Diodes Incorporated (DIOD)

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Diodes Incorporated (DIOD)

Q4 2012 Earnings Call

February 13, 2013 5:00 pm ET


Leanne Sievers – Executive Vice President-Investor Relations

Keh-Shew Lu – President and Chief Executive Officer

Richard D. White – Chief Financial Officer, Secretary and Treasurer

Mark A. King – Senior Vice President-Sales and Marketing


Steven Smigie – Raymond James & Associates, Inc.

Christopher Longiaru – Sidoti & Company, LLC

Harsh Kumar – Stephens, Inc.

Vijay Rakesh – Sterne Agee

Vernon Essi – Needham & Company

Tristan Gerra – Robert W. Baird & Co.

Shawn Harrison – Longbow Research

Steven Shein – UBS



Welcome to Diodes Inc. Fourth Quarter and Full Year 2012 Financial Results Conference Call. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session at end of today’s presentation. (Operator Instructions)

At this time, I would like turn the call over to your host for today. Please proceed, ma’am.

Leanne K. Sievers

Good afternoon, and welcome to Diodes fourth quarter and fiscal 2012 financial results conference call. I’m Leanne Sievers, Executive Vice President of Shelton Group, Diodes’ Investor Relations firm.

With us today are Diodes’ President and CEO, Dr. Keh-Shew Lu; Chief Financial Officer, Rick White; Senior Vice President of Sales and Marketing, Mark King; and Director of Investor Relations, Laura Mehrl.

Before I turn the call over to Dr. Lu, I’d like to remind our listeners that management’s prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions.

Therefore, the Company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the Company’s filings with the Securities and Exchange Commission.

In addition, any projections as to the Company’s future performance represent management’s estimates as of today, February 13, 2013. Diodes assumes no obligation to update these projections in the future as market conditions may or may not change. Additionally, the Company’s press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the Company’s press release are definitions and reconciliations of GAAP net income to non-GAAP adjusted net income, GAAP net income to EBITDA, operating expenses to adjusted operating expenses and free cash flow, which provide additional details. Also throughout the Company’s press release and management’s statements during this conference call, we refer to net income attributable to common stockholders as GAAP net income.

For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 60 days in the Investor Relations section of Diodes’ website at www.diodes.com.

And now, I’ll turn the call over to Diodes’ President and CEO, Dr. Keh-Shew Lu. Dr. Lu, please go ahead.

Keh-Shew Lu

Thank you, Leanne. Welcome, everyone, and thank you for joining us today. Diodes once again delivered solid financial results in 2012, a year in which the global markets remained challenging. First quarter revenue grew 14% over the previous year period as we continued to gain momentum for our products used in smartphones and tablets. Our new product initiatives and the increasing customer content remained key drivers of our market share gains throughout the year.

Despite gold price being approximately 4% and the loading down from third quarter to fourth quarter. Margins improved due mainly to additional copper wire conversion and productivity improvements, coupled with a small mix improvement. Additionally, we made significant progress on our acquisition strategy by closing our acquisition of Power Analog Microelectronics, on October 29. We began integrating PAM as well as Eris Technology Corporation, Eris, during the quarter. As you may recall, Diodes acquired over 50% of outstanding share of Eris on September 1, in order to leverage Eris' assembly and test equipment automation capability.

Then at the end of the year, we announced the proposed acquisition of BCD Semiconductor Manufacturing Limited, BCD. We expect BCD will greatly enhance our analog product portfolio by expanding our product offerings for standard linear and AC to DC solutions for power supply charges and adapters. Combining manufacturing synergies and BCD’s established local market position in China with Diodes’ global customer base and sales channels provide enhanced profitability and growth opportunities for the Company in 2013 and beyond.

Then in earlier January, we secure a five-year $300 million revolving senior credit facility with an option, pending bank approval, to increase the size of the credit facility by up to an additional $200 million. In addition to fund-raising our proposed acquisition of BCD the facility also provides Diodes additional flexibility as we continue to on our growth initiatives.

With that, I now turn the call over to Rick to discuss our first quarter and fiscal 2012 financial results as well as the first quarter guidance in more detail.

Richard D. White

Thanks, Dr. Lu, and good afternoon, everyone.

Revenue for the full year 2012 was $633.8 million compared to $635.3 million in 2011. For the fourth quarter of 2012, revenue was $163.3 million, an increase of 14% over the $143.3 million in the fourth quarter of 2011, and a decrease of 2% from $166.6 million in the third quarter of 2012. The sequential decline in revenue was primarily due to seasonal weakness, partially offset by initial revenue recognized from PAM and Eris.

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