DIODES INC DEL

Previous wording

We are a leading global manufacturer and supplier of high-quality application-specific standard products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. The Company serves the industrial, automotive, computing, communications, and consumer markets. For more information about our product and markets we serve, see Note 1 –Summary of Operations and Significant Accounting Policies, included in the condensed consolidated financial statements in Item 1 above. Our products are sold primarily throughout Asia, the Americas, and Europe. We believe that our focus on application-specific standard products utilizing innovative, highly efficient packaging and cost-effective process technologies, coupled with our collaborative, customer-focused product development, provides us with a meaningful competitive advantage relative to other semiconductor companies.

Current wording

We are a leading global manufacturer and supplier of high-quality application-specific standard products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. The Company serves the industrial, automotive, computing, consumer, and communications markets. For more information about our product and markets we serve, see Note 1 – Summary of Operations and Significant Accounting Policies, included in the condensed consolidated financial statements in Item 1 above. Our products are sold primarily throughout Asia, the Americas, and Europe. We believe focusing on dependable delivery and support tailored to specific end-user applications and solution-selling approach has fostered deep customer relationships and created a key competitive advantage for us in the highly fragmented discrete, logic, analog, and mixed-signal semiconductor marketplace. We believe our close relationships with our customers have provided us with keener insight into our customers’ product needs. This results in a stronger demand for our product designs and often provides us with insight into additional opportunities for new design wins in our customers’ products.

Previous wording

Earnings per share attributable to common stockholders was $0.30 per diluted share, compared to $1.05 per diluted share in the third quarter or 2023 and $0.17 per diluted share in the second quarter of 2024; and

Current wording

Earnings per share attributable to common stockholders was a loss of $0.10 per diluted share, compared to earnings of $0.30 per diluted share in the first quarter or 2024 and earnings of $0.18 per diluted share in the fourth quarter of 2024; and

Previous wording

Cash flow provided by operations was $54.4 million. We had $15.0 million of capital expenditures. Net cash flow was $49.4 million.

Current wording

Cash flow provided by operations was $56.7 million. We had $15.9 million of capital expenditures. Net cash flow was $26.2 million.

Previous wording

As of September 30, 2024, our cash, cash equivalents, and short-term investments were $319.3 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.

Current wording

As of March 31, 2025, our cash, cash equivalents, and short-term investments were $343.9 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

Previous wording

For the three months ended September 30, 2024, gross profit decreased approximately 24.3% 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 September 30, 2024 and 2023 was 33.7% and 38.5%, respectively. The decrease in gross profit margin was

Current wording

For the three months ended March 31, 2025, gross profit increased approximately 5.1% when compared to the same period last year primarily due to higher net sales. Gross profit margin for the three-month periods ended March 31, 2025 and 2024 was 31.5% and 33.0%, respectively. The decrease in gross profit margin was primarily due to lower factory utilization.

Previous wording

Operating expenses for the three months ended September 30, 2024, decreased $5.9 when compared to the three months ended September 30, 2023. Operating expenses as a percentage of net sales were 27.4% and 25.2% for the three months ended September 30, 2024 and 2023, respectively. SG&A decreased approximately $3.6 million as compared to the same period last year as the company reduced discretionary expenses across payroll, stock performance awards, freight, and sales commission to align with the softer demand environment. SG&A, as a percentage of net sales, was 17.0% and 15.6% for the three months ended September 30, 2024 and 2023, respectively. Research and development expenses (“R&D”) were flat. The lower levels of discretionary benefits in SG&A reflect lower accruals based on the Company’s 2024 performance being lower than in 2023. R&D, as a percentage of net sales, was 9.6% and 8.4% for the three months ended September 30, 2024 and 2023, respectively.

Current wording

Operating expenses for the three months ended March 31, 2025, increased $11.9 million when compared to the three months ended March 31, 2024. Operating expenses as a percentage of net sales were 31.1% and 30.3% for the three months ended March 31, 2025 and 2024, respectively. SG&A increased approximately $5.0 million as compared to the same period last year reflecting an increase in discretionary benefits of $5.7 million, partially offset by decreases in payroll expenses of $1.5 million. The increase in discretionary benefits in 2025 when compared to 2024 is partially related to a reversal of bonus accruals in 2024 that were not paid. SG&A, as a percentage of net sales, was 17.7% and 17.8% for the three months ended March 31, 2025 and 2024, respectively. The lower levels of discretionary benefits in SG&A reflect lower accruals based on the Company’s performance being lower than in 2024. Research and development expenses (“R&D”) were flat. R&D, as a percentage of net sales, was 11.6% and 11.2% for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Interest income was flat for the three months ended September 30, 2024, compared to the same period last year. Interest expense decreased $0.4 million, or 49.2% for the three months ended September 30, 2024, compared to the same period last year due to lower debt levels. The change in unrealized (loss) gain on investments in 2024 compared to 2023 was to mark to market adjustments to adjust the value of the investment.

Current wording

Interest income increased $1.2 million, or 26.0%, for the three months ended March 31, 2025, compared to the same period last year, reflecting interest income received in the Company’s derivative hedging instruments. Interest expense was flat for the three months ended March 31, 2025, compared to the same period last year. During the three months ended March 31, 2025, the Company recognized an impairment loss on an equity investment of $5.8 million, due to a decline in the value of the investment. The change in unrealized (loss) gain on investments in 2025 compared to 2024 was to mark to market adjustments to adjust the value of the investment.

Previous wording

We recognized an income tax expense of approximately $3.6 million and $10.7 million for the three months ended September 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 $0.0 million and $3.5 million for the three months ended March 2025 and 2024, respectively. The decrease in income taxes for 2025 compared to 2024 was primarily attributable to a decrease in pretax book income.

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 $317.1 million at September 30, 2024. This decrease in cash, cash equivalents, and restricted cash reflects normal operations of the Company. As of September 30, 2024, we had short-term investments totaling $7.5 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 increased from $314.7 million at December 31, 2024 to $341.0 million at March 31, 2025. This increase in cash, cash equivalents, and restricted cash reflects normal operations of the Company. As of March 31, 2025, we had short-term investments totaling $8.2 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 September 30, 2024 and December 31, 2023, our working capital was $909.7 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 March 31, 2025 and December 31, 2024, our working capital was $868.0 million and $848.6 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 September 30, 2024, our foreign subsidiaries held approximately $215.4 million of cash, cash equivalents and investments of which approximately $93.1 million would be subject to a potential non-U.S.

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 March 31, 2025, our foreign subsidiaries held approximately $249.5 million of cash, cash equivalents and investments of which approximately $95.3 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 $95.3 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 $148.7 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 September 30, 2024, was approximately $112.6 million, net of $35.7 million advanced under our foreign credit lines and $0.4 million of credit used for import and export guarantee.

Current wording

-23- uncommitted, and contain no restrictive covenants. These credit facilities bear interest at the Taipei Interbank Offering Rate (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, 2025, was approximately $93.9 million, net of $31.0 million advanced under our foreign credit lines and $0.4 million of credit used for import and export guarantee.

Previous wording

Because some of our outstanding debt is subject to variable interest rates, the recent rise in interest rates will potentially increase our overall debt service cost. If interest rates continue to rise globally, our cost of capital may increase in the future.

Current wording

Because some of our outstanding debt is subject to variable interest rates, higher interest rates will potentially increase our overall debt service cost. If interest rates rise globally, our cost of capital may increase in the future.

Previous wording

Net cash flows provided by operating activities for the nine months ended September 30, 2023 was $242.5 million. Net cash flows provided by operating activities for the nine months ended September 30, 2023 resulted from net income of $205.5 million, depreciation and amortization of intangible assets of $102.7 million and share-based compensation of $23.4 million. The increases were partially offset by a decrease in operating asset and liability accounts of $65.3 million and a non-cash investment gain of $17.6 million.

Current wording

Net cash flows from operating activities for the three months ended March 31, 2024 was $31.1 million. Net cash flows from 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.

Previous wording

Net cash and cash equivalents from investing activities was ($48.9) million for the nine months ended September 30, 2024. Net cash and cash equivalents used in investing activities for the nine months ended September 30, 2024 was primarily due to purchases of property, plant, and equipment of $53.3 million, or 5.5% of net sales. This outflow of cash to purchase property, plant and equipment was partially offset by the receipt of an insurance recovery of $4.7 million and net proceeds from the sale of short-term investments of $2.5 million. 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 $129.4 million for the nine months ended September 30, 2023. Net cash and cash equivalents used in investing activities for the nine months ended September 30, 2023 was primarily due to purchases of property, plant and equipment of $123.5 million, or 9.2% 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.

Current wording

Net cash and cash equivalents from investing activities was $18.3 million for the three months ended March 31, 2024. Net cash and cash equivalents from 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.

Previous wording

Net cash and cash equivalents from financing activities was ($15.5) million for the nine months ended September 30, 2024. Net cash provided by financing activities in the nine months ended September 30, 2024 consisted primarily of $3.8 million of net decreases in our debt and taxes paid on net share settlements of $9.5 million. Net cash and cash equivalents used in financing activities was $150.7 million for the nine months ended September 30, 2023. Net cash used in financing activities in the nine months ended September 30, 2023 consisted primarily of $130.4 million of net reductions in our debt and taxes paid on net share settlements of $15.6 million.

Current wording

Net cash and cash equivalents from financing activities was ($1.3) million for the three months ended March 31, 2025. Net cash provided by financing activities in the three months ended March 31, 2025 consisted primarily of $0.2 million of net increases in our debt and taxes paid on net share settlements of $1.5 million. Net cash and cash equivalents provided by financing activities was $3.2 million for the three months ended March 31, 2024. Net cash and cash equivalents from 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.

Previous wording

We use interest rate swaps, foreign exchange forward contracts, and cross currency swaps to provide a level of protection against interest rate risks and foreign exchange exposure.

Current wording

We use, or may use, interest rate swaps, foreign exchange forward contracts, and cross currency swaps to provide a level of protection against interest rate risks and foreign exchange exposure.

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

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 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.

Previous wording

All forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to, in addition to the other matters described in this Quarterly Report on Form 10-Q, a variety of significant risks and uncertainties. The following discussion highlights some of these risks and uncertainties. Further, from time to time, information provided by us or statements made by our employees may contain forward-looking information. There can be no assurance that actual results or business conditions will not differ materially from those set forth or suggested in such forward-looking statements as a result of various factors, including those discussed below.

Current wording

-25- some of these risks and uncertainties. Further, from time to time, information provided by us or statements made by our employees may contain forward-looking information. There can be no assurance that actual results or business conditions will not differ materially from those set forth or suggested in such forward-looking statements as a result of various factors, including those discussed below.

Previous wording

Our customers require our products to undergo a lengthy and expensive qualification process without any assurance of product sales and may demand to audit our operations from time to time. A failure to qualify a product or a negative audit finding could adversely affect our net sales, operating results, and financial condition.

Current wording

Our customers may require our products to undergo a lengthy and expensive qualification process without any assurance of product sales and may audit our operations from time to time. A failure to qualify a product or a negative audit finding could adversely affect our net sales, operating results, and financial condition.

Previous wording

The invasion of Ukraine by Russia could negatively impact our business.

Current wording

The continued hostilities between Ukraine and Russia could negatively impact our business.