Diodes Inc. (
DIOD) posted third quarter results after the closing bell on Monday. The company swung to a GAAP net profit of $7.0 million, from GAAP net loss of $3.0 million and $4.6 million in the previous and year-ago quarters, respectively. Excluding certain special items, pro forma earnings per share came in at 21 cents, edging past the Zacks Consensus Estimate by a penny.
Diodes is a global designer, manufacturer and supplier of application specific standard products serving the consumer electronics, computing, communications, industrial and automotive markets. The company’s product portfolio includes diodes, rectifiers, transistors, MOSFETs, protection devices, functional specific arrays, amplifiers and comparators, Hall-effect sensors, temperature sensors and power management devices.
The company reported an 8.9% year-over-year decline in revenues to $122.1 million, but grew by 17.5% on a sequential basis. The sequential expansion was driven by a recovery in the demand for Diodes’ products used in LCD and LED televisions, LCD panels, set-top boxes, mobile handsets and notebooks. Moreover, the company’s Asian customers advanced fourth quarter orders to the third quarter due to holidays in China, which further helped the sequential growth.
In terms of geographic regions, Asia contributed 78% to total revenue and posted a growth of 18% sequentially. North America contributed 13% towards top-line and grew 7% over the second quarter, while Europe generated 9% of total revenues and expanded 27% over the same period.
Gross margin recorded a sequential growth of 450 basis points (bps) and a year-over-year increase of 230 bps to 30.8%. The growth was primarily the result of improved capacity utilization at the company’s packaging and wafer fabrication facilities. Total operating expenses, as a percentage of revenue, rose to 21.6% from 20.7% in the last quarter mainly due to higher employee related expenses on account of cancellation of temporary salary reductions, increased commissions and equity compensation expenses.
During the quarter, the company generated $19.4 million of cash from operations and deployed approximately $6.3 million towards capital expenditure. The company also reduced its leverage during the quarter by repurchasing $19.8 million worth of Convertible Senior Notes for common stock. Inventories at the end of the quarter were $82.9 million, an increase of approximately $3 million over the second quarter as a result of increased raw materials.
Moving forward, the company expects fourth quarter revenue to range between $126 and $130 million, while further improvements in utilization at wafer fabrication facilities is expected to push gross margin towards 31% to 33%. The Zacks Consensus Estimate on the company’s full-year earnings is currently pegged at 6 cents per share, which has moved up a penny over the past month as 1 of 5 covering analysts raised expectations. The most accurate estimate is slightly bullish at 7 cents per share.
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