Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today is correcting an error to its press release issued on November 2, 2022 announcing the Company’s financial results for the third quarter of 2022. Subsequent to the furnishing of the press release, the Company identified a scrivener’s error in the Non-GAAP reconciliation table attached to the press release for Adjusted Net Income per common share (basic and diluted) for the nine month period ended September 30, 2021, which should have been $0.82 and $0.78 per share, respectively, consistent with the Company’s prior reports for that historical period. No other amounts or information reported in the press release were changed. The complete, corrected release follows:

 

Magnachip Reports Results for Third Quarter 2022

  • Revenue of $71.2 million was within our guidance range. The year-over-year and sequential decline were primarily driven by the supply shortages of OLED wafers in the 2nd half of this year that impacted design-in projects from our large panel customer in Korea.
  • Gross profit margin was 24.2%, below the low end of our guidance range as we recorded a $3.3 million charge to scrap 12-inch wafers as a result of slowing demand caused by elevated smartphone inventories in China.
  • GAAP diluted loss per share was $0.38.
  • Non-GAAP diluted earnings per share was $0.02.

 

SEOUL, South KoreaNov. 4, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the third quarter of 2022.

(PRNewsfoto/Magnachip Semiconductor)Commenting on the results for the third quarter of 2022, YJ Kim, Magnachip’s chief executive officer stated, “Our Q3 revenue of $71.2 million was within our guidance range. As we mentioned last quarter, our Display business in the 2nd half is impacted by supply shortages of 28nm 12-inch OLED wafers that impacted design-in projects from our large panel customer in Korea, which are typically given in advance based on future wafer supply allocation. In addition, China covid lockdowns and the dramatic slowdown in consumer spending due to inflationary pressures reduced demand for smartphones and TVs and resulted in an oversupply of channel inventories, particularly in China. Our Power business also slowed due to lower consumer spending.”

YJ Kim continued, “While the global economic situation remains challenging, our balance sheet is strong, and we are focused on executing a recovery of our Display business. During the quarter, we successfully released our new OLED DDIC sample to our new panel customer and we expect to begin mass production in 2023. In addition, due to the global economic slowdown, we are seeing more wafer capacity availability and we are in discussion with multiple foundries to secure capacity and believe that our 2023 wafer supply will be more than two times higher than 2022. As such, we expect to see a significant recovery of Display business in 2023.”

 

Q3 2022 Financial Highlights

In thousands of U.S. dollars, except share data
GAAP
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Revenues
Standard Products Business
Display Solutions 6,355 28,336 down 77.6 % 58,528 down 89.1 %
Power Solutions 56,416 62,952 down 10.4 % 58,887 down 4.2 %
Transitional Fab 3 foundry services(1) 8,428 10,088 down 16.5 % 9,585 down 12.1 %
Gross Profit Margin 24.2 % 28.6 % down 4.4 %pts 36.7 % down 12.5 %pts
Operating Income (Loss) (10,008) 2,002 down n/a 20,001 down n/a
Net Income (Loss) (17,195) (3,340) down n/a 10,768 down n/a
Basic Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
Diluted Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
In thousands of U.S. dollars, except share data
Non-GAAP(2)
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Adjusted Operating Income (Loss) (6,646) 4,787 down n/a 22,691 down n/a
Adjusted EBITDA (2,995) 8,525 down n/a 26,361 down n/a
Adjusted Net Income 1,097 10,567 down 89.6 % 20,073 down 94.5 %
Adjusted Earnings per Common Share—Diluted 0.02 0.23 down 91.3 % 0.42 down 95.2 %

 

___________
(1) Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, and for a period of up to three years, we will provide transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi (“Transitional Fab 3 Foundry Services”). Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions business lines.
(2) 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 our 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 (loss) 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.

 

Q4 2022 Financial Guidance
The Company’s near-term outlook is being challenged by previous OLED wafer allocation constraints that impacted 2nd half design-in projects, elevated smartphone channel inventories, a pushout of the initial mass production ramp of our new OLED customer and weakening demand in consumer end markets on growing recession fears and cost increases, including labor, due to inflationary pressures. In addition, we estimate our Q4 revenue will be further negatively impacted by approximately $5 million of foreign exchange hedging instruments. While actual results may vary, looking into the next quarter, Magnachip currently expects:

  • Revenue to be in the range of $57 million to $62 million, including about $7 million of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 26 % to 28%.

 

Q3 2022 Earnings Conference Call
Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, November 2, 2022, to discuss its financial results. In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the Company’s website at www.magnachip.com.

 

Online registration: https://register.vevent.com/register/BIccd8bcc64c4a4092bc5e11273a22e8f2

 

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 expectations about estimated historical or future operating results and financial performance, outlook and business plans, including fourth quarter 2022 revenue and gross profit margin expectations, and the impact of market conditions associated with inflation and rising interest rates, the COVID-19 pandemic or the emergence of various variants of the virus, geopolitical conflict between Russia and Ukraine, and escalated trade tensions and supply constraints on Magnachip’s fourth quarter 2022 and future operating results. 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, among others: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to inflation, potential recessions or other deteriorations, economic instability or civil unrest; the COVID-19 pandemic or the emergence of various variants of the virus or other outbreaks of disease, and governmental lock-downs or other measures implemented in response thereto, and the Russia-Ukraine conflict; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs, as well as impacting demand for our products from customers who are similarly affected by such capacity constraints or disruptions; 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, our customers and our distributors, including those related to the Russia-Ukraine conflict; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products, including uncertainties regarding the impacts of the COVID-19 pandemic or the emergence of various variants of the virus that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for Magnachip’s products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks detailed from time to time in Magnachip’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Form 10-K filed on February 23, 2022 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.

 

About Magnachip Semiconductor
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACT:
Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Revenues:
Net sales – standard products business $         62,771 $         91,288 $         117,415 $       248,069 $       333,589
Net sales – transitional Fab 3 foundry services 8,428 10,088 9,585 28,599 30,306
Total revenues 71,199 101,376 127,000 276,668 363,895
Cost of sales:
Cost of sales – standard products business 45,497 63,620 71,641 165,197 221,297
Cost of sales – transitional Fab 3 foundry services 8,477 8,811 8,772 26,305 27,659
Total cost of sales 53,974 72,431 80,413 191,502 248,956
Gross profit 17,225 28,945 46,587 85,166 114,939
Gross profit as a percentage of standard products business net sales 27.5 % 30.3 % 39.0 % 33.4 % 33.7 %
Gross profit as a percentage of total revenues 24.2 % 28.6 % 36.7 % 30.8 % 31.6 %
Operating expenses:
Selling, general and administrative expenses 11,411 12,736 12,550 38,310 39,185
Research and development expenses 13,321 13,410 12,270 38,685 39,015
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 214 3,298 3,360
Total operating expenses 27,233 26,943 26,586 80,293 95,402
Operating income (loss) (10,008) 2,002 20,001 4,873 19,537
Interest expense (278) (499 ) (113) (888) (1,239)
Foreign currency loss, net (12,809) (7,012 ) (7,579) (20,511) (12,000 )
Other income, net 1,958 1,272 1,608 4,163 2,839
Income (loss) before income tax expense (21,137) (4,237 ) 13,917 (12,363) 9,137
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Net income (loss) $         (17,195) $          (3,340 ) $         10,768 $         (11,007) $           3,097
 

Basic earnings (loss) per common share—

$             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Diluted earnings (loss) per common share— $             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Weighted average number of shares—
Basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Diluted 44,865,266 44,897,278 47,808,457 45,119,214 45,811,792

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
September 30,
2022
December 31,
2021
(In thousands of U.S. dollars, except share data)
Assets
Current assets
Cash and cash equivalents $                 250,831 $                   279,547
Accounts receivable, net 36,759 50,954
Inventories, net 37,298 39,370
Other receivables 8,248 25,895
Prepaid expenses 10,322 7,675
Hedge collateral 15,370 3,060
Other current assets 20,208 2,619
Total current assets 379,036 409,120
Property, plant and equipment, net 94,411 107,882
Operating lease right-of-use assets 4,928 4,275
Intangible assets, net 1,770 2,377
Long-term prepaid expenses 11,382 8,243
Deferred income taxes 34,299 41,095
Other non-current assets 10,382 10,662
Total assets $                 536,208 $                   583,654
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $                   26,545 $                     37,593
Other accounts payable 14,809 6,289
Accrued expenses 15,800 20,071
Accrued income taxes 11,823
Operating lease liabilities 1,324 2,323
Other current liabilities 15,881 7,382
Total current liabilities 74,359 85,481
Accrued severance benefits, net 28,036 33,064
Non-current operating lease liabilities 3,811 1,952
Other non-current liabilities 16,787 10,395
Total liabilities 122,993 130,892
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 56,234,774 shares issued and 44,579,075 outstanding at September 30, 2022 and 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 562 559
Additional paid-in capital 264,510 241,197
Retained earnings 332,535 343,542
Treasury stock, 11,655,699 shares at September 30, 2022 and 10,246,016 shares at December 31, 2021, respectively (152,161) (130,306 )
Accumulated other comprehensive loss (32,231) (2,230 )
Total stockholders’ equity 413,215 452,762
Total liabilities and stockholders’ equity $                 536,208 $                   583,654

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months
Ended
Nine Months
Ended
September 30,
2022
September 30,
2022
September 30,
2021
Cash flows from operating activities
Net income (loss) $    (17,195) $     (11,007) $       3,097
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization 3,623 11,225 10,576
Provision for severance benefits 1,923 5,163 5,514
Amortization of debt issuance costs and original issue discount 261
Loss on foreign currency, net 37,152 66,335 32,607
Provision for inventory reserves 2,448 7,730 1,484
Stock-based compensation 861 4,487 6,056
Other, net (81) 631 442
Changes in operating assets and liabilities
Accounts receivable, net 20,182 7,805 6,696
Inventories (7,722) (13,208) (4,561)
Other receivables 5,475 17,115 (5,287)
Other current assets (12,028) (14,117) 7,933
Accounts payable (17,221) (14,792) (16,192)
Other accounts payable (354) (6,215) (3,729)
Accrued expenses 8,575 5,866 (1,641 )
Accrued income taxes 30 (11,483) (8,308)
Other current liabilities 570 (1,583) 555
Other non-current liabilities (47) 523 (666 )
Payment of severance benefits (1,247) (4,181) (4,772)
Other, net 335 (50) (49 )
Net cash provided by operating activities 25,279 50,244 30,016
Cash flows from investing activities
Proceeds from settlement of hedge collateral 2,805 3,995
Payment of hedge collateral (8,438) (15,282) (2,744 )
Purchase of property, plant and equipment (10,301) (11,812) (13,368)
Payment for intellectual property registration (148) (301) (455)
Collection of guarantee deposits 3,192
Payment of guarantee deposits (1,026) (2,075) (4,960 )
Other, net 778 792 (103)
Net cash used in investing activities (19,135) (25,873) (14,443 )
Cash flows from financing activities
Proceeds from exercise of stock options 1,786 3,920
Acquisition of treasury stock (3,239) (5,065) (1,653 )
Repayment of financing related to water treatment facility arrangement (120) (381) (427 )
Repayment of principal portion of finance lease liabilities (18) (50) (49)
Net cash provided by (used in) financing activities (3,377) (3,710) 1,791
Effect of exchange rates on cash and cash equivalents (25,733) (49,377) (21,003)
Net decrease in cash and cash equivalents (22,966) (28,716) (3,639 )
Cash and cash equivalents
Beginning of the period 273,797 279,547 279,940
End of the period $   250,831 $     250,831 $   276,301

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Operating income (loss) $ (10,008) $ 2,002 $ 20,001 $ 4,873 $ 19,537
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Inventory reserve related to Huawei (1,081) (1,081)
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 214 3,298 3,360
Adjusted Operating Income (Loss) $ (6,646) $ 4,787 $ 22,691 $ 12,658 $ 41,714

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We define Adjusted Operating Income (Loss) for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense (ii) Inventory reserve related to Huawei (iii) Merger-related costs and (iv) Other charges, net. For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, incurred in connection with the regulatory requests.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September30,
2021
Net income (loss) $        (17,195 ) $         (3,340 ) $            10,768 $     (11,007) $         3,097
Adjustments:
Interest income, net (1,506 ) (562 ) (439) (2,672 ) (512)
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Depreciation and amortization 3,623 3,711 3,578 11,225 10,576
EBITDA (19,020 ) (1,088 ) 17,056 (3,810) 19,201
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146) (184 ) (237) (201) (94)
Inventory reserve related to Huawei (1,081) (1,081)
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Adjusted EBITDA $           (2,995) $          8,525 $           26,361 $       24,285 $          52,557
Net income (loss) $         (17,195) $         (3,340 ) $           10,768 $       (11,007) $            3,097
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146 ) (184 ) (237) (201 ) (94)
Inventory reserve related to Huawei (1,081) (1,081)
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Income tax effect on non-GAAP adjustments 2,267 4,294 7,512
Adjusted Net Income $             1,097 $         10,567 $         20,073 $       24,600 $        36,453
Adjusted Net Income per common share—
– Basic $              0.02 $             0.24 $             0.43 $           0.55 $              0.82
– Diluted $             0.02 $             0.23 $             0.42 $           0.53 $              0.78
Weighted average number of shares – basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Weighted average number of shares – diluted 45,747,255 45,937,515 47,808,457 46,134,231 47,718,578

We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs and (vi) Other charges, net. EBITDA for the periods indicated is defined as net income (loss) before interest income, net, income tax expense (benefit) and depreciation and amortization.

We prepare Adjusted Net Income 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 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) Equity-based compensation expense, (ii) Foreign currency loss, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs, (vi) Other charges, net and (vii) Income tax effect on non-GAAP adjustments.

For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, incurred in connection with the regulatory requests, both of which were offset in part by a $0.7 million legal settlement gain related to certain expenses incurred in prior periods in connection with our legacy Fab 4 (which was sold during the year ended December 31, 2020) and awarded in the third quarter of 2021.

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SOURCE Magnachip Semiconductor Corporation

  • Revenue of $71.2 million was within our guidance range. The year-over-year and sequential decline were primarily driven by the supply shortages of OLED wafers in the 2nd half of this year that impacted design-in projects from our large panel customer in Korea.
  • Gross profit margin was 24.2%, below the low end of our guidance range as we recorded a $3.3 million charge to scrap 12-inch wafers as a result of slowing demand caused by elevated smartphone inventories in China.
  • GAAP diluted loss per share was $0.38.
  • Non-GAAP diluted earnings per share was $0.02.

 

SEOUL, South KoreaNov. 2, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the third quarter of 2022.

(PRNewsfoto/Magnachip Semiconductor)Commenting on the results for the third quarter of 2022, YJ Kim, Magnachip’s chief executive officer stated, “Our Q3 revenue of $71.2 million was within our guidance range. As we mentioned last quarter, our Display business in the 2nd half is impacted by supply shortages of 28nm 12-inch OLED wafers that impacted design-in projects from our large panel customer in Korea, which are typically given in advance based on future wafer supply allocation. In addition, China covid lockdowns and the dramatic slowdown in consumer spending due to inflationary pressures reduced demand for smartphones and TVs and resulted in an oversupply of channel inventories, particularly in China. Our Power business also slowed due to lower consumer spending.”

YJ Kim continued, “While the global economic situation remains challenging, our balance sheet is strong, and we are focused on executing a recovery of our Display business. During the quarter, we successfully released our new OLED DDIC sample to our new panel customer and we expect to begin mass production in 2023. In addition, due to the global economic slowdown, we are seeing more wafer capacity availability and we are in discussion with multiple foundries to secure capacity and believe that our 2023 wafer supply will be more than two times higher than 2022. As such, we expect to see a significant recovery of Display business in 2023.”

 

Q3 2022 Financial Highlights

In thousands of U.S. dollars, except share data
GAAP
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Revenues
Standard Products Business
Display Solutions 6,355 28,336 down 77.6 % 58,528 down 89.1 %
Power Solutions 56,416 62,952 down 10.4 % 58,887 down 4.2 %
Transitional Fab 3 foundry services(1) 8,428 10,088 down 16.5 % 9,585 down 12.1 %
Gross Profit Margin 24.2 % 28.6 % down 4.4 %pts 36.7 % down 12.5 %pts
Operating Income (Loss) (10,008) 2,002 down n/a 20,001 down n/a
Net Income (Loss) (17,195) (3,340) down n/a 10,768 down n/a
Basic Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
Diluted Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
In thousands of U.S. dollars, except share data
Non-GAAP(2)
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Adjusted Operating Income (Loss) (6,646) 4,787 down n/a 22,691 down n/a
Adjusted EBITDA (2,995) 8,525 down n/a 26,361 down n/a
Adjusted Net Income 1,097 10,567 down 89.6 % 20,073 down 94.5 %
Adjusted Earnings per Common Share—Diluted 0.02 0.23 down 91.3 % 0.42 down 95.2 %

 

___________
(1) Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, and for a period of up to three years, we will provide transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi (“Transitional Fab 3 Foundry Services”). Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions business lines.
(2) 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 our 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 (loss) 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.

 

Q4 2022 Financial Guidance
The Company’s near-term outlook is being challenged by previous OLED wafer allocation constraints that impacted 2nd half design-in projects, elevated smartphone channel inventories, a pushout of the initial mass production ramp of our new OLED customer and weakening demand in consumer end markets on growing recession fears and cost increases, including labor, due to inflationary pressures. In addition, we estimate our Q4 revenue will be further negatively impacted by approximately $5 million of foreign exchange hedging instruments. While actual results may vary, looking into the next quarter, Magnachip currently expects:

  • Revenue to be in the range of $57 million to $62 million, including about $7 million of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 26 % to 28%.

 

Q3 2022 Earnings Conference Call
Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, November 2, 2022, to discuss its financial results. In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the Company’s website at www.magnachip.com.

 

Online registration: https://register.vevent.com/register/BIccd8bcc64c4a4092bc5e11273a22e8f2

 

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 expectations about estimated historical or future operating results and financial performance, outlook and business plans, including fourth quarter 2022 revenue and gross profit margin expectations, and the impact of market conditions associated with inflation and rising interest rates, the COVID-19 pandemic or the emergence of various variants of the virus, geopolitical conflict between Russia and Ukraine, and escalated trade tensions and supply constraints on Magnachip’s fourth quarter 2022 and future operating results. 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, among others: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to inflation, potential recessions or other deteriorations, economic instability or civil unrest; the COVID-19 pandemic or the emergence of various variants of the virus or other outbreaks of disease, and governmental lock-downs or other measures implemented in response thereto, and the Russia-Ukraine conflict; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs, as well as impacting demand for our products from customers who are similarly affected by such capacity constraints or disruptions; 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, our customers and our distributors, including those related to the Russia-Ukraine conflict; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products, including uncertainties regarding the impacts of the COVID-19 pandemic or the emergence of various variants of the virus that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for Magnachip’s products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks detailed from time to time in Magnachip’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Form 10-K filed on February 23, 2022 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.

 

About Magnachip Semiconductor
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACT:
Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Revenues:
Net sales – standard products business $         62,771 $         91,288 $         117,415 $       248,069 $       333,589
Net sales – transitional Fab 3 foundry services 8,428 10,088 9,585 28,599 30,306
Total revenues 71,199 101,376 127,000 276,668 363,895
Cost of sales:
Cost of sales – standard products business 45,497 63,620 71,641 165,197 221,297
Cost of sales – transitional Fab 3 foundry services 8,477 8,811 8,772 26,305 27,659
Total cost of sales 53,974 72,431 80,413 191,502 248,956
Gross profit 17,225 28,945 46,587 85,166 114,939
Gross profit as a percentage of standard products business net sales 27.5 % 30.3 % 39.0 % 33.4 % 33.7 %
Gross profit as a percentage of total revenues 24.2 % 28.6 % 36.7 % 30.8 % 31.6 %
Operating expenses:
Selling, general and administrative expenses 11,411 12,736 12,550 38,310 39,185
Research and development expenses 13,321 13,410 12,270 38,685 39,015
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 214 3,298 3,360
Total operating expenses 27,233 26,943 26,586 80,293 95,402
Operating income (loss) (10,008) 2,002 20,001 4,873 19,537
Interest expense (278) (499 ) (113) (888) (1,239)
Foreign currency loss, net (12,809) (7,012 ) (7,579) (20,511) (12,000 )
Other income, net 1,958 1,272 1,608 4,163 2,839
Income (loss) before income tax expense (21,137) (4,237 ) 13,917 (12,363) 9,137
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Net income (loss) $         (17,195) $          (3,340 ) $         10,768 $         (11,007) $           3,097
 

Basic earnings (loss) per common share—

$             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Diluted earnings (loss) per common share— $             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Weighted average number of shares—
Basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Diluted 44,865,266 44,897,278 47,808,457 45,119,214 45,811,792

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
September 30,
2022
December 31,
2021
(In thousands of U.S. dollars, except share data)
Assets
Current assets
Cash and cash equivalents $                 250,831 $                   279,547
Accounts receivable, net 36,759 50,954
Inventories, net 37,298 39,370
Other receivables 8,248 25,895
Prepaid expenses 10,322 7,675
Hedge collateral 15,370 3,060
Other current assets 20,208 2,619
Total current assets 379,036 409,120
Property, plant and equipment, net 94,411 107,882
Operating lease right-of-use assets 4,928 4,275
Intangible assets, net 1,770 2,377
Long-term prepaid expenses 11,382 8,243
Deferred income taxes 34,299 41,095
Other non-current assets 10,382 10,662
Total assets $                 536,208 $                   583,654
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $                   26,545 $                     37,593
Other accounts payable 14,809 6,289
Accrued expenses 15,800 20,071
Accrued income taxes 11,823
Operating lease liabilities 1,324 2,323
Other current liabilities 15,881 7,382
Total current liabilities 74,359 85,481
Accrued severance benefits, net 28,036 33,064
Non-current operating lease liabilities 3,811 1,952
Other non-current liabilities 16,787 10,395
Total liabilities 122,993 130,892
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 56,234,774 shares issued and 44,579,075 outstanding at September 30, 2022 and 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 562 559
Additional paid-in capital 264,510 241,197
Retained earnings 332,535 343,542
Treasury stock, 11,655,699 shares at September 30, 2022 and 10,246,016 shares at December 31, 2021, respectively (152,161) (130,306 )
Accumulated other comprehensive loss (32,231) (2,230 )
Total stockholders’ equity 413,215 452,762
Total liabilities and stockholders’ equity $                 536,208 $                   583,654

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months
Ended
Nine Months
Ended
September 30,
2022
September 30,
2022
September 30,
2021
Cash flows from operating activities
Net income (loss) $    (17,195) $     (11,007) $       3,097
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization 3,623 11,225 10,576
Provision for severance benefits 1,923 5,163 5,514
Amortization of debt issuance costs and original issue discount 261
Loss on foreign currency, net 37,152 66,335 32,607
Provision for inventory reserves 2,448 7,730 1,484
Stock-based compensation 861 4,487 6,056
Other, net (81) 631 442
Changes in operating assets and liabilities
Accounts receivable, net 20,182 7,805 6,696
Inventories (7,722) (13,208) (4,561)
Other receivables 5,475 17,115 (5,287)
Other current assets (12,028) (14,117) 7,933
Accounts payable (17,221) (14,792) (16,192)
Other accounts payable (354) (6,215) (3,729)
Accrued expenses 8,575 5,866 (1,641 )
Accrued income taxes 30 (11,483) (8,308)
Other current liabilities 570 (1,583) 555
Other non-current liabilities (47) 523 (666 )
Payment of severance benefits (1,247) (4,181) (4,772)
Other, net 335 (50) (49 )
Net cash provided by operating activities 25,279 50,244 30,016
Cash flows from investing activities
Proceeds from settlement of hedge collateral 2,805 3,995
Payment of hedge collateral (8,438) (15,282) (2,744 )
Purchase of property, plant and equipment (10,301) (11,812) (13,368)
Payment for intellectual property registration (148) (301) (455)
Collection of guarantee deposits 3,192
Payment of guarantee deposits (1,026) (2,075) (4,960 )
Other, net 778 792 (103)
Net cash used in investing activities (19,135) (25,873) (14,443 )
Cash flows from financing activities
Proceeds from exercise of stock options 1,786 3,920
Acquisition of treasury stock (3,239) (5,065) (1,653 )
Repayment of financing related to water treatment facility arrangement (120) (381) (427 )
Repayment of principal portion of finance lease liabilities (18) (50) (49)
Net cash provided by (used in) financing activities (3,377) (3,710) 1,791
Effect of exchange rates on cash and cash equivalents (25,733) (49,377) (21,003)
Net decrease in cash and cash equivalents (22,966) (28,716) (3,639 )
Cash and cash equivalents
Beginning of the period 273,797 279,547 279,940
End of the period $   250,831 $     250,831 $   276,301

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
Operating income (loss) $ (10,008) $ 2,002 $ 20,001 $ 4,873 $ 19,537
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Inventory reserve related to Huawei (1,081) (1,081)
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 214 3,298 3,360
Adjusted Operating Income (Loss) $ (6,646) $ 4,787 $ 22,691 $ 12,658 $ 41,714

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We define Adjusted Operating Income (Loss) for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense (ii) Inventory reserve related to Huawei (iii) Merger-related costs and (iv) Other charges, net. For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, incurred in connection with the regulatory requests.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022
June 30,
2022
September 30,
2021
September 30,
2022
September30,
2021
Net income (loss) $        (17,195 ) $         (3,340 ) $            10,768 $     (11,007) $         3,097
Adjustments:
Interest income, net (1,506 ) (562 ) (439) (2,672 ) (512)
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Depreciation and amortization 3,623 3,711 3,578 11,225 10,576
EBITDA (19,020 ) (1,088 ) 17,056 (3,810) 19,201
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146) (184 ) (237) (201) (94)
Inventory reserve related to Huawei (1,081) (1,081)
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Adjusted EBITDA $           (2,995) $          8,525 $           26,361 $       24,285 $          52,557
Net income (loss) $         (17,195) $         (3,340 ) $           10,768 $       (11,007) $            3,097
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146 ) (184 ) (237) (201 ) (94)
Inventory reserve related to Huawei (1,081) (1,081)
Merger-related costs 1,552 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Income tax effect on non-GAAP adjustments 2,267 4,294 7,512
Adjusted Net Income $             1,097 $         10,567 $         20,073 $       24,600 $        36,453
Adjusted Net Income per common share—
– Basic $              0.02 $             0.24 $             0.43 $           0.55 $              0.54
– Diluted $             0.02 $             0.23 $             0.42 $           0.53 $              0.53
Weighted average number of shares – basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Weighted average number of shares – diluted 45,747,255 45,937,515 47,808,457 46,134,231 47,718,578

We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs and (vi) Other charges, net. EBITDA for the periods indicated is defined as net income (loss) before interest income, net, income tax expense (benefit) and depreciation and amortization.

We prepare Adjusted Net Income 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 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) Equity-based compensation expense, (ii) Foreign currency loss, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs, (vi) Other charges, net and (vii) Income tax effect on non-GAAP adjustments.

For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, incurred in connection with the regulatory requests, both of which were offset in part by a $0.7 million legal settlement gain related to certain expenses incurred in prior periods in connection with our legacy Fab 4 (which was sold during the year ended December 31, 2020) and awarded in the third quarter of 2021.

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SOURCE Magnachip Semiconductor Corporation

SEOUL, South KoreaOct. 19, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that it will report its financial results for the third quarter ended September 30, 2022, on Wednesday, November 2, 2022, after the market closes. The Company will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET to discuss its financial results.

Magnachip logo

In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call.

Online registration: https://register.vevent.com/register/BIccd8bcc64c4a4092bc5e11273a22e8f2

A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the company’s website at www.magnachip.com.

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design 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.

CONTACTS:

Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

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SOURCE Magnachip Semiconductor Corporation

SEOUL, South KoreaSept. 12, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced that the Board of Directors has authorized an expansion of the Company’s previously announced stock repurchase program from $75 million to $87.5 million of the Company’s common stock. The Company has already repurchased shares worth $37.5 million under the program.

(PRNewsfoto/Magnachip Semiconductor)

The remaining $50.0 million of the expanded $87.5 million program will be repurchased in the open market or through privately negotiated transactions. In connection with the repurchase program, the Company has established a stock trading plan in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934.

The timing of stock repurchases and the number of shares of common stock to be repurchased will depend upon prevailing market conditions and other factors.

 

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor created thereby. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These forward-looking statements are often, but not always, made through the use of words or phrases such as “may,” “will,” “will be,” “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe(s),” “intend,” “predict,” “potential,” “future,” “strategy,” “opportunity” and similar words or phrases or the negatives of these words or phrases. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including, but not limited to: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to inflation, potential recessions or other deteriorations, economic instability or civil unrest the COVID 19 pandemic or the emergence of various variants of the virus or other outbreaks of disease, and governmental lock-downs or other measures implemented in response thereto, and the Russia-Ukraine conflict; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs, as well as impacting demand for our products from customers who are similarly affected by such capacity constraints or disruptions; 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 or supply constraints; 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, our customers and our distributors, including those related to the Russia-Ukraine conflict; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products, including uncertainties regarding the impacts of the COVID-19 pandemic or the emergence of various variants of the virus that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for Magnachip’s products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks and uncertainties and the factors identified under “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and updated in subsequent reports filed by the Company with the U.S. Securities and Exchange Commission and/or make available on our website. These reports are available at www.magnachip.com or www.sec.gov. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update them in light of new information or future events.

 

About Magnachip Semiconductor
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACT:
Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

 

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SOURCE Magnachip Semiconductor Corporation

  • Revenue of $101.4 million was down 2.6% sequentially and down 11.0% year-over-year (YoY). The YoY decrease was mainly due to severe supply shortages for 28nm 12″ OLED wafers, partially offset by an 11.1% YoY increase in Power solutions business revenue.
  • Gross profit margin was 28.6%, down 890 basis points from Q1 and down 120 basis points from Q2 a year ago. The sequential decrease was primarily the result of: 1) the prior quarter benefiting 200 basis points from a one-time timing mismatch of lower cost 12″ wafers, 2) lower demand for China smartphones resulting in an inventory reserve of approximately $4.7 million related to 12″ display products, 3) higher foundry cost relating to 12″ wafers and 4) unfavorable product mix.
  • GAAP diluted loss per share was $0.07.
  • Non-GAAP diluted earnings per share (EPS) was $0.23.

 

SEOUL, South KoreaAug. 8, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the second quarter of 2022.

Commenting on the results for the second quarter of 2022, YJ Kim, Magnachip’s chief executive officer stated, “In the second quarter of 2022, we reported revenue of $101.4 million and non-GAAP diluted EPS of $0.23 despite an increasingly challenging macroeconomic environment. Similar to last quarter, our OLED revenue continued to be impacted by severe supply shortages for 28nm 12-inch wafers and our Power solutions business continued its positive momentum of double-digit YoY growth.”

YJ Kim continued, “Looking ahead, we are facing several challenges in the 2nd half of 2022 that will further impact our near-term results before we expect recovery in 2023. First, lower allocation of 28nm wafers impacted timing of design wins. Second, our new customer ramp schedule will be delayed due to product feature changes. And third, we are seeing a slowdown of the smartphone market. However, we have successfully sampled the full working chip to our new OLED customer, and we expect to get better wafer allocations starting at the end of 2022. We are confident that we will begin to see a recovery of our OLED business in 2023. Accordingly, our Board of Directors has reaffirmed the remaining $37.5 million stock repurchase program that we announced previously. We have also activated the Strategic Review Committee to assist the Board in reviewing, considering, exploring and evaluating strategic alternatives that may be available to the Company to maximize shareholder value while we focus on executing our OLED recovery plan in 2023 and continuing our success in the Power solutions business.”

 

Stock Repurchase Program and Strategic Review Committee

The Company’s Board of Directors reaffirmed the remaining $37.5 million stock repurchase program that was announced previously. Magnachip believes that this stock repurchase program and continuing to drive its OLED business recovery plan combined with the continued momentum of its Power solutions business, the Company is well positioned to drive significant accretion and value for shareholders over the coming years.

Magnachip also announced today that the Board of Directors has activated the Strategic Review Committee to assist the Board in reviewing, considering, exploring and evaluating strategic alternatives that may be available to the Company to maximize shareholder value. The committee’s mandate is to review the Company’s capital allocation plans and actively explore potential strategic and transactional opportunities, including, but not limited to, joint ventures, strategic partnerships and M&A possibilities that may arise in the future, and make recommendations to the Board regarding those matters, as appropriate. The Strategic Review Committee includes directors Melvin Keating, Ilbok Lee, Camillo Martino and Gary Tanner.

 

Q2 2022 Financial Highlights
In thousands of U.S. dollars, except share data
GAAP
Q2 2022 Q1 2022 Q/Q change Q2 2021 Y/Y change
Revenues
Standard Products Business
Display Solutions 28,336 29,185 down 2.9 % 46,601 down 39.2 %
Power Solutions 62,952 64,825 down 2.9 % 56,667 up 11.1 %
Transitional Fab 3 foundry services(1) 10,088 10,083 up 0.0 % 10,608 down 4.9 %
Gross Profit Margin 28.6 % 37.5 % down 8.9 %pts 29.8 % down 1.2 %pts
Operating Income(2) 2,002 12,879 down 84.5 % 1,627 up 23.0 %
Net Income (Loss) (3,340) 9,528 down n/a (198) down n/a
Basic Earnings (Loss) per Common Share (0.07) 0.21 down n/a (0.00) down n/a
Diluted Earnings (Loss) per Common Share (0.07) 0.20 down n/a (0.00) down n/a
In thousands of U.S. dollars, except share data
Non-GAAP(3)
Q2 2022 Q1 2022 Q/Q change Q2 2021 Y/Y change
Adjusted Operating Income 4,787 14,517 down 67.0 % 9,052 down 47.1 %
Adjusted EBITDA 8,525 18,755 down 54.5 % 12,692 down 32.8 %
Adjusted Net Income 10,567 12,936 down 18.3 % 7,034 up 50.2 %
Adjusted Earnings per Common Share—Diluted 0.23 0.28 down 17.9 % 0.15 up 53.3 %
___________
(1) Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, and for a period of up to three years, we will provide transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi (“Transitional Fab 3 Foundry Services”). Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions business lines.
(2) In Q2 2022, operating income of $2.0 million included professional service fees and expenses of $0.8 million incurred in connection with certain strategic evaluations. In Q2 2021, operating income of $1.6 million included professional service fees and expenses of $2.5 million incurred in connection with the contemplated merger transaction and non-recurring professional service fees and expenses of $2.6 million incurred in connection with the regulatory requests.
(3) 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 our 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 (loss) 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.

 

Q3 2022 Financial Guidance

The Company’s near-term outlook is being challenged by further OLED wafer shortages, pushout of initial mass production ramp of our new OLED customer outside of Korea, weakening demand in consumer end markets on growing recession fears and cost increases, including labor, due to inflationary pressures.  While actual results may vary, looking into the next quarter, Magnachip currently expects:

  • Revenue to be in the range of $70 million to $75 million, including about $9 million of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 26.5% to 28.5%.

 

Q2 2022 Earnings Conference Call

Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Monday, August 8, 2022, to discuss its financial results. In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the Company’s website at www.magnachip.com.

 

Online registration: https://register.vevent.com/register/BI726a270135494c57a56defb9ec4da9d0

 

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 expectations about estimated historical or future operating results and financial performance, outlook and business plans, including third quarter 2022 revenue and gross profit margin expectations, and the impact of market conditions associated with inflation and rising interest rates, the COVID-19 pandemic or the emergence of various variants of the virus, geopolitical conflict between Russia and Ukraine, and escalated trade tensions and supply constraints on Magnachip’s third quarter 2022 and future operating results. 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, among others: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to inflation, potential recessions or other deteriorations, economic instability or civil unrest the COVID-19 pandemic or the emergence of various variants of the virus or other outbreaks of disease, and governmental lock-downs or other measures implemented in response thereto, and the Russia-Ukraine conflict; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs, as well as impacting demand for our products from customers who are similarly affected by such capacity constraints or disruptions; 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, our customers and our distributors, including those related to the Russia-Ukraine conflict; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products, including uncertainties regarding the impacts of the COVID-19 pandemic or the emergence of various variants of the virus that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for Magnachip’s products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks detailed from time to time in Magnachip’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Form 10-K filed on February 23, 2022 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.

 

About Magnachip Semiconductor

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACT:
Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30,
2022
March 31,
2022
June 30,
2021
June 30,
2022
June 30,
2021
Revenues:
Net sales – standard products business $         91,288 $         94,010 $       103,268 $       185,298 $       216,174
Net sales – transitional Fab 3 foundry services 10,088 10,083 10,608 20,171 20,721
Total revenues 101,376 104,093 113,876 205,469 236,895
Cost of sales:
Cost of sales – standard products business 63,620 56,080 70,409 119,700 149,656
Cost of sales – transitional Fab 3 foundry services 8,811 9,017 9,497 17,828 18,887
Total cost of sales 72,431 65,097 79,906 137,528 168,543
Gross profit 28,945 38,996 33,970 67,941 68,352
Gross profit as a percentage of standard products business net sales 30.3 % 40.3 % 31.8 % 35.4 % 30.8 %
Gross profit as a percentage of total revenues 28.6 % 37.5 % 29.8 % 33.1 % 28.9 %
Operating expenses:
Selling, general and administrative expenses 12,736 14,163 14,001 26,899 26,635
Research and development expenses 13,410 11,954 13,322 25,364 26,745
Merger-related costs 2,459 12,290
Other charges 797 2,561 797 3,146
Total operating expenses 26,943 26,117 32,343 53,060 68,816
Operating income (loss) 2,002 12,879 1,627 14,881 (464 )
Interest expense (499) (111) (85) (610 ) (1,126 )
Foreign currency gain (loss), net (7,012) (690) 250 (7,702 ) (4,421 )
Other income, net 1,272 933 611 2,205 1,231
Income (loss) before income tax expense (4,237) 13,011 2,403 8,774 (4,780 )
Income tax expense (benefit) (897) 3,483 2,601 2,586 2,891
Net income (loss) $          (3,340) $           9,528 $             (198) $           6,188 $          (7,671 )
Basic earnings (loss) per common share— $            (0.07) 0.21 $            (0.00) $             0.14 $            (0.18 )
Diluted earnings (loss) per common share— $            (0.07) 0.20 $            (0.00) $             0.13 $            (0.18 )
Weighted average number of shares—
Basic 44,897,278 45,603,208 46,322,027 45,248,293 43,324,088
Diluted 44,897,278 46,693,294 46,322,027 46,329,559 43,324,088

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
June 30,
2022
December 31,
2021
(In thousands of U.S. dollars, except share data)
Assets
Current assets
Cash and cash equivalents $                 273,797 $                   279,547
Accounts receivable, net 59,817 50,954
Inventories, net 36,168 39,370
Other receivables 14,094 25,895
Prepaid expenses 10,783 7,675
Hedge collateral 6,990 3,060
Other current assets 8,361 2,619
Total current assets 410,010 409,120
Property, plant and equipment, net 96,832 107,882
Operating lease right-of-use assets 3,322 4,275
Intangible assets, net 1,979 2,377
Long-term prepaid expenses 14,953 8,243
Deferred income taxes 37,825 41,095
Other non-current assets 10,804 10,662
Total assets $                 575,725 $                   583,654
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $                   38,143 $                     37,593
Other accounts payable 14,835 6,289
Accrued expenses 15,426 20,071
Accrued income taxes 11,823
Operating lease liabilities 1,838 2,323
Other current liabilities 8,562 7,382
Total current liabilities 78,804 85,481
Accrued severance benefits, net 30,466 33,064
Non-current operating lease liabilities 1,485 1,952
Other non-current liabilities 16,823 10,395
Total liabilities 127,578 130,892
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 56,234,774 shares issued and 44,903,718 outstanding at June 30, 2022 and 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 562 559
Additional paid-in capital 263,698 241,197
Retained earnings 349,730 343,542
Treasury stock, 11,331,056 shares at June 30, 2022 and 10,246,016 shares at December 31, 2021, respectively (148,523) (130,306)
Accumulated other comprehensive loss (17,320) (2,230)
Total stockholders’ equity 448,147 452,762
Total liabilities and stockholders’ equity $                 575,725 $                   583,654

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months
Ended
Six Months
Ended
June 30,
2022
June 30,
2022
June 30,
2021
Cash flows from operating activities
Net income (loss) $     (3,340) $       6,188 $     (7,671)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization 3,711 7,602 6,998
Provision for severance benefits 1,570 3,240 3,507
Amortization of debt issuance costs and original issue discount 261
Loss on foreign currency, net 22,803 29,183 13,353
Provision for inventory reserves 5,137 5,282 3,346
Stock-based compensation 1,988 3,626 4,051
Other, net 551 712 266
Changes in operating assets and liabilities
Accounts receivable, net (11,164) (12,377) 5,098
Inventories (6,942) (5,486) (7,170)
Other receivables 10,973 11,640 (4,841)
Other current assets 4,740 (2,089) 8,623
Accounts payable 1,891 2,429 1,040
Other accounts payable (5,159) (5,861) (674)
Accrued expenses (2,896) (2,709) (2,298)
Accrued income taxes (9,167) (11,513) (10,249)
Other current liabilities (1,442) (2,153) (102)
Other non-current liabilities 643 570 (274)
Payment of severance benefits (1,545) (2,934) (2,836)
Other, net (207) (385) (62)
Net cash provided by operating activities 12,145 24,965 10,366
Cash flows from investing activities
Proceeds from settlement of hedge collateral 976 2,805 972
Payment of hedge collateral (3,953) (6,844) (585)
Purchase of property, plant and equipment (567) (1,511) (4,866)
Payment for intellectual property registration (94) (153) (288)
Collection of guarantee deposits 307
Payment of guarantee deposits (970) (1,049) (4,960)
Other, net 12 14 (130)
Net cash used in investing activities (4,596) (6,738) (9,550)
Cash flows from financing activities
Proceeds from exercise of stock options 5 1,786 2,549
Acquisition of treasury stock (996) (1,826) (1,653)
Repayment of financing related to water treatment facility arrangement (127) (261) (288)
Repayment of principal portion of finance lease liabilities (16) (32) (33)
Net cash provided by (used in) financing activities (1,134) (333) 575
Effect of exchange rates on cash and cash equivalents (17,539) (23,644) (9,451)
Net decrease in cash and cash equivalents (11,124) (5,750) (8,060)
Cash and cash equivalents
Beginning of the period 284,921 279,547 279,940
End of the period $   273,797 $   273,797 $   271,880

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30,
2022
March 31,
2022
June 30,
2021
June 30,
2022
June 30,
2021
Operating income (loss) $ 2,002 $ 12,879 $ 1,627 $ 14,881 $ (464)
Adjustments:
Equity-based compensation expense 1,988 1,638 2,405 3,626 4,051
Merger-related costs 2,459 12,290
Other charges 797 2,561 797 3,146
Adjusted Operating Income $ 4,787 $ 14,517 $ 9,052 $ 19,304 $ 19,023

 

We present Adjusted Operating Income as a supplemental measure of our performance. We define Adjusted Operating Income for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense (ii) Merger-related costs and (iii) Other charges.

For the three and six months ended June 30, 2021, we recorded $2,459 thousand and $12,290 thousand, respectively, of professional service fees and expenses incurred in connection with the contemplated merger transaction.

For the three and six months ended June 30, 2022, we recorded $797 thousand of professional service fees and expenses incurred in connection with certain strategic evaluations. For the three and six months ended June 30, 2021, we recorded $2,561 thousand and $3,146 thousand, respectively, of non-recurring professional service fees and expenses incurred in connection with the regulatory requests.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30,
2022
March 31,
2022
June 30,
2021
June 30,
2022
June 30,
2021
Net income (loss) $          (3,340) $           9,528 $             (198) $         6,188 $        (7,671)
Adjustments:
Interest income, net (562) (604) (493) (1,166) (73)
Income tax expense (benefit) (897) 3,483 2,601 2,586 2,891
Depreciation and amortization 3,711 3,891 3,550 7,602 6,998
EBITDA (1,088) 16,298 5,460 15,210 2,145
Equity-based compensation expense 1,988 1,638 2,405 3,626 4,051
Foreign currency loss (gain), net 7,012 690 (250) 7,702 4,421
Derivative valuation loss (gain), net (184) 129 57 (55) 143
Merger-related costs 2,459 12,290
Other charges 797 2,561 797 3,146
Adjusted EBITDA $           8,525 $         18,755 $         12,692 $       27,280 $       26,196
Net income (loss) $          (3,340) $           9,528 $             (198) $         6,188 $        (7,671)
Adjustments:
Equity-based compensation expense 1,988 1,638 2,405 3,626 4,051
Foreign currency loss (gain), net 7,012 690 (250) 7,702 4,421
Derivative valuation loss (gain), net (184) 129 57 (55) 143
Merger-related costs 2,459 12,290
Other charges 797 2,561 797 3,146
Income tax effect on non-GAAP adjustments 4,294 951 5,245
Adjusted Net Income $         10,567 $         12,936 $           7,034 $       23,503 $     16,380
Adjusted Net Income per common share—
– Basic $             0.24 $             0.28 $             0.15 $           0.52 $           0.38
– Diluted $             0.23 $             0.28 $             0.15 $           0.51 $           0.36
Weighted average number of shares – basic 44,897,278 45,603,208 46,322,027 45,248,293 43,324,088
Weighted average number of shares – diluted 45,937,515 46,693,294 47,846,217 46,329,559 47,685,875

 

We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Merger-related costs and (v) Other charges. EBITDA for the periods indicated is defined as net income (loss) before interest income, net, income tax expense (benefit) and depreciation and amortization.

We prepare Adjusted Net Income 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 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) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Merger-related costs, (v) Other charges and (vi) Income tax effect on non-GAAP adjustments.

For the three and six months ended June 30, 2021, we recorded $2,459 thousand and $12,290 thousand, respectively, of professional service fees and expenses incurred in connection with the contemplated merger transaction.

For the three and six months ended June 30, 2022, we recorded $797 thousand of professional service fees and expenses incurred in connection with certain strategic evaluations. For the three and six months ended June 30, 2021, we recorded $2,561 thousand and $3,146 thousand, respectively, of non-recurring professional service fees and expenses incurred in connection with the regulatory requests.

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SOURCE Magnachip Semiconductor Corporation

SEOUL, South KoreaJuly 27, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that its management will participate at the Oppenheimer 25th Annual Technology, Internet & Communications Conference virtually between August 9 and August 10, 2022.

(PRNewsfoto/Magnachip Semiconductor)

Mr. YJ Kim, Magnachip’s chief executive officer, and Ms. Shinyoung Park, Magnachip’s chief financial officer, will be available for one-on-one and small group meetings with institutional investors during the conference. For more information about the conference or to request a one-on-one meeting, please contact an Oppenheimer sales representative.

 

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACTS:
Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

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SOURCE Magnachip Semiconductor Corporation

SEOUL, South KoreaJuly 25, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that it will report its financial results for the second quarter ended June 30, 2022, on Monday, August 8, 2022, after the market closes. The Company will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET to discuss its financial results.

(PRNewsfoto/Magnachip Semiconductor)In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call.

Online registration: https://register.vevent.com/register/BI726a270135494c57a56defb9ec4da9d0

A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the company’s website at www.magnachip.com.

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACTS:

Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

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SOURCE Magnachip Semiconductor Corporation

  • Revenue of $104.1 million was down 5.7% sequentially and down 15.4% year-over-year (YoY). The decrease was mainly due to a 29.3% sequential decline in Display solutions revenue as a result of continued severe supply shortage of 28nm 12″ OLED wafers, partially offset by record revenue in our Power solutions business, which was up 11.4% sequentially and 20.0% YoY on strong demand in premium products.
  • Gross profit margin was 37.5%, up 250 basis points from Q4 and up over 960 basis points from Q1 a year ago. The YoY increase was primarily attributable to an improved product mix, combined with an increase in average selling price under a favorable pricing environment.  Sequentially, Q1 benefited by approximately 200 basis points from the timing mismatch of lower cost 12″ wafers purchased in a prior period and sold in Q1.
  • GAAP diluted earnings per share (EPS) was $0.20.
  • Non-GAAP diluted EPS was $0.28.

 

SEOUL, South KoreaMay 3, 2022 – Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the first quarter of 2022.

(PRNewsfoto/Magnachip Semiconductor)Commenting on the results for the first quarter of 2022, YJ Kim, Magnachip’s chief executive officer stated, “In Q1, we reported revenue of $104.1 million and non-GAAP EPS of 28 cents, which was an increase of 27% year-over-year bolstered by a strong gross profit margin.  As expected, OLED revenue remained severely impacted by the shortage of 28nm 12-inch wafer supply; however, this impact was somewhat offset by strength in our Power solutions business, which achieved yet another record quarterly revenue.”

YJ Kim continued, “Looking forward, the ongoing lockdowns in China has added new challenges to an already stressed supply chain. Despite the current macro issues, which may limit our near-term growth, our recent design tractions with an existing OLED customer, broadening customer base, and new wafer capacity later this year give us confidence and optimism about our long-term growth.”

 

Q1 2022 Financial Highlights
In thousands of U.S. dollars, except share data
GAAP
Q1 2022 Q4 2021 Q/Q change Q1 2021 Y/Y change
Revenues
Standard Products Business
Display Solutions 29,185 41,298 down 29.3 % 58,895 down 50.4 %
Power Solutions 64,825 58,212 up 11.4 % 54,011 up 20.0 %
Transitional Fab 3 foundry services(1) 10,083 10,825 down 6.9 % 10,113 down 0.3 %
Gross Profit Margin 37.5 % 35.0 % up 2.5 % pts 27.9 % up 9.6 % pts
Operating Income (Loss)(2) 12,879 63,870 down 79.8 % (2,091) up n/a
Net Income (Loss) 9,528 53,611 down 82.2 % (7,473) up n/a
Basic Earnings (Loss) per Common Share 0.21 1.16 down 81.9 % (0.19) up n/a
Diluted Earnings (Loss) per Common Share 0.20 1.12 down 82.1 % (0.19) up n/a
In thousands of U.S. dollars, except share data
Non-GAAP(3)
Q1 2022 Q4 2021 Q/Q change Q1 2021 Y/Y change
Adjusted Operating Income 14,517 14,421 up 0.7 % 9,971 up 45.6 %
Adjusted EBITDA 18,755 18,144 up 3.4 % 13,504 up 38.9 %
Adjusted Net Income 12,936 14,606 down 11.4 % 9,346 up 38.4 %
Adjusted Earnings per Common Share—Diluted 0.28 0.31 down 9.7 % 0.22 up 27.3 %
 
(1) Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, and for a period of up to three years, we will provide transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi (“Transitional Fab 3 Foundry Services”). Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions businesses.
(2) For the three months ended December 31, 2021, operating income of $63.9 million included net gain of $49.4 million that represented $70.2 million income from the recognition of a reverse termination fee, net of professional service fees and expenses of $20.8 million incurred in connection with the contemplated merger transaction.
(3) 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 our 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 (loss) 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.

 

Q2 2022 Financial Guidance
Our near-term outlook is still being challenged by persisting supply constraints, especially for 28nm 12″ wafers.  While actual results may vary, looking into the next quarter, Magnachip currently expects:

  • Revenue to be in the range of $100 million to $105 million, including about $9.5 million of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 33% to 35%.

Q1 2022 Earnings Conference Call
Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on May 3, 2022 to discuss its financial results. The conference call will be webcast live and also is available by dialing toll-free at 1-844-536-5472 in US/Canada. International call-in participants can dial 1-614-999-9318. The conference ID number is 2619959. Participants are encouraged to initiate their calls at least 10 minutes in advance of the start time to ensure a timely connection. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the company’s website at www.magnachip.com. A replay of the conference call will be available until 8:00 p.m. ET on May 10, 2022. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056.  The conference ID number is 2619959.

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 expectations about estimated historical or future operating results and financial performance, outlook and business plans, including second quarter 2022 revenue and gross profit margin expectations, and the impact of the COVID-19 pandemic or the emergence of various variants of the virus, escalated trade tensions and supply constraints on Magnachip’s second quarter 2022 and future operating results. 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, among others: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to the COVID-19 pandemic or the emergence of various variants of the virus and governmental lock-downs or other measures implemented in response thereto, other outbreaks of disease, the Russia-Ukraine crisis, recessions, economic instability or civil unrest; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs, as well as impacting demand for our products from customers who are similarly affected by such capacity constraints or disruptions; 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 or supply constraints; 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, our customers and our distributors, including those related to the Russia-Ukraine crisis; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products, including uncertainties regarding the impacts of the COVID-19 pandemic or the emergence of various variants of the virus that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for Magnachip’s products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks detailed from time to time in Magnachip’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Form 10-K filed on February 23, 2022 (including that the impact of the COVID-19 pandemic or the emergence of various variants of the virus, trade tensions and supply constraints may also exacerbate the risks discussed therein) 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.

 

About Magnachip Semiconductor
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,150 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACTS:
Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2022 2021 2021
Revenues:
          Net sales – standard products business $ 94,010 $ 99,510 $ 112,906
          Net sales – transitional Fab 3 foundry services 10,083 10,825 10,113
               Total revenues 104,093 110,335 123,019
Cost of sales:
          Cost of sales – standard products business 56,080 62,206 79,247
          Cost of sales – transitional Fab 3 foundry services 9,017 9,525 9,390
               Total cost of sales 65,097 71,731 88,637
Gross profit 38,996 38,604 34,382
Gross profit as a percentage of standard products business net sales 40.3 % 37.5 % 29.8 %
Gross profit as a percentage of total revenues 37.5 % 35.0 % 27.9 %
Operating expenses:
          Selling, general and administrative expenses 14,163 13,255 12,634
          Research and development expenses 11,954 12,197 13,423
          Merger-related costs (income), net (49,369) 9,831
          Other charges, net (1,349) 585
               Total operating expenses (income) 26,117 (25,266) 36,473
Operating income (loss) 12,879 63,870 (2,091)
          Interest expense (111) (132) (1,041)
          Foreign currency gain (loss), net (690) 147 (4,671)
          Other income, net 933 947 620
Income (loss) before income tax expense 13,011 64,832 (7,183)
Income tax expense 3,483 11,221 290
Net income (loss) $ 9,528 $ 53,611 $ (7,473)
Basic earnings (loss) per common share— $ 0.21 $ 1.16 $ (0.19)
Diluted earnings (loss) per common share— $ 0.20 $ 1.12 $ (0.19)
Weighted average number of shares—
          Basic 45,603,208 46,369,520 40,292,838
          Diluted 46,693,294 47,691,816 40,292,838

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
      March 31,

      2022

    December 31,

      2021

Assets
Current assets
          Cash and cash equivalents $  284,921 $  279,547
          Accounts receivable, net 51,208 50,954
          Inventories, net 36,947 39,370
          Other receivables 26,121 25,895
          Prepaid expenses 9,124 7,675
          Hedge collateral 4,060 3,060
          Other current assets 9,262 2,619
               Total current assets 421,643 409,120
Property, plant and equipment, net 102,675 107,882
Operating lease right-of-use assets 3,719 4,275
Intangible assets, net 2,203 2,377
Long-term prepaid expenses 6,771 8,243
Deferred income taxes 40,246 41,095
Other non-current assets 10,608 10,662
               Total assets $  587,865 $  583,654
Liabilities and Stockholders’ Equity
Current liabilities
          Accounts payable $    37,566 $    37,593
          Other accounts payable 7,707 6,289
          Accrued expenses 20,573 20,071
          Accrued income taxes 9,361 11,823
          Operating lease liabilities 2,223 2,323
          Other current liabilities 6,989 7,382
               Total current liabilities 84,419 85,481
Accrued severance benefits, net 32,572 33,064
Non-current operating lease liabilities 1,496 1,952
Other non-current liabilities 8,216 10,395
               Total liabilities 126,703 130,892
Commitments and contingencies
Stockholders’ equity
          Common stock, $0.01 par value, 150,000,000 shares authorized, 56,225,441 shares issued and
44,894,385 outstanding at March 31, 2022 and 55,905,320 shares issued and 45,659,304
outstanding at December 31, 2021
562 559
          Additional paid-in capital 261,830 241,197
          Retained earnings 353,070 343,542
          Treasury stock, 11,331,056 shares at March 31, 2022 and 10,246,016 shares at December 31, 2021, respectively (148,523 ) (130,306 )
          Accumulated other comprehensive loss (5,777 ) (2,230 )
               Total stockholders’ equity 461,162 452,762
               Total liabilities and stockholders’ equity $   587,865 $   583,654

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended
March 31,
2022
March 31,
2021
Cash flows from operating activities
Net income (loss) $        9,528 $       (7,473 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities
          Depreciation and amortization 3,891 3,448
          Provision for severance benefits 1,670 1,771
          Amortization of debt issuance costs and original issue discount 261
          Loss on foreign currency, net 6,380 14,873
          Provision for inventory reserves 145 1,504
          Stock-based compensation 1,638 1,646
          Other, net 161 154
Changes in operating assets and liabilities
          Accounts receivable, net (1,213 ) 9,794
          Inventories 1,456 6,071
          Other receivables 667 (1,438 )
          Other current assets (6,829 ) 5,427
          Accounts payable 538 (7,701 )
          Other accounts payable (702 ) 1,570
          Accrued expenses 187 2,393
          Accrued income taxes (2,346 ) (10,700 )
          Other current liabilities (711 ) 1,087
          Other non-current liabilities (73 ) 18
          Payment of severance benefits (1,389 ) (1,493 )
          Other, net (178 ) 12
Net cash provided by operating activities 12,820 21,224
Cash flows from investing activities
          Proceeds from settlement of hedge collateral 1,829
          Payment of hedge collateral (2,891 )
          Purchase of property, plant and equipment (944 ) (1,082 )
          Payment for intellectual property registration (59 ) (171 )
          Other, net (77 ) (111 )
Net cash used in investing activities (2,142 ) (1,364 )
Cash flows from financing activities
          Proceeds from exercise of stock options 1,781 2,538
          Acquisition of treasury stock (830 ) (1,540 )
          Repayment of financing related to water treatment facility arrangement (134 ) (144 )
          Repayment of principal portion of finance lease liabilities (16 ) (16 )
Net cash provided by financing activities 801 838
Effect of exchange rates on cash and cash equivalents (6,105 ) (10,444 )
Net increase in cash and cash equivalents 5,374 10,254
Cash and cash equivalents at beginning of period 279,547 279,940
Cash and cash equivalents at end of period $    284,921 $    290,194

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2022 2021 2021
Operating income (loss) $ 12,879 $ 63,870 $ (2,091)
Adjustments:
          Equity-based compensation expense 1,638 1,648 1,646
          Inventory reserve related to Huawei impact of downstream trade restrictions (379)
          Merger-related costs (income), net (49,369) 9,831
          Other charges, net (1,349) 585
Adjusted Operating Income $ 14,517 $ 14,421 $ 9,971

We present Adjusted Operating Income as a supplemental measure of our performance. We define Adjusted Operating Income for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense, (ii) Inventory reserve related to Huawei impact of downstream trade restrictions, (iii) Merger-related costs (income), net and (iv) Other charges, net.

For the three months ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $49,369 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $20,831 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018), partially offset by $70 thousand of non-recurring expenses incurred in connection with the regulatory requests.

For the three months ended March 31, 2021, we recorded $9,831 thousand non-recurring professional service fees and expenses incurred in connection with the contemplated merger transaction. For the same period, we also recorded $585 thousand non-recurring professional service fees and expenses incurred in connection with the regulatory requests.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2022 2021 2021
Net income (loss) $ 9,528 $ 53,611 $ (7,473)
Adjustments:
          Interest expense (income), net (604) (726) 420
          Income tax expense 3,483 11,221 290
          Depreciation and amortization 3,891 3,663 3,448
EBITDA 16,298 67,769 (3,315)
          Equity-based compensation expense 1,638 1,648 1,646
          Foreign currency loss (gain), net 690 (147) 4,671
          Derivative valuation loss (gain), net 129 (29) 86
          Inventory reserve related to Huawei impact of downstream trade restrictions (379)
          Merger-related costs (income), net (49,369) 9,831
          Other charges, net (1,349) 585
Adjusted EBITDA $ 18,755 $ 18,144 $ 13,504
Net income (loss) $ 9,528 $ 53,611 $ (7,473)
Adjustments:
          Equity-based compensation expense 1,638 1,648 1,646
          Foreign currency loss (gain), net 690 (147) 4,671
          Derivative valuation loss (gain), net 129 (29) 86
          Inventory reserve related to Huawei impact of downstream trade restrictions (379)
          Merger-related costs (income), net (49,369) 9,831
          Other charges, net (1,349) 585
          GAAP and cash tax expense difference 907
          Income tax effect on non-GAAP adjustments 951 9,713
Adjusted Net Income $ 12,936 $ 14,606 $ 9,346
Adjusted Net Income per common share—
          – Basic $ 0.28 $ 0.31 $ 0.23
          – Diluted $ 0.28 $ 0.31 $ 0.22
Weighted average number of shares – basic 45,603,208 46,369,520 40,292,838
Weighted average number of shares – diluted 46,693,294 47,691,816 47,470,416

We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Inventory reserve related to Huawei impact of downstream trade restrictions, (v) Merger-related costs (income), net and (vi) Other charges, net. EBITDA for the periods indicated is defined as net income (loss) before interest expense (income), net, income tax expense and depreciation and amortization.

We prepare Adjusted Net Income 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 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) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Inventory reserve related to Huawei impact of downstream trade restrictions, (v) Merger-related costs (income), net, (vi) Other charges, net, (vii) GAAP and cash tax expense difference and (viii) Income tax effect on non-GAAP adjustments.

For the three months ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $49,369 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $20,831 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018), partially offset by $70 thousand of non-recurring expenses incurred in connection with the regulatory requests.

For the three months ended March 31, 2021, we recorded $9,831 thousand non-recurring professional service fees and expenses incurred in connection with the contemplated merger transaction. For the same period, we also recorded $585 thousand non-recurring professional service fees and expenses incurred in connection with the regulatory requests.

 

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SOURCE Magnachip Semiconductor Corporation

SEOUL, South KoreaApril 7, 2022 – Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that it will report its financial results for the first quarter ended March 31, 2022, on Tuesday, May 3, 2022, after the market closes. The Company will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET to discuss its financial results.

The conference call will be webcast live and also is available by dialing toll-free at 1-844-536-5472 in US/Canada. International call-in participants can dial 1-614-999-9318. The conference ID number is 2619959. Participants are encouraged to initiate their calls at least 10 minutes in advance of the start time to ensure a timely connection. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the company’s website at www.magnachip.com.   A replay of the conference call will be available until 8:00 p.m. ET on May 10, 2022. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056.  The conference ID number is 2619959.

 

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,150 registered patents and pending applications, and has extensive engineering, design 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.

 

CONTACTS:

So-Yeon Jeong
Jeong Consulting
Tel. +1-408-712-6151
Investor.relations@magnachip.com

Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

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SOURCE Magnachip Semiconductor Corporation

– Fourth quarter revenue of $110.3 million was down 13.1% sequentially and down 22.8% year-over-year (YoY) due mainly to severe supply shortages especially for 28nm 12″ OLED wafers; Full-year revenue of $474.2 million decreased 6.5% YoY due primarily to a revenue decrease in our OLED business due to wafer supply shortages, offset in part by strong growth in our Power business.
– GAAP gross profit margin for the fourth quarter was 35.0%, down 170 bps sequentially and up 810 bps YoY; Full-year GAAP gross profit margin of 32.4% was an increase of 710 bps YoY due mainly to improved product mix, increased average selling price, and a higher utilization rate.
– GAAP diluted earnings per share (EPS) for the fourth quarter was $1.12; Full-year GAAP diluted EPS was $1.21.
– Non-GAAP diluted EPS for the fourth quarter was $0.31; Full-year non-GAAP diluted EPS was $1.09.
SEOUL, South Korea, Feb. 16, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the fourth quarter and full-year 2021.

Commenting on the results for the fourth quarter of 2021, YJ Kim, Magnachip’s chief executive officer stated, “For the fourth quarter, the demand and signals from our customers remained strong across the board. However, severe supply constraints continued to significantly limit our OLED revenue potential, which was partially offset by strong Power business. We reported $110.3 million in revenue and 31 cents in non-GAAP diluted EPS for the fourth quarter.”

Commenting on the full-year, YJ stated, “While our 2021 revenue was negatively impacted by continuing supply shortages, especially for 28nm 12″ OLED wafers, we delivered higher profitability in all of our key measures in 2021 compared to 2020. In addition, our team at Magnachip achieved critical milestones to fuel future growth; we broadened our customer base, further penetrated new applications, and enhanced our supply chain for additional manufacturing capacity, which is expected to come online in the later part of 2022. While our near-term outlook is still being challenged by persisting supply constraints, these developments reinforce our confidence and optimism about our long-term growth.”

Q4 and 2021 Financial Highlights

In thousands of U.S dollars, except share data
GAAP
Q4 2021 Q3 2021 Q/Q change Q4 2020 Y/Y change
Revenues
Standard Products Business
Display Solutions 41,298 58,528 down 29.4 % 82,705 down 50.1 %
Power Solutions 58,212 58,887 down 1.1 % 46,861 up 24.2 %
Transitional Fab 3 foundry services(1) 10,825 9,585 up 12.9 % 13,379 down 19.1 %
Gross Profit Margin 35.0 % 36.7 % down 1.7 %pts 26.9 % up 8.1 %pts
Operating Income 63,870 20,001 up 219.3 % 9,206 up 593.8 %
Net Income 53,611 10,768 up 397.9 % 66,581 down 19.5 %
Basic Earnings per Common Share 1.16 0.23 up 404.3 % 1.87 down 38.0 %
Diluted Earnings per Common Share 1.12 0.23 up 387.0 % 1.45 down 22.8 %

 

In thousands of U.S dollars, except share data
Non-GAAP(4)
Q4 2021 Q3 2021 Q/Q change Q4 2020 Y/Y change
Adjusted Operating Income 14,421 22,691 down 36.4 % 15,355 down 6.1 %
Adjusted EBITDA 18,144 26,361 down 31.2 % 18,582 down 2.4 %
Adjusted Net Income 14,606 20,073 down 27.2 % 17,268 down 15.4 %
Adjusted Earnings per Common Share—Diluted 0.31 0.42 down 26.2 % 0.40 down 22.5 %

 

In thousands of U.S dollars, except share data
GAAP
2021 2020 Y/Y Change
Revenues
Standard Products Business
Display Solutions 205,322 299,057 down 31.3 %
Power Solutions 227,777 166,462 up 36.8 %
Transitional Fab 3 foundry services(1) 41,131 41,540 down 1.0 %
Gross Profit Margin 32.4 % 25.3 % up 7.1 %pts
Operating Income(2) 83,407 27,016 up 208.7 %
Net Income(3) 56,708 344,965 down 83.6 %
Basic Earnings per Common Share 1.26 9.80 down 87.1 %
Diluted Earnings per Common Share 1.21 7.54 down 84.0 %

 

In thousands of U.S dollars, except share data
Non-GAAP(4)
2021 2020 Y/Y Change
Adjusted Operating Income 56,135 41,584 up 35.0 %
Adjusted EBITDA 70,701 52,919 up 33.6 %
Adjusted Net Income 51,059 28,260 up 80.7 %
Adjusted Earnings per Common Share—Diluted 1.09 0.73 up 49.3 %

(1)Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, and for a period of up to three years, we will provide transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi (“Transitional Fab 3 Foundry Services”). Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions businesses.

(2)For the year ended December 31, 2021, operating income of $83.4 million included net gain of $35.5 million that represented $70.2 million income from the recognition of a reverse termination fee, net of professional service fees and expenses of $34.7 million incurred in connection with the contemplated merger transaction.

(3)For the year ended December 31,2020, net income of $345.0 million included income from discontinued operations, net of tax, of $287.9 million, primarily attributable to the recognition of $287.1 million as gain on sale of the Foundry Services Group business and Fab 4. It also included income tax benefits of $46.2 million, mainly attributable to the recognition of differences between GAAP and cash tax expense of $43.9 million.

(4)Non-GAAP financial measures are calculated based on the results from continuing operations. 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 our 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 from continuing operations 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.

Q1 2022 Financial Guidance
Our near-term outlook is still being challenged by persisting supply constraints especially for 28nm 12″ wafers.  While actual results may vary, looking into the next quarter, which typically presents seasonal softness, Magnachip anticipates Q1 2022 to be the bottom and currently expects:

  • Revenue to be in the range of $102 million to $108 million, including about $9 million of the Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 34.5% to 36.5%

Q4 2021 Earnings Conference Call
Magnachip will host a conference call at 5 p.m. Eastern Time on February 16, 2022. The conference call will be webcast live and also is available by dialing toll-free at 1-844-536-5472. International call-in participants can dial 1-614-999-9318. The conference ID number is 1582546. Participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. Eastern Time start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com. 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 1582546.

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 expectations about estimated historical or future operating results and financial performance, outlook and business plans, including first quarter 2022 revenue and gross profit margin expectations, and the impact of the COVID-19 pandemic or the emergence of various variants of the virus, escalated trade tensions and supply constraints on Magnachip’s first quarter 2022 and future operating results. 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, among others: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to the COVID-19 pandemic or the emergence of various variants of the virus, other outbreaks of disease, recessions, economic instability or civil unrest; manufacturing capacity constraints or supply chain disruptions; 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 or supply constraints; 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, our customers and our distributors; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products, including uncertainties regarding the impacts of the COVID-19 pandemic or the emergence of various variants of the virus that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for Magnachip’s products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks detailed from time to time in Magnachip’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Form 10-K filed on March 9, 2021 (amended on April 30, 2021), our Form 10-Qs filed on May 10, 2021, August 6, 2021 and November 5, 2021 (including that the impact of the COVID-19 pandemic, trade tensions and supply constraints may also exacerbate the risks discussed therein) 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.

About Magnachip Semiconductor
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip with more than 40 years of operating history, owns a portfolio of approximately 1,150 registered patents and pending applications, and has extensive engineering, design 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.

CONTACT:
In the United States:

So-Yeon Jeong

Jeong Consulting

Tel. +1-408-712-6151

Investor.relations@magnachip.com

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data)
(Unaudited)

 

Three Months Ended Year Ended
  December 31,       September 30,      December 31,      December 31,      December 31,
2021 2021 2020 2021 2020
Revenues:
Net sales – standard products business $ 99,510 $ 117,415 $ 129,566 $ 433,099 $ 465,519
Net sales – transitional Fab 3 foundry services 10,825 9,585 13,379 41,131 41,540
Total revenues 110,335 127,000 142,945 474,230 507,059
Cost of sales:
Cost of sales – standard products business 62,206 71,641 92,503 283,503 338,420
Cost of sales – transitional Fab 3 foundry services 9,525 8,772 11,981 37,184 40,322
Total cost of sales 71,731 80,413 104,484 320,687 378,742
Gross profit 38,604 46,587 38,461 153,543 128,317
Gross profit as a percentage of standard products business net sales 37.5 % 39.0 % 28.6 % 34.5 % 27.3 %
Gross profit as a percentage of total revenues 35.0 % 36.7 % 26.9 % 32.4 % 25.3 %
Operating expenses:
Selling, general and administrative expenses 13,255 12,550 12,576 52,440 49,974
Research and development expenses 12,197 12,270 11,604 51,212 45,698
Merger-related costs (income), net (49,369) 1,552 653 (35,527) 653
Early termination and other charges, net (1,349) 214 4,422 2,011 4,976
Total operating expenses (income) (25,266) 26,586 29,255 70,136 101,301
Operating income: 63,870 20,001 9,206 83,407 27,016
Interest expense (132) (113) (1,625) (1,371) (18,147)
Foreign currency gain (loss), net 147 (7,579) 13,256 (11,853) (382)
Loss on early extinguishment of borrowings, net (766) (766)
Other income, net 947 1,608 767 3,786 3,110
Income from continuing operations before income tax expense 64,832 13,917 20,838 73,969 10,831
Income tax expense (benefit) 11,221 3,149 (47,064) 17,261 (46,228)
Income from continuing operations 53,611 10,768 67,902 56,708 57,059
Income (loss) from discontinued operations, net of tax (1,321) 287,906
Net income $ 53,611 $ 10,768 $ 66,581 $ 56,708 $ 344,965
Basic earnings (loss) per common share—
Continuing operations $ 1.16 $ 0.23 $ 1.91 $ 1.26 $ 1.62
Discontinued operations (0.04) 8.18
Total $ 1.16 $ 0.23 $ 1.87 $ 1.26 $ 9.80
Diluted earnings (loss) per common share—
Continuing operations $ 1.12 $ 0.23 $ 1.47 $ 1.21 $ 1.35
Discontinued operations (0.02) 6.19
Total $ 1.12 $ 0.23 $ 1.45 $ 1.21 $ 7.54
Weighted average number of shares—
Basic 46,369,520 46,449,234 35,582,966 44,879,412 35,213,525
Diluted 47,691,816 47,808,457 47,062,903 47,709,373 46,503,586

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)

 

December 31,
2021 2020
Assets
Current assets
Cash and cash equivalents $  279,547 $  279,940
Accounts receivable, net 50,954 64,390
Inventories, net 39,370 39,039
Other receivables 25,895 4,338
Prepaid expenses 7,675 7,332
Hedge collateral 3,060 5,250
Other current assets 2,619 9,321
Total current assets 409,120 409,610
Property, plant and equipment, net 107,882 96,383
Operating lease right-of-use assets 4,275 4,632
Intangible assets, net 2,377 2,727
Long-term prepaid expenses 8,243 4,058
Deferred income taxes 41,095 44,541
Other non-current assets 10,662 9,739
Total assets $  583,654 $  571,690
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $     37,593 $     52,164
Other accounts payable 6,289 2,531
Accrued expenses 20,071 16,241
Accrued income taxes 11,823 12,398
Operating lease liabilities 2,323 2,210
Current portion of long-term borrowings, net 83,479
Other current liabilities 7,382 4,595
Total current liabilities 85,481 173,618
Accrued severance benefits, net 33,064 40,462
Non-current operating lease liabilities 1,952 2,422
Other non-current liabilities 10,395 9,588
Total liabilities 130,892 226,090
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 and 44,943,854 shares issued and 35,783,347 outstanding at December 31, 2020 559 450
Additional paid-in capital 241,197 163,010
Retained earnings 343,542 286,834
Treasury stock, 10,246,016 shares at December 31, 2021 and 9,160,507 shares at December 31, 2020, respectively (130,306) (108,397)
Accumulated other comprehensive income (loss) (2,230) 3,703
Total stockholders’ equity 452,762 345,600
Total liabilities and stockholders’ equity $   583,654 $   571,690

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)

 

 Three Months Ended Year Ended
December 31, December 31, December 31,
2021 2021 2020
Cash flows from operating activities
Net income $ 53,611 $ 56,708 $ 344,965
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 3,663 14,239 16,481
Provision for severance benefits 2,768 8,282 16,743
Amortization of debt issuance costs and original issue discount 261 2,220
Loss (gain) on foreign currency, net (175) 32,432 (23,233)
Restructuring and other charges 3,502
Merger-related costs (income), net (12,142) (12,142) 360
Provision for inventory reserves 760 2,244 3,695
Stock-based compensation 1,648 7,704 6,699
Loss on early extinguishment of borrowings, net 766
Gain on sale of discontinued operations (287,117)
Deferred income tax assets 893 918 (44,441)
Other, net (1,030) (613) 217
Changes in operating assets and liabilities
Accounts receivable, net 809 7,505 (19,268)
Unbilled accounts receivable, net 14,260
Inventories (1,378) (5,939) (816)
Other receivables 2,949 (2,338) 6,954
Other current assets 4,464 12,397 13,561
Accounts payable 4,755 (11,437) 3,960
Other accounts payable (4,084) (7,813) (12,000)
Accrued expenses (765) (2,406) (29,116)
Accrued income taxes 8,307 (1) 10,825
Deferred revenue 863 (131) 2,174
Other current liabilities (104) 1,445 279
Other non-current liabilities (732) (1,398) 3,521
Contributions to severance insurance deposit accounts (5,526) (5,688) (11,921)
Payment of severance benefits (1,907) (6,679) (12,076)
Other, net 80 193 (3,724)
Net cash provided by operating activities 57,727 87,743 7,470
Cash flows from investing activities
Proceeds from settlement of hedge collateral 1,219 5,214 13,762
Payment of hedge collateral (605) (3,349) (8,839)
Proceeds from disposal of property, plant and equipment 1,419 1,446 65
Purchase of property, plant and equipment (18,844) (32,212) (36,100)
Payment for intellectual property registration (159) (614) (741)
Collection of guarantee deposits 3,192 1,024
Payment of guarantee deposits (41) (5,001) (1,236)
Proceeds from sale of discontinued operations 350,553
Other, net 16 (114) (6)
Net cash provided by (used in) investing activities (16,995) (31,438) 318,482
Cash flows from financing activities
Repurchase of long-term borrowings (224,250)
Proceeds from exercise of stock options 359 4,279 3,918
Acquisition of treasury stock (1,653) (1,125)
Acquisition of stock under accelerated stock repurchase agreement (20,073) (20,073)
Payment under accelerated stock repurchase agreement (17,427) (17,427)
Repayment of financing related to water treatment facility arrangement (136) (563) (546)
Others (58) (107) (278)
Net cash used in financing activities (37,335) (35,544) (222,281)
Effect of exchange rates on cash and cash equivalents (151) (21,154) 24,612
Net increase (decrease) in cash and cash equivalents 3,246 (393) 128,283
Cash and cash equivalents at beginning of period 276,301 279,940 151,657
Cash and cash equivalents at end of period $ 279,547 $ 279,547 $ 279,940

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME
(In thousands of U.S. dollars)
(Unaudited)

 

Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2021 2021 2020 2021 2020
Operating income $ 63,870 $ 20,001 $ 9,206 $ 83,407 $ 27,016
Adjustments:
Equity-based compensation expense 1,648 2,005 1,945 7,704 6,311
Inventory reserve related to Huawei impact of downstream trade restrictions (379) (1,081) (871) (1,460) 1,460
Expenses related to Fab 3 power outage 1,168
Merger-related costs (income), net (49,369) 1,552 653 (35,527) 653
Early termination and other charges, net (1,349) 214 4,422 2,011 4,976
Adjusted operating income $ 14,421 $ 22,691 $ 15,355 $ 56,135 $ 41,584

We present Adjusted Operating Income as a supplemental measure of our performance. We define Adjusted Operating Income for the periods indicated as operating income adjusted to exclude (i) Equity-based compensation expense, (ii) Inventory reserve related to Huawei impact of downstream trade restrictions, (iii) Expenses related to Fab 3 power outage, (iv) Merger-related costs (income), net and (v) Early termination and other charges, net.

For the year ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $35,527 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $34,673 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $3,430 thousand of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018).

For the year ended December 31, 2020, we recorded in our consolidated statement of operations $4,422 thousand of early termination and other charges, net, in connection with the headcount reduction program offered and paid to the employees during the fourth quarter of 2020. During the same period, we also recorded $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME
(In thousands of U.S. dollars, except share data)
(Unaudited)

 

Three Months Ended Year Ended
December 31, September 30, December 31, December 31, December 31,
2021 2021 2020 2021 2020
Income from continuing operations $ 53,611 $ 10,768 $ 67,902 $ 56,708 $ 57,059
Adjustments:
Interest expense, net (726) (439) 863 (1,238) 15,404
Income tax expense (benefit) 11,221 3,149 (47,064) 17,261 (46,228)
Depreciation and amortization 3,663 3,578 3,148 14,239 11,116
EBITDA 67,769 17,056 24,849 86,970 37,351
Equity-based compensation expense 1,648 2,005 1,945 7,704 6,311
Foreign currency loss (gain), net (147) 7,579 (13,256) 11,853 382
Derivative valuation loss (gain), net (29) (237) 74 (123) (148)
Loss on early extinguishment of borrowings, net 766 766
Inventory reserve related to Huawei impact of downstream trade restrictions (379) (1,081) (871) (1,460) 1,460
Expenses related to Fab 3 power outage 1,168
Merger-related costs (income), net (49,369) 1,552 653 (35,527) 653
Early termination and other charges, net (1,349) (513) 4,422 1,284 4,976
Adjusted EBITDA 18,144 26,361 18,582 70,701 52,919
Income from continuing operations $ 53,611 $ 10,768 $ 67,902 $ 56,708 $ 57,059
Adjustments:
Equity-based compensation expense 1,648 2,005 1,945 7,704 6,311
Foreign currency loss (gain), net (147) 7,579 (13,256) 11,853 382
Derivative valuation loss (gain), net (29) (237) 74 (123) (148)
Loss on early extinguishment of borrowings, net 766 766
Inventory reserve related to Huawei impact of downstream trade restrictions (379) (1,081) (871) (1,460) 1,460
Expenses related to Fab 3 power outage 1,168
Merger-related costs (income), net (49,369) 1,552 653 (35,527) 653
Early termination and other charges, net (1,349) (513) 4,422 1,284 4,976
GAAP and cash tax expense difference 907 (43,874) 907 (43,874)
Income tax effect on non-GAAP adjustments 9,713 (493) 9,713 (493)
Adjusted Net Income $ 14,606 $ 20,073 $ 17,268 $ 51,059 $ 28,260
Adjusted Net Income per common share—
– Basic $ 0.31 $ 0.43 $ 0.49 $ 1.14 $ 0.80
– Diluted $ 0.31 $ 0.42 $ 0.40 $ 1.09 $ 0.73
Weighted average number of shares – basic 46,369,520 46,449,234 35,582,966 44,879,412 35,213,525
Weighted average number of shares – diluted 47,691,816 47,808,457 47,062,903 47,709,373 46,503,586

 

We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of borrowings, net, (v) Inventory reserve related to Huawei impact of downstream trade restrictions, (vi) Expenses related to Fab 3 power outage, (vii) Merger-related costs (income), net and (viii) Early termination and other charges, net.

EBITDA for the periods indicated is defined as Income from continuing operations before interest expense, net, income tax expense (benefit) and depreciation and amortization. We prepare Adjusted Net Income by adjusting income from continuing operations 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 for the periods as income from continuing operations, adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of borrowings, net, (v) Inventory reserve related to Huawei impact of downstream trade restrictions, (vi) Expenses related to Fab 3 power outage, (vii) Merger-related costs (income), net, (viii) Early termination and other charges, net, (ix) GAAP and cash tax expense difference and (x) Income tax effect on non-GAAP adjustments.

For the year ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $35,527 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $34,673 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $3,430 thousand of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018 and $727 thousand legal settlement gain related to certain expenses incurred in prior periods in connection with our legacy Fab 4 (which was sold during the year ended December 31, 2020) and awarded in the third quarter of 2021.

For the year ended December 31, 2020, we recorded in our consolidated statement of operations $4,422 thousand of early termination and other charges, net in connection with the headcount reduction program offered and paid to the employees during the fourth quarter of 2020. During the same period, we also recorded $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.

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SOURCE Magnachip Semiconductor Corporation