Himax Technologies (NASDAQ:HIMX)

First Quarter 2012 Results

• Revenues for the first quarter of 2012 increased 18.1% to $166.7 million year over year.
• Gross profit was 22.9%, compared to 20.1% in the first quarter of 2011 and 22.1% in the fourth quarter of 2011.
• Company's non-GAAP adjusted pre-tax income for the first quarter 2012 was $15.6 million, or $0.090 per diluted ADS, up 346.2% as compared to $3.5 million, or $0.020 per diluted ADS, during the same period 2011 and up 50.7% from $10.3 million, or $0.059 per diluted ADS, in the previous quarter.

We revised our first quarter guidance on April 5, raising our forecast revenues to $166.7 million, gross margin to 22.9% and GAAP earnings per ADS to 6.6 cents. All these numbers exceeded the initial guidance we provided on February 13. I am pleased to report that the actual first quarter results all met our revised guidance numbers," stated Mr. Jordan Wu, President and Chief Executive Officer of Himax.

Share Buyback Update

With regards to the Company's $25.0 million dollars share buyback program, Himax has purchased a total of $11.2 million, or approximately 8.3 million ADSs through March 31, 2012. Himax purchased approximately $6.5 million or 4.5 million ADSs in the three months ended March 31, 2012. As of March 31, 2012, Himax had 170.1 million outstanding equivalent ADSs.Himax management has stated they will continue to execute the remaining share repurchase program in accordance with Rule 10b-18.

Business Updates

Himax continues to sign new customers and increase its business from existing customers across each of its major product segments. In large panel drivers, the Company has captured more market share by penetrating new Chinese large panel manufacturers and servicing the demand for TV sets in China. Large panel display driver remains one of Himax's long-term focuses, over which the Company has continued to commit to R&D activities.

With leading market share and product roadmap in smartphone driver, Himax has introduced new products that position the Company for growth with multiple tier-1 smartphone customers. Beyond smartphones, the Company is also working closely with numerous panel makers on other small and medium-sized applications, including automotive and tablets among others, which all show strong signs of growth.

In the non-driver IC business, Himax forecasts order growth in its touch panel controllers, CMOS image sensors, power management ICs and WLED drivers. Based on these positive developments, the Company sees its sales growth momentum in non-driver segments continuing through 2012.

Management is particularly excited about some recent progress the Company has made with its LCOS products. Himax is working with a number of top-tier customers to develop certain new applications using its LCOS panels and has also signed major contracts with tier-1 customers to provide IP licensing and ASIC services, some of which involve the same customers using the Company's LCOS panels for their new products. This is an illustration of not just its strong R&D capability, but also the synergy of product and knowhow that the Company can bring to its customers. While these will not bring in immediate financial contribution, the Company believes these products can facilitate its long term growth.

Q2 2012 Guidance

For the three months ending June 30, 2012, the Company is projecting the following:

Net Revenues: 15% to 20% sequential growth

Gross Margin: To be slightly up from the first quarter of 2012

GAAP Net Income: To be in the range of 8 to 10 cents per diluted ADS

Diluted ADS Shares Outstanding: 170 million shares

TAINAN, Taiwan, April 5, 2012 (GLOBE NEWSWIRE) -- Himax Technologies, Inc. ("Himax" or "Company") (Nasdaq:HIMX) today announced that it expects its first quarter revenues, gross margin and EPS to exceed the Company's previously announced guidance on February 13, 2012.

Himax is revising its first quarter revenue guidance to $166.7 million, exceeding its initial guidance which projected revenues to decline by mid-single-digit percentage versus $169.2 million in the fourth quarter of 2011. Gross margin is now expected to be around 22.9%, as compared to previous guidance of flat or down slightly from the 22.1% in the fourth quarter 2011. GAAP EPS is now expected to be around $0.066, as compared to initial guidance of $0.03 to $0.04.

"First quarter is traditionally a low season, marked by fewer business days. Our first quarter performance is a good indication that our business has bottomed out from the trough of last year," commented Mr. Jordan Wu, President and Chief Executive Officer of Himax Technologies. "Strong sales in our display driver business and continued growth in our non-driver products contributed to overall sales, margins and EPS exceeding prior projections. We experienced robust growth across literally all product lines with strong sale-through particularly into the China market. We continue to hold the view that the first quarter is likely to be the bottom of the year for our business and we remain excited about the growth prospects of the second quarter."

The Company will provide additional details regarding its first quarter 2012 results and second quarter guidance in early May.  

Fourth Quarter 2011 Results

• Revenues for the fourth quarter of 2011 increased 19.8% to $169.2 million year-over-year and increased 4.4% sequentially.
• Non-GAAP adjusted pre-tax income for the fourth quarter was $10.3 million, or $0.059 per diluted ADS, up 51.5% compared to $6.8 million, or $0.038 per diluted ADS during the same period last year, and up 83.3% from $5.6 million, or $0.032 per diluted ADS.

Business Updates

Himax has successfully implemented a product diversification strategy as by entering new markets and signing new customers. The small-medium driver segment has become the Company's single largest revenue contributor which also produce higher gross margins. Revenues from the small-medium segment alone surpassed those from all large panel applications combined, including TV, monitor and laptops. The non-driver business has also grown quickly to become over 10% of total revenue in 2011. 2011 has been marked as a year of transition for success. Seeing the potential upside potential, the Company remains optimistic it will generate positive top line and bottom line growth in 2012.

"Entering into 2012, we are seeing strong fundamentals across many of our businesses, including large panel driver business, which we believe has stabilized. We are on track with new customer additions in several regions. Equally important, we expect a more balanced product portfolio to contribute to our overall business improvement including better gross margin and more controlled operating expenses. Our smartphone and non-driver products will continue its strong growth to represent a larger part of our overall sales." Concluded Mr. Wu.

Q1 2012 Guidance

In the first quarter, we expect a mid-single-digit decline in our revenues compared to the last quarter with gross margin being flat or down slightly. Given that the first quarter has fewer working days due to Chinese New Year and that it is a cyclically low season, we believe Q1 will be weakest of the quarters in terms of sales. GAAP earnings attributable to shareholders per ADS are expected to be in the range of 3 to 4 cents per ADS based on 172 million outstanding ADS. The guided EPS improvement against the last quarter was mainly to reflect our expectation that the effective income tax rate would be back to a more normal level versus the unusually high level of the last quarter, as explained earlier.

Third Quarter 2011 Results

• For the third quarter of 2011, Himax reported net revenues of $162.1 million, representing a 17.2% increase from $138.3 million in the third quarter of 2010
• Non-GAAP net income attributable to Himax stockholders for the third quarter of 2011 was $4.8 million or $0.027 per diluted ADS, down from $7.0 million or $0.040 per diluted ADS in the third quarter of 2010, and down from $5.0 million or $0.028 per diluted ADS in the second quarter of 2011.

"We are currently in a strong position in the smart phone sector with leading technologies and competitive products. We carry a wide range of smart phone products including hVGA, WVGA, nHD, qHD resolution drivers for mainstream smartphones as well as the HD720 high resolution drivers of which we are one of the industry leaders in shipping to first-tier smart phone brand customers. We are also working with our panel partners in Taiwan, Japan, Korea and China to supply drivers for numerous smart phone brand customers. The growth momentum is expected to continue into the fourth quarter 2011 and beyond with strong demand from both Chinese and international brand customers."

Himax Technologies, Inc. updates its previously announced third quarter 2010 guidance.

The Company now expects

• revenue to decline approximately 26% sequentially, from the $187.7 million posted in the second quarter 2010.
  
• gross margin to increase slightly above the top of the previous gross margin guidance.
  
• GAAP earnings per ADS to be in the range of $0-0.01.
  
• Excluding share-based compensation and acquisition-related charges, non-GAAP earnings per ADS in the third quarter is expected to be in the range of $0.04-0.05. The revision is primarily to reflect adjustment in customer demand.

Previous guidance provided on August 10, 2010 had forecast third quarter 2010

• revenues to decline by 13-18% quarter over quarter.
  
• gross margin to increase by 1-2 percentage points from 20.4% in the second quarter.
  
• GAAP earnings per ADS to be in the range of $0-0.02.
  
• non-GAAP earnings per ADS to be in the range of $0.04-0.06.

Jordan Wu, President and Chief Executive Officer of Himax, commented, "As updated in our last earnings conference call, we experienced a sudden order cutback right around the same time when we provided our third quarter guidance in mid-August. These order adjustments continued in September while panel inventory levels remained a concern for panel makers. However, we managed to increase our gross margin primarily due to a more favorable product mix."

For the second quarter of 2010:

• Net revenues of $187.7 million, representing a 1.5% increase from $184.9 million in the second quarter of 2009, and a 7.0% increase from $175.5 million in the first quarter of 2010.
  
• Gross margin was 20.4% in the second quarter of 2010, down 40 basis points year-over-year, and up 60 basis points, sequentially.
  
• Operating income in the second quarter was $13.0 million, compared to $14.8 million for the same period last year and $10.1 million in the previous quarter.
  
• Net income attributable to Himax stockholders for the second quarter of 2010 was $12.0 million or $0.07 per diluted ADS, down from $15.4 million or $0.08 per diluted ADS in the second quarter of 2009, and up from $9.1 million or $0.05 per diluted ADS in the first quarter of 2010.
  
• Excluding share-based compensation and acquisition-related charges, non-GAAP operating income for the second quarter of 2010 was $15.4 million, down from $17.7 million in the same period last year, and up from $12.5 million in the previous quarter.
  
• Non-GAAP net income attributable to Himax stockholders for the second quarter of 2010 was $14.0 million or $0.08 per diluted ADS, down from $17.9 million or $0.10 per diluted ADS in the second quarter of 2009, and up from $11.2 million or $0.06 per diluted ADS in the first quarter of 2010.

Mr. Wu added, "We are seeing softening demand since June with talks of end product sell-through noticeably slowing down and customers getting cautious on inventory levels. Over the past ten days, in particular, we have seen our customers significantly cut back their forecasts for August and September. While we are actively talking to our customers, we have not yet come to a conclusion as to whether this is a short-term over-reaction or if it has long-term implications. We are uncertain if this is specific to Himax or this is an industry-wide phenomenon."

For the third quarter 2010, we expect:

• Revenues to decline by 13% to 18%.
  
• Gross margin to increase by 1-2 percentage points.
  
• GAAP earnings per ADS to be in the range of $0-0.02. 
  
• Excluding share-based compensation and acquisition-related charges, our third quarter 2010 non-GAAP earnings per ADS guidance is $0.04-0.06."

Jordan Wu, President and Chief Executive Officer of Himax, commented, "Demand for our display drivers rebounded strongly in the second quarter.

Mr. Wu added, "Looking forward, the shortage of glass substrate for TFT-LCD panels is expected to continue in the third quarter of 2009, which is a factor of uncertainty for our third quarter guidance. In addition, the capacity tightness for certain of our semiconductor subcontractors, particularly the backend packaging and testing houses, would increase our costs of revenues and may negatively impact our gross margin.

For the third quarter, we expect revenues to grow by double-digit percentage points sequentially.

^a The above forecasts reflect the Company's current and preliminary
Source: See views and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

^b Non-GAAP EPS figures generally exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to its financial press releases. The GeoTeam® non-GAAP figures may, from time to time, differ from company supplied figures.

Mr. Wu continued, "While the global financial crisis has had a profound impact on the TFT-LCD industry, we believe that it is a great opportunity for us to capitalize on our strategy and grow our business. Customers around the world are paying attention to suppliers' financial soundness, looking for industry's leaders who have sufficient resources to fund R&Ds, product developments, and customer services on a sustainable basis. Even amid the global economic downturn, our financial position has grown stronger over the past quarter. With no debts, our cash, cash equivalents and marketable securities available for sale were $204.6 million on March 31, 2009, a $55.5 million increase from the previous quarter. Backed by our strong balance sheet, we remain confident in the long-term growth prospects of our business and remain committed to adding value to our shareholders."

Mr. Wu added, "We are seeing a strong, across the board rebound in the demand for our display drivers, as customers' capacity utilizations have been substantially improved. We expect rush orders to continue throughout the second quarter."

^a The above forecasts reflect the Company's current and preliminary views and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

^b These interim financials do not fully comply with US GAAP because they omit all interim disclosure required by US GAAP).

Guidance Report:

Himax Technologies, Inc. announced that fourth-quarter results will be lower than the company's previous guidance given on November 4, 2008, as customers reduce orders amid the slowing worldwide economy.

Fourth Quarter 2008 Guidance Ending December

Implied Full Year 2008 Guidance Ending December

With no debts, our balance sheet remains strong and we are confident that we will continue to generate positive operating cash flow in the fourth quarter. Though the short-term visibility is quite limited, we remain focused on investing in R&D and improving our operating efficiency. We will continue to execute the $50 million share buy-back program announced on November 14, 2008."

Source: GlobeNewswire (December 5, 2008)