Magnachip Reports Results for Fourth Quarter and Year 2021
- Fourth quarter revenue of $110.3 million was down 13.1% sequentially and down 22.8% year-over-year (YoY) due mainly to severe supply shortages especially for 28nm 12" OLED wafers; Full-year revenue of $474.2 million decreased 6.5% YoY due primarily to a revenue decrease in our OLED business due to wafer supply shortages, offset in part by strong growth in our Power business.
- GAAP gross profit margin for the fourth quarter was 35.0%, down 170 bps sequentially and up 810 bps YoY; Full-year GAAP gross profit margin of 32.4% was an increase of 710 bps YoY due mainly to improved product mix, increased average selling price, and a higher utilization rate.
- GAAP diluted earnings per share (EPS) for the fourth quarter was $1.12; Full-year GAAP diluted EPS was $1.21.
- Non-GAAP diluted EPS for the fourth quarter was $0.31; Full-year non-GAAP diluted EPS was $1.09.
SEOUL, South Korea, Feb. 16, 2022 /PRNewswire/ -- Magnachip Semiconductor Corporation (NYSE: MX) ("Magnachip" or the "Company") today announced financial results for the fourth quarter and full-year 2021.
Commenting on the results for the fourth quarter of 2021, YJ Kim, Magnachip's chief executive officer stated, "For the fourth quarter, the demand and signals from our customers remained strong across the board. However, severe supply constraints continued to significantly limit our OLED revenue potential, which was partially offset by strong Power business. We reported $110.3 million in revenue and 31 cents in non-GAAP diluted EPS for the fourth quarter."
Commenting on the full-year, YJ stated, "While our 2021 revenue was negatively impacted by continuing supply shortages, especially for 28nm 12" OLED wafers, we delivered higher profitability in all of our key measures in 2021 compared to 2020. In addition, our team at Magnachip achieved critical milestones to fuel future growth; we broadened our customer base, further penetrated new applications, and enhanced our supply chain for additional manufacturing capacity, which is expected to come online in the later part of 2022. While our near-term outlook is still being challenged by persisting supply constraints, these developments reinforce our confidence and optimism about our long-term growth."
Q4 and 2021 Financial Highlights |
||||||||||||||||||||||||||||
In thousands of U.S dollars, except share data |
||||||||||||||||||||||||||||
GAAP |
||||||||||||||||||||||||||||
Q4 2021 |
Q3 2021 |
Q/Q change |
Q4 2020 |
Y/Y change |
||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||||
Standard Products Business |
||||||||||||||||||||||||||||
Display Solutions |
41,298 |
58,528 |
down |
29.4 |
% |
82,705 |
down |
50.1 |
% |
|||||||||||||||||||
Power Solutions |
58,212 |
58,887 |
down |
1.1 |
% |
46,861 |
up |
24.2 |
% |
|||||||||||||||||||
Transitional Fab 3 foundry services(1) |
10,825 |
9,585 |
up |
12.9 |
% |
13,379 |
down |
19.1 |
% |
|||||||||||||||||||
Gross Profit Margin |
35.0 |
% |
36.7 |
% |
down |
1.7 |
%pts |
26.9 |
% |
up |
8.1 |
%pts |
||||||||||||||||
Operating Income |
63,870 |
20,001 |
up |
219.3 |
% |
9,206 |
up |
593.8 |
% |
|||||||||||||||||||
Net Income |
53,611 |
10,768 |
up |
397.9 |
% |
66,581 |
down |
19.5 |
% |
|||||||||||||||||||
Basic Earnings per Common Share |
1.16 |
0.23 |
up |
404.3 |
% |
1.87 |
down |
38.0 |
% |
|||||||||||||||||||
Diluted Earnings per Common Share |
1.12 |
0.23 |
up |
387.0 |
% |
1.45 |
down |
22.8 |
% |
|||||||||||||||||||
In thousands of U.S dollars, except share data |
||||||||||||||||||||||||||||
Non-GAAP(4) |
||||||||||||||||||||||||||||
Q4 2021 |
Q3 2021 |
Q/Q change |
Q4 2020 |
Y/Y change |
||||||||||||||||||||||||
Adjusted Operating Income |
14,421 |
22,691 |
down |
36.4 |
% |
15,355 |
down |
6.1 |
% |
|||||||||||||||||||
Adjusted EBITDA |
18,144 |
26,361 |
down |
31.2 |
% |
18,582 |
down |
2.4 |
% |
|||||||||||||||||||
Adjusted Net Income |
14,606 |
20,073 |
down |
27.2 |
% |
17,268 |
down |
15.4 |
% |
|||||||||||||||||||
Adjusted Earnings per Common Share—Diluted |
0.31 |
0.42 |
down |
26.2 |
% |
0.40 |
down |
22.5 |
% |
|||||||||||||||||||
In thousands of U.S dollars, except share data |
||||||||||||||||
GAAP |
||||||||||||||||
2021 |
2020 |
Y/Y Change |
||||||||||||||
Revenues |
||||||||||||||||
Standard Products Business |
||||||||||||||||
Display Solutions |
205,322 |
299,057 |
down |
31.3 |
% |
|||||||||||
Power Solutions |
227,777 |
166,462 |
up |
36.8 |
% |
|||||||||||
Transitional Fab 3 foundry services(1) |
41,131 |
41,540 |
down |
1.0 |
% |
|||||||||||
Gross Profit Margin |
32.4 |
% |
25.3 |
% |
up |
7.1 |
%pts |
|||||||||
Operating Income(2) |
83,407 |
27,016 |
up |
208.7 |
% |
|||||||||||
Net Income(3) |
56,708 |
344,965 |
down |
83.6 |
% |
|||||||||||
Basic Earnings per Common Share |
1.26 |
9.80 |
down |
87.1 |
% |
|||||||||||
Diluted Earnings per Common Share |
1.21 |
7.54 |
down |
84.0 |
% |
|||||||||||
In thousands of U.S dollars, except share data |
||||||||||||||||
Non-GAAP(4) |
||||||||||||||||
2021 |
2020 |
Y/Y Change |
||||||||||||||
Adjusted Operating Income |
56,135 |
41,584 |
up |
35.0 |
% |
|||||||||||
Adjusted EBITDA |
70,701 |
52,919 |
up |
33.6 |
% |
|||||||||||
Adjusted Net Income |
51,059 |
28,260 |
up |
80.7 |
% |
|||||||||||
Adjusted Earnings per Common Share—Diluted |
1.09 |
0.73 |
up |
49.3 |
% |
|||||||||||
(1) |
Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, and for a period of up to three years, we will provide transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi ("Transitional Fab 3 Foundry Services"). Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions businesses. |
||
(2) |
For the year ended December 31, 2021, operating income of $83.4 million included net gain of $35.5 million that represented $70.2 million income from the recognition of a reverse termination fee, net of professional service fees and expenses of $34.7 million incurred in connection with the contemplated merger transaction. |
||
(3) |
For the year ended December 31,2020, net income of $345.0 million included income from discontinued operations, net of tax, of $287.9 million, primarily attributable to the recognition of $287.1 million as gain on sale of the Foundry Services Group business and Fab 4. It also included income tax benefits of $46.2 million, mainly attributable to the recognition of differences between GAAP and cash tax expense of $43.9 million. |
||
(4) |
Non-GAAP financial measures are calculated based on the results from continuing operations. Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a meaningful understanding of the factors and trends affecting our business and operations and assist in evaluating our core operating performance. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income from continuing operations 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 in this press release. |
||
Q1 2022 Financial Guidance
Our near-term outlook is still being challenged by persisting supply constraints especially for 28nm 12" wafers. While actual results may vary, looking into the next quarter, which typically presents seasonal softness, Magnachip anticipates Q1 2022 to be the bottom and currently expects:
- Revenue to be in the range of $102 million to $108 million, including about $9 million of the Transitional Fab 3 Foundry Services.
- Gross profit margin to be in the range of 34.5% to 36.5%
Q4 2021 Earnings Conference Call
Magnachip will host a conference call at 5 p.m. Eastern Time on February 16, 2022. 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 1582546. Participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. Eastern Time 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 1582546.
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 expectations about estimated historical or future operating results and financial performance, outlook and business plans, including first quarter 2022 revenue and gross profit margin expectations, and the impact of the COVID-19 pandemic or the emergence of various variants of the virus, escalated trade tensions and supply constraints on Magnachip's first quarter 2022 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, among others: the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to the COVID-19 pandemic or the emergence of various variants of the virus, other outbreaks of disease, recessions, economic instability or civil unrest; manufacturing capacity constraints or supply chain disruptions; 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 or supply constraints; 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, our customers and our distributors; change or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the COVID-19 pandemic or the emergence of various variants of the virus; 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 or the emergence of various variants of the virus 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 U.S. Securities and Exchange Commission (the "SEC"), including our Form 10-K filed on March 9, 2021 (amended on April 30, 2021), our Form 10-Qs filed on May 10, 2021, August 6, 2021 and November 5, 2021 (including that the impact of the COVID-19 pandemic, trade tensions and supply constraints may also exacerbate the risks discussed therein) 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.
About Magnachip Semiconductor
Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip with more than 40 years of operating history, owns a portfolio of approximately 1,150 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.
CONTACT: |
|
In the United States: So-Yeon Jeong Jeong Consulting Tel. +1-408-712-6151 |
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||||||
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||
Revenues: |
||||||||||||||||||||
Net sales – standard products business |
$ |
99,510 |
$ |
117,415 |
$ |
129,566 |
$ |
433,099 |
$ |
465,519 |
||||||||||
Net sales – transitional Fab 3 foundry services |
10,825 |
9,585 |
13,379 |
41,131 |
41,540 |
|||||||||||||||
Total revenues |
110,335 |
127,000 |
142,945 |
474,230 |
507,059 |
|||||||||||||||
Cost of sales: |
||||||||||||||||||||
Cost of sales – standard products business |
62,206 |
71,641 |
92,503 |
283,503 |
338,420 |
|||||||||||||||
Cost of sales – transitional Fab 3 foundry services |
9,525 |
8,772 |
11,981 |
37,184 |
40,322 |
|||||||||||||||
Total cost of sales |
71,731 |
80,413 |
104,484 |
320,687 |
378,742 |
|||||||||||||||
Gross profit |
38,604 |
46,587 |
38,461 |
153,543 |
128,317 |
|||||||||||||||
Gross profit as a percentage of standard products business net sales |
37.5 |
% |
39.0 |
% |
28.6 |
% |
34.5 |
% |
27.3 |
% |
||||||||||
Gross profit as a percentage of total revenues |
35.0 |
% |
36.7 |
% |
26.9 |
% |
32.4 |
% |
25.3 |
% |
||||||||||
Operating expenses: |
||||||||||||||||||||
Selling, general and administrative expenses |
13,255 |
12,550 |
12,576 |
52,440 |
49,974 |
|||||||||||||||
Research and development expenses |
12,197 |
12,270 |
11,604 |
51,212 |
45,698 |
|||||||||||||||
Merger-related costs (income), net |
(49,369) |
1,552 |
653 |
(35,527) |
653 |
|||||||||||||||
Early termination and other charges, net |
(1,349) |
214 |
4,422 |
2,011 |
4,976 |
|||||||||||||||
Total operating expenses (income) |
(25,266) |
26,586 |
29,255 |
70,136 |
101,301 |
|||||||||||||||
Operating income: |
63,870 |
20,001 |
9,206 |
83,407 |
27,016 |
|||||||||||||||
Interest expense |
(132) |
(113) |
(1,625) |
(1,371) |
(18,147) |
|||||||||||||||
Foreign currency gain (loss), net |
147 |
(7,579) |
13,256 |
(11,853) |
(382) |
|||||||||||||||
Loss on early extinguishment of borrowings, net |
— |
— |
(766) |
— |
(766) |
|||||||||||||||
Other income, net |
947 |
1,608 |
767 |
3,786 |
3,110 |
|||||||||||||||
Income from continuing operations before income tax expense |
64,832 |
13,917 |
20,838 |
73,969 |
10,831 |
|||||||||||||||
Income tax expense (benefit) |
11,221 |
3,149 |
(47,064) |
17,261 |
(46,228) |
|||||||||||||||
Income from continuing operations |
53,611 |
10,768 |
67,902 |
56,708 |
57,059 |
|||||||||||||||
Income (loss) from discontinued operations, net of tax |
— |
— |
(1,321) |
— |
287,906 |
|||||||||||||||
Net income |
$ |
53,611 |
$ |
10,768 |
$ |
66,581 |
$ |
56,708 |
$ |
344,965 |
||||||||||
Basic earnings (loss) per common share— |
||||||||||||||||||||
Continuing operations |
$ |
1.16 |
$ |
0.23 |
$ |
1.91 |
$ |
1.26 |
$ |
1.62 |
||||||||||
Discontinued operations |
— |
— |
(0.04) |
— |
8.18 |
|||||||||||||||
Total |
$ |
1.16 |
$ |
0.23 |
$ |
1.87 |
$ |
1.26 |
$ |
9.80 |
||||||||||
Diluted earnings (loss) per common share— |
||||||||||||||||||||
Continuing operations |
$ |
1.12 |
$ |
0.23 |
$ |
1.47 |
$ |
1.21 |
$ |
1.35 |
||||||||||
Discontinued operations |
— |
— |
(0.02) |
— |
6.19 |
|||||||||||||||
Total |
$ |
1.12 |
$ |
0.23 |
$ |
1.45 |
$ |
1.21 |
$ |
7.54 |
||||||||||
Weighted average number of shares— |
||||||||||||||||||||
Basic |
46,369,520 |
46,449,234 |
35,582,966 |
44,879,412 |
35,213,525 |
|||||||||||||||
Diluted |
47,691,816 |
47,808,457 |
47,062,903 |
47,709,373 |
46,503,586 |
|||||||||||||||
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||
December 31, |
||
2021 |
2020 |
|
Assets |
||
Current assets |
||
Cash and cash equivalents |
$ 279,547 |
$ 279,940 |
Accounts receivable, net |
50,954 |
64,390 |
Inventories, net |
39,370 |
39,039 |
Other receivables |
25,895 |
4,338 |
Prepaid expenses |
7,675 |
7,332 |
Hedge collateral |
3,060 |
5,250 |
Other current assets |
2,619 |
9,321 |
Total current assets |
409,120 |
409,610 |
Property, plant and equipment, net |
107,882 |
96,383 |
Operating lease right-of-use assets |
4,275 |
4,632 |
Intangible assets, net |
2,377 |
2,727 |
Long-term prepaid expenses |
8,243 |
4,058 |
Deferred income taxes |
41,095 |
44,541 |
Other non-current assets |
10,662 |
9,739 |
Total assets |
$ 583,654 |
$ 571,690 |
Liabilities and Stockholders' Equity |
||
Current liabilities |
||
Accounts payable |
$ 37,593 |
$ 52,164 |
Other accounts payable |
6,289 |
2,531 |
Accrued expenses |
20,071 |
16,241 |
Accrued income taxes |
11,823 |
12,398 |
Operating lease liabilities |
2,323 |
2,210 |
Current portion of long-term borrowings, net |
— |
83,479 |
Other current liabilities |
7,382 |
4,595 |
Total current liabilities |
85,481 |
173,618 |
Accrued severance benefits, net |
33,064 |
40,462 |
Non-current operating lease liabilities |
1,952 |
2,422 |
Other non-current liabilities |
10,395 |
9,588 |
Total liabilities |
130,892 |
226,090 |
Commitments and contingencies |
||
Stockholders' equity |
||
Common stock, $0.01 par value, 150,000,000 shares authorized, 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 and 44,943,854 shares issued and 35,783,347 outstanding at December 31, 2020 |
559 |
450 |
Additional paid-in capital |
241,197 |
163,010 |
Retained earnings |
343,542 |
286,834 |
Treasury stock, 10,246,016 shares at December 31, 2021 and 9,160,507 shares at December 31, 2020, respectively |
(130,306) |
(108,397) |
Accumulated other comprehensive income (loss) |
(2,230) |
3,703 |
Total stockholders' equity |
452,762 |
345,600 |
Total liabilities and stockholders' equity |
$ 583,654 |
$ 571,690 |
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||
Three Months Ended |
Year Ended |
|||||||||||
December 31, |
December 31, |
December 31, |
||||||||||
2021 |
2021 |
2020 |
||||||||||
Cash flows from operating activities |
||||||||||||
Net income |
$ |
53,611 |
$ |
56,708 |
$ |
344,965 |
||||||
Adjustments to reconcile net income to net cash provided by operating activities |
||||||||||||
Depreciation and amortization |
3,663 |
14,239 |
16,481 |
|||||||||
Provision for severance benefits |
2,768 |
8,282 |
16,743 |
|||||||||
Amortization of debt issuance costs and original issue discount |
— |
261 |
2,220 |
|||||||||
Loss (gain) on foreign currency, net |
(175) |
32,432 |
(23,233) |
|||||||||
Restructuring and other charges |
— |
— |
3,502 |
|||||||||
Merger-related costs (income), net |
(12,142) |
(12,142) |
360 |
|||||||||
Provision for inventory reserves |
760 |
2,244 |
3,695 |
|||||||||
Stock-based compensation |
1,648 |
7,704 |
6,699 |
|||||||||
Loss on early extinguishment of borrowings, net |
— |
— |
766 |
|||||||||
Gain on sale of discontinued operations |
— |
— |
(287,117) |
|||||||||
Deferred income tax assets |
893 |
918 |
(44,441) |
|||||||||
Other, net |
(1,030) |
(613) |
217 |
|||||||||
Changes in operating assets and liabilities |
||||||||||||
Accounts receivable, net |
809 |
7,505 |
(19,268) |
|||||||||
Unbilled accounts receivable, net |
— |
— |
14,260 |
|||||||||
Inventories |
(1,378) |
(5,939) |
(816) |
|||||||||
Other receivables |
2,949 |
(2,338) |
6,954 |
|||||||||
Other current assets |
4,464 |
12,397 |
13,561 |
|||||||||
Accounts payable |
4,755 |
(11,437) |
3,960 |
|||||||||
Other accounts payable |
(4,084) |
(7,813) |
(12,000) |
|||||||||
Accrued expenses |
(765) |
(2,406) |
(29,116) |
|||||||||
Accrued income taxes |
8,307 |
(1) |
10,825 |
|||||||||
Deferred revenue |
863 |
(131) |
2,174 |
|||||||||
Other current liabilities |
(104) |
1,445 |
279 |
|||||||||
Other non-current liabilities |
(732) |
(1,398) |
3,521 |
|||||||||
Contributions to severance insurance deposit accounts |
(5,526) |
(5,688) |
(11,921) |
|||||||||
Payment of severance benefits |
(1,907) |
(6,679) |
(12,076) |
|||||||||
Other, net |
80 |
193 |
(3,724) |
|||||||||
Net cash provided by operating activities |
57,727 |
87,743 |
7,470 |
|||||||||
Cash flows from investing activities |
||||||||||||
Proceeds from settlement of hedge collateral |
1,219 |
5,214 |
13,762 |
|||||||||
Payment of hedge collateral |
(605) |
(3,349) |
(8,839) |
|||||||||
Proceeds from disposal of property, plant and equipment |
1,419 |
1,446 |
65 |
|||||||||
Purchase of property, plant and equipment |
(18,844) |
(32,212) |
(36,100) |
|||||||||
Payment for intellectual property registration |
(159) |
(614) |
(741) |
|||||||||
Collection of guarantee deposits |
— |
3,192 |
1,024 |
|||||||||
Payment of guarantee deposits |
(41) |
(5,001) |
(1,236) |
|||||||||
Proceeds from sale of discontinued operations |
— |
— |
350,553 |
|||||||||
Other, net |
16 |
(114) |
(6) |
|||||||||
Net cash provided by (used in) investing activities |
(16,995) |
(31,438) |
318,482 |
|||||||||
Cash flows from financing activities |
||||||||||||
Repurchase of long-term borrowings |
— |
— |
(224,250) |
|||||||||
Proceeds from exercise of stock options |
359 |
4,279 |
3,918 |
|||||||||
Acquisition of treasury stock |
— |
(1,653) |
(1,125) |
|||||||||
Acquisition of stock under accelerated stock repurchase agreement |
(20,073) |
(20,073) |
— |
|||||||||
Payment under accelerated stock repurchase agreement |
(17,427) |
(17,427) |
— |
|||||||||
Repayment of financing related to water treatment facility arrangement |
(136) |
(563) |
(546) |
|||||||||
Others |
(58) |
(107) |
(278) |
|||||||||
Net cash used in financing activities |
(37,335) |
(35,544) |
(222,281) |
|||||||||
Effect of exchange rates on cash and cash equivalents |
(151) |
(21,154) |
24,612 |
|||||||||
Net increase (decrease) in cash and cash equivalents |
3,246 |
(393) |
128,283 |
|||||||||
Cash and cash equivalents at beginning of period |
276,301 |
279,940 |
151,657 |
|||||||||
Cash and cash equivalents at end of period |
$ |
279,547 |
$ |
279,547 |
$ |
279,940 |
||||||
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||||||
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||
Operating income |
$ |
63,870 |
$ |
20,001 |
$ |
9,206 |
$ |
83,407 |
$ |
27,016 |
||||||||||
Adjustments: |
||||||||||||||||||||
Equity-based compensation expense |
1,648 |
2,005 |
1,945 |
7,704 |
6,311 |
|||||||||||||||
Inventory reserve related to Huawei impact of downstream trade restrictions |
(379) |
(1,081) |
(871) |
(1,460) |
1,460 |
|||||||||||||||
Expenses related to Fab 3 power outage |
— |
— |
— |
— |
1,168 |
|||||||||||||||
Merger-related costs (income), net |
(49,369) |
1,552 |
653 |
(35,527) |
653 |
|||||||||||||||
Early termination and other charges, net |
(1,349) |
214 |
4,422 |
2,011 |
4,976 |
|||||||||||||||
Adjusted operating income |
$ |
14,421 |
$ |
22,691 |
$ |
15,355 |
$ |
56,135 |
$ |
41,584 |
||||||||||
We present Adjusted Operating Income as a supplemental measure of our performance. We define Adjusted Operating Income for the periods indicated as operating income adjusted to exclude (i) Equity-based compensation expense, (ii) Inventory reserve related to Huawei impact of downstream trade restrictions, (iii) Expenses related to Fab 3 power outage, (iv) Merger-related costs (income), net and (v) Early termination and other charges, net.
For the year ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $35,527 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $34,673 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $3,430 thousand of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018).
For the year ended December 31, 2020, we recorded in our consolidated statement of operations $4,422 thousand of early termination and other charges, net, in connection with the headcount reduction program offered and paid to the employees during the fourth quarter of 2020. During the same period, we also recorded $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||
Three Months Ended |
Year Ended |
|||||||||||||||||||
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||||||||||||||||
2021 |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||
Income from continuing operations |
$ |
53,611 |
$ |
10,768 |
$ |
67,902 |
$ |
56,708 |
$ |
57,059 |
||||||||||
Adjustments: |
||||||||||||||||||||
Interest expense, net |
(726) |
(439) |
863 |
(1,238) |
15,404 |
|||||||||||||||
Income tax expense (benefit) |
11,221 |
3,149 |
(47,064) |
17,261 |
(46,228) |
|||||||||||||||
Depreciation and amortization |
3,663 |
3,578 |
3,148 |
14,239 |
11,116 |
|||||||||||||||
EBITDA |
67,769 |
17,056 |
24,849 |
86,970 |
37,351 |
|||||||||||||||
Equity-based compensation expense |
1,648 |
2,005 |
1,945 |
7,704 |
6,311 |
|||||||||||||||
Foreign currency loss (gain), net |
(147) |
7,579 |
(13,256) |
11,853 |
382 |
|||||||||||||||
Derivative valuation loss (gain), net |
(29) |
(237) |
74 |
(123) |
(148) |
|||||||||||||||
Loss on early extinguishment of borrowings, net |
— |
— |
766 |
— |
766 |
|||||||||||||||
Inventory reserve related to Huawei impact of downstream trade restrictions |
(379) |
(1,081) |
(871) |
(1,460) |
1,460 |
|||||||||||||||
Expenses related to Fab 3 power outage |
— |
— |
— |
— |
1,168 |
|||||||||||||||
Merger-related costs (income), net |
(49,369) |
1,552 |
653 |
(35,527) |
653 |
|||||||||||||||
Early termination and other charges, net |
(1,349) |
(513) |
4,422 |
1,284 |
4,976 |
|||||||||||||||
Adjusted EBITDA |
18,144 |
26,361 |
18,582 |
70,701 |
52,919 |
|||||||||||||||
Income from continuing operations |
$ |
53,611 |
$ |
10,768 |
$ |
67,902 |
$ |
56,708 |
$ |
57,059 |
||||||||||
Adjustments: |
||||||||||||||||||||
Equity-based compensation expense |
1,648 |
2,005 |
1,945 |
7,704 |
6,311 |
|||||||||||||||
Foreign currency loss (gain), net |
(147) |
7,579 |
(13,256) |
11,853 |
382 |
|||||||||||||||
Derivative valuation loss (gain), net |
(29) |
(237) |
74 |
(123) |
(148) |
|||||||||||||||
Loss on early extinguishment of borrowings, net |
— |
— |
766 |
— |
766 |
|||||||||||||||
Inventory reserve related to Huawei impact of downstream trade restrictions |
(379) |
(1,081) |
(871) |
(1,460) |
1,460 |
|||||||||||||||
Expenses related to Fab 3 power outage |
— |
— |
— |
— |
1,168 |
|||||||||||||||
Merger-related costs (income), net |
(49,369) |
1,552 |
653 |
(35,527) |
653 |
|||||||||||||||
Early termination and other charges, net |
(1,349) |
(513) |
4,422 |
1,284 |
4,976 |
|||||||||||||||
GAAP and cash tax expense difference |
907 |
— |
(43,874) |
907 |
(43,874) |
|||||||||||||||
Income tax effect on non-GAAP adjustments |
9,713 |
— |
(493) |
9,713 |
(493) |
|||||||||||||||
Adjusted Net Income |
$ |
14,606 |
$ |
20,073 |
$ |
17,268 |
$ |
51,059 |
$ |
28,260 |
||||||||||
Adjusted Net Income per common share— |
||||||||||||||||||||
- Basic |
$ |
0.31 |
$ |
0.43 |
$ |
0.49 |
$ |
1.14 |
$ |
0.80 |
||||||||||
- Diluted |
$ |
0.31 |
$ |
0.42 |
$ |
0.40 |
$ |
1.09 |
$ |
0.73 |
||||||||||
Weighted average number of shares – basic |
46,369,520 |
46,449,234 |
35,582,966 |
44,879,412 |
35,213,525 |
|||||||||||||||
Weighted average number of shares – diluted |
47,691,816 |
47,808,457 |
47,062,903 |
47,709,373 |
46,503,586 |
|||||||||||||||
We present Adjusted EBITDA and Adjusted Net Income as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of borrowings, net, (v) Inventory reserve related to Huawei impact of downstream trade restrictions, (vi) Expenses related to Fab 3 power outage, (vii) Merger-related costs (income), net and (viii) Early termination and other charges, net.
EBITDA for the periods indicated is defined as Income from continuing operations before interest expense, net, income tax expense (benefit) and depreciation and amortization. We prepare Adjusted Net Income by adjusting income from continuing operations 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 for the periods as income from continuing operations, adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of borrowings, net, (v) Inventory reserve related to Huawei impact of downstream trade restrictions, (vi) Expenses related to Fab 3 power outage, (vii) Merger-related costs (income), net, (viii) Early termination and other charges, net, (ix) GAAP and cash tax expense difference and (x) Income tax effect on non-GAAP adjustments.
For the year ended December 31, 2021, we recorded in our consolidated statement of operations net gain of $35,527 thousand that represented income of $70,200 thousand from the recognition of a reverse termination fee, net of professional service fees and expenses of $34,673 thousand incurred in connection with the contemplated merger transaction of the Company that was terminated in December 2021. For the same period, we also recorded $3,430 thousand of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1,419 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi (which was closed during the year ended December 31, 2018 and $727 thousand legal settlement gain related to certain expenses incurred in prior periods in connection with our legacy Fab 4 (which was sold during the year ended December 31, 2020) and awarded in the third quarter of 2021.
For the year ended December 31, 2020, we recorded in our consolidated statement of operations $4,422 thousand of early termination and other charges, net in connection with the headcount reduction program offered and paid to the employees during the fourth quarter of 2020. During the same period, we also recorded $554 thousand of non-recurring professional service fees and expenses incurred in connection with certain treasury and finance initiatives.
SOURCE Magnachip Semiconductor Corporation
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