Diodes Inc (DIOD) Reports Decline in Annual Revenue and Earnings for Fiscal Year 2023
Revenue: Declined to $1.7 billion in 2023 from $2.0 billion in 2022.
Net Income: Decreased to $227.2 million in 2023 from $331.3 million in the previous year.
Gross Profit Margin: Slightly decreased to 39.6% in 2023 from 41.3% in 2022.
Operating Income: Fell to $250.6 million, representing 15.1% of revenue, down from 20.4% in 2022.
Earnings Per Share (EPS): GAAP EPS was $4.91, down from $7.20 in 2022; Non-GAAP EPS was $4.81, down from $7.36 in 2022.
Free Cash Flow: Achieved $130.1 million, including $150.8 million of capital expenditures.
Debt Reduction: Reduced total debt by $124 million, ending with $62 million in total debt.
On February 6, 2024, Diodes Inc (DIOD) released its 8-K filing, detailing its financial performance for the fourth quarter and full fiscal year ended December 31, 2023. The company, a leading manufacturer and supplier of high-quality semiconductors, faced a challenging year with a noticeable decline in revenue and earnings compared to the previous year. Despite the downturn, Diodes Inc managed to maintain a strong revenue contribution from its automotive and industrial product segments, which remained above the target model at 46%.
Annual Financial Highlights
Diodes Inc reported a year-over-year decrease in revenue from $2.0 billion in 2022 to $1.7 billion in 2023. The GAAP gross profit followed suit, dropping from $827.2 million to $658.2 million, with the gross profit margin slightly decreasing to 39.6%. Operating income saw a significant reduction to $250.6 million, or 15.1% of revenue, compared to $408.2 million, or 20.4% of revenue, in the previous year. Net income also fell to $227.2 million from $331.3 million in 2022.
GAAP EPS decreased to $4.91 per diluted share from $7.20, while Non-GAAP EPS dropped to $4.81 from $7.36 per diluted share in the previous year. The company also reported a non-cash share-based compensation expense, which, if excluded, would have increased both GAAP net income and Non-GAAP adjusted net income by $0.53 per diluted share.
EBITDA for the year was $404.2 million, or 24.3 percent of revenue, a decrease from $520.4 million, or 26.0 percent of revenue in 2022. The company achieved $280.9 million cash flow from operations and $130.1 million of free cash flow, which includes $150.8 million of capital expenditures. Net cash flow was a negative $22.6 million, which includes the net pay-down of $124.3 million of total debt.
Quarterly Performance and Outlook
For the fourth quarter of 2023, revenue was $322.7 million, a decrease from $404.6 million in the third quarter of 2023 and $496.2 million in the fourth quarter of 2022. GAAP gross profit for the fourth quarter was $112.5 million, or 34.9 percent of revenue, compared to $206.2 million, or 41.6 percent of revenue, in the same quarter of the previous year.
GAAP net income for the fourth quarter was $25.3 million, or $0.55 per diluted share, a decrease from $92.1 million, or $2.00 per diluted share, in the fourth quarter of 2022. Non-GAAP adjusted net income was $23.4 million, or $0.51 per diluted share, compared to $79.6 million, or $1.73 per diluted share, in the same quarter of the previous year.
Looking ahead to the first quarter of 2024, Diodes expects revenue to be approximately $305 million, plus or minus 3 percent, with a GAAP gross margin of 34.0 percent, plus or minus 1 percent.
Management Commentary
This past year proved to be challenging as the consumer, computing and communications markets experienced an extended slowdown, coupled with inventory rebalancing in the industrial market late in the year as well as softness in certain areas of the automotive market. Despite this global weakness, we made notable progress on improving the quality and mix of our product portfolio as we continued to focus on the automotive and industrial markets through expanding design wins and increased investment in new product development, which resulted in over 350 new automotive-compliant products. The combined revenue from these two markets expanded to 46% of product revenue in 2023 compared to 42% last year," stated Gary Yu, President of Diodes.
Yu also highlighted the company's ability to maintain a near 40% gross margin and strong cash generation, which enabled significant debt reduction. Looking forward, Diodes remains focused on driving improvements in its product portfolio, particularly in the automotive and industrial markets.
The full financial tables and additional details can be found in the company's 8-K filing. The results announced are preliminary and unaudited, subject to finalization and quarterly review by the independent registered public accounting firm.
For more detailed information and analysis on Diodes Inc's financial performance, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Diodes Inc for further details.
This article first appeared on GuruFocus.
