• 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/cn.   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/cn. 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

 

SEOUL, South Korea, Jan. 31, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today it will report its results for the fourth quarter and year ended December 31, 2021 on Wednesday, February 16, 2022 after the close of market. 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 1582546. 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/cn.   A replay of the conference call will be available until 8:00 p.m. ET on February 23, 2022. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056.  The conference ID number is 1582546.

 

About Magnachip Semiconductor

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, 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 1,200 registered patents and pending applications, and has extensive engineering, design and manufacturing process expertise. For more information, please visit www.magnachip.com/cn. 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

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SOURCE Magnachip Semiconductor Corporation

– Magnachip initiates $37.5 Million Accelerated Stock Repurchase Agreement

SEOUL, South Korea, Dec. 21, 2021 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip Corp.” or the “Company”) (NYSE: MX), announced today that the Board of Directors has authorized the Company to repurchase up to $75 million of the Company’s common stock. As an immediate step towards implementing the approved stock repurchase program, the Company has entered into an accelerated stock repurchase agreement (the “ASR Agreement”) with JPMorgan Chase Bank, National Association (“JPM”) to repurchase an aggregate of $37.5 million of Magnachip’s common stock.

Pursuant to the terms of the ASR Agreement dated December 21, 2021, the Company will pay JPM $37.5 million in cash and will receive an initial delivery of approximately 1.0 million shares of the Company’s common stock. The final number of shares of common stock to ultimately be repurchased by the Company will generally be based on the average of the daily volume-weighted average stock prices of the Company’s common stock during the valuation period of the ASR Agreement, less a discount and subject to adjustments. Upon final settlement of the ASR Agreement, the Company may be entitled to receive additional shares of common stock from JPM or, under certain circumstances specified in the ASR Agreement, the Company may be required to deliver shares of common stock or make a cash payment, at its option, to JPM. The ASR Agreement contains provisions customary for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances under which the ASR Agreement may be accelerated, extended or terminated early by JPM and various acknowledgments, representations and warranties made by the parties to one another. Final settlement of the ASR Agreement is expected to occur during the fiscal quarter ending March 31, 2022.

“Today’s announcement reflects the confidence of the management team and our Board of Directors in Magnachip’s financial strength, long-term growth strategy and ability to generate sustainable cash flow,” said YJ Kim, Magnachip’s chief executive officer. “It is also consistent with our commitment to enhance and return value to our shareholders. Our business has sound long-term fundamentals and we are poised to accelerate our MX 3.0 strategy, which we look forward to articulating in more detail at our investor call on January 6, 2022.”

Investor Conference Call
Magnachip will host an investor conference call at 5:00 pm Eastern time on January 6, 2022. The investor 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 9163925. 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 call 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 pm ET on January 13, 2022. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056. The conference ID number is 9163925.

About Magnachip Semiconductor Corporation
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, 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 1,200 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.

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 the COVID-19 outbreak, recessions, economic instability and the outbreak of disease; 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 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; 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 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 I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and updated in subsequent reports filed by the Company with the SEC. 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.

CONTACTS:
In the United States:

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

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SOURCE Magnachip Semiconductor Corporation

SEOUL, South Korea, June 17, 2021 /PRNewswire/ — As previously announced, on March 25, 2021, Magnachip Semiconductor Corporation (“Magnachip” or the “Company”) (NYSE: MX), the South Korean leader in display and power solutions, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with South Dearborn Limited, an exempted company incorporated in the Cayman Islands with limited liability (“Parent”) formed by an affiliate of Wise Road Capital LTD (“Wise Road”), and Michigan Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, among other things, and subject to the terms and conditions thereof, Merger Sub will be merged with and into Magnachip (the “Merger”), with Magnachip continuing its corporate existence under the General Corporation Law of the State of Delaware as the surviving corporation in the Merger and becoming a wholly owned subsidiary of Parent. In connection with the Merger, the Company filed its definitive proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission (the “SEC”) on May 7, 2021 (as amended and supplemented, the “Proxy Statement”).

 

 

As announced in Magnachip’s Form 8-K filed with the SEC on June 16, 2021, the Company received an “Order Establishing Interim Mitigation Measures” (the “Interim Order”) from the U.S. Department of Treasury on behalf of the Committee on Foreign Investment in the United States (“CFIUS”) on June 15, 2021.  In light of the Interim Order, Magnachip today announced the postponement of its special meeting of stockholders, which was scheduled to be held at 8:00 p.m. Eastern time on June 17, 2021, pending further developments with respect to the Interim Order.

###

 

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, 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 1,200 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.

 

Additional Information and Where to Find It

This communication is being made in respect of the proposed transaction involving Magnachip and Wise Road Capital. In connection with the proposed transaction, Magnachip has filed relevant materials with the SEC, including the Proxy Statement. Promptly after filing the Proxy Statement with the SEC, Magnachip mailed the Proxy Statement and a proxy card to each shareholder of Magnachip entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the Proxy Statement or any other document that Magnachip may file with the SEC or send to its shareholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, SHAREHOLDERS OF MAGNACHIP ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT MAGNACHIP WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. The Proxy Statement and other relevant materials in connection with the proposed transaction, and any other documents filed by Magnachip with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov or at Magnachip’s website at www.magnachip.com.

 

Participants in the Solicitation

This communication does not constitute a solicitation of proxy, an offer to purchase, or a solicitation of an offer to sell any securities. Magnachip and its directors and executive officers are, and certain employees may be, deemed to be participants in the solicitation of proxies from shareholders in connection with the proposed transaction. Information regarding the names of such persons and their respective interests in the proposed transaction, by securities holdings or otherwise, are set forth in the Proxy Statement filed with the SEC on May 7, 2021. Additional information regarding these individuals is set forth in Magnachip’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 9, 2021, and Annual Report Amendment No. 1 on Form 10-K/A for the year ended December 31, 2020, filed with the SEC on April 30, 2021. To the extent Magnachip’s directors and executive officers or their holdings of Magnachip securities have changed from the amounts disclosed in those filings, to Magnachip’s knowledge, such changes have been or will be reflected on initial statements of beneficial ownership on Form 3 or statements of change in ownership on Form 4 on file with the SEC. These documents are (or, when filed, will be) available free of charge at the SEC’s website at www.sec.gov or at Magnachip’s website at www.magnachip.com.

 

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 and statements relating to the proposed transaction among the Company and Wise Road Capital and expressions of confidence, 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 possibility that any or all of the conditions precedent to the consummation of the proposed transaction, including, the receipt of shareholder and regulatory approvals, may not be satisfied or waived; unanticipated difficulties or expenditures relating to the proposed transaction; that the transaction may not be completed in a timely manner or at all; the occurrence of any event, change or circumstance that could give rise to the termination of the definitive agreement with respect to the proposed transaction with Wise Road Capital; the diversion of and attention of management of the Company on transaction-related issues; legal proceedings, judgments or settlements, including those that may be instituted against the Company, the Company’s board of directors and executive officers and others following the announcement of the proposed transaction; disruptions of current plans and operations caused by the announcement and pendency of the proposed transaction; potential difficulties in employee retention due to the announcement and pendency of the proposed transaction; the response of customers, suppliers, business partners and regulators to the announcement of the proposed transaction; and other risks and uncertainties and the factors identified under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and updated in subsequent reports filed by the Company with the SEC. 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.

 

CONTACTS:

In the United States:
So-Yeon Jeong
Head of Investor Relations
Tel. +1-408-712-6151
investor.relations@magnachip.com

# # #

 

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SOURCE Magnachip Semiconductor Corporation

SEOUL, South Korea, June 11, 2021 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip” or the “Company”) (NYSE: MX), the South Korean leader in display and power solutions, today confirmed receipt of an unsolicited proposal from Cornucopia Investment Partners on behalf of itself and a group of investors, including financial sponsors led by Mr. Tim Crown, Yango financial holdings, Sino-Rock Investment Management Company Limited and Lombarda China Fund, to acquire all of the outstanding shares of Magnachip common stock, par value $0.01 per share (the “Common Stock”), for $35.00 per share in cash (assuming the number of shares on a fully diluted basis at closing of the transaction will be 47,470,416, as shown in the Magnachip’s Form 10-Q filed on May 10, 2021) (the “Proposal”).

 

 

As previously announced, on March 25, 2021, Magnachip entered into an Agreement and Plan of Merger (the “Merger Agreement”) with South Dearborn Limited, an exempted company incorporated in the Cayman Islands with limited liability (“Parent”) formed by an affiliate of Wise Road Capital LTD (“Wise Road”), and Michigan Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will be merged with and into Magnachip (the “Merger”), with Magnachip continuing its corporate existence under the General Corporation Law of the State of Delaware as the surviving corporation in the Merger and becoming a wholly owned subsidiary of Parent. Under and subject to the terms of the Merger Agreement, each share of Common Stock issued and outstanding immediately before the effective time of the Merger (other than Excluded Shares and Dissenting Shares (as defined in the Merger Agreement)) will be cancelled and will cease to exist and will be automatically converted into the right to receive $29.00 in cash, without interest, subject to applicable withholding taxes. In connection with the Merger, the Company filed its definitive proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission (the “SEC”) on May 7, 2021 (the “Proxy Statement”).

Magnachip’s Board of Directors, in consultation with its legal and financial advisors, will carefully review and consider the Proposal. Magnachip, Parent and Merger Sub have reached an agreement whereby, through June 16, 2021, Magnachip will have the right to participate in discussions with Cornucopia in connection with the Proposal for the sole purpose of determining whether the Proposal constitutes or could reasonably be expected to lead to a superior proposal.  Magnachip’s Board of Directors has not yet made such a determination.  In light of the Proposal, Magnachip expects to adjourn the special meeting of stockholders scheduled for 8:00 p.m. Eastern time on June 15, 2021 to June 17, 2021. The time of the adjourned meeting will be announced on June 15, 2021.

Magnachip remains subject to the Merger Agreement. Magnachip’s Board of Directors has not changed its recommendation that Magnachip stockholders vote “FOR” the proposal to adopt the Merger Agreement and approve the Merger.

 

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, 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 1,200 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.

 

Additional Information and Where to Find It

This communication is being made in respect of the proposed transaction involving Magnachip and Wise Road Capital. In connection with the proposed transaction, Magnachip has filed relevant materials with the SEC, including the Proxy Statement. Promptly after filing the Proxy Statement with the SEC, Magnachip mailed the Proxy Statement and a proxy card to each shareholder of Magnachip entitled to vote at the special meeting relating to the proposed transaction. This communication is not a substitute for the Proxy Statement or any other document that Magnachip may file with the SEC or send to its shareholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, SHAREHOLDERS OF MAGNACHIP ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT MAGNACHIP WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. The Proxy Statement and other relevant materials in connection with the proposed transaction, and any other documents filed by Magnachip with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov or at Magnachip’s website at www.magnachip.com.

 

Participants in the Solicitation

This communication does not constitute a solicitation of proxy, an offer to purchase, or a solicitation of an offer to sell any securities. Magnachip and its directors and executive officers are, and certain employees may be, deemed to be participants in the solicitation of proxies from shareholders in connection with the proposed transaction. Information regarding the names of such persons and their respective interests in the proposed transaction, by securities holdings or otherwise, are set forth in the Proxy Statement filed with the SEC on May 7, 2021. Additional information regarding these individuals is set forth in Magnachip’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 9, 2021, and Annual Report Amendment No. 1 on Form 10-K/A for the year ended December 31, 2020, filed with the SEC on April 30, 2021. To the extent Magnachip’s directors and executive officers or their holdings of Magnachip securities have changed from the amounts disclosed in those filings, to Magnachip’s knowledge, such changes have been or will be reflected on initial statements of beneficial ownership on Form 3 or statements of change in ownership on Form 4 on file with the SEC. These documents are (or, when filed, will be) available free of charge at the SEC’s website at www.sec.gov or at Magnachip’s website at www.magnachip.com.

 

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 and statements relating to the proposed transaction among the Company and Wise Road Capital and expressions of confidence, 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 possibility that any or all of the conditions precedent to the consummation of the proposed transaction, including, the receipt of shareholder and regulatory approvals, may not be satisfied or waived; unanticipated difficulties or expenditures relating to the proposed transaction; that the transaction may not be completed in a timely manner or at all; the occurrence of any event, change or circumstance that could give rise to the termination of the definitive agreement with respect to the proposed transaction with Wise Road Capital; the diversion of and attention of management of the Company on transaction-related issues; legal proceedings, judgments or settlements, including those that may be instituted against the Company, the Company’s board of directors and executive officers and others following the announcement of the proposed transaction; disruptions of current plans and operations caused by the announcement and pendency of the proposed transaction; potential difficulties in employee retention due to the announcement and pendency of the proposed transaction; the response of customers, suppliers, business partners and regulators to the announcement of the proposed transaction; and other risks and uncertainties and the factors identified under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and updated in subsequent reports filed by the Company with the SEC. 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.

 

CONTACTS:
In the United States:
So-Yeon Jeong
Head of Investor Relations
Tel. +1-408-712-6151
investor.relations@magnachip.com

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SOURCE Magnachip Semiconductor Corporation

– First quarter revenue of $123.0 million was down 13.9% sequentially and up 2.1% year-over-year (YoY).

– Gross profit margin for the first quarter was 27.9%, up 100 bps sequentially and up 370 bps YoY.

– GAAP diluted loss per share for the first quarter was $0.19.

– Non-GAAP diluted earnings per share was $0.22.

 

SEOUL, South KoreaMay 10, 2021 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the first quarter 2021.

 

 

“Magnachip delivered solid quarterly results despite the industry-wide supply constraints. Our revenue came in above the midpoint of the company’s Q1 revenue guidance range, driven by strong growth in the Power solutions business. Gross profit margin exceeded the high-end of our expectations due to the improved product mix and higher utilization,” said YJ Kim, Magnachip’s chief executive officer.

Due to the pending merger with an investment vehicle formed by an affiliate of Wise Road Capital LTD pursuant to a definitive agreement executed on March 25, 2021, Magnachip will not be hosting a quarterly earnings conference call and has suspended the practice of providing forward-looking guidance. Please review the ‘Investors’ section of the Company’s website for the quarterly financial results and SEC filings for the latest updates on the pending transaction.

 

Q1 2021 Financial Highlights

In thousands of US dollars, except share data

GAAP

Q1 2021

Q4 2020

Q/Q change

Q1 2020

Y/Y change

Revenues

Standard Products Business

Display Solutions

58,895

82,705

down

28.8%

77,593

down

24.1%

Power Solutions

54,011

46,861

up

15.3%

33,143

up

63.0%

Transitional Fab 3 Foundry Services(1)

10,113

13,379

down

24.4%

9,737

up

3.9%

Gross Profit Margin

27.9%

26.9%

up

1.0% pts

24.2%

up

3.7% pts

Operating Income (Loss) (2)

(2,091)

9,206

down

122.7%

5,965

down

135.1%

Net Income (Loss) (3)

(7,473)

66,581

down

111.2%

(23,749)

up

68.5%

Basic Earnings (Loss) per Common Share

(0.19)

1.87

down

110.2%

(0.68)

up

72.1%

Diluted Earnings (Loss) per Common Share

(0.19)

1.45

down

113.1%

(0.68)

up

72.1%

 

In thousands of US dollars, except share data

Non-GAAP(3)

Q1 2021

Q4 2020

Q/Q change

Q1 2020

Y/Y change

Adjusted Operating Income

9,971

15,355

down

35.1%

7,281

up

36.9%

Adjusted EBITDA

13,504

18,582

down

27.3%

9,895

up

36.5%

Adjusted Net Income

9,346

17,268

down

45.9%

1,092

up

755.9%

Adjusted Earnings per Common Share—Diluted

0.22

0.40

down

45.0%

0.03

up

633.3%

 

(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, the Company will provide transitional foundry services to the buyer for foundry products manufactured in the Company’s 
          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)     In Q1 2021, operating loss of $2.1 million included non-recurring professional fees and certain transaction related expenses of $9.8 
          million in connection with a definitive agreement (the “Merger Agreement”) that the Company entered into with South Dearborn 
          Limited, an exempted company incorporated in the Cayman Islands with limited liability (“Parent”), formed by an affiliate of Wise 
          Road Capital LTD, and Michigan Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Parent (“Merger 
          Sub”). The Merger Agreement provides that, among other things, Merger Sub will be merged with and into the Company (the 
          “Merger”), with the Company continuing its corporate existence as the surviving corporation in the Merger and becoming a wholly 
          owned subsidiary of Parent.

(3)     In Q4 2020, total net income of $66.6 million included one-time recognition of deferred tax benefits 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 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 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.

 

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. 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 the possibility that any or all of the conditions precedent to the consummation of the pending merger may not be satisfied or waived; unanticipated difficulties or expenditures relating to the proposed merger; that the merger may not be completed in a timely manner or at all; the diversion of and attention of Magnachip’s management on merger-related issues; legal proceedings, judgments or settlements following the announcement of the proposed merger; disruptions of current plans and operations caused by the announcement and pendency of the proposed merger; potential difficulties in employee retention due to the announcement and pendency of the proposed merger; the response of customers, suppliers, business partners and regulators to the announcement of the proposed merger; the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to the COVID-19 outbreak, recessions, economic instability and the outbreak of disease; 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; 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; 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 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 SEC, including our Form 10-K filed on March 9, 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 Securities and Exchange Commission 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, 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 1,200 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:

So-Yeon Jeong
Head of Investor Relations
Tel. +1-408-712-6151
Investor.relations@maganachip.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,

2021

2020

2020

Revenues:

Net sales – standard products business

$

112,906

$

129,566

$

110,736

Net sales – transitional Fab 3 foundry services

10,113

13,379

9,737

Total revenues

123,019

142,945

120,473

Cost of sales:

Cost of sales – standard products business

79,247

92,503

81,606

Cost of sales – transitional Fab 3 foundry services

9,390

11,981

9,737

Total cost of sales

88,637

104,484

91,343

Gross profit

34,382

38,461

29,130

Gross profit as a percentage of standard products

business net sales

29.8%

28.6%

26.3%

Gross profit as a percentage of total revenues

27.9%

26.9%

24.2%

Operating expenses:

Selling, general and administrative expenses

12,634

12,576

12,102

Research and development expenses

13,423

11,604

10,509

Early termination and other charges

10,416

5,075

554

Total operating expenses

36,473

29,255

23,165

Operating income (loss)

(2,091)

9,206

5,965

Interest expense

(1,041)

(1,625)

(5,607)

Foreign currency gain (loss), net

(4,671)

13,256

(30,971)

Loss on early extinguishment of borrowings, net

(766)

Other income, net

620

767

838

Income (loss) from continuing operations before

income tax expense

(7,183)

20,838

(29,775)

Income tax expense (benefit)

290

(47,064)

1,303

Income (loss) from continuing operations

(7,473)

67,902

(31,078)

Income (loss) from discontinued operations, net of tax

(1,321)

7,329

Net income (loss)

$

(7,473)

$

66,581

$

(23,749)

Basic earnings (loss) per common share—

Continuing operations

$

(0.19)

$

1.91

$

(0.89)

Discontinued operations

(0.04)

0.21

Total

$

(0.19)

$

1.87

$

(0.68)

Diluted earnings (loss) per common share—

Continuing operations

$

(0.19)

$

1.47

$

(0.89)

Discontinued operations

(0.02)

0.21

Total

$

(0.19)

$

1.45

$

(0.68)

Weighted average number of shares—

Basic

40,292,838

35,582,966

34,893,157

Diluted

40,292,838

47,062,903

34,893,157

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)

(Unaudited)

 

March 31,

December 31,

2021

2020

Assets

Current assets

Cash and cash equivalents

$

290,194

$

279,940

Accounts receivable, net

52,250

64,390

Inventories, net

29,964

39,039

Other receivables

5,649

4,338

Prepaid expenses

9,136

7,332

Hedge collateral

5,250

5,250

Other current assets

2,435

9,321

Total current assets

394,878

409,610

Property, plant and equipment, net

91,014

96,383

Operating lease right-of-use assets

4,592

4,632

Intangible assets, net

2,602

2,727

Long-term prepaid expenses

5,993

4,058

Deferred income taxes

42,906

44,541

Other non-current assets

9,422

9,739

Total assets

$

551,407

$

571,690

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

43,357

$

52,164

Other accounts payable

8,261

2,531

Accrued expenses

17,867

16,241

Accrued income taxes

1,224

12,398

Operating lease liabilities

2,352

2,210

Current portion of long-term borrowings, net

83,479

Other current liabilities

6,558

4,595

Total current liabilities

79,619

173,618

Accrued severance benefits, net

39,070

40,462

Non-current operating lease liabilities

2,240

2,422

Other non-current liabilities

10,131

9,588

Total liabilities

131,060

226,090

Commitments and contingencies

Stockholders’ equity

Common stock, $0.01 par value, 150,000,000 shares authorized, 55,469,375 shares issued and 46,257,413

outstanding at March 31, 2021 and 44,943,854 shares issued and 35,783,347 outstanding at December 31, 2020        

555

450

Additional paid-in capital

250,829

163,010

Retained earnings

279,361

286,834

Treasury stock, 9,211,962 shares at March 31, 2021 and 9,160,507 shares at December 31, 2020, respectively

(109,407)

(108,397)

Accumulated other comprehensive income (loss)

(991)

3,703

Total stockholders’ equity

420,347

345,600

Total liabilities and stockholders’ equity

$

551,407

$

571,690

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

 

Three Months Ended  

March 31,
2021
  

March 31,
2020
  

Cash flows from operating activities

Net loss

$       (7,473)

$     (23,749)

Adjustments to reconcile net loss to net cash provided by operating activities

Depreciation and amortization             

3,448

7,935

Provision for severance benefits          

1,771

5,071

Amortization of debt issuance costs and original issue discount  

261

598

Loss on foreign currency, net

14,873

38,480

Restructuring and other charges          

9,504

2,138

Provision for inventory reserves           

1,504

570

Stock-based compensation   

1,646

885

Deferred income tax assets  

30

23

Others, net 

124

107

Changes in operating assets and liabilities

Accounts receivable, net        

9,794

(10,430)

Unbilled accounts receivable, net        

6,937

Inventories

6,071

(4,863)

Other receivables    

(1,438)

1,982

Other current assets

5,427

909

Accounts payable    

(7,701)

1,988

Other accounts payable         

(2,009)

(1,817)

Accrued expenses   

(3,532 )

(6,611)

Accrued income taxes            

(10,700)

(274)

Other current liabilities            

1,087

1,336

Other non-current liabilities   

18

1,808

Payment of severance benefits            

(1,493)

(2,080)

Others, net 

12

125

Net cash provided by operating activities      

21,224

21,068

Cash flows from investing activities

Proceeds from settlement of hedge collateral  

4,239

Payment of hedge collateral 

(7,841)

Purchase of property, plant and equipment       

(1,082)

(3,351)

Payment for intellectual property registration    

(171)

(229)

Payment of guarantee deposits           

(76)

Others, net 

(35)

55

Net cash used in investing activities               

(1,364)

(7,127)

Cash flows from financing activities

Proceeds from exercise of stock options            

2,538

Acquisition of treasury stock  

(1,540)

(1,021)

Repayment of financing related to water treatment facility arrangement    

(144)

(135)

Repayment of principal portion of finance lease liabilities             

(16)

(60)

Net cash provided by (used in) financing activities     

838

(1,216)

Effect of exchange rates on cash and cash equivalents            

(10,444)

(7,089)

Net increase in cash and cash equivalents  

10,254

5,636

Cash and cash equivalents

Beginning of the period    

279,940

151,657

End of the period

$    290,194

$    157,293

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME

(In thousands of U.S. dollars)

(Unaudited)

 

Three Months Ended

March 31,

December 31,

March 31,

2021

2020

2020

Operating income (loss)

$

(2,091)

$

9,206

$

5,965

Adjustments:

Equity-based compensation expense

1,646

1,945

762

Early termination and other charges

10,416

5,075

554

Inventory reserve related to Huawei impact of

downstream trade restrictions

(871)

Adjusted operating income

$

9,971

$

15,355

$

7,281

 

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) Early termination and other charges and (iii) Inventory reserve related to Huawei impact of downstream trade restrictions.

For the three months ended March 31, 2021, early termination and other charges eliminate $10,416 thousand, of which $9,831 thousand related to non-recurring professional fees and certain transaction related expenses incurred in connection with the Merger. For the three months ended March 31, 2020, early termination and other charges eliminate $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.

For the three months ended December 31, 2020, early termination and other charges eliminate $5,075 thousand, of which $4,422 thousand related to the reduction of workforce under a voluntary resignation program and non-recurring professional service fees, and $653 thousand related to non-recurring professional fees and certain transaction related expenses incurred in connection with the Merger.

 

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

March 31,

December 31,

March 31,

2021

2020

2020

Income (loss) from continuing operations

$

(7,473)

$

67,902

$

(31,078)

Adjustments:

Interest expense, net

420

863

4,930

Income tax expense (benefit)

290

(47,064)

1,303

Depreciation and amortization

3,448

3,148

2,570

EBITDA

(3,315)

24,849

(22,275)

Equity-based compensation expense

1,646

1,945

762

Early termination and other charges

10,416

5,075

554

Foreign currency loss (gain), net

4,671

(13,256)

30,971

Derivative valuation loss (gain), net

86

74

(117)

Loss on early extinguishment of borrowings, net

766

Inventory reserve related to Huawei impact of

downstream trade restrictions

(871)

Adjusted EBITDA

$

13,504

$

18,582

$

9,895

Income (loss) from continuing operations

$

(7,473)

$

67,902

$

(31,078)

Adjustments:

Equity-based compensation expense

1,646

1,945

762

Early termination and other charges

10,416

5,075

554

Foreign currency loss (gain), net

4,671

(13,256)

30,971

Derivative valuation loss (gain), net

86

74

(117)

Loss on early extinguishment of borrowings, net

766

Inventory reserve related to Huawei impact of

downstream trade restrictions

(871)

GAAP and cash tax expense difference

(43,874)

Income tax effect on non-GAAP adjustments

(493)

Adjusted Net Income

$

9,346

$

17,268

$

1,092

Adjusted Net Income per common share—

– Basic

$

0.23

$

0.49

$

0.03

– Diluted

$

0.22

$

0.40

$

0.03

Weighted average number of shares – basic

40,292,838

35,582,966

34,893,157

Weighted average number of shares – diluted

47,470,416

47,062,903

35,883,200

 

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) Early termination and other charges, (iii) Foreign currency loss (gain), net, (iv) Derivative valuation loss (gain), net, (v) Loss on early extinguishment of borrowings, net and (vi) Inventory reserve related to Huawei impact of downstream trade restrictions. EBITDA for the periods indicated is defined as Income (loss) from continuing operations before interest expense, net, income tax expense (benefit) and depreciation and amortization.

We present Adjusted Net Income by adjusting income (loss) 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 (loss) from continuing operations, adjusted to exclude (i) Equity-based compensation expense, (ii) Early termination and other charges, (iii) Foreign currency loss (gain), net, (iv) Derivative valuation loss (gain), net, (v) Loss on early extinguishment of borrowings, net, (vi) Inventory reserve related to Huawei impact of downstream trade restrictions, (vii) GAAP and cash tax expense difference and (viii) Income tax effect on non-GAAP adjustments.

For the three months ended March 31, 2021, early termination and other charges eliminate $10,416 thousand, of which $9,831 thousand related to non-recurring professional fees and certain transaction related expenses incurred in connection with the Merger. For the three months ended March 31, 2020, early termination and other charges eliminate $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.

For the three months ended December 31, 2020, early termination and other charges eliminate $5,075 thousand, of which $4,422 thousand related to the reduction of workforce under a voluntary resignation program and non-recurring professional service fees, and $653 thousand related to non-recurring professional fees and certain transaction related expenses incurred in connection with the Merger.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/magnachip-reports-results-for-first-quarter-2021-301287179.html

SOURCE Magnachip Semiconductor Corporation

SEOUL, South Korea, April 26, 2021 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip” or the “Company”) (NYSE: MX) will provide a press release with fiscal first quarter 2021 results before the market opens on Monday, May 10, 2021. This release will be accessible from the ‘Investors’ section of the company’s website at www.magnachip.com.

 

 

Magnachip will not host a conference call to discuss its results for the first quarter of 2021, as the Company entered into a definitive agreement with investment vehicles formed by an affiliate of Wise Road Capital LTD in a take private transaction on March 25, 2021.

 

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, 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 1,200 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
Head of Investor Relations
Tel. +1-408-712-6151
investor.relations@magnachip.com

 

Cision View original content to download multimedia: http://www.prnewswire.com/news-releases/magnachip-to-announce-first-quarter-2021-financial-results-on-may-10-301276276.html

SOURCE Magnachip Semiconductor Corporation