Company Meets
Q4 Revenue,
Misses Gross Margin and EPS
Company Guidance Due to an
Additional Inventory Write-down
Himax Technologies, Inc. (Nasdaq:HIMX) (“Himax” or “Company”), a
leading supplier and fabless manufacturer of display drivers and
other semiconductor products, announced its financial results for
the fourth quarter and full year ended December 31, 2016.
SUMMARY FINANCIALS
Fourth Quarter 2016 Results
Compared to Fourth Quarter 2015
Results (USD in millions)
(unaudited) |
|
|
Q4 2016 |
|
|
Q4 2015 |
CHANGE |
Net Revenue |
$ |
203.4 |
|
|
|
$ |
178.0 |
|
+14.3 |
% |
Gross Profit |
$ |
38.9 |
|
|
|
$ |
40.7 |
|
-4.4 |
% |
Gross Margin |
|
19.1 |
% |
|
|
|
22.9 |
% |
-3.8 |
% |
GAAP Net Income
Attributable to Shareholders |
$ |
4.4 |
|
|
|
$ |
6.1 |
|
-27.6 |
% |
Non-GAAP Net Income
Attributable to Shareholders |
$ |
4.8 |
(1) |
|
|
$ |
6.5 |
(2) |
-26.2 |
% |
GAAP EPS (Per Diluted
ADS, USD) |
$ |
0.026 |
|
|
|
$ |
0.036 |
|
-27.6 |
% |
Non-GAAP EPS (Per
Diluted ADS, USD) |
$ |
0.028 |
(1) |
|
|
$ |
0.038 |
(2) |
-26.2 |
% |
(1) Non-GAAP Net income attributable to common
shareholders and EPS excludes $0.2 million share-based compensation
expenses, net of tax and $0.2 million non-cash acquisition related
charge, net of tax.(2) Non-GAAP Net income attributable to common
shareholders and EPS excludes $0.2 million share-based compensation
expenses, net of tax and $0.2 million non-cash acquisition related
charge, net of tax.
|
Fourth Quarter 2016 Results Compared
to Third Quarter 2016 Results
(USD in millions)
(unaudited) |
|
|
Q4 2016 |
Q3 2016 |
CHANGE |
Net
Revenue |
$ |
203.4 |
|
$ |
218.1 |
|
-6.7 |
% |
Gross
Profit |
$ |
38.9 |
|
$ |
55.7 |
|
-30.2 |
% |
Gross
Margin |
|
19.1 |
% |
|
25.6 |
% |
-6.5 |
% |
GAAP Net
Income Attributable to Shareholders |
$ |
4.4 |
|
$ |
13.6 |
|
-67.4 |
% |
Non-GAAP
Net Income Attributable to Shareholders |
$ |
4.8 |
(1) |
$ |
21.3 |
(2) |
-77.5 |
% |
GAAP EPS
(Per Diluted ADS, USD) |
$ |
0.026 |
|
$ |
0.079 |
|
-67.4 |
% |
Non-GAAP
EPS (Per Diluted ADS, USD) |
$ |
0.028 |
(1) |
$ |
0.124 |
(2) |
-77.5 |
% |
(1) Non-GAAP Net income attributable to common
shareholders and EPS excludes $0.2 million share-based compensation
expenses, net of tax and $0.2 million non-cash acquisition related
charge, net of tax.(2) Non-GAAP Net income attributable to common
shareholders and EPS excludes $7.6 million share-based compensation
expenses, net of tax and $0.1 million non-cash acquisition related
charge, net of tax.
"Our 2016 fourth quarter revenue, gross margin,
GAAP and non-GAAP earnings per diluted ADS were as pre-announced on
January 26th. We reported net revenues of $203.4 million,
representing a 6.7% sequential decrease and in-line with our
original guidance of a 4.0% to 9.0% sequential decline issued on
November 10, 2016 while gross margin and EPS were below the
guidance due to an additional inventory write-down. Nevertheless,
we still delivered solid results to achieve both top and bottom
line growth during 2016 as our driver and non-driver business
segments both performed strongly,” said Mr. Jordan Wu, President
and Chief Executive Officer of Himax. “Notably, we increased market
share in our core driver IC business in 2016 and continued to
solidify our leading position through technology advancement and
customer engagement. We continued to lead the market in major new
driver IC technology trends, including higher display resolution,
AMOLED and in-cell TDDI. We have collaborated closely with leading
panel makers across China for AMOLED product development. On the
TDDI front, we made volume shipments to a leading Chinese
smartphone customer and were busy with design-in activities with
Korean, Chinese and Taiwanese panel makers. Our non-driver
businesses experienced tremendous growth during 2016, primarily
driven by the LCOS and WLO businesses due to shipments to one of
our leading AR device customers. We also made solid progress in new
territories such as 3D depth scanning, IoT and machine vision with
our latest CIS and WLO products, evidenced by more design-ins and
engagements with certain heavyweight partners.”
Mr. Wu continued: “In the first quarter of 2017,
we are seeing weaker seasonality and market demand in associated
with our core driver IC business and anticipating near-term
headwinds in our non-driver business mainly due to lower LCOS and
WLO revenues resulted from our major AR customer’s shift in focus
to the development of future generation devices. We also expect our
gross margin to be under pressure in the short term due to
continuous pricing pressure and less favorable product mix of
driver IC products, lower revenues from high-margin AR/VR related
businesses and lower NRE income. That being said, looking into
2017, we will leverage our total solution capabilities and focus on
major new technology trends to maintain our leading position in our
core driver IC business. We also remain positive on the long-term
growth prospect of our non-driver business. We are particularly
excited about recent developments especially in WLO and CIS product
lines where we offer unique and market leading technologies and
solutions for IoT and machine vision applications. We have
proceeded with the expansion plan for our next generation LCOS and
WLO production lines and will start to construct the new office/fab
soon. In addition, to meet the strong demand of new customers for
our WLO technology, we are accelerating our WLO capacity expansion.
After many years of R&D and product development, we may see
significant business progress in our non-driver business to
contribute to both top and bottom lines out of WLO and CIS areas as
early as the second half of 2017. Taken together, we remain
committed to our long-term strategy to diversify our product and
customer base with innovative technologies, which ultimately,
should increase shareholder value.”
Fourth Quarter 2016 Revenue Breakdown by Product Line
(USD in millions) (unaudited)
|
|
Q4 2016 |
|
|
% |
|
|
|
Q4 2015 |
|
|
% |
% Change |
|
Display drivers for
large-sized panels |
$ |
67.7 |
|
|
33.3 |
% |
|
|
$ |
62.1 |
|
|
34.9 |
% |
+9.0 |
% |
|
Display drivers for
small/medium-sized panels |
$ |
99.7 |
|
|
49.0 |
% |
|
|
$ |
81.9 |
|
|
46.0 |
% |
+21.8 |
% |
|
Non-driver
products |
$ |
36.0 |
|
|
17.7 |
% |
|
|
$ |
34.0 |
|
|
19.1 |
% |
+6.0 |
% |
|
Total |
$ |
203.4 |
|
|
100.0 |
% |
|
|
$ |
178.0 |
|
|
100.0 |
% |
+14.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2016 |
|
|
% |
|
|
|
Q3 2016 |
|
|
% |
% Change |
|
Display drivers for
large-sized panels |
$ |
67.7 |
|
|
33.3 |
% |
|
|
$ |
72.0 |
|
|
33.0 |
% |
-6.0 |
% |
|
Display drivers for
small/medium-sized panels |
$ |
99.7 |
|
|
49.0 |
% |
|
|
$ |
99.3 |
|
|
45.5 |
% |
+0.4 |
% |
|
Non-driver
products |
$ |
36.0 |
|
|
17.7 |
% |
|
|
$ |
46.8 |
|
|
21.5 |
% |
-22.9 |
% |
|
Total |
$ |
203.4 |
|
|
100.0 |
% |
|
|
$ |
218.1 |
|
|
100.0 |
% |
-6.7 |
% |
The fourth quarter revenues of $203.4 million
represented a 6.7% sequential decrease and a 14.3% increase
year-over-year. Revenue from large panel display drivers was $67.7
million, down 6.0% sequentially, and up 9.0% from a year ago. Large
panel driver ICs accounted for 33.3% of the Company’s total
revenues for the fourth quarter, compared to 33.0% in the third
quarter and 34.9% a year ago. The sequential decline was the
outcome of one single customer’s inventory adjustment.
Nevertheless, the Company’s large panel products actually enjoyed
9.0% year-over-year growth thanks to strong demand from Chinese and
Taiwanese panel customers during the quarter. In China, the
Company’s driver IC business for large panel grew more than 10.0%
year-over-year during the quarter. In comparison, worldwide
large-size TFT-LCD panel shipments declined around 1.5% in the same
period. It is especially worth highlighting that the Company’s
engineering collaboration and design-in activities with large panel
customers across China, Taiwan and Korea all remain robust and
Himax expects these trends to continue into 2017.
Revenue for small and medium-sized drivers came
in at $99.7 million, up 0.4% sequentially and up 21.8% from the
same period last year. Driver ICs for small and medium-sized
applications accounted for 49.0% of total sales for the fourth
quarter, as compared to 45.5% in the third quarter and 46.0% a year
ago. As opposed to original guidance of low single digit sequential
growth, the Company’s small and medium-sized panel driver business
grew just 0.4% because of lower-than-expected smartphone driver IC
sales. Sales into smartphones, while increased close to 25.0%
year-over-year, declined high-single-digits sequentially due to the
slowdown in China’s smartphone market starting around December. The
strong growth of smartphone driver IC business compared to the same
year ago period came from the Company’s long-standing leading
market share in China where the Company’s end brand customers were
performing strongly. Revenues from automotive applications also
contributed to the segment and continued solid momentum, growing
close to 10.0% during the fourth quarter, both sequentially and
year-over-year.
Revenues from non-driver businesses were $36.0
million, down 22.9% sequentially and up 6.0% from the same period
last year. Non-driver products accounted for 17.7% of total
revenues, as compared to 21.5% in the third quarter and 19.1% a
year ago. The sequential decline was primarily due to lower LCOS
and WLO shipments for AR applications. As the Company highlighted
in the last earnings call, a major AR customer asked that Himax
reduces shipment for their current generation device to a minimum.
To a lesser extent, lower sales of touch panel controllers and ASIC
chips also contributed to the sequential decline. This decline was
partially offset by the increased sales of timing controllers and
CMOS image sensors. It is worth noting that despite the near term
headwinds, Himax remains positive on the long-term prospect of WLO
and LCOS product lines, judging by the expanding customer list that
covers some of the world’s biggest tech names, and the busy
engineering activities going on with such customers right now.
GAAP gross margin for the fourth quarter was
19.1%, down 650 basis points from 25.6% in the third quarter, and
down 380 basis points from the same period last year, below the
Company’s guidance of “slightly down” from 25.6% reported in the
third quarter of 2016. The lower gross margin is the result of an
additional one-time, non-cash inventory write-down totaling $12.0
million. Excluding the additional inventory write-down, gross
margin would have been 25.0% and met the Company guidance. The
$12.0 million inventory write-down is on top of the $2.7 million
original inventory write-off estimate for the fourth quarter. In
comparison, the inventory write-off amounts were $2.5 million, $3.0
million and $2.5 million for the first, second and third quarter of
2016, respectively. The vast majority of the additional write-down
was related to certain aged inventories of traditional human vision
CMOS image sensors (“CIS”) with smaller amounts also covering
driver IC and other products. Earlier in 2016, the Company decided
to focus its CIS business on smart sensor, machine vision segments,
as opposed to the traditional human vision segments. As part of
this new strategic direction, the Company made a decision recently
to expedite the sales of some aged inventories of human vision
sensors. The Company believes it is appropriate that it write-downs
the inventory at this time, as it anticipates the need to offer
discounted prices to accelerate the sales of some products and, for
some other products where the potential revenues do not justify the
efforts, stop the sales all together. Himax’s new CIS strategy is
backed by new products such as the Always-on-Sensor (“AoS”) and the
structured light 3D depth scanning total solution, which offer
unique and market leading features. The new strategy is also backed
by close collaboration and intensive development activities with
certain heavyweight partners and customers. Following this one-time
write-down, the Company believes its inventory will be healthy
across CIS, driver IC and all other product areas.
GAAP operating expenses were $32.1 million in
the fourth quarter of 2016, down 20.7% from the preceding quarter
and down 0.2% from a year ago. The sequential decrease was
primarily the result of the difference in RSU charges. In
accordance with the Company’s protocol, Himax grants annual RSUs to
its staff at the end of September each year, which, given all other
items equal, leads to higher third quarter GAAP operating expenses
compared to the other quarters of the year. The fourth quarter RSU
expense was only $0.2 million while it was $9.2 million in the
third quarter. Excluding the RSU expense, operating expenses
increased 2.2% from the third quarter and decreased 0.1%
year-over-year.
GAAP operating margin for the fourth quarter of
2016 was 3.4%, down from 4.8% for the same period last year and
down from 7.0% in the third quarter. The GAAP operating income
decreased 55.1% sequentially and 20.3% year-over-year. The
sequential decrease was primarily a result of the aforementioned
additional inventory write-down and lower sales, offset by the
lower RSU expense.
Fourth quarter non-GAAP operating income, which
excludes share-based compensation and acquisition-related charges,
was $7.4 million, or 3.6% of sales, down from 5.1% for the same
period last year and down from 11.5% a quarter ago. The non-GAAP
operating income decreased 70.7% sequentially and 19.3% from the
same quarter in 2015. Excluding the aforementioned inventory
write-down, non-GAAP operating margin would have been 9.5% for the
quarter, as compared to 11.5% in the previous quarter.
GAAP net income for the fourth quarter was $4.4
million, or 2.6 cents per diluted ADS, compared to $13.6 million,
or 7.9 cents per diluted ADS, in the previous quarter and GAAP net
income of $6.1 million, or 3.6 cents per diluted ADS, a year ago,
below the Company’s guided range of 8.5 to 11.0 cents. GAAP net
income decreased 27.6% year-over-year and 67.4% from the previous
quarter. Excluding the additional aforementioned inventory
write-down, GAAP EPS would have been 8.6 cents and met the
Company’s original guidance.
Fourth quarter non-GAAP net income was $4.8
million, or 2.8 cents per diluted ADS, compared to $21.3 million
last quarter and $6.5 million the same period last year, below the
guided range of 8.7 to 11.2 cents. Excluding the additional
aforementioned inventory write-down, non-GAAP EPS would have been
8.8 cents and met the Company’s original guidance.
Full Year 2016 Financial Results
FY 2016 Results Compared to
FY 2015 Results (USD in
millions) (unaudited)
|
|
|
FY 2016 |
|
FY 2015 |
CHANGE |
|
Net Revenues |
|
|
$ |
802.9 |
|
|
$ |
691.8 |
|
+16.1 |
% |
Gross Profit |
|
|
$ |
194.3 |
|
|
$ |
163.1 |
|
+19.1 |
% |
Gross Margin |
|
|
|
24.2 |
% |
|
|
23.6 |
% |
+0.6 |
% |
GAAP Net Income
Attributable to Shareholders |
|
|
$ |
50.9 |
|
|
$ |
25.2 |
|
+102.1 |
% |
Non-GAAP Net Income
Attributable to Shareholders |
|
|
$ |
59.7 |
(1) |
|
$ |
30.6 |
(2) |
+95.2 |
% |
GAAP EPS (Per Diluted
ADS, USD) |
|
|
$ |
0.295 |
|
|
$ |
0.146 |
|
+101.7 |
% |
Non-GAAP EPS (Per
Diluted ADS, USD) |
|
|
$ |
0.347 |
(1) |
|
$ |
0.178 |
(2) |
+94.8 |
% |
(1) Non-GAAP Net income attributable to common
shareholders and EPS excludes $8.2 million share-based compensation
expenses, net of tax and $0.6 million non-cash acquisition related
charge, net of tax.(2) Non-GAAP Net income attributable to common
shareholders and EPS excludes $4.9 million share-based compensation
expenses, net of tax and $0.5 million non-cash acquisition related
charge, net of tax.
FY 2016 Revenue Breakdown by Product Line (USD in
millions) (unaudited)
|
|
|
FY 2016 |
% |
FY 2015 |
% |
% Change |
Display drivers for
large-sized panels |
|
|
$ |
272.9 |
|
34.0 |
% |
|
$ |
224.4 |
|
32.4 |
% |
|
+21.6 |
% |
Display drivers for
small/medium-sized panels |
|
|
$ |
369.0 |
|
46.0 |
% |
|
$ |
336.0 |
|
48.6 |
% |
|
+9.8 |
% |
Non-driver
products |
|
|
$ |
161.0 |
|
20.0 |
% |
|
$ |
131.4 |
|
19.0 |
% |
|
+22.6 |
% |
Total |
|
|
$ |
802.9 |
|
100.0 |
% |
|
$ |
691.8 |
|
100.0 |
% |
|
+16.1 |
% |
Revenues totaled $802.9 million in 2016,
representing a 16.1% increase over 2015. Revenues from large panel
display drivers increased 21.6% year-over-year, representing 34.0%
of the Company’s total revenues, as compared to 32.4% in 2015. The
Company’s large panel driver sales totaled $272.9 million for the
year. The strong year-over year growth originated from the
Company’s focus in China starting in 2012 and its efforts to
achieve a more diversified customer base by adding new customers in
Taiwan, China and Korea.
Small and medium-sized driver sales increased
9.8% year-over-year, representing 46.0% of total revenues, as
compared to 48.6% in 2015. Contributing to this growth was the
strong momentum in driver ICs for smartphone and automotive
applications. Himax has the most comprehensive coverage of leading
Chinese smartphone names and their fast growing market share has
led to the Company’s good result in 2016. Automotive driver IC
sales registered the strongest growth in this segment to increase
about 26% year-over-year.
Non-driver products increased 22.6%
year-over-year, representing 20.0% of total sales, as compared to
19.0% a year ago. This growth was primarily due to higher LCOS and
WLO shipments to a major AR customer during the year. Other product
lines such as timing controller and ASIC also delivered strong
growth, but offset by sales declines in CMOS and PMIC.
Gross margin in 2016 was 24.2%, a 60 basis-point
increase from 23.6% in 2015. The increased gross margin was
primarily due to a more favorable product mix in small and
medium-sized driver ICs, increased LCOS and WLO shipments for AR
applications and certain engineering fees from AR/VR new project
engagements. The gross margin increase for the whole year was
offset substantially by the aforementioned inventory write-down.
Gross margin improvement remains one of the Company’s business
focuses.
GAAP operating expenses were $135.1 million, up
$2.6 million or 2.0% compared to last year. GAAP operating income
of $59.2 million represented a 93.1% increase versus 2015.
GAAP net income for the year was $50.9 million,
or 29.5 cents per diluted ADS, up from $25.2 million, or 14.6 cents
per diluted ADS, in 2015. GAAP net income and GAAP earnings per
diluted ADS grew 102.1% and 101.7% year-over-year, respectively.
The increase in GAAP net income was a combination of higher
revenue, improved gross margin, and a lower income tax, partially
offset by higher operating expenses.
Non-GAAP net income for 2016 was $59.7 million,
or 34.7 cents per diluted ADS, up from $30.6 million, or 17.8 cents
per diluted ADS, for 2015. Non-GAAP net income and Non-GAAP
earnings per diluted ADS grew 95.2% and 94.8% year-over- year,
respectively.
Balance Sheet and Cash Flow
Himax had $194.6 million of cash, cash
equivalents and marketable securities as of the end of December
2016, compared to $148.3 million at the same time last year and
$153.4 million a quarter ago. On top of the above cash position,
restricted cash was $138.2 million at the end of the quarter, up
from $138.0 million in the preceding quarter and down from $180.4
million a year ago. The restricted cash is mainly used to guarantee
the Company’s short-term loan for the same amount. Himax continues
to maintain a very strong balance sheet and remain a debt-free
company.
Inventories as of December 31, 2016 were $149.7
million, down from $171.4 million a year ago and down from $169.4
million a quarter ago. Accounts receivable at the end of December
2016 were $191.0 million as compared to $177.2 million a year ago
and $208.4 million last quarter. DSO was 87 days at the end of
December 2016, as compared to 93 days a year ago and 95 days at end
of the last quarter.
Net cash inflow from operating activities for
the fourth quarter was $47.2 million as compared to an inflow of
$25.9 million for the same period last year and an inflow of $2.9
million last quarter. Cumulative cash inflow from operations in
2016 was $84.7 million as compared to $22.5 million in 2015. The
increase in cash inflow was a result of improved profitability and
lower working capital.
Capital expenditures were $2.2 million in the
fourth quarter of 2016 versus $3.6 million a year ago and $1.9
million last quarter. The capital expenditure in the fourth quarter
consisted mainly of purchases of R&D related equipment. Total
capital expenditures for the year were $7.9 million versus $10.0
million a year ago.
In August 2016, Himax paid an annual dividend of
13 cents per ADS, or 89.0% of 2015 GAAP earnings per diluted ADS.
The Company remains committed to paying annual dividends, the
amount of which is based primarily on its prior year’s
profitability. The high payout ratio in 2016 is an illustration of
the Company’s confidence in its future profitability.
Share Buyback Update
As of December 31, 2016, Himax had 172.0 million
ADS outstanding, unchanged from last quarter. On a fully diluted
basis, the total ADS outstanding are 172.4 million.
2017 Investor Outreach
and Conferences
Ms. Jackie Chang, CFO and Ms. Penny Lin,
internal IR Manager, and Mr. Greg Falesnik, Himax’s U.S.-based IR,
will maintain corporate access for shareholders and attend future
investor conferences. If you are interested in speaking with the
management, please contact Himax’s US or Taiwan-based investor
relations contact at the numbers below.
Business Updates
The Company is mindful that 2017 will likely be
a year of macro uncertainty, marked by currency fluctuations and
the risk of China’s slowdown. However, looking into the new year,
the Company believes its overall financial performance will be
resilient to the potential macro headwinds. Particularly, following
many years of R&D and investment, various areas of Himax’s
non-driver IC businesses may start to contribute significantly to
its overall financials.
Before detailing the prospect for the Company’s
driver and non-driver businesses in 2017, it is important to update
this year’s CAPEX plan as its scale will be unprecedented in the
Company’s history. Being a fabless company for its IC business,
Himax has typically had a low annual CAPEX, as in the case of the
last two years - $10.0 million in 2015 and $7.9 million in 2016.
The regular CAPEX is primarily for the investment of design tools
and testing equipment for its IC design business. This year’s CAPEX
plan will include the construction of a new building, which the
Company has announced before, and an increase of its WLO capacity,
on top of the regular CAPEX. The new building, located nearby the
Company’s current headquarters, will house the next generation LCOS
and WLO production lines and provide the extra office space that is
desperately needed as the Company already has to take up sizable
leases outside to cope with the current office space shortage. The
progress of the new building construction is in line with the
Company’s plan as the Company has completed the design stage and is
moving on to construction stage. More specifically, the Company has
budgeted $50.0 to $55.0 million CAPEX for the new office/fab
construction in 2017, covering land, building, facilities and clean
rooms. The new building will be completed and ready for personnel
and equipment move-in by early 2018. The CAPEX budget for 2018 for
the new building is around $10.0 million. Additionally, to meet the
strong demand of new customers for its WLO technology, the Company
is accelerating its WLO capacity expansion. Rather than waiting for
the new building to complete, the Company is now investing around
$25.0 million in new WLO capacity during the first half of 2017, to
be located in the existing headquarter building by retrofitting
certain areas for the new equipment. If everything goes as planned,
Himax will see revenue and bottom-line contributions from the new
WLO investment starting the second half of 2017.
The CAPEX budget for 2017 and the dividend for
the year of 2016 will be funded through the Company’s internal
resources and banking facilities.
During 2017, the Company expects its large panel
driver IC business will continue to benefit from continued increase
of 4K TV penetration and, starting the second half of 2017, Chinese
panel customers’ ramping of a brand new Gen 8.5 and another Gen 8.6
fab. However, first quarter will see mid teen’s sequential decline
in its large panel driver IC revenue due to fewer working days in
China and Taiwan and phase-out of certain customers’ old models.
Despite the temporary slowdown, the Company’s leadership position
in this segment stays strong. The Company’s large panel customers
are increasingly demanding a total solution from IC vendors in
addition to their constant request for better IC solutions to
support their high-end and high-resolution products. Himax believes
its technology strength and total solution capability are
significant differentiators against most of its competitors and
will further solidify its leading position as Chinese customers
continue to expand their capacity and the industry further upgrades
to 8K TVs. Himax is one of the pioneers in product development of
8K TVs with its Chinese and Korean panel customers and has already
shipped small volume to a leading Korean panel maker.
The other segment within the Company’s driver
business is ICs used in small and medium-sized panels for
applications including smartphones, tablets and automotives. First
quarter sales for smartphones are likely to decline by close to
45.0% sequentially on weak market, seasonality, customers’
inventory adjustment for HD720 driver IC and less addressable
market for smartphones using pure TFT-LCD driver ICs due to higher
TDDI adoption rate. Compared to overall market, HD720 accounted for
a relatively high percentage of the Company’s total smartphone
driver IC shipment in 2016. Due to the panel supply shortage, most
notably in the HD720 segment, in the second half of 2016, some of
the Company’s China customers pulled in excess inventory of HD720
driver ICs and panels. Many of them have therefore substantially
slowed down their new panel purchases in the first quarter. After
customers’ seasonal inventory adjustment, the Company expects the
smartphone driver IC momentum to recover sequentially in the second
quarter. The Company is mindful of the trend that higher in-cell
panel and TDDI adoption rate will reduce the addressable market for
smartphones using traditional TFT-LCD driver ICs. Himax is
confident that its TDDI solutions and business will pick up soon.
On the AMOLED front, Himax has been collaborating closely with
leading panel makers across China for AMOLED product development.
With fewer competitors and higher barrier of entry, the Company
believes AMOLED driver ICs will be one of the long-term growth
engines for its small panel driver IC business.
Among driver ICs used in small and medium-sized
panels, the best-performing category in recent years has been
automotives. The Company expects the category’s Q1 revenue to be
down high-single-digits sequentially and grow around 15.0%
year-over-year. With leading market share and numerous tier 1
automobile brands as its indirect end customers, Himax has
successfully engaged all key panel manufacturers and module houses
worldwide for long-term partnerships and secured many of their key
projects pipelined for the next few years. To address the growing
demand of larger automotive displays with higher resolution and
built-in on-cell or in-cell touch screen features, the Company
continues to develop advanced solutions to enable new automotive
display applications and provide its customers with the most
comprehensive and state-of-the-art solutions in the industry. As
such, the Company is well positioned to take advantage of the
growing automotive display market and anticipates the strong growth
will likely continue into the next few years. However, the
Company’s driver ICs used in tablets will decline close to 40.0%
sequentially for slow season effect. Overall, Himax expects the
small and medium-sized driver IC segment to decrease sequentially
by around 30.0% in the first quarter.
For the non-driver IC business segments, Himax
anticipates near-term headwinds as the Company mentioned in the
previous earnings call and expects about high teen’s sequential
decline in its non-driver revenues for the first quarter. Sales of
CMOS image sensors will deliver strong growth in the first quarter,
but those of WLO, LCOS micro displays and touch panel controllers
will decline sequentially.
For touch panel controller product line, on top
of several projects entering volume shipment featuring Himax’s
on-cell solution, the Company continues to secure new design-wins
from Chinese smartphone brand customers for their 2017 models. The
Company has also seen significant traction in customer adoption and
design-wins of its discrete touch solutions to break into several
leading Chinese and international end brand customers with new
models to enter mass production from the first quarter of 2017. On
TDDI, the Company is seeing rapid adoption of in-cell displays
among smartphone brand customers for their new generation
mid-to-high end models recently and expects TDDI to continue to
expand in the smartphone and tablet market in next few years. Himax
has comprehensive design-in activities with Korean, Chinese and
Taiwanese panel and end product customers. The Company is also
aggressively developing new products and strengthening its team to
expand its product portfolio and roadmap. With very comprehensive
joint development engagements covering many leading panel makers,
the Company is confident that it can leverage its long-standing and
widespread relationships with panel makers to increase its market
share in TDDI. TDDI is a major long-term growth engine for the
Company’s small panel business and will contribute to its business
starting the second half of 2017.
As the Company warned in the last earnings call,
Himax expects its LCOS sales to decline in the first quarter, as
well as over the next few quarters in 2017, because one of its
leading AR device customers decided to reduce shipment of their
current generation device to a minimum, and instead, to focus on
the development of future generation devices which the Company is
still a critical part of. While the revenues for LCOS may subside
over the next few quarters, they will come from a much more
diversified customer base in 2017. Quite a few of Himax’s other
customers are expected to launch their AR products starting 2017,
although the Company is still uncertain of their volume potential
given that they are still early generation products. Having
invested in related technologies for over 15 years, Himax is
uniquely positioned as the provider of choice for micro display and
related optics, both of which critical enablers to AR devices. With
little competition, the Company is currently working with over 30
customers on various current and future generation AR devices using
LCOS micro display. The Company’s increasing design engagements
cover not only leading tech companies, but also niche AR players
which bring in innovative product ideas.
Switching gear to WLO, as in the case of LCOS
that the Company mentioned above, Himax expects the near term
business prospect to be affected by the reduced shipment of a major
AR customer. However, Himax continues to partner with numerous
industry leading companies using its cutting edge and
industry-dominant WLO technology. In addition to AR application,
Himax’s WLO technology is adopted by the Company’s customers to
enable new things such as 3D depth scanning and machine vision,
which can in turn be used in a wide variety of industries such as
consumer, industrial, IoT, AI, medical, automotive, military and
surveillance. The Company’s customer base for this business is
extremely diversified, covering numerous major tech names
throughout the world, many of which leading end brand players or
semiconductor platform solution providers. Himax is one of the very
few players in the market with WLO technology and the one
possessing the best mass production proven track record with
expertise ranging from design and high yield production to cost and
quality controls. The Company is very happy with its current
development and business progress in this area. Given the
aforementioned exciting growth opportunities, the Company is
accelerating its WLO capacity expansion to meet strong customer
demand in the near term.
Earlier in 2016, the Company decided to switch
its strategy of the CIS business to focus on smart sensor and
machine vision segments, as opposed to the traditional human vision
sensors. Himax has launched two smart sensor product lines, i.e.,
near infrared (“NIR”) sensor and Always-on-Sensor (“AoS”). The
Company continues to make great business progress with these two
smart sensor products. In addition to close collaboration and
intensive development activities with certain heavyweight partners
and customers, Himax’s smart sensors have garnered lots of
customers’ interests during the recent demonstrations at CES and
the Japan Auto Expo.
By combining a NIR sensor and a structured light
projector consisting of a laser diode and DOE with collimator
fabricated using its WLO technology, the Company is offering the
most effective 3D depth scanning total solution with the industry’s
smallest form factor to enable easy integration into next
generation smartphones and other consumer electronics devices such
as AR/VR. The Company is targeting to work with its partners to
have the structured light 3D depth scanning total solution embedded
in next-generation smartphones in 2017. Himax also attracted
additional heavyweight potential customers’ interest following the
recent press release of its NIR sensor for its outstanding
technical performance. With regards to Himax’s AoS product, the
sensor can be bundled with the Company’s WLO lens to support super
low power computer vision to enable new applications across a very
wide variety of industries. After recent demonstrations at CES and
the Japan Auto Expo, Himax’s AoS has gained significant customer
interests especially in smart home, industrial IoT and surveillance
applications. In a recent joint-press release with CEVA Inc. and
Emza Visual Sense Ltd., the Company announced the industry’s first
intelligent always-on visual sensor specifically designed to
overcome the power and cost constraints of vision processing for
IoT applications. The ultra-low power, always-on vision sensor is a
powerful solution capable of detecting, tracking and recognizing
its environment in an extremely efficient manner using a few
milliwatts of power. As the Company’s long-term goal is to provide
complete solutions for always-on computer vision applications,
Himax decided to form a strategic alliance with Emza, an Israeli
company dedicated to developing extremely efficient machine vision
algorithms that enable smart IoT visual sensors. The Company will
report business developments in these new territories in due
course. Lastly, for the traditional human vision segments, the
Company maintains a leading position in laptop applications and
expects mass production of several design wins for notebooks and
increased shipments for multimedia applications such as
surveillance, drones, home appliances, and consumer electronics,
among others, during the first quarter.
In summary, Himax is seeing weak seasonality and
market demand in the driver IC business, which will lead to
sequential revenue decline in the first quarter. The Company also
expects its gross margin to be under pressure in the short term due
to continuous pricing pressure and less favorable product mix of
driver IC products, lower revenues from high-margin AR/VR related
businesses and lower NRE income. Nevertheless, after many years of
R&D and product development, the Company may see significant
business progress in its non-driver business to contribute to both
top and bottom lines out of WLO and CIS areas as early as the
second half of 2017.
First Quarter 2017
Guidance
The Company is providing the following financial
guidance for the first quarter of 2017:
Net Revenue: |
|
|
|
|
|
|
To be down 18.0% to
25.0% sequentially |
Gross Margin: |
|
|
|
|
|
|
To be around 23.0% to
24.0% |
GAAP EPS: |
|
|
|
|
|
|
0.5 to 2.0 cents per
diluted ADS, as compared to 2.6 cents reported in the fourth
quarter of 2016 |
The first quarter is traditionally the bottom of
the year in terms of sales because it has fewer working days due to
the Chinese New Year. The scale 5.6 earthquake that struck Tainan
in early February also somehow impacted some of the Company’s
customers’ productions and therefore its driver IC shipment.
In providing the above earnings guidance, Himax
has assumed a 16.5% income tax rate for 2017, calculated based on
exchange rate of NTD 31.0 against the USD, which is also the
exchange rate as of beginning of February 2017.
HIMAX TECHNOLOGIES FOURTH QUARTER AND
FULL YEAR 2016 EARNINGS CONFERENCE CALL
DATE: |
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Thursday, February 16,
2017 |
TIME: |
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U.S.
8:00 a.m. EST |
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Taiwan
9:00 p.m. |
DIAL
IN: |
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U.S.
+1 (866) 444-9147 |
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INTERNATIONAL +1 (678) 509-7569 |
CONFERENCE
ID |
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52514789 |
WEBCAST: |
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http://edge.media-server.com/m/p/4nviuyux |
A replay of the call will be available beginning
two hours after the call through 11:59 p.m. US EST on February 23,
2017 (12:59 p.m. Taiwan time, February 24, 2017) on
www.himax.com.tw and by telephone at +1 (855) 859-2056 (US
Domestic) or +1 (404) 537-3406 (International). The conference ID
number is 52514789. This call is being webcast by Nasdaq and can be
accessed by clicking on this link or Himax’s website, where the
webcast can be accessed through February 16, 2018.
About Himax Technologies,
Inc.
Himax Technologies, Inc. (NASDAQ:HIMX) is a
fabless semiconductor solution provider dedicated to display
imaging processing technologies. Himax is a worldwide market leader
in display driver ICs and timing controllers used in TVs, laptops,
monitors, mobile phones, tablets, digital cameras, car navigation,
virtual reality (VR) devices and many other consumer electronics
devices. Additionally, Himax designs and provides controllers for
touch sensor displays, in-cell Touch and Display Driver Integration
(TDDI) single-chip solutions, LED driver ICs, power management ICs,
scaler products for monitors and projectors, tailor-made video
processing IC solutions, silicon IPs and LCOS micro-displays for
augmented reality (AR) devices and head-up displays (HUD) for
automotive. The Company also offers digital camera solutions,
including CMOS image sensors and wafer level optics which are used
in a wide variety of applications such as mobile phone, tablet,
laptop, TV, PC camera, automobile, security, medical devices and
Internet of Things. Founded in 2001 and headquartered in Tainan,
Taiwan, Himax currently employs over 2,100 people from three
Taiwan-based offices in Tainan, Hsinchu and Taipei and country
offices in China, Korea, Japan and the US. Himax has 2,948 patents
granted and 437 patents pending approval worldwide as of December
31st, 2016. Himax has retained its position as the leading display
imaging processing semiconductor solution provider to consumer
electronics brands worldwide.
http://www.himax.com.tw
Forward Looking Statements
Factors that could cause actual events or
results to differ materially include, but not limited to, General
business and economic conditions and the state of the semiconductor
industry; market acceptance and competitiveness of the driver and
non-driver products developed by the Company; demand for end-use
applications products; reliance on a small group of principal
customers; the uncertainty of continued success in technological
innovations; our ability to develop and protect our intellectual
property; pricing pressures including declines in average selling
prices; changes in customer order patterns; changes in estimated
full-year effective tax rate; shortages in supply of key
components; changes in environmental laws and regulations; exchange
rate fluctuations; regulatory approvals for further investments in
our subsidiaries; our ability to collect accounts receivable and
manage inventory and other risks described from time to time in the
Company's SEC filings, including those risks identified in the
section entitled "Risk Factors" in its Form 20-F for the year ended
December 31, 2015 filed with the SEC, as may be amended.
Company Contacts:
Jackie Chang, CFOHimax Technologies, Inc.Tel:
+886-2-2370-3999 Ext.22300 OrUS Tel: +1-949-585-9838 Ext.252Fax:
+886-2-2314-0877Email:
jackie_chang@himax.com.twwww.himax.com.tw
Penny Lin, Investor RelationsHimax
Technologies, Inc.Tel: +886-2-2370-3999 Ext.22320Fax:
+886-2-2314-0877 Email:
penny_lin@himax.com.tw www.himax.com.tw
Investor Relations - US RepresentativeGreg
Falesnik, Managing DirectorMZ North AmericaTel:
+1-212-301-7130Email: greg.falesnik@mzgroup.us www.mzgroup.us
-Financial Tables- |
|
Himax Technologies, Inc. |
Unaudited Condensed Consolidated Statements of
Income |
(These interim financials do not fully comply
with US GAAP because they omit all interim disclosure required by
US GAAP) |
(Amounts in Thousands of U.S. Dollars,
Except Share and Per Share
Data) |
|
|
Three Months Ended December
31, |
|
Three Months Ended
September
30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
|
|
|
|
Revenues |
$ |
203,443 |
|
|
$ |
177,977 |
|
|
$ |
218,081 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
Cost of revenues |
|
164,517 |
|
|
|
137,243 |
|
|
|
162,348 |
|
Research and development |
|
21,826 |
|
|
|
22,575 |
|
|
|
28,789 |
|
General and administrative |
|
4,950 |
|
|
|
4,544 |
|
|
|
5,774 |
|
Sales and marketing |
|
5,289 |
|
|
|
5,004 |
|
|
|
5,874 |
|
Total costs and expenses |
|
196,582 |
|
|
|
169,366 |
|
|
|
202,785 |
|
|
|
|
|
|
|
Operating income |
|
6,861 |
|
|
|
8,611 |
|
|
|
15,296 |
|
|
|
|
|
|
|
Non operating income
(loss): |
|
|
|
|
|
Interest income |
|
399 |
|
|
|
188 |
|
|
|
264 |
|
Gains on sale of securities, net |
|
5 |
|
|
|
159 |
|
|
|
95 |
|
Equity in income (losses) of equity method investees |
|
(712 |
) |
|
|
262 |
|
|
|
(206 |
) |
Foreign currency exchange gains (losses), net |
|
686 |
|
|
|
(28 |
) |
|
|
(486 |
) |
Interest expense |
|
(131 |
) |
|
|
(141 |
) |
|
|
(133 |
) |
Other income (losses), net |
|
2 |
|
|
|
(77 |
) |
|
|
2 |
|
|
|
249 |
|
|
|
363 |
|
|
|
(464 |
) |
Earnings before income
taxes |
|
7,110 |
|
|
|
8,974 |
|
|
|
14,832 |
|
Income tax expense |
|
3,609 |
|
|
|
3,759 |
|
|
|
1,441 |
|
Net income |
|
3,501 |
|
|
|
5,215 |
|
|
|
13,391 |
|
Net loss
attributable to noncontrolling interests |
|
938 |
|
|
|
915 |
|
|
|
207 |
|
Net income
attributable to Himax Technologies, Inc. stockholders |
$ |
4,439 |
|
|
$ |
6,130 |
|
|
$ |
13,598 |
|
|
|
|
|
|
|
Basic earnings
per ADS attributable to Himax Technologies, Inc.
stockholders |
$ |
0.026 |
|
|
$ |
0.036 |
|
|
$ |
0.079 |
|
Diluted
earnings per ADS attributable to Himax Technologies, Inc.
stockholders |
$ |
0.026 |
|
|
$ |
0.036 |
|
|
$ |
0.079 |
|
|
|
|
|
|
|
Basic Weighted Average Outstanding ADS |
|
172,399 |
|
|
|
172,303 |
|
|
|
172,304 |
|
Diluted Weighted Average Outstanding ADS |
|
172,415 |
|
|
|
172,303 |
|
|
|
172,356 |
|
Himax Technologies, Inc. |
Unaudited Condensed Consolidated Statements of
Income |
(Amounts in Thousands of U.S. Dollars,
Except Share and Per Share
Data) |
|
|
|
Twelve Months Ended
December
31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Revenues |
|
|
$ |
802,917 |
|
|
$ |
691,789 |
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
Cost of
revenues |
|
|
|
608,605 |
|
|
|
528,651 |
|
Research
and development |
|
|
|
95,820 |
|
|
|
94,422 |
|
General
and administrative |
|
|
|
20,119 |
|
|
|
18,470 |
|
Sales and
marketing |
|
|
|
19,138 |
|
|
|
19,574 |
|
Total costs and expenses |
|
|
|
743,682 |
|
|
|
661,117 |
|
|
|
|
|
|
|
Operating
income |
|
|
|
59,235 |
|
|
|
30,672 |
|
|
|
|
|
|
|
Non
operating income
(loss): |
|
|
|
|
|
Interest
income |
|
|
|
1,221 |
|
|
|
710 |
|
Dividend
income |
|
|
|
700 |
|
|
|
- |
|
Gains on
sale of securities, net |
|
|
|
10 |
|
|
|
1,993 |
|
Equity in
losses of equity method investees |
|
|
|
(1,277 |
) |
|
|
(77 |
) |
Foreign
currency exchange gains (losses), net |
|
|
|
167 |
|
|
|
(43 |
) |
Interest
expense |
|
|
|
(633 |
) |
|
|
(514 |
) |
Other
income (losses), net |
|
|
|
(5 |
) |
|
|
126 |
|
|
|
|
|
183 |
|
|
|
2,195 |
|
Earnings before income
taxes |
|
|
|
59,418 |
|
|
|
32,867 |
|
Income
tax expense |
|
|
|
10,671 |
|
|
|
11,405 |
|
Net
income |
|
|
|
48,747 |
|
|
|
21,462 |
|
Net loss
attributable to noncontrolling interests |
|
|
|
2,165 |
|
|
|
3,733 |
|
Net
income attributable to Himax
Technologies, Inc.
stockholders |
|
|
$ |
50,912 |
|
|
$ |
25,195 |
|
|
|
|
|
|
|
Basic earnings
per ADS attributable to Himax Technologies,
Inc. stockholders |
|
|
$ |
0.295 |
|
|
$ |
0.147 |
|
Diluted
earnings per ADS attributable to Himax
Technologies, Inc.
stockholders |
|
|
$ |
0.295 |
|
|
$ |
0.146 |
|
|
|
|
|
|
|
Basic Weighted Average Outstanding ADS |
|
|
|
172,327 |
|
|
|
171,785 |
|
Diluted Weighted Average Outstanding
ADS |
|
|
|
172,362 |
|
|
|
172,066 |
|
Himax Technologies, Inc. |
Unaudited Supplemental Financial
Information |
(Amounts in Thousands of U.S.
Dollars) |
|
|
|
|
|
|
The amount of
share-based compensation included in applicable
statements of income categories is
summarized as follows: |
|
|
Three Months Ended December
31, |
|
Three MonthsEnded
September |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
30, 2016 |
|
Share-based
compensation |
|
|
|
|
|
|
|
Cost of
revenues |
|
|
$ |
25 |
|
|
$ |
27 |
|
|
$ |
146 |
|
Research
and development |
|
|
|
137 |
|
|
|
160 |
|
|
|
7,128 |
|
General
and administrative |
|
|
|
68 |
|
|
|
70 |
|
|
|
1,002 |
|
Sales and
marketing |
|
|
|
24 |
|
|
|
20 |
|
|
|
1,325 |
|
Income
tax benefit |
|
|
|
(42 |
) |
|
|
(47 |
) |
|
|
(2,027 |
) |
Total |
|
|
$ |
212 |
|
|
$ |
230 |
|
|
$ |
7,574 |
|
|
|
|
|
|
|
|
|
The amount
of acquisition-related charges
included in applicable statements of
income categories is summarized as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
charges |
|
|
|
|
|
|
|
Research
and development |
|
|
$ |
247 |
|
|
$ |
237 |
|
|
$ |
246 |
|
Income
tax benefit |
|
|
|
(99 |
) |
|
|
(98 |
) |
|
|
(99 |
) |
Total |
|
|
$ |
148 |
|
|
$ |
139 |
|
|
$ |
147 |
|
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Unaudited Supplemental Financial
Information |
(Amounts in Thousands of U.S.
Dollars) |
|
|
|
The amount of
share-based compensation included in applicable
statements of income categories is
summarized as follows: |
|
Twelve Months Ended
December
31, |
|
|
|
2016 |
|
|
|
2015 |
|
Share-based
compensation |
|
|
|
|
Cost of
revenues |
|
$ |
224 |
|
|
$ |
110 |
|
Research
and development |
|
|
7,586 |
|
|
|
4,289 |
|
General
and administrative |
|
|
1,210 |
|
|
|
865 |
|
Sales and
marketing |
|
|
1,389 |
|
|
|
1,010 |
|
Income
tax benefit |
|
|
(2,164 |
) |
|
|
(1,342 |
) |
Total |
|
$ |
8,245 |
|
|
$ |
4,932 |
|
|
|
|
|
|
The amount
of acquisition-related charges
included in applicable statements of
income categories is summarized as
follows: |
|
|
|
|
|
|
|
|
|
Acquisition-related
charges |
|
|
|
|
Research
and development |
|
$ |
985 |
|
|
$ |
845 |
|
Income
tax benefit |
|
|
(395 |
) |
|
|
(358 |
) |
Total |
|
$ |
590 |
|
|
$ |
487 |
|
|
|
|
|
|
Himax Technologies, Inc. |
GAAP Unaudited Condensed
Consolidated Balance Sheets |
(Amounts in Thousands of U.S. Dollars,
Except Share and Per Share
Data) |
|
|
December 31,
2016 |
|
September 30, 2016 |
|
December 31, 2015 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
184,452 |
|
|
$ |
140,805 |
|
|
$ |
129,829 |
|
Investments in marketable securities available-for-sale |
|
|
10,157 |
|
|
|
12,559 |
|
|
|
18,511 |
|
Accounts
receivable, less allowance for doubtful accounts, sales returns and
discounts |
|
|
190,998 |
|
|
|
208,372 |
|
|
|
177,198 |
|
Inventories |
|
|
149,748 |
|
|
|
169,382 |
|
|
|
171,374 |
|
Deferred
income taxes |
|
|
5,065 |
|
|
|
3,459 |
|
|
|
3,306 |
|
Restricted cash, cash equivalents and marketable securities |
|
|
138,200 |
|
|
|
138,000 |
|
|
|
180,442 |
|
Other
receivables from related parties |
|
|
7,150 |
|
|
|
4,000 |
|
|
|
- |
|
Prepaid
expenses and other current assets |
|
|
17,195 |
|
|
|
24,435 |
|
|
|
17,175 |
|
Total current assets |
|
|
702,965 |
|
|
|
701,012 |
|
|
|
697,835 |
|
Investment in non-marketable
equity securities |
|
|
12,242 |
|
|
|
12,379 |
|
|
|
11,211 |
|
Equity method
investments |
|
|
2,362 |
|
|
|
3,104 |
|
|
|
3,648 |
|
Property, plant and
equipment, net |
|
|
48,172 |
|
|
|
49,849 |
|
|
|
54,461 |
|
Deferred income
taxes |
|
|
1,050 |
|
|
|
1,194 |
|
|
|
871 |
|
Goodwill |
|
|
28,138 |
|
|
|
28,138 |
|
|
|
28,138 |
|
Other
intangible assets, net |
|
|
3,170 |
|
|
|
3,418 |
|
|
|
4,161 |
|
Restricted
marketable securities |
|
|
124 |
|
|
|
127 |
|
|
|
121 |
|
Other
assets |
|
|
1,411 |
|
|
|
1,547 |
|
|
|
1,891 |
|
|
|
|
96,669 |
|
|
|
99,756 |
|
|
|
104,502 |
|
Total assets |
|
$ |
799,634 |
|
|
$ |
800,768 |
|
|
$ |
802,337 |
|
Liabilities, redeemable
noncontrolling interest and
Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Short-term debt |
|
$ |
138,000 |
|
|
$ |
138,000 |
|
|
$ |
180,000 |
|
Accounts
payable |
|
|
142,269 |
|
|
|
141,810 |
|
|
|
124,423 |
|
Accounts
payable from related parties |
|
|
576 |
|
|
|
- |
|
|
|
- |
|
Income
taxes payable |
|
|
14,155 |
|
|
|
13,708 |
|
|
|
12,139 |
|
Deferred
income taxes |
|
|
25 |
|
|
|
144 |
|
|
|
138 |
|
Other
accrued expenses and other current liabilities |
|
|
29,721 |
|
|
|
34,549 |
|
|
|
36,030 |
|
Total current liabilities |
|
|
324,746 |
|
|
|
328,211 |
|
|
|
352,730 |
|
Other
liabilities |
|
|
3,081 |
|
|
|
3,851 |
|
|
|
4,610 |
|
Total liabilities |
|
|
327,827 |
|
|
|
332,062 |
|
|
|
357,340 |
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest |
|
|
3,656 |
|
|
|
3,656 |
|
|
|
3,656 |
|
Equity |
|
|
|
|
|
|
Himax
Technologies, Inc.
stockholders’ equity: |
|
|
|
|
|
|
Ordinary
shares, US$0.3 par value, 1,000,000,000 shares authorized;
356,699,482 shares issued; and 344,007,418 shares, 344,007,418
shares and 343,815,424 shares outstanding at December 31, 2016,
September 30, 2016 and December 31, 2015, respectively |
|
|
107,010 |
|
|
|
107,010 |
|
|
|
107,010 |
|
Additional paid-in capital |
|
|
106,350 |
|
|
|
106,109 |
|
|
|
105,355 |
|
Treasury
shares, at cost, 12,692,064 shares, 12,692,064 shares and
12,884,058 shares at December 31, 2016, September 30, 2016 and
December 31, 2015, respectively |
|
|
(9,020 |
) |
|
|
(9,020 |
) |
|
|
(9,157 |
) |
Accumulated other comprehensive loss |
|
|
(2,467 |
) |
|
|
(1,794 |
) |
|
|
(1,879 |
) |
Unappropriated retained earnings |
|
|
265,860 |
|
|
|
261,283 |
|
|
|
237,375 |
|
Himax Technologies, Inc. stockholders’
equity |
|
|
467,733 |
|
|
|
463,588 |
|
|
|
438,704 |
|
Noncontrolling
interests |
|
|
418 |
|
|
|
1,462 |
|
|
|
2,637 |
|
Total equity |
|
|
468,151 |
|
|
|
465,050 |
|
|
|
441,341 |
|
Total liabilities,
redeemable noncontrolling
interest and equity |
|
$ |
799,634 |
|
|
$ |
800,768 |
|
|
$ |
802,337 |
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts
in Thousands of
U.S.
Dollars) |
|
|
|
Three Months Ended December
31, |
|
Three Months Ended
September
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net income |
|
|
$ |
3,501 |
|
|
$ |
5,215 |
|
|
$ |
13,391 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
3,448 |
|
|
|
3,407 |
|
|
|
3,393 |
|
Bad debt
expense |
|
|
|
620 |
|
|
|
310 |
|
|
|
--- |
|
Share-based compensation expenses |
|
|
|
254 |
|
|
|
277 |
|
|
|
378 |
|
Loss
(gain) on disposals of property and equipment |
|
|
|
28 |
|
|
|
--- |
|
|
|
(2 |
) |
Gain on
disposals of marketable securities, net |
|
|
|
(5 |
) |
|
|
(159 |
) |
|
|
(95 |
) |
Equity in
losses (income) of equity method investees |
|
|
|
712 |
|
|
|
(262 |
) |
|
|
206 |
|
Deferred
income tax expense (benefit) |
|
|
|
(1,494 |
) |
|
|
1,665 |
|
|
|
(219 |
) |
Inventories write downs |
|
|
|
14,793 |
|
|
|
2,445 |
|
|
|
2,653 |
|
Changes in: |
|
|
|
|
|
|
|
Accounts
receivable |
|
|
|
16,615 |
|
|
|
(9,583 |
) |
|
|
(20,441 |
) |
Inventories |
|
|
|
4,841 |
|
|
|
3,875 |
|
|
|
14,620 |
|
Prepaid
expenses and other current assets |
|
|
|
4,739 |
|
|
|
4,295 |
|
|
|
(5,054 |
) |
Accounts
payable |
|
|
|
459 |
|
|
|
12,427 |
|
|
|
(10,033 |
) |
Accounts
payable from related parties |
|
|
|
576 |
|
|
|
--- |
|
|
|
--- |
|
Income
taxes payable |
|
|
|
(215 |
) |
|
|
(749 |
) |
|
|
2,035 |
|
Other
accrued expenses and other current liabilities |
|
|
|
(1,690 |
) |
|
|
3,088 |
|
|
|
2,034 |
|
Other
liabilities |
|
|
|
33 |
|
|
|
(385 |
) |
|
|
(6 |
) |
Net cash provided by
operating activities |
|
|
|
47,215 |
|
|
|
25,866 |
|
|
|
2,860 |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
|
|
(2,159 |
) |
|
|
(3,567 |
) |
|
|
(1,861 |
) |
Proceeds
from disposal of property and equipment |
|
|
|
--- |
|
|
|
--- |
|
|
|
9 |
|
Purchases
of available-for-sale marketable securities |
|
|
|
(6,977 |
) |
|
|
(16,498 |
) |
|
|
(6,123 |
) |
Proceeds
from disposals of available-for-sale marketable securities |
|
|
|
8,956 |
|
|
|
17,520 |
|
|
|
8,777 |
|
Purchases
of investment securities |
|
|
|
--- |
|
|
|
--- |
|
|
|
(1,600 |
) |
Proceeds
from capital reduction of investment |
|
|
|
137 |
|
|
|
--- |
|
|
|
--- |
|
Purchase
of equity method investment |
|
|
|
--- |
|
|
|
--- |
|
|
|
(37 |
) |
Proceeds
from refundable deposits, net |
|
|
|
56 |
|
|
|
13 |
|
|
|
5 |
|
Pledges
of restricted cash, cash equivalents and marketable securities |
|
|
|
(197 |
) |
|
|
--- |
|
|
|
(2 |
) |
Other
receivables from related parties |
|
|
|
(3,150 |
) |
|
|
--- |
|
|
|
(3,000 |
) |
Cash
received from the acquisition of Liqxtal, net of cash paid of
$1,780 |
|
|
|
--- |
|
|
|
341 |
|
|
|
--- |
|
Net cash used in
investing activities |
|
|
|
(3,334 |
) |
|
|
(2,191 |
) |
|
|
(3,832 |
) |
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts
in Thousands of
U.S.
Dollars) |
|
|
Three Months Ended December
31, |
|
Three Months Ended September
30, |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
Payments
of cash dividends |
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
(22,348 |
) |
Proceeds
from disposals of subsidiary shares to noncontrolling interests by
Himax Imaging, Inc. |
|
|
--- |
|
|
|
4 |
|
|
|
8 |
|
Purchases
of subsidiary shares from noncontrolling interests |
|
|
(85 |
) |
|
|
(145 |
) |
|
|
(290 |
) |
Proceeds
from short-term debt |
|
|
31,000 |
|
|
|
92,303 |
|
|
|
89,000 |
|
Repayments of short-term debt |
|
|
(31,000 |
) |
|
|
(92,303 |
) |
|
|
(89,000 |
) |
Net cash used in
financing activities |
|
|
(85 |
) |
|
|
(141 |
) |
|
|
(22,630 |
) |
Effect
of foreign currency exchange rate
changes on cash and cash equivalents |
|
|
(149 |
) |
|
|
(92 |
) |
|
|
(16 |
) |
Net
increase
(decrease) in
cash and cash equivalents |
|
|
43,647 |
|
|
|
23,442 |
|
|
|
(23,618 |
) |
Cash and cash
equivalents at beginning of period |
|
|
140,805 |
|
|
|
106,387 |
|
|
|
164,423 |
|
Cash and cash
equivalents at end of period |
|
$ |
184,452 |
|
|
$ |
129,829 |
|
|
$ |
140,805 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid
during the period for: |
|
|
|
|
|
|
Interest |
|
$ |
131 |
|
|
$ |
79 |
|
|
$ |
137 |
|
Income
taxes |
|
$ |
314 |
|
|
$ |
350 |
|
|
$ |
4,558 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of investing activities affecting both
cash and non-cash items: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
$ |
1,595 |
|
|
$ |
1,948 |
|
|
$ |
1,949 |
|
Decrease
(increase) in payable for purchases of equipment and asset
retirement obligations |
|
|
564 |
|
|
|
1,619 |
|
|
|
(88 |
) |
Cash
paid |
|
$ |
2,159 |
|
|
$ |
3,567 |
|
|
$ |
1,861 |
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts
in Thousands of
U.S.
Dollars) |
|
|
|
|
Twelve Months Ended
December
31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net income |
|
|
|
$ |
48,747 |
|
|
$ |
21,462 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
13,756 |
|
|
|
14,164 |
|
Bad debt
expense |
|
|
|
|
620 |
|
|
|
310 |
|
Share-based compensation expenses |
|
|
|
|
1,186 |
|
|
|
1,818 |
|
Loss
(gain) on disposals of property and equipment |
|
|
|
|
26 |
|
|
|
(2 |
) |
Gain on
disposals of equity method investment |
|
|
|
|
--- |
|
|
|
(88 |
) |
Gain on
disposals of investment securities, net |
|
|
|
|
--- |
|
|
|
(1,682 |
) |
Gain on
disposals of marketable securities, net |
|
|
|
|
(10 |
) |
|
|
(223 |
) |
Equity in
losses of equity method investees |
|
|
|
|
1,277 |
|
|
|
77 |
|
Deferred
income tax expense (benefit) |
|
|
|
|
(1,978 |
) |
|
|
4,148 |
|
Inventories write downs |
|
|
|
|
23,342 |
|
|
|
9,785 |
|
Changes in: |
|
|
|
|
|
|
Accounts
receivable |
|
|
|
|
(14,602 |
) |
|
|
41,656 |
|
Inventories |
|
|
|
|
(1,716 |
) |
|
|
(15,054 |
) |
Prepaid
expenses and other current assets |
|
|
|
|
(647 |
) |
|
|
2,067 |
|
Accounts
payable |
|
|
|
|
17,846 |
|
|
|
(54,905 |
) |
Accounts
payable from related parties |
|
|
|
|
576 |
|
|
|
--- |
|
Income
taxes payable |
|
|
|
|
1,389 |
|
|
|
(6,475 |
) |
Other
accrued expenses and other current liabilities |
|
|
|
|
(5,164 |
) |
|
|
5,987 |
|
Other
liabilities |
|
|
|
|
24 |
|
|
|
(516 |
) |
Net cash provided by
operating activities |
|
|
|
|
84,672 |
|
|
|
22,529 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
|
|
|
(7,902 |
) |
|
|
(9,982 |
) |
Proceeds
from disposals of property and equipment |
|
|
|
|
9 |
|
|
|
8 |
|
Purchases
of available-for-sale marketable securities |
|
|
|
|
(30,248 |
) |
|
|
(63,051 |
) |
Proceeds
from disposals of available-for-sale marketable securities |
|
|
|
|
38,532 |
|
|
|
46,720 |
|
Purchases
of investment securities |
|
|
|
|
(1,600 |
) |
|
|
--- |
|
Proceeds from disposals of investment securities |
|
|
--- |
|
|
|
1,682 |
|
Proceeds from capital reduction of investment |
|
|
568 |
|
|
|
--- |
|
Purchase
of equity method investment |
|
|
|
|
(37 |
) |
|
|
(3,708 |
) |
Proceeds from disposals of equity method investment |
|
|
--- |
|
|
|
179 |
|
Proceeds from (repayments of) refundable deposits, net |
|
|
461 |
|
|
|
(304 |
) |
Releases (pledges) of restricted cash, cash equivalents and
marketable securities |
|
|
240 |
|
|
|
(227 |
) |
Other
receivables from related parties |
|
|
|
|
(7,150 |
) |
|
|
--- |
|
Cash
received from the acquisition of Liqxtal, net of cash paid of
$1,780 |
|
|
|
|
--- |
|
|
|
341 |
|
Net cash used in
investing activities |
|
|
|
|
(7,127 |
) |
|
|
(28,342 |
) |
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts
in Thousands of
U.S.
Dollars) |
|
|
|
|
Twelve Months Ended
December
31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
Payments
of cash dividends |
|
|
|
$ |
(22,348 |
) |
|
$ |
(51,364 |
) |
Excess
tax benefits from share-based compensation |
|
|
|
|
--- |
|
|
|
771 |
|
Proceeds
from disposals of subsidiary shares to noncontrolling interests by
Himax Imaging, Inc. |
|
|
|
|
9 |
|
|
|
22 |
|
Purchases
of subsidiary shares from noncontrolling interests |
|
|
|
|
(376 |
) |
|
|
(503 |
) |
Releases
(pledges) of restricted cash, cash equivalents and marketable
securities (for borrowing of short-term debt) |
|
|
|
|
42,000 |
|
|
|
(50,000 |
) |
Proceeds
from issuance of new shares by subsidiaries |
|
|
|
|
--- |
|
|
|
1,466 |
|
Proceeds
from short-term debt |
|
|
|
|
230,000 |
|
|
|
412,303 |
|
Repayments of short-term debt |
|
|
|
|
(272,000 |
) |
|
|
(362,303 |
) |
Net cash used in
financing activities |
|
|
|
|
(22,715 |
) |
|
|
(49,608 |
) |
Effect
of foreign currency exchange rate
changes on cash and cash equivalents |
|
|
|
|
(207 |
) |
|
|
(216 |
) |
Net
increase (decrease) in
cash and cash equivalents |
|
|
|
|
54,623 |
|
|
|
(55,637 |
) |
Cash and cash
equivalents at beginning of period |
|
|
|
|
129,829 |
|
|
|
185,466 |
|
Cash and cash
equivalents at end of period |
|
|
|
$ |
184,452 |
|
|
$ |
129,829 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid
during the period for: |
|
|
|
|
|
|
Interest
expense |
|
|
|
$ |
637 |
|
|
$ |
516 |
|
Income
taxes |
|
|
|
$ |
11,534 |
|
|
$ |
12,505 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of investing activities affecting both
cash and non-cash items: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
|
|
$ |
6,570 |
|
|
$ |
10,567 |
|
Decrease
(increase) in payable for purchases of equipment and asset
retirement obligations |
|
|
|
|
1,332 |
|
|
|
(585 |
) |
Cash
paid |
|
|
|
$ |
7,902 |
|
|
$ |
9,982 |
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Non-GAAP Unaudited Supplemental Data –
Reconciliation Schedule |
(Amounts in Thousands of U.S.
Dollars) |
|
Gross Margin, Operating Margin and Net Margin Excluding
Share-Based Compensation and
Acquisition-Related Charges: |
|
Three Months Ended December
31, |
|
Three Months Ended September
30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
Revenues |
$ |
203,443 |
|
|
$ |
177,977 |
|
|
$ |
218,081 |
|
Gross profit |
|
38,926 |
|
|
|
40,734 |
|
|
|
55,733 |
|
Add: Share-based
compensation – cost of revenues |
|
25 |
|
|
|
27 |
|
|
|
146 |
|
Gross profit excluding
share-based compensation |
|
38,951 |
|
|
|
40,761 |
|
|
|
55,879 |
|
Gross margin excluding
share-based compensation |
|
19.1 |
% |
|
|
22.9 |
% |
|
|
25.6 |
% |
Operating income |
|
6,861 |
|
|
|
8,611 |
|
|
|
15,296 |
|
Add: Share-based
compensation |
|
254 |
|
|
|
277 |
|
|
|
9,601 |
|
Operating income
excluding share-based compensation |
|
7,115 |
|
|
|
8,888 |
|
|
|
24,897 |
|
Add:
Acquisition-related charges –intangible assets amortization |
|
247 |
|
|
|
237 |
|
|
|
246 |
|
Operating income
excluding share-based compensation and acquisition-related
charges |
|
7,362 |
|
|
|
9,125 |
|
|
|
25,143 |
|
Operating margin
excluding share-based compensation and acquisition-related
charges |
|
3.6 |
% |
|
|
5.1 |
% |
|
|
11.5 |
% |
Net income attributable
to Himax Technologies, Inc. stockholders |
|
4,439 |
|
|
|
6,130 |
|
|
|
13,598 |
|
Add: Share-based
compensation, net of tax |
|
212 |
|
|
|
230 |
|
|
|
7,574 |
|
Add:
Acquisition-related charges, net of tax |
|
148 |
|
|
|
139 |
|
|
|
147 |
|
Net income attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
4,799 |
|
|
|
6,499 |
|
|
|
21,319 |
|
Net margin attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
2.4 |
% |
|
|
3.7 |
% |
|
|
9.8 |
% |
|
|
|
|
|
|
*Gross
margin excluding share-based compensation equals gross profit
excluding share-based compensation divided by revenues |
*Operating
margin excluding share-based compensation and acquisition-related
charges equals operating income excluding share-based compensation
and acquisition-related charges divided by revenues |
*Net
margin attributable to Himax Technologies, Inc. stockholders
excluding share-based compensation and acquisition-related charges
equals net income attributable to Himax Technologies, Inc.
stockholders excluding share-based compensation and
acquisition-related charges divided by revenues |
Himax Technologies, Inc. |
Non-GAAP Unaudited Supplemental Data –
Reconciliation Schedule |
(Amounts in Thousands of U.S.
Dollars) |
Gross Margin, Operating Margin and Net Margin
Excluding Share-Based Compensation and Acquisition-Related
Charges: |
|
|
|
|
Twelve Months Ended
December
31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
Revenues |
|
|
$ |
802,917 |
|
|
$ |
691,789 |
|
Gross profit |
|
|
|
194,312 |
|
|
|
163,138 |
|
Add: Share-based
compensation – Cost of revenues |
|
|
|
224 |
|
|
|
110 |
|
Gross profit excluding
share-based compensation |
|
|
|
194,536 |
|
|
|
163,248 |
|
Gross margin excluding
share-based compensation |
|
|
|
24.2 |
% |
|
|
23.6 |
% |
Operating income |
|
|
|
59,235 |
|
|
|
30,672 |
|
Add: Share-based
compensation |
|
|
|
10,409 |
|
|
|
6,274 |
|
Operating income
excluding share-based compensation |
|
|
|
69,644 |
|
|
|
36,946 |
|
Add:
Acquisition-related charges –Intangible assets amortization |
|
|
|
985 |
|
|
|
845 |
|
Operating income
excluding share-based compensation and acquisition-related
charges |
|
|
|
70,629 |
|
|
|
37,791 |
|
Operating margin
excluding share-based compensation and acquisition-related
charges |
|
|
|
8.8 |
% |
|
|
5.5 |
% |
Net income attributable
to Himax Technologies, Inc. stockholders |
|
|
|
50,912 |
|
|
|
25,195 |
|
Add: Share-based
compensation, net of tax |
|
|
|
8,245 |
|
|
|
4,932 |
|
Add:
Acquisition-related charges, net of tax |
|
|
|
590 |
|
|
|
487 |
|
Net income attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
|
|
59,747 |
|
|
|
30,614 |
|
Net margin attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
|
|
7.4 |
% |
|
|
4.4 |
% |
|
|
|
|
|
|
*Gross
margin excluding share-based compensation equals gross profit
excluding share-based compensation divided by revenues |
*Operating
margin excluding share-based compensation and acquisition-related
charges equals operating income excluding share-based compensation
and acquisition-related charges divided by revenues |
*Net
margin attributable to Himax Technologies, Inc. stockholders
excluding share-based compensation and acquisition-related charges
equals net income attributable to Himax Technologies, Inc.
stockholders excluding share-based compensation and
acquisition-related charges divided by revenues |
Diluted Earnings Per ADS Attributable to Himax
Technologies, Inc. Stockholders Excluding Share-based Compensation
and Acquisition-Related Charges: (Amounts in U.S.
Dollars) |
|
|
|
Three Months EndedDecember
31, |
|
|
Twelve Months
EndedDecember
31, |
|
|
2016 |
|
|
2016 |
|
Diluted GAAP earnings
per ADS attributable to Himax Technologies, Inc. stockholders |
$ |
0.026 |
|
|
$ |
0.295 |
|
Add: Share-based
compensation per ADS |
$ |
0.001 |
|
|
$ |
0.048 |
|
Add:
Acquisition-related charges per ADS |
$ |
0.001 |
|
|
$ |
0.003 |
|
|
|
|
|
|
|
Diluted non-GAAP
earnings per ADS attributable to Himax Technologies, Inc.
stockholders excluding share-based compensation and
acquisition-related charges |
$ |
0.028 |
|
|
$ |
0.347 |
|
|
|
|
|
|
Numbers do not add up due to rounding |
|
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