Diodes (NASDAQ: DIOD) reported Q4 EPS of $0.65, $0.02 better than the analyst estimate of $0.63. Revenue for the quarter came in at $301.2 million versus the consensus estimate of $300 million.

Fourth Quarter Highlights

• Revenue was $301.2 million as compared to $314.4 million in the fourth quarter 2018;
• GAAP gross profit was $109.4 million as compared to $114.2 million in the fourth quarter 2018;
• GAAP gross profit margin was 36.3 percent in both the fourth quarter 2018 and the fourth quarter 2019;
• GAAP net income was $47.2 million, or $0.90 per diluted share as compared to $29.5 million, or $0.58 per diluted share, in the fourth quarter 2018;
• Non-GAAP adjusted net income was $33.8 million, or $0.65 per diluted share as compared to $33.2 million, or $0.65 per diluted share, in the fourth quarter 2018;
• Excluding $4.1 million, net of tax, of non-cash share-based compensation expense, both GAAP and non-GAAP earnings per share would have increased by $0.08 per diluted share;
• EBITDA was $88.3 million, or 29.3 percent of revenue, compared to $70.5 million, or 22.4 percent of revenue, in the fourth quarter 2018; and
• Achieved cash flow from operations of $52.1 million and $29.7 million free cash flow, including $22.4 million of capital expenditures. Net cash flow was a positive $39.8 million, which includes the pay-down of $22.6 million of long-term debt.

Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer, stated, “2019 was another record year for Diodes across all financial metrics, generating solid revenue growth as well as increasing profitability and cash flow. Additionally, our record performance in the automotive and industrial markets combined with record sales from our Pericom IC products continue to be key contributors to our growth and margin expansion. As a result of our strong cash flow generation, we have also been able to strengthen our balance sheet and significantly reduce long-term debt to below $100 million.

“Our full year revenue growth of 2.9% once again outperformed our served market, which was down 6.6% in 2019. This consistent, above-market performance is a direct result of our targeted sales strategy to serve as a total solutions provider, leveraging our expanded product portfolio and broadened customer relationships. Our approach has also resulted in increased market share and content gains across key end equipment, while also addressing new application areas.

“Looking forward to the coming year, we expect to maintain our strong performance and continued achievement of record results, as we take further steps toward our long-term financial goals of 40% gross margin and 20% operating margin. With the automotive and industrial markets approaching our target of 40% of total revenue, we are well positioned to further drive growth and margin expansion. Our focus remains on increasing content across the growing end markets of automotive, industrial, high-end servers and storage, 5G as well as IoT.”

GUIDANCE:

Diodes sees Q1 2020 revenue of $290 million, versus the consensus of $291.97 million.

Dr. Lu concluded, “For the first quarter of 2020, we expect revenue to be approximately $290 million, plus or minus 3 percent. At the mid-point, this represents a reduction of approximately 3.7 percent sequentially, which is better than typical seasonality. We expect GAAP gross margin to be 35.0 percent, plus or minus 1 percent. These guidance ranges reflect the delayed start to manufacturing production following the extended Chinese New Year holiday due to the coronavirus outbreak in China. All production, including wafer fabs and assembly test facilities in China, resumed on February 10th, but we anticipate it will take longer to return to full production. At this time, it is difficult for us to fully determine the potential impact to the supply chain or customer demand disruption resulting from the prevailing crisis. As a reminder, Diodes does not have a manufacturing facility in the affected areas of Wuhan and Hubei province, as our primary facilities are located in Shanghai and Chengdu. Similar to many other companies, we will continue to closely monitor the situation.

“Non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition-related intangible assets, are expected to be approximately 22.5 percent of revenue, plus or minus 1 percent. We expect net interest expense to be approximately $2.0 million. Our income tax rate is expected to be 20 percent, plus or minus 3 percent, and shares used to calculate diluted EPS for the first quarter are anticipated to be approximately 52.9 million.”

For earnings history and earnings-related data on Diodes (DIOD) click here.