MagnaChip(US:MX)2019-10-24 00:26Financial Data and Key Metrics Changes - Q3 2019 revenue reached $229.7 million, an increase of 11.5% year-over-year and 12% sequentially, marking the highest revenue quarter since the company's IPO in 2011 [6][21] - Total gross profit margin was 26.5%, exceeding guidance of 22% to 24%, and up from 21.4% in Q2 2019 [7][25] - Operating income was $25.9 million, up 41.9% year-over-year and nearly threefold quarter-over-quarter [24] - Adjusted EBITDA was $35.5 million, up 27.2% year-over-year and up 108.6% quarter-over-quarter [24] Business Line Data and Key Metrics Changes - OLED revenue was a record $78.3 million, up over 34% year-over-year and over 7% sequentially, benefiting from the launch of 6 OLED smartphones in Asia [8][6] - Power revenue reached $48.7 million, up 9.5% year-over-year, with premium power products representing nearly 50% of Power revenue [12][22] - Foundry revenue was $90.3 million, up 7.7% year-over-year and 23.6% sequentially, driven by strong demand from computing and consumer segments [15][22] Market Data and Key Metrics Changes - Approximately 90% of the company's revenue is generated in Asia, with about 50% of that from greater China [20][40] - OLED smartphones represented 46.8% of all smartphone models introduced by Chinese smartphone makers in 2019, up from 25% in 2018 [18][44] Company Strategy and Development Direction - The company is evaluating strategic options for its Foundry business, including potential sale, joint ventures, and partnerships to maximize shareholder value [16][36] - The company aims to expand its position in the OLED market beyond smartphones to TVs, tablets, computers, and automotive applications [11] Management's Comments on Operating Environment and Future Outlook - The company experienced a rebound in business after a slow start to the year due to trade tensions and inventory corrections, expecting modest revenue growth for the year [17] - Anticipated seasonal drop-off in OLED revenue in Q4 is expected to be less severe than in previous years due to increased design wins [41][43] Other Important Information - The company generated net operating cash flow of $12.9 million in Q3, marking the second consecutive quarter of positive operating cash flow [30] - CapEx in Q3 was $1.7 million, significantly lower than previous quarters, with expectations for lower CapEx in 2019 compared to 2018 [31] Q&A Session Summary Question: Can you elaborate on the Foundry sale and potential interest? - Management is exploring various options to maximize shareholder value, including potential sale and joint ventures, but no specific timeline has been set [36][37] Question: What is the recovery seen in Foundry and its relation to China? - The company noted strong demand from the consumer and computing segments, with a significant portion of business coming from China [40] Question: Why is OLED expected to be less seasonal in Q4 this year? - The increase in design wins from 6 in Q3 2018 to 11 in Q3 2019 is a key factor contributing to the expected momentum [43] Question: Are there improvements in revenue per wafer and customer mix in Foundry? - The product mix has improved, contributing to better-than-expected gross margins [46][47] Question: When will wafer yield from the new supplier hit production? - The 28-nanometer OLED process is now in production with good yield, and the company is confident in its performance [50]