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 first quarter ended March 31, 2019.
SUMMARY FINANCIALS
First Quarter
2019 Results
Compared to First Quarter 2018
Results (USD in millions)
(unaudited) |
|
Q1 2019 |
Q1 2018 |
CHANGE |
Net Revenue |
$163.3 |
$162.9 |
+0.3% |
Gross Profit |
$36.9 |
$36.6 |
+0.7% |
Gross Margin |
22.6% |
22.5% |
+0.1% |
IFRS Loss Attributable to
Shareholders |
($2.3) |
($2.8) |
+18.0% |
Non-IFRS Loss Attributable to
Shareholders |
($2.0)(1) |
($2.6)(2) |
+24.0% |
IFRS EPS (Per Diluted ADS,
USD) |
($0.013) |
($0.016) |
+18.0% |
Non-IFRS EPS (Per Diluted ADS,
USD) |
($0.011)(1) |
($0.015)(2) |
+24.0% |
|
(1) Non-IFRS Loss attributable to common shareholders and EPS
excludes $0.3 million of share-based compensation expenses, net of
tax and $0.02 million non-cash acquisition related charge, net of
tax.(2) Non-IFRS Loss attributable to common shareholders and EPS
excludes $0.2 million of share-based compensation expenses, net of
tax and $0.08 million non-cash acquisition related charges, net of
tax.
|
First
Quarter 2019 Results
Compared to Fourth
Quarter 2018 Results
(USD in millions)
(unaudited) |
|
Q1 2019 |
Q4 2018 |
CHANGE |
Net Revenue |
$163.3 |
$191.0 |
-14.5% |
Gross Profit |
$36.9 |
$46.4 |
-20.5% |
Gross Margin |
22.6% |
24.3% |
-1.7% |
IFRS Profit (Loss)
Attributable to Shareholders |
($2.3) |
$8.5 |
-127.4% |
Non-IFRS Profit
(Loss) Attributable to Shareholders |
($2.0)(1) |
$8.7(2) |
-122.5% |
IFRS EPS (Per
Diluted ADS, USD) |
($0.013) |
$0.049 |
-127.4% |
Non-IFRS EPS (Per
Diluted ADS, USD) |
($0.011)(1) |
$0.050(2) |
-122.5% |
|
|
|
(1) Non-IFRS Loss attributable to common
shareholders and EPS excludes $0.3 million of share-based
compensation expenses, net of tax and $0.02 million non-cash
acquisition related charge, net of tax.(2) Non-IFRS Profit
attributable to common shareholders and EPS excludes $0.2 million
of share-based compensation expenses, net of tax and $0.02 million
non-cash acquisition related charge, net of tax.
“Our first quarter 2019 revenues, gross margin and EPS all met
our guidance issued on February 19. The anticipated decline in
revenue was primarily a result of several factors that include the
impact of seasonality, customers’ inventory correction on
smartphone and the worldwide sluggish automotive sales. IFRS gross
margin for the first quarter declined sequentially due to less
favorable product mix,” said Mr. Jordan Wu, President and Chief
Executive Officer of Himax.
“As the current market conditions, including global economy,
oversupply of TV panel markets, weak global smartphone demand and
automotive sales, and customers’ ongoing downward inventory
adjustment in smartphone TDDI, have not shown signs of improvement,
we will continue to experience pricing and cost pressure. For the
second quarter, we expect revenue to increase sequentially, driven
primarily by the shipment increase of TDDI and traditional driver
IC for smartphone. Gross margin, however, is expected to decline
for three major reasons: higher material cost resulting from an
industry-wide material shortage for the large panel driver IC,
reduced WLO shipment per an anchor customer’s demand which leads to
lower capacity utilization, and the product mix change in
smartphone segment due to shipment increase of TDDI for lower-end
market and traditional driver IC, both generate gross margin lower
than the corporate average.”
“Looking ahead into the second half, among our major product
segments, we expect TDDI and WLO shipments to increase
significantly, offset by shipment decline of the traditional
discrete driver ICs for smartphones and automotive display drivers.
Notably, our TDDI solutions made good progress in diversifying into
other leading smartphone end customers, winning more strategic
projects and expanding to other applications beyond smartphone.
Such new design-wins, new end customers and new markets will
contribute to our TDDI sales in Q2 and a strong growth for the
remainder of 2019. In terms of WLO business, we were informed of a
product replacement decision by our WLO anchor customer after our
last earnings call on February 19, 2019. Foreseeing that WLO
shipment volume in 2019 will decline significantly starting from
the third quarter, we disclosed the information in our 20-F filing
in March. The filing also warned of the additional negative impact
the anticipated volume fall-off would cause to our 2019 margin and
profitability as the substantial cut-back of WLO fab capacity
utilization would lead to higher equipment depreciation and fab
overhead on a per unit basis. As it turns out, we have very
recently been notified by the anchor customer of their new
decision. Contrary to our earlier warning, we now expect the second
half WLO shipment to increase significantly to a scale comparable
to that of the same period last year with therefore similar amount
of equipment depreciation and fab overhead charges on a per unit
basis. In parallel, we expect the traditional discrete driver ICs
for smartphone to decline substantially in the second half 2019 as
its addressable market in smartphone continues to be quickly
replaced by TDDI and AMOLED. Moreover, in automotive display
segment, on the backdrop of a feeble car market, the penetration of
displays into vehicles is also maturing. Therefore, we may not be
able to see the same kind of growth that we enjoyed in the past
several years. However, we are still the leader in this space and
we are leading the market in the introduction of new technologies
including TDDI, AMOLED and local dimming timing controller. We
believe such new technologies will rejuvenate the industry and
bring it back to a growth trajectory. As to our large-panel driver
IC business, while the large display market is still clouded with
concerns of oversupply and waning demand, our current forecast for
the second half is showing signs of revenue rebound thanks to
certain of our product upgrades and earlier design-wins and, most
importantly, our efforts to secure additional COF capacity which is
leading to more allocation from our panel customers and even more
design-wins. The margin for large panel driver will likely still be
under pressure during the second half but we are working on ways to
improve the costs and margin,” said Mr. Jordan Wu.
“On 3D sensing, we continue to participate in most of the
smartphone OEMs’ ongoing 3D sensing projects covering structured
light and time-of-flight (ToF). At present, Android smartphone’s
front-facing 3D sensing adoption is still hindered by the high
hardware cost, long development lead time, and the lack of killer
applications. Reacting to their lukewarm response, we started to
work on the next generation SLiM™ 3D sensing, aiming to leapfrog
the market by providing high performance, easy to adopt and yet
cost friendly total solutions, targeting the majority of Android
smartphone players. Currently, we have completed the feasibility
study for Gen 2 SLiM™ solutions covering detailed specifications,
performance and cost. We will seek feedback from Android smartphone
OEMs to determine the way forward for 3D sensing total solution
strategy. For the avoidance of doubt, we remain and are committed
to be the leader in the optics for structured light 3D sensing
where we are currently engaged in multiple development projects
from multiple customers. Being a leading provider of 3D sensing
technology, we are also an active participant in smartphone OEMs’
design projects for new devices involving ToF technology. Unlike
structured light 3D sensing where we provide total solution or just
projector module or optics depending on customers’ needs, with ToF,
we will only focus on transmitter module by leveraging our WLO
related expertise.”
“Last but not least, we fully realize that this quarter will
mark the second consecutive quarter that we will make a bottom line
loss, the first in our corporate history. While we remain committed
to our big picture strategy, we are actively taking measures to get
back to steady profitability,” said Mr. Jordan Wu.
First Quarter 2019 Revenue Breakdown by Product Line
(USD in millions) (unaudited)
|
|
Q1 2019 |
% |
Q1 2018 |
% |
% Change |
|
Display drivers for
large-sized panels |
$70.0 |
42.9% |
$59.3 |
36.4 |
+18.0% |
|
Display drivers for
small/medium-sized panels |
$67.6 |
41.4% |
$71.7 |
44.0 |
-5.8% |
|
Non-driver products |
$25.7 |
15.7% |
$31.9 |
19.6 |
-19.0% |
|
Total |
$163.3 |
100.0% |
$162.9 |
100.0% |
+0.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2019 |
% |
Q4 2018 |
% |
% Change |
|
Display drivers for
large-sized panels |
$70.0 |
42.9% |
$74.2 |
38.9% |
-5.7% |
|
Display drivers for
small/medium-sized panels |
$67.6 |
41.4% |
$79.8 |
41.8% |
-15.4% |
|
Non-driver products |
$25.7 |
15.7% |
$37.0 |
19.3% |
-30.2% |
|
Total |
$163.3 |
100.0% |
$191.0 |
100.0% |
-14.5% |
|
|
|
|
|
|
|
The Company recorded net revenues of $163.3
million for the first quarter, representing a decrease of 14.5%
sequentially and an increase of 0.3% year-over-year. The first
quarter is traditionally the bottom of the year in terms of sales
because it has fewer working days due to the Lunar New Year
holidays. Customers’ inventory correction on smartphone and the
worldwide sluggish automotive sales also negatively impacted the
Company’s first quarter revenues. Gross margin was 22.6%, down 170
basis points sequentially due to less favorable product mix. IFRS
loss per diluted ADS were 1.3 cents, in line with the guidance
range of 1.0 to 3.0 cents. Non-IFRS loss per diluted ADS were 1.1
cents, in line with the guidance range of 0.8 to 2.8 cents.
Revenue from large display drivers was $70.0
million, down 5.7% sequentially, and up 18.0% year-over-year. The
sequential decline reflected the impact of seasonality while the
year-over-year increase was driven by higher ASP and more 4K TV
shipment. Large panel driver ICs accounted for 42.9% of the
Company’s total revenues for the first quarter, compared to 38.9%
in the fourth quarter of 2018 and 36.4% a year ago.
Revenue for small and medium-sized display
drivers came in at $67.6 million, down 15.4% sequentially and down
5.8% year-over-year. The driver ICs for the segment accounted for
41.4% of total sales for the first quarter, as compared to 41.8% in
the fourth quarter of 2018 and 44.0% a year ago. Revenue for this
segment in the first quarter declined by mid-teens as anticipated
due to seasonality, declining cars sales across all major markets,
and most importantly, the lackluster demand of the global
smartphone market.
Sales into smartphones were down 25.5%
sequentially and down 4.1% year-over-year. The sequential decline
was mainly caused by lower TDDI shipment and ASP reflecting weak
smartphone market and a major TDDI customer’s inventory correction.
The year-over-year decline was due to the much-decreased shipment
in traditional driver IC for smartphone, down close to 50%, as the
traditional driver IC is being quickly replaced by TDDI and AMOLED
but offset by higher TDDI sales. Display drivers for tablet and
other consumer products were down 4.2% sequentially and 27.8%
year-over-year due to weak overall market demand.
Driver IC revenue for automotive applications
reached $28.5 million, down 13.4% sequentially but up 14.5%
year-over-year, accounting for 20.7% of its total driver IC
revenue. The sequential decline partially reflected seasonality but
was largely driven by the weak car sales momentum across all major
markets. Another attributing factor is the new European Union
emissions regulations effective September last year which has since
caused car sales to slump for several major European
automakers.
Revenues from non-driver businesses were $25.7
million, down 30.2% sequentially and down 19.0% from last year.
Non-driver products accounted for 15.7% of total revenues, as
compared to 19.3% in the fourth quarter of 2018 and 19.6% a year
ago. Lower shipments of timing controllers have attributed to both
the sequential and year-over-year decline. The WLO anchor
customer’s lower seasonal demand also contributed negatively to the
sequential decline, but on a year-over-year basis WLO shipment
almost doubled.
IFRS gross margin for the first quarter was
22.6%, down 170 basis points sequentially and up 10 basis points
from the same period last year, both a result of product mix.
IFRS operating expenses were $40.2 million in
the first quarter, down 2.0% from the preceding quarter and up 1.0%
from a year ago. The slight year-over-year increase was primarily a
result of increased depreciation expense, mainly from the new
building and equipment needed to support the 3D sensing business.
However, salary expense came down from last year due to NT dollar
depreciation against US dollar as the Company pays the bulk of its
employee salaries in NT dollars. Likewise, on a sequential basis,
salary and R&D expenses also came down while depreciation
charge also went up for the same reason.
IFRS operating margin for the first quarter was
-2.1%, little changed from -2.0% in the same period last year but
down from 2.8% in the prior quarter. The sequential decrease was
primarily a result of lower sales and gross margin, offset by lower
operating expenses. The year-over-year decline was a result of
higher operating expenses.
First quarter non-IFRS operating loss was $2.9
million, or -1.8% of sales, versus non-IFRS operating loss of 2.9
million, or -1.8% of sales, for the same period last year and down
from 3.0% a quarter ago.
IFRS loss for the first quarter was $2.3
million, or 1.3 cents per diluted ADS, compared to profit of $8.5
million, or 4.9 cents per diluted ADS, in the previous quarter and
IFRS loss of $2.8 million, or 1.6 cents per diluted ADS, a year
ago. Part of the sequential profit decrease was a result of lower
sales and lower gross margin, offset by lower operating expenses.
Another factor causing the profit decline is the last quarter’s
revaluation gain on investment of $2.9 million, accounting for 1.7
cents per diluted ADS, coming from an AI startup investment made in
November 2017 that the Company reported during the fourth quarter
2018 earnings call. Excluding the investment gain, IFRS profit for
Q4 2018 would be $5.6 million or 3.2 cents per diluted ADS.
First quarter non-IFRS loss was $2.0 million, or
1.1 cents per diluted ADS, compared to non-IFRS profit of $8.7
million, or 5.0 cents per diluted ADS last quarter and non-IFRS
loss of $2.6 million, or 1.5 cents per diluted ADS the same period
last year. Excluding the above-mentioned investment gain, non-IFRS
profit for Q4 2018 would be $5.8 million or 3.3 cents per diluted
ADS.
Balance Sheet and Cash Flow
Himax had $108.2 million of cash, cash
equivalents and other financial assets as of the end of March 2019,
compared to $151.9 million at the same time last year and $117.7
million a quarter ago. On top of the cash position, restricted cash
was $164.3 million at the end of the quarter, same to the preceding
quarter and up from $147.0 million a year ago. The restricted cash
is mainly used to guarantee the Company’s secured short-term
borrowing for the same amount. The Company had $40 million
unsecured short-term loan at the end of Q1. It expects the loan
balance to rise further next quarter primarily due to land
payment.
Himax’s inventories as of March 31, 2019 were
$189.3 million, up from $162.6 million a quarter ago and up from
$148.0 million at the same time last year. Accounts receivable at
the end of March 2019 were $176.2 million as compared to $166.6
million a year ago and $189.3 million last quarter. DSO was 97 days
at the end of March 2019, as compared to 92 days a year ago and 95
days at end of the last quarter. As highlighted in the last
earnings call, in response to capacity shortage of foundry and
certain packaging material, the Company had to keep the inventory
level higher than usual. Looking forward, given the prevailing
uncertain market conditions the Company has started to control its
inventory level, targeting to bring it down to a more normal level
soon.
Net cash outflow from operating activities for
the first quarter was $22.1 million as compared to an inflow of
$2.3 million for the same period last year and an inflow of $2.3
million last quarter. Net cash outflow from additional
inventory buildup, mainly for driver ICs including TDDI, amounted
to $31.5 million during the quarter. As highlighted above, in
response to capacity shortage of foundry and certain packaging
material, the Company had to keep the inventory level higher than
usual.
First quarter capital expenditures were $6.3
million, versus $18.6 million a year ago and $5.2 million last
quarter. The investment in design tools and R&D related
equipment for its traditional IC design business amounted to $2.4
million in the quarter. The remaining $3.9 million was for the
ongoing payments for the new building’s construction, WLO capacity
expansion and installation of active alignment capacity to support
the Company’s 3D sensing business. The second quarter capex
for the Company’s expansion project will reach the peak, budgeted
to be $33 million, including $27.7 million for the land purchase.
By then it will have concluded substantially all the capex payments
for the expansion project with just $3 million left to be
made.
Share Buyback Update
As of March 31, 2019, Himax had 172.1 million
ADS outstanding, unchanged from last quarter. On a fully diluted
basis, the total ADS outstanding are 172.6 million.
Q2 2019
Outlook
Himax expects the second quarter gross margin to
decline around 3% with slightly increasing revenue from the
previous quarter. The Company fully realizes that this quarter mark
the second consecutive quarter that it will make a bottom line
loss, the first in the Company’s corporate history. While Himax
remain committed to its big picture strategy, Himax is actively
taking measures to get back to steady profitability. The second
quarter gross margin will decline for three major reasons. Firstly,
the higher material cost of the large panel driver IC resulting
from an industry-wide material shortage will lead to lower gross
margin. The Company’s large-size panel customers are going through
a difficult period of increasing supply and lackluster demand right
now. Himax thought it was prudent not to pass on the rising
material cost to its customers as it used to for the consideration
of long term relationship. Secondly, the gross margin of the WLO
business would also fall because of reduced shipment per an anchor
customer’s demand which will lead to lower capacity utilization.
The Company expects the gross margin of WLO to return to a
much-improved level in the second half when orders are expected to
come back strongly, reflecting the anchor customer’s demand
seasonality. Finally, smartphone segment gross margin would likely
shrink a little for product mix change. Himax anticipates
significant sequential increase in the second quarter shipment of
TDDI for lower-end market and certain traditional discrete driver
IC for smartphones. Both will generate gross margins lower than the
corporate average.
Based on its Q1 results and Q2 outlook, Himax’s
1H19 revenue would experience year-over-year decline as the current
market conditions have not shown signs of improvement. The
uncertain market conditions, including global economy, oversupply
of TV panel markets, weak global smartphone demand and automotive
sales, have led to pricing and cost pressure for Himax. Customers’
ongoing downward inventory adjustment in smartphone TDDI was also
outside of the Company’s expectation. However, looking ahead into
the second half, among its major product segments, the Company
expects TDDI and WLO shipments to increase significantly, offset by
shipment decline of the traditional discrete driver ICs for
smartphones and automotive display drivers. Automotive display
drivers are expected to stay relatively weak following several
years’ strong and continuous growth.
Last but not least, Himax continues to tighten
its cost and expense controls. The Company is in the process
of bringing inventory down from an unusually high level which was
built up in response to material shortage. It expects to begin to
see reduction in inventory days and in absolute value in Q2. The
Company is also putting close control in R&D expenses,
targeting to continuing R&D activities across its strategic
areas without raising R&D expenses from the last year. These
include next generation display driver technology for 8K TV and
AMOLED, 3D sensing for both mobile phone and non-mobile phone
applications and AI-based ultra-low power smart sensing solutions.
Total opex for 2019 is budgeted to be at around the same level as
that of the last year excluding the anticipated increase of $4.9
million in depreciation arising primarily from the construction of
the new fab.
Comparing to the First quarter 2019 revenues,
Himax expects large display driver ICs to decline by mid-teens,
small and medium-sized display driver IC to increase by more than
20% and its non-driver IC business to increase by mid-single digit
in the second quarter 2019.
Display
Driver IC
MarketLDDICThe
Company expects its large display driver IC business’s gross margin
to be under pressure due to the panel market is in over-supply and
COF, the material needed to make large panel driver IC, which is in
shortage. Q2 revenue in this segment is expected to decrease by
mid-teens sequentially with lower gross margin, as mentioned
earlier. While the large display market is still clouded with
concerns of oversupply and waning demand, Himax’s current forecast
for the second half is showing signs of revenue rebound thanks to
certain of its product upgrades and earlier design-wins and, most
importantly, its efforts to secure additional COF capacity which is
leading to more allocation from the Company’s panel customers and
even more design-wins. The margin for large panel driver will
likely still be under pressure during the second half but Himax is
working on ways to improve the costs and margin.
On technology development, the Company has
started shipping 8K TV related ICs to one of its industry leading
panel customers and expect a few more to come during the second
half when more TV brands are scheduled to launch new 8K TV models.
Having said that, 8K TVs are still expected to hold a small share
in the TV market because 8K content and transmission technology
have not yet matured. But 8K TV is a strategic area for Himax as it
will boost demand for higher LCD driver ICs and timing controller
contents over the next few years.
SMDDICOn
smartphone, declining sales into the smartphone market has
been the key factor causing Himax’s P&L pressure over the last
few quarters, especially considering that smartphone market had
been the number one contributor to its top and bottom lines for
many years in the past. The Company is determined to take back
market share by securing more tier one customers with the existing
TDDI products and advancing its technology to win the next
generation TDDI market.
Reflecting weak smartphone demand and a
bigger-than-expected inventory correction by a major Chinese end
customer, the Company’s first quarter TDDI shipment declined more
than 30% sequentially. The fluctuation is high due to its rather
concentrated customer base for the time being. Despite the
unsatisfactory Q1 result, Himax made good progress in diversifying
into other leading end customers, winning more strategic projects
and starting to make production shipment of lower-end HD+ TDDI
chips, primarily for a leading Korean smartphone end customer. As
the Company reported in the last earnings call, because of capacity
constraint, it chose to limit its TDDI shipment to only higher-end
FHD+ projects previously as they yield higher revenue and better
margin. Himax has expanded partnership with the leading Korean
smartphone customer which has been a partner of the Company for a
long time. It expects more shipments for other leading smartphone
makers to begin in the second half and possibly expand its end
product coverage of TDDI shipment to tablet market. Such new
design-wins, new end customers and new markets will contribute to
the Company’s TDDI sales in Q2 and a strong growth for the
remainder of 2019.
Looking ahead, Himax is in the forefront of
offering new generation TDDIs which will further enable narrow
bezel panel design without the usage of COF packaging. As the
Company described earlier, COF material not only is costly but also
suffers from serious supply constraint. This will provide a new
option for smartphone design going forward. Himax is working on
several design-in projects with its new generation TDDI with more
customers in evaluation stage right now.
The Company just mentioned that it could
potentially start shipping TDDI chips for tablet market within this
year. In fact, it won’t take long to also see the adoption of TDDI
in automotive display, tablet with active stylus and even 2-in-1
notebooks. Himax is in the frontier in terms of exploring those
opportunities and engagement with customers. Its TDDI for
automotive display has started production shipment in Q1 to a
leading panel customer for the use of a prominent car maker. The
initial volume started small but the pipeline for next year’s mass
production looks promising. This could potentially resume the
growth of its automotive segment and strengthen its gross margin
amidst the stagnant car market worldwide. On tablet, the Company’s
TDDI chips are under verification by panel makers. It expects
revenue contribution to start from Q4 this year with a number of
leading end customers. Furthermore, it is leading the industry in
TDDI with active stylus by partnering with the world's leading
brands for pen tablets and interactive pen displays. While both
segments are smaller than smartphone in terms of volume, they do
represent growth areas for Himax’s TDDI solutions in the near
future.
In addition to TDDI, Himax is also seeing a
stronger second quarter for traditional discrete driver ICs in
smartphone segment. Its design-win with a major Chinese smartphone
maker went into production in March and shipment is set to expand
strongly in Q2 per the customer’s forecast. Notwithstanding this
rebound, the trend of the traditional discrete driver ICs’
addressable market being quickly replaced by TDDI and AMOLED in
smartphone will continue. The Company expects the traditional
discrete driver ICs for smartphone to decline substantially in the
second half 2019.
Combining significantly more shipment of low-end
TDDI and discrete smartphone driver, the Company’s Q2 sales into
the smartphone market is expected to increase by close to 50%
sequentially. However, such growth in revenue will lead to lower
overall corporate gross margin as both products generate lower
gross margin than the corporate average.
On AMOLED product line, Himax 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.
In automotive display segment, Himax’s panel
customers were greatly affected by the weakened worldwide
automotive market demand during the first quarter. Many were forced
to reduce shipments to major European makers due to the new and
tightened European Union emission testing rules. Suffering from
high inventory, the Company’s panel customers are foreseeing a
sequential decline of shipments in the second quarter for
automotive segment. As Himax commands more than 30% of the global
automotive display driver IC market, such wide range inventory
correction has had a significant impact on its business. Q2 sales
into this segment is likely to decrease by mid-single digit
sequentially. Looking forward, on the backdrop of a feeble car
market, the penetration of displays into vehicles is also maturing.
Therefore, Himax may not be able to see the same kind of growth
that it enjoyed in the past several years from automotive segment.
However, Himax is still the leader in this space and it is leading
the market in the introduction of new technologies including TDDI,
AMOLED and local dimming timing controller. The Company believes
such new technologies will rejuvenate the industry and bring its
automotive sales back to a growth trajectory.
Himax’s tablet and consumer electronics
businesses represented around 10% of its total sales in the first
quarter. Although the overall markets remain weak, it expects
tablet business to rebound during Q2 for additional shipment to a
leading end customer and white box market as well as improved
foundry supply for this segment. As mentioned earlier, it also
started to provide OEMs with samples for its world leading in-cell
TDDI that supports the use of active stylus for tablet in the first
quarter. The Company will report progress in due course. Combing
tablet and consumer electronics businesses, Himax expects a sales
increase of around 20% sequentially in the second quarter.
For second-quarter small and medium-sized driver
IC business, Himax expects revenue to increase by more than 20%
sequentially.
Non-Driver Product
Categories3D Sensing SolutionsHimax
continues to participate in most of the smartphone OEMs’ ongoing 3D
sensing projects covering structured light and time-of-flight
(ToF). At present, Android smartphone’s front facing 3D sensing
adoption is still hindered by the high hardware cost, long
development lead time, and the lack of killer applications. Instead
of 3D sensing, most of the Android phone makers have chosen the
fingerprint technology which can achieve similar phone unlock and
online payment functions with a much lower cost. Reacting to their
lukewarm response, Himax started to work on the next generation
SLiMTM 3D sensing, aiming to leapfrog the market by providing high
performance, easy to adopt and yet cost friendly total solutions,
targeting the majority of Android smartphone players. Currently it
has completed the feasibility study for its Gen 2 SLiMTM solutions
covering detailed specifications, performance and cost. The
Company’s next step is to seek feedback from Android smartphone
OEMs. With that, it will then determine the way forward for its 3D
sensing total solution strategy. For the avoidance of doubt,
the Company remain and is committed to be the leader in the optics
for structured light 3D sensing where it is currently engaged in
multiple development projects from multiple customers.
Being a leading provider of 3D sensing
technology, Himax is also an active participant in smartphone OEMs’
design projects for new devices involving ToF technology. The
Company sees ToF building momentum in such use cases as advanced
photography, distance/dimension measurement and 3D depth
information generation for AR. Unlike structured light 3D sensing
where it provides total solution or just projector module or optics
depending on customers’ needs, with ToF, it will only focus on
transmitter module by leveraging its WLO related expertise.
The Company has mentioned previously that 3D
sensing can have a wide range of applications beyond smartphone. It
has started to explore business opportunities in various industries
that are typically less sensitive to cost and always require a
total solution. Among such projects is a collaboration effort with
Kneron, an industry leader in edge-based artificial intelligence in
which the Company has made an equity investment, to develop an
AI-enabled 3D sensing solution targeting security and surveillance
markets. The Company is also working with partners/customers on new
applications covering home appliances and industrial
manufacturing.
As to the Himax’s capex investment for 3D
sensing production capacity, while the Company still needs to
absorb the associated cost in the short term, the capacity is a
strategic investment necessary to substantiate engagement with
customers. The production capacity, which is primarily WLO fab, can
be used not only to support its own SLiMTM total solution, it is
essential for Himax to provide optics products to customers for
their structured light or ToF 3D sensing projects. Furthermore, the
WLO capacity can be used for various other product areas including,
but not limited to, waveguide for AR goggle device where it is
still getting frequent enquiries from top tech companies. As a
matter of fact, having some readily available production capacity
has become a competitive advantage to participate in leading
customers’ new design projects at a time when the smartphone
product cycle, and therefore the design lead time, is getting
shorter. With the capacity, coupled with the Company's unique
knowhow in providing sophisticated diffractive optics design, Himax
is often the partner of choice when customers are exploring
advanced optical challenges.
WLOAs anticipated, the first
quarter WLO revenue declined substantially due to an anchor
customer’s lower seasonal demand. Himax expects further reduction
for the second quarter. The much-reduced shipment will lead to
lower capacity utilization and therefore negatively impact its Q2
gross margin. Himax’s WLO business has been largely dependent on
one anchor customer for the past couple of years, despite good
design-in pipelines and collaboration projects with multiple
customers. The Company was informed of a product replacement
decision by the anchor customer after its last earnings call on
February 19, 2019. Foreseeing that WLO shipment volume in 2019 will
decline significantly starting from the third quarter, Himax
disclosed the information in its 20-F filing in March. The filing
also warned of the additional negative impact the anticipated
volume fall-off would cause its 2019 margin and profitability as
the substantial cut-back of WLO fab capacity utilization would lead
to higher equipment depreciation and fab overhead on a per unit
basis. As it turns out, the Company has very recently been notified
by the anchor customer of their new decision. Contrary to its
earlier warning, Himax now expect the second half WLO shipment to
increase significantly to a scale comparable to that of the same
period last year with therefore similar amount of equipment
depreciation and fab overhead charges on a per unit basis. As a
semiconductor company, Himax is not immune to a customer’s supplier
decision which can work in or against its favor. The Company
believes the customer’s earlier replacement decision was a normal
occurrence in the semiconductor industry and is pleased that its
new decision has removed the concerns on the short-term impact over
the revenue and profitability of the Company’s WLO business.
Regardless, it believes such incidents would not affect its
long-term partnership with the anchor customer. In fact, the
Company is very optimistic about the growth opportunities it has
with the customer. Himax has many ongoing development projects for
their future generation products centering around its exceptional
design know-how and mass production expertise in WLO and related
technologies.
CMOS Image SensorOn CMOS image
sensor business updates, Himax continues to make great progress
with its machine-vision sensor product lines. Himax and Emza
unveiled the second generation WiseEye AIoT intelligent vision
solution at the ISC West 2019 in early April. The solution is
consisted of Himax’s industry leading ultra-low power sensor and
ASIC designs with Emza’s unique AI-based, ultra-low power computer
vision algorithm. The solution is uniquely positioned for AIoT
markets featuring battery-powered human detection sensor, AI-based
machine learning and always-on visual sensor, all operating at the
edge device. Furthermore, it brings an enhanced user experience and
better-informed decision-making running on minimal power and much
better cost compared to similar solutions consuming much higher
power. The Company is pleased with the status of engagement with
leading players in areas such as connected home, smart building and
security. In parallel, it is actively participating in the rapidly
growing AIoT eco-system which it believes will open up further
future opportunities for Himax.
For traditional human vision segments, Himax
sees strong demands in laptop and increasing shipment for
multimedia applications such as car recorders, surveillance,
drones, home appliances, and consumer electronics, among
others.
LCOSIn 2018, many AR goggle
devices were launched, targeting primarily niche industrial or
business applications, with top name multinationals continuing to
invest heavily to develop the ecosystem -- applications, software,
operating system, system electronics, and optics. While AR goggles
will take a few more years to fully realize its market potential,
Himax believes LCOS remains the mainstream technology in this
space. The Company’s technology leadership and proven manufacturing
expertise are evidenced by the growing list of AR goggle device
customers and ongoing engineering projects. In addition, Himax
continues to make great progress in developing high-end holographic
head-up displays for high-end automotive. LCOS for both goggle
device and HUD enjoy much higher ASP and better gross margin for
Himax and represents a long-term growth driver for the Company.
For non-driver IC business, the Company expects
revenue to increase by mid-single digit sequentially in the second
quarter.
Second
Quarter 2019 Guidance |
The Company is
providing the following financial guidance for the second quarter
of 2019: |
Net Revenue: |
To increase around 2% to 7% sequentially |
Gross Margin: |
To be around 19.5% to 20.0%,
depending on final product mix |
IFRS Loss: |
To be around 2.0 to 3.5 cents
per diluted ADS |
The second quarter gross margin will decline for three major
reasons. Firstly, the higher material cost of the large panel
driver IC resulting from an industry-wide material shortage will
lead to lower gross margin. Himax’s large-size panel customers are
going through a difficult period of increasing supply and
lackluster demand right now. The Company thought it was prudent not
to pass on the rising material cost to its customers as it used to
for the consideration of long term relationship. Secondly, the
gross margin of the WLO business would also fall because of reduced
shipment per an anchor customer’s demand which will lead to lower
capacity utilization. The Company expects the gross margin of WLO
to return to a much-improved level in the second half when orders
are expected to come back strongly, reflecting the anchor
customer’s demand seasonality. Finally, smartphone segment gross
margin would likely shrink a little for product mix change. Himax
anticipates significant sequential increase in the second quarter
shipment of TDDI for lower-end market and certain traditional
discrete driver IC for smartphones. Both will generate gross
margins lower than the corporate average.
HIMAX TECHNOLOGIES FIRST QUARTER 2019
EARNINGS CONFERENCE CALL
DATE: |
Thursday, May
9th, 2019 |
TIME: |
U.S.
8:00 a.m. EDT |
|
Taiwan 8:00 p.m. |
DIAL IN: |
U.S. +1 (866) 444-9147 |
|
INTERNATIONAL +1 (678) 509-7569 |
CONFERENCE ID |
7765575 |
WEBCAST: |
https://edge.media-server.com/m6/p/rz7dfvoh |
A replay of the call will be available beginning
two hours after the call through 11:30 a.m. US EDT on May 16th,
2019 (11:30 p.m. Taiwan time, May 16th, 2019) 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 7765575. 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 May 9th, 2020.
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, home appliance and Internet
of Things. Founded in 2001 and headquartered in Tainan, Taiwan,
Himax currently employs around 2,200 people from three Taiwan-based
offices in Tainan, Hsinchu and Taipei and country offices in China,
Korea, Japan, Israel, and the US. Himax has 2,965 patents granted
and 517 patents pending approval worldwide as of March 31st, 2019.
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, 2018 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.tw www.himax.com.tw
Sky Wang, Investor RelationsHimax Technologies,
Inc.US Tel: +1-949-585-9838 Ext.223Fax: +1-312-445-3643Email:
sky_wang@himax.com.tw www.himax.com.tw
Investor Relations - US RepresentativeJohn
Mattio, PresidentLamnia International Tel: +1-203-885-1058Email:
jmattio@lamniaintl.comwww.lamniaintl.com
-Financial Tables-
Himax Technologies, Inc. |
Unaudited Condensed Consolidated Statements of
Profit or
Loss |
(These interim financials do not fully comply with
IFRS because they omit all interim
disclosure required by
IFRS) |
(Amounts in Thousands of U.S. Dollars, Except
Share and Per Share Data) |
|
|
Three Months Ended March 31, |
|
Three Months Ended December
31, |
|
|
2019 |
|
|
|
2018 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
163,334 |
|
|
$ |
162,851 |
|
|
$ |
191,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
126,469 |
|
|
|
126,254 |
|
|
|
144,624 |
|
Research and development |
|
30,357 |
|
|
|
30,040 |
|
|
|
30,424 |
|
General and administrative |
|
5,522 |
|
|
|
4,906 |
|
|
|
5,650 |
|
Sales and marketing |
|
4,363 |
|
|
|
4,895 |
|
|
|
4,969 |
|
Total costs and expenses |
|
166,711 |
|
|
|
166,095 |
|
|
|
185,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
(3,377 |
) |
|
|
(3,244 |
) |
|
|
5,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non operating income
(loss): |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
562 |
|
|
|
549 |
|
|
|
605 |
|
Changes in fair value of financial assets at fair value through
profit or loss |
|
(17 |
) |
|
|
1 |
|
|
|
2,104 |
|
Foreign currency exchange gains (losses), net |
|
277 |
|
|
|
(258 |
) |
|
|
(68 |
) |
Finance costs |
|
(476 |
) |
|
|
(252 |
) |
|
|
(337 |
) |
Share of profit (losses) of associates |
|
41 |
|
|
|
(844 |
) |
|
|
1,397 |
|
Other income |
|
23 |
|
|
|
4 |
|
|
|
176 |
|
|
|
410 |
|
|
|
(800 |
) |
|
|
3,877 |
|
Profit (loss) before income
taxes |
|
(2,967 |
) |
|
|
(4,044 |
) |
|
|
9,216 |
|
Income tax expense (benefit) |
|
- |
|
|
|
(728 |
) |
|
|
1,390 |
|
Profit (loss) for the period |
|
(2,967 |
) |
|
|
(3,316 |
) |
|
|
7,826 |
|
Loss
attributable to noncontrolling interests |
|
648 |
|
|
|
487 |
|
|
|
637 |
|
Profit (loss)
attributable to Himax Technologies, Inc. stockholders |
$ |
(2,319 |
) |
|
$ |
(2,829 |
) |
|
$ |
8,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per ADS attributable to
Himax Technologies, Inc. stockholders |
$ |
(0.013 |
) |
|
$ |
(0.016 |
) |
|
$ |
0.049 |
|
Diluted earnings
(loss) per ADS attributable to Himax Technologies, Inc.
stockholders |
$ |
(0.013 |
) |
|
$ |
(0.016 |
) |
|
$ |
0.049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted Average Outstanding ADS |
|
172,540 |
|
|
|
172,499 |
|
|
|
172,540 |
|
Diluted Weighted Average Outstanding ADS |
|
172,557 |
|
|
|
172,536 |
|
|
|
172,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 profit or loss categories is
summarized as follows: |
Three Months Ended March
31, |
|
Three Months Ended
December 31, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2018 |
|
Share-based compensation |
|
|
|
|
|
Cost of revenues |
$ |
- |
|
|
$ |
12 |
|
|
$ |
- |
|
Research and development |
|
13 |
|
|
|
57 |
|
|
|
13 |
|
General and administrative |
|
2 |
|
|
|
9 |
|
|
|
2 |
|
Sales and marketing |
|
4 |
|
|
|
13 |
|
|
|
4 |
|
Income tax benefit |
|
(4 |
) |
|
|
(12 |
) |
|
|
(4 |
) |
Total |
$ |
15 |
|
|
$ |
79 |
|
|
$ |
15 |
|
|
|
|
|
|
|
The amount of
acquisition-related charges included in
applicable statements of profit or loss
categories is summarized as follows: |
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
charges |
|
|
|
|
|
Research and development |
$ |
470 |
|
|
$ |
246 |
|
|
$ |
310 |
|
Income tax benefit |
|
(122 |
) |
|
|
(71 |
) |
|
|
(78 |
) |
Total |
$ |
348 |
|
|
$ |
175 |
|
|
$ |
232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
IFRS Unaudited Condensed
Consolidated
Statements
of Financial
Position |
(Amounts in Thousands of U.S. Dollars) |
|
|
|
March
31,
2019 |
|
December
31, 2018 |
|
March
31,
2018 |
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
96,753 |
|
|
$ |
106,437 |
|
|
$ |
139,806 |
|
Financial assets at amortized cost |
|
|
11,476 |
|
|
|
11,229 |
|
|
|
11,753 |
|
Financial assets at fair value through profit or loss |
|
|
- |
|
|
|
- |
|
|
|
361 |
|
Accounts receivable, net |
|
|
176,152 |
|
|
|
189,279 |
|
|
|
166,603 |
|
Inventories |
|
|
189,317 |
|
|
|
162,561 |
|
|
|
147,962 |
|
Income taxes receivable |
|
|
55 |
|
|
|
72 |
|
|
|
45 |
|
Restricted deposit |
|
|
164,324 |
|
|
|
164,326 |
|
|
|
147,000 |
|
Other receivable from related parties |
|
|
2,780 |
|
|
|
2,780 |
|
|
|
3,515 |
|
Other current assets |
|
|
24,064 |
|
|
|
17,731 |
|
|
|
19,609 |
|
Total current assets |
|
|
664,921 |
|
|
|
654,415 |
|
|
|
636,654 |
|
Financial assets at
fair value through profit or loss |
|
|
9,750 |
|
|
|
9,768 |
|
|
|
1,600 |
|
Financial assets at
fair value through other comprehensive
income |
|
|
776 |
|
|
|
791 |
|
|
|
1,522 |
|
Equity method
investments |
|
|
4,130 |
|
|
|
4,064 |
|
|
|
9,905 |
|
Property, plant and
equipment, net |
|
|
118,759 |
|
|
|
111,067 |
|
|
|
95,953 |
|
Deferred tax
assets |
|
|
13,698 |
|
|
|
13,904 |
|
|
|
8,199 |
|
Goodwill |
|
|
28,138 |
|
|
|
28,138 |
|
|
|
28,138 |
|
Other
intangible assets, net |
|
|
10,169 |
|
|
|
10,778 |
|
|
|
3,027 |
|
Restricted
deposit |
|
|
130 |
|
|
|
130 |
|
|
|
481 |
|
Other non-current
assets |
|
|
3,682 |
|
|
|
3,623 |
|
|
|
8,579 |
|
|
|
|
189,232 |
|
|
|
182,263 |
|
|
|
157,404 |
|
Total assets |
|
$ |
854,153 |
|
|
$ |
836,678 |
|
|
$ |
794,058 |
|
Liabilities and
Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Unsecured borrowings |
|
$ |
40,000 |
|
|
$ |
20,000 |
|
|
$ |
- |
|
Secured borrowings |
|
|
164,000 |
|
|
|
164,000 |
|
|
|
147,000 |
|
Financial liability at amortized cost |
|
|
5,071 |
|
|
|
5,071 |
|
|
|
4,920 |
|
Accounts payable |
|
|
147,281 |
|
|
|
150,500 |
|
|
|
134,970 |
|
Income taxes payable |
|
|
5,807 |
|
|
|
6,007 |
|
|
|
4,920 |
|
Other payable to related party |
|
|
3,937 |
|
|
|
3,797 |
|
|
|
1,900 |
|
Other current liabilities |
|
|
41,599 |
|
|
|
41,780 |
|
|
|
44,701 |
|
Total current liabilities |
|
|
407,695 |
|
|
|
391,155 |
|
|
|
338,411 |
|
Net defined benefit
liabilities |
|
|
150 |
|
|
|
151 |
|
|
|
1,178 |
|
Deferred tax
liabilities |
|
|
1,702 |
|
|
|
1,759 |
|
|
|
106 |
|
Other non-current
liabilities |
|
|
5,256 |
|
|
|
1,326 |
|
|
|
3,672 |
|
|
|
|
7,108 |
|
|
|
3,236 |
|
|
|
4,956 |
|
Total liabilities |
|
|
414,803 |
|
|
|
394,391 |
|
|
|
343,367 |
|
Equity |
|
|
|
|
|
|
Ordinary shares |
|
|
107,010 |
|
|
|
107,010 |
|
|
|
107,010 |
|
Additional paid-in capital |
|
|
104,768 |
|
|
|
104,749 |
|
|
|
104,533 |
|
Treasury shares |
|
|
(8,819 |
) |
|
|
(8,819 |
) |
|
|
(8,878 |
) |
Accumulated other comprehensive income |
|
|
(537 |
) |
|
|
(549 |
) |
|
|
(322 |
) |
Retained earnings |
|
|
241,838 |
|
|
|
244,157 |
|
|
|
250,574 |
|
Equity attributable to owners of Himax
Technologies, Inc. |
|
|
444,260 |
|
|
|
446,548 |
|
|
|
452,917 |
|
Noncontrolling
interests |
|
|
(4,910 |
) |
|
|
(4,261 |
) |
|
|
(2,226 |
) |
Total equity |
|
|
439,350 |
|
|
|
442,287 |
|
|
|
450,691 |
|
Total liabilities and equity |
|
$ |
854,153 |
|
|
$ |
836,678 |
|
|
$ |
794,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts in
Thousands of
U.S.
Dollars) |
|
|
Three Months Ended March 31, |
|
Three Months Ended December
31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Profit (loss) for the
period |
|
$ |
(2,967 |
) |
|
$ |
(3,316 |
) |
|
$ |
7,826 |
|
Adjustments for: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
6,320 |
|
|
|
5,098 |
|
|
|
4,869 |
|
Expected credit loss recognized on accounts receivable |
|
|
- |
|
|
|
- |
|
|
|
100 |
|
Share-based compensation expenses |
|
|
19 |
|
|
|
91 |
|
|
|
19 |
|
Gain on disposals of property, plant and equipment |
|
|
(6 |
) |
|
|
- |
|
|
|
- |
|
Changes in fair value of financial assets at fair value through
profit or loss |
|
|
17 |
|
|
|
(1 |
) |
|
|
(2,104 |
) |
Interest income |
|
|
(562 |
) |
|
|
(549 |
) |
|
|
(605 |
) |
Finance costs |
|
|
476 |
|
|
|
252 |
|
|
|
337 |
|
Income tax expense (benefit) |
|
|
- |
|
|
|
(728 |
) |
|
|
1,390 |
|
Share of losses (profit) of associates |
|
|
(41 |
) |
|
|
844 |
|
|
|
(1,397 |
) |
Inventories write downs |
|
|
4,750 |
|
|
|
2,954 |
|
|
|
6,003 |
|
Foreign currency exchange losses (gains) of financial assets |
|
|
(91 |
) |
|
|
(222 |
) |
|
|
9 |
|
|
|
|
7,915 |
|
|
|
4,423 |
|
|
|
16,447 |
|
Changes in: |
|
|
|
|
|
|
Accounts receivable |
|
|
12,862 |
|
|
|
22,171 |
|
|
|
(1,766 |
) |
Inventories |
|
|
(31,506 |
) |
|
|
(15,716 |
) |
|
|
(22,752 |
) |
Other receivable from related parties |
|
|
- |
|
|
|
(15 |
) |
|
|
60 |
|
Other current assets |
|
|
(6,027 |
) |
|
|
(1,672 |
) |
|
|
(583 |
) |
Accounts payable |
|
|
(3,219 |
) |
|
|
(4,963 |
) |
|
|
8,947 |
|
Other payable to related party |
|
|
140 |
|
|
|
(300 |
) |
|
|
1,547 |
|
Net defined benefit liabilities |
|
|
51 |
|
|
|
26 |
|
|
|
(99 |
) |
Other current liabilities |
|
|
(2,022 |
) |
|
|
(1,629 |
) |
|
|
1,770 |
|
Other non-current liabilities |
|
|
- |
|
|
|
(7 |
) |
|
|
(491 |
) |
Cash generated from operating activities |
|
|
(21,806 |
) |
|
|
2,318 |
|
|
|
3,080 |
|
Interest received |
|
|
257 |
|
|
|
166 |
|
|
|
916 |
|
Interest paid |
|
|
(462 |
) |
|
|
(170 |
) |
|
|
(216 |
) |
Income tax paid |
|
|
(41 |
) |
|
|
(37 |
) |
|
|
(1,445 |
) |
Net cash provided by (used in) operating
activities |
|
|
(22,052 |
) |
|
|
2,277 |
|
|
|
2,335 |
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
Acquisitions of property, plant and equipment |
|
|
(6,260 |
) |
|
|
(18,550 |
) |
|
|
(5,218 |
) |
Proceeds from disposal of property, plant and equipment |
|
|
6 |
|
|
|
- |
|
|
|
- |
|
Acquisitions of intangible assets |
|
|
(29 |
) |
|
|
(94 |
) |
|
|
(582 |
) |
Acquisitions of financial assets at amortized cost |
|
|
(881 |
) |
|
|
(1,897 |
) |
|
|
(737 |
) |
Proceeds from disposals of financial assets at amortized cost |
|
|
803 |
|
|
|
754 |
|
|
|
1,556 |
|
Acquisitions of financial assets at fair value through profit or
loss |
|
|
(8,095 |
) |
|
|
(4,330 |
) |
|
|
(7,644 |
) |
Proceeds from disposals of financial assets at fair value through
profit or loss |
|
|
8,086 |
|
|
|
26,506 |
|
|
|
7,626 |
|
|
Himax Technologies, Inc. |
Unaudited Condensed
Consolidated Statements of Cash Flows |
(Amounts in
Thousands of
U.S.
Dollars) |
|
|
Three Months Ended March 31, |
|
Three Months Ended December
31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2018 |
|
Acquisition of business |
|
$ |
(700 |
) |
|
$ |
(700 |
) |
|
$ |
- |
|
Proceeds from capital reduction of investment |
|
|
- |
|
|
|
- |
|
|
|
55 |
|
Acquisition of equity method investment |
|
|
- |
|
|
|
- |
|
|
|
(2,093 |
) |
Decrease (increase) in refundable deposits |
|
|
10 |
|
|
|
(1 |
) |
|
|
78 |
|
Releases (pledges) of restricted deposit |
|
|
2 |
|
|
|
(11 |
) |
|
|
3 |
|
Cash paid for loan made to related party |
|
|
- |
|
|
|
(250 |
) |
|
|
- |
|
Income tax paid for disposal of financial assets at fair value
through profit or loss |
|
|
- |
|
|
|
(2,187 |
) |
|
|
- |
|
Net cash used in investing activities |
|
|
(7,058 |
) |
|
|
(760 |
) |
|
|
(6,956 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of new shares by subsidiary |
|
|
- |
|
|
|
11 |
|
|
|
- |
|
Proceeds from unsecured borrowings |
|
|
40,000 |
|
|
|
- |
|
|
|
20,000 |
|
Repayments of unsecured borrowings |
|
|
(20,000 |
) |
|
|
- |
|
|
|
- |
|
Proceeds from secured borrowings |
|
|
37,000 |
|
|
|
- |
|
|
|
27,000 |
|
Repayments of secured borrowings |
|
|
(37,000 |
) |
|
|
- |
|
|
|
(27,000 |
) |
Payment of lease liabilities |
|
|
(504 |
) |
|
|
- |
|
|
|
- |
|
Net cash provided by financing
activities |
|
|
19,496 |
|
|
|
11 |
|
|
|
20,000 |
|
Effect of
foreign currency exchange rate
changes on cash and cash equivalents |
|
|
(70 |
) |
|
|
255 |
|
|
|
112 |
|
Net
increase (decrease) in cash and cash
equivalents |
|
|
(9,684 |
) |
|
|
1,783 |
|
|
|
15,491 |
|
Cash and cash
equivalents at beginning of period |
|
|
106,437 |
|
|
|
138,023 |
|
|
|
90,946 |
|
Cash and cash
equivalents at end of period |
|
$ |
96,753 |
|
|
$ |
139,806 |
|
|
$ |
106,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Himax Technologies, Inc. |
Non-IFRS 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 March
31, |
|
Three Months Ended December
31, |
|
2019 |
|
2018 |
|
2018 |
Revenues |
$ |
163,334 |
|
|
$ |
162,851 |
|
|
$ |
191,006 |
|
Gross profit |
|
36,865 |
|
|
|
36,597 |
|
|
|
46,382 |
|
Add: Share-based compensation
– cost of revenues |
|
- |
|
|
|
12 |
|
|
|
- |
|
Gross profit excluding
share-based compensation |
|
36,865 |
|
|
|
36,609 |
|
|
|
46,382 |
|
Gross margin excluding
share-based compensation |
|
22.6 |
% |
|
|
22.5 |
% |
|
|
24.3 |
% |
Operating income (loss) |
|
(3,377 |
) |
|
|
(3,244 |
) |
|
|
5,339 |
|
Add: Share-based
compensation |
|
19 |
|
|
|
91 |
|
|
|
19 |
|
Operating income (loss)
excluding share-based compensation |
|
(3,358 |
) |
|
|
(3,153 |
) |
|
|
5,358 |
|
Add: Acquisition-related
charges –intangible assets amortization |
|
470 |
|
|
|
246 |
|
|
|
310 |
|
Operating income (loss)
excluding share-based compensation and acquisition-related
charges |
|
(2,888 |
) |
|
|
(2,907 |
) |
|
|
5,668 |
|
Operating margin excluding
share-based compensation and acquisition-related charges |
|
(1.8 |
%) |
|
|
(1.8 |
%) |
|
|
3.0 |
% |
Profit (loss) attributable to
Himax Technologies, Inc. stockholders |
|
(2,319 |
) |
|
|
(2,829 |
) |
|
|
8,463 |
|
Add: Share-based compensation,
net of tax |
|
15 |
|
|
|
79 |
|
|
|
15 |
|
Add: Acquisition-related
charges, net of tax |
|
348 |
|
|
|
175 |
|
|
|
232 |
|
Profit (loss) attributable to
Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
(1,956 |
) |
|
|
(2,575 |
) |
|
|
8,710 |
|
Net margin attributable to
Himax Technologies, Inc. stockholders excluding share-based
compensation and acquisition-related charges |
|
(1.2 |
%) |
|
|
(1.6 |
%) |
|
|
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 (loss) 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
profit (loss) attributable to Himax Technologies, Inc. stockholders
excluding share-based compensation and acquisition-related charges
divided by revenues |
|
Diluted
Loss Per ADS Attributable to Himax Technologies,
Inc. Stockholders Excluding Share-based Compensation and
Acquisition-Related Charges: (Amounts in U.S.
Dollars) |
|
|
Three Months Ended March
31, |
|
|
2019 |
Diluted IFRS loss per ADS
attributable to Himax Technologies, Inc. stockholders |
|
($0.013) |
Add: Share-based compensation per ADS |
|
$0.000 |
Add: Acquisition-related charges per ADS |
|
$0.002 |
|
|
|
Diluted non-IFRS loss per ADS
attributable to Himax Technologies, Inc. stockholders excluding
share-based compensation and acquisition-related charges |
|
($0.011) |
|
|
|
Numbers do not add up due to
rounding |
|
|
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