Magnachip Reports Results for Second Quarter 2024

Rhea-AI Summary

Magnachip Semiconductor reported Q2 2024 revenue of $53.2 million, surpassing the guidance range mid-point. The Standard Product Business revenue grew 11.6% sequentially.

The gross profit margin was 21.8%, exceeding the guidance range. Cash reserves stood at $132.5 million with an additional $30 million in short-term financial investments. The company completed a share repurchase of 0.5 million shares worth $2.3 million.

Operational highlights include the opening of a new subsidiary in China, a purchase commitment for OLED drivers, and sampling next-gen OLED drivers and smartwatches. Automotive sector rebounded with new design wins. The company launched a new IGBT for solar applications expected to enter mass production in H2 2024.

For Q3 2024, revenue is expected between $61.5 million and $66.5 million with an improved gross profit margin of 22.5%-24.5%.

Positive

• Q2 2024 revenue of $53.2 million, above guidance.
• Standard Product Business revenue grew 11.6% sequentially.
• Gross profit margin of 21.8%, surpassing guidance.
• Cash reserves at $132.5 million.
• Share repurchase of 0.5 million shares for $2.3 million.
• New subsidiary launched in China.
• Secured purchase commitment for OLED drivers.
• New design wins in the automotive sector.
• Launch of new IGBT for solar applications to enter mass production in H2 2024.

Negative

• Q2 2024 net loss of $12.997 million.
• Consolidated revenue decreased 12.8% YoY.
• Standard Product Business revenue down 1.1% YoY.
• Mixed-Signal Solutions revenue down 6.2% YoY.
• Operating loss of $12.824 million.
• Gross profit margin dropped 0.4 percentage points YoY.
• Transitional Fab 3 Foundry Services revenue down 75.7% YoY.

Insights

Financial Analyst

Magnachip's Q2 2024 results show mixed signals. While revenue of $53.2 million exceeded guidance, it still represents a 12.8% year-over-year decline. The gross profit margin of 21.8% surpassed expectations, indicating improved operational efficiency.

The Standard Products Business, comprising MSS and PAS, showed resilience with a 11.6% sequential increase. However, the operating loss of $12.8 million and net loss of $13 million are concerning, reflecting ongoing challenges in profitability.

Looking ahead, the Q3 guidance suggests continued recovery, with projected revenue of $61.5-66.5 million. The expected growth in MSS (33.7% sequentially) and PAS (19.8% sequentially) is promising. However, investors should note the company's revised full-year outlook, now expecting flat to slightly down consolidated revenue, a downgrade from previous expectations.

The company's cash position of $132.5 million plus $30 million in short-term investments provides a solid financial buffer. The ongoing share repurchase program, with $2.3 million spent in Q2, demonstrates confidence in the company's long-term prospects.

Tech Industry Analyst

Magnachip's Q2 results highlight its strategic focus on OLED and power solutions. The company's progress in OLED technology is particularly noteworthy:

• Secured a purchase commitment for an OLED driver targeted at a premium smartphone OEM
• Advanced development of next-generation OLED drivers with enhanced features and 20% reduced power consumption
• Expanded into the smartwatch market with their first OLED smartwatch DDIC

These developments position Magnachip well in the growing OLED market, especially as demand for advanced displays in smartphones and wearables continues to rise.

In the power solutions segment, the 7.4% sequential growth in Power Analog Solutions is encouraging. The launch of a new 75A/1200V IGBT for solar applications demonstrates Magnachip's efforts to diversify its product portfolio and tap into the renewable energy sector.

The formation of Magnachip Technology Company in China is a strategic move to strengthen the company's presence in a key market. However, investors should monitor how geopolitical tensions might impact this expansion.

While the company faces near-term challenges, its focus on innovation and market expansion in OLED and power solutions could drive long-term growth, provided they can effectively monetize these technological advancements.

Financial Highlights

• Q2 consolidated revenue was $53.2 million, above the mid-point of guidance range of $49-54 million.
  • Q2 standard product business revenue was up 11.6% sequentially.
• Q2 consolidated gross profit margin was 21.8%, above the upper end of guidance range of 17-19%.
  • Q2 standard product business gross profit margin was 23.1%, up nearly two percentage points sequentially.
• Ended Q2 with cash of $132.5 million; and also have an additional short-term financial investment of $30 million.
• Repurchased approximately 0.5 million shares for aggregate purchase price of $2.3 million during the quarter.

Operational Highlights

• Held formal opening ceremony in China for newly formed subsidiary, Magnachip Technology Company, Ltd. (MTC).
• Secured a purchase commitment for OLED driver targeted for a premium smartphone OEM; mass production and revenue currently expected to begin by year-end.
• Delivered samples of our next-generation OLED driver to a panel supplier for a leading Chinese smartphone OEM's winter 2024 model, now in the final design validation phase.
• Taped out a new OLED driver designed with next-generation IP including sub-pixel rendering (SPR), refined color enhancement, color filter, brightness uniformity control and more than 20% reduction in power consumption than previous generation.
• Sampled our first OLED smartwatch DDIC in Q2 following a Q1 tape-out, demonstrating our expansion into new, adjacent markets.
• Power IC revenue increased sequentially, driven primarily by demand for LCD TVs and OLED IT monitors.
• Sequential revenue growth in PAS segment was driven by industrial, communication and consumer applications. Automotive rebounded with new design wins in Japan and China.
• Launched new 75A/1200V IGBT for a design opportunity in solar applications; expected to begin mass production in the second half of the year.

SEOUL, South Korea--(BUSINESS WIRE)-- Magnachip Semiconductor Corporation (NYSE: MX) (“Magnachip” or the “Company”) today announced financial results for the second quarter 2024.

YJ Kim, Magnachip’s CEO, commented, “Our Q2 revenue was above the mid-point of guidance and gross margin was better than expected. Revenue in our Standard Products Business, which is comprised of our MSS and PAS businesses, increased sequentially by double digits in Q2. We benefited from a recovery in our Power business, increased demand for OLED drivers for China smartphones and European autos, and an upturn in Power IC demand for OLED IT panels and LED TVs.”

YJ Kim added, “Looking ahead, we currently expect Standard Product Business revenue will increase sequentially once again in Q3, driven by leaner distribution channels in Power, as well as seasonality, and an increase in OLED and Power IC businesses.”

Q2 2024 Financial Highlights
	In thousands of U.S. dollars, except share data
	GAAP
	Q2 2024			Q1 2024			Q/Q change				Q2 2023			Y/Y change
Consolidated Revenues	53,171			49,067			up	8.4	%		60,979			down	12.8	%
Standard Products Business	50,835			45,541			up	11.6	%		51,375			down	1.1	%
Mixed-Signal Solutions	11,595			9,006			up	28.7	%		12,357			down	6.2	%
Power Analog Solutions	39,240			36,535			up	7.4	%		39,018			up	0.6	%
Transitional Fab 3 foundry services(1)	2,336			3,526			down	33.7	%		9,604			down	75.7	%
Consolidated Gross Profit Margin	21.8	%		18.3	%		up	3.5	%pts		22.2	%		down	0.4	%pts
Standard Products Business	23.1	%		21.2	%		up	1.9	%pts		26.3	%		down	3.2	%pts
Mixed-Signal Solutions	34.6	%		44.6	%		down	10.0	%pts		36.4	%		down	1.8	%pts
Power Analog Solutions	19.7	%		15.4	%		up	4.3	%pts		23.1	%		down	3.4	%pts
Operating Loss	(12,824	)		(13,459	)		up	n/a			(10,656	)		down	n/a
Net Loss	(12,997	)		(15,417	)		up	n/a			(3,947	)		down	n/a
Basic Loss per Common Share	(0.34	)		(0.40	)		up	n/a			(0.09	)		down	n/a
Diluted Loss per Common Share	(0.34	)		(0.40	)		up	n/a			(0.09	)		down	n/a
	In thousands of U.S. dollars, except share data
	Non-GAAP(2)
	Q2 2024			Q1 2024			Q/Q change				Q2 2023			Y/Y change
Adjusted Operating Loss	(11,608	)		(12,559	)		up	n/a			(7,762	)		down	n/a
Adjusted EBITDA	(7,569	)		(8,441	)		up	n/a			(3,594	)		down	n/a
Adjusted Net Loss	(8,134	)		(10,884	)		up	n/a			(2,472	)		down	n/a
Adjusted Loss per Common Share—Diluted	(0.21	)		(0.28	)		up	n/a			(0.06	)		down	n/a

___________

(1)		Following the consummation of the sale of the Foundry Services Group business and Fab 4 in Q3 2020, we provided transitional foundry services to the buyer for foundry products manufactured in our fabrication facility located in Gumi, Korea, known as “Fab 3” (“Transitional Fab 3 Foundry Services”). The contractual obligation to provide the Transitional Fab 3 Foundry Services ended August 31, 2023, and we are winding down these foundry services and planning to convert portions of the idle capacity to PAS products beginning around the second half of 2024. Because these foundry services during the wind-down period are still provided to the same buyer by us using our Fab 3 based on mutually agreed terms and conditions, we will continue to report our revenue from providing these foundry services and related cost of sales within the Transitional Fab 3 Foundry Services line in our consolidated statement of operations until such wind down is completed. Management believes that disclosing revenue of Transitional Fab 3 Foundry Services separately from the standard products business allows investors to better understand the results of our core standard products MSS and PAS businesses.
(2)		Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a meaningful understanding of the factors and trends affecting our business and operations and assist in evaluating our core operating performance. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net loss or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included in this press release.

Q3 and Full-year 2024 Financial Guidance

Beginning in Q1, the Company began reporting results under its newly organized businesses: MSS (Mixed-Signal Solutions) and PAS (Power Analog Solutions). While actual results may vary, Magnachip currently expects the following:

For Q3 2024:

• Consolidated revenue to be in the range of $61.5 to $66.5 million, including approximately $1.5 million of Transitional Foundry Services.
  • MSS revenue to be in the range of $14.5 to $16.5 million, up 33.7% sequentially and 46.2% year-over-year at the mid-point. This compares with MSS equivalent revenue of $11.6 million in Q2 2024 and $10.6 million in Q3 2023.
  • PAS revenue to be in the range of $45.5 to $48.5 million, up 19.8% sequentially and 14.6% year-over-year at the mid-point. This compares with PAS equivalent revenue of $39.2 million in Q2 2024 and $41.0 million in Q3 2023.
• Consolidated gross profit margin to be in the range of 22.5% to 24.5%.
  • MSS gross profit margin to be in the range of 36.5% to 39.5%. This compares with MSS equivalent gross profit margin of 34.6% in Q2 2024 and 28.8% in Q3 2023.
  • PAS gross profit margin to be in the range of 18.5% to 20.5%. This compares with PAS equivalent gross profit margin of 19.7% in Q2 2024 and 28.6% in Q3 2023.

For the full-year 2024, we currently expect:

• MSS revenue to grow double digits year-over-year as compared with MSS equivalent revenue of $44.4 million in 2023, consistent with what we communicated at the beginning of the year.
• PAS revenue to grow double digits year-over-year as compared with PAS equivalent revenue of $151.3 million in 2023, consistent with what we communicated at the beginning of the year.
• Transitional Foundry Services revenue will decline in 2024, as expected. We expect this revenue to phase out by the end of the year.
• Consolidated revenue flattish-to-slightly down, compared to prior expectation of flat-to-up-slightly year-over-year.
• Consolidated gross profit margin between 19% to 22%, above our prior expectation of 17% to 20%. This compares with the consolidated gross profit margin of 22.4% in 2023.

Q2 2024 Earnings Conference Call

Magnachip will host a corresponding conference call at 2:00 p.m. PT / 5:00 p.m. ET on Wednesday, July 31, 2024, to discuss its financial results. In advance of the conference call, all participants must use the following link to complete the online registration process. Upon registering, each participant will receive access details for this event including the dial-in numbers, a PIN number, and an e-mail with detailed instructions to join the conference call. A live and archived webcast of the conference call and a copy of earnings release will be accessible from the ‘Investors’ section of the Company’s website at www.magnachip.com.

Online registration: https://register.vevent.com/register/BId7d466aa72124a439fec483c2b65d307

Safe Harbor for Forward-Looking Statements

Information in this release regarding Magnachip’s forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include expectations about estimated historical or future operating results and financial performance, outlook and business plans, including third quarter and full year 2024 revenue and gross profit margin expectations, future growth and revenue opportunities from new and existing products and customers, the timing and extent of future revenue contributions by our products and businesses, and the impact of market conditions associated with inflation and higher interest rates, geopolitical conflicts between Russia-Ukraine and between Israel-Hamas, sustained military action and conflict in the Red Sea, and trade tensions between the U.S. and China, on Magnachip’s third quarter and full year 2024 and future operating results. All forward-looking statements included in this release are based upon information available to Magnachip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, among others: the impact of changes in macroeconomic conditions, including those caused by or related to inflation, potential recessions or other deteriorations, economic instability or civil unrest; the geopolitical conflicts between Russia-Ukraine and between Israel-Hamas, sustained military action and conflict in the Red Sea, and trade tensions between the U.S. and China; manufacturing capacity constraints or supply chain disruptions that may impact our ability to deliver our products or affect the price of components, which may lead to an increase in our costs and impact demand for our products from customers who are similarly affected by such capacity constraints or disruptions; the impact of competitive products and pricing; timely acceptance of our designs by customers; timely introduction of new products and technologies; our ability to ramp new products into volume production; industry-wide shifts in supply and demand for semiconductor products; overcapacity within the industry or at Magnachip; effective and cost-efficient utilization of manufacturing capacity; financial stability in foreign markets and the impact of foreign exchange rates; unanticipated costs and expenses or the inability to identify expenses that can be eliminated; compliance with U.S. and international trade and export laws and regulations by us, our customers and our distributors; change to or ratification of local or international laws and regulations, including those related to environment, health and safety; public health issues, other business interruptions that could disrupt supply or delivery of, or demand for, Magnachip’s products; and other risks detailed from time to time in Magnachip’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Form 10-K filed on March 8, 2024, and subsequent registration statements, amendments or other reports that we may file from time to time with the SEC and/or make available on our website. Magnachip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.

About Magnachip Semiconductor

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communication, Internet of Things (“IoT”), consumer, computing, industrial and automotive applications. The Company provides a broad range of standard products to customers worldwide. Magnachip, with more than 40 years of operating history, owns a portfolio of approximately 1,050 registered patents and pending applications, and has extensive engineering, design, and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through Magnachip's website is not a part of, and is not incorporated into, this release.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of U.S. dollars, except share data) (Unaudited)
			Three Months Ended													Six Months Ended
			June 30, 2024				March 31, 2024				June 30, 2023					June 30, 2024				June 30, 2023
Revenues:
Net sales – standard products business			$	50,835			$	45,541			$	51,375				$	96,376			$	102,889
Net sales – transitional Fab 3 foundry services				2,336				3,526				9,604					5,862				15,095
Total revenues				53,171				49,067				60,979					102,238				117,984
Cost of sales:
Cost of sales – standard products business				39,113				35,888				37,867					75,001				75,179
Cost of sales – transitional Fab 3 foundry services				2,457				4,211				9,574					6,668				17,173
Total cost of sales				41,570				40,099				47,441					81,669				92,352
Gross profit				11,601				8,968				13,538					20,569				25,632
Gross profit as a percentage of standard products business net sales				23.1	%			21.2	%			26.3	%				22.2	%			26.9	%
Gross profit as a percentage of total revenues				21.8	%			18.3	%			22.2	%				20.1	%			21.7	%
Operating expenses:
Selling, general and administrative expenses				11,734				11,264				12,137					22,998				24,302
Research and development expenses				12,691				11,163				11,255					23,854				24,553
Early termination and other charges				—				—				802					—				9,251
Total operating expenses				24,425				22,427				24,194					46,852				58,106
Operating loss				(12,824	)			(13,459	)			(10,656	)				(26,283	)			(32,474	)
Interest income				2,228				2,213				2,692					4,441				5,534
Interest expense				(554	)			(238	)			(200	)				(792	)			(456	)
Foreign currency gain (loss), net				(3,557	)			(5,001	)			1,237					(8,558	)			(2,193	)
Other income (loss), net				108				44				3					152				(32	)
Loss before income tax benefit				(14,599	)			(16,441	)			(6,924	)				(31,040	)			(29,621	)
Income tax benefit				(1,602	)			(1,024	)			(2,977	)				(2,626	)			(4,204	)
Net loss			$	(12,997	)		$	(15,417	)		$	(3,947	)			$	(28,414	)		$	(25,417	)
Basic loss per common share—			$	(0.34	)			(0.40	)		$	(0.09	)			$	(0.74	)		$	(0.60	)
Diluted loss per common share—			$	(0.34	)			(0.40	)		$	(0.09	)			$	(0.74	)		$	(0.60	)
Weighted average number of shares—
Basic				38,174,920				38,544,781				41,741,310					38,359,851				42,561,514
Diluted				38,174,920				38,544,781				41,741,310					38,359,851				42,561,514

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data) (Unaudited)
		June 30, 2024					December 31, 2023
Assets
Current assets
Cash and cash equivalents		$	132,467				$	158,092
Short-term financial instruments			30,000					—
Accounts receivable, net			31,175					32,641
Inventories, net			34,783					32,733
Other receivables			3,977					4,295
Prepaid expenses			8,548					7,390
Hedge collateral			1,600					1,000
Other current assets			11,653					9,283
Total current assets			254,203					245,434
Property, plant and equipment, net			88,330					100,122
Operating lease right-of-use assets			4,181					4,639
Intangible assets, net			1,320					1,537
Long-term prepaid expenses			8,085					5,736
Deferred income taxes			44,578					50,836
Other non-current assets			11,998					12,187
Total assets		$	412,695				$	420,491
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	25,575				$	24,443
Other accounts payable			8,383					5,292
Accrued expenses			9,199					10,457
Accrued income taxes			1,422					1,496
Operating lease liabilities			1,805					1,914
Other current liabilities			4,168					3,286
Total current liabilities			50,552					46,888
Long-term borrowing			28,794					—
Accrued severance benefits, net			15,759					16,020
Non-current operating lease liabilities			2,514					2,897
Other non-current liabilities			9,228					10,088
Total liabilities			106,847					75,893
Commitments and contingencies
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 57,015,569 shares issued and 37,799,482 outstanding at June 30, 2024 and 56,971,394 shares issued and 38,852,742 outstanding at December 31, 2023			569					569
Additional paid-in capital			275,329					273,256
Retained earnings			270,470					298,884
Treasury stock, 19,216,087 shares at June 30, 2024 and 18,118,652 shares at December 31, 2023, respectively			(219,949	)				(213,454	)
Accumulated other comprehensive loss			(20,571	)				(14,657	)
Total stockholders’ equity			305,848					344,598
Total liabilities and stockholders’ equity		$	412,695				$	420,491

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (Unaudited)
		Three Months Ended					Six Months Ended
		June 30, 2024					June 30, 2024				June 30, 2023
Cash flows from operating activities
Net loss		$	(12,997	)			$	(28,414	)		$	(25,417	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization			4,016					8,115				8,502
Provision for severance benefits			1,565					2,970				4,091
Loss on foreign currency, net			6,622					16,848				9,117
Provision for inventory reserves			(77	)				(1,024	)			1,121
Stock-based compensation			1,216					2,116				3,212
Deferred income tax assets			1.845					3,158				27
Other, net			163					426				423
Changes in operating assets and liabilities
Accounts receivable, net			(1,636	)				(235	)			(342	)
Inventories			(4,250	)				(3,449	)			4,911
Other receivables			986					601				4,407
Prepaid expenses			2,922					3,827				4,073
Other current assets			(3,262	)				(2,931	)			(3,678	)
Accounts payable			1,381					1,944				2,880
Other accounts payable			(1,420	)				(6,676	)			(6,488	)
Accrued expenses			1,618					(427	)			1,104
Accrued income taxes			(184	)				(17	)			(2,972	)
Other current liabilities			840					453				(471	)
Other non-current liabilities			378					(246	)			(214	)
Payment of severance benefits			(478	)				(1,362	)			(5,728	)
Other, net			(360	)				(761	)			(487	)
Net cash used in operating activities			(1,112	)				(5,084	)			(1,929	)
Cash flows from investing activities
Proceeds from settlement of hedge collateral			—					—				3,335
Payment of hedge collateral			(612	)				(612	)			(2,586	)
Purchase of property, plant and equipment			(898	)				(1,566	)			(1,518	)
Payment for intellectual property registration			(118	)				(178	)			(163	)
Collection of guarantee deposits			5					1,138				1,445
Payment of guarantee deposits			(36	)				(1,910	)			(6,907	)
Increase in short-term financial instruments			(30,000	)				(30,000	)			—
Other, net			(1	)				0				—
Net cash used in investing activities			(31,660	)				(33,128	)			(6,394	)
Cash flows from financing activities
Proceeds from long-term borrowings			—					30,059				—
Proceeds from exercise of stock options			—					—				27
Acquisition of treasury stock			(2,200	)				(6,859	)			(36,840	)
Repayment of financing related to water treatment facility arrangement			(117	)				(238	)			(248	)
Repayment of principal portion of finance lease liabilities			(34	)				(69	)			(46	)
Net cash provided by (used in) financing activities			(2,351	)				22,893				(37,107	)
Effect of exchange rates on cash and cash equivalents			(4,012	)				(10,306	)			(7,093	)
Net decrease in cash and cash equivalents			(39,135	)				(25,625	)			(52,523	)
Cash and cash equivalents
Beginning of the period			171,602					158,092				225,477
End of the period		$	132,467				$	132,467			$	172,954

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES RECONCILIATION OF OPERATING LOSS TO ADJUSTED OPERATING LOSS (In thousands of U.S. dollars) (Unaudited)
		Three Months Ended													Six Months Ended
		June 30, 2024				March 31, 2024				June 30, 2023					June 30, 2024				June 30, 2023
Operating loss		$	(12,824	)		$	(13,459	)		$	(10,656	)			$	(26,283	)		$	(32,474	)
Adjustments:
Equity-based compensation expense			1,216				900				2,092					2,116				3,212
Early termination and other charges			—				—				802					—				9,251
Adjusted Operating Income Loss		$	(11,608	)		$	(12,559	)		$	(7,762	)			$	(24,167	)		$	(20,011	)

We present Adjusted Operating Loss as a supplemental measure of our performance. We define Adjusted Operating Loss for the periods indicated as operating loss adjusted to exclude (i) Equity-based compensation expense and (ii) Early termination and other charges.

For the six months ended June 30, 2023, we recorded in our consolidated statement of operations $8,449 thousand of termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023. For the three and six months ended June 30, 2023, we recorded $802 thousand of one-time employee incentives.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA AND ADJUSTED NET LOSS (In thousands of U.S. dollars, except share data) (Unaudited)
		Three Months Ended													Six Months Ended
		June 30, 2024				March 31, 2024				June 30, 2023					June 30, 2024				June 30, 2023
Net loss		$	(12,997	)		$	(15,417	)		$	(3,947	)			$	(28,414	)		$	(25,417	)
Adjustments:
Interest income			(2,228	)			(2,213	)			(2,692	)				(4,441	)			(5,534	)
Interest expense			554				238				200					792				456
Income tax benefit			(1,602	)			(1,024	)			(2,977	)				(2,626	)			(4,204	)
Depreciation and amortization			4,016				4,099				4,145					8,115				8,502
EBITDA			(12,257	)			(14,317	)			(5,271	)				(26,574	)			(26,197	)
Equity-based compensation expense			1,216				900				2,092					2,116				3,212
Foreign currency loss (gain), net			3,557				5,001				(1,237	)				8,558				2,193
Derivative valuation loss (gain), net			(85	)			(25	)			20					(110	)			74
Early termination and other charges			—				—				802					—				9,251
Adjusted EBITDA		$	(7,569	)		$	(8,441	)		$	(3,594	)			$	(16,010	)		$	(11,467	)
Net loss		$	(12,997	)		$	(15,417	)		$	(3,947	)			$	(28,414	)		$	(25,417	)
Adjustments:
Equity-based compensation expense			1,216				900				2,092					2,116				3,212
Foreign currency loss (gain), net			3,557				5,001				(1,237	)				8,558				2,193
Derivative valuation loss (gain), net			(85	)			(25	)			20					(110	)			74
Early termination and other charges			—				—				802					—				9,251
Income tax effect on non-GAAP adjustments			175				(1,343	)			(202	)				(1,168	)			(2,152	)
Adjusted Net Loss		$	(8,134	)		$	(10,884	)		$	(2,472	)			$	(19,018	)		$	(12,839	)
Adjusted Net Loss per common share—
- Basic		$	(0.21	)		$	(0.28	)		$	(0.06	)			$	(0.50	)		$	(0.30	)
- Diluted		$	(0.21	)		$	(0.28	)		$	(0.06	)			$	(0.50	)		$	(0.30	)
Weighted average number of shares – basic			38,174,920				38,544,781				41,741,310					38,359,851				42,561,514
Weighted average number of shares – diluted			38,174,920				38,544,781				41,741,310					38,359,851				42,561,514

We present Adjusted EBITDA and Adjusted Net Loss as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net and (iv) Early termination and other charges. EBITDA for the periods indicated is defined as net loss before interest income, interest expense, income tax benefit and depreciation and amortization.

We prepare Adjusted Net Loss by adjusting net loss to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Loss is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Loss for the periods as net loss, adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Early termination and other charges and (v) Income tax effect on non-GAAP adjustments.

For the six months ended June 30, 2023, we recorded in our consolidated statement of operations $8,449 thousand of termination related charges in connection with the voluntary resignation program that we offered to certain employees during the first quarter of 2023. For the three and six months ended June 30, 2023, we recorded $802 thousand of one-time employee incentives.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731545229/en/

Steven C. Pelayo, CFA

The Blueshirt Group

Tel. +1 (360) 808-5154

steven@blueshirtgroup.co

Source: Magnachip Semiconductor Corporation

FAQ

What was Magnachip's Q2 2024 revenue?

Magnachip reported Q2 2024 revenue of $53.2 million.

How much did Magnachip's Standard Product Business revenue grow in Q2 2024?

Magnachip's Standard Product Business revenue grew 11.6% sequentially in Q2 2024.

What is Magnachip's Q2 2024 gross profit margin?

Magnachip's Q2 2024 gross profit margin was 21.8%.

What were Magnachip's cash reserves at the end of Q2 2024?

Magnachip ended Q2 2024 with $132.5 million in cash reserves.

How many shares did Magnachip repurchase in Q2 2024?

Magnachip repurchased approximately 0.5 million shares for $2.3 million in Q2 2024.

What is Magnachip's expected revenue for Q3 2024?

Magnachip expects Q3 2024 revenue to be in the range of $61.5 to $66.5 million.

What was Magnachip's net loss in Q2 2024?

Magnachip reported a net loss of $12.997 million in Q2 2024.

How did Magnachip's Q2 2024 revenue compare to the same quarter last year?

Magnachip's Q2 2024 revenue decreased 12.8% year-over-year.

What is the expected gross profit margin for Magnachip in Q3 2024?

Magnachip expects a gross profit margin of 22.5% to 24.5% in Q3 2024.