Magnachip Reports Results for Second Quarter 2020
– GAAP earnings per share of $0.34 from continuing operations
– Non-GAAP diluted earnings per share from continuing operations of $0.13
– Cash of $192.8 million highest since IPO in March 2011; net operating cash flow of $36.0 million, which was the 5th straight quarter of positive operating cash flow
– Revenue from continuing operations of $118.8 million; reflecting approximately $6 million impact from the strategic exit of non-auto LCD DDIC product line during the second quarter
– Revenue from standard products business of $109.0 million and the Foundry Services Group of $95.8 million
– Non-GAAP combined revenue of $204.7 million from total operations exceeded high-end of the guidance range
– Gross profit margin from continuing operations of 27.0%, 460 bps increase Y/Y
– Gross profit margin from standard products business of 29.5% and the Foundry Services Group of 32.3%
– Excluding depreciation benefit of $2 million from discontinued operations, non-GAAP combined gross margin from total operations of 29.7% surpassed high-end of guidance range
SEOUL, South Korea and SAN JOSE, Calif., July 30, 2020 /PRNewswire/ — MagnaChip Semiconductor Corporation (NYSE: MX) (“MagnaChip” or the “Company”) today announced financial results for the second quarter of 2020.”We executed well and delivered an excellent quarter despite market disruptions caused by COVID-19 by achieving key financial metrics above expectations, said YJ Kim, MagnaChip’s chief executive officer. In addition to delivering outstanding financial results, our team is making substantial progress with the pending sale of our Foundry Services Group business and Fab 4. Based on the progress we made so far, we now anticipate that the transaction likely will close in the third quarter instead of our previous estimate of the September-October timeframe.””The new MagnaChip is undergoing a dramatic transformation to accelerate our profitability. While we can’t be completely immune to the risk of COVID-19 and macroeconomic conditions, we will continue our relentless execution to deliver a successful close of the pending transaction and strengthen our business foundation for profitable growth.”
Q2 2020 Financial Highlights
For further information, please visit “News Releases” of “Investors” on this website.
Q3 2020 financial guidance
Revenue from the continuing operations to be in the range of $118 million to $124 million, including $9.5 million to $10 million of the Transitional Fab 3 Foundry Services at cost
On July 20, 2020, our Fab 3 facility in Gumi, South Korea experienced a temporary power outage for approximately 9 hours and 15 minutes as a result of an accident involving branches of a nearby tree falling onto cables connecting one of the electricity pylons that supplies power to the Gumi plant. We are nearly fully operational in our Fab 3 facility as of the date of this earnings report. The accident caused damage to our work-in-process wafers with an estimated total cost of up to approximately $2.3 million. The related impact to our revenue from continuing operations is expected to be negligible. We are currently evaluating potential insurance and other claims that we may have for the above loss and damages.
As we expect to close the pending sale of the Foundry business and Fab 4 in Q3, we will provide a quarterly outlook on continuing operations only. The COVID-19 global pandemic and escalated trade tension are rapidly evolving situations and reduce our forward visibility. While actual results may vary, MagnaChip currently anticipates for Q3 2020:
Gross profit margin from continuing operations to be in the range of 25% to 27%
Without the estimated power outage impact, gross profit margin from continuing operations would have been in the range of 27% and 29%
Second Quarter 2020 Earnings Conference Call
MagnaChip will host a conference call at 5 p.m. Eastern Time on July 30, 2020. 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 8269223. Participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. ET 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 8269223.
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 MagnaChip’s future operating and financial performance, outlook and business plans, including third quarter 2020 revenue and gross profit margin expectations, the evaluation and expectation of costs and related revenue impact and timing as a result of the power outage, and the impact of the COVID-19 pandemic and escalated trade tensions on MagnaChip’s third quarter 2020 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 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; the risk that the pending sale of our Foundry Services Group business and the Fab 4 facility to Magnus Semiconductor, LLC or one of its wholly owned subsidiaries is not consummated according to our current expectations or at all; 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 February 21, 2020 (including that the impact of the COVID-19 pandemic may also exacerbate the risks discussed therein), our Form 10-Q filed on May 11, 2020 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 and manufacturing services to customers worldwide. MagnaChip, with more than 40 years of operating history, owns a portfolio of approximately 2,950 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.
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