MagnaChip Reports Third Quarter 2012 Financial Results
SEOUL, South Korea and CUPERTINO, Calif., Nov. 1, 2012 /PRNewswire/ — MagnaChip Semiconductor Corporation (“MagnaChip”) (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the third quarter ended September 30, 2012.
(Logo: http://photos.prnewswire.com/prnh/20120305/NY61184LOGO )
Revenue for the third quarter of 2012 was $221.9 million, a 9.5% increase compared to $202.6 million for the second quarter of 2012, and a 10.7% increase compared to $200.4 million for the third quarter of 2011.
Gross margin was $76.4 million or 34.5%, as a percent of revenue, for the third quarter of 2012. This compares to gross margin of $62.9 million or 31.0% for the second quarter of 2012 and $60.1 million or 30.0% for the third quarter of 2011.
Net income, on a GAAP basis, for the third quarter of 2012 totaled $48.4 million or $1.30 per diluted share. This compares to net income of $4.3 million or $0.12 per diluted share for the second quarter of 2012 and net loss of $56.0 million or $1.43 per diluted share for the third quarter of 2011. Net income was impacted primarily by a foreign currency gain of $21.8 million during the quarter which was primarily related to non-cash foreign currency translation for intercompany balances that were denominated in U.S. dollars.
“Our sequential revenue growth of nearly 10% put us at the high end of the semiconductor group in terms of top line performance with smartphone and tablet PC demand remaining strong going into the fourth quarter. This smartphone and tablet PC demand is well diversified with MagnaChip supplying about 50 unique products to 26 different customers,” said Sang Park, MagnaChip Chairman and CEO. “In addition to strong revenue growth, our Q3 gross margin was up 350 basis points sequentially and up 630 basis points since Q1 due to higher fab utilization and improved product mix shift.”
Adjusted net income, a non-GAAP measurement, for the third quarter of 2012 totaled $30.4 million or $0.81 per diluted share compared to $17.9 million or $0.48 per diluted share for the second quarter of 2012 and $18.2 million or $0.46 per diluted share for the third quarter of 2011.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more 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.
Combined cash balances (cash and cash equivalents plus restricted cash) totaled $165.8 million at the end of the third quarter of 2012, an increase of $4.8 million from the end of the prior quarter. Cash provided from operations totaled approximately $23.0 million for the third quarter of 2012.
Revenue by
Segment
In thousands
of US
dollars Three Months Ended
September 30, 2012 June 30, 2012 September 30, 2011
Semiconductor $117,978 $91,318 $81,571
Manufacturing
Services
Display
Solutions 69,415 76,784 91,767
Power
Solutions 33,849 33,699 26,358
Other 630 833 709
Total
Revenue $221,872 $202,634 $200,405
Third Quarter and Recent Company Highlights
- Seventh Consecutive Quarter of Achieving Financial Guidance.
- Expanded Gross Margins to $76.4 million or 34.5%.
- Achieved GAAP EPS of $1.30 Per Diluted Share and Adjusted EPS of $0.81 Per Diluted Share.
- Repurchased 444 Thousand Shares under MagnaChip’s 2011 Stock Repurchase Program.
Business Outlook
For the fourth quarter of 2012, MagnaChip expects:
- Revenue will be in the range of $213 million to $222 million.
- Gross margin will be 33.5% to 34.5%.
Non-GAAP Metrics
Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, net, income tax expense, restructuring and impairment charges, stock-based compensation expense, foreign currency loss (gain), net, derivative valuation loss (gain), net, secondary offering and others, and loss on early extinguishment of senior notes. Adjusted net income (loss) excludes charges related to restructuring and impairment charges, stock-based compensation expense, amortization of intangible assets associated with continuing operations, foreign currency loss (gain), net, derivative valuation loss (gain), net, secondary offering and others, and loss on early extinguishment of senior notes. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.
About MagnaChip Semiconductor Corporation
Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through, MagnaChip’s website is not a part of, and is not incorporated into, this release.
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 ability to capitalize on improving market dynamics and future operating and financial performance including fourth quarter 2012 revenue and gross margin. 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 SEC, including our Form 10-K filed on March 8, 2012 and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.
CONTACTS:
In the United States: In Korea:
Robert Pursel Chankeun Park
Director of Investor Relations Senior Manager, Public Relations
Tel. +1-408-625-1262 Tel. +82-2-6903-3195
robert.pursel@magnachip.com chankeun.park@magnachip.com
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except share data)
(Unaudited)
Three Months Ended
------------------
September 30, June 30, September 30,
2012 2012 2011
---- ---- ----
Net sales $221,872 $202,634 $200,405
Cost of sales 145,432 139,776 140,284
------- ------- -------
Gross profit 76,440 62,858 60,121
------ ------ ------
Gross profit % 34.5% 31.0% 30.0%
Selling, general and administrative expenses 21,388 20,093 17,881
Research and development expenses 19,470 19,762 19,003
Restructuring and impairment charges - - 1,621
Operating income 35,582 23,003 21,616
Other income (expense)
Interest expense, net (5,746) (5,619) (5,860)
Foreign currency gain (loss), net 21,782 (10,586) (68,058)
Loss on early extinguishment of senior notes - - (1,357)
Other 695 701 (558)
--- --- ----
16,731 (15,504) (75,833)
------ ------- -------
Income (loss) before income taxes 52,313 7,499 (54,217)
------ ----- -------
Income tax expense 3,901 3,159 1,793
----- ----- -----
Net income (loss) $48,412 $4,340 $(56,010)
======= ====== ========
Earnings (loss) per common share :
- Basic $1.34 $0.12 $(1.43)
- Diluted $1.30 $0.12 $(1.43)
===== ===== ======
Weighted average number of shares-Basic 36,199,655 36,713,569 39,064,071
Weighted average number of shares-Diluted 37,324,787 37,566,699 39,064,071
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NETINCOME
(In thousands of US dollars, except share data)
(Unaudited)
Three Months Ended
------------------
September 30, June 30, September 30,
2012 2012 2011
Net income (loss) $48,412 $4,340 $(56,010)
Adjustments:
Depreciation and amortization 8,443 7,923 13,053
Interest expense, net 5,746 5,619 5,861
Income tax expense 3,901 3,159 1,793
Restructuring and impairment charges - - 1,621
Stock-based compensation expense 535 457 552
Foreign currency loss (gain), net (21,782) 10,586 68,058
Derivative valuation loss (gain), net (695) (701) 558
Secondary offering and others 2,119 1,216 -
Loss on early extinguishment of senior notes - - 1,357
Adjusted EBITDA $46,679 $32,599 $36,843
======= ======= =======
Adjusted EBITDA per common share:
- Diluted $1.25 $0.87 $0.92
Weighted average number of shares - Diluted 37,324,787 37,566,699 39,973,691
Net income (loss) $48,412 $4,340 $(56,010)
Adjustments:
Restructuring and impairment charges - - 1,621
Stock-based compensation expense 535 457 552
Amortization of intangibles 1,829 1,980 2,092
Foreign currency loss (gain), net (21,782) 10,586 68,058
Derivative valuation loss (gain), net (695) (701) 558
Secondary offering and others 2,119 1,216 -
Loss on early extinguishment of senior notes - - 1,357
--- --- -----
Adjusted net income $30,418 $17,878 $18,228
======= ======= =======
Adjusted net income per common share:
- Diluted $0.81 $0.48 $0.46
Weighted average number of shares - Diluted 37,324,787 37,566,699 39,973,691
We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense, (iv) restructuring and impairment charges, (v) stock-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, (viii) secondary offering and others, and (ix) loss on early extinguishment of senior notes.
We present Adjusted Net Income as a further supplemental measure of our performance. We prepare Adjusted Net Income by adjusting net income 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 is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income as net income adjusted to exclude (i) restructuring and impairment charges (ii) stock-based compensation expense, (iii) amortization of intangibles, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, (vi) secondary offering and others, and (vii) loss on early extinguishment of senior notes.
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except share data)
(Unaudited)
September 30, December 31,
2012 2011
---- ----
Assets
Current assets
Cash and cash equivalents $165,658 $162,111
Restricted cash 136 6,830
Accounts receivable, net 148,537 125,922
Inventories, net 75,020 62,836
Other receivables 2,097 256
Prepaid expenses 9,120 6,032
Other current assets 19,270 15,909
------ ------
Total current assets 419,838 379,896
------- -------
Property, plant and equipment, net 229,632 182,663
Intangible assets, net 16,684 16,787
Long-term prepaid expenses 9,575 4,790
Other non-current assets 17,044 18,539
------ ------
Total assets $692,773 $602,675
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $97,386 $77,848
Other accounts payable 19,049 13,452
Accrued expenses 40,483 31,723
Current portion of capital lease obligations - 2,852
Derivative liabilities 1,818 9,757
Other current liabilities 8,460 2,007
----- -----
Total current liabilities 167,196 137,639
Long-term borrowings, net 201,586 201,389
Accrued severance benefits, net 105,051 90,755
Other non-current liabilities 11,556 6,222
------ -----
Total liabilities 485,389 436,005
------- -------
Stockholders' equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 39,513,351 395 394
shares issued and 35,954,925 outstanding at September 30, 2012 and
39,439,115 shares issued and 37,907,575 outstanding at December 31,
2011
Additional paid-in capital 100,834 98,929
Retained earnings 161,965 93,950
Treasury stock, 3,558,426 shares at September 30, 2012 (34,730) (11,793)
Accumulated other comprehensive loss (21,080) (14,810)
------- -------
Total stockholders' equity 207,384 166,670
======= =======
Total liabilities and stockholders' equity $692,773 $602,675
======== ========
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
(Unaudited)
Three Months Nine Months
Ended Ended
----- -----
September 30, September 30, September 30,
2012 2012 2011
---- ---- ----
Cash flows from operating activities
Net income (loss) $48,412 $68,015 $(1,912)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities
Depreciation and amortization 8,443 23,840 42,368
Provision for severance benefits 5,804 16,779 13,137
Amortization of debt issuance costs and original issue discount 256 753 728
Loss (gain) on foreign currency translation, net (25,359) (25,304) 33,220
Loss (gain) on disposal of property, plant and equipment, net 16 (174) (15)
Loss on disposal of intangible assets, net 11 26 17
Restructuring and impairment charges - - 4,096
Stock-based compensation 535 1,450 1,798
Loss on early extinguishment of senior notes - - 5,460
Other 16 (332) 651
Changes in operating assets and liabilities
Accounts receivable (9,872) (18,168) (4,400)
Inventories 2,972 (8,526) (4,400)
Other receivables 793 (1,787) 836
Other current assets (9,513) (662) (3,196)
Deferred tax assets 368 1,514 1,483
Accounts payable 2,818 17,472 15,072
Other accounts payable (10,377) (700) 7,157
Accrued expenses 5,871 13,761 (18,278)
Other current liabilities 2,839 9,450 (1,209)
Payment of severance benefits (753) (5,569) (6,549)
Other (243) (2,239) 141
---- ------ ---
Net cash provided by operating activities 23,037 89,599 86,205
------ ------ ------
Cash flows from investing activities
Decrease (increase) in restricted cash 5,140 6,774 (9,711)
Proceeds from disposal of plant, property and equipment 46 937 29
Purchase of plant, property and equipment (10,017) (56,745) (42,945)
Payment for intellectual property registration (187) (752) (521)
Payment for acquisition - (8,642) -
Decrease in short-term financial instruments - 173 -
Collection of guarantee deposits 2 72 984
Payment of guarantee deposits (135) (311) (2,489)
Other 3 (50) (625)
--- --- ----
Net cash used in investing activities (5,148) (58,544) (55,278)
------ ------- -------
Cash flows from financing activities
Proceeds from issuance of common stock 253 436 8,835
Repurchase of senior notes - - (50,307)
Repayment of obligations under capital lease - (2,968) (4,831)
Acquisition of treasury stock (6,002) (22,937) -
------
Net cash used in financing activities (5,749) (25,469) (46,303)
Effect of exchange rates on cash and cash equivalents (2,246) (2,039) 2,672
------ ------ -----
Net increase (decrease) in cash and cash equivalents 9,894 3,547 (12,704)
----- ----- -------
Cash and cash equivalents
Beginning of the period 155,764 162,111 172,172
------- ------- -------
End of the period $165,658 $165,658 $159,468
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SOURCE MagnaChip Semiconductor Corporation
