Company Meets Q 1 2018 Revenue Guidance , Exceeds Gross Margin and EPS Guidance
Provides Q2 2018 Guidance Revenue to Increase around 9% to 14% Sequentially, Gross Margin to be around 23% and IFRS EPS to be 0.0 to 1.0 Cent
- Q1 revenue declined 10.1 % sequentially to $ 162.9M, came in at the high end of the Company’s guidance
- Product sales: large driver ICs, 36.4% of revenue, up 1.6% QoQ; small and medium-sized driver ICs, 44.0% of revenue, down 11.8% QoQ; non-driver products, 19.6% of revenue, down 23.2% QoQ
- Q1 IFRS gross margin was 22.5 % , 50 bps higher than guidance, however, down 210 bps sequentially due to much reduced order from WLO anchor customer, resulting in higher equipment depreciation and factory overhead charges on a per unit basis
- Q1 IFRS loss was $ 2.8M, or 1.6 cents per diluted ADS , down from profit of $23.5 million, or 13.6 cents per diluted ADS in Q4 2017
- Company is uniquely positioned in structured light 3D sensing and ASC 3D sensing for facial recognition as well as under-display optical sensor for fingerprint authentication for Android-based smartphones
- Himax SLiMTM 3D sensing solution for premium Android smartphone is mass production ready in Q1 2018 as planned, awaits smartphone makers and their ecosystem partners to integrate 3D sensing technologies into the new end products. Each smartphone makers have different design and requirement for facial recognition and online payment, such developments are taking longer than the Company anticipated. Company now targets the end of 2018 for shipment to customers
- Company remains positive on its long term business outlook
TAINAN, Taiwan, May 10, 2018 (GLOBE NEWSWIRE) -- Himax Technologies, Inc. (Nasdaq:HIMX) (“Himax” or “Company”), a leading supplier and fabless manufacturer of display drivers and other semiconductor products, announced its financial results for the first quarter ended March 31, 2018.
“The Company’s first quarter 2018 revenues came in at the high end of our guidance while gross margin and IFRS loss per diluted ADS were both better than guidance. The anticipated sequential decline in revenue was mainly due to lower sales in the smartphone segment in the small and medium-sized display driver business reflecting seasonality and the overall weak smartphone market, as well as the much reduced WLO shipment in the non-driver businesses per the anchor customer’s demand forecast. Despite the decline in the first quarter of 2018, Himax expects a solid rebound in the second quarter overall and sequential growth across all three major product categories,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax.
“Going into the second quarter, while our large display driver IC business will continue benefiting from Chinese panel customers’ ongoing capacity expansion and in-cell TDDI shipment for smartphone in the small and medium display driver IC business will benefit from the new model launches, the growth in both segments would be somewhat offset by the foundry capacity shortage issue. We are working very hard to source and qualify additional foundry capacity in addition to securing more capacity from the existing foundries. As to automotive segment, we continue to have new projects going into mass production which were design-wins of the prior years.”
“For the non-driver areas, we are optimistic that WLO shipment to the anchor customer for the second quarter will rise from that of the first quarter per customer’s forecast. SLiM™, our structured light based 3D sensing total solution, which we announced jointly with Qualcomm for Android-based smartphone last August is ready for mass production. The Qualcomm/Himax solution is by far the highest quality 3D sensing total solution available for the Android market right now. However, because each smartphone maker’s design and requirement for facial recognition and online payment are somewhat different and therefore the integration of structured light 3D sensing technologies into end products, typically flagship or premium models, is taking longer than we anticipated. We are now targeting the end of the year for shipment to customers for their smartphones’ sales in the first quarter of next year. As to the active stereoscopic camera (ASC) 3D sensing solution plan that we unveiled in the last earnings call, the joint development with an industry leading AP platform player is well under way. The ASC 3D sensing solution, a lower cost alternative to structured light 3D sensing solution for its relatively simple projector, is targeting more mass market smartphone models for facial recognition. Our goal is to have ASC 3D sensing solution ready for mass production by the end of this year. Overall, we believe the 3D sensing adoption on Android smartphone in 2018 would be limited but foresee the market demands will increase substantially starting 2019. With our leading technologies, proven manufacturing expertise, new solution roadmap and alliance with leading AP providers, we believe we are well positioned to be the partner of choice for Android smartphone makers in their 3D sensing projects.”
“Last but not the least, we are pleased to report an emerging optical fingerprint opportunity for the non-driver CMOS image sensor business. Combining the leading fingerprint solution design of our partner and a low-power CMOS image sensor with superior sensitivity which we fully customized for this purpose, a number of design-in projects are already ongoing and we expect more to come,” added Mr. Wu. “Along with the new smartphone designs featuring edge-to-edge displays, structured light 3D sensing and ASC 3D sensing, both for facial recognition, as well as under-display optical sensor for fingerprint authentication are three new approaches for phone unlock and online payment to replace the traditional home button with capacitive fingerprint technology. Himax is uniquely positioned in that we offer critical technologies in all of the three solutions and are already a key player by forming different collaboration partnerships for each of the three alternatives. They represent immense revenue opportunities with much higher ASP and gross margin versus our mainstream display driver IC business.”
First Quarter 2018 Financial Results
The first quarter revenues of $162.9 million represented a decrease of 10.1% sequentially and an increase of 4.9% year-over-year. Gross margin was 22.5%, 50 basis points higher than guidance, but down 210 basis points sequentially. IFRS loss per diluted ADS was 1.6 cents, better than the guidance range of 2.0 to 3.0 cents.
Revenue from large display drivers was $59.3 million, up 1.6% sequentially and up 0.1% year-over-year. Large panel driver ICs accounted for 36.4% of Himax’s total revenues for the first quarter, compared to 32.3% in the fourth quarter of 2017 and 38.2% a year ago. The first quarter is traditionally the bottom of the year because it has fewer working days due to Chinese New Year. Against seasonality, the Company’s large panel driver business grew low-single-digit sequentially, driven by increasing 4K TV penetration and Chinese panel customers’ ramping of new LCD fabs.
Revenue for small and medium-sized display drivers came in at $71.7 million, down 11.8% sequentially and up 7.6% year-over-year, due to seasonality and the overall weak smartphone market. The product segment accounted for 44.0% of total sales for the first quarter, as compared to 44.9% in the fourth quarter of 2017 and 42.9% a year ago. Sales into smartphones were down 23.0% sequentially and declined 5.4% year-over-year. The Company’s TDDI shipment in Q1 was still hindered by customers’ high inventory despite its numerous design-wins for HD+ and FHD+ projects with top tier customers. However, Himax expects the shipment of its TDDI chips to accelerate starting the second quarter, but the volume would be somewhat offset by foundry capacity constraint that the industry is facing right now.
Small and medium-sized driver IC sales for automotive application recorded another historical quarter. Revenue, against seasonality, went up 1% sequentially and close to 40% year-over-year. The quarterly revenue is now close to $25 million, reaching almost 20% of the total driver IC revenues. Driver IC sales for tablets were down 9.2% sequentially but up 2.4% year-over-year due to weak overall market demand in this product segment.
