MagnaChip Reports Second Quarter 2013 Financial Results

- Revenue Grew 4.9% Sequentially, 6.2% Year-Over-Year

- Power Solutions Revenue Increased 19.1% Sequentially, 6.7% Year-Over-Year

- Gross Margin Improved 100 BPS Sequentially, 200 BPS Year-Over-Year

- Achieved GAAP EPS of $0.12 and Adjusted EPS of $0.71 Per Diluted Share

- Board Approves New $100 Million Stock Repurchase Program

30 Jul, 2013, 16:01 ET from MagnaChip Semiconductor Corporation

SEOUL, South Korea and CUPERTINO, Calif., July 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 second quarter ended June 30, 2013.

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

Revenue for the second quarter of 2013 was $215.3 million, a 4.9% increase compared to $205.3 million for the first quarter of 2013 and a 6.2% increase compared to $202.6 million for the second quarter of 2012.

Gross margin was $71.0 million or 33.0%, as a percent of revenue, for the second quarter of 2013. This compares to gross margin of $65.7 million or 32.0% for the first quarter of 2013 and $62.9 million or 31.0% for the second quarter of 2012.

Net income, on a GAAP basis, for the second quarter of 2013 totaled $4.4 million or $0.12 per diluted share. This compares to a net loss of $7.4 million or $0.21 per diluted share for the first quarter of 2013 and a net income of $4.3 million or $0.12 per diluted share for the second quarter of 2012.

"We delivered solid results in the second quarter. Revenue of $215.3 million dollars was up 4.9% sequentially and up 6.2% year-over-year. Gross margin of 33.0% was up 100 basis points compared to last quarter and up 200 basis points compared to Q2 of last year," said Sang Park, MagnaChip Chairman and CEO. "We're excited that our effort to focus on fast growing markets with our expanding list of innovative partners has enabled us to deliver ten consecutive quarters of meeting or exceeding our financial guidance, in spite of the recent soft demand from high-end smartphone makers."

Adjusted net income, a non-GAAP measurement, for the second quarter of 2013 totaled $26.2 million or $0.71 per diluted share compared to $19.7 million or $0.53 per diluted share for the first quarter of 2013 and $17.9 million or $0.48 per diluted share for the second 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 $192.6 million at the end of the second quarter of 2013, an increase of $9.6 million from the end of the prior quarter. Cash provided from operations totaled approximately $11.0 million for the second quarter of 2013.

 

Revenue by Segment

In thousands of US dollars

Three Months Ended

June 30, 2013

March 31, 2013

June 30, 2012

Semiconductor Manufacturing Services (Foundry)

$    109,751

$    104,138

$    91,318

Display Solutions

68,867

70,323

76,784

Power Solutions

35,959

30,184

33,699

Other

712

653

833

Total Revenue

$     215,289

$     205,298

$     202,634

Second Quarter and Recent Company Highlights

  • Completed Private Offering of $225 Million of Senior Notes.
  • Lowered Cash Interest Expense by 30.3% or $6.5 Million Annually.
  • Corporate Credit and Debt Rating Upgraded by Moody's Investors Service.
  • Tenth Consecutive Quarter of Meeting or Exceeding Financial Guidance.

Business Outlook

For the third quarter of 2013, MagnaChip expects:

  • Revenue will be in the range of $215 million to $225 million.
  • Gross margin will be 33.0% to 34.0% as a percent of revenue.

Conference Call

MagnaChip will hold a conference call at 5 p.m. EDT today to discuss the second 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 18170301 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 18170301.

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 third 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

June 30,

2013

March 31,

2013

June 30,

2012

Net sales

$

215,289

$

205,298

$

202,634

Cost of sales

144,241

139,555

139,776

Gross profit

71,048

65,743

62,858

Gross profit %

33.0%

32.0%

31.0%

Selling, general and administrative expenses

19,709

19,791

20,093

Research and development expenses

21,131

20,582

19,762

Restructuring and impairment charges

2,446

Operating income

30,208

22,924

23,003

Other income (expenses)

Interest expense, net

(5,879)

(5,849)

(5,619)

Foreign currency loss, net

(20,978)

(22,558)

(10,586)

Other

(230)

(260)

701

(27,087)

(28,667)

(15,504)

Income (loss) before income taxes

3,121

(5,743)

7,499

Income tax expense (benefit)

(1,315)

1,662

3,159

Net income (loss)

$

4,436

$

(7,405)

$

4,340

Earnings (loss) per common share :

        - Basic

$

0.13

$

(0.21)

$

0.12

        - Diluted

$

0.12

$

(0.21)

$

0.12

Weighted average number of shares—Basic

35,474,001

35,539,413

36,713,569

Weighted average number of shares—Diluted

37,125,005

35,539,413

37,566,699

 

 

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

June 30,

2013

March 31,

2013

June 30,

2012

Net income (loss)

$

4,436

$

(7,405)

$

4,340

Adjustments:

Depreciation and amortization

8,359

8,522

7,923

Interest expense, net      

5,879

5,849

5,619

Income tax expense (benefit)

(1,315)

1,662

3,159

Restructuring and impairment charges

2,446

Stock-based compensation expense

493

420

457

Foreign currency loss, net

20,978

22,558

10,586

Derivative valuation loss (gain), net

230

267

(701)

Secondary offering expense

669

1,216

Adjusted EBITDA

$

39,060

$

34,988

$

32,599

Adjusted EBITDA per common share:

- Diluted

$

1.05

$

0.94

$

0.87

Weighted average number of shares

- Diluted

37,125,005

37,138,414

37,566,699

Net income (loss)

$

4,436

$

(7,405)

$

4,340

Adjustments:

Restructuring and impairment charges

2,446

Stock-based compensation expense

493

420

457

Amortization of intangibles

1,492

1,749

1,980

Foreign currency loss, net

20,978

22,558

10,586

Derivative valuation loss (gain), net

230

267

(701)

Secondary offering expense

669

1,216

GAAP and cash tax expense difference

(1,452)

(998)

Adjusted net income

$

26,177

$

19,706

$

17,878

Adjusted net income per common share:

- Diluted

$

0.71

$

0.53

$

0.48

Weighted average number of shares - Diluted

37,125,005

37,138,414

37,566,699

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, 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, 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)

 

 

June 30,

2013

 

December 31, 2012

Assets

Current assets

Cash and cash equivalents

$

192,641

$

182,238

Restricted cash

6

133

Accounts receivable, net

165,181

143,331

Inventories, net

76,342

89,363

Other receivables

2,459

1,429

Prepaid expenses

9,366

7,884

Current deferred income tax assets

25,347

22,768

Other current assets

3,695

9,680

     Total current assets

475,037

456,826

Property, plant and equipment, net

247,242

238,256

Intangible assets, net

10,068

15,260

Long-term prepaid expenses

17,962

18,048

Deferred income tax assets

42,631

46,710

Other non-current assets

15,422

14,866

     Total assets

$

808,362

$

789,966

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

76,175

$

79,236

Other accounts payable

16,804

15,600

Accrued expenses

49,918

43,486

Derivative liabilities

10,247

Other current liabilities

6,912

9,973

     Total current liabilities

160,056

148,295

Long-term borrowings, net

201,801

201,653

Accrued severance benefits, net

112,198

112,446

Other non-current liabilities

17,880

17,263

     Total liabilities

491,935

479,657

Stockholders' equity

Common stock, $0.01 par value, 150,000,000 shares authorized,

40,021,283 shares issued and 35,681,382 shares outstanding at June

30, 2013 and 39,599,374 shares issued and 35,635,357 shares

outstanding at December 31, 2012

400

396

Additional paid-in capital

107,375

101,885

Retained earnings

284,282

287,251

Treasury stock, 4,339,901 shares at June 30, 2013 and 3,964,017

 shares at December 31, 2012

(45,918)

(39,918)

Accumulated other comprehensive loss

(29,712)

(39,305)

     Total stockholders' equity

316,427

310,309

     Total liabilities and stockholders' equity

$

808,362

$

789,966

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(Unaudited)

 

Three Months Ended

Six Months

 Ended

June 30,

2013

June 30,

2013

June 30,

2012

Cash flows from operating activities

Net income (loss)

$

4,436

$

(2,969)

$

19,603

Adjustments to reconcile net income (loss) to net cash provided by operating activities

Depreciation and amortization

8,359

16,881

15,397

Provision for severance benefits

6,457

10,686

10,975

Amortization of debt issuance costs and original issue discount

285

568

497

Loss on foreign currency translation, net

26,728

55,008

55

Gain on disposal of property, plant and equipment, net

(26)

(26)

(190)

Loss on disposal of intangible assets, net

1

15

Restructuring and impairment charges

618

Stock-based compensation

493

913

915

Other

776

1,411

(348)

Changes in operating assets and liabilities

Accounts receivable

(23,077)

(29,486)

(8,296)

Inventories

4,738

6,760

(11,498)

Other receivables

1,878

600

(2,580)

Other current assets

5,411

7,425

8,851

Deferred tax assets

(3,177)

(995)

1,146

Accounts payable

(1,437)

853

14,654

Other accounts payable

(17,256)

(7,522)

9,677

Accrued expenses

(5,878)

(7,003)

7,890

Other current liabilities

4,741

(1,097)

6,611

Payment of severance benefits

(2,312)

(2,939)

(4,816)

Other

(103)

(1,107)

(1,996)

Net cash provided by operating activities

11,036

48,580

66,562

Cash flows from investing activities

Decrease in restricted cash

30

122

1,634

Proceeds from disposal of plant, property and equipment

27

27

891

Purchase of plant, property and equipment

(6,963)

(39,890)

(46,728)

Payment for intellectual property registration

(101)

(243)

(565)

Payment for acquisition

(8,642)

Decrease in short-term financial instruments

173

Collection of guarantee deposits

117

117

70

Payment of guarantee deposits

(198)

(939)

(176)

Other

3

11

(53)

Net cash used in investing activities

(7,085)

(40,795)

(53,396)

Cash flows from financing activities

Proceeds from issuance of common stock

3,575

4,581

183

Repayment of obligations under capital lease

(2,968)

Acquisition of treasury stock

(6,000)

(16,935)

Net cash provided by (used in) financing activities

3,575

(1,419)

(19,720)

Effect of exchange rates on cash and cash equivalents

2,128

4,037

207

Net increase (decrease) in cash and cash equivalents

9,654

10,403

(6,347)

Cash and cash equivalents

Beginning of the period

182,987

182,238

162,111

End of the period

$

192,641

$

192,641

$

155,764

 

SOURCE MagnaChip Semiconductor Corporation



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