Sign in

You're signed outSign in or to get full access.

DI

DIODES INC /DEL/ (DIOD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue of $339.3M grew 5.1% YoY and came in above the company’s prior Q4 guide mid-point (~$337M), while GAAP gross margin compressed to 32.7% and non‑GAAP EPS was $0.27 as factory underloading and mix weighed on profitability .
  • Automotive + Industrial mix held at 42% of product revenue, the 11th straight quarter at or above target, with Asia strength offsetting continued softness in Europe/North America; Asia accounted for 80% of sales in Q4 .
  • Q1 2025 guide: revenue ~$323M (±3%), down ~4.8% QoQ on Chinese New Year seasonality but up ~7% YoY; GAAP gross margin 32.5% (±1%), non‑GAAP OpEx ~30% of revenue (±1%), and net interest income ~$1.5M .
  • Strategic narrative: sustained AI server content ramp ($90/box vs ~$53 traditional servers), ongoing product mix upgrades, and porting to internal fabs to mitigate underloading; near-term catalysts are broader end-market recovery and margin expansion as mix and utilization improve .

What Went Well and What Went Wrong

  • What Went Well

    • Revenue beat relative to prior guidance mid-point and turned positive YoY (+5%); “above seasonal revenue” with improving Asia momentum, especially China/SE Asia .
    • Mix resilience: Automotive + Industrial held at 42% of product revenue for Q4; Asia POS in 2H24 posted double-digit growth YoY .
    • Strong cash generation: $81.8M CFO and $62.1M FCF; cash/investments ~$322M against ~$52M total debt at year-end .

  • What Went Wrong

    • Margin pressure: GAAP gross margin fell to 32.7% (from 33.7% in Q3 and 34.9% in Q4’23); EBITDA margin dropped to 12.0% vs 13.4% in Q3 and 18.1% in Q4’23, reflecting underloading and mix .
    • EPS compression: GAAP EPS $0.18 (vs $0.30 in Q3; $0.55 in Q4’23); non‑GAAP EPS $0.27 (vs $0.43 in Q3; $0.51 in Q4’23) .
    • Inventory still elevated in the system: inventory days rose to ~193 (vs ~187 in Q3); management flagged lingering inventory adjustments in Auto/Industrial and demand softness in Europe/North America .

Financial Results

  • P&L and cash metrics
MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($M)$322.7 $319.8 $350.1 $339.3
GAAP Gross Margin %34.9% 33.6% 33.7% 32.7%
GAAP Diluted EPS ($)$0.55 $0.17 $0.30 $0.18
Non‑GAAP Diluted EPS ($)$0.51 $0.33 $0.43 $0.27
EBITDA ($M)$58.4 $41.1 $46.9 $40.7
EBITDA Margin %18.1% 12.8% 13.4% 12.0%
Cash from Operations ($M)—$14.4 $54.4 $81.8
Free Cash Flow ($M)—$(3.5) $39.4 $62.1
  • Mix and geographic/route trends
Mix/RegionQ2 2024Q3 2024Q4 2024
End-market mix: Computing26% 25% 25%
End-market mix: Consumer19% 18% 18%
End-market mix: Industrial23% 23% 23%
End-market mix: Communications14% 15% 15%
End-market mix: Automotive18% 19% 19%
Channel: Distribution63% 64% 65%
Region: Asia Pacific77% 78% 80%
Region: Europe15% 15% 12%
Region: Americas8% 7% 8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2024 vs Q1 2025~$337M ±3% (Q4’24) ~$323M ±3% (Q1’25) Sequentially lower (~4.8% QoQ) on CNY seasonality; +7% YoY at midpoint
GAAP Gross MarginQ4 2024 vs Q1 202533.0% ±1% (Q4’24) 32.5% ±1% (Q1’25) Slightly lower
Non‑GAAP OpEx (% Rev)Q4 2024 vs Q1 2025~28.0% ±1% (Q4’24) ~30.0% ±1% (Q1’25) Higher as % of revenue
Net Interest IncomeQ4 2024 vs Q1 2025~$2.5M (Q4’24) ~$1.5M (Q1’25) Lower
Tax RateQ4 2024 vs Q1 2025~18.0% ±3% (Q4’24) ~18.5% ±3% (Q1’25) Slightly higher
Diluted SharesQ4 2024 vs Q1 2025~46.7M (Q4’24) ~46.7M (Q1’25) Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
AI/Compute contentAI server momentum; design-ins for PCIe packet switches, clocks; early ramps Above-seasonal guide tied to compute/AI; continued design momentum AI server content ~$90/box vs ~$53 traditional; expanding sockets beyond mainboards Increasing contribution and content
Supply chain/inventoryChannel inventory weeks decreasing; total inventory days rose to ~191 Inventory days ~187; maintaining finished goods to serve short lead-time orders Inventory days ~193; channel inventory lower in dollars/weeks QoQ Normalizing, but still elevated
PricingTypical 1.5–2% quarterly price erosion assumed —Pricing “pretty stable;” 1.5–2% bill‑in per quarter; competition concentrated in commodity Stable with mix upgrade focus
Auto/IndustrialMix at 41%; ongoing inventory rebalancing Mix at 42%; auto rev +18% QoQ to 19% Mix at 42%; Auto 19% with inventory adjustments persisting Recovery lagging but mix resilient
RegionalAsia strength; improving POS Asia POS +10% QoQ; China improving Asia 80% of sales; Europe/NA remain soft Asia-led recovery

Management Commentary

  • “Our above seasonal revenue results in the fourth quarter reflect the improving momentum… especially in China and the Southeast Asia region… We achieved 5% growth over the fourth quarter 2023” — Gary Yu, President .
  • “With our product mix consistently above our target model, we are well positioned for future growth and margin expansion as the market recovery broadens across our end markets in 2025 and beyond.” — Gary Yu .
  • “EBITDA for the fourth quarter was $40.7 million or 12% of revenue… inventory days were approximately 193… finished goods inventory days were 82” — Brett Whitmire, CFO .
  • “Our addressable content in the AI server today is approximately $90 per box, which compared to $53 per box last year for traditional servers.” — Emily Yang, SVP Sales & Marketing .
  • On margins: product mix upgrades and porting more products to internal fabs to minimize underloading; improvements will be gradual over multiple quarters — Emily Yang .

Q&A Highlights

  • Seasonality and China: Q1 seasonality “within expectation”; some extended shutdowns but overall typical Chinese New Year impact; guide down 4.8% QoQ slightly better than usual .
  • Margin drivers: focus on mix upgrades and reducing underloading via internal fab qualifications; improvement expected through 2025 as volumes/mix recover .
  • Operating leverage: no structural cost additions; OpEx expected to leverage down as revenue recovers; margin benefit from insourcing select products to internal fabs (SPFAB/GFAB) .
  • Pricing: stable, with 1.5–2% quarterly price erosion assumption; emphasis on higher-ASP, better‑GM new products offsets commodity pressure .
  • AI exposure: growth driven by expanded PCIe port requirements and broader subsystem content (PSUs, fans, DC‑DC bricks), not just mainboard sockets .

Estimates Context

  • Wall Street consensus from S&P Global was unavailable at the time of request due to data access limits. As a proxy, the company slightly exceeded its own Q4 revenue guidance mid-point (actual $339.3M vs prior guide midpoint ~$337M), while margins/earnings tracked softer due to underloading and mix .
  • Near-term estimate revisions may skew: (a) modestly lower for Q1 on seasonality (revenue ~$323M midpoint) and higher OpEx %, and (b) medium-term higher on AI/server content gains and Asia-led recovery if Automotive/Industrial normalize as management expects .

Key Takeaways for Investors

  • Mix durability with Auto/Industrial at 42% supports medium-term margin recovery once Europe/North America demand and channel inventories normalize .
  • AI server content is real and expanding beyond mainboards; the ~$90/box content comment is a tangible indicator of incremental TAM per unit .
  • Q1 guide embeds normal CNY seasonality; watch for sequential revenue down ~5% and gross margin ~32.5% before a potential H2 recovery as utilization and mix improve .
  • Margin levers: internalization/porting to SPFAB/GFAB, product mix upgrades, and Auto/Industrial recovery; track EBITDA margin progression from the 12% trough level .
  • Strong liquidity and FCF generation give flexibility to invest in product/technology and absorb near-term cyclicality (CFO $81.8M; FCF $62.1M in Q4) .
  • Risk checks: lingering inventory adjustments in Auto/Industrial; regional softness in Europe/North America; pricing steady but monitor commodity areas .
  • Tactical setup: near-term prints likely seasonally weaker; catalysts are evidence of broader recovery, improving utilization, and continued AI design‑win ramps translating to revenue .