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, 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.

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 our 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

As disclosed in Part I, Item 1A: Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the Company’s business is subject to risks related to, among other factors, tariffs and other trade barriers put in the place by government authorities. The imposition of tariffs and other trade barriers by government authorities on imported goods, including raw materials and components essential to our manufacturing processes, could have significant adverse effects on our business, financial condition, and results of operations. Starting in the first quarter of 2025 and continuing into the second quarter of 2025, the United States government announced additional tariffs on goods imported into the U.S. from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response. The U.S. government stated that it is willing to negotiate with other countries regarding the tariffs. If the negotiations with the other countries are unsuccessful, the tariffs may negatively impact demand for our products and result in an increase in some product costs. The Company continues to analyze the impacts of the tariffs and actions that can be taken to moderate and/or minimize their effects.

Current wording

As disclosed in Part I, Item 1A: Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, the Company’s business is subject to risks related to, among other factors, tariffs and other trade barriers put in the place by government authorities. The imposition of tariffs and other trade barriers by government authorities on imported goods, including raw materials and components essential to our manufacturing processes, could have significant adverse effects on our business, financial condition, and results of operations. In 2025, the United States government announced additional tariffs on goods imported into the U.S. from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response. The U.S. government stated that it is willing to negotiate with other countries regarding the tariffs. If the negotiations with the other countries are unsuccessful, the tariffs may negatively impact demand for our products and result in an increase in some product costs. The Company continues to analyze the impacts of the tariffs and actions that can be taken to moderate and/or minimize their effects.

Previous wording

Gross profit margin was 31.5%, compared to 33.0% in the first quarter of 2024 and 32.7% in the fourth quarter of 2024;

Current wording

Gross profit margin was 31.5%, compared to 33.6% in the three months ended June 30, 2024 and 31.5% in the three months ended March 31, 2025;

Previous wording

Net loss was $4.4 million, compared to net income of $14.0 million in the first quarter of 2024 and net income of $8.2 for the fourth quarter of 2024;

Current wording

Net income was $46.1 million, compared to net income of $8.0 million in the three months ended June 30, 2024 and net loss of $4.4 million in the three months ended March 31, 2025;

Previous 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

Current wording

Earnings per share attributable to common stockholders was $0.99 per diluted share, compared to $0.17 per diluted share in the three months ended June 30, 2024 and a loss of $0.10 per diluted share in the three months ended March 31, 2025; and

Previous 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.

Current wording

Cash flow provided by operations was $41.5 million. We had $20.4 million of capital expenditures. Net cash flow was ($18.2) million.

Previous 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

Current wording

As of June 30, 2025, our cash, cash equivalents, and short-term investments were $327.3 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.

Previous wording

-22- weighted-average sales price increased 10.0% and volume was flat, when compared to the same period in 2024. The increase in weighted-average sales price was primarily due to product mix.

Current wording

-23- decreased 4.2% and volume increased 19.5%, when compared to the same period in 2024. The decrease in weighted-average sales price was primarily due to lower market pricing.

Previous 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.

Current wording

For the three months ended June 30, 2025, gross profit increased approximately 7.4% when compared to the same period last year primarily due to higher net sales. Gross profit margin for the three months ended June 30, 2025 and 2024 was 31.5% and 33.6%, respectively. The decrease in gross profit margin was primarily due to factory utilization and lower market pricing.

Previous 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.

Current wording

We recognized an income tax expense of approximately $9.1 million and $2.6 million for the three months ended June 30, 2025 and 2024, respectively. The increase in income taxes for 2025 compared to 2024 was primarily attributable to an increase in pretax book income.

Previous wording

Net sales increased approximately $30.1 million, or 10.0%, for the three months ended March 31, 2025, compared to the same period last year, primarily due to increased demand in the Asia region. During the three months ended March 31, 2025,

Current wording

Net sales increased approximately $76.6 million, or 12.3%, for the six months ended June 30, 2025, compared to the same period last year, primarily due to increased demand in Asia. During the six months ended June 30, 2025, weighted-average sales price increased 2.6% and volume increased 9.5%, when compared to the same period in 2024. The increase in weighted-average sales price was primarily due to product mix.

Previous 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.

Current wording

Operating expenses for the six months ended June 30, 2025, increased $19.0 million when compared to the six months ended June 30, 2024. Operating expenses as a percentage of net sales were 30.0% and 30.6% for the six months ended June 30, 2025 and 2024, respectively. SG&A increased approximately $6.0 million as compared to the same period last year reflecting an increase in salaries and wages of $9.2 million. The increase in salaries and wages in 2025 when compared to 2024 is partially related to a reversal of bonus accruals in 2024 for bonuses that were not paid. SG&A, as a percentage of net sales, was 16.9% and 18.0% for the six months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, R&D increased approximately $12.0 million when compared to the six months ended June 30, 2024 due to increased R&D expenses related to marketing of $3.8 million, supplies of $2.6 million, and salaries and benefits of $3.0 million. R&D, as a percentage of net sales, was 11.3% and 10.8% for the six months ended June 30, 2025 and 2024, respectively.

Previous 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.

Current wording

Interest income increased $4.0 million, or 45.0%, for the six months ended June 30, 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 six months ended June 30, 2025, compared to the same period last year. During the six months ended June 30, 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 gain on investments in 2025 compared to 2024 was due to mark-to-market adjustments to adjust the value of the investments, including a $33.3 million increase in the value of the Company’s investment in Atlas. The Company recognized a gain of approximately $13.7 million related to the disposal of a subsidiary.

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 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.

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 $322.8 million at June 30, 2025. This increase in cash, cash equivalents, and restricted cash reflects normal operations of the Company. As of June 30, 2025, we had short-term investments totaling $10.3 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, 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.

Current wording

At June 30, 2025 and December 31, 2024, our working capital was $871.0 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 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.

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, 2025, our foreign subsidiaries held approximately $198.8 million of cash, cash equivalents and investments of which approximately $76.5 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 $76.5 million is held in Germany, China, Korea, and Taiwan.

Previous 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.

Current wording

Our Asia subsidiaries maintain short-term credit facilities with several financial institutions through our foreign entities worldwide totaling $115.5 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 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 June 30, 2025, was approximately $87.5 million, net of $27.6 million advanced under our foreign credit lines and $0.4 million of credit used for import and export guarantee.

Previous wording

Net cash flows from operating activities for the three months ended March 31, 2025 was $56.7 million. The following recurring operating items gave rise to the calculation of net cash flows from operating activities for the three months ended March 31, 2025: Depreciation and amortization of intangible assets of $35.9 million, a net increase of $12.1 million of changes in working capital accounts, a $4.0 million non-cash loss on investments related to mark-to-market adjustments to adjust the value of the investment, and share-based compensation of $6.4 million. These increases were partially offset by a net loss of $2.8 million. During the three months ended March 31, 2025, the Company recorded a $5.8 million non-cash impairment charge related to the decrease in value of a previously made equity investment, the result of which is an increase to operating cash flow.

Current wording

Net cash flows from operating activities for the six months ended June 30, 2025 was $98.3 million. The following recurring operating items gave rise to the calculation of net cash flows from operating activities for the six months ended June 30, 2025: Net income of $41.4 million, depreciation and amortization of intangible assets of $71.8 million, a net increase of $15.3 million of changes in working capital accounts, and share-based compensation of $12.2 million. During the six months ended June 30, 2025 the Company also recognized net investment gains of $39.4 million, including a $33.3 million non-cash mark-to-market increase in the value of the Company’s investment in Atlas, a non-cash mark-to-market decrease of $7.7 million of previously made equity investments, and a gain on the disposal of a subsidiary for $13.7 million.

Previous 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.

Current wording

Net cash flows from operating activities for the six months ended June 30, 2024 was ($16.7) million. Our net use of cash from operating activities for the six months ended June 30, 2024 resulted from net income of $25.4 million, depreciation and amortization of intangible assets of $68.6 million and share-based compensation of $9.3 million. The increases were offset by a net decrease of $104.4 million due to changes in operating asset and liability accounts, and non-cash gains and other income of $15.8 million.

Previous wording

Net cash and cash equivalents from investing activities was ($28.5) million for the three months ended March 31, 2025. Net cash and cash equivalents from investing activities for the three months ended March 31, 2025 was primarily due to purchases of property, plant, and equipment of $15.9 million, or 4.8% of net sales, the expiration of a hedge instrument of $6.9 million, and the acquisition of the minority interest in a joint venture in Taiwan for approximately $4.1 million, bringing the Company’s ownership to 100%. We expect capital expenditures for the twelve months ended December 31, 2025 to be within our target model of 5% to 9% of net sales.

Current wording

Net cash and cash equivalents from investing activities was ($78.6) million for the six months ended June 30, 2025. Net cash and cash equivalents from investing activities for the three months ended June 30, 2025 was primarily due to purchases of property, plant, and equipment of $36.3 million, or 5.2% of net sales. We expect capital expenditures for the twelve months ended December 31, 2025 to be within our target model of 5% to 9% of net sales. The Company made purchases of equity securities, including making an investment in ATX of approximately $30.0 million, increasing its investment in Atlas by approximately $17.3 million, and the acquisition of the minority interest in a joint venture in Taiwan for approximately $4.1 million, bringing the Company’s ownership to 100%. The Company also paid approximately $6.9 million due to the expiration of a hedge instrument. These uses of cash for investing were partially offset by the receipt of approximately $16.0 million related to the sale of TFS.

Previous 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.

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.

Previous 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.

Current wording

Net cash and cash equivalents from financing activities was ($30.1) million for the three months ended June 30, 2025. Net cash from financing activities in the three months ended June 30, 2025 consisted of net decreases in non-controlling interests of $13.5 million, stock repurchases of $10.0 million, $5.0 million of net decreases in our debt, and taxes paid on net share settlements of $1.6 million. 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.

Previous 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.

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 our 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

-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.

Current 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.