Magnachip Reports Results for Second Quarter 2024

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	)

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