Diodes Inc (DIOD) Reports Decrease in Q3 Revenue and Profit Amid Market Challenges
Diodes Inc (NASDAQ:DIOD) reports a 13.4% QoQ and 22.4% YoY decline in revenue for Q3 2023.
GAAP net income fell to $48.7 million, down from $82.0 million in Q2 2023 and $86.4 million in Q3 2022.
Despite market softness, automotive and industrial product revenue remains above the target model at 45%.
On November 8, 2023, Diodes Inc (NASDAQ:DIOD) released its financial results for the third quarter ended September 30, 2023, revealing a downturn in revenue and profit compared to both the previous quarter and the same quarter last year. The company's revenue came in at $404.6 million, a 13.4% decrease from the second quarter of 2023 and a 22.4% decrease from the third quarter of 2022. GAAP gross profit also declined to $155.9 million, representing a gross margin of 38.5%, which is lower than the 41.8% reported in both the second quarter of 2023 and the third quarter of 2022.
Financial Performance Overview
Diodes Inc (NASDAQ:DIOD) experienced a challenging third quarter, with GAAP net income dropping to $48.7 million from $82.0 million in Q2 2023 and $86.4 million in Q3 2022. Non-GAAP adjusted net income also decreased to $52.5 million, compared to $73.3 million in the previous quarter and $92.2 million in the prior year's quarter. Earnings per share (EPS) on a GAAP basis were $1.05, down from $1.77 in Q2 2023 and $1.88 in Q3 2022. Non-GAAP EPS stood at $1.13, compared to $1.59 last quarter and $2.00 in the same quarter of the previous year.
Dr. Keh-Shew Lu, Chairman, President, and CEO of Diodes, commented on the results, highlighting the weaker than expected end customer demand in consumer, computing, and communications markets, as well as the overall Asia market. He noted that the company's automotive product revenue remained strong, contributing to a combined automotive and industrial revenue of 45%, which is above their target model of 40%. However, he also cautioned about the expected slowdown in the industrial market and softness in the automotive market due to inventory adjustments.
Despite the temporarily weaker demand dynamics, we remain focused on the long-term and our product mix improvement initiatives as we continue to invest in R&D for new products, targeting expanded design wins in the automotive and industrial markets, said Dr. Lu.
Balance Sheet and Cash Flow
As of September 30, 2023, Diodes Inc (NASDAQ:DIOD) had approximately $308 million in cash, cash equivalents, and short-term investments. Total debt was about $53 million, and working capital was approximately $768 million. The company generated $50.1 million in cash flow from operations and $11.6 million in free cash flow, after accounting for $38.5 million in capital expenditures.
Outlook and Conference Call
For the fourth quarter of 2023, Diodes Inc (NASDAQ:DIOD) expects revenue to be approximately $325 million, plus or minus 3 percent. The GAAP gross margin is projected to be around 35.0 percent, plus or minus 1 percent, primarily due to higher underutilization costs on the lower expected revenue combined with a less favorable product mix.
Diodes will host a conference call to discuss the Q3 financial results and provide further details on the outlook for Q4 2023. Interested parties can access the call through the Investors section of Diodes' website or by dialing in directly.
The financial results are preliminary and unaudited, subject to finalization and the completion of the quarterly review by the independent registered public accounting firm. The full results will be available upon filing the company's Form 10-Q for the quarter ending September 30, 2023.
For detailed financial tables and further information, readers are encouraged to visit the full earnings release on Diodes' investor relations website.
Explore the complete 8-K earnings release (here) from Diodes Inc for further details.
This article first appeared on GuruFocus.
