Magnachip Reports Results for Fourth Quarter and Full-Year 2023

Announces successful design-wins with Smartphone Chinese OEMs

Financial Highlights

  • Q4 revenue of $50.8 million was near the low-end of our guidance range.
  • Q4 gross profit margin was 22.7%, near the low-end of our guidance range.
  • Ended Q4 with no debt and cash of $158.1 million.
  • Repurchased approximately $8.2 million of stock during the quarter.
  • Full-year revenue of $230.1 million decreased 31.9% YoY.
  • Full-year gross profit margin was 22.4%, down 760 bps YoY.

Operational Highlights

  • Secured 1st design-win and began initial shipment in Q4 for first generation OLED DDIC for after-service market.
  • Secured 2nd design-win following quarter close with leading Chinese smartphone OEM for spring launch.
  • Entered into strategic commercial partnership with Chinese watch solution provider to collaborate on OLED smartwatch display market.
  • Display and Power business separation and entity restructuring completed effective with the start of 2024; New businesses MSS (Mixed-Signal Solutions) and PAS (Power-Analog Solutions)*

 

SEOUL, South Korea--()--Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the fourth quarter and full-year 2023.

YJ Kim, Magnachip’s Chief Executive Officer commented, “As we reflect on the past year and look ahead, we’re shaping our future with the transformation of our business. First, we have shifted our Display business to be laser-focused on the burgeoning OLED market in China and our efforts there are already showing promising results. We now have two design-wins and a dedicated team on the ground to help build on this momentum. Additionally, we are working to optimize our Gumi Fab to transition from lower-margin Transitional Foundry Services to higher-margin Power products. Finally, we’ve restructured our company to streamline operations, enhance shareholder value and increase transparency for our investors with the completion of our legal separation of historical Display and Power businesses into MSS and PAS.”

YJ continued, “Looking ahead, for full year 2024, we currently expect double-digit revenue growth in both the newly organized MSS and PAS businesses. We currently expect total consolidated company revenue for full year 2024 to remain relatively flat to slightly up due to the phase-out of Transitional Foundry Services. We also anticipate PAS gross margin to be challenged during the transition period while we convert the Transitional Foundry Services capacity to Power capacity, but we are committed to navigating this period with a clear focus on long-term value creation for shareholders.”
____________
*MSS consists of historical Display and Power IC business, which is operated by Magnachip Mixed-Signal, Ltd., a limited liability company incorporated in Korea. PAS business is operated by Magnachip Semiconductor, Ltd., the existing limited liability company incorporated in Korea.

Q4 and 2023 Financial Highlights

 

 

In thousands of U.S. dollars, except share data

 

 

GAAP

 

 

 

Q4 2023

 

 

Q3 2023

 

 

Q/Q change

 

 

Q4 2022

 

 

Y/Y change

 

Revenues

 

 

 

 

 

Standard Products Business

 

 

 

 

 

Display Solutions

 

 

5,232

 

 

 

6,404

 

 

 

down

 

18.3

%

 

 

7,556

 

 

 

down

 

30.8

%

Power Solutions

 

 

35,950

 

 

 

45,215

 

 

 

down

 

20.5

%

 

 

46,271

 

 

 

down

 

22.3

%

Transitional Fab 3 foundry services(1)

 

 

9,640

 

 

 

9,626

 

 

 

up

 

0.1

%

 

 

7,163

 

 

 

up

 

34.6

%

Gross Profit Margin

 

 

22.7

%

 

 

23.6

%

 

 

down

 

0.9

%pts

 

 

26.4

%

 

 

down

 

3.7

%pts

Operating Loss

 

 

(15,935

)

 

 

(9,235

)

 

 

down

 

n/a

 

 

 

(10,117

)

 

 

down

 

n/a

 

Net Income (Loss)

 

 

(6,040

)

 

 

(5,165

)

 

 

down

 

n/a

 

 

 

2,971

 

 

 

down

 

n/a

Basic Earnings (Loss) per Common Share

 

 

(0.16

)

 

 

(0.13

)

 

 

down

 

n/a

 

 

 

0.07

 

 

 

down

 

n/a

 

Diluted Earnings (Loss) per Common Share

 

 

(0.16

)

 

 

(0.13

)

 

 

down

 

n/a

 

 

 

0.07

 

 

 

down

 

n/a

 

 

 

 

In thousands of U.S. dollars, except share data

 

 

Non-GAAP(2)

 

 

 

Q4 2023

 

 

Q3 2023

 

 

Q/Q change

 

 

Q4 2022

 

 

Y/Y change

 

Adjusted Operating Loss

 

 

(14,095

)

 

 

(7,064

)

 

 

down

 

n/a

 

 

(8,567

)

 

 

down

 

n/a

 

Adjusted EBITDA

 

 

(9,972

)

 

 

(2,735

)

 

 

down

 

n/a

 

 

 

(4,768

)

 

 

down

 

n/a

 

Adjusted Net Loss

 

 

(8,044

)

 

 

(1,591

)

 

 

down

 

n/a

 

 

 

(15,848

)

 

 

up

 

n/a

 

Adjusted Loss per Common Share—Diluted

 

 

(0.21

)

 

 

(0.04

)

 

 

down

 

n/a

 

 

 

(0.36

)

 

 

up

 

n/a

 

 

In thousands of U.S dollars, except share data

 

GAAP

 

2023

 

2022

 

Y/Y Change

Revenues

 

 

 

 

 

Standard Products Business

 

 

 

 

 

Display Solutions

32,134

 

71,432

 

down

55.0

%

Power Solutions

163,556

 

230,464

 

down

29.0

%

Transitional Fab 3 foundry services(1)

34,361

 

35,762

 

down

3.9

%

Gross Profit Margin

22.4

%

30.0

%

down

7.6

pts

Operating Loss

(57,644

)

(5,244

)

down

n/a

 

Net Loss

(36,622

)

(8,036

)

down

n/a

 

Basic Loss per Common Share

(0.89

)

(0.18

)

down

n/a

 

Diluted Loss per Common Share

(0.89

)

(0.18

)

down

n/a

 

 

 

 

 

 

 

In thousands of U.S dollars, except share data

 

 

 

 

 

 

Non-GAAP(2)

 

 

 

 

 

 

 

2023

 

 

2022

Y/Y Change

 

Adjusted Operating Income (Loss)

 

 

 

 

(41,170

)

 

 

4,091

down

n/a

Adjusted EBITDA

 

 

 

 

(24,174

)

 

19,517

down

n/a

Adjusted Net Income (Loss)

 

 

 

 

(22,474

)

 

 

8,752

down

n/a

Adjusted Earnings (Loss) per Common Share—Diluted

 

 

 

 

(0.55

)

 

0.19

down

n/a

___________

(1)

Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, we provided transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi, Korea, known as “Fab 3” (“Transitional Fab 3 Foundry Services”). The contractual obligation to provide the Transitional Fab 3 Foundry Services ended August 31, 2023, and we are planning to wind down these foundry services and convert portions of the idle capacity to PAS products beginning around the second half of 2024. Because these foundry services during the wind-down period are still provided to the same buyer by us using our Fab 3 based on mutually agreed terms and conditions, we will continue to report our revenue from providing these foundry services and related cost of sales within the Transitional Fab 3 Foundry Services line in our consolidated statement of operations until such wind down is completed. Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products display solutions and power solutions businesses.

 

(2)

Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a meaningful understanding of the factors and trends affecting our business and operations and assist in evaluating our core operating performance. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income (loss) or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included in this press release.

Q1 and 2024 Financial Guidance

Beginning in Q1, the Company will begin reporting results under its newly organized businesses: MSS (Mixed-Signal Solutions) and PAS (Power-Analog Solutions). While actual results may vary, Magnachip currently expects the following:

For Q1 2024:

  • Consolidated revenue to be in the range of $46 to $51 million, including approximately $3 million of Transitional Foundry Services.
    • MSS revenue to be in the range of $8 to $10 million. This compares with MSS equivalent revenue of $8.6 million in Q4 2023.
    • PAS revenue to be in the range of $35 to $38 million. This compares with PAS equivalent revenue of $32.6 million in Q4 2023.
  • Consolidated gross profit margin to be in the range of 17% to 20%.
    • MSS gross profit margin to be in the range of 40% to 43%, which includes the positive impact of expected one-time non-recurring engineering revenue. This compares with MSS equivalent gross profit margin of 41.3% in Q4 2023, which also included one-time non-recurring engineering revenue.
    • PAS gross profit margin to be in the range of 15% to 18% due primarily to the expected decline in Transitional Foundry Services revenue. This compares with PAS equivalent gross profit margin of 18.0% in Q4 2023.

For the full-year 2024:

  • MSS revenue to grow double digits year-over-year as compared with MSS equivalent revenue of $44.4 million in 2023.
  • PAS revenue to grow double digits year-over-year as compared with PAS equivalent revenue of $151.3 million in 2023.
  • Consolidated revenue flat-to-up-slightly year-over-year as recovery in MSS and PAS is offset by the phase-out of Transitional Foundry Services.
  • Consolidated gross profit margin between 17% to 20% due to idle capacity expected from the phase-out of Transitional Foundry Services. This compares with the consolidated gross profit margin of 22.4% in 2023.

Q4 2023 Earnings Conference Call

Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, February 28, 2024, to discuss its financial results. In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the Company’s website at www.magnachip.com.

Online registration: https://register.vevent.com/register/BI736feb7bc081454c8d811cbbeb6b92dc

Safe Harbor for Forward-Looking Statements

Information in this release regarding Magnachip’s forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include expectations about estimated historical or future operating results and financial performance, outlook and business plans, including first quarter and full year 2024 revenue and gross profit margin expectations, future growth and revenue opportunities from new and existing products and customers, the timing and extent of future revenue contributions by our products and businesses, and the impact of market conditions associated with inflation and higher interest rates, remaining effects from the COVID-19 pandemic, geopolitical conflicts between Russia-Ukraine and between Israel-Hamas, sustained military action and conflict in the Red Sea, and trade tensions between the U.S. and China, on Magnachip’s first quarter and full year 2024 and future operating results. All forward-looking statements included in this release are based upon information available to Magnachip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, among others: the impact of changes in macroeconomic conditions, including those caused by or related to inflation, potential recessions or other deteriorations, economic instability or civil unrest; remaining effects from the COVID-19 pandemic, the geopolitical conflicts between Russia-Ukraine and between Israel-Hamas, sustained military action and conflict in the Red Sea, and trade tensions between the U.S. and China; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs and impact demand for our products from customers who are similarly affected by such capacity constraints or disruptions; the impact of competitive products and pricing; timely acceptance of our designs by customers; timely introduction of new products and technologies; our ability to ramp new products into volume production; industry-wide shifts in supply and demand for semiconductor products; overcapacity within the industry or at Magnachip; effective and cost-efficient utilization of manufacturing capacity; financial stability in foreign markets and the impact of foreign exchange rates; unanticipated costs and expenses or the inability to identify expenses that can be eliminated; compliance with U.S. and international trade and export laws and regulations by us, our customers and our distributors; change to or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, including the remaining effects of the COVID-19 pandemic; other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products; and other risks detailed from time to time in Magnachip’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Form 10-K filed on February 22, 2023, and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. Magnachip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.

About Magnachip Semiconductor

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communication, Internet of Things (“IoT”), consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,100 registered patents and pending applications, and has extensive engineering, design, and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through Magnachip's website is not a part of, and is not incorporated into, this release.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except share data)

(Unaudited)

 

 

Three Months Ended

Year Ended

 

December 31,
2023

September 30,
2023

December 31,
2022

December 31,
2023

December 31,
2022

Revenues:

 

 

 

 

 

Net sales – standard products business

$

41,182

 

$

51,619

 

$

53,827

 

$

195,690

 

$

301,896

 

Net sales – transitional Fab 3 foundry services

 

9,640

 

 

9,626

 

 

7,163

 

 

34,361

 

 

35,762

 

Total revenues

 

50,822

 

 

61,245

 

 

60,990

 

 

230,051

 

 

337,658

 

Cost of sales:

 

 

 

 

 

Cost of sales – standard products business

 

31,754

 

 

36,829

 

 

37,150

 

 

143,762

 

 

202,347

 

Cost of sales – transitional Fab 3 foundry services

 

7,541

 

 

9,935

 

 

7,742

 

 

34,649

 

 

34,047

 

Total cost of sales

 

39,295

 

 

46,764

 

 

44,892

 

 

178,411

 

 

236,394

 

Gross profit

 

11,527

 

 

14,481

 

 

16,098

 

 

51,640

 

 

101,264

 

Gross profit as a percentage of standard products business net sales

 

22.9

%

 

28.7

%

 

31.0

%

 

26.5

%

 

33.0

%

Gross profit as a percentage of total revenues

 

22.7

%

 

23.6

%

 

26.4

%

 

22.4

%

 

30.0

%

Operating expenses:

 

 

 

 

 

Selling, general and administrative expenses

 

12,079

 

 

12,089

 

 

12,562

 

 

48,470

 

 

50,872

 

Research and development expenses

 

15,383

 

 

11,627

 

 

13,653

 

 

51,563

 

 

52,338

 

Early termination and other charges, net

 

 

 

 

 

 

 

9,251

 

 

3,298

 

Total operating expenses

 

27,462

 

 

23,716

 

 

26,215

 

 

109,284

 

 

106,508

 

Operating loss

 

(15,935

)

 

(9,235

)

 

(10,117

)

 

(57,644

)

 

(5,244

)

Interest income

 

2,519

 

 

2,382

 

 

2,420

 

 

10,435

 

 

5,980

 

Interest expense

 

(183

)

 

(189

)

 

(269

)

 

(828

)

 

(1,157

)

Foreign currency gain (loss), net

 

5,241

 

 

(2,583

)

 

17,492

 

 

465

 

 

(3,019

)

Other income (loss), net

 

(42

)

 

87

 

 

(42

)

 

13

 

 

561

 

Loss before income tax expense (benefit)

 

(8,400

)

 

(9,538

)

 

9,484

 

 

(47,559

)

 

(2,879

)

Income tax expense (benefit)

 

(2,360

)

 

(4,373

)

 

6,513

 

 

(10,937

)

 

5,157

 

Net income (loss)

$

(6,040

)

$

(5,165

)

$

2,971

 

$

(36,622

)

$

(8,036

)

 

Basic earnings (loss) per common share—

$

(0.16

)

$

(0.13

)

$

0.07

 

$

(0.89

)

$

(0.18

)

Diluted earnings (loss) per common share—

$

(0.16

)

$

(0.13

)

$

0.07

 

$

(0.89

)

$

(0.18

)

Weighted average number of shares—

 

 

 

 

 

Basic

 

38,834,451

 

 

40,145,290

 

 

44,054,275

 

 

41,013,069

 

 

44,850,791

 

Diluted

 

38,834,451

 

 

40,145,290

 

 

44,731,683

 

 

41,013,069

 

 

44,850,791

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)

(Unaudited)

     

 

December 31,
2023

 

December 31,
2022

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

158,092

 

 

 

$

225,477

 

Accounts receivable, net

 

 

32,641

 

 

 

 

35,380

 

Inventories, net

 

 

32,733

 

 

 

 

39,883

 

Other receivables

 

 

4,295

 

 

 

 

7,847

 

Prepaid expenses

 

 

7,390

 

 

 

 

10,560

 

Hedge collateral

 

 

1,000

 

 

 

 

2,940

 

Other current assets

 

 

9,283

 

 

 

 

15,766

 

Total current assets

 

 

245,434

 

 

 

 

337,853

 

Property, plant and equipment, net

 

 

100,122

 

 

 

 

110,747

 

Operating lease right-of-use assets

 

 

4,639

 

 

 

 

5,265

 

Intangible assets, net

 

 

1,537

 

 

 

 

1,930

 

Long-term prepaid expenses

 

 

5,736

 

 

 

 

10,939

 

Deferred income taxes

 

 

50,836

 

 

 

 

38,324

 

Other non-current assets

 

 

12,187

 

 

 

 

11,587

 

Total assets

 

$

420,491

 

 

 

$

516,645

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

24,443

 

 

 

$

17,998

 

Other accounts payable

 

 

5,292

 

 

 

 

9,702

 

Accrued expenses

 

 

10,457

 

 

 

 

9,688

 

Accrued income taxes

 

 

1,496

 

 

 

 

3,154

 

Operating lease liabilities

 

 

1,914

 

 

 

 

1,397

 

Other current liabilities

 

 

3,286

 

 

 

 

5,306

 

Total current liabilities

 

 

46,888

 

 

 

 

47,245

 

Accrued severance benefits, net

 

 

16,020

 

 

 

 

23,121

 

Non-current operating lease liabilities

 

 

2,897

 

 

 

 

4,091

 

Other non-current liabilities

 

 

10,088

 

 

 

 

14,035

 

Total liabilities

 

 

75,893

 

 

 

 

88,492

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Common stock, $0.01 par value, 150,000,000 shares authorized, 56,971,394 shares issued and 38,852,742 outstanding at December 31, 2023 and 56,432,449 shares issued and 43,824,575 outstanding at December 31, 2022

 

 

569

 

 

 

 

564

 

Additional paid-in capital

 

 

273,256

 

 

 

 

266,058

 

Retained earnings

 

 

298,884

 

 

 

 

335,506

 

Treasury stock, 18,118,652 shares at December 31, 2023 and 12,607,874 shares at December 31, 2022, respectively

 

 

(213,454

)

 

 

 

(161,422

)

Accumulated other comprehensive loss

 

 

(14,657

)

 

 

 

(12,553

)

Total stockholders’ equity

 

 

344,598

 

 

 

 

428,153

 

Total liabilities and stockholders’ equity

 

$

420,491

 

 

 

$

516,645

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

 

Three Months

Ended

Year Ended

December 31,
2023

December 31,
2023

December 31,
2022

Cash flows from operating activities

 

 

 

Net loss

$

(6,040

)

$

(36,622

)

$

(8,036

)

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

 

 

 

Depreciation and amortization

 

4,101

 

 

16,684

 

 

15,000

 

Provision for severance benefits

 

(25

)

 

5,333

 

 

6,289

 

Loss (gain) on foreign currency, net

 

(11,159

)

 

3,373

 

 

19,729

 

Provision for inventory reserves

 

850

 

 

3,885

 

 

9,574

 

Stock-based compensation

 

1,840

 

 

7,223

 

 

6,037

 

Deferred income taxes

 

(13,493

)

 

(13,405

)

 

278

 

Other, net

 

165

 

 

757

 

 

664

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable, net

 

8,318

 

 

1,909

 

 

10,276

 

Inventories

 

(1,265

)

 

2,370

 

 

(12,626

)

Other receivables

 

(1,146

)

 

3,847

 

 

18,146

 

Prepaid expenses

 

3,155

 

 

8,808

 

 

8,923

 

Other current assets

 

15,992

 

 

8,048

 

 

(13,073

)

Accounts payable

 

1,086

 

 

7,152

 

 

(16,325

)

Other accounts payable

 

(2,196

)

 

(8,934

)

 

(9,410

)

Accrued expenses

 

(126

)

 

493

 

 

(7,228

)

Accrued income taxes

 

1,445

 

 

(1,569

)

 

(8,400

)

Deferred revenue

 

782

 

 

85

 

 

(1,261

)

Other current liabilities

 

(65

)

 

(109

)

 

(645

)

Other non-current liabilities

 

41

 

 

(238

)

 

749

 

Contributions to severance insurance deposit accounts

 

(4,278

)

 

(5,101

)

 

(7,899

)

Payment of severance benefits

 

(799

)

 

(6,982

)

 

(6,012

)

Other, net

 

(3

)

 

(21

)

 

415

 

Net cash provided by (used in) operating activities

 

(2,820

)

 

(3,014

)

 

5,165

 

Cash flows from investing activities

 

 

 

Proceeds from settlement of hedge collateral

 

2,334

 

 

5,669

 

 

15,232

 

Payment of hedge collateral

 

(600

)

 

(3,754

)

 

(15,282

)

Proceeds from disposal of property, plant and equipment

 

 

 

 

 

550

 

Purchase of property, plant and equipment

 

(4,675

)

 

(6,955

)

 

(23,394

)

Payment for intellectual property registration

 

(33

)

 

(263

)

 

(390

)

Collection of guarantee deposits

 

 

 

4,984

 

 

737

 

Payment of guarantee deposits

 

(62

)

 

(7,338

)

 

(2,381

)

Net cash used in investing activities

 

(3,036

)

 

(7,657

)

 

(24,928

)

Cash flows from financing activities

 

 

 

Proceeds from exercise of stock options

 

 

 

27

 

 

1,786

 

Acquisition of treasury stock

 

(8,695

)

 

(51,782

)

 

(13,960

)

Repayment of financing related to water treatment facility arrangement

 

(122

)

 

(493

)

 

(500

)

Others

 

(22

)

 

(91

)

 

(70

)

Net cash used in financing activities

 

(8,839

)

 

(52,339

)

 

(12,744

)

Effect of exchange rates on cash and cash equivalents

 

6,143

 

 

(4,375

)

 

(21,563

)

Net decrease in cash and cash equivalents

 

(8,552

)

 

(67,385

)

 

(54,070

)

Cash and cash equivalents

 

 

 

Beginning of the period

 

166,644

 

 

225,477

 

 

279,547

 

End of the period

$

158,092

 

$

158,092

 

$

225,477

 

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF OPERATING LOSS TO ADJUSTED OPERATING INCOME (LOSS)

(In thousands of U.S. dollars)

(Unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31,
2023

 

 

September 30,
2023

 

 

December 31,
2022

 

December 31,
2023

 

 

December 31,
2022

 

Operating loss

 

$

(15,935

)

 

$

(9,235

)

 

$

(10,117

)

 

 

$

(57,644

)

 

$

(5,244

)

 

Adjustments:

 

 

 

 

 

 

Equity-based compensation expense

 

 

1,840

 

 

 

2,171

 

 

 

1,550

 

 

 

 

7,223

 

 

 

6,037

 

 

Early termination and other charges, net

 

 

 

 

 

 

 

 

 

 

 

9,251

 

 

 

3,298

 

 

Adjusted Operating Income (Loss)

 

$

(14,095

)

 

$

(7,064

)

 

$

(8,567

)

 

 

$

(41,170

)

 

$

4,091

 

 

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We define Adjusted Operating Income (Loss) for the periods indicated as operating loss adjusted to exclude (i) Equity-based compensation expense and (ii) Early termination and other charges, net.

For the year ended December 31, 2023, Early termination and other charges includes $8,449 thousand of termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023 and $802 thousand of one-time employee incentives.

For the year ended December 31, 2022, Early termination and other charges, net includes $2,821 thousand of one-time employee incentives and professional service fees and expenses of $1,014 thousand, incurred in connection with certain strategic evaluations, both of which were offset in part by a $537 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

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

(In thousands of U.S. dollars, except share data)

(Unaudited)

 

 

Three Months Ended

Year Ended

 

December 31,
2023

 

September 30,
2023

 

December 31,
2022

 

December 31,
2023

 

December 31,
2022

Net Income (Loss)

$

(6,040

)

$

(5,165

)

$

2,971

 

$

(36,622

)

$

(8,036

)

Adjustments:

 

 

 

 

Interest income

 

(2,519

)

 

(2,382

)

 

(2,420

)

 

(10,435

)

 

(5,980

)

Interest expense

 

183

 

 

189

 

 

269

 

 

828

 

 

1,157

Income tax expense (benefit)

 

(2,360

)

 

(4,373

)

 

6,513

 

 

(10,937

)

 

5,157

Depreciation and amortization

 

4,101

 

 

4,081

 

 

3,775

 

 

16,684

 

 

15,000

EBITDA

 

(6,635

)

 

(7,650

)

 

11,108

 

 

(40,482

)

 

7,298

Equity-based compensation expense

 

1,840

 

 

2,171

 

 

1,550

 

 

7,223

 

 

6,037

Foreign currency loss (gain), net

 

(5,241

)

 

2,583

 

 

(17,492

)

 

(465

)

 

3,019

Derivative valuation loss (gain), net

 

64

 

 

161

 

 

66

 

 

299

 

 

(135

)

Early termination and other charges, net

 

 

 

 

 

 

 

9,251

 

 

3,298

Adjusted EBITDA

$

(9,972

)

$

(2,735

)

$

(4,768

)

$

(24,174

)

$

19,517

Net Income (Loss)

$

(6,040

)

$

(5,165

)

$

2,971

 

$

(36,622

)

$

(8,036

)

Adjustments:

 

 

 

 

Equity-based compensation expense

 

1,840

 

 

2,171

 

 

1,550

 

 

7,223

 

 

6,037

Foreign currency loss (gain), net

 

(5,241

)

 

2,583

 

 

(17,492

)

 

(465

)

 

3,019

Derivative valuation loss (gain), net

 

64

 

 

161

 

 

66

 

 

299

 

 

(135

)

Early termination and other charges, net

 

 

 

 

 

 

 

9,251

 

 

3,298

Income tax effect on non-GAAP adjustments

 

1,333

 

 

(1,341

)

 

(2,943

)

 

(2,160

)

 

4,569

Adjusted Net Income (Loss)

$

(8,044

)

$

(1,591

)

$

(15,848

)

$

(22,474

)

$

8,752

Adjusted Net Income (Loss) per common share—

 

 

 

 

- Basic

$

(0.21

)

$

(0.04

)

$

(0.36

)

$

(0.55

)

$

0.20

- Diluted

$

(0.21

)

$

(0.04

)

$

(0.36

)

$

(0.55

)

$

0.19

Weighted average number of shares – basic

 

38,834,451

 

 

40,145,290

 

 

44,054,275

 

 

41,013,069

 

 

44,850,791

Weighted average number of shares – diluted

 

38,834,451

 

 

40,145,290

 

 

44,054,275

 

 

41,013,069

 

 

45,795,559

We present Adjusted EBITDA and Adjusted Net Income (Loss) as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net and (iv) Early termination and other charges, net. EBITDA for the periods indicated is defined as net income (loss) before interest income, interest expense, income tax expense (benefit) and depreciation and amortization.

We prepare Adjusted Net Income (Loss) by adjusting net income (loss) to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income (Loss) is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income (Loss) for the periods as net income (loss), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Early termination and other charges, net and (v) Income tax effect on non-GAAP adjustments.

For the year ended December 31, 2023, Early termination and other charges includes $8,449 thousand of termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023 and $802 thousand of one-time employee incentives.

For the year ended December 31, 2022, Early termination and other charges, net includes $2,821 thousand of one-time employee incentives and professional service fees and expenses of $1,014 thousand, incurred in connection with certain strategic evaluations, both of which were offset in part by a $537 thousand gain on sale of certain legacy equipment of the closed back-end line in our fabrication facility in Gumi.

Contacts

Steven Pelayo
The Blueshirt Group
Tel. +1 (360) 808-5154
steven@blueshirtgroup.co

Contacts

Steven Pelayo
The Blueshirt Group
Tel. +1 (360) 808-5154
steven@blueshirtgroup.co