-- Revenue of Nearly $200 Million Fueled by Record Demand for OLED Display Drivers --
SEOUL, South Korea and SAN JOSE, Calif., July 30, 2018 — (PRNewswire) — MagnaChip Semiconductor Corporation (NYSE: MX) today announced financial results for the second quarter of 2018 ended June 30.Q2 2018 Summary
- Revenue of $199.7 million exceeded high-end of guidance range of $182-188 million; revenue increased 19.8% Year-over-Year (YoY)
- Record OLED display driver revenue of $62.2 million quadrupled YoY and increased 81.3% from Q1 2018
- Power products revenue increased 13.3% YoY; Foundry revenue decreased 0.8% YoY on a reported basis, but had better product mix with 17% increase in new products YoY
- Gross profit margin of 27.0% in line with 26-28% guidance range; gross profit margin declined by one percentage point YoY and gross profit dollars increased 15.4% YoY
- Operating income of $13.9 million increased 42.8% YoY
- Adjusted EBITDA of $23.5 million increased 15.7% YoY
- Cash flow from operations of $25.7 million up fivefold YoY; free cash flow, which represents cash flow from operations less capital expenditures, totaled $17.3 million as compared with a negative $0.2 million a year ago
CEO Comments from YJ Kim: "Revenue in the second quarter far exceeded previous guidance due to record demand for our OLED display drivers coupled with a higher-than-expected number of launches of OLED smartphones, primarily in China. Our OLED revenue in Q2 quadrupled from the second quarter a year ago and increased 81.3% sequentially. Given our current business visibility, OLED revenue in 2018 is expected to exceed the previous record of $161.0 million set in 2016. Revenue in the Power standard products business increased by double digits year-over-year, while new product revenue in our Foundry business increased by 17% year over year. Both Foundry and Power businesses recorded a sequential increase in revenue in Q2 as compared to Q1 2018."
CFO Comments from Jonathan Kim:
"Key financial metrics showed continued improvement in the second quarter, driven primarily by higher-than-expected revenue. Revenue, gross profit dollars, operating income and Adjusted EBITDA, all showed double-digit percentage gains year-over-year, as well as sequentially. Operating income, Adjusted EBITDA and gross profit increased 88.6%, 51.7%, and 20.8% sequentially, and the Company remains committed to show improvement in gross profit over time. Our improved financial performance helped MagnaChip achieve positive free cash flow of $17.3 million in the second quarter as compared to negative free cash flow in the same year-ago period. We anticipate that we will continue to generate positive free cash flow for the second half of 2018."
Second Quarter Financial Review
Total Revenue
Total revenue in the second quarter of 2018 was $199.7 million, up 19.8% as compared to reported revenue of $166.7 million from the second quarter of 2017, and up 20.4% from $165.8 million in the first quarter of 2018.
Segment Revenue and Segment Adjustments
In January 2018, as part of the Company's ongoing portfolio optimization effort to realign business processes and streamline the organizational structure, the Company transferred a portion of the non-OLED Display business, which was $4.4 million for Q1 2018 and $3.7 million for Q2 2018, from the Standard Products Group to the Foundry Services Group. As a result, the historical financial results below are discussed both on an as reported and as adjusted basis for comparative purposes.
Foundry Services Group revenue in the second quarter was $80.9 million, down 0.8% from reported revenue of $81.5 million from the second quarter of 2017, and up 4.5% from the first quarter of 2018 on an as reported basis; and down 7.6% from the second quarter of 2017, and down 3.2% from the first quarter of 2017 on an as adjusted basis.
Following the strategic realignment and portfolio optimization discussed above, Standard Products Group revenue in the second quarter of 2018 was $118.7 million, up 39.6% year-over-year on a reported basis and up 34.4% sequentially; and up 50.2% year-over-year on an as adjusted basis. The improved results in the Standard Products Group reflected a sharp improvement in mobile OLED driver revenue in connection with the introduction of new OLED smartphones from China manufacturers, and higher demand for premium Power products.
Total Gross Profit and Gross Profit Margin
Total gross profit in the second quarter of 2018 was $53.9 million or 27.0% as a percentage of sales as compared with gross profit of $46.7 million or 28.0% gross profit margin in the second quarter of 2017, and $44.6 million or 26.9% gross profit margin for the first quarter of 2018.
Segment Gross Profit Margin
Foundry Services Group gross profit margin was 27.4% in the second quarter of 2018 as compared with, on an as reported basis, 28.7% in the second quarter of 2017 and 26.7% in the first quarter of 2018. The Foundry Services Group gross profit margin was, on an as adjusted basis, 28.2% in the second quarter of 2017 and 27.9% in the first quarter of 2017. The Standard Products Group gross profit margin was 26.6% in the second quarter of 2018 as compared with, on an as reported basis, 27.2% in the second quarter of 2017, and 27.2% in the first quarter of 2018. The Standard Products Group gross profit margin was, on an adjusted basis, 27.7% in the second quarter of 2017, and 23.3% in the first quarter of 2017.
Operating Income, Net Income, Adjusted Net Income, Adjusted EBITDA
Operating income, on a GAAP basis, for the second quarter was $13.9 million as compared with $9.7 million in the second quarter of 2017 and $7.4 million in the first quarter of 2018.
Net loss on a GAAP basis, for the second quarter was $21.5 million or $0.62 per basic and diluted share as compared with a net loss of $8.1 million or $0.24 per basic and diluted share in the second quarter of 2017, and net income of $2.8 million or $0.08 per basic and diluted share in the first quarter of 2018. The net loss in the second quarter of 2018 was attributable primarily to a non-cash foreign exchange loss on the Company's intercompany loans.
