MagnaChip Reports First Quarter 2015 Financial Results
- Reports Revenue of $164.9 million and gross margin of 21.2%
- Announces YJ Kim as CEO and a Member of Board of Directors; Jonathan Kim as CFO
- Launched a Comprehensive Cost and Portfolio Optimization Program; Engages Independent Business Advisory Firm to Assist with Evaluation
- Combines Display and Power Solutions into Newly Formed Standard Products Group
- Names a Chief Compliance Officer to Executive Team
SEOUL, South Korea and CUPERTINO, Calif., May 28, 2015 /PRNewswire/ -- MagnaChip Semiconductor Corporation ("MagnaChip") (NYSE: MX), a Korea-based designer and manufacturer of analog and mixed-signal semiconductor products, today announced financial results for the first quarter ended March 31, 2015.
The Company also announced the appointment of YJ Kim, a semiconductor industry veteran, as Chief Executive Officer and a member of the Company's Board of Directors, and Jonathan Kim as Executive Vice President and Chief Financial Officer. Both held the same posts on an interim basis for the past year. In addition, the Company named Theodore Kim as Executive Vice President and Chief Compliance Officer, a newly created position, reporting directly to the Board of Directors. He continues to serve as General Counsel.
On behalf of MagnaChip's Board, Chairman Doug Norby said, "I am pleased that, after conducting a broad and thorough search process, the Board has unanimously appointed YJ to lead MagnaChip and Jonathan to serve as CFO. As interim CEO, YJ provided strong leadership and strategic vision to the Company during this important period. Jonathan successfully led the completion of the restatement process, and has proven himself to be a very capable financial executive. The Board looks forward to working with the two leaders to improve MagnaChip's performance."
Revenue for the first quarter of 2015 was $164.9 million, a 1.7% decline compared to $167.7 million for the fourth quarter of 2014 and flat compared to $164.2 million for the first quarter of 2014.
Gross profit was $35.0 million or 21.2%, as a percent of revenue, for the first quarter of 2015. This compares to gross profit of $34.5 million or 20.6% for the fourth quarter of 2014 and $40.3 million or 24.5% for the first quarter of 2014.
Net loss, on a GAAP basis, for the first quarter of 2015 totaled $20.0 million or $0.59 per diluted share. This compares to a net loss of $63.8 million or $1.87 per diluted share for the fourth quarter of 2014 and a net loss of $21.6 million or $0.63 per diluted share for the first quarter of 2014. Net loss was impacted primarily by lower revenue and gross margin as well as by substantial accounting, legal and other related costs associated with our restatement and certain related litigation and other regulatory investigations and actions.
"We continue to face major challenges as a result of strategic missteps in the past, so we have implemented a comprehensive cost and portfolio optimization program to position MagnaChip for growth over the long-term while we also work to improve fab utilization and boost engineering efficiencies," said CEO YJ Kim. "Our goal is to broaden our customer base, expand into new markets including sensors and the Internet of Things (IoT), accelerate product innovation and improve engineering productivity. To help achieve these goals and streamline product functions, we recently combined our Display Solutions and Power Solutions divisions into a single Standard Products Group."
MagnaChip also announced today that HK Kim, Executive Vice President and General Manager of the Power Solutions Division, and Brent Rowe, Executive Vice President of Worldwide Sales, have resigned. The Company announced earlier this month that TY Hwang, formerly the President and Chief Operating Officer, resigned effective April 30.
"We devoted substantial efforts and resources to getting caught up on our delayed SEC filings. With today's filing of our 2014 10-K and with the filing of our 10-Q for the first quarter of 2015, which we expect to file within the next two weeks, we will be current with our filings and plan to be a timely filer starting in the second quarter," said Jonathan Kim, Chief Financial Officer. "We are committed to achieving and maintaining a strong internal control over financial reporting and financial reporting integrity." In addition, Mr. Kim said, "We have engaged a global consulting firm with considerable expertise in cost and portfolio optimization to help us focus on strategies to emerge from our current challenges and to drive our business forward and return long-term value to our shareholders."
Adjusted net loss, a non-GAAP measurement, for the first quarter of 2015 totaled $9.6 million or $0.28 per diluted share compared to an adjusted net loss of $10.8 million or $0.32 per diluted share for the fourth quarter of 2014 and an adjusted net loss of $6.4 million or $0.19 per diluted share for the first quarter of 2014.
Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a more meaningful understanding of the factors and trends affecting MagnaChip's business and operations. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income 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 following the financial statements.
Combined cash balances (cash and cash equivalents) totaled $91.4 million at the end of the first quarter of 2015, a decrease of $11.0 million from the end of the prior quarter.
First Quarter and Recent Company Events
•Appointed YJ Kim as CEO and Jonathan Kim as CFO
•Appointed Theodore Kim as Chief Compliance Officer
•Announced Diversified Products for Internet of Things Applications
•Announced 5th Annual Foundry Technology Symposium in Taiwan, California, and Texas
•Introduced Automotive Qualified Display Driver ICs for Major Japanese LCM Maker
•Completed Review and Restatement of Financial Results
•Introduced New Step-Down LED Backlight Drivers
•Offered Enhanced 0.13 Micron Embedded EEPROM Process Technology
The Company today filed its Annual Report on Form 10-K for the year ended Dec. 31, 2014, with the Securities and Exchange Commission. A copy of this and other MagnaChip SEC filings is available at www.magnachip.com.
Business Outlook
For the second quarter of 2015, MagnaChip anticipates:
•Revenue will be in the range of $155 million to $165 million.
•Gross margin will be 17.0% to 19.0% as a percent of revenue.
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