MagnaChip Reports First Quarter 2013 Financial Results

- Revenue Grew 16% Year-Over-Year

- Gross Margin Improved 380 Basis Points Year-Over-Year

- Foundry Business Revenue Increased 53% Year-Over-Year

- Ninth Consecutive Quarter of Achieving Financial Guidance

30 Apr, 2013, 16:00 ET from MagnaChip Semiconductor Corporation

SEOUL, South Korea and CUPERTINO, Calif., April 30, 2013 /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, 2013.

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

Revenue for the first quarter of 2013 was $205.3 million, a 5.9% decrease compared to $218.1 million for the fourth quarter of 2012 and a 16.0% increase compared to $177.0 million for the first quarter of 2012.

Gross margin was $65.7 million or 32.0%, as a percent of revenue, for the first quarter of 2013. This compares to gross margin of $74.3 million or 34.1% for the fourth quarter of 2012 and $49.9 million or 28.2% for the first quarter of 2012.

Net loss, on a GAAP basis, for the first quarter of 2013 totaled $7.4 million or $0.21 per diluted share. This compares to net income of $125.3 million or $3.38 per diluted share for the fourth quarter of 2012 and a net income of $15.3 million or $0.40 per diluted share for the first quarter of 2012. Net loss was impacted primarily by a foreign currency loss of $22.6 million during the quarter which was primarily related to non-cash foreign currency translation for intercompany balances that were denominated in U.S. dollars.

"Our first quarter revenue and margin performance was better than the same quarter last year because of the product mix and customer shift we have been making which has enabled us to be better aligned with growing markets," said Sang Park, MagnaChip Chairman and CEO. "The March quarter is typically a weak quarter due to seasonality and the post-holiday consumer spending slowdown.  However, in addition to normal seasonality we also experienced lower than anticipated demand from the smartphone market. Despite these obstacles, we were able to achieve our financial guidance for the ninth consecutive quarter. Looking ahead, challenges still remain and visibility is somewhat limited. However, we remain optimistic that the macro environment is starting to improve and that our business will return to normal seasonal growth beginning in the second quarter."

Adjusted net income, a non-GAAP measurement, for the first quarter of 2013 totaled $19.7 million or $0.53 per diluted share compared to $28.7 million or $0.77 per diluted share for the fourth quarter of 2012 and $6.5 million or $0.17 per diluted share for the first quarter of 2012.

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.

Combined cash balances (cash and cash equivalents plus restricted cash) totaled $183.0 million at the end of the first quarter of 2013, an increase of $0.7 million from the end of the prior quarter. Cash provided from operations totaled approximately $37.5 million for the first quarter of 2013.

Revenue by Segment

In thousands of US dollars

Three Months Ended

March 31, 2013

December 31, 2012

March 31, 2012

Semiconductor Manufacturing Services

$    104,138

$    112,654

$    67,863

Display Solutions

70,323

72,806

83,225

Power Solutions

30,184

31,949

25,253

Other

653

675

661

Total Revenue

$     205,298

$     218,084

$     177,002

First Quarter and Recent Company Highlights

  • Foundry Revenue Grew 53% Year-Over-Year.
  • Power Solutions Revenue Increased 20% Year-Over-Year.
  • Corporate Credit and Debt Rating Upgraded by Standard and Poor's. 
  • Repurchased 376,000 Shares in Q1 under MagnaChip's 2011 Stock Repurchase Program.

Business Outlook For the second quarter of 2013, MagnaChip expects:

  • Revenue will be in the range of $210 million to $220 million.
  • Gross margin will be 32.0% to 34.0% as a percent of revenue.

Conference Call MagnaChip will hold a conference call at 3 p.m. PDT today to discuss the first quarter 2013 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 31661611 and participants are encouraged to initiate their calls at least 10 minutes in advance of the 3 p.m. PDT 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 31661611.

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 2013 revenue and gross margin. All forward-looking statements included in this release are based upon information available to MagnaChip Semiconductor as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions, the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new products and technologies, ability to ramp new products into volume production, industry wide shifts in supply and demand for semiconductor products, industry and/or company overcapacity, effective and cost efficient utilization of manufacturing capacity, financial stability in foreign markets and the impact of foreign exchange rates, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, compliance with U.S. and international trade and export laws and regulations by us and our distributors, and other risks detailed from time to time in MagnaChip's filings with the SEC, including our Form 10-K filed on February 22, 2013 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. +1-408-625-1262

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,

2013

December 31,

2012

March 31,

2012

Net sales

$

205,298

$

218,084

$

177,002

Cost of sales

139,555

143,796

127,087

Gross profit

65,743

74,288

49,915

Gross profit %

32.0%

34.1%

28.2%

Selling, general and administrative expenses

19,791

19,281

18,209

Research and development expenses

20,582

19,660

19,831

Restructuring and impairment charges

2,446

Operating income

22,924

35,347

11,875

Other income (expenses)

Interest expense, net

(5,849)

(5,655)

(5,580)

Foreign currency gain (loss), net

(22,558)

33,656

11,109

Other

(260)

634

89

(28,667)

28,635

5,618

Income (loss) before income taxes

(5,743)

63,982

17,493

Income tax expense (benefit)

1,662

(61,304)

2,230

Net income (loss)

$

(7,405)

$

125,286

$

15,263

Earnings (loss) per common share :

        - Basic

$

(0.21)

$

3.50

$

0.41

        - Diluted

$

(0.21)

$

3.38

$

0.40

Weighted average number of shares—Basic

35,539,413

35,845,367

37,524,127

Weighted average number of shares—Diluted

35,539,413

37,074,657

38,298,336

 

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,

2013

December 31,

2012

March 31,

2012

Net income (loss)

$

(7,405)

$

125,286

$

15,263

Adjustments:

Depreciation and amortization

8,522

8,550

7,474

Interest expense, net      

5,849

5,655

5,580

Income tax expense (benefit)

1,662

(61,304)

2,230

Restructuring and impairment charges

2,446

Stock-based compensation expense

420

546

458

Foreign currency loss (gain), net

22,558

(33,656)

(11,109)

Derivative valuation loss (gain), net

267

(634)

(85)

Secondary offering expense

669

Adjusted EBITDA

$

34,988

$

44,443

$

19,811

Adjusted EBITDA per common share:

- Diluted

$

0.94

$

1.20

$

0.52

Weighted average number of shares - Diluted

37,138,414

37,074,657

38,298,336

Net income (loss)

$

(7,405)

$

125,286

$

15,263

Adjustments:

Restructuring and impairment charges

2,446

Stock-based compensation expense

420

546

458

Amortization of intangibles

1,749

1,893

1,993

Foreign currency loss (gain), net

22,558

(33,656)

(11,109)

Derivative valuation loss (gain), net

267

(634)

(85)

Secondary offering expense

669

GAAP and cash tax expense difference

(998)

(64,749)

Adjusted net income

$

19,706

$

28,686

$

6,520

Adjusted net income per common share:

- Diluted

$

0.53

$

0.77

$

0.17

Weighted average number of shares - Diluted

37,138,414

37,074,657

38,298,336

We define Adjusted EBITDA as net income (loss) adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit), (iv) restructuring and impairment charges, (v) stock-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, and (viii) secondary offering expense.

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 (loss) adjusted to exclude (i) restructuring and impairment charges, (ii) stock-based compensation expense, (iii) amortization of intangibles, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, (vi) secondary offering expense, and (vii) GAAP and cash tax expense difference.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of US dollars, except share data)

(Unaudited)

March 31,

2013

December 31, 2012

Assets

Current assets

Cash and cash equivalents

$

182,987

$

182,238

Restricted cash

37

133

Accounts receivable, net

146,267

143,331

Inventories, net

83,910

89,363

Other receivables

3,662

1,429

Prepaid expenses

10,401

7,884

Current deferred income tax assets

22,870

22,768

Other current assets

5,322

9,680

Total current assets

455,456

456,826

Property, plant and equipment, net

255,144

238,256

Intangible assets, net

12,169

15,260

Long-term prepaid expenses

16,101

18,048

Deferred income tax assets

42,804

46,710

Other non-current assets

15,359

14,866

Total assets

$

797,033

$

789,966

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

79,425

$

79,236

Other accounts payable

29,975

15,600

Accrued expenses

49,268

43,486

Derivative liabilities

4,619

Other current liabilities

3,136

9,973

Total current liabilities

166,423

148,295

Long-term borrowings, net

201,727

201,653

Accrued severance benefits, net

111,806

112,446

Other non-current liabilities

13,897

17,263

Total liabilities

493,853

479,657

Stockholders' equity

Common stock, $0.01 par value, 150,000,000 shares authorized, 39,747,933

   shares issued and 35,408,032 shares outstanding at March 31, 2013 and

   39,599,374 shares issued and 35,635,357 shares outstanding at December

   31, 2012

397

396

Additional paid-in capital

103,310

101,885

Retained earnings

279,846

287,251

Treasury stock, 4,339,901 shares at March 31, 2013 and 3,964,017 shares at

December 31, 2012

(45,918)

(39,918)

Accumulated other comprehensive loss

(34,455)

(39,305)

Total stockholders' equity

303,180

310,309

Total liabilities and stockholders' equity

$

797,033

$

789,966

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(Unaudited)

Three Months Ended

March 31,

2013

March 31,

2012

Cash flow from operating activities

Net income (loss)

$

(7,405)

$

15,263

Adjustments to reconcile net income to net cash provided by operating

   activities

Depreciation and amortization

8,522

7,474

Provision for severance benefits

4,229

4,703

Amortization of debt issuance costs and original issue discount

283

242

Loss (gain) on foreign currency translation, net

2

28,280

(12,824)

Gain on disposal of property, plant and equipment, net

(269)

Loss on disposal of intangible assets, net

1

11

Restructuring and impairment charges

618

Stock-based compensation

420

458

Other

635

123

Changes in operating assets and liabilities

Accounts receivable

(6,409)

1,339

Inventories

2,022

(2,860)

Other receivables

(1,278)

(4,024)

Other current assets

2,014

8,536

Deferred tax assets

2,182

871

Accounts payable

2,290

12,581

Other accounts payable

9,734

(298)

Accrued expenses

(1,125)

9,886

Other current liabilities

(5,838)

2,225

Payment of severance benefits

(627)

(2,323)

Other

(1,004)

(1,261)

Net cash provided by operating activities

37,544

39,853

Cash flow from investing activities

Decrease in restricted cash

92

2,995

Proceeds from disposal of plant, property and equipment

273

Purchase of plant, property and equipment

(32,927)

(24,758)

Payment for intellectual property registration

(142)

(190)

Payment for acquisition

(8,642)

Decrease in short-term financial instruments

173

Collection of guarantee deposits

31

Payment of guarantee deposits

(741)

(178)

Other

8

(48)

Net cash used in investing activities

(33,710)

(30,344)

Cash flow from financing activities

Proceeds from issuance of common stock

1,006

108

Repayment of obligations under capital lease

(1,510)

Acquisition of treasury stock

(6,000)

(11,935)

Net cash used in financing activities

(4,994)

(13,337)

Effect of exchange rates on cash and cash equivalents

1,909

(1,660)

Net increase (decrease) in cash and cash equivalents

749

(5,488)

Cash and cash equivalents

Beginning of the period

182,238

162,111

End of the period

$

182,987

$

156,623

 

 

SOURCE MagnaChip Semiconductor Corporation



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