MagnaChip Reports Fourth Quarter 2016 Financial Results
Revenue for the fourth quarter of 2016 was
Revenue for the 2016 full year was
Revenue in the
Total gross profit in the fourth quarter was
Foundry gross profit margin was 30.3% in the fourth quarter of 2016, as compared with 23.5% in the third quarter of 2016, and 22.7% in the fourth quarter of 2015.
Net loss, on a GAAP basis, for the fourth quarter of 2016 was
Adjusted Net Income, a non-GAAP financial measure, for the fourth quarter of 2016 totaled $1.6 million or $0.05 per basic share and $0.04 per diluted share, compared to Adjusted Net Loss of $1.3 million or $0.04 per basic share in the third quarter of 2016, and compared to Adjusted Net Income of $5.2 million or $0.15 per basic and diluted share in the fourth quarter of 2015.
Adjusted EBITDA in the fourth quarter of 2016 was
"The financial results in the fourth quarter of 2016 and the full year continue to reflect the operational progress we've made in our business turnaround," said YJ Kim, Chief Executive Officer of MagnaChip. "Our key priorities in 2017 include a plan to achieve higher gross profit margin, improve overall profitability and invest in initiatives to fuel long-term growth."
The Company this month launched a new headcount reduction plan that is expected to be two to three times larger than a 2016 program, which resulted last year in a reduction in headcount of 169 employees. The expected payback period is estimated at approximately 1.5 years, with estimated annual cost savings from
In commenting on the fourth quarter financial results, Chief Financial Officer
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a meaningful understanding of the factors and trends affecting MagnaChip's business and operations and assist in evaluating our core operating performance. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included in this press release.
Cash and cash equivalents totaled
The following table sets forth information relating to our operating segments:
Three Months Ended |
Year Ended |
|||||||||||||||
December 31, |
December 31, |
December 31, |
December 31, |
|||||||||||||
Net Sales |
||||||||||||||||
Foundry Services Group |
$ |
77,809 |
$ |
65,822 |
$ |
273,961 |
$ |
290,775 |
||||||||
Standard Products Group |
||||||||||||||||
Display Solutions |
64,796 |
53,895 |
281,967 |
207,480 |
||||||||||||
Power Solutions |
37,718 |
32,576 |
131,468 |
134,814 |
||||||||||||
Total Standard Products Group |
102,514 |
86,471 |
413,435 |
342,294 |
||||||||||||
All other |
139 |
137 |
573 |
643 |
||||||||||||
Total net sales |
$ |
180,462 |
$ |
152,430 |
$ |
687,969 |
$ |
633,712 |
||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||
Amount |
% of |
Amount |
% of |
|||||||||||||
Gross Profit |
||||||||||||||||
Foundry Services Group |
$ |
23,592 |
30.3 |
% |
$ |
14,935 |
22.7 |
% |
||||||||
Standard Products Group |
22,358 |
21.8 |
14,878 |
17.2 |
||||||||||||
All other |
139 |
100.0 |
89 |
65.0 |
||||||||||||
Total gross profit |
$ |
46,089 |
25.5 |
% |
$ |
29,902 |
19.6 |
% |
||||||||
Year Ended |
Year Ended |
|||||||||||||||
Amount |
% of |
Amount |
% of |
|||||||||||||
Gross Profit |
||||||||||||||||
Foundry Services Group |
$ |
69,412 |
25.3 |
% |
$ |
66,175 |
22.8 |
% |
||||||||
Standard Products Group |
87,194 |
21.1 |
68,094 |
19.9 |
||||||||||||
All other |
(380) |
(66.3) |
595 |
92.5 |
||||||||||||
Total gross profit |
$ |
156,226 |
22.7 |
% |
$ |
134,864 |
21.3 |
% |
Fourth Quarter and Recent Company Highlights
- MagnaChip Selected as "2016 Best Supplier" by
LG Display . The award is the highest possible level of recognition presented to a supplier byLG Display for delivering outstanding product quality. - MagnaChip Priced Upsized Offering of 5.00% Exchangeable Senior Notes after the initial purchasers exercised an over-allotment option. The offering totaled
$86.25 million aggregate principal amount of notes, taking into account the over-allotment option exercised by the initial purchasers. - MagnaChip Announces Cost Competitive 0.13 micron Slim Flash Process Technology
- MagnaChip to Offer 0.13 micron EEPROM-based RF-CMOS technology
- MagnaChip Offers 0.35 micron 700V Ultra High Voltage Process Technology
Business Outlook
For the first quarter of 2017, MagnaChip anticipates:
- Revenue to be in the range of
$157 million to $163 million , a sequential decline of 9.7% to 13%, reflecting both a typical first quarter seasonal decline and the timing of new AMOLED products previously described during our last earnings call inOctober 2016 . The first quarter revenue outlook represents year-on-year growth as compared to total revenue of$148.1 million in the first quarter of 2016. - Gross profit is anticipated to be in the range of 24% to 26%, about flat with Q4 2016, and above the 23.1% gross profit margin in the first quarter of 2016.
Conference Call
MagnaChip will hold a conference call on
A replay of the conference call will be available the same day and will run for 72 hours. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056. The access code is 58406105.
About MagnaChip Semiconductor Corporation
MagnaChip is a
Safe Harbor for Forward-Looking Statements
Information in this release regarding MagnaChip's forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our future operating and financial performance, including fourth quarter 2016 revenue and gross profit expectations. All forward-looking statements included in this release are based upon information available to MagnaChip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip's filings with the
CONTACTS: |
|||
In the United States: Bruce Entin Investor Relations Tel. +1-408-625-1262 |
In Korea: Chankeun Park Director, Public Relations Tel. +82-2-6903-3195 |
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of US dollars, except share data) (Unaudited) |
|||||||||||||||||||||||||||
Three Months Ended |
Year Ended |
||||||||||||||||||||||||||
December 31, 2016 |
September 30, 2016 |
December 31, 2015 |
December 31, 2016 |
December 31, 2015 |
|||||||||||||||||||||||
Net sales |
$ |
180,462 |
$ |
192,296 |
$ |
152,430 |
$ |
687,969 |
$ |
633,712 |
|||||||||||||||||
Cost of sales |
134,373 |
153,157 |
122,528 |
531,743 |
498,848 |
||||||||||||||||||||||
Gross profit |
46,089 |
39,139 |
29,902 |
156,226 |
134,864 |
||||||||||||||||||||||
Gross profit % |
25.5 |
% |
20.4 |
% |
19.6 |
% |
22.7 |
% |
21.3 |
% |
|||||||||||||||||
Operating expenses |
|||||||||||||||||||||||||||
Selling, general and administrative expenses |
23,112 |
20,082 |
18,653 |
89,094 |
94,378 |
||||||||||||||||||||||
Research and development expenses |
17,748 |
18,439 |
18,879 |
72,180 |
83,420 |
||||||||||||||||||||||
Restructuring gain |
— |
— |
— |
(7,785) |
— |
||||||||||||||||||||||
Total operating expenses |
40,860 |
38,521 |
37,532 |
153,489 |
177,798 |
||||||||||||||||||||||
Operating income (loss) |
5,229 |
618 |
(7,630) |
2,737 |
(42,934) |
||||||||||||||||||||||
Interest expense |
(4,053) |
(4,055) |
(4,081) |
(16,238) |
(16,268) |
||||||||||||||||||||||
Foreign currency gain (loss), net |
(49,628) |
33,174 |
17,080 |
(15,360) |
(42,531) |
||||||||||||||||||||||
Other income, net |
561 |
887 |
617 |
2,990 |
1,779 |
||||||||||||||||||||||
Income (loss) before income tax expenses |
(47,891) |
30,624 |
5,986 |
(25,871) |
(99,954) |
||||||||||||||||||||||
Income tax expenses (benefits) |
1,899 |
758 |
(16,868) |
3,744 |
(15,087) |
||||||||||||||||||||||
Net income (loss) |
$ |
(49,790) |
$ |
29,866 |
$ |
22,854 |
$ |
(29,615) |
$ |
(84,867) |
|||||||||||||||||
Earnings (loss) per common share : |
|||||||||||||||||||||||||||
- Basic |
$ |
(1.42) |
$ |
0.86 |
$ |
0.66 |
$ |
(0.85) |
$ |
(2.47) |
|||||||||||||||||
- Diluted |
$ |
(1.42) |
$ |
0.85 |
$ |
0.66 |
$ |
(0.85) |
$ |
(2.47) |
|||||||||||||||||
Weighted average number of shares—Basic |
35,068,330 |
34,849,805 |
34,698,777 |
34,833,967 |
34,380,517 |
||||||||||||||||||||||
Weighted average number of shares—Diluted |
35,068,330 |
35,302,706 |
34,713,034 |
34,833,967 |
34,380,517 |
||||||||||||||||||||||
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS) (In thousands of US dollars, except share data) (Unaudited) |
||||||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||||||
December 31, 2016 |
September 30, 2016 |
December 31, 2015 |
December 31, 2016 |
December 31, 2015 |
||||||||||||||||
Net income (loss) |
$ |
(49,790) |
$ |
29,866 |
$ |
22,854 |
$ |
(29,615) |
$ |
(84,867) |
||||||||||
Adjustments: |
||||||||||||||||||||
Interest expense, net |
3,987 |
3,996 |
4,020 |
15,983 |
16,039 |
|||||||||||||||
Income tax expenses (benefits) |
1,899 |
758 |
(16,868) |
3,744 |
(15,087) |
|||||||||||||||
Depreciation and amortization |
6,625 |
6,539 |
6,424 |
25,416 |
26,490 |
|||||||||||||||
EBITDA |
(37,279) |
41,159 |
16,430 |
15,528 |
(57,425) |
|||||||||||||||
Restructuring and other |
— |
— |
— |
(1,286) |
— |
|||||||||||||||
Equity-based compensation expense |
877 |
1,462 |
398 |
3,843 |
2,768 |
|||||||||||||||
Foreign currency loss (gain), net |
49,627 |
(33,174) |
(17,080) |
15,360 |
42,531 |
|||||||||||||||
Derivative valuation loss (gain), net |
273 |
32 |
(61) |
272 |
516 |
|||||||||||||||
Restatement related expenses |
597 |
476 |
(891) |
6,970 |
$ |
12,372 |
||||||||||||||
Adjusted EBITDA |
$ |
14,095 |
$ |
9,955 |
$ |
(1,204) |
$ |
40,687 |
$ |
762 |
||||||||||
Net income (loss) |
$ |
(49,790) |
$ |
29,866 |
$ |
22,854 |
$ |
(29,615) |
$ |
(84,867) |
||||||||||
Adjustments: |
||||||||||||||||||||
Restructuring and other |
— |
— |
— |
(1,286) |
— |
|||||||||||||||
Equity-based compensation expense |
877 |
1,462 |
398 |
3,843 |
2,768 |
|||||||||||||||
Foreign currency loss (gain), net |
49,627 |
(33,174) |
(17,080) |
15,360 |
42,531 |
|||||||||||||||
Derivative valuation loss (gain), net |
273 |
32 |
(61) |
272 |
516 |
|||||||||||||||
Restatement related expenses |
597 |
476 |
(891) |
6,970 |
12,372 |
|||||||||||||||
Adjusted Net Income (Loss) |
$ |
1,584 |
$ |
(1,338) |
$ |
5,220 |
$ |
(4,456) |
$ |
(26,680) |
||||||||||
Adjusted Net Income (Loss) per common share: |
||||||||||||||||||||
- Basic |
$ |
0.05 |
$ |
(0.04) |
$ |
0.15 |
$ |
(0.13) |
$ |
(0.78) |
||||||||||
- Diluted |
$ |
0.04 |
$ |
(0.04) |
$ |
0.15 |
$ |
(0.13) |
$ |
(0.78) |
||||||||||
Weighted average number of shares – Basic |
35,068,330 |
34,849,805 |
34,698,777 |
34,833,967 |
34,380,517 |
|||||||||||||||
Weighted average number of shares – Diluted |
35,503,993 |
34,849,805 |
34,713,034 |
34,833,967 |
34,380,517 |
|||||||||||||||
We present Adjusted EBITDA and Adjusted Net Income (Loss) as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) restructuring and other, (ii) equity-based compensation expense, (iii) foreign currency loss (gain), net, (iv) derivative valuation loss (gain), net and (v) restatement related expenses. EBITDA for the periods indicated is defined as net income (loss) before interest expense, net, income tax expenses (benefits) and depreciation and amortization. We prepare Adjusted Net Income (Loss) by adjusting net income (loss) to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income (Loss) is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income (Loss) for the periods as net income (loss), adjusted to exclude (i) restructuring and other, (ii) equity-based compensation expense, (iii) foreign currency loss (gain), net, (iv) derivative valuation loss (gain), net, and (v) restatement related expenses. |
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of US dollars, except share data) (Unaudited) |
|||
December 31, 2016 |
December 31, 2015 |
||
Assets |
|||
Current assets |
|||
Cash and cash equivalents |
$ 83,355 |
$ 90,882 |
|
Restricted cash |
18,251 |
— |
|
Accounts receivable, net |
61,775 |
63,498 |
|
Inventories, net |
57,048 |
57,619 |
|
Other receivables |
5,864 |
31,932 |
|
Prepaid expenses |
8,137 |
7,075 |
|
Current deferred income tax assets |
37 |
34 |
|
Hedge collateral |
3,150 |
6,000 |
|
Other current assets |
5,076 |
3,194 |
|
Total current assets |
242,693 |
260,234 |
|
Property, plant and equipment, net |
179,793 |
191,985 |
|
Intangible assets, net |
3,085 |
2,629 |
|
Long-term prepaid expenses |
9,556 |
12,117 |
|
Deferred income tax assets |
193 |
238 |
|
Other non-current assets |
6,632 |
6,897 |
|
Total assets |
$ 441,952 |
$ 474,100 |
|
Liabilities and Stockholders' Equity |
|||
Current liabilities |
|||
Accounts payable |
$ 51,509 |
$ 55,476 |
|
Other accounts payable |
12,272 |
10,961 |
|
Accrued expenses |
60,365 |
76,721 |
|
Deferred revenue |
11,092 |
10,060 |
|
Deposits received |
16,549 |
8,165 |
|
Other current liabilities |
1,654 |
5,128 |
|
Total current liabilities |
153,441 |
166,511 |
|
Long-term borrowings, net |
221,082 |
220,375 |
|
Accrued severance benefits, net |
129,225 |
134,148 |
|
Other non-current liabilities |
10,318 |
15,396 |
|
Total liabilities |
514,066 |
536,430 |
|
Commitments and contingencies |
|||
Stockholders' equity |
|||
Common stock, $0.01 par value, 150,000,000 shares authorized, 41,627,103 shares issued and 35,048,338 outstanding at December 31, 2016 and 41,147,707 shares issued and 34,568,942 outstanding at December 31, 2015 |
416 |
411 |
|
Additional paid-in capital |
130,189 |
124,618 |
|
Accumulated deficit |
(125,825) |
(96,210) |
|
Treasury stock, 6,578,765 shares at December 31, 2016 and 2015, respectively |
(90,918) |
(90,918) |
|
Accumulated other comprehensive income (loss) |
14,024 |
(231) |
|
Total stockholders' deficit |
(72,114) |
(62,330) |
|
Total liabilities and stockholders' equity |
$ 441,952 |
$ 474,100 |
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of US dollars) (Unaudited) |
||||||||||||
Three Months |
Year Ended |
|||||||||||
December 31, 2016 |
December 31, 2016 |
December 31, 2015 |
||||||||||
Cash flows from operating activities |
||||||||||||
Net loss |
$ |
(49,790) |
$ |
(29,615) |
$ |
(84,867) |
||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities |
||||||||||||
Depreciation and amortization |
6,625 |
25,416 |
26,490 |
|||||||||
Provision for severance benefits |
823 |
14,432 |
15,289 |
|||||||||
Amortization of debt issuance costs and original issue discount |
180 |
707 |
660 |
|||||||||
Loss on foreign currency, net |
57,066 |
18,884 |
46,984 |
|||||||||
Stock-based compensation |
877 |
3,843 |
2,768 |
|||||||||
Restructuring gain |
— |
(7,785) |
— |
|||||||||
Other |
(318) |
103 |
2,434 |
|||||||||
Changes in operating assets and liabilities |
||||||||||||
Accounts receivable, net |
(692) |
285 |
3,299 |
|||||||||
Inventories, net |
8,855 |
(557) |
12,929 |
|||||||||
Other receivables |
(1,089) |
19,125 |
(21,463) |
|||||||||
Other current assets |
4,490 |
5,000 |
11,339 |
|||||||||
Deferred tax assets |
34 |
65 |
372 |
|||||||||
Accounts payable |
(11,251) |
(4,163) |
(12,605) |
|||||||||
Other accounts payable |
(1,839) |
(6,603) |
(10,892) |
|||||||||
Accrued expenses |
5,782 |
(16,305) |
(1,679) |
|||||||||
Deferred revenue |
(988) |
1,674 |
8,136 |
|||||||||
Other current liabilities |
(1,462) |
(5,331) |
(1,210) |
|||||||||
Other non-current liabilities |
(162) |
(1,574) |
3,105 |
|||||||||
Payment of severance benefits |
(1,174) |
(15,352) |
(11,394) |
|||||||||
Other |
5,595 |
5,382 |
328 |
|||||||||
Net cash provided by (used in) operating activities |
21,562 |
7,631 |
(9,977) |
|||||||||
Cash flows from investing activities |
||||||||||||
Proceeds from settlement of hedge collateral |
— |
6,317 |
10,841 |
|||||||||
Payment of hedge collateral |
(1,058) |
(3,552) |
(17,182) |
|||||||||
Proceeds from disposal of plant, property and equipment |
503 |
688 |
9,886 |
|||||||||
Purchase of property, plant and equipment |
(7,382) |
(18,727) |
(6,350) |
|||||||||
Payment for intellectual property registration |
(295) |
(1,049) |
(742) |
|||||||||
Collection of guarantee deposits |
143 |
619 |
636 |
|||||||||
Payment of guarantee deposits |
(8) |
(193) |
(675) |
|||||||||
Other |
14 |
23 |
195 |
|||||||||
Net cash used in investing activities |
(8,083) |
(15,874) |
(3,391) |
|||||||||
Cash flows from financing activities |
||||||||||||
Proceeds from issuance of common stock |
230 |
1,732 |
3,436 |
|||||||||
Net cash provided by financing activities |
230 |
1,732 |
3,436 |
|||||||||
Effect of exchange rates on cash and cash equivalents |
(5,782) |
(1,016) |
(1,620) |
|||||||||
Net increase (decrease) in cash and cash equivalents |
7,927 |
(7,527) |
(11,552) |
|||||||||
Cash and cash equivalents |
||||||||||||
Beginning of the period |
75,428 |
90,882 |
102,434 |
|||||||||
End of the period |
$ |
83,355 |
$ |
83,355 |
$ |
90,882 |
||||||
Supplemental disclosure of non-cash investing activity |
||||||||||||
Restricted cash received from sale of property, plant and equipment |
$ |
(16,917) |
$ |
(16,917) |
$ |
— |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/magnachip-reports-fourth-quarter-2016-financial-results-300404900.html
SOURCE