Diodes Incorporated Reports First Quarter 2008 Financial Results

Business Wire,  May 8, 2008  

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Revenue and Gross Margin Improve Year-over-Year

DALLAS -- Diodes Incorporated (NASDAQ:DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete and analog semiconductor markets, today reported financial results for the first quarter ended March 31, 2008.

Financial and Business Highlights:

* Revenue increased 3.9 percent over the prior year period to $95.6 million.

* Gross margin increased 130 basis points over prior year period and was comparable to the fourth quarter of 2007 at 33.4 percent.

* Adjusted net income increased 6.7 percent to $15.1 million, or $0.35 per share, up from $14.2 million, or $0.33 per share, in the first quarter of 2007.

* Recently announced the proposed acquisition of Zetex plc, which is expected to result in revenue, operating and cost synergies.

Revenue for the first quarter of 2008 increased 3.9 percent to $95.6 million, compared to $92.0 million reported in the first quarter of 2007. As previously expected, revenue declined 11.2 percent sequentially due to the overall weakening of the global economy combined with seasonality, as well as the Company's foundry and subcontracting business, which showed greater weakness than its core revenue drivers.

Gross profit for the first quarter of 2008 increased 8.1 percent to $31.9 million, or 33.4 percent of revenue, compared to $29.5 million, or 32.1 percent of revenue, in the prior year quarter and 33.5 percent in the fourth quarter of 2007.

Commenting on the quarter, Dr. Keh-Shew Lu, President and CEO of Diodes Incorporated, said, "We continued to make significant progress during the quarter towards our strategic growth objectives. From a financial perspective, our first quarter results were sequentially impacted by the economic slowdown as well as weakness in our foundry and subcontracting business. However, we continued to demonstrate the success of our business model, which is built around the achievement of profitable growth. Our gross margin remained consistent compared to the fourth quarter due to our operational and manufacturing efficiencies."

Dr. Lu further commented, "Most notable, our quarter was highlighted by the announcement of our proposed acquisition of Zetex plc, a U.K. publicly traded semiconductor company, which we believe will further enhance Diodes' global leadership for discrete and analog solutions. This acquisition will strengthen and broaden our product offerings, including entry with components into the fast growing LED lighting as well as the automotive market, expand our geographical footprint through increased exposure within the European market, and provide enhanced scale through a larger revenue base as well as manufacturing and packaging synergies and capacity efficiencies. We believe that Zetex fits perfectly into the profitable growth strategy we have consistently communicated to investors and further complements the strength and growth of our business. We look forward to reporting additional details regarding the future integration of Zetex into our business upon the pending close in June."

First quarter net income was $14.2 million, or $0.33 per diluted share, compared to $13.0 million, or $0.31 per share, in the first quarter of 2007 and $18.3 million, or $0.43 per share, in the fourth quarter of 2007.

Adjusted net income for the first quarter of 2008, which excluded $0.9 million of SFAS 123R net stock option expenses, was $15.1 million, or $0.35 per diluted share, an increase of 6.7 percent compared to the $14.2 million, or $0.33 per share, reported in the prior year quarter and $18.6 million, or $0.43 per share, reported in the fourth quarter of 2007.

As of March 31, 2008, Diodes had approximately $61.2 million in total cash, $302.6 million in long-term investments, $144.5 million in working capital, $237 million in long-term debt (including the convertible note) and unused and available credit facilities of $59 million.

Business Outlook

"As we look to the second quarter of 2008, we expect an increase in revenue to between $100 million and $106 million. In addition, we expect gross margin to be down slightly due a stronger China currency affecting our manufacturing costs, but gross profit will increase 4 to 9 percent sequentially," stated Dr. Lu. "We are beginning to see signs of improvement in the consumer as well as in the computer market segments, primarily within notebooks. The Zetex acquisition is progressing according to our original schedule to close in early June, and its impact is not included in our second quarter guidance."

Conference Call

Diodes will host a conference call on Thursday, May 8, 2008 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to discuss its first quarter 2008 financial results. Investors and analysts may join the conference call by dialing 888-713-4213 and providing the confirmation code 54974371. International callers may join the teleconference by dialing 617-213-4865. A telephone replay of the call will be available approximately two hours after the call and will be available until May 12, 2008 at midnight Pacific Time. The replay number is 888-286-8010 with a pass code of 37811030. International callers should dial 617-801-6888 and enter the same pass code at the prompt. Additionally, this conference call will be broadcast live over the Internet and can be accessed by all interested parties on the Investor section of Diodes' website at http://www.diodes.com. To listen to the live call, please go to the Investor section of Diodes website and click on the Conference Call link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Diodes' website for approximately 60 days.