DIODES INC DEL

Previous wording

Net sales were $302.0 million, a decrease of 35.4% from the $467.2 million in the first quarter 2023 and a decrease of 6.4% from the $322.7 million in the fourth quarter 2023;

Current wording

Net sales were $319.8 million, a decrease of 31.5% from the $467.2 million in the second quarter of 2023 and an increase of 5.9% from the $302.0 million in the first quarter of 2024;

Previous wording

Gross profit was $99.6 million, a decrease of 48.8% from the $194.5 million in the first quarter 2023 and a decrease of 11.5% from the $112.5 million in the fourth quarter 2023;

Current wording

Gross profit was $107.4 million, a decrease of 45.0% from the $195.4 million in the second quarter of 2023 and an increase of 7.8% from the $99.6 million in the first quarter of 2024;

Previous wording

Net income attributable to common stockholders was $14.0 million, compared to $71.2 million in the first quarter 2023 and $25.3 million in the fourth quarter 2023;

Current wording

Net income attributable to common stockholders was $8.0 million, compared to $82.0 million in the second quarter of 2023 and $14.0 million in the first quarter of 2024;

Previous wording

Earnings per share attributable to common stockholders was $0.30 per diluted share, compared to $1.54 per diluted share in the first quarter 2023 and $0.55 per diluted share in the fourth quarter of 2023; and

Current wording

Earnings per share attributable to common stockholders was $0.17 per diluted share, compared to $1.77 per diluted share in the second quarter or 2023 and $0.30 per diluted share in the first quarter of 2024; and

Previous wording

Cash flow used in operations was $31.1 million. We had $20.4 of capital expenditures. Net cash flow was a negative $47.9 million.

Current wording

Cash flow provided by operations was $14.4 million. We had $17.9 million of capital expenditures. Net cash flow was a negative $2.9 million.

Previous wording

As of March 31, 2024, our cash, cash equivalents, and short-term investments were $276.0 million, and we had access to additional borrowing capacity of $225.0 million under the revolving portion of our U.S. Credit Agreement. We believe our liquidity and our borrowing capacity will allow us to manage the impacts of the recent industry challenges on our business and to cover our cash needs for working capital, capital expenditures, and acquisitions for at least the next 12 months.

Current wording

As of June 30, 2024, our cash, cash equivalents, and short-term investments were $273.9 million, and we had access to unused borrowing capacity of $225.0 million under the revolving portion of our U.S. Credit Agreement. We believe our liquidity and our borrowing capacity will allow us to cover our cash needs for working capital, capital expenditures, and acquisitions for at least the next 12 months.

Previous wording

During the three months ended March 31, 2024, weighted-average sales price decreased 27.6%, when compared to the same period in 2023.

Current wording

Net sales decreased approximately $147.4 million, or 31.5%, for the three months ended June 30, 2024, compared to the same period last year, driven by lower product shipments caused by lower demand across all regions and all end markets. During the three months ended June 30, 2024, weighted-average sales price decreased 19.2% and volume decreased 15.3%, when compared to the same period in 2023. The decline in weighted-average sales price was primarily due to weaker end-user demand in the automotive and industrial markets which collectively comprised 41% and 48% of product revenue for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Cost of goods sold decreased approximately $70.4 million for the three months ended March 31, 2024, compared to the same period last year, due to the decreased net sales during the three months ended March 31, 2024. As a percent of sales, cost of goods sold was 67.0% for the three months ended March 31, 2024, compared to 58.4% for the same period last year. Average unit cost decreased

Current wording

Cost of goods sold decreased approximately $59.4 million for the three months ended June 30, 2024, compared to the same period last year, due to the decreased net sales during the three months ended June 30, 2024. As a percent of sales, cost of goods sold was 66.4% for the three months ended June 30, 2024, compared to 58.2% for the same period last year. Average unit cost decreased approximately 7.8% for the three months ended June 30, 2024, compared to the same period last year.

Previous wording

-19- approximately 16.9% for the three months ended March 31, 2024, compared to the same period last year. For the three months ended March 31, 2024, gross profit decreased approximately 48.8% when compared to the same period last year. Gross profit margin for the three month periods ended March 31, 2024 and 2023 was 33.0% and 41.6%, respectively.

Current wording

For the three months ended June 30, 2024, gross profit decreased approximately 45.0% when compared to the same period last year primarily due to lower net sales, caused by lower demand in all regions and all end-markets. Gross profit margin for the three month periods ended June 30, 2024 and 2023 was 33.6% and 41.8%, respectively. The decrease in gross profit margin was primarily due to

Previous wording

Interest income increased $2.8 million for the three months ended March 31, 2024, compared to the same period last year due to income earned on financial instruments to hedge the Company’s net investment risk as well as higher interest rates earned on short-term investments. Interest expense decreased $1.6 million, or 75.0% for the three months ended March 31, 2024, compared to the same period last year due to lower debt levels partially offset by higher interest rates. Unrealized gain on investments decreased from 2023 due to mark to market adjustments on investments recorded in 2023 and not repeated in 2024.

Current wording

Interest income increased $2.0 million for the three months ended June 30, 2024, compared to the same period last year due to income earned on financial instruments to hedge the Company’s net investment risk as well as higher interest rates earned on short-term investments. Interest expense decreased $1.3 million, or 61.1% for the three months ended June 30, 2024, compared to the same period last year due to lower debt levels partially offset by higher interest rates. Unrealized gain on investments decreased from 2023 due to mark to market adjustments on investments recorded in 2023 and not repeated in 2024.

Previous wording

We recognized an income tax expense of approximately $3.5 million and $16.6 million for the three months ended March 31, 2024, and 2023, respectively. The decrease in income taxes for 2024 compared to 2023 was primarily attributable to a decrease in pretax book income.

Current wording

We recognized an income tax expense of approximately $2.6 million and $17.2 million for the three months ended June, 2024, and 2023, respectively. The decrease in income taxes for 2024 compared to 2023 was primarily attributable to a decrease in pretax book income.

Previous wording

Operating expenses for the three months ended March 31, 2024, decreased $21.4 million when compared to the three months ended March 31, 2023. Operating expenses as a percentage of net sales was 28.7% and 23.1% for the three months ended March 31, 2024 and 2023, respectively. SG&A decreased approximately $17.3 million as compared to the same period last year driven primarily by decreases in wages and selling expenses. These decreases were partially offset by increases in SG&A operating expenses. SG&A, as a percentage of net sales, was 17.8% and 15.2% for the three months ended March 31, 2024 and 2023, respectively. Research and development expenses (“R&D”) increased approximately $0.7 million due to increases in professional services and supplies expenses as compared to the same period last year. R&D, as a percentage of net sales, was 11.2% and 7.1% for the three months ended March 31, 2024 and 2023, respectively. Gain on disposal of fixed assets increased $4.8 million the three months ended March 31, 2024 when compared to the three months ended March 31, 2023.

Current wording

Operating expenses for the six months ended June 30, 2024, decreased $23.5 million when compared to the six months ended June 30, 2023. Operating expenses as a percentage of net sales was 30.6% and 22.9% for the six months ended June 30, 2024 and 2023, respectively. SG&A decreased approximately $26.2 million as compared to the same period last year primarily driven by lower amounts of wages and benefits, specifically payroll and variable compensation due to the lower Company performance. Also included in the lower SG&A was lower selling expense, a result of the lower revenue levels. SG&A, as a percentage of net sales, was 18.0% and 14.8% for the six months ended June 30, 2024 and 2023, respectively. R&D decreased approximately $0.7 million as compared to the same period last year. R&D, as a percentage of net sales, was 10.8% and 7.3% for the six months ended June 30, 2024 and 2023, respectively. Gain on disposal of fixed assets increased $4.8 million for the six months ended June 30, 2024 when compared to the six months ended June 30, 2023. Also included in operating expenses for the six months ended June 30, 2024 was $8.3 million related to restructuring activities undertaken by us during the period to consolidate operations.

Previous wording

Our primary source of liquidity is cash flow from operations. Additional sources of liquidity are cash and cash equivalents, short-term investments, and our credit facilities. Our cash and cash equivalents and restricted cash decreased from $318.5 million at December 31, 2023 to $270.6 million at March 31, 2024. This decrease in cash, cash equivalents, and restricted cash reflects normal operations of the Company. As of March 31, 2024, we had short-term investments totaling $9.8 million. These investments are highly liquid with maturity dates greater than three months at the date of purchase. We generally can access these investments in a relatively short time frame but in doing so we generally forfeit all earned and future interest income.

Current wording

Our primary source of liquidity is cash flow from operations. Additional sources of liquidity are cash and cash equivalents, short-term investments, and our credit facilities. Our cash and cash equivalents and restricted cash decreased from $318.5 million at December 31, 2023 to $267.7 million at June 30, 2024. This decrease in cash, cash equivalents, and restricted cash reflects normal operations of the Company. As of June 30, 2024, we had short-term investments totaling $9.2 million. These investments are highly liquid with maturity dates greater than three months at the date of purchase. We generally can access these investments in a relatively short time frame but in doing so we generally forfeit all earned and future interest income.

Previous wording

At March 31, 2024 and December 31, 2023, our working capital was $824.0 million and $793.9 million, respectively. We expect cash generated by our operations together with existing cash, cash equivalents, short-term investments and available borrowing under credit facilities to be sufficient to cover our cash needs for working capital, capital expenditures and acquisitions for at least the next 12 months.

Current wording

At June 30, 2024 and December 31, 2023, our working capital was $859.5 million and $793.9 million, respectively. We expect cash generated by our operations together with existing cash, cash equivalents, short-term investments and available borrowing under credit facilities to be sufficient to cover our cash needs for working capital, capital expenditures and acquisitions for at least the next 12 months.

Previous wording

Our undistributed foreign earnings continue to be indefinitely reinvested in foreign operations, with limited exceptions related to earnings of certain European and Asian subsidiaries. As of March 31, 2024, our foreign subsidiaries held approximately $197.3 million of cash, cash equivalents and investments of which approximately $58.9 million would be subject to a potential non-U.S. withholding tax if distributed outside the country in which the cash is currently held. The $58.9 million is held in Germany, China, Korea, and Taiwan.

Current wording

Our undistributed foreign earnings continue to be indefinitely reinvested in foreign operations, with limited exceptions related to earnings of certain European and Asian subsidiaries. As of June 30, 2024, our foreign subsidiaries held approximately $209.2 million of cash, cash equivalents and investments of which approximately $67.8 million would be subject to a potential non-U.S. withholding tax if distributed outside the country in which the cash is currently held. The $67.8 million is held in Germany, China, Korea, and Taiwan.

Previous wording

Our Asia subsidiaries maintain short-term credit facilities with several financial institutions through our foreign entities worldwide totaling $153.1 million. Other than two Taiwanese credit facilities that are collateralized by assets, our foreign credit lines are unsecured, uncommitted, and contain no restrictive covenants. These credit facilities bear interest at SOFR or similar indices plus a specified margin. Interest payments are due monthly on outstanding amounts under the credit lines. The unused and available credit under the various facilities as of March 31, 2024, was approximately $103.7 million, net of $48.9 million advanced under our foreign credit lines and $0.4 million of credit used for import and export guarantee.

Current wording

Our Asia subsidiaries maintain short-term credit facilities with several financial institutions through our foreign entities worldwide totaling $149.6 million. Other than two Taiwanese credit facilities that are collateralized by assets, our foreign credit lines are unsecured, uncommitted, and contain no restrictive covenants. These credit facilities bear interest at SOFR or similar indices plus a specified margin. Interest payments are due monthly on outstanding amounts under the credit lines. The unused and available credit under the various facilities as of June 30, 2024, was approximately $122.9 million, net of $26.3 million advanced under our foreign credit lines and $0.4 million of credit used for import and export guarantee.

Previous wording

Net cash flows used in operating activities for the three months ended March 31, 2024 was $31.1 million. Net cash flows used in operating activities for the three months ended March 31, 2024 resulted from net income of $15.3 million, depreciation and amortization of intangible assets of $34.8 million and share-based compensation of $5.1 million. The increases were offset by a decrease in operating asset and liability accounts of $77.4 million and a gain on disposal of property plant and equipment of $4.9 million. Net cash flows provided by operating activities for the three months ended March 31, 2023 was $99.8 million. Net cash flows provided by operating activities for the three months ended March 31, 2023 resulted from net income of $72.0 million, depreciation and amortization of intangible assets of $33.6 million and share-based compensation of $9.8 million. The increases were partially offset by a decrease in operating asset and liability accounts of $11.7 million and a non-cash investment gain of $3.8 million.

Current wording

Net cash flows provided by operating activities for the six months ended June 30, 2023 resulted from net income of $155.7 million, depreciation and amortization of intangible assets of $67.9 million, and share-based compensation of $17.5 million. The increases were partially offset by a decrease in operating asset and liability accounts of $32.0 million and a non-cash investment gain of $16.0 million.

Previous wording

Net cash and cash equivalents used in investing activities was $18.3 million for the three months ended March 31, 2024. Net cash and cash equivalents used in investing activities for the three months ended March 31, 2024 was primarily due to purchases of property, plant and equipment of $20.4 million, or 6.7% of net sales. We expect capital expenditures for the twelve months ended December 31, 2024 to be within our target model of 5% to 9% of net sales. Net cash and cash equivalents used in investing activities was $48.1 million for the three months ended March 31, 2023. Net cash and cash equivalents used in investing activities for the three months ended March 31, 2023 was primarily due to purchases of property, plant, and equipment of $48.0 million, or 10.3% of net sales, due to the expansion of a wafer fabrication facility located in Hsinchu Science Park in Taiwan.

Current wording

Net cash and cash equivalents from investing activities was ($30.8) million for the six months ended June 30, 2024. Net cash and cash equivalents used in investing activities for the six months ended June 30, 2024 was primarily due to purchases of property, plant, and equipment of $38.3 million, or 6.2% of net sales. We expect capital expenditures for the twelve months ended December 31, 2024 to be within our target model of 5% to 9% of net sales. Net cash and cash equivalents used in investing activities was $97.5 million for the six months ended June 30, 2023. Net cash and cash equivalents used in investing activities for the six months ended June 30, 2023 was primarily due to purchases of property, plant, and equipment of $85.0 million, or 9.1% of net sales, due to the expansion of a wafer fabrication facility located in Hsinchu Science Park in Taiwan and the additional investment of $13.9 million in a privately held wafer design company.

Previous wording

Net cash and cash equivalents provided by financing activities was $3.2 million for the three months ended March 31, 2024. Net cash provided by financing activities in the three months ended March 31, 2024 consisted primarily of $8.6 million of net increases in our debt, partially offset by taxes paid on net share settlements of $5.4 million. Net cash and cash equivalents used in financing activities was $70.3 million for the three months ended March 31, 2023. Net cash used in financing activities in the three months ended March 31, 2023 consisted primarily of $60.8 million of net reductions in our debt and taxes paid on net share settlements of $9.7 million.

Current wording

Net cash and cash equivalents from financing activities was ($17.0) million for the six months ended June 30, 2024. Net cash provided by financing activities in the six months ended June 30, 2024 consisted primarily of $13.5 million of net decreases in our debt and taxes paid on net share settlements of $5.7 million. Net cash and cash equivalents used in financing activities was $106.7 million for the six months ended June 30, 2023. Net cash used in financing activities in the six months ended June 30, 2023 consisted primarily of $95.2 million of net reductions in our debt and taxes paid on net share settlements of $10.6 million.

Previous wording

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps, including interest rate collars, as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Current wording

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps, including interest rate collars, as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Previous wording

The Company makes use of cross-currency swaps and foreign-currency forward contracts to decrease the foreign exchange risk inherent in the Company’s investment in some of its foreign subsidiaries.

Current wording

We make use of cross-currency swaps and foreign-currency forward contracts to decrease the foreign exchange risk inherent in our investment in some of our foreign subsidiaries.

Previous wording

Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934. We generally identify forward-looking statements by the use of terminology such as “may,” “will,” “could,” “should,” “potential,” “continue,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or similar phrases or the negatives of such terms. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed in the subsection “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our most recent Annual Report on Form 10-K, and similar discussions elsewhere in this Quarterly Report on Form 10-Q, and in other reports we file with the SEC from time to time, that could cause actual results to differ materially from those anticipated by our management. The PSLRA provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the PSLRA.

Current wording

Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934. We generally identify forward-looking statements by the use of terminology such as “may,” “will,” “could,” “should,” “potential,” “continue,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or similar phrases or the negatives of such terms. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed in the subsection “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our most recent