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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 | |
---|---|---|---|---|---|---|---|---|
0.65 | 13.21% | 5.57 | 5.145 | 5.00 | 5.00 | 402,222 | 00:58:00 |
Financial Highlights
Operational Highlights
Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the second quarter 2024.
YJ Kim, Magnachip’s CEO, commented, “Our Q2 revenue was above the mid-point of guidance and gross margin was better than expected. Revenue in our Standard Products Business, which is comprised of our MSS and PAS businesses, increased sequentially by double digits in Q2. We benefited from a recovery in our Power business, increased demand for OLED drivers for China smartphones and European autos, and an upturn in Power IC demand for OLED IT panels and LED TVs.”
YJ Kim added, “Looking ahead, we currently expect Standard Product Business revenue will increase sequentially once again in Q3, driven by leaner distribution channels in Power, as well as seasonality, and an increase in OLED and Power IC businesses.”
Q2 2024 Financial Highlights
In thousands of U.S. dollars, except share data
GAAP
Q2 2024
Q1 2024
Q/Q change
Q2 2023
Y/Y change
Consolidated Revenues
53,171
49,067
up
8.4
%
60,979
down
12.8
%
Standard Products Business
50,835
45,541
up
11.6
%
51,375
down
1.1
%
Mixed-Signal Solutions
11,595
9,006
up
28.7
%
12,357
down
6.2
%
Power Analog Solutions
39,240
36,535
up
7.4
%
39,018
up
0.6
%
Transitional Fab 3 foundry services(1)
2,336
3,526
down
33.7
%
9,604
down
75.7
%
Consolidated Gross Profit Margin
21.8
%
18.3
%
up
3.5
%pts
22.2
%
down
0.4
%pts
Standard Products Business
23.1
%
21.2
%
up
1.9
%pts
26.3
%
down
3.2
%pts
Mixed-Signal Solutions
34.6
%
44.6
%
down
10.0
%pts
36.4
%
down
1.8
%pts
Power Analog Solutions
19.7
%
15.4
%
up
4.3
%pts
23.1
%
down
3.4
%pts
Operating Loss
(12,824
)
(13,459
)
up
n/a
(10,656
)
down
n/a
Net Loss
(12,997
)
(15,417
)
up
n/a
(3,947
)
down
n/a
Basic Loss per Common Share
(0.34
)
(0.40
)
up
n/a
(0.09
)
down
n/a
Diluted Loss per Common Share
(0.34
)
(0.40
)
up
n/a
(0.09
)
down
n/a
In thousands of U.S. dollars, except share data
Non-GAAP(2)
Q2 2024
Q1 2024
Q/Q change
Q2 2023
Y/Y change
Adjusted Operating Loss
(11,608
)
(12,559
)
up
n/a
(7,762
)
down
n/a
Adjusted EBITDA
(7,569
)
(8,441
)
up
n/a
(3,594
)
down
n/a
Adjusted Net Loss
(8,134
)
(10,884
)
up
n/a
(2,472
)
down
n/a
Adjusted Loss per Common Share—Diluted
(0.21
)
(0.28
)
up
n/a
(0.06
)
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.
Q3 and Full-year 2024 Financial Guidance
Beginning in Q1, the Company began 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 Q3 2024:
For the full-year 2024, we currently expect:
Q2 2024 Earnings Conference Call
Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, July 31, 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/BId7d466aa72124a439fec483c2b65d307
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 third 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 third 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 1,050 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
Six Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Revenues:
Net sales – standard products business
$
50,835
$
45,541
$
51,375
$
96,376
$
102,889
Net sales – transitional Fab 3 foundry services
2,336
3,526
9,604
5,862
15,095
Total revenues
53,171
49,067
60,979
102,238
117,984
Cost of sales:
Cost of sales – standard products business
39,113
35,888
37,867
75,001
75,179
Cost of sales – transitional Fab 3 foundry services
2,457
4,211
9,574
6,668
17,173
Total cost of sales
41,570
40,099
47,441
81,669
92,352
Gross profit
11,601
8,968
13,538
20,569
25,632
Gross profit as a percentage of standard products business net sales
23.1
%
21.2
%
26.3
%
22.2
%
26.9
%
Gross profit as a percentage of total revenues
21.8
%
18.3
%
22.2
%
20.1
%
21.7
%
Operating expenses:
Selling, general and administrative expenses
11,734
11,264
12,137
22,998
24,302
Research and development expenses
12,691
11,163
11,255
23,854
24,553
Early termination and other charges
—
—
802
—
9,251
Total operating expenses
24,425
22,427
24,194
46,852
58,106
Operating loss
(12,824
)
(13,459
)
(10,656
)
(26,283
)
(32,474
)
Interest income
2,228
2,213
2,692
4,441
5,534
Interest expense
(554
)
(238
)
(200
)
(792
)
(456
)
Foreign currency gain (loss), net
(3,557
)
(5,001
)
1,237
(8,558
)
(2,193
)
Other income (loss), net
108
44
3
152
(32
)
Loss before income tax benefit
(14,599
)
(16,441
)
(6,924
)
(31,040
)
(29,621
)
Income tax benefit
(1,602
)
(1,024
)
(2,977
)
(2,626
)
(4,204
)
Net loss
$
(12,997
)
$
(15,417
)
$
(3,947
)
$
(28,414
)
$
(25,417
)
Basic loss per common share—
$
(0.34
)
(0.40
)
$
(0.09
)
$
(0.74
)
$
(0.60
)
Diluted loss per common share—
$
(0.34
)
(0.40
)
$
(0.09
)
$
(0.74
)
$
(0.60
)
Weighted average number of shares—
Basic
38,174,920
38,544,781
41,741,310
38,359,851
42,561,514
Diluted
38,174,920
38,544,781
41,741,310
38,359,851
42,561,514
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data) (Unaudited)
June 30,
2024
December 31,
2023
Assets
Current assets
Cash and cash equivalents
$
132,467
$
158,092
Short-term financial instruments
30,000
—
Accounts receivable, net
31,175
32,641
Inventories, net
34,783
32,733
Other receivables
3,977
4,295
Prepaid expenses
8,548
7,390
Hedge collateral
1,600
1,000
Other current assets
11,653
9,283
Total current assets
254,203
245,434
Property, plant and equipment, net
88,330
100,122
Operating lease right-of-use assets
4,181
4,639
Intangible assets, net
1,320
1,537
Long-term prepaid expenses
8,085
5,736
Deferred income taxes
44,578
50,836
Other non-current assets
11,998
12,187
Total assets
$
412,695
$
420,491
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$
25,575
$
24,443
Other accounts payable
8,383
5,292
Accrued expenses
9,199
10,457
Accrued income taxes
1,422
1,496
Operating lease liabilities
1,805
1,914
Other current liabilities
4,168
3,286
Total current liabilities
50,552
46,888
Long-term borrowing
28,794
—
Accrued severance benefits, net
15,759
16,020
Non-current operating lease liabilities
2,514
2,897
Other non-current liabilities
9,228
10,088
Total liabilities
106,847
75,893
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 57,015,569 shares issued and 37,799,482 outstanding at June 30, 2024 and 56,971,394 shares issued and 38,852,742 outstanding at December 31, 2023
569
569
Additional paid-in capital
275,329
273,256
Retained earnings
270,470
298,884
Treasury stock, 19,216,087 shares at June 30, 2024 and 18,118,652 shares at December 31, 2023, respectively
(219,949
)
(213,454
)
Accumulated other comprehensive loss
(20,571
)
(14,657
)
Total stockholders’ equity
305,848
344,598
Total liabilities and stockholders’ equity
$
412,695
$
420,491
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (Unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
June 30, 2024
June 30, 2023
Cash flows from operating activities
Net loss
$
(12,997
)
$
(28,414
)
$
(25,417
)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization
4,016
8,115
8,502
Provision for severance benefits
1,565
2,970
4,091
Loss on foreign currency, net
6,622
16,848
9,117
Provision for inventory reserves
(77
)
(1,024
)
1,121
Stock-based compensation
1,216
2,116
3,212
Deferred income tax assets
1.845
3,158
27
Other, net
163
426
423
Changes in operating assets and liabilities
Accounts receivable, net
(1,636
)
(235
)
(342
)
Inventories
(4,250
)
(3,449
)
4,911
Other receivables
986
601
4,407
Prepaid expenses
2,922
3,827
4,073
Other current assets
(3,262
)
(2,931
)
(3,678
)
Accounts payable
1,381
1,944
2,880
Other accounts payable
(1,420
)
(6,676
)
(6,488
)
Accrued expenses
1,618
(427
)
1,104
Accrued income taxes
(184
)
(17
)
(2,972
)
Other current liabilities
840
453
(471
)
Other non-current liabilities
378
(246
)
(214
)
Payment of severance benefits
(478
)
(1,362
)
(5,728
)
Other, net
(360
)
(761
)
(487
)
Net cash used in operating activities
(1,112
)
(5,084
)
(1,929
)
Cash flows from investing activities
Proceeds from settlement of hedge collateral
—
—
3,335
Payment of hedge collateral
(612
)
(612
)
(2,586
)
Purchase of property, plant and equipment
(898
)
(1,566
)
(1,518
)
Payment for intellectual property registration
(118
)
(178
)
(163
)
Collection of guarantee deposits
5
1,138
1,445
Payment of guarantee deposits
(36
)
(1,910
)
(6,907
)
Increase in short-term financial instruments
(30,000
)
(30,000
)
—
Other, net
(1
)
0
—
Net cash used in investing activities
(31,660
)
(33,128
)
(6,394
)
Cash flows from financing activities
Proceeds from long-term borrowings
—
30,059
—
Proceeds from exercise of stock options
—
—
27
Acquisition of treasury stock
(2,200
)
(6,859
)
(36,840
)
Repayment of financing related to water treatment facility arrangement
(117
)
(238
)
(248
)
Repayment of principal portion of finance lease liabilities
(34
)
(69
)
(46
)
Net cash provided by (used in) financing activities
(2,351
)
22,893
(37,107
)
Effect of exchange rates on cash and cash equivalents
(4,012
)
(10,306
)
(7,093
)
Net decrease in cash and cash equivalents
(39,135
)
(25,625
)
(52,523
)
Cash and cash equivalents
Beginning of the period
171,602
158,092
225,477
End of the period
$
132,467
$
132,467
$
172,954
MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES RECONCILIATION OF OPERATING LOSS TO ADJUSTED OPERATING LOSS (In thousands of U.S. dollars) (Unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Operating loss
$
(12,824
)
$
(13,459
)
$
(10,656
)
$
(26,283
)
$
(32,474
)
Adjustments:
Equity-based compensation expense
1,216
900
2,092
2,116
3,212
Early termination and other charges
—
—
802
—
9,251
Adjusted Operating Income Loss
$
(11,608
)
$
(12,559
)
$
(7,762
)
$
(24,167
)
$
(20,011
)
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 and other charges.
For the six months ended June 30, 2023, we recorded in our consolidated statement of operations $8,449 thousand of termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023. For the three and six months ended June 30, 2023, we recorded $802 thousand of one-time employee incentives.
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
Six Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Net loss
$
(12,997
)
$
(15,417
)
$
(3,947
)
$
(28,414
)
$
(25,417
)
Adjustments:
Interest income
(2,228
)
(2,213
)
(2,692
)
(4,441
)
(5,534
)
Interest expense
554
238
200
792
456
Income tax benefit
(1,602
)
(1,024
)
(2,977
)
(2,626
)
(4,204
)
Depreciation and amortization
4,016
4,099
4,145
8,115
8,502
EBITDA
(12,257
)
(14,317
)
(5,271
)
(26,574
)
(26,197
)
Equity-based compensation expense
1,216
900
2,092
2,116
3,212
Foreign currency loss (gain), net
3,557
5,001
(1,237
)
8,558
2,193
Derivative valuation loss (gain), net
(85
)
(25
)
20
(110
)
74
Early termination and other charges
—
—
802
—
9,251
Adjusted EBITDA
$
(7,569
)
$
(8,441
)
$
(3,594
)
$
(16,010
)
$
(11,467
)
Net loss
$
(12,997
)
$
(15,417
)
$
(3,947
)
$
(28,414
)
$
(25,417
)
Adjustments:
Equity-based compensation expense
1,216
900
2,092
2,116
3,212
Foreign currency loss (gain), net
3,557
5,001
(1,237
)
8,558
2,193
Derivative valuation loss (gain), net
(85
)
(25
)
20
(110
)
74
Early termination and other charges
—
—
802
—
9,251
Income tax effect on non-GAAP adjustments
175
(1,343
)
(202
)
(1,168
)
(2,152
)
Adjusted Net Loss
$
(8,134
)
$
(10,884
)
$
(2,472
)
$
(19,018
)
$
(12,839
)
Adjusted Net Loss per common share—
- Basic
$
(0.21
)
$
(0.28
)
$
(0.06
)
$
(0.50
)
$
(0.30
)
- Diluted
$
(0.21
)
$
(0.28
)
$
(0.06
)
$
(0.50
)
$
(0.30
)
Weighted average number of shares – basic
38,174,920
38,544,781
41,741,310
38,359,851
42,561,514
Weighted average number of shares – diluted
38,174,920
38,544,781
41,741,310
38,359,851
42,561,514
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 and other 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 and other charges and (v) Income tax effect on non-GAAP adjustments.
For the six months ended June 30, 2023, we recorded in our consolidated statement of operations $8,449 thousand of termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023. For the three and six months ended June 30, 2023, we recorded $802 thousand of one-time employee incentives.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240731545229/en/
Steven C. Pelayo, CFA The Blueshirt Group Tel. +1 (360) 808-5154 steven@blueshirtgroup.co
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