– 15% Sequential Revenue Growth Driven by Strong Demand Across the Board –
SEOUL, South Korea and SAN JOSE, Calif., Oct. 27, 2016 /PRNewswire/ — MagnaChip Semiconductor Corporation (“MagnaChip” or the “Company”) (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the third quarter ended September 30, 2016.
Revenue for the third quarter of 2016 was $192.3 million, an increase of 15.1% compared to $167.1 million for the second quarter of 2016, and up 24.6% as compared to $154.4 million for the third quarter of 2015. The increase in sequential revenue was 4% higher than the top end of prior guidance and reflected across-the-board strength in customer demand for the Company’s foundry services, display and power products.
Foundry Services revenue in the third quarter of 2016 was $73.9 million, a sequential increase of 18.5%, marking the third consecutive quarter of growth. Revenue in the Standard Products Group was $118.3 million, a 13.1% sequential increase and the fourth consecutive quarter of growth. Standard Product Group revenue in the third quarter was at its highest level since 2012 and Foundry Services revenue rebounded to mid-2015 levels.
Gross profit was $39.1 million, or 20.4% as a percent of revenue for the third quarter of 2016. This compared with gross profit of $36.7 million, or 22.0%, for the second quarter of 2016 and $34.7 million, or 22.5%, for the third quarter of 2015. Foundry gross profit was 23.5% and Standard Products Group gross profit was 18.3% in the third quarter of 2016.
Net income, on a GAAP basis, for the third quarter of 2016 totaled $29.9 million or $0.86 per basic share and $0.85 per diluted share, as compared to net loss of $17.8 million or $0.51 per basic share for the second quarter of 2016 and a net loss of $57.1 million or $1.65 per basic share for the third quarter of 2015. Net income in the third quarter of 2016 was attributable primarily to a non-cash foreign exchange gain on the Company’s intercompany loans.
“Demand was strong across the board in the third quarter, with our Power, Display and Foundry businesses each recording a double digit gain in revenue as compared with the prior quarter,” said YJ Kim, Chief Executive Officer of MagnaChip. “Our foundry business was especially strong, and our fab utilization climbed to the highest level in more than three years.”
In commenting on the third quarter, Chief Financial Officer Jonathan Kim said, “We continued to execute on our strategy to increase fab utilization in order to reduce unit costs and prudently manage cash flows.” Mr. Kim added, “We now are implementing a comprehensive plan to improve gross profit margin.”
Adjusted Net Loss, a non-GAAP financial measure, for the third quarter of 2016 totaled $1.3 million or $0.04 per basic share, compared to Adjusted Net Loss of $1.9 million or $0.05 per basic share in the second quarter of 2016, and compared to Adjusted Net Loss of $10.4 million or $0.30 per basic share in the third quarter of 2015.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a meaningful understanding of the factors and trends affecting MagnaChip’s business and operations and assist in evaluating our core operating performance. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included in this press release.
Cash and cash equivalents totaled $75.4 million at the end of the 2016 third quarter, down from $83.9 million at the end of our 2016 second quarter.
As previously announced, the Board of Directors has established a Strategic Review Committee (“SRC”) to assist the Board in reviewing, considering and evaluating strategic alternatives that may be available to MagnaChip, including the potential sale of all or a substantial portion of the Company. The SRC continues to evaluate strategic alternatives but is not currently engaged in an active process of considering alternatives for the sale of the entire Company. The SRC will consider any strategic opportunities that arise in the future.
The following table sets forth information relating to our operating segments:
Third Quarter and Recent Company Highlights
The Foundry Services Group and the Standard Products Group both recorded double-digit increases in revenue
Hosted its annual Foundry Technology Symposium in Taiwan
Selected by a leading Taiwanese fabless company to begin volume production on jointly developed power management IC
For the fourth quarter of 2016, MagnaChip anticipates:
Revenue will be in the range of $174 million to $180 million, a sequential decline of 6% to 10%, reflecting a typical seasonal decline, but representing double-digit year-over-year growth.
Gross profit to be in the range of 22% to 24% as a percent of revenue, representing a sequential and year-over-year improvement.
MagnaChip will hold a conference call at 5 p.m. EDT today (October 27, 2016) to discuss the third quarter financial results. The conference call will be webcast live and is also available by dialing 1-216-562-0462. The conference ID number is 1615389 and participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. EDT 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 access number is 1-404-537-3406 or toll-free at 1-855-859-2056. The access code is 1615389.
About MagnaChip Semiconductor Corporation
MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer, communication, industrial and computing applications. The Company’s Standard Products Group and Foundry Services Group provide a broad range of standard products and manufacturing services to customers worldwide. MagnaChip, with a 30-year operating history, owns a portfolio of more than 3,500 registered and pending patents, 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.
Safe Harbor for Forward-Looking Statements
Information in this release regarding MagnaChip’s forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our future operating and financial performance, including fourth quarter 2016 revenue and gross profit expectations. All forward-looking statements included in this release are based upon information available to MagnaChip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip’s filings with the SEC, including our Form 10-K filed on February 22, 2016 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.
In the United States:
Director, Public Relations