* Third quarter 2007 revenue increased to $243.3 million - record
high since inception
* Third quarter 2007 gross margin increased to 22.5% - marks
fourth consecutive quarter of improvement
* Fourth quarter 2007 revenue expected to grow around mid-single
digits, with gross margin to remain flat, and EPS to be in the
range of $0.16 to $0.17
Board Authorizes $40 Million Share Buyback Program
TAINAN, Taiwan, Nov. 1, 2007 (PRIME NEWSWIRE) -- Himax Technologies, Inc. ("Himax" or "Company") (Nasdaq:HIMX) today reported financial results for the third quarter ended September 30, 2007.
Net revenue for the third quarter of 2007 was $243.3 million, representing 37.4% growth year-over-year and 9.2% growth sequentially.
Gross margin was 22.5% in the third quarter of 2007, up 510 basis points year-over-year and 210 basis points sequentially.
Operating margin was 8.2% in the third quarter of 2007. Operating income was $19.9 million, up from $0.8 million in the same period last year, and down from $24.9 million in the previous quarter.
Net income for the third quarter of 2007 was $21.8 million, up from $2.6 million in the same period last year, and down from $26.8 million in the previous quarter. The decline is primarily due to the grant of 2007 annual restricted share units at the end of September. This represents earnings per share of $0.11 per basic and diluted share, compared to $0.01 per basic and diluted share in the third quarter of 2006, and $0.14 per basic and diluted share in the second quarter of 2007.
Excluding share-based compensation and acquisition-related charges, non-GAAP operating margin was 14.9% in the third quarter of 2007. Non-GAAP operating income was $36.2 million, up from $12.2 million in the same period last year, and up from $28.1 million in the previous quarter.
Non-GAAP net income was $38.0 million, up from $14.1 million in the same period last year, and up from $30.0 million in the previous quarter. This represents earnings per share of $0.19 per basic and diluted share, compared to $0.07 per basic and diluted share in the third quarter of 2006, and $0.15 per basic and diluted share in the second quarter of 2007.
Share-based compensation was $15.7 million, compared to $11.5 million in the third quarter of 2006, and $1.5 million in the second quarter of 2007. Acquisition-related charges were $0.6 million, compared to $0 in the third quarter of 2006 and $1.6 million in the second quarter of 2007.
A reconciliation of our gross margin, operating margin and diluted EPS excluding share-based compensation and acquisition-related charges, a non-GAAP financial measure, to GAAP gross margin, GAAP operating margin and diluted GAAP EPS, our most comparable GAAP figure, is set out in the attached reconciliation schedule.
Jordan Wu, President and Chief Executive Officer of Himax, commented, "We are pleased with the third quarter results as we achieved record high revenues. We were able to improve our gross margin for the fourth consecutive quarter, resulting in a seven fold increase in our year-over-year GAAP net income. Separately, on October 12, we announced plans to spin-off our TV and monitor chipset operation which will be named Himax Media Solutions, Inc., a wholly-owned subsidiary of Himax Taiwan upon its establishment. Himax Media Solutions, Inc. will be focusing on expanding market share in the global TV and monitor chipset market opportunity. We have identified certain strategic investors and plan to invite them to partner with us in the future. We believe this new company structure will allow us to better focus our resources for the global TV and monitor chipset market opportunity."
Mr. Wu added, "On November 1st, our board approved a share repurchase program that authorizes the Company to repurchase up to $40 million worth of the Company's American Depository Receipts. The program does not obligate Himax to acquire any particular amount of ADRs and may be modified or suspended at any time at the Company's sole discretion. With the repurchase program, we reaffirm our confidence and optimism in the long term future of the company. This also demonstrates our commitment to deliver value to our shareholders."
Max Chan, Chief Financial Officer of Himax, said, "We made our 2007 annual restricted share units grant of approximately $26.4 million at the end of September. Approximately 54.5%, or $14.4 million was paid out in cash, and vested and expensed immediately. The remainder of the grant will be vested in three equal installments over the next three years. Total share-based compensation accrued in the third quarter, including expenses from legacy grants amounted to $15.7 million, or $0.08 per diluted share."
Looking forward, Mr. Wu added, "We expect revenue to grow around mid-single digit in the fourth quarter and gross margin to remain flat. We expect diluted GAAP EPS to be in the range of $0.16 to $0.17. "
Investor Conference Call / Webcast Details
The Company's management will review detailed third quarter 2007 results on Thursday, November 1, 2007 at 7:00 PM EDT (7:00 AM, Friday, November 2, Taiwan time). The conference call-in number is +1-201-689-8560 (international) and +1-877-407-0784 (U.S. domestic). A live webcast of the conference call will be available on the Company's website at www.himax.com.tw. The playback will be available beginning two hours after the conclusion of the conference call and will be accessible by dialing +1-201-612-7415 (international) and 1-877-660-6853 (U.S. domestic). The account number to access the replay is 3055 and the confirmation ID number is 258193.
About Himax Technologies, Inc.
Himax Technologies, Inc. designs, develops and markets semiconductors that are critical components of flat panel displays. The Company's principal products are display drivers for large-sized TFT-LCD panels, which are used in desktop monitors, notebook computers and televisions, and display drivers for small- and medium-sized TFT-LCD panels, which are used in mobile handsets and consumer electronics products such as digital cameras, mobile gaming devices and car navigation displays. In addition, the Company is expanding its product offering to include television semiconductor solutions, as well as LCOS products Based in Tainan, Taiwan, the Company has regional offices in Hsinchu and Taipei, Taiwan; Suzhou and Shenzhen, China; Yokohama, Japan and Anyangsi Kyungkido, South Korea; and Irvine, California, USA.
Forward-Looking Statements:
Certain statements in this press release, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this press release. Factors that could cause actual results to differ include general business and economic conditions and the state of the semiconductor industry; level of competition; demand for end-use applications products; reliance on a small group of principal customers; continued success in technological innovations; development of alternative flat panel display technologies; ability to develop and protect our intellectual property; pricing pressures including declines in average selling prices; changes in customer order patterns; shortages in supply of key components; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; and other risks described from time to time in the Company's SEC filings, including its Form 20-F dated June 22, 2007, as amended. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
(These interim financials do not fully comply with US GAAP because
they omit all interim disclosure required by US GAAP.)
(Figures in Thousands of U.S. Dollars, Except Per Share Data)
Three Months Ended
--------------------------------
September 30, June 30,
2007 2006 2007
-------- -------- --------
Revenues
Revenues from third parties, net $ 91,960 $ 88,878 $102,276
Revenues from related parties, net 151,377 88,227 120,607
-------- -------- --------
243,337 177,105 222,883
-------- -------- --------
Costs and expenses:
Cost of revenues 188,626 146,287 177,452
Research and development 26,171 24,267 15,328
General and administrative 4,891 3,190 3,222
Sales and marketing 3,758 2,586 1,995
-------- -------- --------
Total costs and expenses 223,446 176,330 197,997
-------- -------- --------
Operating income 19,891 775 24,886
-------- -------- --------
Non operating income (loss):
Interest income 1,429 2,000 1,514
Foreign exchange gains (losses), net (29) (1,298) 36
Other income, net 166 59 159
-------- -------- --------
1,566 761 1,709
-------- -------- --------
Income before income taxes
and minority interest 21,457 1,536 26,595
Income tax benefit -- (1,246) --
-------- -------- --------
Income before minority interest 21,457 2,782 26,595
Minority interest, net of tax 316 (157) 247
-------- -------- --------
Net income $ 21,773 $ 2,625 $ 26,842
======== ======== ========
Basic earnings per ordinary share
and ADS $ 0.11 $ 0.01 $ 0.14
======== ======== ========
Diluted earnings per ordinary share
and ADS $ 0.11 $ 0.01 $ 0.14
======== ======== ========
Basic Weighted Average
Outstanding Shares 197,690 197,110 197,656
Diluted Weighted Average
Outstanding Shares 197,733 199,729 198,013
Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Figures in Thousands of U.S. Dollars)
The amount of share-based compensation
included in applicable costs and
expenses categories is summarized
as follows:
Three Months Ended
--------------------------------
September 30, June 30,
2007 2006 2007
-------- -------- --------
Share-based compensation
Cost of revenues $ 355 $ 208 $ 25
Research and development 11,795 8,963 1,201
General and administrative 1,718 1,090 151
Sales and marketing 1,842 1,195 156
-------- -------- --------
Total $ 15,710 $ 11,456 $ 1,533
======== ======== ========
The amount of acquisition-related
charges included in applicable
expenses categories is summarized
as follows:
Research and development $ 250 $ -- $ 1,234
Sales and marketing 304 -- 408
-------- -------- --------
Total $ 554 $ -- $ 1,642
======== ======== ========
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Income
(Figures in Thousands of U.S. Dollars, Except Per Share Data)
Nine Months Ended
September 30,
2007 2006
--------- ---------
Revenues
Revenues from third parties, net $ 270,072 $ 238,939
Revenues from related parties, net 381,039 284,700
--------- ---------
651,111 523,639
--------- ---------
Costs and expenses:
Cost of revenues 514,908 422,351
Research and development 56,299 46,772
General and administrative 11,113 6,582
Sales and marketing 7,254 4,690
--------- ---------
Total costs and expenses 589,574 480,395
--------- ---------
Operating income 61,537 43,244
--------- ---------
Non operating income (loss):
Interest income 4,325 4,048
Impairment loss on an investment -- (1,500)
Foreign exchange losses, net (483) (132)
Interest expense -- (311)
Other income, net 367 172
--------- ---------
4,209 2,277
--------- ---------
Income before income taxes and
minority interest 65,746 45,521
Income tax expense -- 1,491
--------- ---------
Income before minority interest 65,746 44,030
Minority interest, net of tax 888 59
--------- ---------
Net income $ 66,634 $ 44,089
========= =========
Basic earnings per ordinary share
and ADS $ 0.34 $ 0.23
========= =========
Diluted earnings per ordinary share
and ADS $ 0.34 $ 0.23
========= =========
Basic Weighted Average
Outstanding Shares 197,671 190,484
Diluted Weighted Average
Outstanding Shares 197,834 193,698
Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Figures in Thousands of U.S. Dollars)
The amount of share-based compensation
included in applicable costs and
expenses categories is summarized
as follows:
Nine Months Ended
September 30,
2007 2006
--------- ---------
Share-based compensation
Cost of revenues $ 405 $ 250
Research and development 14,183 10,645
General and administrative 2,020 1,293
Sales and marketing 2,154 1,469
--------- ---------
Total $ 18,762 $ 13,657
========= =========
The amount of acquisition-related
charges included in applicable
expenses categories is summarized
as follows:
Research and development $ 2,273 $ --
Sales and marketing 810 --
--------- ---------
Total $ 3,083 $ --
========= =========
Himax Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
(Figures in Thousands of U.S. Dollars, Except Per Share Data)
Sept. 30, June 30, Dec. 31,
2007 2007 2006
-------- -------- --------
Assets
Current assets:
Cash and cash equivalents $119,246 $137,508 $109,753
Marketable securities
available-for-sale 16,109 13,327 8,828
Restricted cash equivalents 171 171 108
Accounts receivable, less
allowance for doubtful
accounts, sales returns
and discounts 101,467 116,812 112,767
Accounts receivable from
related parties, less
allowance for doubtful
accounts, sales returns
and discounts 178,099 137,602 116,850
Inventories 125,983 125,146 101,341
Deferred income taxes 6,829 6,829 6,744
Prepaid expenses and
other current assets 12,903 10,113 10,324
-------- -------- --------
Total current assets $560,807 $547,508 $466,715
-------- -------- --------
Property, plant and
equipment, net 46,070 45,801 38,895
Deferred income taxes 12,842 12,842 11,405
Intangible assets, net 33,711 34,273 393
Investments in non-
marketable securities 2,584 1,857 817
Refundable deposits and
prepaid pension costs 612 593 569
-------- -------- --------
95,819 95,366 52,079
-------- -------- --------
Total assets $656,626 $642,874 $518,794
======== ======== ========
Liabilities, minority interest
and stockholders' equity
Current liabilities:
Accounts payable $160,269 $171,218 $120,407
Income tax payable 7,333 7,333 11,666
Dividends payable 39,710 -- --
Other accrued expenses and
other current liabilities 15,738 16,023 21,206
-------- -------- --------
Total current liabilities $223,050 $194,574 $153,279
Accrued pension liability $ 196 $ 196 $ 192
-------- -------- --------
Total liabilities $223,246 $194,770 $153,471
-------- -------- --------
Minority interest $ 3,084 $ 1,715 $ 1,396
-------- -------- --------
Stockholders' equity:
Ordinary share, US$0.0001 par value,
198,548,799, 197,661,063, and
193,600,302 shares issued and
outstanding at September 30, 2007,
June 30, 2007 and December 31, 2006,
respectively 20 20 19
Additional paid-in capital 260,980 259,189 221,666
Accumulated other comprehensive loss (146) (198) (275)
Unappropriated earnings 169,442 187,378 142,517
-------- -------- --------
Total stockholders' equity $430,296 $446,389 $363,927
-------- -------- --------
Total liabilities, minority interest
and stockholders' equity $656,626 $642,874 $518,794
======== ======== ========
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Figures in Thousands of U.S. Dollars)
Three Months Ended
------------------------------
September 30, June 30,
2007 2006 2007
-------- -------- --------
Cash flows from operating activities:
Net income $ 21,773 $ 2,625 $ 26,842
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 4,179 1,119 2,587
Write-off of in-process research
and development -- -- 900
Share-based compensation expenses 1,284 11,456 1,533
Minority interest, net of tax (316) 157 (247)
Loss (gain) on disposal of
property, plant and equipment (16) -- 204
Gain on sale of subsidiary shares
and investments in non-marketable
securities, net (112) (11) (125)
Gain on sale of marketable
securities, net (31) (12) (23)
Deferred income taxes -- 132 (727)
Inventories write downs 3,264 469 5,103
Changes in operating assets and
liabilities:
Accounts receivable 15,850 (14,772) (8,661)
Accounts receivable from related
parties (40,994) (5,096) (31,856)
Inventories (4,032) (7,838) (10,868)
Prepaid expenses and other
current assets (4,390) (2,530) 486
Accounts payable (10,949) 8,815 49,753
Income tax payable -- (1,075) (4,333)
Other accrued expenses and other
current liabilities (114) 3,477 4,071
-------- -------- --------
Net cash provided by
(used in) operating activities (14,604) (3,084) 34,639
-------- -------- --------
Cash flows from investing
activities:
Purchase of property, plant
and equipment (2,500) (5,691) (6,877)
Proceeds from sale of property,
plant and equipment 3 -- 3
Purchase of available-for-sales
marketable securities (12,144) (10,608) (11,723)
Sales and maturities of
available-for-sale marketable
securities 9,404 8,480 11,258
Proceeds from sale of subsidiary
shares and investments in non-
marketable securities by Himax
Technologies Limited 144 27 131
Purchase of investments in non-
marketable securities (750) (1,410) (1,040)
Purchase of subsidiary shares
from minority interest (112) (64) (46)
Refund from (increase in)
refundable deposits (15) (92) 76
Release (pledge) of restricted
cash equivalents -- 424 (91)
-------- -------- --------
Net cash used in
investing activities (5,970) (8,934) (8,309)
-------- -------- --------
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Figures in Thousands of U.S. Dollars)
Three Months Ended
-----------------------------------
September 30, June 30,
2007 2006 2007
--------- --------- ---------
Cash flows from financing
activities:
Proceeds from issuance of
new shares by subsidiaries $ 2,290 $ 655 $ --
Acquisition of ordinary
shares for retirement -- -- (625)
--------- --------- ---------
Net cash provided by (used
in) financing activities 2,290 655 (625)
--------- --------- ---------
Effect of exchange rate
changes on cash and cash
equivalents 22 73 (35)
--------- --------- ---------
Net increase (decrease) in
cash and cash equivalents (18,262) (11,290) 25,670
Cash and cash equivalents
at beginning of period 137,508 166,884 111,838
--------- --------- ---------
Cash and cash equivalents
at end of period $ 119,246 $ 155,594 $ 137,508
========= ========= =========
Supplemental disclosures of
cash flow information:
Cash paid during the
period for income taxes $ 24 $ 21 $ 4,706
========= ========= =========
Supplemental disclosures of
non-cash investing and
financing activities:
Payable for purchase of
equipment and construction
in progress $ 6 $ (1,750) $ (4,473)
========= ========= =========
Dividends payable $ 39,710 $ -- $ --
========= ========= =========
Himax Technologies, Inc.
Unaudited Supplemental Data - Reconciliation Schedule
(Figures in Thousands of U.S. Dollars)
Gross Margin and Operating Margin Excluding Share-based Compensation
and Acquisition-Related Charges:
Three Months Ended
--------------------------------
September 30, June 30,
2007 2006 2007
-------- -------- --------
Revenues $243,337 $177,105 $222,883
Gross profit 54,711 30,818 45,431
Add: Share-based compensation
- Cost of revenues 355 208 25
Gross profit excluding share-
based compensation 55,066 31,026 45,456
Gross margin excluding share-
based compensation 22.6% 17.5% 20.4%
Operating income 19,891 775 24,886
Add: Share-based compensation 15,710 11,456 1,533
Operating income excluding
share-based compensation 35,601 12,231 26,419
Add: Acquisition-related
charges - In-process R&D
write off -- -- 900
- Intangible assets
amortization 554 -- 742
Operating income excluding
share-based compensation
and acquisition-related
charges 36,155 12,231 28,061
Operating margin excluding
share-based compensation
and acquisition-related
charges 14.9% 6.9% 12.6%
Net income excluding
share-based compensation
and acquisition-related
charges 38,037 14,081 30,017
Net margin excluding
share-based compensation
and acquisition-related
charges 15.6% 8.0% 13.5%
* Gross margin excluding share-based compensation equals gross
profit excluding share-based compensation divided by revenues
* Operating margin excluding share-based compensation and
acquisition-related charges equals operating income excluding
share-based compensation and acquisition-related charges divided
by revenues
* Net margin excluding share-based compensation and
acquisition-related charges equals net income excluding
share-based compensation and acquisition-related charges divided
by revenues
Himax Technologies, Inc.
Unaudited Supplemental Data - Reconciliation Schedule
(Figures in Thousands of U.S. Dollars)
Gross Margin and Operating Margin Excluding Share-based Compensation
and Acquisition-Related Charges:
Nine Months Ended
September 30,
2007 2006
-------- --------
Revenues $651,111 $523,639
Gross profit 136,203 101,288
Add: Share-based compensation
- Cost of revenues 405 250
Gross profit excluding share-
based compensation 136,608 101,538
Gross margin excluding share-
based compensation 21.0% 19.4%
Operating income 61,537 43,244
Add: Share-based compensation 18,762 13,657
Operating income excluding
share-based compensation 80,299 56,901
Add: Acquisition-related
charges - In-process R&D write
off 1,600 --
- Intangible assets
amortization 1,483 --
Operating income excluding
share-based compensation
and acquisition-related charges 83,382 56,901
Operating margin excluding
share-based compensation
and acquisition-related
charges 12.8% 10.9%
Net income excluding share-
based compensation and
acquisition-related charges 88,479 57,746
Net margin excluding share-
based compensation and
acquisition-related charges 13.6% 11.0%
* Gross margin excluding share-based compensation equals gross
profit excluding share-based compensation divided by revenues
* Operating margin excluding share-based compensation and
acquisition-related charges equals operating income excluding
share-based compensation and acquisition-related charges divided
by revenues
* Net margin excluding share-based compensation and
acquisition-related charges equals net income excluding
share-based compensation and acquisition-related charges divided
by revenues
Himax Technologies, Inc.
Unaudited Supplemental Data - Reconciliation Schedule
Diluted Earnings Per Share Excluding Share-based Compensation
and Acquisition-Related Charges:
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2007
------------------ -----------------
Diluted GAAP EPS $0.11 $0.34
Add: Estimated share-based
compensation per diluted
share $0.08 $0.09
Add: Estimated acquisition-
related charges $ -- $0.02
Diluted non-GAAP EPS excluding
share-based compensation and
acquisition-related charges $0.19 $0.45
Numbers do not add up due to rounding