MagnaChip Reports First Quarter 2016 Financial Results
Revenue for the first quarter of 2016, a typically seasonally soft quarter, was $148.1 million, a 2.8% decline compared to $152.4 million for the fourth quarter of 2015, and down 10.2% compared to $164.9 million for the first quarter of 2015. Revenue was better-than-expected despite the closure of MagnaChip's legacy 6" semiconductor fab during the first quarter because of the strength in demand serviced by the company's 8" fabs. Foundry Services revenue in the first quarter of 2016 was $60.0 million and Standard Products Group revenue was $88.0 million.
Gross profit was $34.2 million, or 23.1% as a percent of revenue for the first quarter of 2016. This compared with gross profit of $29.9 million, or 19.6%, for the fourth quarter of 2015 and $35.0 million, or 21.2%, for the first quarter of 2015. Foundry gross profit was 23.8% and Standard Products Group gross profit was 23.6% in the first quarter of 2016.
Net income, on a GAAP basis, for the first quarter of 2016 totaled
"Revenue in the first quarter exceeded our prior guidance, fueled by a 42% sequential increase in total sales for our AMOLED display drivers ICs, primarily for smartphones," said YJ Kim, Chief Executive Officer of MagnaChip. Mr. Kim added, "MagnaChip is well positioned to benefit from the growing adoption of AMOLED technology in a range of mobile and wearable devices such as smartphones, tablets, smartwatches and virtual reality headsets, as well as in large displays for high-end televisions."
Chief Financial Officer
Adjusted Net Loss, a non-GAAP measurement, for the first quarter of 2016 totaled $2.8 million, or $0.08 per basic share, compared to Adjusted Net Income, also a non-GAAP measurement, of $5.2 million, or $0.15 per basic and diluted share, in the fourth quarter of 2015 and Adjusted Net Loss of $9.6 million, or $0.28 per basic share, for the first quarter of 2015.
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. 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 following the financial statements.
Cash and cash equivalents totaled $73.5 million at the end of the first quarter, essentially flat compared with the fourth quarter when excluding the one-time effects in the fourth quarter of pre-paid deposits for the sale of our 6" fab equipment and prepayments received for end-of-life products related to the 6" fab.
The following table sets forth information relating to our operating segments:
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Three Months Ended |
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March 31, |
March 31, |
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|
Net Sales |
||||
|
Foundry Services Group |
$ 59,979 |
$ 74,520 |
||
|
Standard Products Group |
||||
|
Display Solutions |
58,059 |
56,353 |
||
|
Power Solutions |
29,918 |
33,837 |
||
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Total Standard Products Group |
87,977 |
90,190 |
||
|
All other |
149 |
175 |
||
|
Total net sales |
$ 148,105 |
$ 164,885 |
||
|
Three Months Ended |
Three Months Ended |
|||
|
Amount |
% of |
Amount |
% of |
|
|
Gross Profit |
||||
|
Foundry Services Group |
$ 14,293 |
23.8 % |
$ 15,377 |
20.6 % |
|
Standard Products Group |
20,760 |
23.6 |
19,425 |
21.5 |
|
All other |
(804) |
(540.0) |
175 |
100.0 |
|
Total gross profit |
$ 34,249 |
23.1 % |
$ 34,977 |
21.2 % |
First Quarter and Recent Company Highlights
- Total AMOLED display driver sales increased 42% in Q1 compared with Q4 2015
- Closed a legacy 6" fab and sold the 6" fab equipment to a third party
- Announced that cumulative shipments of OLED TV display driver ICs surpassed six million units
- Began Delivery of e-Compass Sensors in
China - Selected for "The Best Cooperative Partner Award" by
Sitronix Technology - Announced its Annual U.S. Foundry Technology Symposium in
Santa Clara andAustin inMay 2016
Business Outlook
For the second quarter of 2016, MagnaChip anticipates:
- Revenue will be in the range of
$156 million to $162 million , a sequential increase of 5% to 9%, reflecting a recovery in the Foundry order pipeline and strong demand for AMOLED display driver ICs. - Gross profit to be in the range of 21% to 24% as a percent of revenue.
Conference Call
MagnaChip will hold a conference call at
About MagnaChip Semiconductor Corporation
Headquartered in
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 second 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
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CONTACTS: |
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In the United States: Robert Pursel Director of Investor Relations Tel. +1-408-625-1262 |
In Korea: Chankeun Park Senior Manager, Public Relations Tel. +82-2-6903-3195 |
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MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of US dollars, except share data) (Unaudited) |
||||||||||||
|
Three Months Ended |
||||||||||||
|
March 31, 2016 |
December 31, 2015 |
March 31, 2015 |
||||||||||
|
Net sales |
$ |
148,105 |
$ |
152,430 |
$ |
164,885 |
||||||
|
Cost of sales |
113,856 |
122,528 |
129,908 |
|||||||||
|
Gross profit |
34,249 |
29,902 |
34,977 |
|||||||||
|
Gross profit % |
23.1 |
% |
19.6 |
% |
21.2 |
% |
||||||
|
Operating expenses |
||||||||||||
|
Selling, general and administrative expenses |
19,952 |
18,653 |
25,030 |
|||||||||
|
Research and development expenses |
17,815 |
18,879 |
22,160 |
|||||||||
|
Restructuring gain |
(7,785) |
— |
— |
|||||||||
|
Total operating expenses |
29,982 |
37,532 |
47,190 |
|||||||||
|
Operating income (loss) |
4,267 |
(7,630) |
(12,213) |
|||||||||
|
Interest expense |
(4,057) |
(4,081) |
(4,125) |
|||||||||
|
Foreign currency gain (loss), net |
8,195 |
17,080 |
(3,176) |
|||||||||
|
Other income, net |
535 |
617 |
618 |
|||||||||
|
Income (loss) before income tax expenses |
8,940 |
5,986 |
(18,896) |
|||||||||
|
Income tax expenses (benefits) |
815 |
(16,868) |
1,133 |
|||||||||
|
Net income (loss) |
$ |
8,125 |
$ |
22,854 |
$ |
(20,029) |
||||||
|
Earnings (loss) per common share : |
||||||||||||
|
- Basic |
$ |
0.23 |
$ |
0.66 |
$ |
(0.59) |
||||||
|
- Diluted |
$ |
0.23 |
$ |
0.66 |
$ |
(0.59) |
||||||
|
Weighted average number of shares—Basic |
34,698,904 |
34,698,777 |
34,056,468 |
|||||||||
|
Weighted average number of shares—Diluted |
34,918,568 |
34,713,034 |
34,056,468 |
|||||||||
|
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME (In thousands of US dollars, except share data) (Unaudited) |
|||||||||||||||||||
|
Three Months Ended |
|||||||||||||||||||
|
March 31, 2016 |
December 31, 2015 |
March 31, 2015 |
|||||||||||||||||
|
Net income (loss) |
$ |
8,125 |
$ |
22,854 |
$ |
(20,029) |
|||||||||||||
|
Adjustments: |
|||||||||||||||||||
|
Depreciation and amortization |
6,024 |
6,424 |
6,870 |
||||||||||||||||
|
Interest expense, net |
3,999 |
4,020 |
4,063 |
||||||||||||||||
|
Income tax expenses (benefits) |
815 |
(16,868) |
1,133 |
||||||||||||||||
|
Restructuring and other (gain), net |
(6,832) |
— |
— |
||||||||||||||||
|
Equity-based compensation expense |
536 |
398 |
185 |
||||||||||||||||
|
Foreign currency loss (gain), net |
(8,195) |
(17,080) |
3,176 |
||||||||||||||||
|
Derivative valuation loss (gain), net |
(42) |
(61) |
— |
||||||||||||||||
|
Restatement related expenses |
3,592 |
(891) |
7,058 |
||||||||||||||||
|
Adjusted EBITDA |
$ |
8,022 |
$ |
(1,204) |
$ |
2,456 |
|||||||||||||
|
Adjusted EBITDA per common share: |
|||||||||||||||||||
|
- Basic / Diluted |
$ |
0.23 |
$ |
(0.03) |
$ |
0.07 |
|||||||||||||
|
Weighted average number of shares - Basic |
34,698,904 |
34,698,777 |
34,056,468 |
||||||||||||||||
|
Weighted average number of shares - Diluted |
34,918,568 |
34,713,034 |
34,666,095 |
||||||||||||||||
|
Net income (loss) |
$ |
8,125 |
$ |
22,854 |
$ |
(20,029) |
|||||||||||||
|
Adjustments: |
|||||||||||||||||||
|
Restructuring and other (gain), net |
(6,832) |
— |
— |
||||||||||||||||
|
Equity-based compensation expense |
536 |
398 |
185 |
||||||||||||||||
|
Foreign currency loss (gain), net |
(8,195) |
(17,080) |
3,176 |
||||||||||||||||
|
Derivative valuation loss (gain), net |
(42) |
(61) |
— |
||||||||||||||||
|
Restatement related expenses |
3,592 |
(891) |
7,058 |
||||||||||||||||
|
Adjusted net income (loss) |
$ |
(2,816) |
$ |
5,220 |
$ |
(9,610) |
|||||||||||||
|
Adjusted net income (loss) per common share: |
|||||||||||||||||||
|
- Basic / Diluted |
$ |
(0.08) |
$ |
0.15 |
$ |
(0.28) |
|||||||||||||
|
Weighted average number of shares - Basic |
34,698,904 |
34,698,777 |
34,056,468 |
||||||||||||||||
|
Weighted average number of shares - Diluted |
34,918,568 |
34,713,034 |
34,666,095 |
||||||||||||||||
We define Adjusted EBITDA for the periods indicated as net income (loss), adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expenses (benefits), (iv) restructuring and other (gain), net, (v) equity-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, and (viii) restatement related expenses. We present Adjusted Net Income (loss) as a further supplemental measure of our performance. 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 for the periods as net income (loss), adjusted to exclude (i) restructuring and other (gain), net, (ii) equity-based compensation expense, (iii) foreign currency loss (gain), net, (iv) derivative valuation loss (gain), net, and (v) restatement related expenses.
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MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of US dollars, except share data) (Unaudited) |
|||||
|
March 31, 2016 |
December 31, 2015 |
||||
|
Assets |
|||||
|
Current assets |
|||||
|
Cash and cash equivalents |
$ |
73,527 |
$ |
90,882 |
|
|
Restricted cash |
29,580 |
— |
|||
|
Accounts receivable, net |
55,156 |
63,498 |
|||
|
Inventories, net |
71,003 |
57,619 |
|||
|
Other receivables |
2,756 |
31,932 |
|||
|
Prepaid expenses |
10,320 |
7,075 |
|||
|
Hedge collateral |
2,000 |
6,000 |
|||
|
Other current assets |
3,067 |
3,228 |
|||
|
Total current assets |
247,409 |
260,234 |
|||
|
Property, plant and equipment, net |
190,556 |
191,985 |
|||
|
Intangible assets, net |
2,797 |
2,629 |
|||
|
Long-term prepaid expenses |
11,188 |
12,117 |
|||
|
Deferred income tax assets |
236 |
238 |
|||
|
Other non-current assets |
6,649 |
6,897 |
|||
|
Total assets |
$ |
458,835 |
$ |
474,100 |
|
|
Liabilities and Stockholders' Equity |
|||||
|
Current liabilities |
|||||
|
Accounts payable |
$ |
60,126 |
$ |
55,476 |
|
|
Other accounts payable |
5,794 |
10,961 |
|||
|
Accrued expenses |
74,470 |
76,721 |
|||
|
Deferred revenue |
— |
10,060 |
|||
|
Deposits received |
— |
8,165 |
|||
|
Other current liabilities |
6,769 |
5,128 |
|||
|
Total current liabilities |
147,159 |
166,511 |
|||
|
Long-term borrowings, net |
220,548 |
220,375 |
|||
|
Accrued severance benefits, net |
138,100 |
134,148 |
|||
|
Other non-current liabilities |
12,652 |
15,396 |
|||
|
Total liabilities |
518,459 |
536,430 |
|||
|
Stockholders' equity |
|||||
|
Common stock, $0.01 par value, 150,000,000 shares authorized, 41,277,669 |
412 |
411 |
|||
|
Additional paid-in capital |
125,153 |
124,618 |
|||
|
Accumulated deficit |
(88,085) |
(96,210) |
|||
|
Treasury stock, 6,578,765 shares at March 31, 2016 and December 31,2015 |
(90,918) |
(90,918) |
|||
|
Accumulated other comprehensive loss |
(6,186) |
(231) |
|||
|
Total stockholders' equity (deficit) |
(59,624) |
(62,330) |
|||
|
Total liabilities and stockholders' equity |
$ |
458,835 |
$ |
474,100 |
|
|
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of US dollars) (Unaudited) |
||||||||||||||
|
Three Months Ended |
||||||||||||||
|
March 31, 2016 |
March 31, 2015 |
|||||||||||||
|
Cash flows from operating activities |
||||||||||||||
|
Net income (loss) |
$ |
8,125 |
$ |
(20,029) |
||||||||||
|
Adjustments to reconcile net income (loss) to net cash used in operating activities |
||||||||||||||
|
Depreciation and amortization |
6,024 |
6,870 |
||||||||||||
|
Provision for severance benefits |
5,771 |
7,260 |
||||||||||||
|
Amortization of debt issuance costs and original issue discount |
173 |
162 |
||||||||||||
|
Loss (gain) on foreign currency, net |
(8,857) |
4,179 |
||||||||||||
|
Restructuring and impairment charges (gains) |
(7,785) |
— |
||||||||||||
|
Stock-based compensation |
536 |
185 |
||||||||||||
|
Other |
(10) |
(242) |
||||||||||||
|
Changes in operating assets and liabilities |
||||||||||||||
|
Accounts receivable, net |
7,716 |
133 |
||||||||||||
|
Inventories, net |
(11,946) |
(1,701) |
||||||||||||
|
Other receivables |
(326) |
6,140 |
||||||||||||
|
Other current assets |
(1,559) |
(1,329) |
||||||||||||
|
Accounts payable |
4,920 |
5,902 |
||||||||||||
|
Other accounts payable |
(3,748) |
(4,881) |
||||||||||||
|
Accrued expenses |
(3,729) |
(7,626) |
||||||||||||
|
Deferred revenue |
(9,777) |
(1,604) |
||||||||||||
|
Other current liabilities |
828 |
(170) |
||||||||||||
|
Other non-current Liabilities |
(325) |
(220) |
||||||||||||
|
Payment of severance benefits |
(4,098) |
(1,341) |
||||||||||||
|
Other |
(114) |
(367) |
||||||||||||
|
Net cash used in operating activities |
(18,181) |
(8,679) |
||||||||||||
|
Cash flows from investing activities |
||||||||||||||
|
Purchase of plant, property and equipment |
(4,288) |
(557) |
||||||||||||
|
Payment for intellectual property registration |
(237) |
(77) |
||||||||||||
|
Collection of guarantee deposits |
374 |
— |
||||||||||||
|
Proceeds from settlement of hedge collateral |
3,993 |
— |
||||||||||||
|
Payment of guarantee deposits |
(14) |
(411) |
||||||||||||
|
Other |
10 |
15 |
||||||||||||
|
Net cash used investing activities |
(162) |
(1,030) |
||||||||||||
|
Cash flows from financing activities |
||||||||||||||
|
Net cash provided by financing activities |
— |
— |
||||||||||||
|
Effect of exchange rates on cash and cash equivalents |
988 |
(1,330) |
||||||||||||
|
Net decrease in cash and cash equivalents |
(17,355) |
(11,039) |
||||||||||||
|
Cash and cash equivalents |
||||||||||||||
|
Beginning of the period |
90,882 |
102,434 |
||||||||||||
|
End of the period |
$ |
73,527 |
$ |
91,395 |
||||||||||
|
Non-cash operating activities |
||||||||||||||
|
Insurance proceeds in restricted cash reclassified from other receivables |
$ |
(29,571) |
$ |
— |
||||||||||
|
Non-cash investing activities |
||||||||||||||
|
Property, plant and equipment additions in other accounts payable |
$ |
605 |
$ |
785 |
||||||||||
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