Diodes Earnings: Weak Revenue Shrinks Margins, Net Income Falls

Diodes Incorporated (NASDAQ:DIOD) reported its results for the first quarter. Diodes is a designer, manufacturer, and supplier of high-quality, application specific standard products within the discrete and analog semiconductor markets, in the consumer electronics, computing, communications, industrial, and automotive markets.

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Diodes Incorporated Earnings Cheat Sheet for the First Quarter

Results: Net income for Diodes Incorporated fell to $4.9 million (10 cents per share) vs. $19.7 million (7 cents per share) a year earlier. This is a decline of 75.3% from the year-earlier quarter.

Revenue: Fell 10.5% to $144.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Diodes Incorporated beat the mean analyst estimate of 9 cents per share. Analysts were expecting revenue of $144 million.

Quoting Management: Commenting on the results, Dr. Keh-Shew Lu, President and Chief Executive Officer of Diodes Incorporated, stated, “After Chinese New Year we began to see signs of a recovery in our end markets. We took advantage of this renewed strength by significantly reducing our lower margin finished goods inventory, which helped to support revenue and secure incremental market share gains. Overall, we reduced our finished goods inventory by 20 percent while channel inventory declined three percent. As a result, we achieved moderate sequential revenue growth, which is significantly better than the typical seasonal slowness.”

Key Stats:

Gross margins went down 12.2 percentage points to 23.3%. The change appaered to be driven by falling revenue, as the figure dropped 10.5% from the year-earlier quarter, while costs rose 6.5%.

The company’s net income has fallen for the last three quarters. In the fourth quarter of the last fiscal year, net income fell 87% from the year earlier, while the figure fell 52.9% in the third quarter of the last fiscal year.

Revenue has fallen for the past three quarters. In the fourth quarter of the last fiscal year, revenue declined 12.5% to $143.3 million while the figure fell 1.6% in the third quarter of the last fiscal year from the year earlier.

The company has now beaten estimates the last two quarters. In the fourth quarter of the last fiscal year, it topped expectations with net income of 9 cents versus a mean estimate of net income of 8 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is 20 cents per share, down from 24 cents ninety days ago. The average estimate for the fiscal year is 98 cents per share, down from $1.12 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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