) recently reported second-quarter 2014 results. Adjusted earnings
(excluding amortization of intangible assets and other one-time
item) came in at 38 cents per share, which not only beat the Zacks
Consensus Estimate by a penny but also increased 15.2% on a
Diodes Incorporated - Earnings Surprise |
Diodes' second-quarter revenues came in at $223.2 million, up 4.1%
on a year-over-year basis. Reported revenues came in line with the
Zacks Consensus Estimate. The year-over-year improvement was
attributed to better-than-expected growth in industrial end markets
aided by favorable product mix in North America and Europe.
By end markets, consumer accounted for 33% of total revenue;
communications accounted for 22%, industrial represented 21%,
computing 20% and automotive accounted for 4% of total revenue.
Diodes' gross margin expanded 291 basis points from the year-ago
quarter to 31.5%, primarily due to favorable product mix and better
The company's operating expenses decreased 7.6% from the year-ago
quarter, primarily due to lower selling general and administrative
expenses. Moreover, as a percentage of revenues, operating expenses
contracted 269 bps on a year-over-year basis. This in turn
positively impacted operating results. Operating margins came in at
10.4% compared with 4.8% in the year-ago period.
Diodes' adjusted net income (excluding amortization of intangible
assets and other one-time item) came in at $18.2 million or 38
cents per share compared with $15.5 million or 33 cents per share
reported in the year-ago quarter.
Diodes exited the second quarter with cash and cash equivalents and
short-term investments of $253.1 million compared with $232.2
million in the previous quarter. Receivables were $187.8 million
versus $175.6 million in the prior quarter. Long-term debt stood at
$162.7million compared with $165.4 million in the previous quarter.
The company reported cash flow from operations of $33.9 million for
the three months ended Jun 30, 2014. Free cash flow during the
quarter came in at $22.1 million.
For the third quarter of 2014, Diodes expects revenues in the range
of $228.0 million to $238.0 million (mid-point $233.0 million). The
Zacks Consensus Estimate is pegged at $234.0 million. Gross margin
is expected to be approximately 31.8% (-/+2%). Operating expenses
are expected to be 21% of total revenue (-/+1%).. Income tax rate
is expected to be 22% (-/+3%).
Diodes reported modest second-quarter results, with the bottom line
beating the Zacks Consensus Estimate and the top line matching the
same. The year-over-year comparisons were favorable, primarily due
to better-than-expected growth in the end markets. The company also
provided a modest third quarter revenue outlook.
The BCD Semiconductor acquisition is benefiting Diodes by expanding
its footprint in the broader Analog market and extending its
product offerings. We believe that the company's product launches
and product refreshes will boost revenues, going forward.
However, competition from the likes of Fairchild Semiconductor
International Inc. (
) and ON Semiconductor Corp. (
) remains a concern for the company.
Currently, Diodes has a Zacks Rank #4 (Sell).
Investors can also consider F5 Networks, Inc. (
) which has a Zacks Rank #1 (Strong Buy) and is worth buying.
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