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Magnachip Reports Results for First Quarter 2023

  • Revenue of $57.0 million was within our guidance range. YoY, our revenue decreased 45.2% primarily due to continued effects of last year’s 28nm wafer supply shortage that impacted second half 2022 design-wins and the ongoing inventory correction driven by weak consumer demand.
  • Gross profit margin was 21.2%, at the low end of our guidance range. The sequential decrease was primarily due to lower utilization rate of our internal fabrication facility in response to the industry-wide slowdown and higher fab costs.
  • GAAP diluted loss per share was $0.49.
  • Non-GAAP diluted loss per share was $0.24.

 

SEOUL, South Korea, May 3, 2023 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the first quarter 2023.

(PRNewsfoto/Magnachip Semiconductor)

YJ Kim, Magnachip’s chief executive officer commented, “Our Q1 results continued to be affected by last year’s OLED wafer shortages that impacted second half design-wins and the ongoing smartphone inventory correction in our Display business and weak consumer demand in our Power business. Despite the challenging environment, we remained focused on execution during the quarter. In our Display business, we successfully delivered our second OLED DDIC project sample ahead of schedule to a large non-Korean panel customer and remain on track for second half smartphone launches. We also completed the tape-out for a high-end smartphone project with a large Korean panel customer, with mass production on schedule near the end of this year. In our Power business, we continued our record pace of design-in and -win activities, driven by momentum in industrial, automotive and computing applications. Looking ahead, the macro environment remains uncertain. However, we believe we are bumping along the bottom for the Display business and we have hit the bottom in Q1 for our Power business.”

YJ Kim continued, “Overall, we expect our financial results to remain soft in the near term, but we believe both Display and Power are poised for a recovery in the second half of this year based on our current customer feedback.”

 

Q1 2023 Financial Highlights
In thousands of U.S. dollars, except share data
GAAP
Q1 2023 Q4 2022 Q/Q change Q1 2022 Y/Y change
Revenues
Standard Products Business
Display Solutions 10,841 7,556 up 43.5 % 29,185 down 62.9 %
Power Solutions 40,673 46,271 down 12.1 % 64,825 down 37.3 %
Transitional Fab 3 foundry services(1) 5,491 7,163 down 23.3 % 10,083 down 45.5 %
Gross Profit Margin 21.2 % 26.4 % down 5.2 %pts 37.5 % down 16.3 %pts
Operating Income (Loss) (21,818 (10,117) down n/a 12,879 down n/a
Net Income (Loss) (21,470 2,971 down n/a 9,528 down n/a
Basic Earnings (Loss) per Common Share (0.49 0.07 down n/a 0.21 down n/a
Diluted Earnings (Loss) per Common Share (0.49 0.07 down n/a 0.20 down n/a
In thousands of U.S. dollars, except share data
Non-GAAP(2)
Q1 2023 Q4 2022 Q/Q change Q1 2022 Y/Y change
Adjusted Operating Income (Loss) (12,249 (8,567) down n/a 14,517 down n/a
Adjusted EBITDA (7,873 (4,768) down n/a 18,755 down n/a
Adjusted Net Income (Loss) (10,367 (15,848) up n/a 12,936 down n/a
Adjusted Earnings (Loss) per Common Share—Diluted (0.24 (0.36) up n/a 0.28 down n/a
__________________
(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) 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.

 

Financial Guidance

While actual results may vary, Magnachip currently expects the following for Q2 2023:

  • Revenue to be in the range of $58 million to $63 million, including about $8 millions of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 21% to 23%.

Based on our current projections, and assuming a steady state global economy, we are cautiously optimistic that our key financial metrics have the potential to show sequential improvement in both the third and fourth quarters of 2023.

 

Q1 2023 Earnings Conference Call

Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Thursday, May 3, 2023, 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/BI51f45e599c544fe9bad00a197e100fca

 

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 2023, third quarter 2023 and full year 2023 revenue and gross profit margin expectations, and the impact of market conditions associated with inflation and higher interest rates, remaining effects from the COVID-19 pandemic, geopolitical conflict between Russia and Ukraine, escalated trade tensions between the U.S. and China and continuing supply constraints on Magnachip’s second quarter 2023 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; remaining effects from the COVID-19 pandemic, the geopolitical conflict between Russia and Ukraine, and escalated 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, including the remaining effects of the COVID-19 pandemic; 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 February 22, 2023, 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
     March 31,       December 31,       March 31,
2023 2022 2022
Revenues:
Net sales – standard products business $ 51,514 $ 53,827 $ 94,010
Net sales – transitional Fab 3 foundry services 5,491 7,163 10,083
Total revenues 57,005 60,990 104,093
Cost of sales:
Cost of sales – standard products business 37,312 37,150 56,080
Cost of sales – transitional Fab 3 foundry services 7,599 7,742 9,017
Total cost of sales 44,911 44,892 65,097
Gross profit 12,094 16,098 38,996
Gross profit as a percentage of standard products business net sales 27.6 % 31.0 % 40.3 %
Gross profit as a percentage of total revenues 21.2 % 26.4 % 37.5 %
Operating expenses:
Selling, general and administrative expenses 12,165 12,562 14,163
Research and development expenses 13,298 13,653 11,954
Early termination charges 8,449 — —
Total operating expenses 33,912 26,215 26,117
Operating income (loss) (21,818) (10,117) 12,879
Interest income 2,842) 2,420 715)
Interest expense (256) (269) (111)
Foreign currency gain (loss), net (3,430) 17,492 (690)
Other income (expense), net (35) (42) 218
Income (loss) before income tax expense (22,697) 9,484 13,011
Income tax expense (benefit) (1,227) 6,513 3,483
Net income (loss) $ (21,470) $ 2,971 $ 9,528
Basic earnings (loss) per common share— $ (0.49) $ 0.07 $ 0.21
Diluted earnings (loss) per common share— $ (0.49) $ 0.07 $ 0.20
Weighted average number of shares—
Basic 43,390,832 44,054,275 45,603,208
Diluted 43,390,832 44,731,683 46,693,294

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

(Unaudited)
      March 31,

      2023

     December 31,

      2022
Assets
Current assets
Cash and cash equivalents $     212,085 $     225,477
Accounts receivable, net 32,143 35,380
Inventories, net 36,360 39,883
Other receivables 5,342 7,847
Prepaid expenses 11,238 10,560
Hedge collateral 2,820 2,940
Other current assets 14,927 15,766
Total current assets 314,915 337,853
Property, plant and equipment, net 104,568 110,747
Operating lease right-of-use assets 5,413 5,265
Intangible assets, net 1,784 1,930
Long-term prepaid expenses 9,101 10,939
Deferred income taxes 37,380 38,324
Other non-current assets 14,683 11,587
Total assets $     487,844 $      516,645
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $       19,921 $       17,998
Other accounts payable 9,216 9,702
Accrued expenses 17,125 9,688
Accrued income taxes 146 3,154
Operating lease liabilities 1,622 1,397
Other current liabilities 5,261 5,306
Total current liabilities 53,291 47,245
Accrued severance benefits, net 23,608 23,121
Non-current operating lease liabilities 3,996 4,091
Other non-current liabilities 13,596 14,035
Total liabilities 94,491 88,492
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 56,437,182 shares issued and 42,589,315
outstanding at March 31, 2023 and 56,432,449 shares issued and 43,824,575 outstanding at December 31, 2022		 564 564
Additional paid-in capital 267,187 266,058
Retained earnings 314,036 335,506
Treasury stock, 13,847,867 shares at March 31, 2023 and 12,607,874 shares at December 31, 2022, respectively (173,441) (161,422)
Accumulated other comprehensive loss (14,993) (12,553)
Total stockholders’ equity 393,353 428,153
Total liabilities and stockholders’ equity $   487,844 $     516,645

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)
Three Months Ended
March 31,
2023		 March 31,
2022
Cash flows from operating activities
Net income (loss) $        (21,470) $          9,528
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization 4,357 3,891
Provision for severance benefits 2,330 1,670
Loss on foreign currency, net 9,082 6,380
Provision for inventory reserves 1,138 145
Stock-based compensation 1,120 1,638
Other, net 237 161
Changes in operating assets and liabilities
Accounts receivable, net 2,973 (1,213 )
Inventories 1,062 1,456
Other receivables 2,376 667
Other current assets 1,456 (6,829 )
Accounts payable 1,904 538
Other accounts payable (1,424 ) (702 )
Accrued expenses 7,600 187
Accrued income taxes (2,923 ) (2,346 )
Other current liabilities (596 ) (711 )
Other non-current liabilities (169 ) (73 )
Payment of severance benefits (871 ) (1,389 )
Other, net (306 ) (178)
Net cash provided by operating activities 7,876 12,820
Cash flows from investing activities
Proceeds from settlement of hedge collateral 1,155 1,829
Payment of hedge collateral (1,093 ) (2,891 )
Purchase of property, plant and equipment (135 ) (944 )
Payment for intellectual property registration (74 ) (59 )
Payment of guarantee deposits (3,482 ) (79 )
Other, net 19 2
Net cash used in investing activities (3,610 ) (2,142 )
Cash flows from financing activities
Proceeds from exercise of stock options 9 1,781
Acquisition of treasury stock (12,264 ) (830 )
Repayment of financing related to water treatment facility arrangement (126 ) (134 )
Repayment of principal portion of finance lease liabilities (24 ) (16 )
Net cash provided by (used in) financing activities (12,405 ) 801
Effect of exchange rates on cash and cash equivalents (5,253 ) (6,105 )
Net increase (decrease) in cash and cash equivalents (13,392 ) 5,374
Cash and cash equivalents
Beginning of the period 225,477 279,547
End of the period $      212,085 $      284,921

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)

(In thousands of U.S. dollars)

(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2023 2022 2022
Operating income (loss) $ (21,818) $ (10,117) $ 12,879
Adjustments:
Equity-based compensation expense 1,120 1,550 1,638
Early termination charges 8,449 — —
Adjusted Operating Income (Loss) $ (12,249) $ (8,567) $ 14,517

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We define Adjusted Operating Income (Loss) for the periods indicated as operating income (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 termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

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

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

(Unaudited)
Three Months Ended
March 31, December 31,    March 31,
2023 2022 2022
Net income (loss) $ (21,470) $ 2,971 $ 9,528
Adjustments:
Interest income (2,842) (2,420) (715)
Interest expense 256 269 111
Income tax expense (benefit) (1,227) 6,513 3,483
Depreciation and amortization 4,357 3,775 3,891
EBITDA (20,926) 11,108 16,298
Equity-based compensation expense 1,120 1,550 1,638
Foreign currency loss (gain), net 3,430 (17,492) 690
Derivative valuation loss, net 54 66 129
Early termination charges 8,449 — —
Adjusted EBITDA $ (7,873) $ (4,768) $ 18,755
Net income (loss) $ (21,470) $ 2,971 $ 9,528
Adjustments:
Equity-based compensation expense 1,120 1,550 1,638
Foreign currency loss (gain), net 3,430 (17,492) 690
Derivative valuation loss, net 54 66 129
Early termination charges 8,449 — —
Income tax effect on non-GAAP adjustments (1,950) (2,943) 951
Adjusted Net Income (Loss) $ (10,367) $ (15,848) $ 12,936
Adjusted Net Income (Loss) per common share—
– Basic $ (0.24) $ (0.36) $ 0.28
– Diluted $ (0.24) $ (0.36) $ 0.28
Weighted average number of shares – basic 43,390,832 44,054,275 45,603,208
Weighted average number of shares – diluted 43,390,832 44,054,275 46,693,294

We present Adjusted EBITDA and Adjusted Net Income (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, net and (iv) Early termination charges. EBITDA for the periods indicated is defined as net income (loss) before interest income, interest expense, income tax expense (benefit) and depreciation and amortization.

We prepare Adjusted Net Income (Loss) 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 (Loss) is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income (Loss) 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, 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 termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023.

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/magnachip-reports-results-for-first-quarter-2023-301815000.html

SOURCE Magnachip Semiconductor Corporation

Power Solutions

Magnachip Debuts New Family of 600V SJ MOSFET Products Featuring Fast Recovery Body Diodes

– Magnachip introduces new 600V SJ MOSFET with RDS(on)* as low as 44mΩ for EV chargers and servers

SEOUL, South Korea, May 2, 2023 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip” or “Company”) (NYSE: MX) announced today that the Company has released a new family of 600V Super Junction Metal Oxide Semiconductor Field Effect Transistors (SJ MOSFETs) consisting of nine distinct products featuring proprietary design technology.

 

MAGNACHIP’S NEW FAMILY OF 600V SJ MOSFET PRODUCTS

 

Magnachip’s proprietary design provides specific on-resistance (RSP) reduction of about 10%, and this result was achieved while maintaining the same cell-pitches of previous generation MOSFETs.

In addition, the new product family of 600V SJ MOSFETs is equipped with a fast recovery body diode. This diode technology significantly enhances system efficiency with reduced reverse recovery time (trr) and switching loss. Therefore, the figure of merit to evaluate general performance of MOSFETs was improved by more than 10% compared to the previous generation. As such, these 600V SJ MOSFETs can be used widely in industrial applications, such as solar inverters, energy storage systems, uninterruptible power supply systems, and a variety of electronics.

Among these new MOSFETs, the MMQ60R044RFTH product offers an exceptionally low RDS(on) of 44mΩ, making it an optimal choice for electric vehicle chargers and servers. Omdia, a global market research firm, estimates that the compound annual growth rates of Si MOSFET markets for hybrid & electric vehicles and servers will be 11% and 7%, respectively, from 2023 to 2026.

“Now that we have introduced these 600V SJ MOSFET products, we are aiming to unveil new 650V and 700V SJ MOSFET products with fast recovery body diode in the second half of 2023,” said YJ Kim, CEO of Magnachip. “These new MOSFETs represent a notable achievement for the Company, and we will build upon this success to deliver next-generation power solutions for rapidly changing market requirements and customer expectations.”

 

————————————————————————————————————————
* RDS(on): On resistance, the resistance between the drain and the source of MOSFETs during on-state operation.

 

New Family of 600V SJ MOSFET Products

New Family of 600V SJ MOSFET Products

 

Related Link

Power Solutions > SJ MOSFETs > 600V

 

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.

 

CONTACTS:

United States (Investor Relations):
Yujia Zhai
The Bueshirt Group
Tel. +1-860-214-0809
Investor.relations@maganachip.com		 USA media / industry analysts:
Mike Newsom
LouVan Communications, Inc.
Tel. +1-617-803-5385
mike@louvanpr.com		 Korea / Asia media:
Min A KIM
Senior manager of Public Relations
Tel. +82-2-6903-3211
pr@maganachip.com

 

In the Media

Cision PR Newswire: news distribution, targeting and monitoring home     Magnachip Debuts New Family of 600V SJ MOSFET Products Featuring Fast Recovery Body Diodes

Power Solutions

Magnachip Enters Full-Scale Mass Production of PDFN56 Dual Packaging 40V MXT MOSFET for Electric Vehicles

– The PDFN56 dual package enables small footprint and low conduction losses

 

SEOUL, South Korea, March 21, 2023 – Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that the company began full-scale mass production of its new 40V MXT Metal-Oxide-Semiconductor Field-Effect Transistor (MOSFET)1 optimized for the Electric Water Pumps (EWPs) and Electric Oil Pumps (EOPs) in electric vehicles (EVs).

 

Magnachip's PDFN56 Dual Packaging 40V MXT MOSFET for Electric Vehicles
Magnachip’s PDFN56 Dual Packaging 40V MXT MOSFET for EVs

 

This 40V MXT MOSFET (AMDUA040N070RH) comes in a Power Dual Flat No-lead (PDFN) 56 dual package to reduce the printed circuit board size by 50%, as compared to using two 40V single-packaged MOSFETs. The compact size provides great flexibility in system design and, as a result, AMDUA040N070RH is well-suited to EWPs, EOPs and even the power seat modules of EVs.

The low RDS(on)2 enabled by the PDFN56 package reduces conduction losses, which means applications can be controlled efficiently. In addition, AMDUA040N070RH is fully AEC – Q101 qualified for its performance and stability, because of the enhanced design of its core cells and terminations for automotive applications.

Omdia, a global market research firm, estimates that the Si MOSFET market for hybrid and EVs will grow 11% annually from 2023 to 2026.

“Since 2008 we have strengthened our technological capabilities in the power solutions area” said YJ Kim, CEO of Magnachip. “As a provider of high-performance MOSFETs, Magnachip will continue to deliver innovative solutions to serve the growing demand for eco-friendly applications.”

 

 

1 MXT MOSFET (Magnachip eXtreme Trench MOSFET): Magnachip’s cutting-edge product portfolio of trench MOSFETs, including low and medium voltage (12V to 200V) MOSFETs

2 RDS(on): On resistance, the resistance value between the drain and the source of MOSFETs during on-state operation

 

Related Link

Power Solutions > MXT MOSFETs > 40V

 

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.

 

CONTACTS:

United States (Investor Relations):
Yujia Zhai
The Bueshirt Group
Tel. +1-860-214-0809
Investor.relations@maganachip.com		 USA media / industry analysts:
Mike Newsom
LouVan Communications, Inc.
Tel. +1-617-803-5385
mike@louvanpr.com		 Korea / Asia media:
Min A KIM
Senior manager of Public Relations
Tel. +82-2-6903-3211
pr@maganachip.com

 

In the Media

Cision PR Newswire: news distribution, targeting and monitoring home   Magnachip Enters Full-Scale Mass Production of PDFN56 Dual Packaging 40V MXT MOSFET for Electric Vehicles

Power Solutions

Magnachip Unveils Super-Short Channel MXT MOSFETs for Smartphone Battery Protection Circuit Modules

SEOUL, South Korea, March 2, 2023 – Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that the company has released two seventh-generation MXT Metal-Oxide-Semiconductor Field-Effect Transistors (MOSFETs)1, built on its Super-Short Channel technology, for the battery protection circuit modules in smartphones.

 

Magnachip's Super-Short Channel MXT MOSFETs
Magnachip’s Super-Short Channel MXT MOSFETs

 

Super-Short Channel is Magnachip’s latest design technology to shorten the channel length between the source and the drain to significantly reduce RDS(on)2 and conduction losses during on-state operation. Magnachip is applying this technology first to the newly-released 12V MOSFET (MDWC12D028ERH) and 24V MOSFET (MDWC24D031ERH).

Thanks to Super-Short Channel technology, the sizes of these new MOSFETs have been reduced by 20%, while the RDS(on) of MDWC12D028ERH and MDWC24D031ERH is lowered by 40% and 24%, respectively, compared to the previous versions. With these enhanced product features, power loss is reduced when a battery is charging or discharging and a low operating temperature can be maintained for fast battery charging.

Magnachip plans to release compact-sized Super-Short Channel MXT MOSFETs with great power efficiency for the small batteries of wearable devices, such as smart watches and earphones, in the second half of 2023.

“The new Super-Short Channel technology has taken the performance of MXT MOSFETs to the next level.” said YJ Kim, CEO of Magnachip. “Magnachip will continue our efforts to advance technological innovation and deliver premium power management solutions satisfying the diverse and changing requirements of mobile device manufacturers.”

 

 

1 MXT MOSFET (Magnachip eXtreme Trench MOSFET): Magnachip’s cutting-edge product portfolio of trench MOSFETs, including low and medium voltage (12V to 200V) MOSFETs

2 RDS(on): On resistance, the resistance value between the drain and the source of MOSFETs during on-state operation

 

Related Link

Power Solutions > MXT MOSFETs > 12V

Power Solutions > MXT MOSFETs > 24V

 

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.

 

CONTACTS:

United States (Investor Relations):
Yujia Zhai
The Bueshirt Group
Tel. +1-860-214-0809
Investor.relations@maganachip.com		 USA media / industry analysts:
Mike Newsom
LouVan Communications, Inc.
Tel. +1-617-803-5385
mike@louvanpr.com		 Korea / Asia media:
Min A KIM
Senior manager of Public Relations
Tel. +82-2-6903-3211
pr@maganachip.com

 

In the Media

Cision PR Newswire: news distribution, targeting and monitoring home   Magnachip Unveils Super-Short Channel MXT MOSFETs for Smartphone Battery Protection Circuit Modules

Investors

Magnachip Reports Results for Fourth Quarter and Full-Year 2022

 

  • Fourth quarter revenue of $61.0 million was near the high-end of our guidance range. YoY, our revenue decreased 44.7% primarily due to severe 28nm wafer shortages required for our Display business.
  • Full-year revenue of $337.7 million decreased 28.8% YoY due to significantly lower Display revenue as a result of severe 28nm 12-inch OLED wafer shortages that impacted 2nd half design-in projects from our large panel customers in Korea and weak demand for Android smartphones that led to an inventory correction by smartphone OEMs.
  • Gross profit margin for the fourth quarter was 26.4%, within our guidance range.
  • Full-year gross profit margin of 30.0% was down 240 bps YoY due mainly to certain inventory reserves and scrap cost related to 12-inch OLED products as a result of lower demand for China smartphones.
  • GAAP diluted earnings per share for the fourth quarter was $0.07; Full-year GAAP diluted loss per share was $0.18.
  • Non-GAAP diluted loss per share for the fourth quarter was $0.36; Full-year non-GAAP diluted earnings per share was $0.19.

 

SEOUL, South Korea, Feb. 16, 2023 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the fourth quarter and full-year 2022.

(PRNewsfoto/Magnachip Semiconductor)YJ Kim, Magnachip’s chief executive officer commented, “We closed the fourth quarter with $61.0 million revenue, near the high-end of our guidance range. Q4 results continued to reflect the impact of severe wafer shortages and inventory correction in our Display business and deteriorating consumer demand in our Power Solutions business. Despite the challenges of this past year, we stayed focused and achieved milestones that set the foundation for recovery in 2023. In Display, we expanded our OLED business into international markets by winning a new tier one panel customer outside of Korea and strengthened our global supply chain by qualifying two additional foundries. Further, in Q4, we successfully qualified two OLED projects with our two leading panel customers and expect to begin shipping at the end of this quarter. In Power Solutions, we achieved a record year with 2022 revenue up 1.2% despite the slowdown in the 2nd half due to macro weakness. Further, our Power Solutions business won a record 209 design-in/wins, more than double compared to previous years.”

YJ continued, “Looking ahead, we continue to expect the first half of 2023 to be impacted by inventory corrections and broader macro weakness, but we believe the reopening of China should eventually lead to an improvement in their economy and consumer demand, which will help both our businesses. We expect a recovery in Display revenue in the second half of 2023 as we ramp shipments of our four design-in projects with our two leading panel customers.  For Power, we anticipate on maintaining our momentum of design wins and premium tier product mix. As channel inventories are consumed and the broader economy recovers, we expect to see a rebound in Power revenue.”

 

Q4 and 2022 Financial Highlights
In thousands of U.S. dollars, except share data
GAAP
Q4 2022 Q3 2022 Q/Q change Q4 2021 Y/Y change
Revenues
Standard Products Business
Display Solutions 7,556 6,355 up 18.9 % 41,298 down 81.7 %
Power Solutions 46,271 56,416 down 18.0 % 58,212 down 20.5 %
Transitional Fab 3 foundry services(1) 7,163 8,428 down 15.0 % 10,825 down 33.8 %
Gross Profit Margin 26.4 % 24.2 up 2.2% pts 35.0 % down  8.6%pts
Operating Income (Loss) (10,117) (10,008) down      n/a 63,870 down n/a
Net Income (Loss) 2,971 (17,195) up      n/a 53,611 down 94.5 %
Basic Earnings (Loss) per Common Share 0.07 (0.38) up      n/a 1.16 down 94.0 %
Diluted Earnings (Loss) per Common Share 0.07 (0.38) up      n/a 1.12 down 93.8 %
In thousands of U.S. dollars, except share data
Non-GAAP(3)
Q4 2022 Q3 2022 Q/Q change Q4 2021 Y/Y change
Adjusted Operating Income (Loss) (8,567) (6,646) down n/a 14,421 down n/a
Adjusted EBITDA (4,768) (2,995) down n/a 18,144 down n/a
Adjusted Net Income (Loss) (15,848) 1,097 down n/a 13,699 down n/a
Adjusted Earnings (Loss) per Common Share—Diluted (0.36) 0.02 down n/a 0.29 down n/a

 

In thousands of U.S dollars, except share data
GAAP
2022 2021 Y/Y Change
Revenues
Standard Products Business
Display Solutions 71,432 205,322 down 65.2 %
Power Solutions 230,464 227,777 up 1.2 %
Transitional Fab 3 foundry services(1) 35,762 41,131 down 13.1 %
Gross Profit Margin 30.0 % 32.4 % down 2.4% pts
Operating Income (Loss)(2) (5,244) 83,407 down n/a
Net Income (Loss) (8,036) 56,708 down n/a
Basic Earnings (Loss) per Common Share (0.18) 1.26 down n/a
Diluted Earnings (Loss) per Common Share (0.18) 1.21 down n/a

 

In thousands of U.S dollars, except share data
Non-GAAP(3)
2022 2021 Y/Y Change
Adjusted Operating Income 4,091 56,135 down 92.7 %
Adjusted EBITDA 19,517 70,701 down 72.4 %
Adjusted Net Income 8,752 50,152 down 82.5 %
Adjusted Earnings per Common Share—Diluted 0.19 1.07 down 82.2 %
(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) 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) 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.

 

Financial Guidance

The Company’s near-term outlook is being challenged by previous OLED wafer allocation constraints that impacted 2nd half 2022 design-in projects and ongoing inventory correction in smartphones and other consumer end markets driven by weakening consumer demand. Q1 is also typically the Company’s seasonally slowest quarter following holiday shipments and is impacted by slower activity around the Chinese New Year.

In response to the industry-wide slowdown and inventory correction, the Company has reduced production at its Fab 3. As a result, the Company expects Q1’23 gross profit margin will be further impacted by lower utilization as well as higher manufacturing input costs such as electricity and wages. The Company currently expects gross profit margin to recover as volume and utilization improves in the 2nd half of 2023.

While actual results may vary, Magnachip currently expects the following for Q1’23:

  • Revenue to be in the range of $55 million to $59 million, including about $5 million of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 21% to 23%.

 

Q4 2022 Earnings Conference Call

Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Thursday, February 16, 2023, 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/BI7b1cf7d40d2f43489a0d4fc290ea1ea2

 

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 2023 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 first quarter 2023 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 Year Ended
December 31,
2022		 September 30,
2022		 December 31,
2021		 December 31,
2022		 December 31,
2021
Revenues:
Net sales – standard products business $         53,827 $         62,771 $         99,510 $       301,896 $       433,099
Net sales – transitional Fab 3 foundry services 7,163 8,428 10,825 35,762 41,131
Total revenues 60,990 71,199 110,335 337,658 474,230
Cost of sales:
Cost of sales – standard products business 37,150 45,497 62,206 202,347 283,503
Cost of sales – transitional Fab 3 foundry services 7,742 8,477 9,525 34,047 37,184
Total cost of sales 44,892 53,974 71,731 236,394 320,687
Gross profit 16,098 17,225 38,604 101,264 153,543
Gross profit as a percentage of standard products business net sales 31.0 % 27.5 % 37.5 % 33.0 % 34.5 %
Gross profit as a percentage of total revenues 26.4 % 24.2 % 35.0 % 30.0 % 32.4 %
Operating expenses:
Selling, general and administrative expenses 12,562 11,411 13,255 50,872 52,440
Research and development expenses 13,653 13,321 12,197 52,338 51,212
Merger-related income, net — — (49,369 ) — (35,527 )
Other charges, net — 2,501 (1,349 ) 3,298 2,011
Total operating expenses (income) 26,215 27,233 (25,266 ) 106,508 70,136
Operating income (loss) (10,117) (10,008) 63,870 (5,244) 83,407
Interest income 2,420 1,784 858 5,980 2,609
Interest expense (269) (278) (132 ) (1,157) (1,371 )
Foreign currency gain (loss), net 17,492 (12,809) 147 (3,019) (11,853 )
Other income, net (42) 174 89 561 1,177
Income (loss) before income tax expense (benefit) 9,484 (21,137) 64,832 (2,879) 73,969
Income tax expense (benefit) 6,513 (3,942) 11,221 5,157 17,261
Net income (loss) $           2,971 $       (17,195) $         53,611 $         (8,036) $         56,708
Basic earnings (loss) per common share— $             0.07 $           (0.38) $             1.16 $           (0.18) $             1.26
Diluted earnings (loss) per common share— $             0.07 $           (0.38) $             1.12 $           (0.18) $             1.21
Weighted average number of shares—
Basic 44,054,275 44,865,266 46,369,520 44,850,791 44,879,412
Diluted 44,731,683 44,865,266 47,691,816 44,850,791 47,709,373

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
December 31,
2022		 December 31,
2021
(In thousands of U.S. dollars, except share data)
Assets
Current assets
Cash and cash equivalents $                 225,477 $                   279,547
Accounts receivable, net 35,380 50,954
Inventories, net 39,883 39,370
Other receivables 7,847 25,895
Prepaid expenses 10,560 7,675
Hedge collateral 2,940 3,060
Other current assets 15,766 2,619
Total current assets 337,853 409,120
Property, plant and equipment, net 110,747 107,882
Operating lease right-of-use assets 5,265 4,275
Intangible assets, net 1,930 2,377
Long-term prepaid expenses 10,939 8,243
Deferred income taxes 38,324 41,095
Other non-current assets 11,587 10,662
Total assets $                 516,645 $                   583,654
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $                   17,998 $                     37,593
Other accounts payable 9,702 6,289
Accrued expenses 9,688 20,071
Accrued income taxes 3,154 11,823
Operating lease liabilities 1,397 2,323
Other current liabilities 5,306 7,382
Total current liabilities 47,245 85,481
Accrued severance benefits, net 23,121 33,064
Non-current operating lease liabilities 4,091 1,952
Other non-current liabilities 14,035 10,395
Total liabilities 88,492 130,892
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 56,432,449 shares issued and 43,824,575 outstanding at December 31, 2022 and 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 564 559
Additional paid-in capital 266,058 241,197
Retained earnings 335,506 343,542
Treasury stock, 12,607,874 shares at December 31, 2022 and 10,246,016 shares at December 31, 2021, respectively (161,422) (130,306 )
Accumulated other comprehensive loss (12,553) (2,230 )
Total stockholders’ equity 428,153 452,762
Total liabilities and stockholders’ equity $                 516,645 $                   583,654

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months

Ended

 Year Ended
December 31,
2022		 December 31,
2022		 December 31,
2021
Cash flows from operating activities
Net income (loss) $           2,971 $      (8,036) $       56,708
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization 3,775 15,000 14,239
Provision for severance benefits 1,126 6,289 8,282
Amortization of debt issuance costs and original issue discount — — 261
Loss (gain) on foreign currency, net (46,606) 19,729 32,432
Provision for inventory reserves 1,844 9,574 2,244
Stock-based compensation 1,550 6,037 7,704
Deferred income tax assets 56 278 918
Other, net 255 664 (613)
Changes in operating assets and liabilities
Accounts receivable, net 2,471 10,276 7,505
Inventories 582 (12,626) (5,939)
Other receivables 1,031 18,146 (21,538)
Other current assets 9,967 (4,150) 12,397
Accounts payable (1,533) (16,325) (11,437)
Other accounts payable (3,195) (9,410) (7,798 )
Accrued expenses (13,094) (7,228) 4,637
Accrued income taxes 3,083 (8,400) (1)
Deferred revenue (47) (1,261) (131)
Other current liabilities (276) (645) 1,445
Other non-current liabilities 226 749 (1,398 )
Contributions to severance insurance deposit accounts (7,662) (7,899) (5,688)
Payment of severance benefits (1,831) (6,012) (6,679)
Other, net 228 415 193
Net cash provided by (used in) operating activities (45,079) 5,165 87,743
Cash flows from investing activities
Proceeds from settlement of hedge collateral 12,427 15,232 5,214
Payment of hedge collateral — (15,282) (3,349 )
Proceeds from disposal of property, plant and equipment — 550 1,446
Purchase of property, plant and equipment (11,582) (23,394) (32,212 )
Payment for intellectual property registration (89) (390) (614 )
Collection of guarantee deposits — — 3,192
Payment of guarantee deposits (306) (2,381) (5,001 )
Other, net 495 737 (114 )
Net cash provided by (used in) investing activities 945 (24,928) (31,438 )
Cash flows from financing activities
Proceeds from exercise of stock options — 1,786 4,279
Acquisition of treasury stock (8,895) (13,960) (1,653 )
Acquisition of stock under accelerated stock repurchase agreement — — (20,073)
Payment under accelerated stock repurchase agreement — — (17,427)
Repayment of financing related to water treatment facility arrangement (119) (500) (563 )
Others (20) (70) (107)
Net cash used in financing activities (9,034) (12,744) (35,544 )
Effect of exchange rates on cash and cash equivalents 27,814 (21,563) (21,154 )
Net decrease in cash and cash equivalents (25,354) (54,070) (393 )
Cash and cash equivalents
Beginning of the period 250,831 279,547 279,940
End of the period $       225,477 $    225,477 $   279,547

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Year Ended
December 31,
2022		 September 30,
2022		 December 31,
2021		 December 31,
2022		 December 31,
2021
Operating income (loss) $ (10,117) $ (10,008) $ 63,870 $ (5,244) $ 83,407
Adjustments:
Equity-based compensation expense 1,550 861 1,648 6,037 7,704
Inventory reserve related to Huawei impact of downstream trade restrictions — — (379) — (1,460)
Merger-related income, net — — (49,369) — (35,527)
Other charges, net — 2,501 (1,349) 3,298 2,011
Adjusted Operating Income (Loss) $ (8,567) $ (6,646) $ 14,421 $ 4,091 $ 56,135

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We define Adjusted Operating Income (Loss) for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense (ii) Inventory reserve related to Huawei impact of downstream trade restrictions (iii) Merger-related income, net and (iv) Other charges, net.

For the year ended December 31, 2022, Other charges, net includes $2.8 million of one-time employee incentives and professional service fees and expenses of $1.0 million, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the year ended December 31, 2021, Other charges, net includes $3.4 million of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1.4 million 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, 2021, we recorded in our consolidated statement of operations net gain of $35.5 million that represented income of $70.2 million 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 of the Company that was terminated in December 2021.

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)
(In thousands of U.S. dollars, except share data)
(Unaudited)
Three Months Ended Year Ended
December 31,
2022		 September 30,
2022		 December 31,
2021		 December 31,
2022		 December 31,
2021
Net income (loss) $           2,971 $        (17,195) $            53,611 $        (8,036) $           56,708
Adjustments:
Interest income (2,420) (1,784) (858) (5,980) (2,609)
Interest expense 269 278 132 1,157 1,371
Income tax expense (benefit) 6,513 (3,942) 11,221 5,157 17,261
Depreciation and amortization 3,775 3,623 3,663 15,000 14,239
EBITDA 11,108 (19,020) 67,769 7,298 86,970
Equity-based compensation expense 1,550 861 1,648 6,037 7,704
Foreign currency loss (gain), net (17,492) 12,809 (147) 3,019 11,853
Derivative valuation loss (gain), net 66 (146) (29) (135) (123)
Inventory reserve related to Huawei impact of downstream trade restrictions — — (379) — (1,460)
Merger-related income, net — — (49,369) — (35,527)
Other charges, net — 2,501 (1,349) 3,298 1,284
Adjusted EBITDA $          (4,768) $          (2,995) $            18,144 $        19,517 $           70,701
Net income (loss) $            2,971 $        (17,195 ) $            53,611 $        (8,036) $           56,708
Adjustments:
Equity-based compensation expense 1,550 861 1,648 6,037 7,704
Foreign currency loss (gain), net (17,492) 12,809 (147) 3,019 11,853
Derivative valuation loss (gain), net 66 (146 ) (29) (135) (123)
Inventory reserve related to Huawei impact of downstream trade restrictions — — (379) — (1,460)
Merger-related income, net — — (49,369) — (35,527)
Other charges, net — 2,501 (1,349) 3,298 1,284
Income tax effect on non-GAAP adjustments (2,943) 2,267 9,713 4,569 9,713
Adjusted Net Income (Loss) $         (15,848) $            1,097 $            13,699 $          8,752 $           50,152
Adjusted Net Income (Loss) per common share—
– Basic $             (0.36) $              0.02 $               0.30 $            0.20 $               1.12
– Diluted $             (0.36) $              0.02 $               0.29 $            0.19 $               1.07
Weighted average number of shares – basic 44,054,275 44,865,266 46,369,520 44,850,791 44,879,412
Weighted average number of shares – diluted 44,054,275 45,747,255 47,691,816 45,795,559 47,709,373

We present Adjusted EBITDA and Adjusted Net Income (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 loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Inventory reserve related to Huawei impact of downstream trade restrictions, (v) Merger-related income, net and (vi) Other charges, net. EBITDA for the periods indicated is defined as net income (loss) before interest income, interest expense, income tax expense (benefit) and depreciation and amortization.

We prepare Adjusted Net Income (Loss) 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 (Loss) is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income (Loss) for the periods as net income (loss), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Inventory reserve related to Huawei impact of downstream trade restrictions, (v) Merger-related income, net, (vi) Other charges, net and (vii) Income tax effect on non-GAAP adjustments.

For the year ended December 31, 2022, Other charges, net includes $2.8 million of one-time employee incentives and professional service fees and expenses of $1.0 million, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the year ended December 31, 2021, Other charges, net includes $3.4 million of non-recurring professional service fees and expenses incurred in connection with the regulatory requests, partially offset by $1.4 million 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 $0.7 million 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, 2021, we recorded in our consolidated statement of operations net gain of $35.5 million that represented income of $70.2 million 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 of the Company that was terminated in December 2021.

For the quarter and year ended December 31, 2021, the adjustment for GAAP and cash tax expense difference in connection with the release of valuation allowances will no longer be an adjustment included in the Company’s non-GAAP financial measure. As such, Adjusted Net Income and Adjusted Net Income per Common Share for Q4 2021 and for the full year 2021 presented here have been recast to reflect the removal of this adjustment in accordance with Securities and Exchange Commission guidance.

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SOURCE Magnachip Semiconductor Corporation

Events

Magnachip to Participate in 25th Annual Needham Growth Conference

SEOUL, South Korea, Jan. 3, 2023 /PRNewswire/ — Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that its management will participate virtually in the 25th Annual Needham Growth Conference on January 12, 2023.

(PRNewsfoto/Magnachip Semiconductor)Mr. YJ Kim, Magnachip’s chief executive officer, and Ms. Shinyoung Park, Magnachip’s chief financial officer, will be available for one-on-one meetings with institutional investors during the conference. For more information about the conference or to request a one-on-one meeting, please contact a Needham sales representative.

 

About Magnachip Semiconductor Corporation

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.

 

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

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SOURCE Magnachip Semiconductor Corporation

Power Solutions

Magnachip Introduces 8th-Gen 150V MXT MOSFET for Light Electric Vehicles

– Magnachip’s eighth-generation 150V MXT MOSFET features lower RDS(on) and a TOLL package to enable motor controllers and battery management systems to be managed efficiently

 

SEOUL, South Korea, December 29, 2022 – Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that the company has launched its eighth-generation 150V MXT Metal-Oxide-Semiconductor Field-Effect Transistor (MOSFET)1 optimized for Light Electric Vehicle (LEV) motor controllers and battery management systems (BMSs).

Energy efficiency plays a critical role in electric devices when it comes to power consumption and product stability. This newly-released MOSFET (MDT15N054PTRH) features Magnachip’s eighth-generation trench MOSFET technology to lower RDS(on)2 by 28%, as compared to the previous generation. Based on the enhanced design of the core cell and termination, a high figure of merit can be achieved and an increase in the total gate charge3 can be avoided.

MDT15N054PTRH is available in a surface mount device TO-Leadless (TOLL) package to reduce product size and improve heat dissipation. The energy efficiency is also significantly enhanced by fast switching, while enabling high power density. In addition, a guaranteed operating junction temperature from -55°C up to 175°C and a high level of avalanche ruggedness help the new MXT MOSFET to exceed the performance requirements of LEV motor controllers and BMSs.

“Beginning in 2008 we have released more than 40 MOSFET products for motor controllers and battery management systems and, since 2017, most of them have been made for LEV applications,” said YJ Kim, CEO of Magnachip. “As a provider of high-performance MOSFETs, Magnachip will continue to deliver innovative solutions that meet the sophisticated requirements of the market.”

 

Product features

  • low RDS(on) and switching loss
  • great heat dissipation performance
  • guaranteed operating junction temperature from -55°C up to 175°C
  • a wide range of applications, such as LEV motor controllers and BMSs and switch mode power supplies for various consumer electronics

 

Magnachip introduces 8th-Gen 150V MXT MOSFET for Light Electric Vehicles
Magnachip introduces 8th-Gen 150V MXT MOSFET for Light Electric Vehicles

 

 

1 MXT MOSFET (Magnachip eXtreme Trench MOSFET): Magnachip’s cutting-edge product portfolio of trench MOSFETs, including low and medium voltage MOSFETs

2 RDS(on): On resistance, the resistance value between the drain and the source of MOSFETs during on-state operation

3 Total gate charge (Qg): the amount of charge required to be injected into the gate electrode to turn ON (drive) the MOSFET

 

Related Link

Power Solutions > MXT MOSFETs > 150V

 

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.

 

CONTACTS:

United States (Investor Relations):
Yujia Zhai
The Bueshirt Group
Tel. +1-860-214-0809
Investor.relations@maganachip.com		 USA media / industry analysts:
Mike Newsom
LouVan Communications, Inc.
Tel. +1-617-803-5385
mike@louvanpr.com		 Korea / Asia media:
Min A KIM
Senior manager of Public Relations
Tel. +82-2-6903-3211
pr@maganachip.com

 

In the Media

Cision PR Newswire: news distribution, targeting and monitoring home   Magnachip Introduces 8th-Gen 150V MXT MOSFET for Light Electric Vehicles

Vector (.svg) logo for The Wall Street Journal: Wordmark   Magnachip Introduces 8th-Gen 150V MXT MOSFET for Light Electric Vehicles

Power Solutions

Magnachip Unveils its First Power Management IC Optimized for OLED IT Devices

SEOUL, South Korea, November 15, 2022 – Magnachip Semiconductor Corporation (“Magnachip”) (NYSE: MX) announced today that the company has launched its first Power Management Integrated Circuit (PMIC) for IT devices equipped with OLED screens.

 

Magnachip's First Power Management IC Optimized for OLED IT Devices
Magnachip’s First Power Management IC Optimized for OLED IT Devices

 

A PMIC is a core component to supply power to electronic devices. It plays an increasingly important role as the battery life of handheld IT devices like laptops and tablets is highly dependent on power efficiency.

Based on Magnachip’s integrated power IC technology, this newly-designed PMIC communicates with a system by using an Inter-Integrated Circuit (I2C). Therefore, it can control functions such as output voltage control, ON/OFF block, output voltage sequence management, protection circuit fault flag, and switching frequency transition — all of which offer seamless connectivity and outstanding performance.

The fast transient response of this PMIC supports a variable refresh rate. This allows a screen to adjust how often it refreshes the image to match the frame rate without user input. This feature greatly reduces power consumption and enables a smooth and comfortable viewing experience for games and high-quality videos at refresh rates of 60Hz~240Hz.

In addition, the power circuit can be simple and compact. This new IC incorporates one boost regulator for the power supply to source and gate drivers, one low dropout (LDO) regulator, two voltage reference operational amplifiers, three negative output LDO regulators, three high-current buck regulators for power supply to a timing controller and two operational amplifiers for the gamma buffer. This level of integration results in smaller and faster electronic circuits. Engineered with strong circuit protection, this PMIC also provides over-voltage protection, short circuit protection, thermal shutdown, under voltage lockout, over current detection, over current shutdown and clamping circuit.

Omdia, a global market research firm, estimates that the OLED panel shipments for laptops will grow 44.3% annually from 6.3 million substrates in 2022 to 39.2 million substrates by 2027. The research firm also expects that OLED panels for tablet PCs will be shipped from 3.9 million substrates this year to 24.2 million substrates in 2027.

“The expansion of OLED applications in IT devices is expected to continue,” said YJ Kim, CEO of Magnachip. “Magnachip will extend its premium PMIC product line through technological validation for a wide range of IT applications to address changing market demand and design requirements.”

 

Related Link

Power Solutions > Overview

 

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.

 

CONTACTS:

United States (Investor Relations):
Yujia Zhai
The Bueshirt Group
Tel. +1-860-214-0809
Investor.relations@maganachip.com		 USA media / industry analysts:
Mike Newsom
LouVan Communications, Inc.
Tel. +1-617-803-5385
mike@louvanpr.com		 Korea / Asia media:
Min A KIM
Senior manager of Public Relations
Tel. +82-2-6903-3211
pr@maganachip.com

 

In the Media

Cision PR Newswire: news distribution, targeting and monitoring home   Magnachip Unveils its First Power Management IC Optimized for OLED IT Devices

New Electronics   Magnachip unveils power management IC optimised for OLED IT devices

Investors

/C O R R E C T I O N — Magnachip Semiconductor Corporation/

Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today is correcting an error to its press release issued on November 2, 2022 announcing the Company’s financial results for the third quarter of 2022. Subsequent to the furnishing of the press release, the Company identified a scrivener’s error in the Non-GAAP reconciliation table attached to the press release for Adjusted Net Income per common share (basic and diluted) for the nine month period ended September 30, 2021, which should have been $0.82 and $0.78 per share, respectively, consistent with the Company’s prior reports for that historical period. No other amounts or information reported in the press release were changed. The complete, corrected release follows:

 

Magnachip Reports Results for Third Quarter 2022

  • Revenue of $71.2 million was within our guidance range. The year-over-year and sequential decline were primarily driven by the supply shortages of OLED wafers in the 2nd half of this year that impacted design-in projects from our large panel customer in Korea.
  • Gross profit margin was 24.2%, below the low end of our guidance range as we recorded a $3.3 million charge to scrap 12-inch wafers as a result of slowing demand caused by elevated smartphone inventories in China.
  • GAAP diluted loss per share was $0.38.
  • Non-GAAP diluted earnings per share was $0.02.

 

SEOUL, South Korea, Nov. 4, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the third quarter of 2022.

(PRNewsfoto/Magnachip Semiconductor)Commenting on the results for the third quarter of 2022, YJ Kim, Magnachip’s chief executive officer stated, “Our Q3 revenue of $71.2 million was within our guidance range. As we mentioned last quarter, our Display business in the 2nd half is impacted by supply shortages of 28nm 12-inch OLED wafers that impacted design-in projects from our large panel customer in Korea, which are typically given in advance based on future wafer supply allocation. In addition, China covid lockdowns and the dramatic slowdown in consumer spending due to inflationary pressures reduced demand for smartphones and TVs and resulted in an oversupply of channel inventories, particularly in China. Our Power business also slowed due to lower consumer spending.”

YJ Kim continued, “While the global economic situation remains challenging, our balance sheet is strong, and we are focused on executing a recovery of our Display business. During the quarter, we successfully released our new OLED DDIC sample to our new panel customer and we expect to begin mass production in 2023. In addition, due to the global economic slowdown, we are seeing more wafer capacity availability and we are in discussion with multiple foundries to secure capacity and believe that our 2023 wafer supply will be more than two times higher than 2022. As such, we expect to see a significant recovery of Display business in 2023.”

 

Q3 2022 Financial Highlights

In thousands of U.S. dollars, except share data
GAAP
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Revenues
Standard Products Business
Display Solutions 6,355 28,336 down 77.6 % 58,528 down 89.1 %
Power Solutions 56,416 62,952 down 10.4 % 58,887 down 4.2 %
Transitional Fab 3 foundry services(1) 8,428 10,088 down 16.5 % 9,585 down 12.1 %
Gross Profit Margin 24.2 % 28.6 % down 4.4 %pts 36.7 % down 12.5 %pts
Operating Income (Loss) (10,008) 2,002 down n/a 20,001 down n/a
Net Income (Loss) (17,195) (3,340) down n/a 10,768 down n/a
Basic Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
Diluted Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
In thousands of U.S. dollars, except share data
Non-GAAP(2)
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Adjusted Operating Income (Loss) (6,646) 4,787 down n/a 22,691 down n/a
Adjusted EBITDA (2,995) 8,525 down n/a 26,361 down n/a
Adjusted Net Income 1,097 10,567 down 89.6 % 20,073 down 94.5 %
Adjusted Earnings per Common Share—Diluted 0.02 0.23 down 91.3 % 0.42 down 95.2 %

 

___________
(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) 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.

 

Q4 2022 Financial Guidance
The Company’s near-term outlook is being challenged by previous OLED wafer allocation constraints that impacted 2nd half design-in projects, elevated smartphone channel inventories, a pushout of the initial mass production ramp of our new OLED customer and weakening demand in consumer end markets on growing recession fears and cost increases, including labor, due to inflationary pressures. In addition, we estimate our Q4 revenue will be further negatively impacted by approximately $5 million of foreign exchange hedging instruments. While actual results may vary, looking into the next quarter, Magnachip currently expects:

  • Revenue to be in the range of $57 million to $62 million, including about $7 million of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 26 % to 28%.

 

Q3 2022 Earnings Conference Call
Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, November 2, 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/BIccd8bcc64c4a4092bc5e11273a22e8f2

 

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 fourth 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 fourth 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 Nine Months Ended
September 30,
2022		 June 30,
2022		 September 30,
2021		 September 30,
2022		 September 30,
2021
Revenues:
Net sales – standard products business $         62,771 $         91,288 $         117,415 $       248,069 $       333,589
Net sales – transitional Fab 3 foundry services 8,428 10,088 9,585 28,599 30,306
Total revenues 71,199 101,376 127,000 276,668 363,895
Cost of sales:
Cost of sales – standard products business 45,497 63,620 71,641 165,197 221,297
Cost of sales – transitional Fab 3 foundry services 8,477 8,811 8,772 26,305 27,659
Total cost of sales 53,974 72,431 80,413 191,502 248,956
Gross profit 17,225 28,945 46,587 85,166 114,939
Gross profit as a percentage of standard products business net sales 27.5 % 30.3 % 39.0 % 33.4 % 33.7 %
Gross profit as a percentage of total revenues 24.2 % 28.6 % 36.7 % 30.8 % 31.6 %
Operating expenses:
Selling, general and administrative expenses 11,411 12,736 12,550 38,310 39,185
Research and development expenses 13,321 13,410 12,270 38,685 39,015
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 214 3,298 3,360
Total operating expenses 27,233 26,943 26,586 80,293 95,402
Operating income (loss) (10,008) 2,002 20,001 4,873 19,537
Interest expense (278) (499 ) (113) (888) (1,239)
Foreign currency loss, net (12,809) (7,012 ) (7,579) (20,511) (12,000 )
Other income, net 1,958 1,272 1,608 4,163 2,839
Income (loss) before income tax expense (21,137) (4,237 ) 13,917 (12,363) 9,137
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Net income (loss) $         (17,195) $          (3,340 ) $         10,768 $         (11,007) $           3,097
 

Basic earnings (loss) per common share—

 $             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Diluted earnings (loss) per common share— $             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Weighted average number of shares—
Basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Diluted 44,865,266 44,897,278 47,808,457 45,119,214 45,811,792

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
September 30,
2022		 December 31,
2021
(In thousands of U.S. dollars, except share data)
Assets
Current assets
Cash and cash equivalents $                 250,831 $                   279,547
Accounts receivable, net 36,759 50,954
Inventories, net 37,298 39,370
Other receivables 8,248 25,895
Prepaid expenses 10,322 7,675
Hedge collateral 15,370 3,060
Other current assets 20,208 2,619
Total current assets 379,036 409,120
Property, plant and equipment, net 94,411 107,882
Operating lease right-of-use assets 4,928 4,275
Intangible assets, net 1,770 2,377
Long-term prepaid expenses 11,382 8,243
Deferred income taxes 34,299 41,095
Other non-current assets 10,382 10,662
Total assets $                 536,208 $                   583,654
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $                   26,545 $                     37,593
Other accounts payable 14,809 6,289
Accrued expenses 15,800 20,071
Accrued income taxes — 11,823
Operating lease liabilities 1,324 2,323
Other current liabilities 15,881 7,382
Total current liabilities 74,359 85,481
Accrued severance benefits, net 28,036 33,064
Non-current operating lease liabilities 3,811 1,952
Other non-current liabilities 16,787 10,395
Total liabilities 122,993 130,892
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 56,234,774 shares issued and 44,579,075 outstanding at September 30, 2022 and 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 562 559
Additional paid-in capital 264,510 241,197
Retained earnings 332,535 343,542
Treasury stock, 11,655,699 shares at September 30, 2022 and 10,246,016 shares at December 31, 2021, respectively (152,161) (130,306 )
Accumulated other comprehensive loss (32,231) (2,230 )
Total stockholders’ equity 413,215 452,762
Total liabilities and stockholders’ equity $                 536,208 $                   583,654

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months
Ended		 Nine Months
Ended
September 30,
2022		 September 30,
2022		 September 30,
2021
Cash flows from operating activities
Net income (loss) $    (17,195) $     (11,007) $       3,097
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization 3,623 11,225 10,576
Provision for severance benefits 1,923 5,163 5,514
Amortization of debt issuance costs and original issue discount — — 261
Loss on foreign currency, net 37,152 66,335 32,607
Provision for inventory reserves 2,448 7,730 1,484
Stock-based compensation 861 4,487 6,056
Other, net (81) 631 442
Changes in operating assets and liabilities
Accounts receivable, net 20,182 7,805 6,696
Inventories (7,722) (13,208) (4,561)
Other receivables 5,475 17,115 (5,287)
Other current assets (12,028) (14,117) 7,933
Accounts payable (17,221) (14,792) (16,192)
Other accounts payable (354) (6,215) (3,729)
Accrued expenses 8,575 5,866 (1,641 )
Accrued income taxes 30 (11,483) (8,308)
Other current liabilities 570 (1,583) 555
Other non-current liabilities (47) 523 (666 )
Payment of severance benefits (1,247) (4,181) (4,772)
Other, net 335 (50) (49 )
Net cash provided by operating activities 25,279 50,244 30,016
Cash flows from investing activities
Proceeds from settlement of hedge collateral — 2,805 3,995
Payment of hedge collateral (8,438) (15,282) (2,744 )
Purchase of property, plant and equipment (10,301) (11,812) (13,368)
Payment for intellectual property registration (148) (301) (455)
Collection of guarantee deposits — — 3,192
Payment of guarantee deposits (1,026) (2,075) (4,960 )
Other, net 778 792 (103)
Net cash used in investing activities (19,135) (25,873) (14,443 )
Cash flows from financing activities
Proceeds from exercise of stock options — 1,786 3,920
Acquisition of treasury stock (3,239) (5,065) (1,653 )
Repayment of financing related to water treatment facility arrangement (120) (381) (427 )
Repayment of principal portion of finance lease liabilities (18) (50) (49)
Net cash provided by (used in) financing activities (3,377) (3,710) 1,791
Effect of exchange rates on cash and cash equivalents (25,733) (49,377) (21,003)
Net decrease in cash and cash equivalents (22,966) (28,716) (3,639 )
Cash and cash equivalents
Beginning of the period 273,797 279,547 279,940
End of the period $   250,831 $     250,831 $   276,301

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022		 June 30,
2022		 September 30,
2021		 September 30,
2022		 September 30,
2021
Operating income (loss) $ (10,008) $ 2,002 $ 20,001 $ 4,873 $ 19,537
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Inventory reserve related to Huawei — — (1,081) — (1,081)
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 214 3,298 3,360
Adjusted Operating Income (Loss) $ (6,646) $ 4,787 $ 22,691 $ 12,658 $ 41,714

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We define Adjusted Operating Income (Loss) for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense (ii) Inventory reserve related to Huawei (iii) Merger-related costs and (iv) Other charges, net. For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, 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 Nine Months Ended
September 30,
2022		 June 30,
2022		 September 30,
2021		 September 30,
2022		 September30,
2021
Net income (loss) $        (17,195 ) $         (3,340 ) $            10,768 $     (11,007) $         3,097
Adjustments:
Interest income, net (1,506 ) (562 ) (439) (2,672 ) (512)
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Depreciation and amortization 3,623 3,711 3,578 11,225 10,576
EBITDA (19,020 ) (1,088 ) 17,056 (3,810) 19,201
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146) (184 ) (237) (201) (94)
Inventory reserve related to Huawei — — (1,081) — (1,081)
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Adjusted EBITDA $           (2,995) $          8,525 $           26,361 $       24,285 $          52,557
Net income (loss) $         (17,195) $         (3,340 ) $           10,768 $       (11,007) $            3,097
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146 ) (184 ) (237) (201 ) (94)
Inventory reserve related to Huawei — — (1,081) — (1,081)
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Income tax effect on non-GAAP adjustments 2,267 4,294 — 7,512 —
Adjusted Net Income $             1,097 $         10,567 $         20,073 $       24,600 $        36,453
Adjusted Net Income per common share—
– Basic $              0.02 $             0.24 $             0.43 $           0.55 $              0.82
– Diluted $             0.02 $             0.23 $             0.42 $           0.53 $              0.78
Weighted average number of shares – basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Weighted average number of shares – diluted 45,747,255 45,937,515 47,808,457 46,134,231 47,718,578

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, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs and (vi) Other charges, net. 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, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs, (vi) Other charges, net and (vii) Income tax effect on non-GAAP adjustments.

For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, incurred in connection with the regulatory requests, both of which were offset in part by a $0.7 million 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.

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/magnachip-reports-results-for-third-quarter-2022-301665747.html

SOURCE Magnachip Semiconductor Corporation

Investors

Magnachip Reports Results for Third Quarter 2022

  • Revenue of $71.2 million was within our guidance range. The year-over-year and sequential decline were primarily driven by the supply shortages of OLED wafers in the 2nd half of this year that impacted design-in projects from our large panel customer in Korea.
  • Gross profit margin was 24.2%, below the low end of our guidance range as we recorded a $3.3 million charge to scrap 12-inch wafers as a result of slowing demand caused by elevated smartphone inventories in China.
  • GAAP diluted loss per share was $0.38.
  • Non-GAAP diluted earnings per share was $0.02.

 

SEOUL, South Korea, Nov. 2, 2022 /PRNewswire/ — Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the third quarter of 2022.

(PRNewsfoto/Magnachip Semiconductor)Commenting on the results for the third quarter of 2022, YJ Kim, Magnachip’s chief executive officer stated, “Our Q3 revenue of $71.2 million was within our guidance range. As we mentioned last quarter, our Display business in the 2nd half is impacted by supply shortages of 28nm 12-inch OLED wafers that impacted design-in projects from our large panel customer in Korea, which are typically given in advance based on future wafer supply allocation. In addition, China covid lockdowns and the dramatic slowdown in consumer spending due to inflationary pressures reduced demand for smartphones and TVs and resulted in an oversupply of channel inventories, particularly in China. Our Power business also slowed due to lower consumer spending.”

YJ Kim continued, “While the global economic situation remains challenging, our balance sheet is strong, and we are focused on executing a recovery of our Display business. During the quarter, we successfully released our new OLED DDIC sample to our new panel customer and we expect to begin mass production in 2023. In addition, due to the global economic slowdown, we are seeing more wafer capacity availability and we are in discussion with multiple foundries to secure capacity and believe that our 2023 wafer supply will be more than two times higher than 2022. As such, we expect to see a significant recovery of Display business in 2023.”

 

Q3 2022 Financial Highlights

In thousands of U.S. dollars, except share data
GAAP
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Revenues
Standard Products Business
Display Solutions 6,355 28,336 down 77.6 % 58,528 down 89.1 %
Power Solutions 56,416 62,952 down 10.4 % 58,887 down 4.2 %
Transitional Fab 3 foundry services(1) 8,428 10,088 down 16.5 % 9,585 down 12.1 %
Gross Profit Margin 24.2 % 28.6 % down 4.4 %pts 36.7 % down 12.5 %pts
Operating Income (Loss) (10,008) 2,002 down n/a 20,001 down n/a
Net Income (Loss) (17,195) (3,340) down n/a 10,768 down n/a
Basic Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
Diluted Earnings (Loss) per Common Share (0.38) (0.07) down n/a 0.23 down n/a
In thousands of U.S. dollars, except share data
Non-GAAP(2)
Q3 2022 Q2 2022 Q/Q change Q3 2021 Y/Y change
Adjusted Operating Income (Loss) (6,646) 4,787 down n/a 22,691 down n/a
Adjusted EBITDA (2,995) 8,525 down n/a 26,361 down n/a
Adjusted Net Income 1,097 10,567 down 89.6 % 20,073 down 94.5 %
Adjusted Earnings per Common Share—Diluted 0.02 0.23 down 91.3 % 0.42 down 95.2 %

 

___________
(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) 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.

 

Q4 2022 Financial Guidance
The Company’s near-term outlook is being challenged by previous OLED wafer allocation constraints that impacted 2nd half design-in projects, elevated smartphone channel inventories, a pushout of the initial mass production ramp of our new OLED customer and weakening demand in consumer end markets on growing recession fears and cost increases, including labor, due to inflationary pressures. In addition, we estimate our Q4 revenue will be further negatively impacted by approximately $5 million of foreign exchange hedging instruments. While actual results may vary, looking into the next quarter, Magnachip currently expects:

  • Revenue to be in the range of $57 million to $62 million, including about $7 million of Transitional Fab 3 Foundry Services.
  • Gross profit margin to be in the range of 26 % to 28%.

 

Q3 2022 Earnings Conference Call
Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, November 2, 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/BIccd8bcc64c4a4092bc5e11273a22e8f2

 

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 fourth 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 fourth 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 Nine Months Ended
September 30,
2022		 June 30,
2022		 September 30,
2021		 September 30,
2022		 September 30,
2021
Revenues:
Net sales – standard products business $         62,771 $         91,288 $         117,415 $       248,069 $       333,589
Net sales – transitional Fab 3 foundry services 8,428 10,088 9,585 28,599 30,306
Total revenues 71,199 101,376 127,000 276,668 363,895
Cost of sales:
Cost of sales – standard products business 45,497 63,620 71,641 165,197 221,297
Cost of sales – transitional Fab 3 foundry services 8,477 8,811 8,772 26,305 27,659
Total cost of sales 53,974 72,431 80,413 191,502 248,956
Gross profit 17,225 28,945 46,587 85,166 114,939
Gross profit as a percentage of standard products business net sales 27.5 % 30.3 % 39.0 % 33.4 % 33.7 %
Gross profit as a percentage of total revenues 24.2 % 28.6 % 36.7 % 30.8 % 31.6 %
Operating expenses:
Selling, general and administrative expenses 11,411 12,736 12,550 38,310 39,185
Research and development expenses 13,321 13,410 12,270 38,685 39,015
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 214 3,298 3,360
Total operating expenses 27,233 26,943 26,586 80,293 95,402
Operating income (loss) (10,008) 2,002 20,001 4,873 19,537
Interest expense (278) (499 ) (113) (888) (1,239)
Foreign currency loss, net (12,809) (7,012 ) (7,579) (20,511) (12,000 )
Other income, net 1,958 1,272 1,608 4,163 2,839
Income (loss) before income tax expense (21,137) (4,237 ) 13,917 (12,363) 9,137
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Net income (loss) $         (17,195) $          (3,340 ) $         10,768 $         (11,007) $           3,097
 

Basic earnings (loss) per common share—

 $             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Diluted earnings (loss) per common share— $             (0.38) $            (0.07 ) $             0.23 $             (0.24) $             0.07
Weighted average number of shares—
Basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Diluted 44,865,266 44,897,278 47,808,457 45,119,214 45,811,792

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
(Unaudited)
September 30,
2022		 December 31,
2021
(In thousands of U.S. dollars, except share data)
Assets
Current assets
Cash and cash equivalents $                 250,831 $                   279,547
Accounts receivable, net 36,759 50,954
Inventories, net 37,298 39,370
Other receivables 8,248 25,895
Prepaid expenses 10,322 7,675
Hedge collateral 15,370 3,060
Other current assets 20,208 2,619
Total current assets 379,036 409,120
Property, plant and equipment, net 94,411 107,882
Operating lease right-of-use assets 4,928 4,275
Intangible assets, net 1,770 2,377
Long-term prepaid expenses 11,382 8,243
Deferred income taxes 34,299 41,095
Other non-current assets 10,382 10,662
Total assets $                 536,208 $                   583,654
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $                   26,545 $                     37,593
Other accounts payable 14,809 6,289
Accrued expenses 15,800 20,071
Accrued income taxes — 11,823
Operating lease liabilities 1,324 2,323
Other current liabilities 15,881 7,382
Total current liabilities 74,359 85,481
Accrued severance benefits, net 28,036 33,064
Non-current operating lease liabilities 3,811 1,952
Other non-current liabilities 16,787 10,395
Total liabilities 122,993 130,892
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 56,234,774 shares issued and 44,579,075 outstanding at September 30, 2022 and 55,905,320 shares issued and 45,659,304 outstanding at December 31, 2021 562 559
Additional paid-in capital 264,510 241,197
Retained earnings 332,535 343,542
Treasury stock, 11,655,699 shares at September 30, 2022 and 10,246,016 shares at December 31, 2021, respectively (152,161) (130,306 )
Accumulated other comprehensive loss (32,231) (2,230 )
Total stockholders’ equity 413,215 452,762
Total liabilities and stockholders’ equity $                 536,208 $                   583,654

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months
Ended		 Nine Months
Ended
September 30,
2022		 September 30,
2022		 September 30,
2021
Cash flows from operating activities
Net income (loss) $    (17,195) $     (11,007) $       3,097
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization 3,623 11,225 10,576
Provision for severance benefits 1,923 5,163 5,514
Amortization of debt issuance costs and original issue discount — — 261
Loss on foreign currency, net 37,152 66,335 32,607
Provision for inventory reserves 2,448 7,730 1,484
Stock-based compensation 861 4,487 6,056
Other, net (81) 631 442
Changes in operating assets and liabilities
Accounts receivable, net 20,182 7,805 6,696
Inventories (7,722) (13,208) (4,561)
Other receivables 5,475 17,115 (5,287)
Other current assets (12,028) (14,117) 7,933
Accounts payable (17,221) (14,792) (16,192)
Other accounts payable (354) (6,215) (3,729)
Accrued expenses 8,575 5,866 (1,641 )
Accrued income taxes 30 (11,483) (8,308)
Other current liabilities 570 (1,583) 555
Other non-current liabilities (47) 523 (666 )
Payment of severance benefits (1,247) (4,181) (4,772)
Other, net 335 (50) (49 )
Net cash provided by operating activities 25,279 50,244 30,016
Cash flows from investing activities
Proceeds from settlement of hedge collateral — 2,805 3,995
Payment of hedge collateral (8,438) (15,282) (2,744 )
Purchase of property, plant and equipment (10,301) (11,812) (13,368)
Payment for intellectual property registration (148) (301) (455)
Collection of guarantee deposits — — 3,192
Payment of guarantee deposits (1,026) (2,075) (4,960 )
Other, net 778 792 (103)
Net cash used in investing activities (19,135) (25,873) (14,443 )
Cash flows from financing activities
Proceeds from exercise of stock options — 1,786 3,920
Acquisition of treasury stock (3,239) (5,065) (1,653 )
Repayment of financing related to water treatment facility arrangement (120) (381) (427 )
Repayment of principal portion of finance lease liabilities (18) (50) (49)
Net cash provided by (used in) financing activities (3,377) (3,710) 1,791
Effect of exchange rates on cash and cash equivalents (25,733) (49,377) (21,003)
Net decrease in cash and cash equivalents (22,966) (28,716) (3,639 )
Cash and cash equivalents
Beginning of the period 273,797 279,547 279,940
End of the period $   250,831 $     250,831 $   276,301

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30,
2022		 June 30,
2022		 September 30,
2021		 September 30,
2022		 September 30,
2021
Operating income (loss) $ (10,008) $ 2,002 $ 20,001 $ 4,873 $ 19,537
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Inventory reserve related to Huawei — — (1,081) — (1,081)
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 214 3,298 3,360
Adjusted Operating Income (Loss) $ (6,646) $ 4,787 $ 22,691 $ 12,658 $ 41,714

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We define Adjusted Operating Income (Loss) for the periods indicated as operating income (loss) adjusted to exclude (i) Equity-based compensation expense (ii) Inventory reserve related to Huawei (iii) Merger-related costs and (iv) Other charges, net. For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, 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 Nine Months Ended
September 30,
2022		 June 30,
2022		 September 30,
2021		 September 30,
2022		 September30,
2021
Net income (loss) $        (17,195 ) $         (3,340 ) $            10,768 $     (11,007) $         3,097
Adjustments:
Interest income, net (1,506 ) (562 ) (439) (2,672 ) (512)
Income tax expense (benefit) (3,942) (897 ) 3,149 (1,356) 6,040
Depreciation and amortization 3,623 3,711 3,578 11,225 10,576
EBITDA (19,020 ) (1,088 ) 17,056 (3,810) 19,201
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146) (184 ) (237) (201) (94)
Inventory reserve related to Huawei — — (1,081) — (1,081)
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Adjusted EBITDA $           (2,995) $          8,525 $           26,361 $       24,285 $          52,557
Net income (loss) $         (17,195) $         (3,340 ) $           10,768 $       (11,007) $            3,097
Adjustments:
Equity-based compensation expense 861 1,988 2,005 4,487 6,056
Foreign currency loss, net 12,809 7,012 7,579 20,511 12,000
Derivative valuation gain, net (146 ) (184 ) (237) (201 ) (94)
Inventory reserve related to Huawei — — (1,081) — (1,081)
Merger-related costs — — 1,552 — 13,842
Other charges, net 2,501 797 (513) 3,298 2,633
Income tax effect on non-GAAP adjustments 2,267 4,294 — 7,512 —
Adjusted Net Income $             1,097 $         10,567 $         20,073 $       24,600 $        36,453
Adjusted Net Income per common share—
– Basic $              0.02 $             0.24 $             0.43 $           0.55 $              0.54
– Diluted $             0.02 $             0.23 $             0.42 $           0.53 $              0.53
Weighted average number of shares – basic 44,865,266 44,897,278 46,449,234 45,119,214 44,377,250
Weighted average number of shares – diluted 45,747,255 45,937,515 47,808,457 46,134,231 47,718,578

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, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs and (vi) Other charges, net. 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, net, (iii) Derivative valuation gain, net, (iv) Inventory reserve related to Huawei, (v) Merger-related costs, (vi) Other charges, net and (vii) Income tax effect on non-GAAP adjustments.

For the three and nine months ended September 30, 2022, Other charges, net includes $2.8 million of one-time employee incentives, in each period, and professional service fees and expenses of $0.2 million and $1.0 million, respectively, incurred in connection with certain strategic evaluations, both of which were offset in part by a $0.5 million gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi. For the three and nine months ended September 30, 2021, Other charges, net includes professional service fees and expenses of $0.2 million and $3.4 million, respectively, incurred in connection with the regulatory requests, both of which were offset in part by a $0.7 million 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.

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SOURCE Magnachip Semiconductor Corporation