Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

Magnachip Reports Results for Second Quarter 2022 and Reaffirms Previously-Announced Stock Buyback Program


SEOUL, South Korea, Aug. 8, 2022 /PRNewswire/ -- Magnachip Semiconductor Corporation (NYSE: MX) ("Magnachip" or the "Company") today announced financial results for the second quarter of 2022.

Commenting on the results for the second quarter of 2022, YJ Kim, Magnachip's chief executive officer stated, "In the second quarter of 2022, we reported revenue of $101.4 million and non-GAAP diluted EPS of $0.23 despite an increasingly challenging macroeconomic environment. Similar to last quarter, our OLED revenue continued to be impacted by severe supply shortages for 28nm 12-inch wafers and our Power solutions business continued its positive momentum of double-digit YoY growth."

YJ Kim continued, "Looking ahead, we are facing several challenges in the 2nd half of 2022 that will further impact our near-term results before we expect recovery in 2023. First, lower allocation of 28nm wafers impacted timing of design wins. Second, our new customer ramp schedule will be delayed due to product feature changes. And third, we are seeing a slowdown of the smartphone market. However, we have successfully sampled the full working chip to our new OLED customer, and we expect to get better wafer allocations starting at the end of 2022. We are confident that we will begin to see a recovery of our OLED business in 2023. Accordingly, our Board of Directors has reaffirmed the remaining $37.5 million stock repurchase program that we announced previously. We have also activated the Strategic Review Committee to assist the Board in reviewing, considering, exploring and evaluating strategic alternatives that may be available to the Company to maximize shareholder value while we focus on executing our OLED recovery plan in 2023 and continuing our success in the Power solutions business."

Stock Repurchase Program and Strategic Review Committee

The Company's Board of Directors reaffirmed the remaining $37.5 million stock repurchase program that was announced previously. Magnachip believes that this stock repurchase program and continuing to drive its OLED business recovery plan combined with the continued momentum of its Power solutions business, the Company is well positioned to drive significant accretion and value for shareholders over the coming years.

Magnachip also announced today that the Board of Directors has activated the Strategic Review Committee to assist the Board in reviewing, considering, exploring and evaluating strategic alternatives that may be available to the Company to maximize shareholder value. The committee's mandate is to review the Company's capital allocation plans and actively explore potential strategic and transactional opportunities, including, but not limited to, joint ventures, strategic partnerships and M&A possibilities that may arise in the future, and make recommendations to the Board regarding those matters, as appropriate. The Strategic Review Committee includes directors Melvin Keating, Ilbok Lee, Camillo Martino and Gary Tanner.

Q2 2022 Financial Highlights
































In thousands of U.S. dollars, except share data




GAAP




Q2 2022



Q1 2022



Q/Q change



Q2 2021



Y/Y change


Revenues





























Standard Products Business





























Display Solutions



28,336




29,185




down




2.9

%



46,601




down




39.2

%

Power Solutions



62,952




64,825




down




2.9

%



56,667




up




11.1

%

Transitional Fab 3 foundry services(1)



10,088




10,083




up




0.0

%



10,608




down




4.9

%

Gross Profit Margin



28.6

%



37.5

%



down




8.9

%pts



29.8

%



down




1.2

%pts

Operating Income(2)



2,002




12,879




down




84.5

%



1,627




up




23.0

%

Net Income (Loss)



(3,340)




9,528




down




n/a




(198)




down




n/a


Basic Earnings (Loss) per Common Share



(0.07)




0.21




down




n/a




(0.00)




down




n/a


Diluted Earnings (Loss) per Common Share



(0.07)




0.20




down




n/a




(0.00)




down




n/a






In thousands of U.S. dollars, except share data




Non-GAAP(3)




Q2 2022



Q1 2022



Q/Q change



Q2 2021



Y/Y change


Adjusted Operating Income



4,787




14,517




down




67.0

%



9,052




down




47.1

%

Adjusted EBITDA



8,525




18,755




down




54.5

%



12,692




down




32.8

%

Adjusted Net Income



10,567




12,936




down




18.3

%



7,034




up




50.2

%

Adjusted Earnings per Common Share?Diluted



0.23




0.28




down




17.9

%



0.15




up




53.3

%

___________

(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 business lines.

(2)

In Q2 2022, operating income of $2.0 million included professional service fees and expenses of $0.8 million incurred in connection with certain strategic evaluations. In Q2 2021, operating income of $1.6 million included professional service fees and expenses of $2.5 million incurred in connection with the contemplated merger transaction and non-recurring professional service fees and expenses of $2.6 million incurred in connection with the regulatory requests.

(3)

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 (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 2022 Financial Guidance

The Company's near-term outlook is being challenged by further OLED wafer shortages, pushout of initial mass production ramp of our new OLED customer outside of Korea, weakening demand in consumer end markets on growing recession fears and cost increases, including labor, due to inflationary pressures.  While actual results may vary, looking into the next quarter, Magnachip currently expects:

Q2 2022 Earnings Conference Call

Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Monday, August 8, 2022, 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/BI726a270135494c57a56defb9ec4da9d0

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 2022 revenue and gross profit margin expectations, and the impact of market conditions associated with inflation and rising interest rates, the COVID-19 pandemic or the emergence of various variants of the virus, geopolitical conflict between Russia and Ukraine, and escalated trade tensions and supply constraints on Magnachip's third 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 inflation, potential recessions or other deteriorations, economic instability or civil unrest the COVID-19 pandemic or the emergence of various variants of the virus or other outbreaks of disease, and governmental lock-downs or other measures implemented in response thereto, and the Russia-Ukraine conflict; 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, as well as impacting demand for our products from customers who are similarly affected by such capacity constraints or 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; 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, including those related to the Russia-Ukraine conflict; 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 February 23, 2022 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 1,100 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.

CONTACT:
Yujia Zhai
The Blueshirt Group
Tel. (860) 214-0809
Yujia@blueshirtgroup.com

 

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,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Revenues:                               










Net sales ? standard products business       

$         91,288


$         94,010


$       103,268


$       185,298


$       216,174

Net sales ? transitional Fab 3 foundry services               

10,088


10,083


10,608


20,171


20,721

Total revenues   

101,376


104,093


113,876


205,469


236,895

Cost of sales:          










Cost of sales ? standard products business 

63,620


56,080


70,409


119,700


149,656

Cost of sales ? transitional Fab 3 foundry services

8,811


9,017


9,497


17,828


18,887

Total cost of sales             

72,431


65,097


79,906


137,528


168,543

Gross profit            

28,945


38,996


33,970


67,941


68,352

Gross profit as a percentage of standard products business net sales              

30.3 %


40.3 %


31.8 %


35.4 %


30.8 %

Gross profit as a percentage of total revenues        

28.6 %


37.5 %


29.8 %


33.1 %


28.9 %

Operating expenses:










Selling, general and administrative expenses               

12,736


14,163


14,001


26,899


26,635

Research and development expenses           

13,410


11,954


13,322


25,364


26,745

Merger-related costs    

?


?


2,459


?


12,290

Other charges              

797


?


2,561


797


3,146

Total operating expenses   

26,943


26,117


32,343


53,060


68,816

Operating income (loss)         

2,002


12,879


1,627


14,881


(464 )

Interest expense           

(499)


(111)


(85)


(610 )


(1,126 )

Foreign currency gain (loss), net 

(7,012)


(690)


250


(7,702 )


(4,421 )

Other income, net        

1,272


933


611


2,205


1,231

Income (loss) before income tax expense

(4,237)


13,011


2,403


8,774


(4,780 )

Income tax expense (benefit)

(897)


3,483


2,601


2,586


2,891

Net income (loss)   

$          (3,340)


$           9,528


$             (198)


$           6,188


$          (7,671 )

Basic earnings (loss) per common share?

$            (0.07)


0.21


$            (0.00)


$             0.14


$            (0.18 )

Diluted earnings (loss) per common share?

$            (0.07)


0.20


$            (0.00)


$             0.13


$            (0.18 )

Weighted average number of shares?










Basic            

44,897,278


45,603,208


46,322,027


45,248,293


43,324,088

Diluted         

44,897,278


46,693,294


46,322,027


46,329,559


43,324,088

 

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)

(Unaudited)



June 30,
2022


December 31,
2021


(In thousands of U.S. dollars, except share data)

Assets




Current assets




Cash and cash equivalents

$                 273,797


$                   279,547

Accounts receivable, net

59,817


50,954

Inventories, net

36,168


39,370

Other receivables

14,094


25,895

Prepaid expenses

10,783


7,675

Hedge collateral

6,990


3,060

Other current assets

8,361


2,619

Total current assets

410,010


409,120

Property, plant and equipment, net

96,832


107,882

Operating lease right-of-use assets

3,322


4,275

Intangible assets, net

1,979


2,377

Long-term prepaid expenses

14,953


8,243

Deferred income taxes

37,825


41,095

Other non-current assets

10,804


10,662

Total assets

$                 575,725


$                   583,654

Liabilities and Stockholders' Equity




Current liabilities




Accounts payable

$                   38,143


$                     37,593

Other accounts payable

14,835


6,289

Accrued expenses

15,426


20,071

Accrued income taxes

?


11,823

Operating lease liabilities

1,838


2,323

Other current liabilities

8,562


7,382

Total current liabilities

78,804


85,481

Accrued severance benefits, net

30,466


33,064

Non-current operating lease liabilities

1,485


1,952

Other non-current liabilities

16,823


10,395

Total liabilities

127,578


130,892

Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value, 150,000,000 shares authorized, 56,234,774 shares issued and 44,903,718 outstanding at June 30, 2022 and 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021

562


559

Additional paid-in capital

263,698


241,197

Retained earnings

349,730


343,542

Treasury stock, 11,331,056 shares at June 30, 2022 and 10,246,016 shares at December 31, 2021, respectively

(148,523)


(130,306)

Accumulated other comprehensive loss

(17,320)


(2,230)

Total stockholders' equity

448,147


452,762

Total liabilities and stockholders' equity

$                 575,725


$                   583,654





 

  

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,
2022


June 30,
2022


June 30,
2021

Cash flows from operating activities






Net income (loss)   

$     (3,340)


$       6,188


$     (7,671)

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






Depreciation and amortization     

3,711


7,602


6,998

Provision for severance benefits  

1,570


3,240


3,507

Amortization of debt issuance costs and original issue discount 

?


?


261

Loss on foreign currency, net      

22,803


29,183


13,353

Provision for inventory reserves 

5,137


5,282


3,346

Stock-based compensation          

1,988


3,626


4,051

Other, net     

551


712


266

Changes in operating assets and liabilities






Accounts receivable, net              

(11,164)


(12,377)


5,098

Inventories   

(6,942)


(5,486)


(7,170)

Other receivables         

10,973


11,640


(4,841)

Other current assets     

4,740


(2,089)


8,623

Accounts payable        

1,891


2,429


1,040

Other accounts payable

(5,159)


(5,861)


(674)

Accrued expenses        

(2,896)


(2,709)


(2,298)

Accrued income taxes  

(9,167)


(11,513)


(10,249)

Other current liabilities

(1,442)


(2,153)


(102)

Other non-current liabilities         

643


570


(274)

Payment of severance benefits     

(1,545)


(2,934)


(2,836)

Other, net     

(207)


(385)


(62)

Net cash provided by operating activities               

12,145


24,965


10,366

Cash flows from investing activities






Proceeds from settlement of hedge collateral               

976


2,805


972

Payment of hedge collateral         

(3,953)


(6,844)


(585)

Purchase of property, plant and equipment  

(567)


(1,511)


(4,866)

Payment for intellectual property registration              

(94)


(153)


(288)

Collection of guarantee deposits  

?


?


307

Payment of guarantee deposits    

(970)


(1,049)


(4,960)

Other, net     

12


14


(130)

Net cash used in investing activities       

(4,596)


(6,738)


(9,550)

Cash flows from financing activities






Proceeds from exercise of stock options     

5


1,786


2,549

Acquisition of treasury stock       

(996)


(1,826)


(1,653)

Repayment of financing related to water treatment facility arrangement      

(127)


(261)


(288)

Repayment of principal portion of finance lease liabilities           

(16)


(32)


(33)

Net cash provided by (used in) financing activities

(1,134)


(333)


575

Effect of exchange rates on cash and cash equivalents           

(17,539)


(23,644)


(9,451)

Net decrease in cash and cash equivalents              

(11,124)


(5,750)


(8,060)

Cash and cash equivalents






Beginning of the period          

284,921


279,547


279,940

End of the period    

$   273,797


$   273,797


$   271,880







 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME

(In thousands of U.S. dollars)

(Unaudited)




Three Months Ended


Six Months Ended



June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Operating income (loss)


$

2,002


$

12,879


$

1,627


$

14,881


$

(464)

Adjustments:
















Equity-based compensation expense



1,988



1,638



2,405



3,626



4,051

Merger-related costs



?



?



2,459



?



12,290

Other charges



797



?



2,561



797



3,146

















Adjusted Operating Income


$

4,787


$

14,517


$

9,052


$

19,304


$

19,023

 

We present Adjusted Operating Income as a supplemental measure of our performance. We define Adjusted Operating Income for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense (ii) Merger-related costs and (iii) Other charges.

For the three and six months ended June 30, 2021, we recorded $2,459 thousand and $12,290 thousand, respectively, of professional service fees and expenses incurred in connection with the contemplated merger transaction.

For the three and six months ended June 30, 2022, we recorded $797 thousand of professional service fees and expenses incurred in connection with certain strategic evaluations. For the three and six months ended June 30, 2021, we recorded $2,561 thousand and $3,146 thousand, respectively, of non-recurring professional service fees and expenses incurred in connection with the regulatory requests.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND ADJUSTED NET INCOME

(In thousands of U.S. dollars, except share data)

(Unaudited)



Three Months Ended 


Six Months Ended 


June 30,
2022


March 31,
2022


June 30,
2021


June 30,
2022


June 30,
2021

Net income (loss)   

$          (3,340)


$           9,528


$             (198)


$         6,188


$        (7,671)

Adjustments:










Interest income, net      

(562)


(604)


(493)


(1,166)


(73)

Income tax expense (benefit)       

(897)


3,483


2,601


2,586


2,891

Depreciation and amortization     

3,711


3,891


3,550


7,602


6,998











EBITDA

(1,088)


16,298


5,460


15,210


2,145

Equity-based compensation expense           

1,988


1,638


2,405


3,626


4,051

Foreign currency loss (gain), net 

7,012


690


(250)


7,702


4,421

Derivative valuation loss (gain), net            

(184)


129


57


(55)


143

Merger-related costs    

?


?


2,459


?


12,290

Other charges              

797


?


2,561


797


3,146











Adjusted EBITDA

$           8,525


$         18,755


$         12,692


$       27,280


$       26,196











Net income (loss)   

$          (3,340)


$           9,528


$             (198)


$         6,188


$        (7,671)

Adjustments:          










Equity-based compensation expense           

1,988


1,638


2,405


3,626


4,051

Foreign currency loss (gain), net 

7,012


690


(250)


7,702


4,421

Derivative valuation loss (gain), net            

(184)


129


57


(55)


143

Merger-related costs    

?


?


2,459


?


12,290

Other charges              

797


?


2,561


797


3,146

Income tax effect on non-GAAP adjustments             

4,294


951


?


5,245


?











Adjusted Net Income

$         10,567


$         12,936


$           7,034


$       23,503


$     16,380











Adjusted Net Income per common share?










- Basic         

$             0.24


$             0.28


$             0.15


$           0.52


$           0.38

- Diluted

$             0.23


$             0.28


$             0.15


$           0.51


$           0.36

Weighted average number of shares ? basic

44,897,278


45,603,208


46,322,027


45,248,293


43,324,088

Weighted average number of shares ? diluted

45,937,515


46,693,294


47,846,217


46,329,559


47,685,875











 

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) Merger-related costs and (v) Other charges. EBITDA for the periods indicated is defined as net income (loss) before interest income, net, income tax expense (benefit) and depreciation and amortization.

We prepare Adjusted Net Income by adjusting net income (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 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 net income (loss), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Merger-related costs, (v) Other charges and (vi) Income tax effect on non-GAAP adjustments.

For the three and six months ended June 30, 2021, we recorded $2,459 thousand and $12,290 thousand, respectively, of professional service fees and expenses incurred in connection with the contemplated merger transaction.

For the three and six months ended June 30, 2022, we recorded $797 thousand of professional service fees and expenses incurred in connection with certain strategic evaluations. For the three and six months ended June 30, 2021, we recorded $2,561 thousand and $3,146 thousand, respectively, of non-recurring professional service fees and expenses incurred in connection with the regulatory requests.

 

SOURCE Magnachip Semiconductor Corporation


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Southern Empire Resources Corp. (Southern Empire; TSX-V:SMP; Frankfurt:5RE; OTCQB:SMPEF) announces that, for its Oro Cruz Project located in Imperial County, California, the United States Army's Corps of Engineers ("USACE") issued an...

at 15:00
The Business Development Bank of Canada (BDC) is a Crown corporation that offers a suite of services, including financing, advisory services and access to capital, to entrepreneurs and businesses across Canada. As a cornerstone of the Government of...

at 14:50
My Eyelab and Stanton Optical, leading retail brands of Now Optics offering accessible and affordable eye care and eyewear, opened three stores in three states during the months of October and November. The new full-service retail eye care centers...



News published on 8 august 2022 at 16:05 and distributed by: