Himax Technologies, Inc. Reports Second Quarter 2012 Financial Results

Sales increased 18.0% year-over-year to $189.5 million

Company Meets Q2 Gross Margin and EPS Guidance

• Small and medium-sized panel driver sales increased 34.7% year-over-year to US$83.8 million, achieving record-high quarterly revenues
• Gross margin increased 450 basis points to 23.1% from 18.6% in 2Q11 and increased 20 basis points from 22.9% in 1Q12, highest since 4Q08
• GAAP net income increased 316.8% to US$15.1 million from US$3.6 million in 2Q11 and increased 33.5% from US$11.3 million in 1Q12. GAAP diluted earnings per ADS increased 342.5% to US$0.089 from US$0.02 in 2Q11 and increased 34.7% from US$0.066 in 1Q12

TAINAN, Taiwan, Aug. 8, 2012 (GLOBE NEWSWIRE) -- Himax Technologies, Inc. (Nasdaq:HIMX) ("Himax" or "Company"), a leading supplier and fabless manufacturer of display drivers and other semiconductor products, today announced financial results for the second quarter ended June 30, 2012.

SUMMARY FINANCIALS

"We are pleased with our second quarter performance where we achieved both top and bottom line growth. This signifies the success we have achieved for more balanced sales from various product lines and a more diversified customer base. In addition, we delivered strong growth in our higher margin products and kept our operating expenses under control. All of these factors resulted in substantial improvements in our bottom line profitability. We are confident that Himax is heading in the right direction to achieve additional improvements for the balance of 2012 and beyond," explained Mr. Jordan Wu, President and Chief Executive Officer of Himax.

Second quarter 2012 Financial Results

Breakdown by Product Line (USD in millions) (unaudited)

Revenues for the second quarter of 2012 increased 18.0% to $189.5 million year-over-year and increased 13.7% sequentially. Strong sales in our small and medium-sized drivers and non-driver ICs remained the top contributors to the Company's revenue growth. Sales to non-related parties increased an impressive 36.5% year over year and grew 21.9% sequentially.

Sales of small and medium-sized drivers were $83.8 million, up 34.7% in the second quarter from the same period 2011 and up 15.8% from the previous quarter. The growth was mainly a result of strong sales in a number of fast-growing product segments including smartphones, automotive and tablets. Sales for smartphone driver ICs, particularly those to the China market, were also robust. Himax's small and medium-sized driver sales totaled $83.8 million for the second quarter, a record high in its history.

Revenues from large panel display drivers were $79.7 million, up 4.3% from a year ago and 11.7% from the first quarter of 2012. The sales increase was mainly due to the growing sales to the panel customers in China. Thanks to the new capacity ramp currently underway in China, the Company anticipates this positive trend to continue in the second half of 2012.

Revenues from Himax's non-driver businesses, which include CMOS image sensors, LCOS microdisplays, touch panel controllers, power management ICs, LED diver ICs, wafer level optics, timing controllers, ASIC services and IP licensing, were $26.0 million, an increase of 18.4% from the same period last year and 13.2% higher than the first quarter of 2012.

Gross margins were 23.1% for the three months ended June 30, 2012, up 450 basis points from 18.6% in the second quarter of 2011 and up 20 basis points from 22.9% in the first quarter of 2012. This is the third consecutive quarter of gross margin improvement and the highest level since the fourth quarter of 2008. The increase in gross margin is a direct result of a richer mix of higher margin products. Continued gross margin improvement will remain one of the Company's main focuses for the remainder of 2012.

Second quarter 2012 GAAP operating expenses were $23.5 million, down 11.2% from $26.5 million a year ago and down 0.6% from $23.7 million in the previous quarter. GAAP operating income was $20.2 million in the second quarter of 2012 compared to $3.4 million in the second quarter of 2011 and $14.5 million in the first quarter of 2012.

GAAP operating income for the second quarter of 2012 was $20.2 million, or 10.7% of sales, up $16.8 million, or 492.3%, as compared to $3.4 million, or 2.1% of sales, during the same period in 2011 and up $5.7 million, or 39.7%, from $14.5 million, or 8.7% of sales, in the previous quarter.

Reported GAAP net income was $15.1 million, or 8.9 cents per ADS, for the second quarter of 2012 compared to $3.6 million, or 2.0 cents per ADS, in the corresponding quarter a year ago, and up from $11.3 million, or 6.6 cents per ADS, in the previous quarter. GAAP net income improved 316.8% compared to second quarter 2011 and 33.5% versus first quarter of 2012.

Non-GAAP net income in the second quarter was $15.9 million, or 9.3 cents per diluted ADS, up from $5.0 million, or 2.8 cents per ADS, for the same period last year, and up from $12.1 million, or 7.1 cents per ADS, in the previous quarter.  Non-GAAP net income for the second quarter 2012 grew 216.8% over the same period last year and 31.1% over first quarter of 2012.

Revenues were $356.2 million and gross profits were $81.8 million, representing growth of 18.1% and 40.6% over the first half of 2011 respectively. Gross margin increased to 23.0% in the first six months of 2012, up from 19.3% in the same period last year, a 370 basis point improvement.

GAAP operating expenses were $47.2 million for the first six months 2012, down $5.1 million or 9.7% from $52.3 million for the same period 2011. The significant reduction was due to better overall cost controls and the reduction in the ramp-up costs for WLO, WLM and LCOS products at Himax's dedicated factories for these product lines.

Operating income of $34.7 million represented a 482.4% increase from the first half of 2011. The improvement in operating income was mainly the result of gross margin expansion and cost control measures identified above.

GAAP net income for the first half 2012 was $26.4 million, or 15.4 cents per diluted ADS, up from $6.3 million, or 3.6 cents per ADS, for the same period last year. GAAP net income for the first half of 2012 grew 316.2% over the same period last year.

Non-GAAP net income for the first half 2012 was $28.1 million, or 16.4 cents per diluted ADS, up from $9.2 million, or 5.1 cents per ADS, for the same period last year. Non-GAAP net income for the first half of 2012 grew 206.6% over the same period last year.

All of the above are strong indications that Himax has delivered a solid performance that has lifted its overall financial results.

Balance Sheet and Cash Flow

The Company had $103.2 million in cash and cash equivalents on June 30, 2012, compared to $102.1 million on March 31, 2012. Inventory at end of June was $139.2 million compared to $118.5 million at end of last quarter, reflecting a few customer orders that were pushed out to the third quarter.

Accounts receivable were approximately $212.9 million on June 30, 2012 compared to $189.0 million on March 31, 2012. Day Sales Outstanding ("DSO") was 109 days at end of second quarter 2012 versus 103 days in the first quarter of 2012.

Net cash inflow from operating activities for the second quarter was $3.2 million which consists of net income before depreciation and amortization of $18.1 million offset by increase in receivables, inventory and trade and tax payables.   

Share Buyback Update

With regards to the Company's $25 million dollars share buyback program, Himax has purchased a total of $12.3 million, or approximately 8.9 million ADS through June 30, 2012. Himax purchased approximately $1.14 million or 0.6 million ADS in the three months ended June 30, 2012. Himax management has stated they will continue to execute the remaining share repurchase program in accordance with Rule 10b-18. 

Cash Dividend

On June 11th, Himax declared a cash dividend of 6.3 cents per ADS, totaling $10.7 million, for 2011, paid out on July 25, 2012. This pay-out is consistent with the Company's cash dividend policy based on its prior year's profitability. The Company's decision to pay out 100% of its last year's net profit signifies the board's confidence in the positive business outlook for 2012.

September 2012 Non-Deal Road Show

Ms. Jackie Chang, CFO, Ms. Penny Lin, IR Manager, and John Mattio, US-Based IR from the MZ Group, will host a number of investor meeting in the New York Metro and Boston area from September 10th to 14th. If you are interested in meeting with the Company in a 1-1 session or group session, please contact Himax's US or Taiwan based investor relations contact at the numbers below.

Business Updates

Himax continues to solidify its product portfolio and diversify its customers across several of its major business units. In small and medium-sized drivers, the Company has enjoyed phenomenal growth in this product category for quite some time through leading technology and strong execution. The Company remains bullish on the growth prospect for its small and medium-sized driver business long term, particularly the smartphones application which has delivered the strongest growth since the third quarter of 2011, although it is witnessing several entry-price-point smartphones enter the market. Beyond handsets, Himax has won numerous design wins in tablet, notebook and automotive display applications which will continue to produce strong shipments in the second half of this year.

Himax experienced second quarter growth in the large panel business mainly due to the growth from panel manufacturer customers in China. This growth trend in China will continue through 2012 as a number of Chinese large panel manufacturers have expanded their capacity and increased their capacity utilization. Large panel display drivers remain one of the Company's long-term focuses.

Himax's non-driver products have grown quickly as a result of growth in several product areas. The Company has secured new design wins for new sensor products in conjunction with the launch of Windows 8 with a number of tier-one notebook names. 

Himax has also been able to secure additional design wins for the Company's multi-finger captive touch panel controller and expects to increase shipment volumes for this product line in the third and fourth quarter of the year. Himax believes touch panel controller is a long-term growth engine for Himax.

Himax is also working with several top-tier customers to develop new applications using its LCOS panels. The Company witnessed a change in the application of the technology in the past year away from embedded pico-projector in handphones in favor of head-mounted displays. Himax remains excited on the prospects for this technology in the future as it believes its technology in head-mounted displays application is superior to other competing technologies.

For the Company's new business from the comprehensive monitor and projector scaler product line and tailor-made video processing IC solutions and silicon IP services, Himax is extremely encouraged by some early successes by the engagement of several top-tier brand customers who need such ICs to create differentiation for their end products.

The Company will release its third quarter 2012 guidance before the market opens on August 9, 2012. The management team will provide additional insight to market trends for the third quarter on its second quarter conference call.

Conference Call

Himax Technologies, Inc. will hold a conference call with investors and analysts tomorrow, August 9, 2012 at 8:00 a.m. US Eastern Time to discuss the Company's second quarter and first half 2012 financial results. Details of the call follow below.

A replay of the call will be available beginning two hours after the call through midnight August 16, 2012 (12 p.m. August 17, Taiwan time) on www.himax.com.tw and by telephone at +1-877-870-5176 (US Domestic) or +1-858-384-5517 (International). The conference ID number is 398094. This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this http://public.viavid.com/index.php?id=101194 or at ViaVid's website at http://www.viavid.net, where the webcast can be accessed through August 8, 2013.

About Himax Technologies, Inc.

Himax Technologies, Inc. (Nasdaq:HIMX) is a fabless semiconductor solution provider dedicated to display imagine 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, and many other consumer electronics devices. Additionally, Himax designs and provides controllers for touch sensor displays, LCOS microdisplays used in palm-size projectors and head-mount displays, LED driver ICs, power management ICs, and chipsets for TVs and monitors. The company also offers digital camera solutions, including CMOS image sensors and wafer level optics, which are used in a wide variety of applications such as mobile phone, tablet, laptop, TV, PC camera, automobile, security and medical devices. Founded in 2001 and headquartered in Tainan, Taiwan, Himax currently employs 1,400 people from three Taiwan-based offices in Tainan, Hsinchu and Taipei and country offices in China, Korea, Japan and the US. With more than 1,500 patents in three continents on its technologies, Himax has retained its position as the leading display image processing semiconductor solution provider to consumer electronics brands worldwide.

http://www.himax.com.tw

About Non-GAAP Financial Measures

To supplement the unaudited consolidated statement of income and comprehensive income presented in accordance with GAAP, the Company is also providing non-GAAP measures of income before income tax expenses, net income, net income attributable to us and basic and diluted earnings per share for the six months ended June 30, 2012 and 2011, which are adjusted from results based on GAAP to exclude the non-cash transactions. The non-GAAP financial measures are provided to enhance the investors' overall understanding of our current performance in on-going core operations as well as the prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The Company uses both GAAP and non-GAAP information in evaluating our operating business results internally and therefore deems it important to provide all of this information to investors. The non-GAAP adjustments include share based compensations and acquisition related charges.

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; the uncertainty of success in our Taiwan listing plan which is still under review by Taiwan regulatory authorities and subject to change due to, among other things, changes in either Taiwan or U.S. authorities' policies and Taiwan regulatory authorities' acceptance of the Company's Taiwan listing application 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, 2011 filed with the SEC, as may be amended.

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