MagnaChip Reports Fourth Quarter and Full Year 2015 Financial Results
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MagnaChip Reports Fourth Quarter and Full Year 2015 Financial Results

(PRNewswire) —  MagnaChip Semiconductor Corporation ("MagnaChip") (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the fourth quarter and full year ended December 31, 2015.

Revenue for the fourth quarter of 2015 was $152.4 million, a 1.3% decline compared to $154.4 million for the third quarter of 2015, and down 9.1% compared to $167.7 million for the fourth quarter of 2014.  Foundry Services revenue in the fourth quarter of 2015 was $65.8 million and Standard Products Group revenue was $86.5 million. For the full year 2015, revenue was $633.7 million compared to $698.2 million for 2014, a 9.2% decrease.

Gross profit was $29.9 million, or 19.6% as a percent of revenue for the fourth quarter of 2015. This compared with gross profit of $34.7 million, or 22.5%, for the third quarter of 2015 and $34.5 million, or 20.6%, for the fourth quarter of 2014. Foundry gross profit was 22.7% and Standard Products Group gross profit was 17.2% in the fourth quarter of 2015. For the full year 2015, gross profit was $134.9 million, or 21.3%, compared to $152.9 million, or 21.9%, for 2014.

Net income, on a GAAP basis, for the fourth quarter of 2015 totaled $22.9 million, or $0.66 per basic and diluted share, compared to a net loss of $57.1 million, or $1.65 per basic share, for the third quarter of 2015 and net loss of $63.8 million, or $1.87 per basic share, for the fourth quarter of 2014. Net income included a tax benefit and a foreign currency translation gain on intercompany loans payable as well as spending reductions. For the full year 2015, net loss was $84.9 million, or $2.47 per basic share, compared to $117.2 million or $3.44 per basic share, for 2014.

"Revenue in the fourth quarter was at the high end of our guidance range and gross margin was better than expected, driven primarily by an increase in demand for AMOLED display drivers consumed by smartphone makers in China," said YJ Kim, Chief Executive Officer of MagnaChip. "Despite a weak macro environment, our foundry pipeline is filling, AMOLED demand is improving and our business is showing early signs of stabilizing."

Chief Financial Officer Jonathan Kim commented, "During 2015, we embarked on a comprehensive plan to reduce total normalized spending by more than $40 million for the year. In fact, we far exceeded our goal and reduced total normalized spending by over $50 million, including approximately $13 million in the fourth quarter of 2015 alone. We will continue to explore opportunities to control spending in 2016."

Adjusted Net Income, a non-GAAP measurement, for the fourth quarter of 2015 totaled $5.2 million, or $0.15 per basic and diluted share, compared to an Adjusted Net Loss, a non-GAAP measurement, of $10.4 million, or $0.30 per basic share, in the third quarter of 2015 and an Adjusted Net Loss of $10.8 million, or $0.32 per basic share, for the fourth quarter of 2014. For the full year 2015, Adjusted Net Loss was $26.7 million, or $0.78 per basic share compared to an Adjusted Net Loss of $38.1 million or $1.12 per basic share for 2014.

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 MagnaChip's business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income 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 following the financial statements.

Cash and cash equivalents totaled $90.9 million at the end of the fourth quarter of 2015, an increase of $22.4 million from the end of the prior quarter primarily due to one-time receipts of pre-paid deposits for the planned sale of our 6" fab equipment and prepayment received for end-of-life products produced in our 6" fab.

As disclosed in MagnaChip's 2015 proxy statement, the Board of Directors established a Strategic Review Committee ("SRC") to assist the Board in reviewing, considering and evaluating strategic alternatives that may be available to MagnaChip. The SRC and the Board of Directors are still actively involved in an ongoing process of reviewing various strategic alternatives and will continue to evaluate alternatives consistent with their obligation to act in the best interest of stockholders. No decision has been made to enter into a transaction at this time and MagnaChip can offer no assurance that it will enter into any transaction in the future.

The following table sets forth information relating to our operating segments:







Three Months Ended

Year Ended


December 31,
2015

December 31,
201
4

December 31,
2015

December 31,
2014

Net Sales





Foundry Services Group

$    65,822

$    78,949

$  290,775

$  360,549

Standard Products Group       





Display Solutions          

53,895

55,455

207,480

199,861

Power Solutions             

32,576

33,108

134,814

137,246






Total Standard Products Group  

86,471

88,563

342,294

337,107

All other     

137

140

643

562






Total net sales

$  152,430

$  167,652

$633,712

$  698,218










Three Months Ended

Year Ended


December 31,
2015

December 31,
2014

December 31,
2015

December 31,
2014

Gross Profit





Foundry Services Group

$    14,935

$    15,630

$    66,175

$    75,739

Standard Products Group       

14,878

18,728

68,094

76,561

All other     

89

140

595

562






Total gross profit           

$    29,902

$    34,498

$  134,864

$  152,862






Fourth Quarter and Recent Company Highlights

Business Outlook

For the first quarter of 2016, MagnaChip anticipates:

Conference Call

MagnaChip will hold a conference call at 5 p.m. EST today (February 17, 2016) to discuss the fourth quarter and full year 2015 financial results. The conference call will be webcast live and is also available by dialing 1-866-776-2061 in the U.S. or 1-706-679-0298 for all other locations. The conference ID number is 24897567 and participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. EST start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com.

A replay of the conference call will be available the same day and will run for 72 hours. The replay access numbers are 1-855-859-2056 or 1-404-537-3406. The access code is 24897567.

About MagnaChip Semiconductor Corporation

Headquartered in South Korea, MagnaChip is a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products for high-volume consumer applications. MagnaChip believes it has one of the broadest and deepest ranges of analog and mixed-signal semiconductor platforms in the industry, supported by its 30-year operating history, a large portfolio of registered and pending patents, and extensive engineering 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.

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 statements about our future operating and financial performance, including first quarter 2016 revenue and gross profit and expectations related to future spending and cost reduction initiatives. 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 general economic conditions, 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 and our distributors, and other risks detailed from time to time in MagnaChip's filings with the SEC, including our Form 10-K filed on May 28, 2015 and our Form 10-Q filed on November 6, 2015 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.

CONTACTS:




In the United States:

Robert Pursel

Director of Investor Relations

Tel. +1-408-625-1262

robert.pursel@magnachip.com

In Korea:

Chankeun Park

Senior Manager, Public Relations

Tel. +82-2-6903-3195

chankeun.park@magnachip.com

 



MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of US dollars, except share data)

(Unaudited)









Three Months Ended


Year Ended


December 31,

2015


September 30,

2015


December 31,

2014


December 31,

2015


December 31,

2014

Net sales

$

152,430


$

154,382


$

167,652


$

633,712


$

698,218

Cost of sales


122,528



119,683



133,154



498,848



545,356

Gross profit


29,902



34,699



34,498



134,864



152,862
















Gross profit %


19.6%



22.5%



20.6%



21.3%



21.9%

Operating expenses















Selling, general and
administrative expenses


18,653



22,107



32,491



94,378



126,954

Research and development
expenses


18,879



20,450



22,147



83,420



92,765

Restructuring and impairment
charges






10,269





10,269

Total operating expenses


37,532



42,557



64,907



177,798



229,988

Operating loss


(7,630)



(7,858)



(30,409)



(42,934)



(77,126)

Interest expense


(4,081)



(4,075)



(4,252)



(16,268)



(16,833)

Foreign currency gain (loss), net


17,080



(44,139)



(30,160)



(42,531)



(24,650)

Other income, net


617



256



744



1,779



2,900

Income (loss) before income tax
   expenses


5,986



(55,816)



(64,077)



(99,954)



(115,709)
















Income tax expenses (benefits)


(16,868)



1,250



(247)



(15,087)



1,523
















Net income (loss)

$

22,854


$

(57,066)


$

(63,830)


$

(84,867)


$

(117,232)
















Earnings (loss) per common share :















- Basic

$

0.66


$

(1.65)


$

(1.87)


$

(2.47)


$

(3.44)

- Diluted

$

0.66


$

(1.65)


$

(1.87)


$

(2.47)


$

(3.44)
















Weighted average number of shares—Basic


34,698,777



34,664,246



34,056,413



34,380,517



34,055,513

Weighted average number of shares—Diluted


34,713,034



34,664,246



34,056,413



34,380,517



34,055,513
































 

 


MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

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

(In thousands of US dollars, except share data)

(Unaudited)









Three Months Ended


Year Ended



December 31,

2015


September 30,

2015


December 31,

2014


December 31,

2015


December 31,

2014


Net income (loss)

$

22,854


$

(57,066)


$

(63,830)


$

(84,867)


$

(117,232)


Adjustments:
















Depreciation and amortization


6,424



6,399



7,072



26,490



29,989


Interest expense, net


4,020



4,023



4,134



16,039



16,289


Income tax expenses (benefits)


(16,868)



1,250



(247)



(15,087)



1,523


Restructuring and impairment charges






10,269





10,269


Equity-based compensation expense


398



393



407



2,768



2,072


Foreign currency loss (gain), net


(17,080)



44,139



30,160



42,531



24,650


Derivative valuation loss (gain), net


(61)



270



(49)



516



12


Restatement related expenses


(891)



1,891



12,145



12,372



40,897


















Adjusted EBITDA

$

(1,204)


$

1,299


$

61


$

762


$

8,469


















Adjusted EBITDA per common share:
















- Diluted

$

(0.03)


$

0.04


$

0.00


$

0.02


$

0.24


Weighted average number of shares—Diluted


34,698,777



35,002,896



35,006,862



34,663,593



35,172,755


















Net income (loss)

$

22,854


$

(57,066)


$

(63,830)


$

(84,867)


$

(117,232)


Adjustments:
















Restructuring and impairment charges






10,269





10,269


Equity-based compensation expense


398



393



407



2,768



2,072


Amortization of intangibles






120





1,221


Foreign currency loss (gain), net


(17,080)



44,139



30,160



42,531



24,650


Derivative valuation loss (gain), net


(61)



270



(49)



516



12


Restatement related expenses


(891)



1,891



12,145



12,372



40,897


















Adjusted net income (loss)

$

5,220


$

(10,373)


$

(10,778)


$

(26,680)


$

(38,111)


















Adjusted net income (loss) per common
   share:
















- Diluted

$

0.15


$

(0.30)


$

(0.32)


$

(0.78)


$

(1.12)


















Weighted average number of shares—Diluted


34,713,034



34,664,246



34,056,413



34,380,517



34,055,513





















We define Adjusted EBITDA as net income adjusted to exclude (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expenses (benefits), (iv) restructuring and impairment charges, (v) equity-based compensation expense, (vi) foreign currency loss (gain), net, (vii) derivative valuation loss (gain), net, and (viii) restatement related expenses.

We present Adjusted Net Income (Loss) as a further supplemental measure of our performance. We prepare Adjusted Net Income (Loss) by adjusting net income 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) as net income adjusted to exclude (i) restructuring and impairment charges, (ii) equity-based compensation expense, (iii) amortization of intangibles, (iv) foreign currency loss (gain), net, (v) derivative valuation loss (gain), net, and (vi) restatement related expenses.

 

 


MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of US dollars, except share data)

(Unaudited)








Assets



December 31,
2015


December 31,
2014


Current assets








Cash and cash equivalents


$

90,882


$



102,434


Accounts receivable, net



63,498



72,957


Inventories, net



57,619



75,334


Other receivables



31,932



10,616


Prepaid expenses



7,075



7,560


Current deferred income tax assets



34



237


Hedge collateral



6,000




Other current assets



3,194



6,898










Total current assets



260,234



276,036










Property, plant and equipment, net



191,985



223,766


Intangible assets, net



2,629



2,451


Long-term prepaid expenses



12,117



10,916


Deferred income tax assets



238



415


Other non-current assets



10,678



14,147










Total assets


$

477,881


$

527,731









Liabilities and Stockholders' Equity

Current liabilities

Accounts payable


$

55,476


$

70,767


Other accounts payable



10,961



10,986


Accrued expenses



76,721



81,060


Deferred revenue



10,060



1,990


Deposits received



8,165




Other current liabilities



5,128



4,470











Total current liabilities



166,511



169,273


Long-term borrowings, net



224,156



224,035


Accrued severance benefits, net



134,148



139,289


Other non-current liabilities



15,396



13,636











Total liabilities



540,211



546,233











Stockholders' equity

Common stock, $0.01 par value, 150,000,000 shares authorized,
   41,147,707 shares issued and 34,568,942 outstanding at
   December 31, 2015 and 40,635,233 shares issued and
   34,056,468 outstanding at December 31, 2014



411



406


Additional paid-in capital



124,618



118,419


Accumulated deficit



(96,210)



(11,343)


Treasury stock, 6,578,765 shares at December 31, 2015 and 2014,
   respectively



(90,918)



(90,918)


Accumulated other comprehensive loss



(231)



(35,066)











Total stockholders' equity (deficit)



(62,330)



(18,502)











Total liabilities and stockholders' equity


$

477,881


$

527,731











 

 


MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(Unaudited)



Three Months
Ended



Year Ended


December 31,

2015



December 31,

2015



December 31,

2014

Cash flow from operating activities











Net income (loss)

$

22,854



$

(84,867)



$

(117,232)

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











Depreciation and amortization


6,424




26,490




29,989

Provision for severance benefits


1,116




15,289




17,703

Bad debt expenses (reversal of allowance)


18




(3)




3,718

Amortization of debt issuance costs and original issue discount


169




660




614

Loss (gain) on foreign currency, net


(18,746)




46,984




32,760

Gain on disposal of investments








(1,524)

Impairment charges








10,269

Stock-based compensation


398




2,768




2,072

Other


2,768




2,437




1,375

Changes in operating assets and liabilities











Accounts receivable, net


(5,373)




3,299




(1,668)

Inventories, net


1,627




12,929




(3,380)

Other receivables


(28,578)




(21,463)




(5,052)

Other current assets


10,670




11,339




9,308

Deferred tax assets


5




372




1,458

Accounts payable


6,289




(12,605)




(1,526)

Other accounts payable


(693)




(10,892)




(13,046)

Accrued expenses


31,052




(1,679)




208

Deferred revenue


9,372




8,136




(825)

Other current liabilities


160




(1,210)




2,004

Other non-current labilities


2,915




3,105




1,963

Payment of severance benefits


(3,489)




(11,394)




(6,650)

Other


187




328




(7)












Net cash provided by (used in) operating activities


39,145




(9,977)




(37,469)












Cash flow from investing activities











Proceeds from settlement of hedge collateral





10,841




Payment of hedge collateral





(17,182)




Proceeds from disposal of plant, property and equipment


7,504




9,886




20

Proceeds from disposal of investments








2,003

Purchase of plant, property and equipment


(2,100)




(6,350)




(17,419)

Payment for intellectual property registration


(192)




(742)




(958)

Collection of guarantee deposits


513




636




Payment of guarantee deposits


(5)




(675)




(323)

Other


16




195




(21)












Net cash provided by (used in) investing activities


5,736




(3,391)




(16,698)












Cash flow from financing activities











Proceeds from issuance of common stock


2




3,436




68

Net cash provided by financing activities


2




3,436




68

Effect of exchange rates on cash and cash equivalents


(22,511)




(1,620)




2,927












Net increase (decrease) in cash and cash equivalents


22,372




(11,552)




(51,172)












Cash and cash equivalents











Beginning of the period


68,510




102,434




153,606












End of the period

$

90,882



$

90,882



$

102,434












 

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SOURCE MagnaChip Semiconductor Corporation

Contact:
MagnaChip Semiconductor Corporation
Web: http://www.magnachip.com