

 

 

201,628

 

 

 

570,421

 

 

 

591,528

 

Gross profit

 

111,090

 

 

 

122,046

 

 

 

308,424

 

 

 

356,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

44,651

 

 

 

46,123

 

 

 

132,238

 

 

 

137,143

 

Research and development

 

24,469

 

 

 

22,689

 

 

 

69,469

 

 

 

66,566

 

Amortization of acquisition related intangible assets

 

4,007

 

 

 

4,519

 

 

 

12,249

 

 

 

13,539

 

Other operating expense (income)

 

108

 

 

 

-

 

 

 

(108

)

 

 

(158

)

Total operating expense

 

73,235

 

 

 

73,331

 

 

 

213,848

 

 

 

217,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

37,855

 

 

 

48,715

 

 

 

94,576

 

 

 

139,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

138

 

 

 

272

 

 

 

579

 

 

 

1,780

 

Interest expense

 

(3,745

)

 

 

(2,007

)

 

 

(7,643

)

 

 

(6,163

)

Foreign currency loss, net

 

(2,618

)

 

 

(822

)

 

 

(6,143

)

 

 

(1,382

)

Other income

 

1,627

 

 

 

2,577

 

 

 

2,902

 

 

 

5,056

 

Total other expense

 

(4,598

)

 

 

20

 

 

 

(10,305

)

 

 

(709

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes and noncontrolling interest

 

33,257

 

 

 

48,735

 

 

 

84,271

 

 

 

138,646

 

Income tax provision

 

5,871

 

 

 

10,613

 

 

 

15,097

 

 

 

32,085

 

Net income

 

27,386

 

 

 

38,122

 

 

 

69,174

 

 

 

106,561

 

Less net income attributable to noncontrolling interest

 

(234

)

 

 

(62

)

 

 

(821

)

 

 

(501

)

Net income attributable to common stockholders

$

27,152

 

 

$

38,060

 

 

$

68,353

 

 

$

106,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.52

 

 

$

0.75

 

 

$

1.33

 

 

$

2.09

 

Diluted

$

0.51

 

 

$

0.73

 

 

$

1.30

 

 

$

2.05

 

Number of shares used in earnings per share computation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

51,825

 

 

 

50,998

 

 

 

51,563

 

 

 

50,687

 

Diluted

 

52,729

 

 

 

51,869

 

 

 

52,612

 

 

 

51,699

 

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

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

$

27,386

 

 

$

38,122

 

 

$

69,174

 

 

$

106,561

 

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

 

288

 

 

 

(6,553

)

 

 

(6,563

)

 

 

(11,562

)

Unrealized gain (loss) on swaps and collars, net of tax

 

212

 

 

 

259

 

 

 

(409

)

 

 

(3,146

)

Unrealized foreign currency gain (loss), net of tax

 

20,887

 

 

 

(9,186

)

 

 

18,006

 

 

 

(11,151

)

Comprehensive income

 

48,773

 

 

 

22,642

 

 

 

80,208

 

 

 

80,702

 

Less: Comprehensive income attributable to noncontrolling interest

 

(234

)

 

 

(62

)

 

 

(821

)

 

 

(501

)

Total comprehensive income attributable to common stockholders

$

48,539

 

 

$

22,580

 

 

$

79,387

 

 

$

80,201

 

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, June 30, 2020

 

 

53,082

 

 

$

35,389

 

 

 

(1,483

)

 

$

(38,660

)

 

$

433,989

 

 

$

831,159

 

 

$

(118,492

)

 

$

1,143,385

 

 

$

52,242

 

 

$

1,195,627

 

Total comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

27,152

 

 

 

21,387

 

 

 

48,539

 

 

 

234

 

 

 

48,773

 

Contributions from noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

 

 

2

 

Common stock issued for share-based plans

 

 

357

 

 

 

239

 

 

 

-

 

 

 

-

 

 

 

3,093

 

 

 

-

 

 

 

-

 

 

 

3,332

 

 

 

-

 

 

 

3,332

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,155

 

 

 

-

 

 

 

-

 

 

 

6,155

 

 

 

-

 

 

 

6,155

 

Deferred compensation plan

 

 

-

 

 

 

-

 

 

 

(11

)

 

 

(545

)

 

 

545

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,838

)

 

 

-

 

 

 

-

 

 

 

(2,838

)

 

 

-

 

 

 

(2,838

)

Balance,  September 30, 2020

 

 

53,439

 

 

$

35,628

 

 

 

(1,494

)

 

$

(39,205

)

 

$

440,944

 

 

$

858,311

 

 

$

(97,105

)

 

$

1,198,573

 

 

$

52,478

 

 

$

1,251,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

52,664

 

 

$

35,111

 

 

 

(1,457

)

 

$

(37,768

)

 

$

427,262

 

 

$

789,958

 

 

$

(108,139

)

 

$

1,106,424

 

 

$

46,359

 

 

$

1,152,783

 

Total comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

68,353

 

 

 

11,034

 

 

 

79,387

 

 

 

821

 

 

 

80,208

 

Acquisition of non-controlling interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,225

)

 

 

-

 

 

 

-

 

 

 

(1,225

)

 

 

(4,928

)

 

 

(6,153

)

Contributions from noncontrolling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,779

 

 

 

11,779

 

Dividends to noncontrolling interest

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,553

)

 

 

(1,553

)

Common stock issued for share-based plans

 

 

775

 

 

 

517

 

 

 

-

 

 

 

-

 

 

 

3,880

 

 

 

-

 

 

 

-

 

 

 

4,397

 

 

 

-

 

 

 

4,397

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

17,833

 

 

 

-

 

 

 

-

 

 

 

17,833

 

 

 

-

 

 

 

17,833

 

Deferred compensation plan

 

 

-

 

 

 

-

 

 

 

(37

)

 

 

(1,437

)

 

 

1,437

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Tax related to net share settlement

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,243

)

 

 

-

 

 

 

-

 

 

 

(8,243

)

 

 

-

 

 

 

(8,243

)

Balance,  September 30, 2020

 

 

53,439

 

 

$

35,628

 

 

 

(1,494

)

 

$

(39,205

)

 

$

440,944

 

 

$

858,311

 

 

$

(97,105

)

 

$

1,198,573

 

 

$