MagnaChip(US:MX)2025-05-12 20:40PART I FINANCIAL INFORMATION This section provides the unaudited interim consolidated financial statements and management's discussion and analysis of the company's financial condition and results of operations Item 1. Interim Consolidated Financial Statements (Unaudited) This section presents Magnachip Semiconductor Corporation's unaudited consolidated financial statements for the first quarter of 2025, detailing balance sheets, statements of operations, comprehensive loss, changes in stockholders' equity, and cash flows Consolidated Financial Statements The consolidated financial statements show total assets decreased to $373.9 million by March 31, 2025, with Q1 2025 revenue of $44.7 million and a net loss of $8.9 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $132,654 | $138,610 | | Total current assets | $215,474 | $219,229 | | Total assets | $373,867 | $379,316 | | Total current liabilities | $47,787 | $46,268 | | Total liabilities | $104,666 | $102,519 | | Total stockholders' equity | $269,201 | $276,797 | Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Total revenues | $44,722 | $43,438 | | Gross profit | $9,362 | $6,359 | | Operating loss | ($6,288) | ($9,391) | | Loss from continuing operations | ($5,082) | ($14,284) | | Net loss | ($8,878) | ($15,417) | | Diluted loss per share | ($0.24) | ($0.40) | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,669) | ($3,972) | | Net cash used in investing activities | ($389) | ($1,468) | | Net cash provided by (used in) financing activities | ($1,455) | $25,244 | | Net decrease (increase) in cash | ($5,956) | $13,510 | Notes to Consolidated Financial Statements These notes detail accounting policies and financial data, notably the reclassification of the Display business as a discontinued operation and specifics on inventory, debt, and the company's single Power solutions segment - On April 6, 2025, the Board of Directors approved a plan to shut down the Company's Display business to transition into a pure-play Power company, now classified as a discontinued operation36 Results from Discontinued Operations (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net sales | $9,556 | $5,629 | | Gross profit | $3,117 | $2,609 | | Operating loss | ($3,824) | ($4,068) | | Loss from discontinued operations, net of tax | ($3,796) | ($1,133) | - As of March 31, 2025, the company had an outstanding term loan of approximately $27.3 million with Korea Development Bank (KDB), secured by its Gumi properties6770181 - The company operates as a single operating segment, the Power solutions business, with Q1 2025 revenue from this segment at $44.7 million, an increase from $39.9 million in Q1 20247982 - Under its stock repurchase program, the company bought back 296,835 shares for $1.1 million in Q1 2025, and an additional 612,184 shares for $1.9 million in April 20258993 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's transition to a pure-play Power company, analyzing Q1 2025 financial performance, liquidity, capital resources, and new financing agreements Overview and Recent Developments This section outlines the company's power semiconductor business, its strategic decision to shut down the Display business, and new financing agreements for capital expenditures and working capital - On April 6, 2025, the Board approved a plan to shut down the Display business to focus investments on the Power Analog Solutions and Power IC businesses105117 - The shutdown of the Display business is estimated to have a total cash cost of $12-$15 million, expected to be offset by $15-$20 million in cash inflows from the sale of "end of life" products and IP monetization over approximately two years118119 - The company secured a KRW 40 billion (approx. $29.8 million) working capital term loan from KDB in March 2024 and a credit agreement for up to KRW 38 billion (approx. $26.5 million) in CAPEX loans in December 2024121124 Results of Operations Q1 2025 total revenues increased 3.0% to $44.7 million, driven by the Power solutions business, resulting in a 47.2% gross profit increase and a narrowed operating loss Q1 2025 vs Q1 2024 Performance (in millions) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $44.7 | $43.4 | +3.0% | | Power Solutions Revenue | $44.7 | $39.9 | +12.1% | | Gross Profit | $9.4 | $6.4 | +47.2% | | Gross Margin | 20.9% | 14.6% | +6.3 p.p. | | Operating Loss | ($6.3) | ($9.4) | +33.0% | | Loss from Cont. Ops | ($5.1) | ($14.3) | +64.3% | - The increase in Power solutions revenue was driven by higher demand for power products like MOSFETs in communication applications and Power IC products for televisions and OLED IT devices163 - The year-over-year increase in gross profit margin was primarily attributable to the appreciation of the U.S. dollar against the Korean Won in Q1 2025165 - Net foreign currency loss improved to $0.4 million in Q1 2025 from a loss of $5.0 million in Q1 2024, contributing to the reduced net loss172 Liquidity and Capital Resources As of March 31, 2025, the company held $132.7 million in cash, with management confident in sufficient liquidity for the next 12 months, despite $4.7 million cash used in operations - Cash and cash equivalents were $132.7 million as of March 31, 2025, and the company believes it has sufficient cash to fund operations and capital expenditures for the next 12 months12182 - Net cash used in operating activities was $4.7 million for Q1 2025, compared to $4.0 million used in Q1 2024184 - Capital expenditures for 2025 are expected to be in the range of $26–$28 million, including $14-15 million for new investments in the Gumi fabrication facility, partially funded by the Equipment Financing Credit Agreement190 Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025196 - There were no material changes to the company's internal control over financial reporting during the quarter ended March 31, 2025197 PART II OTHER INFORMATION This section provides additional information, including risk factors and details on the company's stock repurchase program Item 1A. Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the company's 2024 Form 10-K204 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's Q1 2025 stock repurchase activity, where 296,835 shares were bought back for $1.1 million under its $50 million program Stock Repurchase Activity - Q1 2025 | Period | Total Shares Purchased (Program) | Average Price Paid per Share | Approximate Dollar Value Remaining (in thousands) | | :--- | :--- | :--- | :--- | | January 2025 | 31,254 | $3.95 | $24,465 | | February 2025 | — | — | $24,465 | | March 2025 | 265,581 | $3.71 | $23,489 | | Total | 296,835 | $3.74 | $23,489 | - The stock repurchases are part of a $50 million stock buyback program authorized by the Board of Directors on July 19, 202320887