MagnaChip Reports First Quarter 2012 Financial Results

- Power Solutions Revenue Grew 14.6% Sequentially and 23.7% Year-over-Year

- Achieved GAAP EPS of $0.40 and Adjusted EPS of $0.17

- Expects Q2 Revenue to Increase 11% to 15% on a Sequential Basis

Apr 25, 2012, 16:00 ET from MagnaChip Semiconductor Corporation

SEOUL, South Korea and CUPERTINO, Calif., April 25, 2012 /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 first quarter ended March 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120305/NY61184LOGO )

Revenue for the first quarter of 2012 was $177.0 million, a 2.1% decrease compared to $180.8 million for the fourth quarter of 2011, and a 5.8% decrease compared to $187.9 million for the first quarter of 2011.

Gross profit was $49.9 million or 28.2%, as a percent of revenue, for the first quarter of 2012. This compares to gross profit of $51.5 million or 28.5 % for the fourth quarter of 2011 and $56.5 million or 30.1% for the first quarter of 2011.

"I am very pleased that since going public in March 2011, we have met our revenue and gross margin guidance each quarter for 5 consecutive quarters in what has been a very challenging period for the industry," said Sang Park, MagnaChip's Chairman and Chief Executive Officer. "As our Q2 guidance suggests, the first quarter of 2012 was indeed our bottom during this current semiconductor downturn. We have been seeing renewed customer order strength and wafer loading since early March as a result of increased demand from smartphone and tablet PC customers and expect this trend to continue into the second half of this year.  In anticipation of this growing demand, we have allocated additional fab capacity to support expansion."

Net income, on a GAAP basis, for the first quarter of 2012 totaled $15.3 million or $0.40 per diluted share. This compares to net income of $23.7 million or $0.61 per diluted share for the fourth quarter of 2011 and a net income of $22.5 million or $0.57 per diluted share for the first quarter of 2011. Net income was impacted primarily by a foreign currency gain of $11.1 million during the quarter which was primarily related to non-cash translation gains for intercompany balances that were denominated in U.S. dollars.

Adjusted net income, a non-GAAP measurement, for the first quarter of 2012 totaled $6.5 million or $0.17 per diluted share compared to $10.0 million or $0.26 per diluted share for the fourth quarter of 2011 and $15.7 million or $0.40 per diluted share for the first quarter of 2011.

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.

Combined cash balances (cash and cash equivalents plus restricted cash) totaled $160.6 million at the end of the first quarter of 2012, a decrease of $8.4 million from the end of the prior quarter. Cash provided from operations totaled approximately $39.9 million for the first quarter of 2012.

Revenue by Segment

In thousands of US dollars

Three Months Ended

March 31, 2012

December 31, 2011

March 31, 2011

Semiconductor

Manufacturing Services

$      67,863

$        67,973

$      92,266

Display Solutions

83,225

90,045

74,464

Power Solutions

25,253

22,039

20,412

Other

661

769

779

Total Revenue

$     177,002

$      180,826

$     187,921

First Quarter and Recent Company Highlights

  • Power Solutions Revenue Grew 14.6% Sequentially and 23.7% Year-over-Year.
  • Fab loading rate exceeded 90% in March 2012.
  • Achieved GAAP EPS of $0.40 and Adjusted EPS of $0.17.
  • Repurchased 1.04 Million Shares under MagnaChip's Stock Repurchase Program Announced October 11, 2011.

Business Outlook For the second quarter of 2012, MagnaChip expects:

  • Revenue will increase 11% to 15% ($197 million to $203 million) on a sequential basis.
  • Gross Profit, as a percent of revenue, will be in the range of 29.5% to 30.5%.

Non-GAAP Metrics Adjusted EBITDA excludes charges related to depreciation and amortization, interest expense, net, income tax expense, stock-based compensation expense, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. Adjusted net income (loss) excludes charges related to, stock-based compensation expense, amortization of intangible assets associated with continuing operations, foreign currency gain, net, derivative valuation loss (gain), net, and special expense for an IPO employee incentive payment. A reconciliation of GAAP results to non-GAAP results is included following the financial statements.

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 ability to capitalize on improving market dynamics and future operating and financial performance including second quarter 2012 revenue and gross profit. 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 March 8, 2012 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.

CONTACTS:

 

In the United States:

Robert Pursel

Director of Investor Relations

Tel. 408-625-1262

robert.pursel@magnachip.com

In Korea:

Chankeun Park

Senior Manager, Public Relations

Tel. +82-2-6903-3195

chankeun.park@magnachip.com

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of US dollars, except share data)

(Unaudited)

Three Months Ended

March 31,

2012

December 31,

2011

March 31,

2011

Net sales

$

177,002

$

180,826

$

187,921

Cost of sales

127,087

129,287

131,447

Gross profit

49,915

51,539

56,474

Gross profit %

28.2%

28.5%

30.1%

Selling, general and administrative expenses

18,209

17,627

15,401

Research and development expenses

19,831

18,652

18,498

Special expense for IPO incentive

12,146

Operating income

11,875

15,260

10,429

Other income (expense)

Interest expense, net

(5,580)

(5,644)

(7,111)

Foreign currency gain, net

11,109

16,832

21,359

Other

89

(862)

166

5,618

10,326

14,414

Income before income taxes

17,493

25,586

24,843

Income tax expense

2,230

1,881

2,375

Net income

$

15,263

$

23,705

$

22,468

Earnings per common share :

        - Basic

$

0.41

$

0.61

$

0.59

        - Diluted

$

0.40

$

0.61

$

0.57

Weighted average number of shares—Basic

37,524,127

38,632,975

38,332,750

Weighted average number of shares—Diluted

38,298,336

39,110,759

39,570,522

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME

(In thousands of US dollars, except share data)

(Unaudited)

Three Months Ended

March 31,

December 31,

March 31,

2012

2011

2011

Net income

$

15,263

$

23,705

$

22,468

Adjustments:

Depreciation and amortization

7,474

8,856

13,903

Interest expense, net    

5,580

5,644

7,111

Income tax expense

2,230

1,881

2,375

Stock-based compensation expense

458

287

641

Foreign currency gain, net

(11,109)

(16,832)

(21,359)

Derivative valuation loss (gain), net

(85)

862

(158)

Special expense for IPO incentive

12,146

Adjusted EBITDA

$

19,811

$

24,403

$

37,127

Adjusted EBITDA per common share:

- Diluted

$

0.52

$

0.62

$

0.94

Weighted average number of shares - Diluted

38,298,336

39,110,759

39,570,522

Net income

$

15,263

$

23,705

$

22,468

Adjustments:

Stock-based compensation expense

458

287

641

Amortization of intangibles

1,993

1,985

1,990

Foreign currency gain, net

(11,109)

(16,832)

(21,359)

Derivative valuation loss (gain), net

(85)

862

(158)

Special expense for IPO incentive

12,146

Adjusted net income

$

6,520

$

10,007

$

15,728

Adjusted net income per common share:

- Diluted

$

0.17

$

0.26

$

0.40

Weighted average number of shares - Diluted

38,298,336

39,110,759

39,570,522

We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense, (iv) stock-based compensation expense, (v) foreign currency gain, net, (vi) derivative valuation loss (gain), net, and (vii) special expense for IPO incentive.

We present Adjusted Net Income as a further supplemental measure of our performance. We prepare Adjusted Net Income by adjusting net income 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 as net income adjusted to exclude (i) stock-based compensation expense, (ii) amortization of intangibles, (iii) foreign currency gain, net, (iv) derivative valuation loss (gain), net, and (v) special expense for IPO incentive.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of US dollars, except share data)

(Unaudited)

 

March 31,

2012

 

December 31,

2011

Assets

Current assets

Cash and cash equivalents

$

156,623

$

162,111

Restricted cash

3,934

6,830

Accounts receivable, net

127,332

125,922

Inventories, net

68,105

62,836

Other receivables

4,343

256

Prepaid expenses

8,112

6,032

Other current assets

5,578

15,909

Total current assets

374,027

379,896

Property, plant and equipment, net

206,206

182,663

Intangible assets, net

20,348

16,787

Long-term prepaid expenses

4,107

4,790

Other non-current assets

17,972

18,539

Total assets

$

622,660

$

602,675

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

90,902

$

77,848

Other accounts payable

13,772

13,452

Accrued expenses

39,649

31,723

Current portion of capital lease obligations

1,458

2,852

Derivative liabilities

8,308

9,757

Other current liabilities

3,266

2,007

Total current liabilities

157,355

137,639

Long-term borrowings, net

201,452

201,389

Accrued severance benefits, net

94,352

90,755

Other non-current liabilities

5,596

6,222

Total liabilities

458,755

436,005

Commitments and contingencies

Stockholder' equity

Common stock, $0.01 par value, 150,000,000 shares authorized, 39,457,063

   shares issued and 36,880,879 outstanding at March 31, 2012 and 39,439,115

   shares issued and 37,907,575 outstanding at December 31, 2011

394

394

Additional paid-in capital

99,495

98,929

Retained earnings

109,213

93,950

Treasury stock, 2,576,184 shares at March 31, 2012

(23,728)

(11,793)

Accumulated other comprehensive loss

(21,469)

(14,810)

Total stockholders' equity

163,905

166,670

Total liabilities and stockholders' equity

$

622,660

$

602,675

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(Unaudited)

Three Months Ended

March 31,

2012

March 31,

2011

Cash flows from operating activities

Net income

$

15,263

$

22,468

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

Depreciation and amortization

7,474

13,903

Provision for severance benefits

4,703

2,854

Amortization of debt issuance costs and original issue discount

242

246

Gain on foreign currency translation, net

(12,824)

(23,684)

Gain on disposal of property, plant and equipment, net

(269)

Loss on disposal of intangible assets, net

11

4

Stock-based compensation

458

641

Other

123

549

Changes in operating assets and liabilities

Accounts receivable

1,339

(9,250)

Inventories

(2,860)

(3,467)

Other receivables

(4,024)

(1,041)

Other current assets

8,536

(1,449)

Deferred tax assets

871

548

Accounts payable

12,581

14,289

Other accounts payable

(298)

(1,348)

Accrued expenses

9,886

7,153

Other current liabilities

2,225

(1,518)

Payment of severance benefits

(2,323)

(1,610)

Other

(1,261)

(72)

Net cash provided by operating activities

39,853

19,216

Cash flows from investing activities

Decrease in restricted cash

2,995

Proceeds from disposal of plant, property and equipment

273

Purchase of plant, property and equipment

(24,758)

(6,779)

Payment for intellectual property registration

(190)

(165)

Payment for acquisition

(8,642)

Decrease in short-term financial instruments

173

Collection of guarantee deposits

31

979

Payment of guarantee deposits

(178)

(1,004)

Other

(48)

(44)

Net cash used in investing activities

(30,344)

(7,013)

Cash flows from financing activities

Proceeds from issuance of common stock

108

11,425

Repayment of obligation under capital lease

(1,510)

(1,562)

Acquisition of treasury stock

(11,935)

Net cash provided by (used in) financing activities

(13,337)

9,863

Effect of exchange rates on cash and cash equivalents

(1,660)

(59)

Net increase (decrease) in cash and cash equivalents

(5,488)

22,007

Cash and cash equivalents

Beginning of the period

162,111

172,172

End of the period

$

156,623

$

194,179

 

SOURCE MagnaChip Semiconductor Corporation



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