– Reports Revenue of $162.0 Million and Total Gross Profit of 21.8%
– Begins Reporting Gross Profit for Semiconductor Manufacturing Services and Standard Products Group
– Comprehensive Cost Reduction Plans Initiated
SEOUL, South Korea and SAN JOSE, Calif., Aug. 6, 2015 /PRNewswire/ — MagnaChip Semiconductor Corporation (“MagnaChip”) (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the second quarter ended June 30, 2015.
Revenue for the second quarter of 2015 was $162.0 million, a 1.7% decline compared to $164.9 million for the first quarter of 2015, and down 5.8% compared to $172.1 million for the second quarter of 2014. Semiconductor Manufacturing Services (Foundry) revenue in the second quarter of 2015 was $79.0 million, Display Solutions revenue was $48.9 million and Power Solutions revenue was $34.0 million.
Gross profit was $35.3 million, or 21.8% as a percent of revenue, for the second quarter of 2015. This compares to gross profit of $35.0 million, or 21.2%, for the first quarter of 2015 and $35.5 million, or 20.6%, for the second quarter of 2014. Gross profit improvement stemmed from improved product mix and cost savings activities. Aside from reporting its total gross profit, beginning with this second quarter, MagnaChip is now also reporting the gross profit for its Foundry business segment, and its new Standard Products Group business segment, which includes the Display Solutions and Power Solutions business lines. In the second quarter of 2015, Foundry gross profit was 21.8% and Standard Products Group gross profit was 21.7%.
Net loss, on a GAAP basis, for the second quarter of 2015 totaled $30.6 million, or $0.90 per diluted share, compared to net loss of $20.0 million, or $0.59 per diluted share, for the first quarter of 2015 and net income of $15.0 million, or $0.43 per diluted share, for the second quarter of 2014. Net loss was impacted primarily by lower revenue and gross profit as well as by non-cash foreign currency translation loss.
“Revenue in the second quarter was in line with our guidance and gross profit was higher than expected, but the near-term foundry business remains weak and we continue to face major challenges for the remainder of the year,” said YJ Kim, Chief Executive Officer. “We have identified new foundry opportunities to broaden our customer base and position MagnaChip for longer-term growth, but these engagements typically take several quarters to ramp up.”
In commenting on MagnaChip’s previously announced plan to implement a comprehensive cost reduction program, Chief Financial Officer Jonathan Kim said, “Given the current business outlook, we have already reduced our spending by approximately $20 million in the first half of 2015. We are moving to reduce total normalized spending by over $40 million in 2015 and have launched a comprehensive review to assess the feasibility of further cost reductions in 2016.”
Adjusted net loss, a non-GAAP measurement, for the second quarter of 2015 totaled $11.1 million, or $0.32 per diluted share, compared to an adjusted net loss of $9.6 million, or $0.28 per diluted share, in the first quarter of 2015 and compared to an adjusted net loss of $14.1 million, or $0.41 per diluted share, for the second quarter of 2014.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more meaningful understanding of the factors and trends affecting MagnaChip’s business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.
Cash and cash equivalents totaled $72.7 million at the end of the second quarter of 2015, a decrease of $18.7 million from the end of the prior quarter.
As disclosed in MagnaChip’s 2015 proxy statement, the Board of Directors has established a Strategic Review Committee to assist the Board in reviewing, considering and evaluating strategic alternatives that may be available to MagnaChip. MagnaChip has engaged Barclays to serve as its financial adviser in connection with the strategic review process. No decision has been made to enter into a transaction at this time and MagnaChip can offer no assurance that it will enter into any transaction in the future. MagnaChip does not intend to disclose further developments unless and until such time as its Board of Directors has approved a specific course of action, or it otherwise deems further disclosure is appropriate or required.
The following table sets forth information relating to the operating segments:
Second Quarter and Recent Company Events
– Established a task force to offer diversified products with ultra-low power technology for the fast growing Internet of Things (IoT) market
– Introduced a new premium 0.18 micron Bipolar-CMOS-DMOS (BCD) 100V high voltage process featuring operability up to 100V for various applications
– Received the Korea Patent Technology “King Sejong” grand prize award for the first half of 2015 granted by the Korean Intellectual Property Office
– Initiated the co-development of a 0.18 micron automotive MCU process with several partners
For the third quarter of 2015, MagnaChip anticipates:
Revenue to be in the range of $145 million to $155 million
Gross profit to be 20% to 22% as a percent of revenue
MagnaChip will hold a conference call at 5 p.m. EDT today (August 6, 2015) to discuss the second quarter 2015 financial results. The conference call will be webcast live and is also available by dialing 1-866-776-2061 in the U.S. or 1-706-679-0298 for all other locations. The conference ID number is 92718867 and participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. EDT start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com.
A replay of the conference call will be available the same day and will run for 72 hours. The replay access numbers are 1-855-859-2056 or 1-404-537-3406. The access code is 92718867.
About MagnaChip Semiconductor Corporation
Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through, MagnaChip’s website is not a part of, and is not incorporated into, this release.
Safe Harbor for Forward-Looking Statements
Information in this release regarding MagnaChip’s forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about our future operating and financial performance, including third quarter 2015 revenue and gross profit and expectations related to future spending and cost reduction initiatives. All forward-looking statements included in this release are based upon information available to MagnaChip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip’s filings with the SEC, including our Form 10-K filed on May 28, 2015 and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.
In the United States:
Director of Investor Relations
Senior Manager, Public Relations