Company Meets
Q4 2017 Revenue, Gross
Margin, GAAP and Non-GAAP EPS
Guidance
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, 2017.
“The Company’s 2017 fourth quarter revenues,
gross margin, GAAP and non-GAAP earnings per diluted ADS all met
the guidance. Despite the decline in the first half of 2017,
Himax’s driver ICs segment experienced a strong recovery in the
second half from the first half, and WLO business in the non-driver
segments hit inflection in the third quarter when the Company began
mass shipment to an anchor customer. Looking into 2018, the
Company’s growth will come from China panel makers’ increase in
capacity for large panel segment, in-cell TDDI for smartphone,
driver ICs for automotive applications, and increasing
WLO revenue as well as commencement of 3D sensing total
solution shipment. We believe 3D sensing will be our biggest long
term growth engine and, for 2018, a major contributor to both
revenue and profits, consequently creating a more favorable product
mix for Himax starting the second half of 2018. We expect
significant revenue and profit growth this year,” said Mr. Jordan
Wu, President and Chief Executive Officer of Himax.
“Himax jointly with Qualcomm announced SLiM™,
our structure light based 3D sensing total solution, will target
Android based smartphone last August. The solution brings together
Qualcomm’s industry leading 3D algorithm with Himax’s cutting-edge
design and manufacturing capabilities in optics and NIR sensors as
well as unique know-how in 3D sensing system integration. It
represents a very high barrier of entry for any potential
competition and a much higher ASP and profit margin for us. The
Qualcomm/Himax 3D sensing solution is by far the highest quality 3D
sensing total solution available for the Android market right now.
It has the industry’s best performance in all of dimension, 3D
depth accuracy, indoor/outdoor sensitivity and power consumption.
It passes the toughest eye safety standards with a proprietary
glass broken detection mechanism to safeguard the user from any
potential harm. Furthermore, our SLiM™ is the only solution
to offer face recognition for secure online payment, a must-have
feature for high end smartphones. Himax is working with multiple
tier-1 smartphone makers, expecting to launch 3D sensing on their
premium smartphones starting the first half of 2018. SLiM™ solution
will be ready for mass production and shipment by the end of the
first quarter 2018 with an initial capacity of 2 million units per
month. Given that SLiM™ is a highly integrated solution with ASPs
much higher than those of individual components, by the time we
start making shipment, it will be a major growth contributor to our
top and bottom lines,” added Mr. Wu.
Mr. Wu continued, “In an attempt to accelerate
the adoption of 3D sensing for Android phones, in addition to
SLiM™, Himax is also working on stereoscopic type 3D sensing as a
lower cost alternative. Unlike SLiM™ which utilizes structure light
to generate 3D, stereoscopic type uses two cameras to replicate 3D
vision in nature, augmented by coded light for image depth
enhancement. Both types of solutions offered by Himax operate on
active NIR light source with NIR sensors, thus working well under
extreme brightness or total darkness. For 3D sensing purposes,
structure light approach offers better depth precision than
stereoscopic type but the cost is also higher. By introducing
stereoscopic 3D sensing, Himax aims to bring down the cost of 3D
sensing so that it can be afforded by mass market smartphone
models. We are pleased to report that development of stereoscopic
3D sensing total solution for face recognition and 3D features has
been under way. We plan to be mass production and shipment ready by
the fourth quarter 2018 to meet customers’ launch timetable.
Similar to our experience in SLiM™, we are working with some of the
most prominent ecosystem partners in developing our stereoscopic 3D
total solution. We are very excited that this new development will
enable us to expand our 3D total solution portfolio to the high
volume smartphone market in addition to the premium to high-end
models. While lower cost compared to structure light, stereoscopic
3D will still represent a much higher ASP and better gross margin
potential for us.”
“To fulfill strong demands from the WLO anchor
customer and 3D sensing total solution Android smartphone OEMs, we
increased Phase I capex by $25 million from $80 million to $105
million primarily for enhanced manufacturing automation to achieve
higher product yields and better production efficiency to meet
SLiM™ shipment demand from Android OEMs’ 3D sensing smartphone
launches in 1H18 and acceleration in 2H18. We believe a Phase
II capex will soon be required for additional capacity. We are
still gathering customers’ input and finalizing technical details
and will formally announce the Phase II expansion as soon as the
plan is finalized,” further said Mr. Wu.
Fourth Quarter 2017 Financial
Results
The fourth quarter revenues of $181.1 million
represented a decrease of 8.1% sequentially and a decrease of 11.0%
year-over-year. Gross margin was 24.6%, down 0.9% sequentially.
GAAP earnings per diluted ADS were 13.7 cents, compared to the
guidance range of 13.0 to 15.0 cents. Non-GAAP earnings per diluted
ADS were 13.8 cents, compared to the guidance range of 13.2 to 15.2
cents.
Revenue from large display drivers was $58.4
million, up 6.3% sequentially but down 13.7% year-over-year. Large
panel driver ICs accounted for 32.3% of its total revenues for the
fourth quarter, compared to 27.9% in the third quarter of 2017 and
33.3% a year ago. Large panel driver business grew mid-single-digit
sequentially, in line with guidance, driven by ramping of new LCD
fabs in China and strong TV demand ahead of the Chinese New Year
holidays. The year-over-year decline was caused by phase-out of
certain customers’ old models and the misses in certain customers’
new design-in projects as Himax reported in previous earnings
calls. The Company has overcome the engineering hiccup and business
has started to be back on track since the third quarter. Himax is
pleased with its current engineering collaboration and 4K TV
design-in activities in the pipeline. Such activities will lead to
further rebound in future sales.
Revenue for small and medium-sized display
drivers came in at $81.3 million, down 6.8% sequentially and down
18.5% year-over-year. The product segment accounted for 44.9% of
total sales for the fourth quarter, as compared to 44.2% in the
third quarter of 2017 and 49.0% a year ago. As opposed to original
guidance of flattish sequential growth, Himax’s small and
medium-sized panel driver business declined mid-single digit
because of lower-than-expected smartphone driver IC sales. Sales
into smartphones were down 11.5% sequentially and declined more
than 35% year-over-year. The less than satisfactory result in the
fourth quarter was caused mainly by weak sentiment in the China
market as new products failed to attract consumers and therefore
OEMs turned cautious in building inventory. In addition, the
Company’s sales were affected by the shrinking addressable market
for pure TFT-LCD driver ICs, a significant portion of which is
being replaced by TDDI and AMOLED technologies as Himax indicated
in previous earnings calls. The good news is that its TDDI
solutions have started shipping in the fourth quarter.
Small and medium-sized driver IC revenue for
automotive application went up more than 10% sequentially and more
than 25% year-over-year. The quarterly revenue now reached close to
$25 million, a historical high and accounting for over 15% of the
total driver IC revenue. Driver IC sales for tablets were down
17.2% sequentially and declining 24.7% year-over-year due to weak
overall market demand in this product segment.
Revenues from non-driver businesses were $41.4
million, down 24.7% sequentially but up 14.8% versus last year.
Non-driver products accounted for 22.8% of total revenues, as
compared to 27.9% in the third quarter of 2017 and 17.7% a year
ago. The sequential decline was due primarily to certain one-off
customer reimbursements related to its AR goggles business in the
preceding quarter. Excluding the one-off reimbursements, which
totaled $13.3 million, the sequential decrease would have been less
than 1% as compared to the original guidance of 10% growth. Lower
than expected WLO shipment and NRE income contributed to the
sequential sales decline. The year-over-year increase was driven
mainly by WLO product shipment to a leading customer and, to a
lesser extent, increased sales of timing controllers and CMOS image
sensors. The revenue increase was offset by the discontinuation of
LCOS and WLO shipments to one of its major AR device customers who
decided to end the product’s production as the Company reported
before. Himax remains positive on the growth prospect of its 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
24.6%, down 90 basis points from 25.5% in the third quarter of 2017
but up 550 basis points from 19.1% for the same period last year.
The sequential margin decline was due mainly to certain one-off
customer reimbursements in Q3. Excluding the above-mentioned
one-off reimbursements in the third quarter, which knocked down
$5.7 million in gross profit, Himax’s fourth quarter gross margin
would have been an increase of 30 basis points versus the third
quarter. The year-over-year increase was due to an additional
inventory write-down totaling $12 million in the fourth quarter
2016. Excluding the additional inventory write-down, the gross
margin for the fourth quarter of 2016 would have been 25.0%.
GAAP operating expenses were $40.5 million in
the fourth quarter, down 13.9% from the preceding quarter but up
26.2% from a year ago. The significant year-over-year increase was
primarily the result of rising R&D expenses in the areas of 3D
sensing, WLO, TDDI, and high-end TV as well as the annual merit
increase. In addition, NT dollar appreciation against the US dollar
caused Himax’s salary expense to increase around $1.0 million as
the Company pays the bulk of its employee salaries in NT dollars.
The sequential expense decrease was primarily the result of the
difference in RSU charge. In accordance with its protocol, Himax
grants annual RSUs to its staff at the end of September each year,
which, given all other things equal, leads to higher third quarter
GAAP operating expenses compared to the other quarters of the year.
The fourth quarter RSU expense was only $0.1 million while it was
$6.5 million in the third quarter. Excluding the RSU expense,
operating expenses decreased 0.4% from the third quarter and
increased 26.7% year-over-year.
GAAP operating margin for the fourth quarter was
2.3%, down from 3.4% for the same period last year and up from 1.7%
in the previous quarter. The GAAP operating income increased 21.3%
sequentially and decreased 39.9% year-over-year. The sequential
increase was primarily a result of lower RSU expense, offset by the
one-time reimbursement from its AR customer in the third quarter.
The year-over-year decline was, however, a result of higher
operating expenses and lower sales, offset by the one-time
inventory write-down in the previous year.
Fourth quarter non-GAAP operating income
was $4.5 million, or 2.5% of sales, down from 3.6% for the same
period last year and down from 5.2% a quarter ago. The non-GAAP
operating income decreased 55.9% sequentially and 38.7% from the
same quarter in 2016.
GAAP net income for the fourth quarter was $23.5
million, or 13.7 cents per diluted ADS, compared to $3.7 million,
or 2.1 cents per diluted ADS, in the previous quarter and $4.4
million, or 2.6 cents per diluted ADS, a year ago. The increase was
mainly the result of an investment gain of $20.7 million in the
fourth quarter as we disposed of a direct investment in September.
The transaction was already closed in Q4. Excluding this one-time
gain, GAAP net income for the fourth quarter was $2.8 million, or
1.6 cents per diluted ADS, a decrease of 36.6% year-over-year and
23.6% from the previous quarter. The sequential decline was caused
by the non-recurrence of the one-time reimbursement from its
customer in the third quarter as discussed earlier.
Fourth quarter non-GAAP net income was $23.8
million, or 13.8 cents per diluted ADS, compared to $9.0 million,
or 5.2 cents per diluted ADS, in the previous quarter and $4.8
million, or 2.8 cents per diluted ADS, a year ago. Again, the
increase was mainly due to the investment gain of $20.7 million in
the quarter.
Full Year 2017 Financial Results
The 2017 full year revenues totaled $685.2
million in 2017, representing a 14.7% decrease over 2016.
Revenues from large panel display drivers
decreased 17.6% year-over-year, representing 32.8% of its total
revenues, as compared to 34.0% in 2016. Large panel driver sales
totaled $224.8 million for the year. The year-over-year decline was
mainly due to phase-out of certain customers’ old models and
certain misses of new design-in activities at the end of the fourth
quarter 2016 and the first quarter of 2017 as reported earlier.
Small and medium-sized driver sales decreased
17.3% year-over-year, representing 44.5% of its total revenues, as
compared to 46.0% in 2016. Sales into the smartphone segment
declined due to overall market weakness, largely caused by the
increasing adoption of TDDI solutions where we had a relatively
slow start. Automotive driver IC sales registered the strongest
growth in our display driver business to increase over 25%
year-over-year.
Non-driver products decreased 3.6%
year-over-year, representing 22.7% of its total sales, as compared
to 20.0% a year ago. This decline was primarily due to
discontinuation of LCOS and WLO shipments to a major AR customer.
Additionally, discrete touch controller is being quickly replaced
by TDDI and mobile booster sales also shrank. Himax would like to
highlight that its WLO business hit inflection in the middle of the
year when it began mass shipment to an anchor customer.
Gross margin in 2017 was 24.4%, a 20 basis-point
increase from 24.2% in 2016.
GAAP operating expenses were $158.9 million, up
$23.8 million or 17.6% compared to last year. The increase was
primarily the result of rising R&D expenses in the areas of 3D
sensing, WLO, TDDI, and high-end TV as well as the annual merit
increases and additional headcount. In addition, NT dollar
appreciation against the US dollar caused the Company’s salary
expense to increase around $3.7 million.
2017 GAAP operating income of $8.2 million
represented an 86.2% decrease versus 2016 for lower sales and
higher operating expenses.
GAAP net income for the year was $28.0 million,
or 16.2 cents per diluted ADS, a decline of 45.1% from last year.
The decrease in GAAP net income was a combination of lower revenue
and higher operating expenses, offset by an investment gain of
$20.7 million and lower income taxes.
Non-GAAP net income for 2017 was $34.3 million,
or 19.9 cents per diluted ADS, down 42.7% year-over-year
Balance Sheet and Cash Flow
Himax had $148.9 million of cash, cash
equivalents and marketable securities as of the end of December
2017, compared to $194.6 million at the same time last year and
$151.6 million a quarter ago. In addition to the cash position,
restricted cash was $147.0 million at the end of the quarter,
little changed from $147.2 million in the preceding quarter and up
from $138.2 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 operate
as a debt-free company.
Himax’s year-end inventories were $135.2
million, up from $130.1 million a quarter ago but down from $149.7
million at the same time last year. Accounts receivable at the end
of December 2017 were $187.6 million as compared to $191.0 million
a year ago and $181.7 million last quarter. DSO was 100 days, as
compared to 87 days a year ago and 98 days at end of the last
quarter.
Net cash inflow from operating activities for
the fourth quarter was $8.3 million as compared to an inflow of
$47.2 million for the same period last year and an inflow of $16.9
million last quarter. Cash inflow from operations in 2017 was $29.4
million as compared to $84.7 million in 2016. The decrease in
operating cash flow is mainly due to lower net profit.
Capital expenditures were on track with the plan
at $15.7 million in the fourth quarter of 2017, versus $2.2 million
a year ago and $10.2 million last quarter. The fourth quarter capex
consisted mainly of ongoing payments for the new building’s
construction, WLO capacity expansion for certain anchor customer,
and another WLO capacity expansion and installation of active
alignment capacity to support its 3D sensing business. Total
capital expenditure for the year was $39.8M versus $7.9M a year
ago.
Share Buyback Update
As of December 31, 2017, Himax had 172.1 million
ADS outstanding, unchanged from last quarter. On a fully diluted
basis, the total ADS outstanding are 172.5 million
2018
Investor Outreach and Conferences
Ms. Jackie Chang, CFO, Ms. Ophelia Lin, internal
IR Deputy Director, Mr. Ken Liu, internal IR, and Mr. Greg
Falesnik, Himax’s US-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
Himax delivered much improved results in the second half versus
the first half last year. Looking into 2018, the Company’s major
growth engines will be, for large panel segment, China panel
makers’ increase in capacity, for small panel segment, in-cell TDDI
for smartphone and driver ICs for automotive applications, and last
but not the least for non-driver areas, increasing WLO revenue, and
commencement of 3D sensing total solution shipment. 3D sensing will
be Himax’s biggest long term growth engine and, for this year, a
major contributor to both revenues and profit, consequently
creating a more favorable product mix for Himax starting the second
half of the year.
Display
Driver IC
MarketLarge display driver IC
business experienced a strong growth momentum in the second half of
2017 as 4K TV penetration was still on the rise globally and China
continued to ramp brand new advanced generation LCD fabs. In fact,
BOE has just launched the world’s first Gen 10.5 fab a few weeks
ago, while CEC-CHOT’s Gen 8.6 fab and CEC-Panda’s Gen 8.6+ fab will
also go into operation this year. Being a market leader in large
display driver IC business, Himax will benefit from such capacity
expansion. However, the whole market is currently facing a capacity
shortage of 8” foundry where vast majority of large panel driver
ICs are fabricated. While the growth of its large panel driver
business may be limited by the tight 8” foundry capacity during
this year, Himax is starting the early ramp of a newly built 12”
fab in China. Adding the 12” fab into the pool of its foundry
capacity will greatly alleviate the shortage issue of Himax’s
customers. However, the ultimate ramping schedule will depend on
how fast the Company’s customers can go through their customer
qualification, something all its major customers are working very
hard on. For the first quarter, Himax expects a low-single-digit
sequential revenue growth for large display driver ICs.
With the 2020 Tokyo Olympics approaching, the
ecosystem for super-high-resolution TV is being established, hoping
to catch the business opportunity arising from the 8K program
broadcast at the event. At this year’s CES, major TV manufacturers
have unveiled their 8K TV with Himax solutions inside. Himax will
continue working with major panel makers for the development of
next generation 8K TVs.
First quarter sales for smartphone are likely to
decline by approximately 30% sequentially on product transition,
weak market demand and seasonality. Himax has numerous TDDI
design-wins for HD+ and FHD+ projects with top-tier names, yet
shipment has been hindered by the weak overall smartphone market
sentiment. In spite of the short term headwinds, the Company is
confident that its TDDI solutions and display driver IC business
will accelerate starting the second quarter as smartphone makers
begin to replenish inventory for their new product launches in the
second half. On the high side, its new generation FHD+ TDDI with
COF (chip on film) package is in design-in stage with a number of
leading Chinese smartphone brands and panel makers. TDDI with COF
package can enable super-slim bezel design for premium smartphone
models. Himax expects small volume shipment in the first half with
accelerating volume in the second half. Its driver IC business is
also expanding into new areas such as smart home assistant segment.
Such activities will help future rebound in sales momentum.
On AMOLED product line, the Company has been
collaborating closely with leading panel makers across China for
product development. Himax believes AMOLED driver ICs will be one
of the long-term growth engines for its small panel driver IC
business.
As to automotive application, Himax continues to
have further design-wins from prior years going into mass
production this year. It expects Q1 revenue to grow around 10%
sequentially and more than 50% year-over-year. Himax has engaged
all of the major automotive panel manufacturers worldwide for
long-term partnerships and secured many of their key projects
pipelined for the next few years.
Going into the first quarter, due to seasonality
and overall weak smartphone market, the Company expects small and
medium-sized driver IC revenue to be down around 10%
sequentially.
Non-Driver Product
CategoriesThe non-driver IC business segment has been the
Company’s most exciting growth area and a differentiator for the
Company in the past few years.
3D Sensing Total Solution Last
August Himax jointly with Qualcomm announced SLiM™, its structure
light based 3D sensing total solution, will target Android based
smartphone. The solution brings together Qualcomm’s industry
leading 3D algorithm with Himax’s cutting-edge design and
manufacturing capabilities in optics and NIR sensors as well as
unique know-how in 3D sensing system integration.
The majority of the key technologies inside the
SLiMTM total solution is developed and supplied by Himax itself.
These critical technologies include, on the projector end, DOE and
collimator utilizing its world leading WLO technology, a
tailor-made laser driver IC, and high precision active alignment
for the projector assembly; and on the receiver end, a high
efficiency near-infrared CMOS image sensor. Last but not least,
Himax also developed an ASIC by incorporating Qualcomm’s algorithm
for 3D depth map generation. The fact that all of these critical
components are developed in-house puts Himax in a unique leading
position. It represents a very high barrier of entry for any
potential competition and a much higher ASP and profit margin for
the Company.
The Qualcomm/Himax solution is by far the
highest quality 3D sensing total solution available for the Android
market right now. It has the industry’s best performance in all of
dimension, 3D depth accuracy, indoor/outdoor sensitivity and power
consumption. It passes the toughest eye safety standards with a
proprietary glass broken detection mechanism to safeguard the user
from any potential harm. Furthermore, it is the only solution
to offer face recognition for secure online payment, a must-have
feature for high end smartphones of the future. Himax is working
with multiple tier-1 smartphone makers, expecting to launch 3D
sensing on their premium smartphones starting the first half of
2018.
Himax’s SLiM™ solution will be ready for mass
production and shipment by the end of the first quarter, 2018 with
an initial capacity of 2 million units per month. The initial
capacity is part of its Phase I expansion of $80M. The Company has
already achieved pretty satisfactory production yields in its
internal pilot production. Given that SLiM™ is a highly integrated
solution with ASPs much higher than those of individual components,
by the time Himax starts making shipment, it will be a major growth
contributor to Himax’s top and bottom lines.
In an attempt to accelerate the adoption of 3D
sensing for Android phones, in addition to SLiM™, Himax is also
working on stereoscopic type 3D sensing as a lower cost
alternative. Unlike SLiM™ which utilizes structure light to
generate 3D, stereoscopic type uses two cameras to replicate 3D
vision in nature, augmented by coded light for image depth
enhancement. Both types of solutions offered by Himax operate on
active NIR light source with high sensitivity NIR sensors, thus
working well even under extreme brightness or total darkness. For
3D sensing purposes, structure light approach offers better depth
precision than stereoscopic type but the cost is also higher. By
introducing stereoscopic 3D sensing, Himax aims to bring down the
cost of 3D sensing so that it can be afforded by mass market
smartphone models. Himax reports that development of stereoscopic
3D sensing total solution for face recognition and 3D features has
been under way. The Company plans to be mass production and
shipment ready by the fourth quarter of this year to meet
customers’ launch timetable. Similar to its experience in SLiM™,
Himax is working with some of the most prominent ecosystem partners
in developing its stereoscopic 3D total solution. We are very
excited that this new development will enable us to expand our 3D
total solution portfolio to the high volume smartphone market in
addition to the premium to high-end models. While lower cost
compared to structure light, stereoscopic 3D will still represent a
much higher ASP and better gross margin potential for the
Company.
At this year’s CES, many of Himax’s customers
and partners demonstrated 3D sensing applications in IoT,
automotive, AR/VR, and robotic related products with Himax SLiM™
inside and received very positive feedback. 3D sensing can have a
broad range of applications that go beyond smartphone. Himax is
very excited about the growth prospects it represents and believes
3D sensing will be its biggest long term growth engine.
WLOHimax reported that it has
started mass shipment of a highly customized WLO product to an
anchor customer during the third quarter. The production has been
going well as Himax delivers consistent product quality, production
ramp and high yields. Shipment volume to the customer for the
fourth quarter accelerated sequentially. However, lower volume in
the first quarter of 2018 is expected as per the customer’s demand
forecast. The much reduced shipment will negatively impact the
Company’s Q1 gross margin as lower utilization will lead to much
higher equipment depreciation and factory overhead on a per unit
basis. Despite the short term order adjustment, Himax expects
strong rebound in the second half and is more optimistic
than ever about the partnership and growth opportunities it
has with the customer. The R&D projects with the said customer
for their future generation products centers around Himax’s
exceptional design know-how and mass production expertise in WLO
technology for optical devices.
Himax recently announced an acquisition of
certain advanced nano 3D masters manufacturing assets and related
intellectual property and business. The advanced nano 3D
manufacturing masters are primarily used in imprinting or stamping
replication process to fabricate devices such as DOE, diffuser,
collimator lens and micro lens array. This acquisition demonstrates
the Company’s commitment and confidence in the long-term growth
prospects for its WLO and 3D sensing businesses.
New BuildingConstruction of the
new building is one of the major capex projects of 2017. Himax
reports the construction has been completed on schedule. The new
building, located near its current headquarters, will house
additional 8” glass WLO capacity and the new active alignment
equipment needed for its SLiM™ 3D sensing solutions. It will also
provide extra office space. Himax has started moving in equipment
in the past few weeks.
Phase I Capex Update
Himax announced a capex plan of $80M (Phase I
capital expansion) during 2017 which is on top of its regular capex
- an unprecedented move in the Company’s history given its fabless
nature. Phase I capital expansion includes the construction of a
new building, an increase of its WLO capacity for an anchor
customer and an initial monthly capacity of 2 million units for its
SLiMTM solution. Himax is now increasing the Phase I budget from
$80 million to $105 million to meet SLiM™ shipment demand from
Android OEMs’ 3D sensing smartphone launches in 1H18 and
acceleration in 2H18. The addition of $25 million is primarily for
enhanced manufacturing automation and CIM infrastructure to achieve
higher product yields and better production efficiency, an extra
land of 1 hectare and more clean room and office space for future
expansion. The Phase I is being executed as scheduled. Of the $105
million budget, $33 million has been paid out in 2017 with the
remaining $72 million to be paid in 2018.
To fulfill strong demands from the existing WLO
and 3D sensing total solution customers, Himax believes a Phase II
capex will soon be required for additional capacity. The Phase II
capacity will still be located in the same new building, using some
of the clean rooms and office spaces built during the Phase I. In
fact, the new building has sufficient room to house capacity much
in excess of the Phase I and II combined. Himax is still gathering
customers’ input and finalizing technical details and will formally
announce the Phase II expansion as soon as the plan is
finalized.
The capex budget for both phases of expansion
will be funded through Himax’s internal resources and banking
facilities, if so needed.
CMOS Image SensorHimax
continues to make great progress with its two machine vision sensor
product lines, namely, near infrared (“NIR”) sensor and
Always-on-Sensor (“AoSTM”). HImax’s NIR sensor is a critical part
in its SLiMTM total solution. Himax’s NIR sensors’ overall
performance, measured primarily by way of quantum efficiency, is
far ahead of those of its peers for 3D sensing. The Company
currently offers low noise HD, or 1 megapixel, and 5.5 megapixel
NIR sensors and are planning to add more to further enrich its
product portfolio. The Company is also developing the next
generation NIR sensors with quantum efficiency further elevated to
the next level.
On the AoS product line, Himax announced the
launch of the WiseEyeTM IoT sensors together with Emza and DSP
Group, both Isreal-based, in early January. It is the industry’s
first ultra-low power, always-on, fully trainable, AI-based
machine-vision intelligent visual sensor, adding human presence
awareness for consumer appliances and industrial IoT applications.
Emza demonstrated the WiseEyeTM IoT sensors at this year's CES and
successfully generated high interest from key market players,
including smart buildings and security OEMs and makers of home
assistants and home appliances. The Company expects to kick off
some joint product development projects with heavy weight industry
leaders in the second half of the year. Himax owns 45.1% equity in
Emza with an option to acquire the remaining 54.9% and all
outstanding options.
For the traditional human vision segments, the
Company sees strong demands in laptops and increasing shipments for
multimedia applications such as car recorders, surveillance,
drones, home appliances, and consumer electronics, among
others.
LCOSHimax’s main focus areas
are AR goggle devices and head-up-displays (HUD) for automotives
and motorcycles. While AR will take a few years to fully realize
its market potential, the wealth of announcements at CES 2018 say a
lot about the industry's current momentum. Many companies, be the
top name multinationals or new start-ups, are investing heavily to
develop the ecosystem -- applications, software, operating system,
system electronics, and optics. With all these investments, Himax
believes the AR goggle market will be back in an accelerating mode
again. In addition to AR goggle applications, Himax is pleased to
report that the Company continues to make great progress in
developing high-end head-up display for automotives. Himax and its
partners together have secured a few design wins with certain big
names. Timing and major revenue contribution would be 2019 the
earliest. Himax’s technology leadership in this space has little
competition. LCOS represents a significant long term growth
opportunity for the Company.
For non-driver IC business, the Company expects
sequential revenue decline of around 20% in the first quarter.
However, it will still be an increase of close to mid-teens from
the same period last year.
First Quarter
2018 GuidanceThe Company
is providing the following financial guidance for the first quarter
of 2018:
Net Revenue: |
To decrease 9% to 14%
sequentially, representing a low to mid-single-digit
year-over-year growth |
Gross Margin: |
To be around 22%
sequentially, depending on final product mix |
GAAP EPS: |
-2.0 to -3.0 cents per
diluted ADS |
Beginning January 1, 2018, Himax adopted
International Financial Reporting Standards ("IFRS") issued by the
International Accounting Standard Board ("IASB") to prepare its
consolidated financial statements. The Company doesn’t expect the
transition from US GAAP to IFRS to have any significant impact on
its financial results.
The first quarter is traditionally the bottom of
the year in terms of sales because it has fewer working days due to
Chinese Lunar New Year. Himax sees weak seasonality and soft
smartphone market demand, which will lead to sequential revenue
decline in the first quarter. However, the revenue of all three
major product categories will increase from the same period last
year. Himax also expects its gross margin to be under pressure in
the first quarter caused by anticipated WLO shipment reduction as
per the customer’s demand forecast. Nevertheless, Himax believes
shipment of TDDI ICs and WLO will accelerate in the second half
2018. It also expects significant business growth in the Company’s
3D sensing business to contribute to both top and bottom lines as
early as the second half of 2018.
|
HIMAX TECHNOLOGIES FOURTH QUARTER
2017 EARNINGS CONFERENCE
CALL |
|
|
DATE: |
Tuesday, February 13th, 2018 |
TIME: |
U.S.
8:00 a.m. EST |
|
Taiwan 9:00
p.m. |
DIAL IN: |
U.S. +1 (866) 444-9147 |
|
INTERNATIONAL +1 (678) 509-7569 |
CONFERENCE ID: |
7194699 |
WEBCAST: |
https://edge.media-server.com/m6/p/7grrcyuo |
|
|
A replay of the call will be available beginning
two hours after the call through 10:59 a.m. US EST on February
20th, 2018 (11:59 p.m. Taiwan time, February 20th, 2018) 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 7194699. 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 13, 2019.
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 heads-up displays (HUD) for
automotive. The Company also offers digital camera solutions,
including CMOS image sensors and wafer level optics for AR devices,
3D sensing and machine vision, 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 around 2,150 people from three Taiwan-based
offices in Tainan, Hsinchu and Taipei and country offices in China,
Korea, Japan and the US. Himax has 3,032 patents granted and 424
patents pending approval worldwide as of December 31st, 2017. 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, 2016 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
Ophelia Lin, Investor
RelationsHimax Technologies, Inc.Tel: +886-2-2370-3999
Ext.22202Fax: +886-2-2314-0877 Email:
ophelia_lin@himax.com.twwww.himax.com.tw
Ken Liu, Investor RelationsHimax Technologies,
Inc.Tel: +886-2-2370-3999 Ext.22513Fax: +886-2-2314-0877 Email:
ken_liu@himax.com.twwww.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, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
|
|
|
|
Revenues |
$ |
181,081 |
|
|
$ |
203,443 |
|
|
$ |
197,146 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
Cost of revenues |
|
136,499 |
|
|
|
164,517 |
|
|
|
146,778 |
|
Research and development |
|
29,516 |
|
|
|
21,826 |
|
|
|
34,989 |
|
General and administrative |
|
5,413 |
|
|
|
4,950 |
|
|
|
6,016 |
|
Sales and marketing |
|
5,532 |
|
|
|
5,289 |
|
|
|
5,967 |
|
Total costs and expenses |
|
176,960 |
|
|
|
196,582 |
|
|
|
193,750 |
|
|
|
|
|
|
|
Operating income |
|
4,121 |
|
|
|
6,861 |
|
|
|
3,396 |
|
|
|
|
|
|
|
Non operating income
(loss): |
|
|
|
|
|
Interest income |
|
554 |
|
|
|
399 |
|
|
|
509 |
|
Gains on sale of securities, net |
|
23,064 |
|
|
|
5 |
|
|
|
55 |
|
Equity in income (losses) of equity method investees |
|
(483 |
) |
|
|
(712 |
) |
|
|
114 |
|
Foreign currency exchange gains (losses), net |
|
(277 |
) |
|
|
686 |
|
|
|
(180 |
) |
Interest expense |
|
(170 |
) |
|
|
(131 |
) |
|
|
(145 |
) |
Other income, net |
|
10 |
|
|
|
2 |
|
|
|
2 |
|
|
|
22,698 |
|
|
|
249 |
|
|
|
355 |
|
Earnings before income
taxes |
|
26,819 |
|
|
|
7,110 |
|
|
|
3,751 |
|
Income tax expense |
|
3,957 |
|
|
|
3,609 |
|
|
|
621 |
|
Net income |
|
22,862 |
|
|
|
3,501 |
|
|
|
3,130 |
|
Net loss
attributable to noncontrolling interests |
|
687 |
|
|
|
938 |
|
|
|
554 |
|
Net income
attributable to Himax Technologies, Inc. stockholders |
$ |
23,549 |
|
|
$ |
4,439 |
|
|
$ |
3,684 |
|
|
|
|
|
|
|
Basic earnings
per ADS attributable to Himax Technologies, Inc.
stockholders |
$ |
0.137 |
|
|
$ |
0.026 |
|
|
$ |
0.021 |
|
Diluted
earnings per ADS attributable to Himax Technologies, Inc.
stockholders |
$ |
0.137 |
|
|
$ |
0.026 |
|
|
$ |
0.021 |
|
|
|
|
|
|
|
Basic Weighted Average Outstanding ADS |
|
172,499 |
|
|
|
172,399 |
|
|
|
172,401 |
|
Diluted Weighted Average Outstanding ADS |
|
172,518 |
|
|
|
172,415 |
|
|
|
172,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
Revenues |
|
|
$ |
685,167 |
|
|
$ |
802,917 |
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
Cost of
revenues |
|
|
|
518,142 |
|
|
|
608,605 |
|
Research and
development |
|
|
|
117,757 |
|
|
|
95,820 |
|
General and
administrative |
|
|
|
20,614 |
|
|
|
20,119 |
|
Sales and
marketing |
|
|
|
20,504 |
|
|
|
19,138 |
|
Total costs and expenses |
|
|
|
677,017 |
|
|
|
743,682 |
|
|
|
|
|
|
|
Operating
income |
|
|
|
8,150 |
|
|
|
59,235 |
|
|
|
|
|
|
|
Non
operating income
(loss): |
|
|
|
|
|
Interest
income |
|
|
|
2,225 |
|
|
|
1,221 |
|
Dividend
income |
|
|
|
0 |
|
|
|
700 |
|
Gains on sale of
securities, net |
|
|
|
23,226 |
|
|
|
10 |
|
Equity in losses
of equity method investees |
|
|
|
(1,200 |
) |
|
|
(1,277 |
) |
Foreign currency
exchange gains (losses), net |
|
|
|
(1,517 |
) |
|
|
167 |
|
Interest
expense |
|
|
|
(565 |
) |
|
|
(633 |
) |
Other income
(losses), net |
|
|
|
19 |
|
|
|
(5 |
) |
|
|
|
|
22,188 |
|
|
|
183 |
|
Earnings before income
taxes |
|
|
|
30,338 |
|
|
|
59,418 |
|
Income tax
expense |
|
|
|
4,520 |
|
|
|
10,671 |
|
Net
income |
|
|
|
25,818 |
|
|
|
48,747 |
|
Net loss
attributable to noncontrolling interests |
|
|
|
2,149 |
|
|
|
2,165 |
|
Net
income attributable to Himax
Technologies, Inc.
stockholders |
|
|
$ |
27,967 |
|
|
$ |
50,912 |
|
|
|
|
|
|
|
Basic earnings
per ADS attributable to Himax Technologies,
Inc. stockholders |
|
|
$ |
0.162 |
|
|
$ |
0.295 |
|
Diluted
earnings per ADS attributable to Himax
Technologies, Inc.
stockholders |
|
|
$ |
0.162 |
|
|
$ |
0.295 |
|
|
|
|
|
|
|
Basic Weighted Average Outstanding ADS |
|
|
|
172,425 |
|
|
|
172,327 |
|
Diluted Weighted Average Outstanding
ADS |
|
|
|
172,452 |
|
|
|
172,362 |
|
|
|
|
|
|
|
|
|
|
|
|
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 MonthsEnded December 31, |
|
Three MonthsEnded September 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
Share-based
compensation |
|
|
|
|
|
Cost of
revenues |
$ |
24 |
|
|
$ |
25 |
|
|
$ |
130 |
|
Research and
development |
|
87 |
|
|
|
137 |
|
|
|
4,873 |
|
General and
administrative |
|
14 |
|
|
|
68 |
|
|
|
713 |
|
Sales and
marketing |
|
18 |
|
|
|
24 |
|
|
|
877 |
|
Income tax benefit |
|
(16 |
) |
|
|
(42 |
) |
|
|
(1,439 |
) |
Total |
$ |
127 |
|
|
$ |
212 |
|
|
$ |
5,154 |
|
|
|
|
|
|
|
The amount
of acquisition-related charges
included in applicable statements of
income categories is summarized as
follows: |
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
charges |
|
|
|
|
|
Research
and development |
$ |
247 |
|
|
$ |
247 |
|
|
$ |
246 |
|
Income tax benefit |
|
(99 |
) |
|
|
(99 |
) |
|
|
(99 |
) |
Total |
$ |
148 |
|
|
$ |
148 |
|
|
$ |
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, |
|
|
2017 |
|
|
|
2016 |
|
Share-based
compensation |
|
|
|
Cost of
revenues |
$ |
204 |
|
|
$ |
224 |
|
Research and
development |
|
5,234 |
|
|
|
7,586 |
|
General and
administrative |
|
865 |
|
|
|
1,210 |
|
Sales and
marketing |
|
942 |
|
|
|
1,389 |
|
Income tax benefit |
|
(1,540 |
) |
|
|
(2,164 |
) |
Total |
$ |
5,705 |
|
|
$ |
8,245 |
|
|
|
|
|
The amount
of acquisition-related charges
included in applicable statements of
income categories is summarized as
follows: |
|
|
|
|
|
|
|
Acquisition-related
charges |
|
|
|
Research
and development |
$ |
985 |
|
|
$ |
985 |
|
Income tax benefit |
|
(395 |
) |
|
|
(395 |
) |
Total |
$ |
590 |
|
|
$ |
590 |
|
|
|
|
|
|
Himax Technologies, Inc. |
GAAP Unaudited Condensed
Consolidated Balance Sheets |
(Amounts in Thousands of U.S. Dollars,
Except Share and Per Share
Data) |
|
|
|
December 31, 2017 |
|
September 30, 2017 |
|
December 31, 2016 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
138,023 |
|
|
$ |
141,482 |
|
|
$ |
184,452 |
|
Investments in marketable securities available-for-sale |
|
|
10,879 |
|
|
|
10,124 |
|
|
|
10,157 |
|
Accounts
receivable, less allowance for doubtful accounts, sales returns and
discounts |
|
|
187,571 |
|
|
|
181,731 |
|
|
|
190,998 |
|
Inventories |
|
|
135,200 |
|
|
|
130,112 |
|
|
|
149,748 |
|
Deferred
income taxes |
|
|
- |
|
|
|
- |
|
|
|
5,065 |
|
Restricted cash, cash equivalents and marketable securities |
|
|
147,000 |
|
|
|
147,202 |
|
|
|
138,200 |
|
Other
receivables from related parties |
|
|
3,250 |
|
|
|
4,150 |
|
|
|
7,150 |
|
Prepaid
expenses and other current assets |
|
|
39,495 |
|
|
|
18,487 |
|
|
|
17,195 |
|
Total current assets |
|
|
661,418 |
|
|
|
633,288 |
|
|
|
702,965 |
|
Investment in non-marketable
equity securities |
|
|
3,122 |
|
|
|
12,110 |
|
|
|
12,242 |
|
Equity method
investments |
|
|
10,739 |
|
|
|
4,231 |
|
|
|
2,362 |
|
Property, plant and
equipment, net |
|
|
86,673 |
|
|
|
69,518 |
|
|
|
48,172 |
|
Deferred income
taxes |
|
|
7,688 |
|
|
|
6,841 |
|
|
|
1,050 |
|
Goodwill |
|
|
28,138 |
|
|
|
28,138 |
|
|
|
28,138 |
|
Other
intangible assets, net |
|
|
2,179 |
|
|
|
2,427 |
|
|
|
3,170 |
|
Restricted
marketable securities |
|
|
470 |
|
|
|
463 |
|
|
|
124 |
|
Other
assets |
|
|
1,628 |
|
|
|
1,492 |
|
|
|
1,411 |
|
|
|
|
140,637 |
|
|
|
125,220 |
|
|
|
96,669 |
|
Total assets |
|
$ |
802,055 |
|
|
$ |
758,508 |
|
|
$ |
799,634 |
|
Liabilities, Redeemable
noncontrolling interest and
Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Short-term debt |
|
$ |
147,000 |
|
|
$ |
147,000 |
|
|
$ |
138,000 |
|
Accounts
payable |
|
|
139,933 |
|
|
|
125,553 |
|
|
|
142,269 |
|
Accounts
payable to related party |
|
|
- |
|
|
|
- |
|
|
|
576 |
|
Income
taxes payable |
|
|
6,798 |
|
|
|
8,633 |
|
|
|
14,155 |
|
Deferred
income taxes |
|
|
- |
|
|
|
- |
|
|
|
25 |
|
Other
payable to related party |
|
|
2,200 |
|
|
|
1,350 |
|
|
|
- |
|
Other
accrued expenses and other current liabilities |
|
|
41,268 |
|
|
|
37,675 |
|
|
|
29,721 |
|
Total current liabilities |
|
|
337,199 |
|
|
|
320,211 |
|
|
|
324,746 |
|
Other
liabilities |
|
|
6,287 |
|
|
|
3,145 |
|
|
|
3,081 |
|
Total liabilities |
|
|
343,486 |
|
|
|
323,356 |
|
|
|
327,827 |
|
|
|
|
|
|
|
|
|
|
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 344,207,492 shares,
344,207,492 shares and 344,007,418 shares outstanding at December
31, 2017, September 30, 2017 and December 31, 2016,
respectively |
|
|
107,010 |
|
|
|
107,010 |
|
|
|
107,010 |
|
Additional paid-in capital |
|
|
107,400 |
|
|
|
107,140 |
|
|
|
106,350 |
|
Treasury
shares, at cost, 12,491,990 shares, 12,491,990 shares and
12,692,064 shares at December 31, 2017, September 30, 2017 and
December 31, 2016, respectively |
|
|
(8,878 |
) |
|
|
(8,878 |
) |
|
|
(9,020 |
) |
Accumulated other comprehensive loss |
|
|
(1,430 |
) |
|
|
(1,748 |
) |
|
|
(2,467 |
) |
Unappropriated retained earnings |
|
|
252,546 |
|
|
|
228,997 |
|
|
|
265,860 |
|
Himax Technologies, Inc. stockholders’
equity |
|
|
456,648 |
|
|
|
432,521 |
|
|
|
467,733 |
|
Noncontrolling
interests |
|
|
(1,735 |
) |
|
|
(1,025 |
) |
|
|
418 |
|
Total equity |
|
|
454,913 |
|
|
|
431,496 |
|
|
|
468,151 |
|
Total liabilities,
redeemable noncontrolling
interest and equity |
|
$ |
802,055 |
|
|
$ |
758,508 |
|
|
$ |
799,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
22,862 |
|
|
$ |
3,501 |
|
|
$ |
3,130 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
5,098 |
|
|
|
3,448 |
|
|
|
4,672 |
|
Bad debt
expense |
|
|
155 |
|
|
|
620 |
|
|
|
--- |
|
Share-based compensation expenses |
|
|
143 |
|
|
|
254 |
|
|
|
446 |
|
Loss
(gain) on disposals of property and equipment |
|
|
(1 |
) |
|
|
28 |
|
|
|
3 |
|
Gain on
disposal of investment in non-marketable equity securities |
|
|
(23,038 |
) |
|
|
--- |
|
|
|
--- |
|
Gain on
disposals of marketable securities, net |
|
|
(26 |
) |
|
|
(5 |
) |
|
|
(55 |
) |
Equity in
losses (income) of equity method investees |
|
|
483 |
|
|
|
712 |
|
|
|
(114 |
) |
Deferred
income tax benefit |
|
|
(838 |
) |
|
|
(1,494 |
) |
|
|
(223 |
) |
Inventories write downs |
|
|
3,418 |
|
|
|
14,793 |
|
|
|
3,346 |
|
Changes in: |
|
|
|
|
|
|
Accounts
receivable |
|
|
(6,138 |
) |
|
|
16,615 |
|
|
|
(23,691 |
) |
Inventories |
|
|
(8,506 |
) |
|
|
4,841 |
|
|
|
14,222 |
|
Prepaid
expenses and other current assets |
|
|
6,498 |
|
|
|
4,739 |
|
|
|
(6,154 |
) |
Accounts
payable |
|
|
14,380 |
|
|
|
459 |
|
|
|
11,883 |
|
Accounts
payable to related party |
|
|
--- |
|
|
|
576 |
|
|
|
--- |
|
Income
taxes payable |
|
|
(1,873 |
) |
|
|
(215 |
) |
|
|
855 |
|
Other
payable to related party |
|
|
850 |
|
|
|
--- |
|
|
|
1,350 |
|
Other
accrued expenses and other current liabilities |
|
|
(4,546 |
) |
|
|
(1,690 |
) |
|
|
7,206 |
|
Other
liabilities |
|
|
(625 |
) |
|
|
33 |
|
|
|
(4 |
) |
Net cash provided by
operating activities |
|
|
8,296 |
|
|
|
47,215 |
|
|
|
16,872 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
|
(15,712 |
) |
|
|
(2,159 |
) |
|
|
(10,178 |
) |
Proceeds
from disposal of property and equipment |
|
|
87 |
|
|
|
--- |
|
|
|
--- |
|
Purchases
of available-for-sale marketable securities |
|
|
(5,690 |
) |
|
|
(6,977 |
) |
|
|
(20,325 |
) |
Proceeds
from disposals of available-for-sale marketable securities |
|
|
5,088 |
|
|
|
8,956 |
|
|
|
19,014 |
|
Proceeds
from capital reduction of investment |
|
|
--- |
|
|
|
137 |
|
|
|
132 |
|
Purchase
of equity method investment |
|
|
(6,945 |
) |
|
|
--- |
|
|
|
--- |
|
Proceeds
from disposal of investment in non-marketable equity
securities |
|
|
10,000 |
|
|
|
--- |
|
|
|
--- |
|
Proceeds
from (repayments of) refundable deposits, net |
|
|
(82 |
) |
|
|
56 |
|
|
|
(12 |
) |
Releases
(pledges) of restricted marketable securities |
|
|
195 |
|
|
|
(197 |
) |
|
|
(4 |
) |
Cash paid
for loan made to related parties |
|
|
(1,750 |
) |
|
|
(3,150 |
) |
|
|
(1,500 |
) |
Cash
received from loan made to related party |
|
|
2,650 |
|
|
|
--- |
|
|
|
1,500 |
|
Net cash used in
investing activities |
|
|
(12,159 |
) |
|
|
(3,334 |
) |
|
|
(11,373 |
) |
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
Payments
of cash dividends |
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
(41,281 |
) |
Proceeds
from issuance of new shares by subsidiary |
|
|
105 |
|
|
|
--- |
|
|
|
--- |
|
Purchases
of subsidiaries shares from noncontrolling interests |
|
|
--- |
|
|
|
(85 |
) |
|
|
(41 |
) |
Pledges
of restricted cash, cash equivalents and marketable securities (for
borrowing of short-term debt) |
|
|
--- |
|
|
|
--- |
|
|
|
(40,000 |
) |
Proceeds
from short-term debt |
|
|
27,000 |
|
|
|
31,000 |
|
|
|
70,000 |
|
Repayments of short-term debt |
|
|
(27,000 |
) |
|
|
(31,000 |
) |
|
|
(30,000 |
) |
Net cash provided by
(used in)
financing activities |
|
|
105 |
|
|
|
(85 |
) |
|
|
(41,322 |
) |
Effect
of foreign currency exchange rate
changes on cash and cash equivalents |
|
|
299 |
|
|
|
(149 |
) |
|
|
99 |
|
Net
increase
(decrease) in
cash and cash equivalents |
|
|
(3,459 |
) |
|
|
43,647 |
|
|
|
(35,724 |
) |
Cash and cash
equivalents at beginning of period |
|
|
141,482 |
|
|
|
140,805 |
|
|
|
177,206 |
|
Cash and cash
equivalents at end of period |
|
$ |
138,023 |
|
|
$ |
184,452 |
|
|
$ |
141,482 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid during
the period for: |
|
|
|
|
|
|
Interest |
|
$ |
170 |
|
|
$ |
131 |
|
|
$ |
145 |
|
Income
taxes |
|
$ |
273 |
|
|
$ |
314 |
|
|
$ |
6,371 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of investing activities affecting both
cash and non-cash items: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
$ |
22,072 |
|
|
$ |
1,595 |
|
|
$ |
16,118 |
|
Decrease
(increase) in payable for purchases of equipment and asset
retirement obligations |
|
|
(6,360 |
) |
|
|
564 |
|
|
|
(5,940 |
) |
Cash
paid |
|
$ |
15,712 |
|
|
$ |
2,159 |
|
|
$ |
10,178 |
|
|
|
|
|
|
|
|
Proceeds
from disposal of investment in non-marketable equity
securities |
|
$ |
32,000 |
|
|
$ |
--- |
|
|
$ |
--- |
|
Increase
in other current assets for disposal of investment in
non-marketable equity securities |
|
|
(22,000 |
) |
|
|
--- |
|
|
|
--- |
|
Cash
received |
|
$ |
10,000 |
|
|
$ |
--- |
|
|
$ |
--- |
|
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts
in Thousands of
U.S.
Dollars) |
|
|
|
Twelve Months Ended
December
31, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
25,818 |
|
|
$ |
48,747 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
16,680 |
|
|
|
13,756 |
|
Bad debt
expense |
|
|
155 |
|
|
|
620 |
|
Share-based compensation expenses |
|
|
1,098 |
|
|
|
1,186 |
|
Loss
(gain) on disposals of property and equipment |
|
|
(26 |
) |
|
|
26 |
|
Gain on
disposal of investment in non-marketable equitysecurities |
|
|
(23,038 |
) |
|
|
--- |
|
- ain on disposals of marketable securities, net
|
|
|
(188 |
) |
|
|
(10 |
) |
Equity in
losses of equity method investees |
|
|
1,200 |
|
|
|
1,277 |
|
Deferred
income tax benefit |
|
|
(1,601 |
) |
|
|
(1,978 |
) |
Inventories write downs |
|
|
12,298 |
|
|
|
23,342 |
|
Changes in: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(1,998 |
) |
|
|
(14,602 |
) |
Inventories |
|
|
2,250 |
|
|
|
(1,716 |
) |
Prepaid
expenses and other current assets |
|
|
862 |
|
|
|
(647 |
) |
Accounts
payable |
|
|
(2,336 |
) |
|
|
17,846 |
|
Accounts
payable to related party |
|
|
(576 |
) |
|
|
576 |
|
Income
taxes payable |
|
|
(7,390 |
) |
|
|
1,389 |
|
Other
payable to related party |
|
|
2,200 |
|
|
|
--- |
|
Other
accrued expenses and other current liabilities |
|
|
4,678 |
|
|
|
(5,164 |
) |
Other
liabilities |
|
|
(693 |
) |
|
|
24 |
|
Net cash provided by
operating activities |
|
|
29,393 |
|
|
|
84,672 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
|
(39,818 |
) |
|
|
(7,902 |
) |
Proceeds
from disposals of property and equipment |
|
|
115 |
|
|
|
9 |
|
Purchases
of available-for-sale marketable securities |
|
|
(47,095 |
) |
|
|
(30,248 |
) |
Proceeds
from disposals of available-for-sale marketable securities |
|
|
47,119 |
|
|
|
38,532 |
|
Purchases
of investment securities |
|
|
--- |
|
|
|
(1,600 |
) |
Proceeds
from capital reduction of investment |
|
|
132 |
|
|
|
568 |
|
Purchase
of equity method investment |
|
|
(9,175 |
) |
|
|
(37 |
) |
Proceeds
from disposal of investment in non-marketable equity
securities |
|
|
10,000 |
|
|
|
--- |
|
Proceeds
from (repayments of) refundable deposits, net |
|
|
(120 |
) |
|
|
461 |
|
Releases
(pledges) of restricted marketable securities |
|
|
(146 |
) |
|
|
240 |
|
Cash paid
for loan made to related parties |
|
|
(3,250 |
) |
|
|
(7,150 |
) |
Cash
received from loan made to related party |
|
|
7,150 |
|
|
|
--- |
|
Net cash used in
investing activities |
|
|
(35,088 |
) |
|
|
(7,127 |
) |
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts
in Thousands of
U.S.
Dollars) |
|
|
|
|
|
Twelve Months Ended
December
31, |
|
|
|
|
|
2017 |
|
|
|
2016 |
|
Cash flows from
financing activities: |
|
|
|
|
|
|
Payments
of cash dividends |
|
|
|
$ |
(41,281 |
) |
|
$ |
(22,348 |
) |
Proceeds
from disposals of subsidiary shares to noncontrolling interests by
Himax Imaging, Inc. |
|
|
|
|
4 |
|
|
|
9 |
|
Purchases
of subsidiaries shares from noncontrolling interests |
|
|
|
|
(42 |
) |
|
|
(376 |
) |
Releases
(pledges) of restricted cash, cash equivalents and marketable
securities (for borrowing of short-term debt) |
|
|
|
|
(9,000 |
) |
|
|
42,000 |
|
Proceeds
from issuance of new shares by subsidiary |
|
|
|
|
105 |
|
|
|
--- |
|
Proceeds
from short-term debt |
|
|
|
|
151,161 |
|
|
|
230,000 |
|
Repayments of short-term debt |
|
|
|
|
(142,161 |
) |
|
|
(272,000 |
) |
Net cash used in
financing activities |
|
|
|
|
(41,214 |
) |
|
|
(22,715 |
) |
Effect
of foreign currency exchange rate
changes on cash and cash equivalents |
|
|
|
|
480 |
|
|
|
(207 |
) |
Net
increase (decrease) in
cash and cash equivalents |
|
|
|
|
(46,429 |
) |
|
|
54,623 |
|
Cash and cash
equivalents at beginning of period |
|
|
|
|
184,452 |
|
|
|
129,829 |
|
Cash and cash
equivalents at end of period |
|
|
|
$ |
138,023 |
|
|
$ |
184,452 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid during
the period for: |
|
|
|
|
|
|
Interest
expense |
|
|
|
$ |
565 |
|
|
$ |
637 |
|
Income
taxes |
|
|
|
$ |
14,683 |
|
|
$ |
11,534 |
|
|
|
|
|
|
|
|
Supplemental
disclosures of investing activities affecting both
cash and non-cash items: |
|
|
|
|
|
|
Purchases
of property, plant and equipment |
|
|
|
$ |
54,215 |
|
|
$ |
6,570 |
|
Decrease
(increase) in payable for purchases of equipment and asset
retirement obligations |
|
|
|
|
(14,397 |
) |
|
|
1,332 |
|
Cash
paid |
|
|
|
$ |
39,818 |
|
|
$ |
7,902 |
|
|
|
|
|
|
|
|
Proceeds
from disposal of investment in non-marketable equity
securities |
|
|
|
$ |
32,000 |
|
|
$ |
--- |
|
Increase
in other current assets for disposal of investment in
non-marketable equity securities |
|
|
|
|
(22,000 |
) |
|
|
--- |
|
Cash
received |
|
|
|
$ |
10,000 |
|
|
$ |
--- |
|
|
|
|
|
|
|
|
|
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 MonthsEnded December 31, |
|
Three MonthsEnded September 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
Revenues |
$ |
181,081 |
|
|
$ |
203,443 |
|
|
$ |
197,146 |
|
Gross profit |
|
44,582 |
|
|
|
38,926 |
|
|
|
50,368 |
|
Add: Share-based
compensation – cost of revenues |
|
24 |
|
|
|
25 |
|
|
|
130 |
|
Gross profit excluding
share-based compensation |
|
44,606 |
|
|
|
38,951 |
|
|
|
50,498 |
|
Gross margin excluding
share-based compensation |
|
24.6 |
% |
|
|
19.1 |
% |
|
|
25.6 |
% |
Operating income |
|
4,121 |
|
|
|
6,861 |
|
|
|
3,396 |
|
Add: Share-based
compensation |
|
143 |
|
|
|
254 |
|
|
|
6,593 |
|
Operating income
excluding share-based compensation |
|
4,264 |
|
|
|
7,115 |
|
|
|
9,989 |
|
Add:
Acquisition-related charges –intangible assets amortization |
|
247 |
|
|
|
247 |
|
|
|
246 |
|
Operating income
excluding share-based compensation and acquisition-related
charges |
|
4,511 |
|
|
|
7,362 |
|
|
|
10,235 |
|
Operating margin
excluding share-based compensation and acquisition-related
charges |
|
2.5 |
% |
|
|
3.6 |
% |
|
|
5.2 |
% |
Net income attributable
to Himax Technologies, Inc. stockholders |
|
23,549 |
|
|
|
4,439 |
|
|
|
3,684 |
|
Add: Share-based
compensation, net of tax |
|
127 |
|
|
|
212 |
|
|
|
5,154 |
|
Add:
Acquisition-related charges, net of tax |
|
148 |
|
|
|
148 |
|
|
|
147 |
|
Net income attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
23,824 |
|
|
|
4,799 |
|
|
|
8,985 |
|
Net margin attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
13.2 |
% |
|
|
2.4 |
% |
|
|
4.6 |
% |
|
|
|
|
|
|
*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, |
|
|
|
|
2017 |
|
|
|
2016 |
|
Revenues |
|
|
$ |
685,167 |
|
|
$ |
802,917 |
|
Gross profit |
|
|
|
167,025 |
|
|
|
194,312 |
|
Add: Share-based
compensation – Cost of revenues |
|
|
|
204 |
|
|
|
224 |
|
Gross profit excluding
share-based compensation |
|
|
|
167,229 |
|
|
|
194,536 |
|
Gross margin excluding
share-based compensation |
|
|
|
24.4 |
% |
|
|
24.2 |
% |
Operating income |
|
|
|
8,150 |
|
|
|
59,235 |
|
Add: Share-based
compensation |
|
|
|
7,245 |
|
|
|
10,409 |
|
Operating income
excluding share-based compensation |
|
|
|
15,395 |
|
|
|
69,644 |
|
Add:
Acquisition-related charges –Intangible assets amortization |
|
|
|
985 |
|
|
|
985 |
|
Operating income
excluding share-based compensation and acquisition-related
charges |
|
|
|
16,380 |
|
|
|
70,629 |
|
Operating margin
excluding share-based compensation and acquisition-related
charges |
|
|
|
2.4 |
% |
|
|
8.8 |
% |
Net income attributable
to Himax Technologies, Inc. stockholders |
|
|
|
27,967 |
|
|
|
50,912 |
|
Add: Share-based
compensation, net of tax |
|
|
|
5,705 |
|
|
|
8,245 |
|
Add:
Acquisition-related charges, net of tax |
|
|
|
590 |
|
|
|
590 |
|
Net income attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
|
|
34,262 |
|
|
|
59,747 |
|
Net margin attributable
to Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
|
|
5.0 |
% |
|
|
7.4 |
% |
|
|
|
|
|
|
*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 MonthsEnded December 31, |
|
Twelve MonthsEnded December 31, |
|
|
2017 |
|
2017 |
|
Diluted GAAP earnings
per ADS attributable to Himax Technologies, Inc. stockholders |
$0.137 |
|
$0.162 |
|
Add:
Share-based compensation per ADS |
$0.001 |
|
$0.033 |
|
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 |
$0.138 |
|
$0.199 |
|
|
|
|
|
|
Numbers do not add up
due to rounding |
|
|
|
|
|
|
|
|
|
|
|
|
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