Diodes Q3 2026 net income rises to $43.7M
Long-term debt was $381.9 million at September 30, 2026, following the issuance of $375.0 million of 0.00% notes due 2031.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Diodes Incorporated (DIOD) reported third-quarter 2026 net sales of $532.6 million, versus $392.2 million a year earlier. Net income attributable to common stockholders was $43.7 million, versus $14.3 million, and diluted earnings per share were $0.95 versus $0.31. For the first nine months, net sales were $1,383.6 million versus $1,090.5 million, and operating cash flow was $229.9 million versus $177.4 million.
Diodes recorded an approximately $80.7 million increase in goodwill and acquired approximately $199.0 million of identifiable intangible assets in connection with ElevATE Semiconductor. Acquisition cash outflow, net of cash acquired, was $236.2 million for the nine months. On August 18, 2026, Diodes issued $375.0 million aggregate principal amount of 0.00% Convertible Senior Notes due 2031; principal is payable in cash upon conversion, while any conversion premium may be settled in cash, shares, or both. Long-term debt was $381.9 million at September 30, 2026, versus $24.2 million at December 31, 2025.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net sales were $532.6 million, versus $392.2 million a year earlier.
- Moderate pointThird-quarter net income attributable to common stockholders was $43.7 million, versus $14.3 million.
Negative
- Moderate pointLong-term debt was $381.9 million at September 30, versus $24.2 million at year-end.
Filing Explained
No incremental note shares entered diluted earnings per share through September, while capped calls are intended to reduce potential conversion dilution.
This unaudited quarterly filing reports that no incremental shares attributable to the already-issued convertible notes were included in diluted earnings per share for the three- or nine-month periods ended
Separate capped calls are intended to reduce potential share dilution or offset conversion-premium cash payments; they initially cover approximately
During the nine months ended
Key Figures
Key Terms
Convertible Senior Notes financial
Capped Call Transactions financial
if-converted method financial
anti-dilutive financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much did DIOD report in third-quarter 2026 sales and earnings?
What are the terms of DIOD's convertible notes?
What are the terms of DIOD's capped call transactions?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Or
For the transition period from to .
Commission file number:
DIODES INCORPORATED
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification Number) |
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(Address of principal executive offices) |
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(Zip code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the registrant’s Common Stock outstanding as of October 30, 2026 was
DIODES INCORPORATED AND SUBSIDIARIES
Table of Contents
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Page |
Part I – Financial Information |
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Item 1. Condensed Consolidated Financial Statements (Unaudited) |
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3 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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28 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
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35 |
Item 4. Controls and Procedures |
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35 |
Part II – Other Information |
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Item 1. Legal Proceedings |
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36 |
Item 1A. Risk Factors |
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36 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
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38 |
Item 3. Defaults Upon Senior Securities |
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38 |
Item 4. Mine Safety Disclosures |
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38 |
Item 5. Other Information |
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38 |
Item 6. Exhibits |
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39 |
Signatures |
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41 |
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
DIODES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
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September 30, |
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December 31, |
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2026 |
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2025 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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Restricted cash |
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Short-term investments |
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Accounts receivable, net of allowances of $ |
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Inventories |
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Prepaid expenses and other |
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Total current assets |
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Property, plant, and equipment, net |
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Deferred tax assets |
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Goodwill |
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Intangible assets, net |
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Equity investments |
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Operating lease assets |
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Other long-term assets |
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Total assets |
$ |
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$ |
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Liabilities |
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Current liabilities: |
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Lines of credit |
$ |
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$ |
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Accounts payable |
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Operating lease liabilities, current |
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Accrued liabilities and other |
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Income tax payable |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt, net of current portion |
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Deferred tax liabilities |
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Unrecognized tax benefits |
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Operating lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (See Note 10) |
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Stockholders' equity |
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Preferred stock - par value $ |
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Common stock - par value $ |
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Additional paid-in capital |
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Retained earnings |
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Treasury stock, at cost, |
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Accumulated other comprehensive loss |
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Stockholders' equity |
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Noncontrolling interest |
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Total equity |
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Total liabilities and stockholders' equity |
$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements. |
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-3-
DIODES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Net sales |
$ |
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$ |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses |
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Selling, general, and administrative |
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Research and development |
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Amortization of acquisition related intangible assets |
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(Gain) loss on disposal of fixed assets |
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( |
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Other operating (income) expense |
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Total operating expense |
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Income from operations |
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Other income (expense) |
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Interest income |
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Interest expense |
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( |
) |
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( |
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( |
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( |
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Foreign currency (loss), net |
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( |
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( |
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( |
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( |
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Unrealized (loss) gain on investments |
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( |
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Impairment of equity investment |
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Gain on disposal of subsidiary |
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Other income |
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Total other (expense) income |
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( |
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Income before income taxes, equity in net earnings of equity investments, and noncontrolling interest |
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Income tax provision |
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Equity in net earnings of equity investments |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income |
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Less net income attributable to noncontrolling interest |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income attributable to common stockholders |
$ |
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$ |
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$ |
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$ |
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Earnings per share attributable to common stockholders: |
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Basic |
$ |
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$ |
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$ |
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$ |
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Diluted |
$ |
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$ |
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$ |
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$ |
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Number of shares used in earnings per share computation: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
-4-
DIODES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
|
Three Months Ended |
|
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Nine Months Ended |
|
||||||||||
|
September 30, |
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September 30, |
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||||||||||
|
2026 |
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2025 |
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2026 |
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2025 |
|
||||
Net income |
$ |
|
|
$ |
|
|
$ |
|
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$ |
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||||
Unrealized (loss) gain on defined benefit plan, net of tax |
|
( |
) |
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Unrealized gain (loss) on derivative instruments, net of tax |
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( |
) |
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Reclassification adjustment to interest income |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Unrealized foreign currency gain (loss), net of tax |
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( |
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Comprehensive income |
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Less: Comprehensive (income) attributable to noncontrolling interest |
|
( |
) |
|
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( |
) |
|
|
( |
) |
|
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( |
) |
Total comprehensive income attributable to common stockholders |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
-5-
DIODES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands)
|
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Common stock |
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Treasury stock |
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Additional |
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Retained |
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Accumulated |
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Total Diodes |
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Noncontrolling |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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earnings |
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loss |
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equity |
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interest |
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equity |
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||||||||||
Balance, June 30, 2026 |
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$ |
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( |
) |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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|||||||
Total comprehensive income |
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|
- |
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- |
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- |
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- |
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- |
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Net changes in noncontrolling interest |
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- |
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- |
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- |
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- |
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( |
) |
|
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- |
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- |
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( |
) |
|
|
- |
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( |
) |
Common stock issued for share-based plans |
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- |
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- |
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( |
) |
|
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- |
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- |
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- |
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- |
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- |
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Purchase of capped call, net of tax |
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- |
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- |
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- |
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- |
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( |
) |
|
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- |
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- |
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( |
) |
|
|
- |
|
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( |
) |
Share-based compensation |
|
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Stock buyback |
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- |
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- |
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( |
) |
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( |
) |
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- |
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- |
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- |
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( |
) |
|
|
- |
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( |
) |
Tax related to net share settlement |
|
|
- |
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- |
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- |
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- |
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( |
) |
|
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- |
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- |
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( |
) |
|
|
- |
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( |
) |
Balance, September 30, 2026 |
|
|
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|
$ |
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|
|
( |
) |
|
$ |
( |
) |
|
$ |
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$ |
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$ |
( |
) |
|
$ |
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$ |
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$ |
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|||||||
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Common stock |
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Treasury stock |
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Additional |
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Retained |
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Accumulated |
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Total Diodes |
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Noncontrolling |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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earnings |
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loss |
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equity |
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interest |
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equity |
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||||||||||
Balance, December 31, 2025 |
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$ |
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( |
) |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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|||||||
Total comprehensive income (loss) |
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- |
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- |
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- |
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- |
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|
- |
|
|
|
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( |
) |
|
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||||
Net changes in noncontrolling interest |
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|
- |
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- |
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- |
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- |
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- |
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- |
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||||
Common stock issued for share-based plans |
|
|
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|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Purchase of capped call, net of tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
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|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Stock buyback |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Tax related to net share settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance, September 30, 2026 |
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
-6-
DIODES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (CONT.)
(Unaudited)
(In thousands)
|
|
Common stock |
|
|
Treasury stock |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Total Diodes |
|
|
Noncontrolling |
|
|
Total |
|
||||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
earnings |
|
|
loss |
|
|
equity |
|
|
interest |
|
|
equity |
|
||||||||||
Balance, June 30, 2025 |
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Total comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Common stock issued for share-based plans |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Tax related to net share settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance, September 30, 2025 |
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Common stock |
|
|
Treasury stock |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Total Diodes |
|
|
Noncontrolling |
|
|
Total |
|
||||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
earnings |
|
|
loss |
|
|
equity |
|
|
interest |
|
|
equity |
|
||||||||||
Balance, December 31, 2024 |
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Total comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net changes in noncontrolling interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Common stock issued for share-based plans |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Stock buyback |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Tax related to net share settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance, September 30, 2025 |
|
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
-7-
DIODES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
Nine Months Ended |
|
|||||
|
September 30, |
|
|||||
|
2026 |
|
|
2025 |
|
||
Cash flows from operating activities |
|
|
|
|
|
||
Net income |
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash flows from operating activities, net of effects of acquisitions |
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
||
Amortization of intangible assets |
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
||
Deferred income taxes |
|
( |
) |
|
|
( |
) |
Investment gain |
|
( |
) |
|
|
( |
) |
Gain on sale of subsidiary |
|
( |
) |
|
|
( |
) |
Impairment of equity investment |
|
|
|
|
|
||
(Gain) loss on disposal of fixed assets |
|
( |
) |
|
|
|
|
Interest income from derivative financial instruments |
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
||
Changes in operating assets: |
|
|
|
|
|
||
Change in accounts receivable |
|
( |
) |
|
|
|
|
Change in inventory |
|
( |
) |
|
|
|
|
Change in other operating assets |
|
( |
) |
|
|
|
|
Changes in operating liabilities: |
|
|
|
|
|
||
Change in accounts payable |
|
|
|
|
|
||
Change in accrued liabilities |
|
|
|
|
( |
) |
|
Change in income tax payable |
|
|
|
|
( |
) |
|
Change in other operating liabilities |
|
( |
) |
|
|
|
|
Net cash flows from operating activities |
|
|
|
|
|
||
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
||
Acquisition, net of cash acquired |
|
( |
) |
|
|
( |
) |
Purchases of property, plant, and equipment |
|
( |
) |
|
|
( |
) |
Proceeds from sale of property, plant, and equipment |
|
|
|
|
|
||
Proceeds from sale of short-term investments |
|
|
|
|
|
||
Proceeds from maturity of short-term securities |
|
|
|
|
|
||
Purchases of short-term investments |
|
( |
) |
|
|
( |
) |
Purchases of equity securities |
|
( |
) |
|
|
( |
) |
Proceeds from sale of subsidiary |
|
|
|
|
|
||
Cash received (paid) for hedge termination |
|
|
|
|
( |
) |
|
Other |
|
( |
) |
|
|
( |
) |
Net cash flows from investing activities |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
|
|
||
Advances on lines of credit and short-term debt |
|
|
|
|
|
||
Repayments of lines of credit and short-term debt |
|
( |
) |
|
|
( |
) |
Proceeds from long-term debt |
|
|
|
|
|
||
Repayments of long-term debt |
|
( |
) |
|
|
( |
) |
Debt issuance costs |
|
( |
) |
|
|
|
|
Capped call payment |
|
( |
) |
|
|
|
|
Repayment of and proceeds from finance lease obligation |
|
|
|
|
( |
) |
|
Taxes paid related to net share settlement |
|
( |
) |
|
|
( |
) |
Net changes in noncontrolling interest |
|
|
|
|
( |
) |
|
Repurchase of common stock |
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
( |
) |
|
Net cash flows from financing activities |
|
|
|
|
( |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
||
Change in cash and cash equivalents, including restricted cash |
|
|
|
|
|
||
Cash and cash equivalents, beginning of period, including restricted cash |
|
|
|
|
|
||
Cash and cash equivalents, end of period, including restricted cash |
$ |
|
|
$ |
|
||
-8-
Supplemental Cash Flow Information |
|
|
|
|
|
||
Interest paid during the period |
$ |
|
|
$ |
|
||
Taxes paid during the period |
$ |
|
|
$ |
|
||
Non-cash investing and financing activities: |
|
|
|
|
|
||
Accounts payable balance related to the purchase of |
$ |
|
|
$ |
|
||
Dividend payable to noncontrolling interest |
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
-9-
DIODES INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – Summary of Operations and Significant Accounting Policies
Background
Diodes Incorporated (Nasdaq: DIOD), delivers high-quality semiconductor products to the world’s leading companies in the automotive, industrial, computing, consumer electronics, and communications markets. We leverage our expanded product portfolio of analog and power solutions combined with a flexible hybrid manufacturing model that meet customers’ needs. Our broad range of application-specific products, delivered through a total solutions sales approach and supported by global operations including engineering, testing, manufacturing, and customer service, enable us to be a premier provider for high-growth markets.
Basis of Presentation
The unaudited condensed consolidated balance sheet and financial data at December 31, 2025 are derived from audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on February 10, 2026 (“Form 10-K”). The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes necessary for a fair statement of financial position, operating results, and cash flows in conformity with GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in our Form 10-K. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair statement of the operating results for the periods presented have been included in the interim periods. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2026.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. As permitted under GAAP, interim accounting for certain expenses, including income taxes, are based on full year forecasts. For interim financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates taking into consideration discrete items occurring in a quarter.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) issued the following Accounting Standards Updates (“ASU”) which could have potential impact to the Company’s consolidated financial statements:
In May 2026, the FASB issued ASU 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which establishes new guidance for the recognition, measurement, presentation, and disclosure of environmental credits and environmental credit obligations. The guidance applies to environmental credits that are acquired, generated, granted, or received by an entity and to obligations that may be settled using such credits.
The standard is effective for public business entities for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect that adoption of ASU 2026-02 will have on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-09 to amend certain aspects of its hedge accounting guidance to better reflect an entity’s risk management activities in the financial statements. The guidance expands the hedged risks permitted to be aggregated in a group of individual forecasted transactions and increases the variable price components eligible to be designated as the hedged risk in the forecasted purchase or sale of non-financial assets. For public business entities, the provisions of ASU 2025-09 are effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. The Company has adopted the provisions set forth in ASU 2025-09 in the three months ended June 30, 2026, which did not have a material impact on the Company’s consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain
-10-
unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. In the first quarter of 2026, the Company adopted this standard which did not have a material impact on the Company’s consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03, “Business Combination and Consolidation: Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity” (“ASU 2025-03”). ASU 2025-03 provides clarifying guidance on determining the accounting acquirer in certain transactions involving VIEs. The update aims to improve consistency and comparability in financial reporting, especially when companies merge with a special-purpose acquisition company (“SPAC”). ASU 2025-03 requires entities to apply the same factors used for determining the accounting acquirer in other acquisition transactions. Essentially, it aims to make financial reporting more comparable and decision-useful for investors by ensuring that the accounting acquirer is appropriately identified in acquisitions of VIEs, particularly in SPAC transactions. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026 including interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact this amended guidance may have on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require that at each interim and annual reporting period an entity disclose:
The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact this amended guidance may have on its consolidated financial statements.
NOTE 2 – Earnings per Share and Equity
On May 8, 2025, the Board of Directors authorized a share repurchase program pursuant to which the Company may repurchase shares of its common stock from time to time in the open market or through privately negotiated transactions, subject to market conditions, applicable legal requirements, and other factors. The repurchased shares are held as treasury stock and are excluded from shares outstanding for purposes of calculating basic and diluted earnings per share from the date of repurchase.
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
September 30, |
|
|
September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Shares repurchased |
|
|
|
|
|
|
|
|
|
|
|
||||
Aggregate purchase price |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Average purchase price per share |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
During the nine months ended September 30, 2026, our
On August 18, 2026, the Company issued $
The Company accounts for the potential dilutive effect of the Convertible Senior Notes in accordance with the if-converted method.
-11-
Because the principal amount of the Convertible Senior Notes is required to be settled in cash, only the incremental shares, if any, attributable to the conversion premium are included in diluted weighted-average shares outstanding, and no adjustment is made to the numerator for interest expense. Shares issuable upon conversion are included in diluted weighted-average shares outstanding only to the extent required under the if-converted method.
For the three and nine months ended September 30, 2026, no incremental shares attributable to the Convertible Senior Notes were included in diluted earnings per share because the average market price of the Company's common stock did not exceed the conversion price during the applicable periods.
In connection with the issuance of the Convertible Senior Notes, the Company entered into Capped Call Transactions (the "Capped Call Transactions") that are expected to reduce potential dilution to the Company's common stock upon conversion of the Convertible Senior Notes and/or offset cash payments in excess of the principal amount of converted Convertible Senior Notes. The Capped Call Transactions have an initial strike price of approximately $
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
September 30, |
|
|
September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Earnings (numerator) |
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to common stockholders |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares (denominator) |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding (basic) |
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of stock options and stock awards outstanding |
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted weighted-average common shares outstanding (diluted) |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share attributable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and stock awards excluded from EPS |
|
|
|
|
|
|
|
|
|
|
|
||||
NOTE 3 - Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
We use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. These two types of inputs create a three-tier fair value hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
-12-
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 Inputs - Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.
As of September 30, 2026, we had cash and cash equivalents, short-term, and long-term investments. Long-term investments are included within Equity investments on the consolidated balance sheet. Trading securities held at September 30, 2026, were purchased on the open market and unrealized gains and losses are included in Other income (expense). The trading securities are valued under the fair value hierarchy using Level 1 Inputs. Short-term investments consist of investments such as time deposits, which are highly liquid with maturity dates greater than three months at the date of purchase. Generally, we can access these short-term investments in a relatively short amount of time but in doing so we generally forfeit a portion of earned and future interest income. Deferred compensation investments consist primarily of life insurance policies, but may also include investments in the Company’s stock, mutual funds and cash. See Note 12 for additional information related to our deferred compensation program and Note 11 for additional information related to our derivative financial instruments. The short-term investments, long-term investments and deferred compensation investments are valued under the fair value hierarchy using Level 1 and Level 2 Inputs.
Financial assets and liabilities carried at fair value as of September 30, 2026, are classified in the following table:
Description |
|
Fair Market Value |
|
|
Quoted Prices in Active Markets for Identical Assets |
|
|
Significant Other Observable Inputs |
|
|
Significant |
|
|
Total Changes in Fair Values Included in Year-to-Date Earnings |
|
|||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Money markets |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|||
Certificates of deposit and share certificates |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Corporate bonds |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Other fixed income securities |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
U.S. Treasury/Agency Securities |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Total cash and cash equivalents |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Short-term investments |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
||
Long-term investments |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Collared forward liability |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
Commodity swap contracts |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
Deferred compensation investments |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
ElevATE contingent consideration |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Financial assets and liabilities carried at fair value as of December 31, 2025, are classified in the following table:
Description |
|
Fair Market Value |
|
|
Quoted Prices in Active Markets for Identical Assets |
|
|
Significant Other Observable Inputs |
|
|
Significant |
|
|
Total Changes in Fair Values Included in Current Period Earnings |
|
|||||
Short-term investments |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
||
Long-term investments |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
||
Collared forward asset |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Collared forward liability |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
Deferred compensation investments |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not
-13-
measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). We believe the carrying amount of borrowings under our Revolving Credit Facility and notes payable approximates fair value due to the variable nature of the applicable interest rates. The estimated fair value of such borrowings would be classified within Level 2 of the fair value hierarchy. The Company's Convertible Senior Notes are accounted for as a single liability measured at amortized cost. At September 30, 2026, the carrying amount of the Convertible Senior Notes was approximately $
NOTE 4 – Inventories
The table below sets forth inventories which are stated at the lower of cost or net realizable value:
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Finished goods |
$ |
|
|
$ |
|
||
Work-in-progress |
|
|
|
|
|
||
Raw materials |
|
|
|
|
|
||
Total |
$ |
|
|
$ |
|
||
NOTE 5 – Goodwill and Intangible Assets
The increase in goodwill of approximately $
The table below sets forth the changes in goodwill:
Balance at December 31, 2025 |
$ |
|
|
Acquisitions |
|
|
|
Foreign currency translation and other adjustments |
|
( |
) |
Balance at September 30, 2026 |
$ |
|
The table below sets forth the value of intangible assets, other than goodwill:
|
September 30, |
|
|
December 31, |
|
||
|
2026 |
|
|
2025 |
|
||
Intangible assets subject to amortization: |
|
|
|
|
|
||
Gross carrying amount |
$ |
|
|
$ |
|
||
Accumulated amortization |
|
( |
) |
|
|
( |
) |
Foreign currency translation adjustment |
|
( |
) |
|
|
( |
) |
Total intangible assets subject to amortization |
|
|
|
|
|
||
Intangible assets with indefinite lives: |
|
|
|
|
|
||
Gross carrying amount |
|
|
|
|
|
||
Foreign currency translation adjustment |
|
( |
) |
|
|
( |
) |
Total intangible assets with indefinite lives |
|
|
|
|
|
||
Total intangible assets, net |
$ |
|
|
$ |
|
||
The table below sets forth amortization expense related to intangible assets subject to amortization:
Amortization expense |
|
2026 |
|
|
2025 |
|
||
Three Months Ended September 30, |
|
$ |
|
|
$ |
|
||
Nine Months Ended September 30, |
|
$ |
|
|
$ |
|
||
-14-
NOTE 6 – Income Tax Provision
The table below sets forth information related to our income tax expense:
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
September 30, |
|
|
September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Domestic pre-tax income (loss) |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Foreign pre-tax income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income tax provision |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Effective tax rate |
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Impact of tax holidays on tax expense |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Earnings per share impact of tax holidays: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
For the three months ended September 30, 2026, the effective tax rate differs from the
For the nine months ended September 30, 2026, the effective tax rate differs from the
For the three and nine months ended September 30, 2025, the effective tax rate differs from the
The increase in effective tax rate for the three and nine months ended September 30, 2026, when compared to the three and nine months ended September 30, 2025, is primarily due to the change in pre-tax earnings during the comparable periods, including the geographical mix of pre-tax income and loss across tax jurisdictions.
NOTE 7 – Share-Based Compensation
The table below sets forth information related to our share-based compensation expense:
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
September 30, |
|
|
September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cost of goods sold |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Selling, general, and administrative |
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
||||
Total share-based compensation expense |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Share Grants. Share grants consist of restricted stock awards, restricted stock units (“RSUs”) and performance stock units (“PSUs”). Restricted stock awards and RSUs generally vest in equal annual installments over a four-year period and are measured based
-15-
on the fair market value of the underlying stock on the date of grant. Compensation expense is recognized on a straight-line basis over the requisite four-year service period. All new grants are awarded under the Company’s 2022 Equity Incentive Plan.
PSUs are measured based on the fair market value of the underlying stock on the date of grant, and compensation expense is recognized over the three-year performance period, with adjustments made to the expense to recognize the probable payout percentage.
As of September 30, 2026, total unrecognized share-based compensation expense related to share grants was approximately $
NOTE 8 – Enterprise-Wide Segment Information and Net Sales
Segment Reporting. For financial reporting purposes, we operate in a single segment, standard semiconductor products, through our various manufacturing and distribution facilities. One segment reflects how our chief operating decision maker (“CODM”), which is our chief executive officer, allocates resources and measures results.
The table below sets forth net sales attributable to customers that individually accounted for 10% or more of consolidated net sales during the periods presented:
|
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Customer 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Customer 2 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Each customer that accounted for
Disaggregation of Net Sales. The Company disaggregates net sales by sales channel and geographic area. Sales channels consist of direct sales to end customers and distribution sales to distributors ("Distributors"). Direct sales customers are customers that incorporate the Company's products into their manufacturing processes, while Distributors resell the Company's products to third-party customers.
The Company sells its products worldwide for use in the industrial, automotive, computing, consumer and communications end markets. Substantially all contracts with customers are fixed-price arrangements and are generally short-term in nature, ranging from several days to several months.
The tables below set forth net sales based on the location of the subsidiary producing the net sale:
-16-
For the Three Months Ended September 30, 2026 |
|
Asia |
|
|
Americas |
|
|
Europe |
|
|
Consolidated |
|
||||
Total sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intercompany elimination |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
For the Three Months Ended September 30, 2025 |
|
Asia |
|
|
Americas |
|
|
Europe |
|
|
Consolidated |
|
||||
Total sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intercompany elimination |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of and for the |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nine Months Ended September 30, 2026 |
|
Asia |
|
|
Americas |
|
|
Europe |
|
|
Consolidated |
|
||||
Total sales |
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
||||
Intercompany elimination |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property, plant, and equipment, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of and for the |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nine Months Ended September 30, 2025 |
|
Asia |
|
|
Americas |
|
|
Europe |
|
|
Consolidated |
|
||||
Total sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intercompany elimination |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property, plant, and equipment, net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
-17-
The tables below set forth net sales for the Company disaggregated into geographic locations based on shipment destination and by type (direct sales or distributor sales):
|
|
For the Three Months Ended September 30, |
|
|
|||||
Net Sales by Region |
|
2026 |
|
|
2025 |
|
|
||
Asia |
|
$ |
|
|
$ |
|
|
||
Europe |
|
|
|
|
|
|
|
||
Americas |
|
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
||
Net Sales by Type |
|
|
|
|
|
|
|
||
Direct sales |
|
$ |
|
|
$ |
|
|
||
Distributor sales |
|
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
||
|
|
For the Nine Months Ended September 30, |
|
|
|||||
Net Sales by Region |
|
2026 |
|
|
2025 |
|
|
||
Asia |
|
$ |
|
|
$ |
|
|
||
Europe |
|
|
|
|
|
|
|
||
Americas |
|
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
||
Net Sales by Type |
|
|
|
|
|
|
|
||
Direct sales |
|
$ |
|
|
$ |
|
|
||
Distributor sales |
|
|
|
|
|
|
|
||
Total net sales |
|
$ |
|
|
$ |
|
|
||
The table below sets forth the location to where products were shipped, representing 10% or more of net sales in at least one of the periods shown below:
|
|
Location |
|
Amount |
|
|||||
For the three months ended September 30, |
|
|
|
2026 |
|
|
2025 |
|
||
|
|
China |
|
$ |
|
|
$ |
|
||
|
|
Singapore |
|
$ |
|
|
$ |
|
||
|
|
Taiwan |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
For the nine months ended September 30, |
|
|
|
|
|
|
|
|
||
|
|
China |
|
$ |
|
|
$ |
|
||
|
|
Singapore |
|
$ |
|
|
$ |
|
||
|
|
Taiwan |
|
$ |
|
|
$ |
|
||
-18-
NOTE 9 – Debt
Borrowings outstanding as of September 30, 2026 and December 31, 2025 are set forth in the table below:
|
|
September 30, |
|
|
December 31, |
|
|
|
|
Current Amount |
||
Description |
|
2026 |
|
|
2025 |
Interest Rate |
|
Maturity |
||||
Short-term debt |
|
$ |
|
|
$ |
|
|
|
Various during next 12 months |
|||
|
|
|
|
|
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
|
|
|
|
||
Notes payable to Bank of Taiwan |
|
|
|
|
|
|
|
|
June 2033 |
|||
Notes payable to Bank of Taiwan |
|
|
|
|
|
|
|
|
October 2027 |
|||
Notes payable to CTBC Bank |
|
|
|
|
|
|
|
|
March 2028 |
|||
Notes payable to CTBC Bank |
|
|
|
|
|
|
|
|
April 2027 |
|||
Notes payable to CTBC Bank |
|
|
|
|
|
|
|
|
May 2028 |
|||
Notes payable to E Sun Bank |
|
|
|
|
|
|
|
|
July 2027 |
|||
Notes payable to E Sun Bank |
|
|
|
|
|
|
|
|
July 2030 |
|||
Notes payable to E Sun Bank |
|
|
|
|
|
|
|
|
October 2027 |
|||
Notes payable to Taishin Bank |
|
|
|
|
|
|
|
|
January 2027 |
|||
Notes payable to Taishin Bank |
|
|
|
|
|
|
|
|
January 2028 |
|||
Notes payable to Chang Hwa Bank |
|
|
|
|
|
|
|
|
November 2030 |
|||
Notes payable to Chang Hwa Bank |
|
|
|
|
|
|
|
|
December 2030 |
|||
Notes payable to Chang Hwa Bank |
|
|
|
|
|
|
|
|
January 2031 |
|||
Notes payable to China Everbright Bank |
|
|
|
|
|
|
|
|
September 2031 |
|||
Convertible Senior Notes |
|
|
|
|
|
|
|
|
August 2031 |
|||
Total long-term debt |
|
|
|
|
|
|
|
|
|
|
||
Less: Current portion of long-term debt |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Less: Unamortized debt-issuance costs |
|
|
( |
) |
|
|
|
|
|
|
|
|
Total long-term debt, net of current portion |
|
$ |
|
|
$ |
|
|
|
|
|
||
Short-term debt
Our Asia subsidiaries maintain credit facilities with several financial institutions through our foreign entities worldwide totaling $
Long-term debt
The Company maintains a long-term credit facility (“Credit Agreement”). The Credit Agreement consists of a Revolving Credit Facility (“Revolving Credit Facility”) in the amount of $
On August 12, 2026, the Company entered into Amendment No. 1 to the Credit Agreement (the “Amendment”). The Amendment, among other things, (i) extended the maturity date of the Revolving Credit Facility from
The obligations under the Credit Agreement are secured by a lien on substantially all assets of the Company and certain of its subsidiaries. At September 30, 2026, there were
In connection with the Amendment, the Company incurred $
-19-
Convertible Senior Notes
On August 18, 2026, the Company completed a private offering of $
The initial conversion rate of the Convertible Senior Notes is
Prior to May 15, 2031, holders may convert their Convertible Senior Notes only upon the occurrence of certain events and during specified periods as set forth in the Indenture. On or after May 15, 2031, holders may convert the Convertible Senior Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Company is required to settle the principal amount of the Convertible Senior Notes in cash and may settle any conversion value in excess of the principal amount in cash, shares of the Company's common stock, or a combination thereof, at its election, in accordance with the terms of the Indenture.
The conversion rate is subject to adjustment upon the occurrence of certain events in accordance with the terms of the Indenture. In addition, following certain corporate events that occur prior to the maturity date, or if the Company issues a notice of redemption, the Company may be required to increase the conversion rate for holders who elect to convert their Convertible Senior Notes in connection with such events.
The Convertible Senior Notes are not redeemable by the Company prior to August 20, 2029. On or after August 20, 2029, and prior to the 31st scheduled trading day immediately preceding maturity, the Company may redeem all or a portion of the Convertible Senior Notes for cash, subject to certain conditions, including that the last reported sale price of the Company's common stock is at least
The Company received net proceeds of approximately $
The Convertible Senior Notes are accounted for as a single liability measured at amortized cost. Debt issuance costs associated with the Convertible Senior Notes are presented as a reduction of the carrying amount of the Convertible Senior Notes and are amortized to interest expense over the contractual term of the Convertible Senior Notes using the effective interest method. As of September 30, 2026, the carrying amount of the Convertible Senior Notes was $
Other Notes Payable
In addition to our U.S. Credit Agreement, our
Capped Call Transactions
In connection with the issuance of the Convertible Senior Notes, the Company entered into privately negotiated Capped Call Transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company's common stock upon any conversion of the Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of Convertible Senior Notes, as the case may be. The Capped Call Transactions have an initial strike price of approximately $
The Capped Call Transactions cover, subject to customary adjustments, the number of shares of the Company's common stock initially underlying the Convertible Senior Notes. The Capped Call Transactions are generally expected to reduce potential dilution to the Company's common stock upon conversion of the Convertible Senior Notes and/or offset any cash payments the Company is required
-20-
to make in excess of the principal amount of converted Convertible Senior Notes, subject to the cap. The Capped Call Transactions are separate transactions entered into by the Company and are not part of the terms of the Convertible Senior Notes. Holders of the Convertible Senior Notes do not have any rights with respect to the Capped Call Transactions.
The Company paid premiums of approximately $
NOTE 10 – Commitments and Contingencies
Purchase Commitments. We have entered into non-cancelable purchase contracts for capital expenditures, primarily for manufacturing equipment, for approximately $
Contingencies. From time to time, we are involved in various legal proceedings that arise in the normal course of business. While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of any pending legal proceeding will not have any material adverse effect on our consolidated financial position, cash flows, or operating results. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, which could impact our business and operating results for the period in which the ruling occurs and future periods. Based on information available, we evaluate the likelihood of potential outcomes of all pending disputes. We record an appropriate liability when the amount of any liability associated with a pending dispute is deemed probable and reasonably estimable. In addition, we do not accrue estimated legal fees and other directly related costs as they are expensed as incurred. The Company is not currently a party to any pending litigation that we consider material.
NOTE 11 – Derivative Financial Instruments
We use derivative instruments to manage risks related to foreign currencies, interest rates, commodity price management, and the net investment risk in our foreign subsidiaries. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment. The Company does not enter into derivative contracts for speculative purposes.
Commodity Price Risk Management. The Company purchases gold that is used in the manufacturing of connectors, electronic components, and other products. Gold prices are subject to significant market volatility, which can affect the Company's production costs and operating margins.
To manage a portion of its exposure to fluctuations in gold prices, the Company enters into commodity swap contracts. Our gold derivative contracts are designated and accounted for as cash flow hedges of forecasted gold purchases under ASC 815. As of September 30, 2026 and December 31, 2025, we had $
Hedges of Foreign Currency Risk. We are exposed to fluctuations in various foreign currencies relative to our functional currencies. We use foreign currency forward contracts to manage this exposure. As of September 30, 2026 and December 31, 2025, we had $
-21-
Hedges of Interest Rate and Net Investment Risk.
The table below sets forth the fair value of the Company’s derivative financial instruments, which are Level 2 instruments in the fair-value hierarchy, as well as their classification on our condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025:
|
|
|
Fair Value |
|
|
|||||||||||||
|
|
|
Other Current or |
|
|
Other Current or |
||||||||||||
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
||||
Derivatives with hedge designations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collared forwards |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Commodity swap contracts |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Derivatives without hedge designations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange forwards |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
The table below sets forth the effect of the Company’s derivative financial instruments on the Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2026 and 2025:
Derivative Instruments |
|
Amount of Gain or (Loss) Recognized in OCI on Derivative |
|
|
Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion Excluded from |
|
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
|
||||||||||
Designated as |
|
September 30, |
|
|
Effectiveness |
|
September 30, |
|
||||||||||
Hedging Instruments |
|
2026 |
|
|
2025 |
|
|
Testing) |
|
2026 |
|
|
2025 |
|
||||
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collared forwards |
|
$ |
( |
) |
|
$ |
|
|
|
|
$ |
|
|
$ |
|
|||
Commodity swap contracts |
|
$ |
|
|
$ |
|
|
|
$ |
( |
) |
|
N/A |
|
||||
Nine Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Collared forwards |
|
$ |
( |
) |
|
$ |
|
|
|
|
$ |
|
|
$ |
|
|||
Commodity swap contracts |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
N/A |
|
|||
During the three months ended September 30, 2026 and 2025, the Company recognized gains of approximately $
During the nine months ended September 30, 2026 and 2025, the Company recognized gains of approximately $
NOTE 12 – Employee Benefit Plans
NOTE 13 – Related Parties
We conduct business with the following related parties: Keylink International (B.V.I.) Inc. and its subsidiaries and affiliates (“Keylink”), Nuvoton Technology Corporation (“Nuvoton”), Jiyuan Crystal Photoelectric Frequency Technology Ltd. (“JCP”), Atlas Magnetics, Co. (“Atlas”), and ATX Semiconductor SDN (“ATX”).
-22-
Warren Chen, a member of the Company’s board of directors, serves as a member of the Nuvoton board of directors. In the nine months ended September 30, 2026, we purchased approximately $
JCP is a frequency control product manufacturing company from which we purchase material and in which we have made an equity investment that we account for using the equity method of accounting.
Atlas is an early stage privately held fabless wafer design company in which the Company holds a majority interest. The Company determined that Atlas is a variable interest entity (“VIE”), and the Company does not have the power to direct the activities that most significantly impact Atlas. The Company has therefore determined that the Company is not the primary beneficiary. Consequently, we do not consolidate the assets and liabilities of Atlas in the Company’s financial statements. For additional information related to Atlas see Note 14 - Equity Investments - Unconsolidated VIE, below.
In June 2025, the Company entered into a Joint Venture Agreement to acquire a
The table below sets forth the revenues and expenses with our related parties:
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
September 30, |
|
|
September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Keylink: |
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Purchases |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Plating, rental, and consulting expense |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Nuvoton: |
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Purchases |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
JCP: |
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Atlas: |
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
ATX: |
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The table below sets forth accounts receivable from, and accounts payable to, our related parties:
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Keylink: |
|
|
|
|
|
||
Accounts receivable |
$ |
|
|
$ |
|
||
Accounts payable |
$ |
|
|
$ |
|
||
Nuvoton: |
|
|
|
|
|
||
Accounts receivable |
$ |
|
|
$ |
|
||
Accounts payable |
$ |
|
|
$ |
|
||
Atlas: |
|
|
|
|
|
||
Accounts payable |
$ |
|
|
$ |
|
||
ATX: |
|
|
|
|
|
||
Accounts payable |
$ |
|
|
$ |
|
||
NOTE 14 - Equity Investments
The Company maintains equity investments in companies which are accounted for under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair values. As of September 30, 2026 and December 31, 2025, the Company had $
-23-
the nine months ended September 30, 2026, the Company recorded $
Unconsolidated VIE
During July 2021, the Company acquired an interest in Atlas, an early stage privately held fabless wafer design company located in the western United States. The Company’s initial investment in July 2021 was $
• The hiring and firing of officers (i.e., CEO, CFO, etc.) – The hiring and firing of personnel responsible for making the key daily decisions and implementing the strategic operating direction will determine the success the Company has in their initiatives, thereby affecting the economic performance;
• Determining the business plan and budget, including incurring additional indebtedness or issuing additional equity interests – As Atlas is thinly capitalized, the decisions around when and how to obtain cash will influence whether Atlas can continue operating; and
• Determining the strategic operating direction of Atlas – The decisions made around the significant operating direction of Atlas will significantly impact the overall performance of the Company by determining where and how Atlas limited capital is spent without having significant revenues to keep the Company operating.
As the Company is not the primary beneficiary of Atlas, the Company did not consolidate the assets and liabilities of Atlas in our financial statements and instead accounts for the investment under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair value. As such, the Company’s investment is measured at cost less impairment, and adjusted to fair value if there are any observable price changes for identical or similar investment of the same issuer.
Atlas is funded through debt and equity. The Company's maximum exposure to loss is limited to its investment in Atlas and notes receivable and accrued interest owed to the Company from Atlas.
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
VIE total assets |
|
$ |
|
|
$ |
|
||
VIE total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Diodes' equity in VIE |
|
$ |
|
|
$ |
|
||
Diodes' note receivable from VIE |
|
|
|
|
|
|
||
Diodes' interest receivable from VIE |
|
|
|
|
|
|
||
Diodes' maximum exposure to loss |
|
$ |
|
|
$ |
|
||
ATX Semiconductor SDN
In June 2025, the Company entered into a joint venture agreement with Global Advanced Packaging Test Limited to acquire a
Note 15 - Acquisitions and dispositions
ElevATE Semiconductor Acquisition
On
-24-
applications. The acquisition expands Diodes' analog and mixed-signal product portfolio and strengthens the Company's position in attractive, high-growth end markets driven by increasing semiconductor complexity and test intensity.
The total aggregate purchase price was $
The table below sets forth the estimated fair value of the purchase consideration:
Cash paid to acquire outstanding equity interests of ElevATE |
|
$ |
|
|
Fair value of contingent consideration |
|
|
|
|
Transaction costs paid on seller's behalf |
|
|
( |
) |
Purchase consideration |
|
$ |
|
The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed were recognized at their estimated acquisition-date fair values, with the excess of consideration transferred over the fair value of identifiable net assets acquired recognized as goodwill.
Estimated fair value of assets acquired: |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
Inventories |
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
Property, plant, and equipment |
|
|
|
|
|
Intangible assets |
|
|
|
|
|
Other long-term assets |
|
|
|
|
|
Total assets acquired |
|
|
|
|
|
|
|
|
|
|
|
Estimated fair value of liabilities assumed: |
|
|
|
|
|
Accounts payable |
|
|
|
|
|
Accrued liabilities and other |
|
|
|
|
|
Other long-term liabilities |
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
Total liabilities assumed |
|
|
|
|
|
Total identifiable net assets |
|
|
|
|
|
Goodwill |
|
|
|
|
|
Purchase consideration |
|
$ |
|
|
|
The excess of the total equity value of ElevATE over net assets acquired was recorded as goodwill. The goodwill is primarily attributable to the synergies expected to arise from the integration of ElevATE's technologies and product portfolio with the Company's existing operations, as well as the value of the assembled workforce. None of the goodwill is expected to be deductible for tax purposes.
The intangible assets acquired as a result of the acquisition consisted of developed technologies, in-process research & development (“IPR&D”), customer contracts and related relationships, and trademarks, the finite-lived assets will be amortized over the estimated useful life. The approximate fair values of the developed technologies, IPR&D, customer contracts and related relationships and trademarks is $
Finite-lived intangible assets are amortized over their estimated useful lives, which range from
-25-
which time the assets are evaluated for their estimated useful lives and amortization begins. If an IPR&D project is abandoned, the related asset is evaluated for impairment. The Company incurred approximately $
The purchase price allocation is preliminary and subject to adjustment during the measurement period, which will not exceed one year from the acquisition date. The Company is continuing to evaluate the acquisition-date fair values of certain assets acquired and liabilities assumed, including intangible assets, inventory, and the related income tax effects. The preliminary amounts may be adjusted as additional information regarding facts and circumstances existing as of the Acquisition Date becomes available. Any qualifying measurement-period adjustments will be recognized in the reporting period in which the adjustments are determined, with the corresponding effect generally recorded to goodwill.
Unaudited Pro Forma Financial Information
The amounts of revenue and earnings of ElevATE included in the Company's consolidated statement of operations from the acquisition date to the period ending September 30, 2026 are as follows (in thousands):
|
|
August 28, 2026 |
|
|
|
|
September 30, 2026 |
|
|
Net sales |
|
$ |
|
|
Net income |
|
|
|
|
The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition and consolidation of ElevATE had occurred on January 1, 2025:
|
|
Three months ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The unaudited pro forma consolidated results for the three months and nine months ended September 30, 2026, include adjustments that result in an increase to amortization expense of $
The unaudited pro forma consolidated results for the three months and nine months ended September 30, 2025, include adjustments that result in an increase to amortization expense of $
These unaudited pro forma consolidated results of operations were derived, in part, from the historical consolidated financial statements of ElevATE and other available information and assumptions believed to be reasonable under the circumstances.
TF Semiconductor Solutions, Inc. Agreement and Plan of Merger
During the three months ended September 30, 2026, the Company received
-26-
cash consideration that had not previously met the recognition criteria due to uncertainty surrounding the contingency. The aggregate gain recognized during the three months ended September 30, 2026 was approximately $
-27-
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Except for the historical information contained herein, the matters addressed in this Item 2 constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as identified under the heading “Cautionary Statement for Purposes of the “Safe Harbor” Provision of the Private Securities Litigation Reform Act of 1995” herein. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed in the subsection “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our most recent Annual Report on Form 10-K, and similar discussions elsewhere in this Quarterly Report on Form 10-Q and in other reports we file with the SEC from time to time, that could cause actual results to differ materially from those anticipated by our management. The Private Securities Litigation Reform Act of 1995 (the “PSLRA”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the PSLRA. We undertake no obligation to publicly release the results of any revisions to our forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. Unless the context otherwise requires, the words “Diodes,” the “Company,” “we,” “us,” and “our” refer to Diodes Incorporated and its subsidiaries. Dollar amounts and share amounts are presented in thousands, except per share amounts, unless otherwise noted.
This management’s discussion should be read in conjunction with the management’s discussion included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“Form 10-K”), previously filed with Securities and Exchange Commission (“SEC”) on February 10, 2026.
Overview
Diodes Incorporated (Nasdaq: DIOD), delivers high-quality semiconductor products to the world’s leading companies in the automotive, industrial, computing, consumer electronics, and communications markets. We leverage our expanded product portfolio of analog and power solutions combined with a flexible hybrid manufacturing model that meet customers’ needs. Our broad range of application-specific products, delivered through a total solutions sales approach and supported by global operations including engineering, testing, manufacturing, and customer service, enable us to be a premier provider for high-growth markets.
The Company’s diverse product portfolio includes diodes, rectifiers, transistors, MOSFETs, SiC devices, protection devices, logic and interface solutions, amplifiers and comparators, sensors, isolation products, pin electronics PE), device power supply (DPS), and power management devices. Our power management devices include AC-DC converters, DC-DC switching, linear regulators, LED drivers, and voltage references. Our solutions also extend to timing and connectivity products, including clock ICs, crystal oscillators, PCIe and multi-protocol switches, and signal integrity solutions for high-speed applications.
Summary for the three months ended September 30, 2026
As of September 30, 2026, our cash, cash equivalents, and short-term investments were $574.9 million, and we had access to unused borrowing capacity of $225.0 million under the revolving portion of our U.S. Credit Agreement. We believe our liquidity and our borrowing capacity will allow us to cover our cash needs for working capital, capital expenditures, and acquisitions for at least the next 12 months.
On August 18, 2026, we issued $375.0 million aggregate principal amount of 0.00% Convertible Senior Notes due 2031 (the "Convertible Senior Notes"), including the exercise in full of the initial purchasers' option to purchase an additional $50.0 million aggregate principal amount. The Convertible Senior Notes were issued pursuant to an Indenture, dated August 18, 2026 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee. The Convertible Senior Notes are senior unsecured obligations of the Company and mature on August 15, 2031, unless earlier converted, redeemed, or repurchased. The Convertible Senior Notes do not bear regular interest, and the principal amount does not accrete. Special interest may accrue under
-28-
certain circumstances as provided in the Indenture. Also in August 2026, in connection with the pricing of the Convertible Senior Notes and the exercise by the initial purchasers of their option in full to purchase additional notes, we entered into the Capped Call Transactions with several financial institutions, including one or more of the initial purchasers and/or their respective affiliates.
On August 27, 2026, the Company completed its previously announced all cash acquisition of ElevATE Semiconductor, Inc. ("ElevATE"), a fabless semiconductor company based in San Diego, California that specializes in the development of integrated circuits for the automated test equipment industry. The aggregate merger consideration of $267.1 million was based on a $250.0 million base purchase price, subject to customary adjustments for cash, indebtedness, transaction costs, taxes, and net working capital. In addition, the merger agreement provides for potential earnout payments of up to $50.0 million in the aggregate based on the achievement of specified post-closing revenue and gross margin thresholds for calendar years 2027 through 2030. The ElevATE acquisition advances the Company’s portfolio and content expansion initiatives to capitalize on the growing demand for semiconductor test solutions.
The Company’s third quarter revenue reached record levels coupled with an over 500-basis point year-over-year increase in gross margin to 36.1%, with global point of sales reaching record level in the quarter. The Company’s over 19% sequential revenue growth was primarily driven by continued market share gains in the automotive market, improving demand across broad industrial applications, and continued momentum in the artificial intelligence ecosystem. Underpinning this growth is the benefit of the targeted investments we made in capacity expansion over the past year coming online.
Results of operations for the three months ended September 30, 2026 and 2025
The table below sets forth the condensed consolidated statement of operations line items as a percentage of net sales:
For the three months ended September 30, |
|
|||||||
|
|
2026 |
|
|
2025 |
|
||
Net sales |
|
|
100 |
% |
|
|
100 |
% |
Cost of goods sold |
|
|
(64 |
) |
|
|
(69 |
) |
Gross profit |
|
|
36 |
|
|
|
31 |
|
Total operating expense |
|
|
(24 |
) |
|
|
(28 |
) |
Interest income |
|
|
1 |
|
|
|
2 |
|
Foreign currency (loss), net |
|
|
(1 |
) |
|
|
(1 |
) |
Unrealized (loss) gain on investments |
|
|
(1 |
) |
|
|
1 |
|
Gain on disposal of subsidiary |
|
|
1 |
|
|
|
- |
|
Income tax provision |
|
|
(3 |
) |
|
|
(1 |
) |
Equity in net earnings of equity investments |
|
|
(0 |
) |
|
|
- |
|
Net income attributable to common stockholders |
|
|
8 |
|
|
|
4 |
|
The following table and discussion explains in greater detail our consolidated operating results and financial condition for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
|
For the three months ended September 30, |
|
|||||||||||||
|
2026 |
|
|
2025 |
|
|
Increase/(Decrease) |
|
|
% Change |
|
||||
Net sales |
$ |
532,587 |
|
|
$ |
392,170 |
|
|
$ |
140,417 |
|
|
|
35.8 |
% |
Cost of goods sold |
|
340,122 |
|
|
|
271,682 |
|
|
|
68,440 |
|
|
|
25.2 |
% |
Gross profit |
|
192,465 |
|
|
|
120,488 |
|
|
|
71,977 |
|
|
|
59.7 |
% |
Total operating expense |
|
129,052 |
|
|
|
108,916 |
|
|
|
20,136 |
|
|
|
18.5 |
% |
Interest income |
|
4,798 |
|
|
|
8,487 |
|
|
|
(3,689 |
) |
|
|
(43.5 |
%) |
Interest expense |
|
(813 |
) |
|
|
(503 |
) |
|
|
310 |
|
|
|
61.6 |
% |
Foreign currency (loss), net |
|
(2,977 |
) |
|
|
(3,328 |
) |
|
|
(351 |
) |
|
|
10.5 |
% |
Unrealized (loss) gain on investments |
|
(6,041 |
) |
|
|
2,391 |
|
|
|
(8,432 |
) |
|
|
(352.7 |
%) |
Gain on disposal of subsidiary |
|
3,841 |
|
|
|
- |
|
|
|
3,841 |
|
|
N/A |
|
|
Other income |
|
765 |
|
|
|
845 |
|
|
|
(80 |
) |
|
|
(9.5 |
%) |
Income tax provision |
|
14,091 |
|
|
|
3,555 |
|
|
|
10,536 |
|
|
|
296.4 |
% |
Equity in net earnings of equity investments |
|
(2,369 |
) |
|
|
(432 |
) |
|
|
(1,937 |
) |
|
|
448.4 |
% |
Net income attributable to common stockholders |
|
43,712 |
|
|
|
14,278 |
|
|
|
29,434 |
|
|
|
206.1 |
% |
Net sales increased approximately $140.4 million, or 35.8%, for the three months ended September 30, 2026, compared to the same period last year, primarily driven by continued market share gains in the automotive market, improving demand across broad industrial applications, and continued momentum in the artificial intelligence ecosystem. Underpinning this growth is the benefit of the
-29-
targeted investments we made in capacity expansion over the past year coming online. During the three months ended September 30, 2026, weighted-average sales price increased 13.5% and volume increased 19.7%, when compared to the same period in 2025.
The table below sets forth our product revenue as a percentage of total product revenue by end-user market for the three months ended September 30, 2026 and 2025:
|
Three Months Ended |
||
|
September 30, |
||
|
2026 |
|
2025 |
Industrial |
24% |
|
22% |
Automotive |
22% |
|
19% |
Computing |
27% |
|
28% |
Consumer |
17% |
|
18% |
Communications |
10% |
|
13% |
For the three months ended September 30, 2026, gross profit increased approximately 59.7% when compared to the same period last year primarily due to higher net sales. Gross profit margin for the three months ended September 30, 2026 and 2025 was 36.1% and 30.7%, respectively.
Operating expenses for the three months ended September 30, 2026, increased $20.1 million when compared to the three months ended September 30, 2025. Operating expenses as a percentage of net sales were 24.2% and 27.8% for the three months ended September 30, 2026 and 2025, respectively. SG&A increased approximately $19.7 million as compared to the same period last year reflecting an increase in salaries and wages of $7.3 million, increased selling expenses of approximately $6.3 million, increased professional services of approximately $2.5 million, and increased freight and duty expense of $1.6 million. SG&A, as a percentage of net sales, was 15.1% and 15.4% for the three months ended September 30, 2026 and 2025 respectively. For the three months ended September 30, 2026, research and development expenses (“R&D”) was flat when compared to the three months ended September 30, 2025. R&D, as a percentage of net sales, was 8.2% and 10.7% for the three months ended September 30, 2026 and 2025, respectively.
Interest income decreased $3.7 million, or 43.5%, for the three months ended September 30, 2026, compared to the same period last year, reflecting less interest income received in the Company’s derivative hedging instruments. Interest expense increased due primarily to amortization of debt issuance costs associated with the Convertible Senior Notes, for the three months ended September 30, 2026, compared to the same period last year. During the three months ended September 30, 2026, the Company recognized $6.0 million in unrealized losses on investments for mark-to-market adjustments.
We recognized income tax expense of approximately $14.1 million and $3.6 million for the three months ended September 30, 2026 and 2025, respectively. The increase in income taxes for 2026 compared to 2025 is primarily attributable to the change in pre-tax earnings during the comparable periods, including the geographical mix of pre-tax income and loss across tax jurisdictions.
Results of operations for the nine months ended September 30, 2026 and 2025
The table below sets forth the condensed consolidated statement of operations line items as a percentage of net sales:
For the nine months ended September 30, |
|
|||||||
|
|
2026 |
|
|
2025 |
|
||
Net sales |
|
|
100 |
% |
|
|
100 |
% |
Cost of goods sold |
|
|
(66 |
) |
|
|
(69 |
) |
Gross profit |
|
|
34 |
|
|
|
31 |
|
Total operating expense |
|
|
(25 |
) |
|
|
(29 |
) |
Interest income |
|
|
1 |
|
|
|
2 |
|
Foreign currency (loss), net |
|
|
(1 |
) |
|
|
(1 |
) |
Unrealized (loss) gain on investments |
|
|
1 |
|
|
|
3 |
|
Impairment of equity investment |
|
|
- |
|
|
|
(1 |
) |
Gain on disposal of subsidiary |
|
|
0 |
|
|
|
1 |
|
Income tax provision |
|
|
(2 |
) |
|
|
(1 |
) |
Equity in net earnings of equity investments |
|
|
(1 |
) |
|
|
- |
|
Net income attributable to common stockholders |
|
|
8 |
|
|
|
5 |
|
The following table and discussion explains in greater detail our consolidated operating results and financial condition for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. This discussion should be read in
-30-
conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
|
For the nine months ended September 30, |
|
|||||||||||||
|
2026 |
|
|
2025 |
|
|
Increase/(Decrease) |
|
|
% Change |
|
||||
Net sales |
$ |
1,383,583 |
|
|
$ |
1,090,495 |
|
|
$ |
293,088 |
|
|
|
26.9 |
% |
Cost of goods sold |
|
914,760 |
|
|
|
749,989 |
|
|
|
164,771 |
|
|
|
22.0 |
% |
Gross profit |
|
468,823 |
|
|
|
340,506 |
|
|
|
128,317 |
|
|
|
37.7 |
% |
Total operating expense |
|
352,355 |
|
|
|
318,249 |
|
|
|
34,106 |
|
|
|
10.7 |
% |
Interest income |
|
15,791 |
|
|
|
21,324 |
|
|
|
(5,533 |
) |
|
|
(25.9 |
%) |
Interest expense |
|
(1,829 |
) |
|
|
(1,476 |
) |
|
|
353 |
|
|
|
23.9 |
% |
Foreign currency (loss), net |
|
(7,371 |
) |
|
|
(9,943 |
) |
|
|
(2,572 |
) |
|
|
(25.9 |
%) |
Unrealized (loss) gain on investments |
|
16,427 |
|
|
|
28,004 |
|
|
|
(11,577 |
) |
|
|
(41.3 |
%) |
Impairment of equity investment |
|
(1,249 |
) |
|
|
(5,817 |
) |
|
|
4,568 |
|
|
|
(78.5 |
%) |
Gain on disposal of subsidiary |
|
3,841 |
|
|
|
13,730 |
|
|
|
(9,889 |
) |
|
|
(72.0 |
%) |
Other income |
|
1,326 |
|
|
|
1,825 |
|
|
|
(499 |
) |
|
|
(27.3 |
%) |
Income tax provision |
|
24,938 |
|
|
|
12,638 |
|
|
|
12,300 |
|
|
|
97.3 |
% |
Equity in net earnings of equity investments |
|
(7,072 |
) |
|
|
(416 |
) |
|
|
(6,656 |
) |
|
|
1600.0 |
% |
Net income attributable to common stockholders |
|
105,322 |
|
|
|
55,939 |
|
|
|
49,383 |
|
|
|
88.3 |
% |
Net sales increased approximately $293.1 million, or 26.9%, for the nine months ended September 30, 2026, compared to the same period last year. During the nine months ended September 30, 2026, weighted-average sales price increased 1.7% and volume increased 24.7%, when compared to the same period in 2025.
The table below sets forth our product revenue as a percentage of total product revenue by end-user market for the nine months ended September 30, 2026 and 2025:
|
Nine Months Ended |
||
|
September 30, |
||
|
2026 |
|
2025 |
Industrial |
24% |
|
23% |
Automotive |
21% |
|
19% |
Computing |
27% |
|
27% |
Consumer |
17% |
|
18% |
Communications |
11% |
|
13% |
For the nine months ended September 30, 2026, gross profit increased approximately 37.7% when compared to the same period last year primarily due to higher net sales. Gross profit margin for the nine months ended September 30, 2026 and 2025 was 33.9% and 31.2%, respectively.
Operating expenses for the nine months ended September 30, 2026, increased $34.1 million when compared to the nine months ended September 30, 2025. Operating expenses as a percentage of net sales were 25.5% and 29.2% for the nine months ended September 30, 2026 and 2025, respectively. SG&A increased approximately $35.6 million as compared to the same period last year reflecting an increase in salaries and wages of $19.1 million, an increase in selling expense of $5.9 million, an increase in freight and duty expense of $4.5 million, an increase in operating expense of $2.8 million, and an increase in consulting and legal expense of $2.5 million, and SG&A, as a percentage of net sales, was 15.5% and 16.4% for the nine months ended September 30, 2026 and 2025, respectively.
R&D increased approximately $4.1 million when compared to the nine months ended September 30, 2025 due to increased R&D expenses related to salaries and wages of $7.8 million, an increase in depreciation and amortization of $4.4 million, and an increase in selling expenses of $1.0 million. These increases in R&D expenses were partially offset by decreases in R&D marketing expense of $6.9 million and decreases in R&D operating expenses of $2.0 million. R&D, as a percentage of net sales, was 9.0% and 11.1% for the nine months ended September 30, 2026 and 2025, respectively.
Interest income decreased $5.5 million, or 25.9%, for the nine months ended September 30, 2026, compared to the same period last year, reflecting lower amounts of interest income received in the Company’s derivative hedging instruments. Interest expense increased due primarily to amortization of debt issuance costs associated with the Convertible Senior Notes, for the nine months ended September 30, 2026, compared to the same period last year. During the nine months ended September 30, 2026, the Company recognized an impairment loss on an equity investment of $1.2 million, due to a decline in the value of the investment. During the nine months ended September 30, 2026, the Company recognized upward fair value adjustments of $16.4 million related to long-term investments.
-31-
We recognized income tax expense of approximately $24.9 million and $12.6 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in income taxes for 2026 compared to 2025 was primarily attributable to an increase in pre-tax earnings.
Financial Condition
Liquidity and Capital Resources
Our primary sources of liquidity consist of cash and cash equivalents, cash generated from operations, availability under our Revolving Credit Facility, and access to capital markets. Our primary uses of cash include working capital requirements, capital expenditures, strategic acquisitions, debt service obligations, stock repurchases, and other general corporate purposes.
At September 30, 2026 and December 31, 2025, working capital was $1.1 billion and $878.6 million, respectively. At September 30, 2026 our cash and cash equivalents and restricted cash totaled $566.2 million.
We believe that cash generated from operations, together with existing cash balances, and amounts available under our Revolving Credit Facility, will be sufficient to fund our operating requirements, capital expenditures, debt service obligations, and other anticipated liquidity needs for at least the next twelve months.
Financing Transactions
During the three months ended September 30, 2026, the Company completed the financing transactions described below designed to enhance our financial flexibility, strengthen our long-term capital structure, and support future growth initiatives. Collectively, these transactions enhanced our capital structure by providing long-term financing, extending debt maturities, and increasing available liquidity while maintaining borrowing capacity under our Revolving Credit Facility.
Convertible Senior Notes
In August 2026, we issued $375.0 million aggregate principal amount of 0.00% Convertible Senior Notes (“Convertible Senior Notes”) due 2031. Net proceeds from the offering were approximately $364.8 million, after deducting initial purchaser discounts, commissions, and offering expenses and prior to giving effect to the cost of the Capped Call Transactions described below. We used approximately $21.9 million to fund the Capped Call Transactions, and approximately $35.0 million for concurrent repurchases of our common stock. The remaining proceeds are available for general corporate purposes, including potential future acquisitions.
The issuance of the Convertible Senior Notes significantly increased our available liquidity and provided a long-term source of capital with no scheduled cash interest payments. As a result we are able to preserve our substantial cash balances while maintaining capacity under our Revolving Credit Facility for future operating, investing, and strategic activities.
Capped Call Transactions
Concurrently with the issuance of the Convertible Senior Notes, we entered into Capped Call Transactions intended to reduce potential dilution associated with conversions of the Convertible Senior Notes, subject to the terms of the transactions. The aggregate premium paid for the Capped Call Transactions was approximately $21.9 million.
Credit Agreement Amendment
Also during August 2026, we amended our Credit Agreement, extending the maturity date of our Revolving Credit Facility to August 12, 2031, modifying pricing provisions, permitting the Convertible Senior Notes financing, and revising certain financial and negative covenants. The amended facility continues to provide an important source of committed liquidity and financial flexibility. There were no borrowings outstanding under the Credit Agreement at September 30, 2026.
Undistributed Foreign Earnings
Our undistributed foreign earnings continue to be indefinitely reinvested in foreign operations, with limited exceptions related to earnings of certain European and Asian subsidiaries. As of September 30, 2026, our foreign subsidiaries held approximately $250.0 million of cash, cash equivalents and investments of which approximately $98.6 million would be subject to a potential non-U.S. withholding tax if distributed outside the country in which the cash is currently held. The $98.6 million is held in Asia and Europe.
Short-term debt
Our Asia subsidiaries maintain short-term credit facilities with various financial institutions totaling $150.0 million. At September 30, 2026, the unused and available credit under the various facilities was approximately $128.5 million, net of $21.0 million advanced under our foreign credit lines and $0.4 million of credit used for import and export guarantee. These facilities provide additional liquidity to support local operating requirements.
Long-term debt
At September 30, 2026, there was no outstanding balance under the Credit Agreement and approximately $225.0 million remained available for borrowing. In August 2026, we amended the Credit Agreement, extending the maturity or the Revolving Credit Facility to
-32-
August 12, 2031 and modifying certain terms to provide additional financial flexibility. The Credit Agreement contains customary affirmative and negative covenants, including a maximum leverage ratio and a minimum interest coverage ratio. As of September 30, 2026, we were in compliance with all financial covenants under the facility.
In August 2026, we issued $375.0 million aggregate principal amount of 0.00% Convertible Senior Notes due 2031. The issuance provided long-term capital, increased available liquidity, and preserves the borrowing capacity under our Revolving Credit Facility. The Convertible Senior Notes do not bear regular interest and, unless earlier converted, redeemed, or repurchased, mature on August 15, 2031.
Additionally, our 53% owned subsidiary, ERIS, had long-term debt of $17.5 million and $25.0 million, at September 30, 2026 and December 31, 2025, respectively, from local Taiwan banks. These borrowings mature at various dates through 2033.
Because some of our outstanding debt is subject to variable interest rates, higher interest rates will potentially increase our overall debt service cost. If interest rates rise globally, our cost of capital may increase in the future.
Discussion of Cash Flows
The table below sets forth a summary of the condensed consolidated statements of cash flows:
|
Nine Months Ended September 30, |
|
|||||
|
2026 |
|
|
2025 |
|
||
Net cash flows from operating activities |
$ |
229,948 |
|
|
$ |
177,397 |
|
Net cash flows from investing activities |
|
(344,932 |
) |
|
|
(93,970 |
) |
Net cash flows from financing activities |
|
302,113 |
|
|
|
(30,824 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
6,675 |
|
|
|
14,720 |
|
Change in cash and cash equivalents, including restricted cash |
$ |
193,804 |
|
|
$ |
67,323 |
|
Operating Activities
Net cash flows from operating activities for the nine months ended September 30, 2026 was $229.9 million. The following recurring operating items gave rise to the calculation of net cash flows from operating activities for the nine months ended September 30, 2026: Net income of $111.4 million, depreciation and amortization of intangible assets of $106.3 million, share-based compensation of $28.3 million, and a net increase of $2.9 million of changes in working capital accounts. These increases in cash were partially offset by the recognition of net investment gains of $9.2 million and interest income from derivative instruments of $8.4 million.
Net cash flows from operating activities for the nine months ended September 30, 2025 was $177.4 million. The following recurring operating items gave rise to the calculation of net cash flows from operating activities for the nine months ended September 30, 2025: Net income of $56.9 million, depreciation and amortization of intangible assets of $108.5 million, a net increase of $43.3 million of changes in working capital accounts, and share-based compensation of $19.0 million. During the nine months ended September 30, 2025, the Company also recognized net investment gains of $27.6 million, including a $33.3 million non-cash mark-to-market increase in the value of the Company’s investment in Atlas, a non-cash mark-to-market decrease of $5.5 million of previously made equity investments, and a gain on the disposal of a subsidiary for $13.7 million.
Investing Activities
Net cash and cash equivalents from investing activities was $(344.9) million for the nine months ended September 30, 2026. Net cash and cash equivalents from investing activities for the nine months ended September 30, 2026 was primarily due to the purchase of ElevATE that used $262.3 million of cash, and purchases of property, plant, and equipment of $118.7 million, or 8.6% of net sales. We expect capital expenditures for the twelve months ending December 31, 2026 to be within our target model of 5% to 9% of net sales. The Company also received approximately $7.7 million due to the termination of a hedge instrument and made a $2.4 million payment from an escrow account related to the previously made acquisition.
Net cash and cash equivalents from investing activities was $(94.0) million for the nine months ended September 30, 2025. Net cash and cash equivalents from investing activities for the nine months ended September 30, 2025 was primarily due to purchases of property, plant, and equipment of $52.7 million, or 4.8% of net sales. The Company made purchases of equity securities of $49.3 million, including making an investment in ATX of approximately $30.0 million, increasing its investment in Atlas by approximately $17.3 million, and the acquisition of the minority interest in a joint venture in Taiwan for approximately $4.1 million, bringing the Company’s ownership to 100%. The Company also paid approximately $6.6 million due to the expiration of a hedge instrument. These uses of cash for investing were partially offset by the receipt of approximately $16.0 million related to the sale of TFS.
Financing Activities
Net cash and cash equivalents from financing activities was $302.1 million for the nine months ended September 30, 2026. The change primarily reflects the issuance of $375.0 million of Convertible Senior Notes, net of $10.2 million in debt issuance costs, partially
-33-
offset by $21.9 million for the Capped Call Transactions and approximately $45.2 million used to repurchase the Company’s common stock.
Net cash and cash equivalents from financing activities was $(30.8) million for the nine months ended September 30, 2025. Net cash from financing activities in the nine months ended September 30, 2025 consisted of net decreases in noncontrolling interests of $18.0 million, stock repurchases of $10.0 million, $1.6 million of net decreases in our debt, and taxes paid on net share settlements of $4.3 million.
Use of Derivative Instruments and Hedging
We use, or may use, interest rate swaps, commodity swaps, foreign exchange forward contracts, and cross currency swaps to provide a level of protection against interest rate risks and foreign exchange exposure.
Hedges of Commodity Risk
As part of our overall risk management strategy, we enter into commodity swap contracts to manage our exposure to fluctuations in commodity prices. These derivative instruments are intended to reduce the volatility of future cash flows attributable to changes in market prices and to provide greater certainty regarding the cost of commodities used in our operations.
Hedges of Interest Rate Risk
Our objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps, including interest rate collars, as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the contracts without exchange of the underlying notional amount.
Hedges of Foreign Currency Risk
We are exposed to fluctuations in various foreign currencies against our different functional currencies. We use foreign currency forward contracts to manage this exposure and to preserve the economic value of foreign currency denominated monetary assets and liabilities. These instruments are not designated for hedge accounting treatment in accordance with ASC No. 815. The fair value of our foreign exchange hedges approximates zero.
Hedges of Net Investment Risk
We make use of cross-currency swaps and foreign-currency forward contracts to decrease the foreign exchange risk inherent in our investment in some of our foreign subsidiaries.
Off-Balance Sheet Arrangements
We do not have any transactions, arrangements, or other relationships with unconsolidated entities that will affect our liquidity or capital resources. We have no special purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support, nor do we engage in leasing, swap contracts, or outsourcing of research and development services that could expose us to liability that is not reflected on the face of our financial statements.
Contractual Obligations
There have been no material changes in our Contractual Obligations as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 10, 2026.
Critical Accounting Estimates
Our critical accounting estimates are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 10, 2026. Any new accounting estimates or updates to existing accounting estimates as a result of new accounting pronouncements have been discussed in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q in Note 1 – Summary of Operations and Significant Accounting Policies. The application of our critical accounting estimates may require management to make judgments and estimates about the amounts reflected in the condensed consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.
Recently Issued Accounting Pronouncements
See Note 1 - Summary of Operations and Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements, for detailed information regarding the status of recently issued accounting pronouncements, if any.
-34-
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Commodity Price Risk
We are exposed to commodity price risk in the ordinary course of business, including fluctuations in the market price of gold, which is used in our operations and may affect our cost of sales, margins, cash flows and financial condition. Gold prices are influenced by a number of factors beyond our control, including global supply and demand conditions, inflation expectations, interest rates, currency movements, investor demand, central bank activity, geopolitical developments and broader macroeconomic conditions. Significant increases in the price of gold could adversely affect our operating results to the extent we are unable to offset higher costs through pricing actions, productivity improvements, material substitutions or other measures.
To help manage a portion of our exposure to changes in gold prices, we enter into commodity hedging arrangements from time to time, including derivative instruments linked to gold prices. These arrangements are intended to reduce the variability of cash flows and earnings associated with forecasted purchases or usage of gold, but they may not fully offset the effects of commodity price changes and may expose us to basis risk, counterparty risk, liquidity risk and the risk that hedge positions do not qualify for, or are not designated for, hedge accounting treatment. In addition, the timing and amount of gains or losses recognized on these instruments may not coincide with the timing and amount of the underlying commodity exposures.
A hypothetical 10.0% increase or decrease in the market price of gold, measured as of September 30, 2026 and assuming the aggregate notional amount of our gold-related hedging positions and underlying forecasted exposures remained constant, would be expected to result in a corresponding change in the fair value of our gold commodity derivatives and in the cost of our forecasted gold purchases. The actual impact on our consolidated financial statements would depend on a variety of factors, including the notional amount, tenor and structure of our hedging instruments, the volume and timing of underlying gold purchases, whether the instruments are designated as cash flow hedges, and the extent to which any change in derivative fair value offsets changes in the cost of the underlying exposure. Accordingly, while our hedging program is intended to mitigate the effect of changes in gold prices, it does not eliminate commodity price risk.
Item 4. Controls and Procedures.
Our Chief Executive Officer, Gary Yu, and Chief Financial Officer, Brett R. Whitmire, with the participation of our management, carried out an evaluation, as of September 30, 2026, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer believe that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be included in this Quarterly Report is:
Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity’s disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors, mistakes, or intentional circumvention of the established processes.
Changes in Internal Control over Financial Reporting
On August 27, 2026, the Company acquired ElevATE Semiconductor. Management excluded ElevATE from its assessment of internal control over financial reporting as of September 30, 2026. This exclusion is in accordance with SEC guidance that permits an acquired business to be omitted from management's assessment of internal control over financial reporting during the first year following an acquisition. ElevATE represented approximately $265.0 million of total assets and $1.9 million of revenue included in the Company's consolidated financial statements as of and for the period ended September 30, 2026. Other than activities related to the integration of ElevATE, there were no changes in the Company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any pending litigation that we consider material.
From time to time, we are involved in various legal proceedings that arise in the normal course of business. While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of any pending legal proceeding will not have any material adverse effect on our financial position, cash flows, or operating results. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, which could impact our business and operating results for the period in which the ruling occurs or future periods.
Item 1A. Risk Factors.
There have been no material changes to our risk factors from those disclosed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 10, 2026 except
as follows:
We may not have the ability to raise the funds necessary to settle conversions of our Convertible Senior Notes or to repurchase our Convertible Senior Notes upon a fundamental change, and our Credit Agreement contains, and any future debt may also contain, limitations on our ability to pay cash upon conversion or repurchase of our Convertible Senior Notes.
Holders of our Convertible Senior Notes have the right, subject to certain conditions and limited exceptions, to require us to repurchase all or a portion of their Convertible Senior Notes upon the occurrence of a fundamental change (as defined in the Indenture) at a fundamental change repurchase price equal to 100% of the principal amount of our Convertible Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In addition, upon any conversion of our Convertible Senior Notes, we will be required to make cash payments for each $1,000 in principal amount of our Convertible Senior Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values as described in the Convertible Senior Notes Indenture. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of our Convertible Senior Notes surrendered therefor or pay cash with respect to our Convertible Senior Notes being converted. In addition, our Credit Agreement prohibits us from making any cash payments on the conversion or repurchase of our Convertible Senior Notes if an event of default exists thereunder, making any cash payments upon a fundamental change or if, after giving effect to such conversion or repurchase (and any additional indebtedness incurred in connection with such conversion or a repurchase), we would not be in pro forma compliance with our financial covenants under that facility. Our ability to repurchase our Convertible Senior Notes or to pay cash upon conversions of our Convertible Senior Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase our Convertible Senior Notes at a time when the repurchase is required by the Indenture or to pay any cash payable on future conversions of our Convertible Senior Notes as required by the Indenture would constitute a default under the Indenture. A default under the Indenture or the fundamental change itself could also lead to a default under agreements governing our indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase our Convertible Senior Notes or make cash payments upon conversions thereof.
The conditional conversion feature of our Convertible Senior Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of our Convertible Senior Notes is triggered, holders of our Convertible Senior Notes will be entitled to convert their notes at any time during specified periods at their option. If one or more holders elect to convert their notes, we would be required to settle any converted principal amount of such notes through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of our Convertible Senior Notes as a current rather than long-term liability, which would result in a material reduction of our working capital.
Conversion of our Convertible Senior Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.
The conversion of some or all of our Convertible Senior Notes may dilute the ownership interests of our stockholders. Upon conversion of our Convertible Senior Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of our Convertible Senior Notes being converted. If we elect to settle the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of our Convertible Senior Notes being converted in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of our Convertible Senior Notes may encourage short selling by market participants because the conversion of our Convertible Senior Notes could be used
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to satisfy short positions, or anticipated conversion of our Convertible Senior Notes into shares of our common stock could depress the price of our common stock.
Changes in the accounting method for convertible debt securities that may be settled in cash, such as our Convertible Senior Notes, could adversely affect our reported financial condition and results.
The accounting method for reflecting our Convertible Senior Notes on our balance sheet, accruing interest expense for our Convertible Senior Notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.
In August 2020, the Financial Accounting Standards Board published ASU 2020-06, which simplifies certain of the accounting standards that apply to convertible notes. In accordance with ASU 2020-06, our Convertible Senior Notes are reflected as a liability on our balance sheets, with the initial carrying amount equal to the principal amount of our Convertible Senior Notes, net of issuance costs. The issuance costs were treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of our Convertible Senior Notes. As a result of this amortization, the interest expense that we expect to recognize for our Convertible Senior Notes for accounting purposes will be greater than the cash interest payments we will pay on our Convertible Senior Notes, which will result in lower reported net income.
In addition, the shares of our common stock underlying our Convertible Senior Notes are reflected in our diluted earnings per share using the “if converted” method, in accordance with ASU 2020-06. Under that method, diluted earnings per share generally are calculated assuming that all of our Convertible Senior Notes were converted into cash and shares of common stock at the beginning of the reporting period based on the average market price of common stock determined in accordance with applicable accounting rules, unless the result would be anti-dilutive. The application of the if-converted method may reduce our reported diluted earnings per share.
Furthermore, if any of the conditions to the convertibility of our Convertible Senior Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of our Convertible Senior Notes as a current, rather than a long-term, liability. This reclassification could be required even if no noteholders convert their notes and could materially reduce our reported working capital.
Certain provisions in the Indenture governing the Convertible Senior Notes may delay or prevent an otherwise beneficial takeover attempt of us.
Certain provisions in the Indenture may make it more difficult or expensive for a third party to acquire us. For example, the Indenture will require us, subject to limited exceptions, to repurchase our Convertible Senior Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Convertible Senior Notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase our Convertible Senior Notes and/or increase the conversion rate, which could make it costlier for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.
The Capped Call Transactions may affect the value of our common stock.
In connection with the issuance of our Convertible Senior Notes, we entered into the Capped Call Transactions with the option counterparties (the “option counterparties”). The Capped Call Transactions cover, subject to customary adjustments substantially similar to those applicable to our Convertible Senior Notes, the number of shares of our common stock initially underlying our Convertible Senior Notes. The Capped Call Transactions are expected generally to reduce the potential dilution to our common stock upon any conversion of our Convertible Senior Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.
The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of our Convertible Senior Notes and prior to the maturity of our Convertible Senior Notes (and are likely to do so during any observation period related to a conversion of our Convertible Senior Notes or, to the extent we exercise the relevant election under the Capped Call Transactions, following any repurchase or redemption of our Convertible Senior Notes). This activity could also cause or avoid an increase or a decrease in the market price of our common stock.
We are subject to counterparty risk with respect to the Capped Call Transactions.
The option counterparties are financial institutions, and we will be subject to the risk that one or more of the option counterparties may default or otherwise fail to perform, or may exercise certain rights to terminate, their obligations under the Capped Call Transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral.
Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions and could adversely affect the option counterparties’ performance under the Capped Call Transactions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the Capped Call Transactions with such option counterparty. Our exposure will depend on many
-37-
factors but, generally, our exposure will increase if the market price or the volatility of our common stock increases. In addition, upon a default or other failure to perform, or a termination of obligations, by an option counterparty, we may suffer adverse tax consequences or more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the option counterparties.
In addition, the terms of the Capped Call Transactions may be subject to adjustment, modification or, in some cases, renegotiation in the event of certain corporate and other transactions. The Capped Call Transactions may not operate as we intend in the event that we are required to adjust the terms of such instruments as a result of transactions in the future or in the event of other unanticipated developments that may adversely affect the functioning of the Capped Call Transactions.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table provides information about repurchases of our common stock during the three months ended September 30, 2026.
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
||||
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
|
||||
July 1, 2026 - July 31, 2026 |
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
56,184,423 |
|
August 1, 2026 - August 31, 2026 |
|
|
360,119 |
|
|
|
97.19 |
|
|
|
360,119 |
|
|
|
21,184,457 |
|
September 1, 2026 - September 30, 2026 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,184,457 |
|
Total |
|
|
360,119 |
|
|
$ |
97.19 |
|
|
|
360,119 |
|
|
$ |
21,184,457 |
|
Concurrently with the pricing of our Convertible Senior Notes in August 2026, we entered into a share repurchase transaction with one of the initial purchasers of Convertible Senior Notes or its affiliate, pursuant to which we repurchased 360,119 shares of common stock in a privately negotiated transaction at a purchase price of $97.19 per share, for an aggregate purchase price of approximately $35.0 million. The share repurchase transaction, which was the only repurchase of our common stock during the quarter, was made under the authorization received from our board of directors on May 8, 2025, to purchase up to $100.0 million of the Company’s common stock. As of September 30, 2026, $78.8 million of the May 2025 program had been utilized. Share repurchases under the program may be made from time to time in the open market, through privately-negotiated transactions, or otherwise, subject to applicable laws, regulations, and approvals. The timing of the share repurchases will depend on a variety of factors, including market conditions, and the share repurchases may be suspended or discontinued at any time.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Insider Trading Arrangements
During the quarter ended September 30, 2026, no director or officer
On
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Item 6. Exhibits.
Number |
|
Description |
|
Form |
|
Date of First Filing |
|
Exhibit |
|
Filed |
2.1* |
|
Agreement and Plan of Merger, dated as of July 10, 2026, by and among Diodes Incorporated, GN Merger Sub Inc., Elevate Semiconductor, Inc., and Presidio Investors ELV Continuation GP, LLC, solely in its capacity as Equityholders’ Representative. |
|
8-K |
|
July 14, 2026 |
|
2.1 |
|
|
3.1 |
|
Certificate of Incorporation, as amended |
|
10-K |
|
February 20, 2018 |
|
3.1 |
|
|
3.2 |
|
Amended By-laws of the Company as of January 6, 2016 |
|
8-K |
|
January 11, 2016 |
|
3.1 |
|
|
4.1 |
|
Form of Certificate for Common Stock, par value $0.66 2/3 per share |
|
S-3 |
|
August 25, 2005 |
|
4.1 |
|
|
4.2 |
|
Indenture, dated as of August 18, 2026, by and between Diodes Incorporated and U.S. Bank Trust Company, National Association, as Trustee (including the form of the Notes attached thereto as Exhibit A). |
|
8-K |
|
August 18, 2026 |
|
4.1 |
|
|
4.3 |
|
Form of Global Note representing Diodes Incorporated’s 0.00% Convertible Senior Notes due 2031 (included as Exhibit A to the Indenture filed as Exhibit 4.1). |
|
8-K |
|
August 18, 2026 |
|
4.2 |
|
|
10.1* |
|
Amendment No. 1 to Third Amended and Restated Credit Agreement, dated as of August 12, 2026, by and among Diodes Incorporated, Diodes Holding UK Limited, certain subsidiaries of Diodes Incorporated party thereto, Bank of America, N.A., as Administrative Agent, and the Lenders party thereto. |
|
8-K |
|
August 18, 2026 |
|
10.1 |
|
|
10.2 |
|
Form of Confirmation for Capped Call Transactions. |
|
8-K |
|
August 18, 2026 |
|
10.2 |
|
|
31.1 |
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
X |
31.2 |
|
Certification Pursuant to Rule 13a-14(a) /15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
X |
32.1** |
|
Certification Pursuant to 18 U.S.C. 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
X |
32.2** |
|
Certification Pursuant to 18 U.S.C. 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
X |
101.INS |
|
Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
|
X |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema |
|
|
|
|
|
|
|
X |
104 |
|
Cover Page Interactive Data File, formatted in Inline XBRL |
|
|
|
|
|
|
|
X |
* |
|
Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request. |
||||||||
** |
|
A certification furnished pursuant to Item 601(b)(32) of the Regulation S-K will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
||||||||
PLEASE NOTE: It is inappropriate for investors to assume the accuracy of any covenants, representations or warranties that may be contained in agreements or other documents filed as exhibits to this Quarterly Report on Form 10-Q. In certain instances the disclosure
-39-
schedules to such agreements or documents contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants. Moreover, some of the representations and warranties may not be complete or accurate as of a particular date because they are subject to a contractual standard of materiality that is different from those generally applicable to stockholders and/or were used for the purpose of allocating risk among the parties rather than establishing certain matters as facts. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts at the time they were made or otherwise.
-40-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.
|
DIODES INCORPORATED |
|
|
(Registrant) |
|
|
|
|
November 5, 2026 |
By: /s/ Gary Yu |
|
Date |
GARY YU |
|
|
President and Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
|
November 5, 2026 |
By: /s/ Brett R. Whitmire |
|
Date |
BRETT R. WHITMIRE |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer) |
|
|
|
|
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