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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Magnachip Semiconductor Corp | NYSE:MX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.02 | -0.41% | 4.86 | 4.895 | 4.765 | 4.84 | 130,668 | 01:00:00 |
Financial Highlights
Operational Highlights
Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the first quarter 2024.
YJ Kim, Magnachip’s Chief Executive Officer, commented, “In Q1 we started the initial revenue ramp for OLED DDICs for the after-service market, and we were awarded two new designs targeted for a leading China smartphone OEM and also for a leading European EV maker. Our Power Analog Solutions (PAS) business revenue grew 12% sequentially driven by smartphones, e-motors, consumer appliances and server power applications, and we now are launching a slate of next-gen power products to help sustain our momentum. We also are encouraged that the power channel inventory showed signs of improvement in the first quarter.”
YJ continued, “Looking forward, we expect sequential revenue growth in Mixed-Signal Solutions (MSS) and PAS to continue in Q2 and we reiterate our prior full-year guidance for double digit growth in both MSS and PAS businesses.”
Q1 2024 Financial Highlights
In thousands of U.S. dollars, except share data
GAAP
Q1 2024
Q4 2023
Q/Q change
Q1 2023
Y/Y change
Consolidated Revenues
49,067
50,822
down
3.5
%
57,005
down
13.9
%
Standard Products Business
45,541
41,182
up
10.6
%
51,514
down
11.6
%
Mixed-Signal Solutions
9,006
8,558
up
5.2
%
12,807
down
29.7
%
Power Analog Solutions
36,535
32,624
up
12.0
%
38,707
down
5.6
%
Transitional Fab 3 foundry services(1)
3,526
9,640
down
63.4
%
5,491
down
35.8
%
Consolidated Gross Profit Margin
18.3
%
22.7
%
down
4.4
%pts
21.2
%
down
2.9
%pts
Standard Products Business
21.2
%
22.9
%
down
1.7
%pts
27.6
%
down
6.4
%pts
Mixed-Signal Solutions
44.6
%
41.3
%
up
3.3
%pts
30.2
%
up
14.4
%pts
Power Analog Solutions
15.4
%
18.1
%
down
2.7
%pts
26.7
%
down
11.3
%pts
Operating Loss
(13,459
)
(15,935
)
up
n/a
(21,818
)
up
n/a
Net Loss
(15,417
)
(6,040
)
down
n/a
(21,470
)
up
n/a
Basic Loss per Common Share
(0.40
)
(0.16
)
down
n/a
(0.49
)
up
n/a
Diluted Loss per Common Share
(0.40
)
(0.16
)
down
n/a
(0.49
)
up
n/a
In thousands of U.S. dollars, except share data
Non-GAAP(2)
Q1 2024
Q4 2023
Q/Q change
Q1 2023
Y/Y change
Adjusted Operating Loss
(12,559
)
(14,095
)
up
n/a
(12,249
)
down
n/a
Adjusted EBITDA
(8,441
)
(9,972
)
up
n/a
(7,873
)
down
n/a
Adjusted Net Loss
(10,884
)
(8,044
)
down
n/a
(10,367
)
down
n/a
Adjusted Loss per Common Share—Diluted
(0.28
)
(0.21
)
down
n/a
(0.24
)
down
n/a
___________
(1)
Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, we provided transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi, Korea, known as “Fab 3” (“Transitional Fab 3 Foundry Services”). The contractual obligation to provide the Transitional Fab 3 Foundry Services ended August 31, 2023, and we are winding down these foundry services and planning to convert portions of the idle capacity to PAS products beginning around the second half of 2024. Because these foundry services during the wind-down period are still provided to the same buyer by us using our Fab 3 based on mutually agreed terms and conditions, we will continue to report our revenue from providing these foundry services and related cost of sales within the Transitional Fab 3 Foundry Services line in our consolidated statement of operations until such wind down is completed. 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 MSS and PAS businesses.
(2)
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 loss 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.
Q2 and 2024 Financial Guidance
Beginning in Q1, the Company begins reporting results under its newly organized businesses: MSS (Mixed-Signal Solutions) and PAS (Power Analog Solutions). While actual results may vary, Magnachip currently expects the following:
For Q2 2024:
For the full-year 2024, we reiterate our prior guidance:
Q1 2024 Earnings Conference Call
Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Thursday, May 2, 2024, to discuss its financial results. In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the Company’s website at www.magnachip.com.
Online registration: https://register.vevent.com/register/BIffb31aff244f4ff99dae99731c4879bf
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 second quarter and full year 2024 revenue and gross profit margin expectations, future growth and revenue opportunities from new and existing products and customers, the timing and extent of future revenue contributions by our products and businesses, and the impact of market conditions associated with inflation and higher interest rates, geopolitical conflicts between Russia-Ukraine and between Israel-Hamas, sustained military action and conflict in the Red Sea, and trade tensions between the U.S. and China, on Magnachip’s second quarter and full year 2024 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 conditions, including those caused by or related to inflation, potential recessions or other deteriorations, economic instability or civil unrest; the geopolitical conflicts between Russia-Ukraine and between Israel-Hamas, sustained military action and conflict in the Red Sea, and trade tensions between the U.S. and China; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs and impact demand for our products from customers who are similarly affected by such capacity constraints or disruptions; the impact of competitive products and pricing; timely acceptance of our designs by customers; timely introduction of new products and technologies; our ability to ramp new products into volume production; industry-wide shifts in supply and demand for semiconductor products; overcapacity within the industry or at Magnachip; 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 that can be eliminated; compliance with U.S. and international trade and export laws and regulations by us, our customers and our distributors; change to or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products; 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 8, 2024, 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 communication, Internet of Things (“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 1,100 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.
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2024
2023
2023
Revenues:
Net sales – standard products business
$
45,541
$
41,182
$
51,514
Net sales – Transitional Fab 3 foundry services
3,526
9,640
5,491
Total revenues
49,067
50,822
57,005
Cost of sales:
Cost of sales – standard products business
35,888
31,754
37,312
Cost of sales – Transitional Fab 3 foundry services
4,211
7,541
7,599
Total cost of sales
40,099
39,295
44,911
Gross profit
8,968
11,527
12,094
Gross profit as a percentage of standard products business net sales
21.2
%
22.9
%
27.6
%
Gross profit as a percentage of total revenues
18.3
%
22.7
%
21.2
%
Operating expenses:
Selling, general and administrative expenses
11,264
12,079
12,165
Research and development expenses
11,163
15,383
13,298
Early termination charges
—
—
8,449
Total operating expenses
22,427
27,462
33,912
Operating loss
(13,459
)
(15,935
)
(21,818
)
Interest income
2,213
2,519
2,842
Interest expense
(238
)
(183
)
(256
)
Foreign currency gain (loss), net
(5,001
)
5,241
(3,430
)
Other income (expense), net
44
(42
)
(35
)
Loss before income tax expense
(16,441
)
(8,400
)
(22,697
)
Income tax benefit
(1,024
)
(2,360
)
(1,227
)
Net loss
$
(15,417
)
$
(6,040
)
$
(21,470
)
Basic loss per common share—
$
(0.40
)
$
(0.16
)
$
(0.49
)
Diluted loss per common share—
$
(0.40
)
$
(0.16
)
$
(0.49
)
Weighted average number of shares—
Basic
38,544,781
38,834,451
43,390,832
Diluted
38,544,781
38,834,451
43,390,832
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
March 31,
2024
December 31,
2023
Assets
Current assets
Cash and cash equivalents
$
171,602
$
158,092
Accounts receivable, net
30,288
32,641
Inventories, net
31,479
32,733
Other receivables
5,041
4,295
Prepaid expenses
10,255
7,390
Hedge collateral
1,000
1,000
Other current assets
8,550
9,283
Total current assets
258,215
245,434
Property, plant and equipment, net
92,868
100,122
Operating lease right-of-use assets
4,538
4,639
Intangible assets, net
1,391
1,537
Long-term prepaid expenses
9,297
5,736
Deferred income taxes
47,669
50,836
Other non-current assets
12,186
12,187
Total assets
$
426,164
$
420,491
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$
24,619
$
24,443
Other accounts payable
5,650
5,292
Accrued expenses
7,951
10,457
Accrued income taxes
1,622
1,496
Operating lease liabilities
1,884
1,914
Other current liabilities
3,158
3,286
Total current liabilities
44,884
46,888
Long-term borrowing
29,700
—
Accrued severance benefits, net
15,503
16,020
Non-current operating lease liabilities
2,808
2,897
Other non-current liabilities
11,384
10,088
Total liabilities
104,279
75,893
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 57,008,573 shares issued and 38,263,642 outstanding at March 31, 2024 and 56,971,394 shares issued and 38,852,742 outstanding at December 31, 2023
569
569
Additional paid-in capital
274,156
273,256
Retained earnings
283,467
298,884
Treasury stock, 18,744,931 shares at March 31, 2024 and 18,118,652 shares at December 31, 2023, respectively
(217,607
)
(213,454
)
Accumulated other comprehensive loss
(18,700
)
(14,657
)
Total stockholders’ equity
321,885
344,598
Total liabilities and stockholders’ equity
$
426,164
$
420,491
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended
March 31,
2024
March 31,
2023
Cash flows from operating activities
Net loss
$
(15,417
)
$
(21,470
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization
4,099
4,357
Provision for severance benefits
1,405
2,330
Loss on foreign currency, net
10,226
9,082
Provision for inventory reserves
(947
)
1,138
Stock-based compensation
900
1,120
Deferred income tax assets
1,313
(4
)
Other, net
263
241
Changes in operating assets and liabilities
Accounts receivable, net
1,401
2,973
Inventories
801
1,062
Other receivables
(385
)
2,376
Other current assets
331
596
Prepaid expenses
905
860
Accounts payable
563
1,904
Other accounts payable
(5,256
)
(1,424
)
Accrued expenses
(2,045
)
7,600
Accrued income taxes
167
(2,923
)
Other current liabilities
(387
)
(596
)
Other non-current liabilities
(624
)
(169
)
Payment of severance benefits
(884
)
(871
)
Other, net
(401
)
(306
)
Net cash provided by (used in) operating activities
(3,972
)
7,876
Cash flows from investing activities
Proceeds from settlement of hedge collateral
—
1,155
Payment of hedge collateral
—
(1,093
)
Purchase of property, plant and equipment
(668
)
(135
)
Payment for intellectual property registration
(60
)
(74
)
Collection of guarantee deposits
1,133
19
Payment of guarantee deposits
(1,874
)
(3,482
)
Other, net
1
—
Net cash used in investing activities
(1,468
)
(3,610
)
Cash flows from financing activities
Proceeds from long-term borrowing
30,059
—
Proceeds from exercise of stock options
—
9
Acquisition of treasury stock
(4,659
)
(12,264
)
Repayment of financing related to water treatment facility arrangement
(121
)
(126
)
Repayment of principal portion of finance lease liabilities
(35
)
(24
)
Net cash provided by (used in) financing activities
25,244
(12,405
)
Effect of exchange rates on cash and cash equivalents
(6,294
)
(5,253
)
Net increase (decrease) in cash and cash equivalents
13,510
(13,392
)
Cash and cash equivalents
Beginning of the period
158,092
225,477
End of the period
$
171,602
$
212,085
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING LOSS TO ADJUSTED OPERATING LOSS
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2024
2023
2023
Operating loss
$
(13,459
)
$
(15,935
)
$
(21,818
)
Adjustments:
Equity-based compensation expense
900
1,840
1,120
Early termination charges
—
—
8,449
Adjusted Operating Loss
$
(12,559
)
$
(14,095
)
$
(12,249
)
We present Adjusted Operating Loss as a supplemental measure of our performance. We define Adjusted Operating Loss for the periods indicated as operating loss adjusted to exclude (i) Equity-based compensation expense and (ii) Early termination charges.
For the three months ended March 31, 2023, we recorded in our consolidated statement of operations $8,449 thousand of early termination charges in connection with the voluntary resignation program offered to the employees during the first quarter of 2023.
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA AND ADJUSTED NET LOSS
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2024
2023
2023
Net loss
$
(15,417
)
$
(6,040
)
$
(21,470
)
Adjustments:
Interest income
(2,213
)
(2,519
)
(2,842
)
Interest expense
238
183
256
Income tax benefit
(1,024
)
(2,360
)
(1,227
)
Depreciation and amortization
4,099
4,101
4,357
EBITDA
(14,317
)
(6,635
)
(20,926
)
Equity-based compensation expense
900
1,840
1,120
Foreign currency loss (gain), net
5,001
(5,241
)
3,430
Derivative valuation loss (gain), net
(25
)
64
54
Early termination charges
—
8,449
Adjusted EBITDA
$
(8,441
)
$
(9,972
)
$
(7,873
)
Net loss
$
(15,417
)
$
(6,040
)
$
(21,470
)
Adjustments:
Equity-based compensation expense
900
1,840
1,120
Foreign currency loss (gain), net
5,001
(5,241
)
3,430
Derivative valuation loss (gain), net
(25
)
64
54
Early termination charges
—
—
8,449
Income tax effect on non-GAAP adjustments
(1,343
)
1,333
(1,950
)
Adjusted Net Loss
$
(10,884
)
$
(8,044
)
$
(10,367
)
Adjusted Net Loss per common share—
- Basic
$
(0.28
)
$
(0.21
)
$
(0.24
)
- Diluted
$
(0.28
)
$
(0.21
)
$
(0.24
)
Weighted average number of shares – basic
38,544,781
38,834,451
43,390,832
Weighted average number of shares – diluted
38,544,781
38,834,451
43,390,832
We present Adjusted EBITDA and Adjusted Net Loss 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 and (iv) Early termination charges. EBITDA for the periods indicated is defined as net loss before interest income, interest expense, income tax benefit and depreciation and amortization.
We prepare Adjusted Net Loss by adjusting net loss 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 Loss is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Loss for the periods as net loss, adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Early termination charges and (v) Income tax effect on non-GAAP adjustments.
For the three months ended March 31, 2023, we recorded in our consolidated statement of operations $8,449 thousand of early termination charges in connection with the voluntary resignation program offered to the employees during the first quarter of 2023.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240502734057/en/
Steven C. Pelayo, CFA The Blueshirt Group Tel. +1 (360) 808-5154 steven@blueshirtgroup.co
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