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MagnaChip Reports Fourth Quarter and Full Year 2018 Financial Results
And Announces Strategic Review Process of its Foundry Operations
SEOUL, South Korea and SAN JOSE, Calif., February 14, 2019 MagnaChip Semiconductor Corporation (NYSE: MX) today announced financial results for the fourth quarter and full year 2018. Revenue in the fourth quarter was $179.4 million and gross profit margin was 24.5%. For the year 2018, revenue was $750.9 million and gross margin was 26.4%.
MagnaChip also announced today that it has undertaken a strategic evaluation of the Companys Foundry business and Fab 4, the larger of the Companys two 8 manufacturing facilities. Fab 4 is an analog and mixed signal fab that produces approximately 73% of the Companys total capacity, and is used primarily to meet wafer demand from Foundry customers that rely on outside suppliers. The strategic evaluation is expected to include a range of possible options, including, but not limited to, joint ventures, strategic partnerships as well as M&A possibilities. The Company has retained financial and legal advisors to assist in the evaluation.
Nader Tavakoli, Chairman of the Board of MagnaChip, said, The Board is committed to improving MagnaChips profitability and unlocking shareholder value. As we undertake this strategic evaluation of the Foundry business, we will be mindful of the best interests of all of our stakeholders including shareholders, customers and employees.
In commenting on the Companys financial performance in Q4, YJ Kim, CEO of MagnaChip, said, We are pleased to have met our revenue guidance in the seasonally soft fourth quarter despite a challenging macroeconomic backdrop, a slowdown in China, and an inventory correction by customers.
In commenting on the 2018 financial results, Mr. Kim said, Our OLED and Power businesses both had record annual revenue in 2018 and are positioned for success in 2019 due to a strong product lineup, robust product roadmap and well-established customer traction. Higher-margin Premium Power products represented over 45% of total Power revenue in Q4, due mainly to growth in the industrial, television, and lighting markets. In the OLED business, MagnaChip secured new design wins for display driver ICs from China smartphone makers and three design wins from a major smartphone maker in Korea for a line of mid-range smartphones. Our latest and lowest-power 28 nanometer OLED display driver IC will sample at the end of this month, and we anticipate volume production in the second half of this year. Mr. Kim added, Our foundry business under-performed in Q4 2018 on an as adjusted basis, due in part to an inventory correction by customers that caused a drop in utilization in Fab 4. We expect utilization in Fab 4 will decline significantly further in the first half of 2019, due in part to a continuing inventory correction and our decision to be more selective about business as we undergo our strategic evaluation process.
Q4 2018 Summary
Revenue of $179.4 million within guidance range of $174-$184 million; revenue up 2.8% Year-over-Year (YoY)
Standard Products Group revenue of $96.3 million up 2.5% YoY on an as reported basis; up 14.3% on an as adjusted basis
Foundry Services Group revenue of $83.1 million up 3.1% YoY on an as reported basis; down 8.0% on an as adjusted basis
Record Power standard products revenue of $46.1 million; up 14.6% YoY
Total gross profit margin of 24.5% was below the guidance range of 25-27%; gross margin down 3.8 percentage points YoY primarily due to lower Foundry-related fab utilization and increased costs for wafers
Operating income of $7.9 million, or 4.4% of revenue, up 2.9% YoY and Net Loss, on a GAAP basis, of $2.4 million, down 105.5% YoY
Adjusted EBITDA of $17.4 million, or 9.7% of revenue, down 15.4% YoY
Full Year 2018 Summary
Revenue of $750.9 million, up 10.5% YoY
Record OLED revenue of $188.0 million, up 3-fold YoY
Record Power revenue of $169.3 million, up 13.0% YoY
Foundry revenue of $325.3 million, up 1.6% YoY on an as reported basis; down 7.2% on an as adjusted basis
Gross margin of 26.4% declined by 1.2 percentage points YoY primarily due to lower Foundry-related fab utilization
First Quarter 2019 Business Outlook
For the first quarter of 2019, MagnaChip anticipates:
The following information was filed by Magnachip Semiconductor Corp (MX) on Thursday, February 14, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.