* First quarter 2008 gross margin increased to 25.3% -- marks sixth consecutive quarter of improvement * Better-than-expected profit -- EPS of $0.18, 100% growth year-over-year
TAINAN, Taiwan, April 29, 2008 (PRIME NEWSWIRE) -- Himax Technologies, Inc. ("Himax" or "Company") (Nasdaq:HIMX) today reported financial results for the first quarter ended March 31, 2008.
Net revenues for the first quarter of 2008 was $231.6 million, representing 25.3% growth year-over-year and a 13.3% decline sequentially.
Gross margin was 25.3% in the first quarter of 2008, up 580 basis points year-over-year and up 60 basis points sequentially.
Operating margin was 13.7% in the first quarter of 2008. Operating income was $31.7 million, up from $16.8 million in the same period last year, and down from $42.4 million in the previous quarter.
Net income for the first quarter of 2008 was $34.1 million, up from $18.0 million in the same period last year, and down from $46.0 million in the previous quarter. This represents earnings per diluted share of $0.18, compared to $0.09 in the first quarter of 2007, and $0.23 in the fourth quarter of 2007.
Excluding share-based compensation and acquisition-related charges, non-GAAP operating margin was 14.9% in the first quarter of 2008. Non-GAAP operating income was $34.6 million, up from $19.2 million in the same period last year, and down from $44.4 million in the previous quarter.
Non-GAAP net income was $37.0 million, up from $20.4 million in the same period last year, and down from $48.0 million in the previous quarter. This represents earnings per diluted share of $0.19, compared to $0.10 in the first quarter of 2007, and $0.24 in the fourth quarter of 2007.
Share-based compensation was $2.4 million, compared to $1.5 million in the first quarter of 2007, and $1.6 million in the fourth quarter of 2007. Acquisition-related charges were $0.5 million, compared to $0.9 million in the first quarter of 2007, and $0.5 million in the fourth quarter of 2007.
Reconciliation of 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, most comparable GAAP figure, is set out in the attached reconciliation schedule.
Jordan Wu, President and Chief Executive Officer of Himax, commented, "The appreciation of NT dollars had relatively little impact on our financials, as virtually all of our revenues and costs of goods sold are priced in U.S. dollars and we keep and report our books in U.S. dollars. Our first quarter revenues, gross margin and EPS all came in above our guidance. Our revenues declined by 13.3% sequentially, which reflects the seasonally lower demand in the first quarter and fewer working days in the holiday month of February. We were able to improve our gross margin for the sixth consecutive quarter, which was the result of our continued efforts in reducing our unit cost that more than offset our ASP decline."
Mr. Wu continued, "We maintain an optimistic long term view for our non-driver products, which include LCOS microdisplays, timing controllers, monitor scalers, TV chipsets, and power management ICs. We are encouraged by the progress we made in these product segments over the past couple of quarters. Some of these products, such as timing controller, are already in mass production and we have continued to be awarded with new design-wins. In other product areas we are either in early stage of mass production or undergoing advanced stage of anchor customer design-in. We continue to allocate a significant amount of engineering resources to all these new product areas. Upon mass production, all of them will enjoy higher gross margins as compared to display driver IC products."
Looking forward, Mr. Wu added, "We expect revenues to increase sequentially in the second quarter of 2008, primarily due to normal seasonality in the second quarter. We expect revenues to grow by around mid- to high- single digit, gross margin to remain flat or decline within one percentage point and diluted GAAP EPS to be in the range of $0.16 - $0.18."
Investor Conference Call / Webcast Details
The Company's management will review detailed first quarter 2008 results on Tuesday, April 29, 2008 at 7:00 PM EDT (7:00 AM, Wednesday, April 30, 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 281980.
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 LCD TV chipset solution, power management ICs and LCOS microdisplays. Based in Tainan, Taiwan, the Company has regional offices in Hsinchu and Taipei, Taiwan; Ninbo, Foshan, Suzhou and Shenzhen, China; Yokohama, Japan; Anyangsi Kyungkido, and Matsusaka, 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.)
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
Three
Months
Three Months Ended
Ended March 31, Dec. 31,
2008 2007 2007
------- ------- --------
Revenues
Revenues from third parties, net $77,461 $75,836 $101,195
Revenues from related parties, net 154,127 109,055 165,905
------- ------- --------
231,588 184,891 267,100
------- ------- --------
Costs and expenses:
Cost of revenues 172,949 148,830 201,255
Research and development 20,546 14,800 17,607
General and administrative 3,870 3,000 3,790
Sales and marketing 2,558 1,501 2,080
------- ------- --------
Total costs and expenses 199,923 168,131 224,732
------- ------- --------
Operating income 31,665 16,760 42,368
------- ------- --------
Non operating income (loss):
Interest income 777 1,382 1,108
Foreign exchange gains (losses), net 1,370 (490) 164
Other income, net 92 42 209
------- ------- --------
2,239 934 1,481
------- ------- --------
Income before income taxes and minority
interest 33,904 17,694 43,849
Income tax expense (benefit) 702 -- (1,860)
------- ------- --------
Income before minority interest 33,202 17,694 45,709
Minority interest, net of tax 935 325 253
------- ------- --------
Net income $34,137 $18,019 $45,962
======= ======= ========
Basic earnings per ordinary share and ADS $0.18 $0.09 $0.23
======= ======= ========
Diluted earnings per ordinary share and ADS $0.18 $0.09 $0.23
======= ======= ========
Basic Weighted Average Outstanding Shares 191,542 195,761 196,327
Diluted Weighted Average Outstanding
Shares 192,429 195,968 197,264
Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Amounts in Thousands of U.S. Dollars)
The amount of share-based compensation
included in applicable costs and expenses
categories is summarized as follows: Three
Three Months Months
Ended Ended
March 31, Dec. 31,
2008 2007 2007
------ ------ ------
Share-based compensation
Cost of revenues $28 $25 $17
Research and development 1,872 1,187 1,210
General and administrative 233 151 162
Sales and marketing 241 156 170
------ ------ ------
Total $2,374 $1,519 $1,559
====== ====== ======
The amount of acquisition-related charges
included in applicable expenses categories is
summarized as follows:
Research and development $240 $789 $210
Sales and marketing 289 98 251
------ ------ ------
Total $529 $887 $461
====== ====== ======
Himax Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
(Amounts in Thousands of U.S. Dollars, Except Per Share Data)
March 31, Dec. 31, March 31,
2008 2007 2007
-------- -------- --------
Assets
Current assets:
Cash and cash equivalents $125,835 $94,780 $111,838
Marketable securities available-for-sale 15,216 15,208 12,783
Restricted cash equivalents and
marketable securities 2,049 97 106
Accounts receivable, less allowance for
doubtful accounts, sales returns and
discounts 85,795 88,682 108,147
Accounts receivable from related parties,
less allowance for doubtful accounts,
sales returns and discounts 179,801 194,902 105,740
Inventories 122,437 116,550 119,379
Deferred income taxes 13,520 12,671 7,401
Prepaid expenses and other current
assets 9,420 15,371 10,276
-------- -------- --------
Total current assets $554,073 $538,261 $475,670
-------- -------- --------
Property, plant and equipment, net 46,523 46,180 45,767
Deferred income taxes 22,109 20,725 11,964
Goodwill 22,331 22,331 28,565
Intangible assets, net 12,185 12,721 7,300
Investments in non-marketable securities 11,619 7,138 817
Refundable deposits and prepaid pension
costs 874 859 618
-------- -------- --------
115,641 109,954 95,031
-------- -------- --------
Total assets $669,714 $648,215 $570,701
======== ======== ========
Liabilities, minority interest and
stockholders' equity
Current liabilities:
Accounts payable $135,163 $147,221 $121,459
Income tax payable 21,106 19,146 12,150
Other accrued expenses and other current
liabilities 19,106 19,232 16,987
-------- -------- --------
Total current liabilities $175,375 $185,599 $150,596
Accrued pension liability $233 $218 $196
-------- -------- --------
Total liabilities $175,608 $185,817 $150,792
-------- -------- --------
Minority interest $8,296 $11,089 $1,980
-------- -------- --------
Stockholders' equity:
Ordinary shares, US$0.0001 par value,
500,000,000 shares authorized;
190,905,649, 191,979,691, and
197,656,063 shares issued and
outstanding at March 31, 2008,
December 31, 2007, and March 31, 2007,
respectively 19 19 20
Additional paid-in capital 235,402 235,894 257,678
Accumulated other comprehensive
income(loss) 849 (7) (305)
Unappropriated retained earnings 249,540 215,403 160,536
-------- -------- --------
Total stockholders' equity $485,810 $451,309 $417,929
-------- -------- --------
Total liabilities, minority interest and
stockholders' equity $669,714 $648,215 $570,701
======== ======== ========
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
Three
Three Months Months
Ended Ended
March 31, Dec. 31,
2008 2007 2007
------- ------- -------
Cash flows from operating activities:
Net income $34,137 $18,019 $45,962
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 2,939 2,026 2,892
Write-off of in-process research and
development -- 700 --
Share-based compensation expenses 2,374 1,519 1,559
Minority interest, net of tax (935) (325) (253)
Loss (gain) on disposal of property, plant
and equipment (6) 35 --
Gain on disposal of long-lived assets held
for sale (113) -- --
Gain on sale of subsidiary shares and
investments in non-marketable securities,
net (64) (21) (160)
Gain on sale of marketable securities, net (6) (30) (28)
Deferred income taxes (2,167) -- (13,891)
Inventories write downs 5,099 2,719 3,754
Changes in operating assets and liabilities:
Accounts receivable 2,919 6,084 12,698
Accounts receivable from related parties 15,105 11,514 (16,708)
Inventories (10,923) (20,404) 5,686
Prepaid expenses and other current assets 5,830 (85) (1,912)
Accounts payable (12,083) 416 (12,988)
Income tax payable 1,960 -- 11,813
Other accrued expenses and other current
liabilities (109) (6,290) 2,826
------- ------- -------
Net cash provided by operating activities 43,957 15,877 41,250
------- ------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (2,263) (6,483) (3,138)
Proceeds from sale of property, plant and
equipment and long-lived assets held for
sale 264 -- 3
Purchase of available-for-sale marketable
securities (22,550) (17,581) (11,028)
Sales and maturities of available-for-sale
marketable securities 22,957 13,639 12,002
Cash acquired (paid) in acquisition -- 6,197 (36)
Proceeds from sale of subsidiary shares
and investments in non-marketable
securities by Himax Technologies Limited 9 34 253
Purchase of investments in non-marketable
securities (4,481) -- (4,531)
Purchase of subsidiary shares from
minority interest (29) (17) (120)
Increase in refundable deposits (26) (16) (20)
Release (pledge) of restricted cash
equivalents and marketable securities (1,952) 2 100
------- ------- -------
Net cash used in investing activities (8,071) (4,225) (6,515)
------- ------- -------
Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in Thousands of U.S. Dollars)
Three
Months
Three Months Ended
Ended March 31, Dec. 31,
2008 2007 2007
-------- -------- --------
Cash flows from financing activities:
Distribution of cash dividends $-- $-- $(39,710)
Proceeds from issuance of new shares by
subsidiaries 89 1,217 8,307
Payments to acquire of ordinary shares
for retirement (5,364) (10,841) (27,879)
-------- -------- --------
Net cash used in financing activities (5,275) (9,624) (59,282)
-------- -------- --------
Effect of exchange rate changes 444 57 81
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents 31,055 2,085 (24,466)
Cash and cash equivalents at beginning
of period 94,780 109,753 119,246
-------- -------- --------
Cash and cash equivalents at end of
period $125,835 $111,838 $94,780
======== ======== ========
Supplemental disclosures of cash flow
information:
Cash paid during the period for income
taxes $31 $17 $32
======== ======== ========
Supplemental disclosures of non-cash
investing and financing activities:
Payable for purchase of equipment and
construction in progress $476 $1,384 $(242)
======== ======== ========
Fair value of ordinary shares issued by
Himax Technologies, Inc. in the
acquisition of Wisepal Technologies,
Inc. $-- $45,031 $--
======== ======== ========
Fair value of additional ordinary shares
to be issued by Himax Technologies,
Inc. pursuant to the contingent
consideration provision in the
acquisition of Wisepal Technologies,
Inc. $-- $-- $1,688
======== ======== ========
Himax Technologies, Inc.
Unaudited Supplemental Data - Reconciliation Schedule
(Amounts in Thousands of U.S. Dollars)
Gross Margin and Operating Margin Excluding Share-based Compensation
and Acquisition-Related Charges:
Three
Months
Three Months Ended
Ended March 31, Dec. 31,
2008 2007 2007
-------- -------- --------
Revenues $231,588 $184,891 $267,100
Gross profit 58,639 36,061 65,845
Add: Share-based compensation - Cost of
revenues 28 25 17
Gross profit excluding share-based
compensation 58,667 36,086 65,862
Gross margin excluding share-based
compensation 25.3% 19.5% 24.7%
Operating income 31,665 16,760 42,368
Add: Share-based compensation 2,374 1,519 1,559
Operating income excluding share-based
compensation 34,039 18,279 43,927
Add: Acquisition-related charges
-Intangible assets amortization 529 187 461
-In-process R&D write off -- 700 --
Operating income excluding share-based
compensation
and acquisition-related charges 34,568 19,166 44,388
Operating margin excluding share-based
compensation and acquisition-related
charges 14.9% 10.4% 16.6%
Net income excluding share-based
compensation and acquisition-related
charges 37,040 20,425 47,982
Net margin excluding share-based
compensation and acquisition-related
charges 16.0% 11.0% 18.0%
*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
Diluted Earnings Per Share Excluding Share-based Compensation and
Acquisition-Related Charges:
Three Months
Ended March 31,
2008
---------------
Diluted GAAP EPS $0.18
Add: Estimated share-based compensation per diluted
share $0.01
Add: Estimated acquisition-related charges per
diluted share $--
Diluted non GAAP EPS excluding share-based
compensation and acquisition-related charges $0.19
Numbers do not add up due to rounding