Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the First Quarter 2023 Magnachip Semiconductor Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After this conference presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

hand Zhai, over MagnaChip. Investor to today your like Yujia with Relations now the to conference host I'd representative for go ahead. Please

Yujia Zhai

financial Hello to quarter for you March results Magnachip’s ended everyone. first for XXXX. joining XX, the Thank discuss us

release the our first on call today after be investor will of website today’s relations website. be was the The that issued on close shortly market afterwards. earnings can replay archived quarter Company’s found The webcast

Officer; Shinyoung YJ is is me Executive Financial Magnachip’s Joining Magnachip’s Kim, Officer, Park, Chief on today Chief leave. maternity

provide is the Shinyoung’s absence, recent of quarter Principal During prepared overview, the and following the of will guidance company. There and XXXX. will for performance will YJ and a remarks. Company’s for the the the results Q&A Financial will session provide quarter financial Officer second discuss I be business YJ the operating YJ

Magnachip’s During statements and expectations. the call, make may course this of about outlook business we forward-looking conference

historical that as described Our forward-looking therefore our uncertainties filings. to and statements, Safe not today risks of predictions are and our statements SEC subject and in all are and as beliefs statement facts, in found Harbor other the reflect

we our be prepared relations principles, in the website. to The financial discuss measures investor will the to our found comparable measures quarter are in alternative financial measures reconciliation measure accepted non-GAAP an non-GAAP illustrate that may useful. performance not can of of A be most directly earnings section call non-GAAP but operating GAAP the the in first release During generally also with intended accordance measures. accounting are Magnachip’s of

Kim. turn will I YJ that, now call the over With YJ? to

YJ Kim

earnings joining to and for welcome Magnachip’s today QX call. XXXX Hello everyone, thank you us

Holdings. Strategic of the member as want currently Committee Nathan Power Before managing Review the is of and to the of of hoc ad welcome CEO observer Advisors well Jackson Gilbert we Board as Board. the Nathan of proceed, Mr. Directors Company's Keycon an as I Square

us. extensive Boards are of multiple listed publicly his companies, pleased serving With experience on join the very we him have to

in be and shareholders’ Nathan as Magnachip’s a Review our promptly Mr. our Board on a director Strategic member May, Following Committee. will serve annual as meeting appointed on

We are from and to knowledge our as shareholders. finance we capital enhance markets, expertise deep to and in benefit value strive Nathan's Mr. for pleased

Moving on to our results.

financial QX was guidance Revenue $XX range within performance provided our was profit XX.X%. Our QX gross margin the and we call. of was million on earnings the

we main indicated discuss detail impacted As I quarter, macro will by I last challenges businesses. severely as being two our of results that our are several each

revenue of half Xnd XX.X% OLED effects XX.X% Beginning year’s nanometer $XX.X our results XXXX and Display last correction. supply ongoing reflect wins design but down smartphone XX QX was inventory year-over-year, million, the up wafers that XX-inch continued business. with sequentially. shortage These of the impacted

to to continued products some in be overall market have we demand End-consumer our recovery display Premium the begun see play. but weak, Tier, where

first quarter, we panel from customer a our the Korean large During leading model. demand smartphone for saw increased Korean

a new to smartphone We leading launched in Smartphone OEM. Asian this our shipments also for OLED by to products OEM premium-tier Global commenced designs customer QX expected be a Smartphone and two of

remain key the steadfast of during we quarter. plan I business summarize Further, our execute around for our recovery to some and continue initiatives mission you. the Display business to in will our recovery turn Display

the for customer, X panel non-Korean our new last Xst we project. OLED Tier DDIC quarter, At completed qualification

in quarters. initial shipments shipping we to began volume expect and the quarter, accelerate This coming

production the second-half the successfully we project in delivered In year. and ahead sample of the mass expected DDIC is schedule QX, OLED second also our of

many to customer of prospects second DDIC OEMs. with have and we smartphone DDIC from Our leading offers Xst OLED performance significant our the feature this upgrades continue and for

foundry partner. new as well I as multiple their customer in our new visited sites, panel our also recently

Our strategic partnerships are stronger than ever.

other regarding that them year active projects We contribute XXXX. tape revenue with out could in and growth this later are to in discussions

high-end of to to large out our customer in project Korea, QX, the with year. Korean production smartphone customer completed now [Technical near samples panel our mass successfully of tape we in At and begin the DDIC expected targeting release the end are Difficulty] a to in the

For our production at the project automotive announced we this shipment mass last mid-May. now expected customer, quarter is OLED timing in

upcoming wins optimistic additional are our design securing Automotive OLED on We about the in quarters DDIC. based

to million, last Moving continues in Computing be a XX.X% on demand weak Power revenue was business and sequentially. XX.X% QX down our Power down and to impacted quarter, markets, our $XX.X Consumer. to by business: year-over-year particularly our across end Similar

we at impacted negatively margin significantly was Fab to gross of result, lower a during the our which quarter normalize a during reduced driver our Fab utilization, which internal quarter. the production As inventories, primary

the Despite down, premium market blended environment, increased in and challenging unchanged: fundamentals our the of portfolio the markets. XX.X% remain Despite on the Power improving and the core for business focusing product by quarter-over-over year-over-year ASP X.X% Power slow QX’XX product

and increased continued mix products In over year. represented to XX.X% Premium revenue year total ago ASPs. year X.X% products Premium product its strong and Premium maintain ASPs to a of Our compared Power QX, XX.X%

In addition, applications. QX’XX, product activities. ins across and industrial our over our design by In and automotive, wins, continued were we portfolio awarded XXX computing strong design record we driven pace of

strong of that quick correction, to remain this confident While recovery side inventory weak due during on total volumes the will other we remain we fundamentals. these cycle a this see industry-wide

next also featuring nine least the percentage. performance efficiency. set second-half cost double-digit on-resistance system We be products This or technology at have to continue improves by overall this that Super design new week, of better that XXX a a Junction will year, proprietary In full and products innovate. of MOSFET will generation announced we volt introducing we

the continued make applications automotive in to solid progress various our Further, XEV Automotive segment’s within market. Power business

across power Electric Korea, makers for auto Water and For and with systems Charging Heaters, example, Go Vehicle with leading and Systems, China wins Braking Pumps, Japan, we Regenerative Taiwan. Idle as design awarded were multiple our innovative Positive such applications Stations Electric EV Temperature products Stop

along the on OLED that goals is the near-term to set the our our we we bumping to on forth believe executing back panel poised customers. second-half have major bottom growth make our industry environment turning two Now and With products, OLED is our business current in in XXXX. cutting-edge to with to focus deliver once significant OLED to the positioned in continue strides summary, improves. and business well We revenue the we are expect ramp

ahead, we market is few foundry further next to OLED Looking particularly folds available we our opportunities, major expected the our next the headway optimistic internationally Korea, capacity increase are highly into where about over make beyond years. few as

year. products design-in/win ever than rate In stronger our we’re next throughout rolling product this business, and out is Power generation our power

the believe forward hit gradual we in as bottom uncertain, QX we remains are and we Looking however, inventories the macro expect channel environment consumed. ahead, improvement going

computing segments. growth expect We automotive, industrial, especially sequential and in

our market disappointing. have Finally, recent been we performance results and recognize

decision However, as assure maximize to our demonstrated and by to that fresh shareholder the Board. growth bring we our Nathan perspectives we investors remain our want drive Mr. with addition value in in to unwavering commitment to our of

as Further, patience of shareholders accretive towards other we our program challenging daily work net on I that of our Thank continue returns your and market our will our buyback the side shareholders confident the and for you support this we to am goals. downturn. provide to purchases appreciate execute stock your to we all across the

financials I detail. in over will over to call now Yujia turn the to the go

Yujia Zhai

I QX. YJ, provide will Thank and Shinyoung CFO on update Magnachip’s of you Park, financial the for behalf

QX million, and products in down X.X% year-over-year. business sequentially sequentially XX.X% Total $XX from revenue was Revenue million, was and the XX.X% down down down $XX.X standard X.X% year-over-year.

XX.X% year-over-year. million, Display was up and Revenue XX.X% $XX.X from down sequentially business our

the the downturn second-half by slow impacted impacted be to in and smartphone OLED a top-tier wafer continued for smartphone XXXX results global of models as market. our the and that business Our wins supply the in design demand of in Chinese constraints result Korean our

our was and sequentially $XX.X XX.X% from year-over-year. business Revenue Power XX.X% down down million,

particularly most business Power weak end to Computing by our environment across applications. demand Our and impacted related a continues of Consumer markets, be

margin XX.X%, internal in QX from from to was due rate decline correction The the down gross and our costs. QX a XX.X% XXXX in lower to Gross response margin of slowdown, QX in mainly fabrication industry-wide year. was inventory facility Gumi and in sequential down XX.X% the fab utilization last higher an in in

a an rate mix utilization primarily was The and the in year-over-year drop due our fab. decrease to Gumi significant of unfavorable product

gross reminder, basis benefited points purchased a a XXXX. XXXX QX in in subsequently QX timing QX cost by XXX one-time, lower of margin XX and last that in was mismatch sold As from year wafers inch

and expect expected wages. utilization higher We Gross anticipate our well margin electricity is impacted continue costs higher to second-half. be QX will XXXX and as by margin gross as as in manufacturing volume rates such the we improve to input utilization, lower as

million, in $XX.X last as in million $XX.X QX QX now million, as XXXX year. QX compared R&D was to last QX $XX.X Operating $XX.X XXXX Expenses. year. million Turning million to QX $XX.X was QX and in and in to compared $XX.X million SG&A

annual compared in OpEx quarter in included quarter. million. Stock compensation in that our in of QX, $X.X of program, that subject year. million was to have million our employees charges the to savings to $X.X were $X.X on operating early million we one-time QX included voluntary a expenses QX of termination this program approximately $X.X to during Also last executed related resignation Based million in we charge expect and the this opted number $X.X for

QX basis, income loss adjusted million million. of and operating This XXXX. in loss operating adjusted million $XX.X an QX was of operating a in income of operating million $XX.X non-GAAP loss an million QX QX in million, QX $XX.X $X.X adjusted compares was operating compared in $XX.X On QX to year. loss operating $XX.X an of to last and

a year. QX a million. This QX million $X.X compares positive $XX.X negative adjusted to last in QX in negative EBITDA $X.X was million and

net Net year. $X.X million, QX QX million a of loss compared income as in in income in of $XX.X last net $X.X and was with a QX million

last was GAAP share an loss of QX per QX in in share in an compared per per $X.XX of and $X.XX, Our share as $X.XX year. earnings QX diluted with earnings

an with diluted in of QX and compares loss year. loss share $X.XX of $X.XX was in share per QX last non-GAAP per $X.XX. This in QX non-GAAP share Our diluted earnings per

Our program. of reflects for million as diluted share were shares, shares repurchased part expanded XX.X outstanding repurchase our which the quarter shares

buyback stock QX amounted to in XXXX million. Our $XX.X

Board. Cumulatively, start or last by that million program this and September the continue we’ve exercise year buyback million the repurchased shares of QX $XX.X authorized X.X end was the in the the year, since to to stock we of

million of balance down cash the sheet. primary the spent QX QX ended of stock cash debt, and was at quarter the We XXXX. from million $XXX.X $XXX.X with million buybacks. cash outflow to in $XX.X of Moving no the The on end

our We program, normal and to balance CapEx. charges expect the our draw quarters, driven subject termination down buyback voluntary of primarily program, in to resignation by related cash payment on the continue coming to

on macro whether we and Based choose into $XXX positions $XXX sheet We well range between a anticipate with wafer and position to our is depending enter between we agreement could this uncertainty. supply strong on XX-inch period balance forecast, of our QX, long-term during and million our QX a foundry. us believe cash

Net end from accounts the receivable at totaled represents the million, $XX.X a which QX decrease XXXX. of X.X% quarter of

QX. compares days and XX-days outstanding for to was XX-days sales Our QX in

Inventories, million. net quarter QX at the $XX.X end million of to This compares $XX.X in the XXXX. totaled

Our average inventory XX-days for to in and was days XX-days QX compares in QX.

million. Lastly, QX CapEx was $X.X

for CapEx continue $XX mentioned XXXX, XXXX which level. to from be earlier, million, I As lower XX% approximately is anticipate to the nearly we

now That YJ concludes guidance. the for turn of me let today’s remarks, to over the section call CFO prepared

YJ Kim

Thanks, Yujia.

based the state our improvement We of assuming in both second-half Power financial potential on and in poised economy, quarters are remain near-term, cautiously our we the we global a but the believe fourth both in year steady current the XXXX. feedback. a expect for results Display show key to to current that of customer third this Based are have our projections, soft sequential recovery on optimistic and metrics our and

our Now moving quarter to second guidance.

range may of results our Fab. to including in profit currently XX% of expects million $X about Gumi the to XX%. the million actual revenue for be Transitional vary, Foundry $XX margin While to range million, Gross Magnachip $XX in in QX, Services be of to

for questions. the operator may remarks open concludes up our of the prepared That you. call now today, call section Thank you

Operator

of Our Gill Raji comes the from question with first line Needham.

Nick Doyle

Raji is Doyle Gill. this Thanks taking for on question. Hi, for other Nick my

First then market of more you more about if question, if could moment just a speak if premium being talk the about there? And, little design you the around wanted, could -- your DDIC mentioned chips? you recovery you also bit could Thanks. talk new

YJ Kim

Sure. Thank much. very you

QX. this product deliver well the Korean win new one for premium in design customer, happening on front, quarter to saw chip customer, have as that we two in recovery launches that's new So QX we supposed of customer. a to some as the that With Korean phone

of some saw the we improvement there. So

We are also mid-May. going to production with automotive this

So that those with the progress are key customer.

have We last And increment to first the some we product non-Korean quarters. ship next to we quarter. then the the expect few shipped during and in customer, qualified panel

initial chip Our done. second delivered evaluation on and that has schedule

into is much performance Now really and to well And moving that product first as we in lot of do we are a stage. That product seeing the we're panel expect better consumption evaluation power feature and the interest. the one.

are looking about we So optimistic that.

today's generation part that said that on chip call, to then as we next year will also our And we working pay next during will as we contribute revenue well. are

Nick Doyle

display power Thanks. the more if is well? did again could you to on or tied was And year? hoping you as it expected further utilization, you this could And in we and And go talk that is to about that say the next give lower that completely quarter. segment into Thanks. lower direction quarter

YJ Kim

Yes.

the So inch. using XXX% we of OLED inch whether external to the XX foundry DDIC X display make it's

utilization chip. that doesn't the matter for So

power, the internally. On make around XX% we

that's QX region utilization does of the So matter, was on margin one low power. and the why

We better the QX expect without giving but of utilization the the magnitude. to than QX, details be

Operator

[Operator Oppenheimer. from next of question Our the Instructions] [Indiscernible] with line comes

Unidentified Analyst

Hi.

Martin. calling Martin Oppenheimer. I'm line, the for for On Yang

at to driving First the confident how ASP product? you Solutions growth here? your what in And Power the premium premiums question, are was maintaining

YJ Kim

of premium the and This introducing have next we more other also IGBT introducing be Junction products. introduced series composed our alluded volt. Power other Junction And so will products Super Super more of we IC, than Super been generation Junction, more. week, we we products XXX saw that you nine So of

So be a much will that have portfolio we introduced. product will better

some can our confidence lot the a looks new portfolio the very the the all is But So then in say high. more And year. see roadmap products growing second-half lot on and more to will I product introduction good. QX of not really stuff. going premium give product we're But other this a in you

Unidentified Analyst

great. Okay,

when about Sounds happen good. margin high gross My takes margin needs and to next question drive puts is, can towards you gross talk XX%? to

YJ Kim

So that's good really question.

the the factor. power, on So utilization key a is

the with will will margin feel utilization, and come. fill gross a to because cost starting more have drive we so a we're fab, once gross better you So that the margin, the fixed fab

based launches half. second On and towards of be end well on the side DDI, expect higher and the it of devices like the as portfolio, devices brand type that the towards will QHD new we shift as the WXGA

each So that's how we'll product drive the gross line. margins of

Unidentified Analyst

That's Got it, me. all from great.

YJ Kim

Thank you.

Operator

in I'm you at participating. queue showing further questions time. this conference concludes This today's no call. for Thank

You may now disconnect.

Magnachip Semiconductor (MX) 3 May 232023 Q1 Earnings call transcript