Himax Slashes Margins Shrink In Q1 Due To Inventory Offloading, issues Lukewarm Outlook, Shares Slide

  • Himax Technologies, Inc HIMX reported a first-quarter FY23 revenue decline of 40.8% year-on-year to $244.2 million, beating the consensus of $226.1 million. Net revenues declined 6.9% Q/Q.
  • Revenue from large display drivers grew by 21.8% Q/Q to $53 million.
  • Notebook sales were also better than guided due to demand from chip replenishment. Himax saw solid sequential growth in TV IC sales from increasing customer orders preparing for the upcoming China shopping festivals. 
  • Small and medium-sized display drivers' revenue was $154.7 million, down by 12.8% Q/Q due to increasing shipment of smartphones and tablets, especially TDDI products, to leading global brands after the Lunar New Year holidays.
  • The Q1 automotive driver sales decreased mid-teens quarter over quarter, as guided. For automotive TDDI, sales unexpectedly declined as panel houses cut back their IC purchases while experiencing sudden order suspensions from their EV customers.
  • Revenue from its non-driver businesses was $36.5 million, down by 11.8% Q/Q. 
  • Tcon business was up a single-digit sequentially, bolstered by a decent shipment of automotive Tcon and a better-than-expected shipment of large-sized display Tcon. 
  • For automotive Tcon, backed by a strong order pipeline, Himax anticipates accelerating business momentum with rapidly expanding design wins.
  • The non-IFRS gross margin contracted 1,890 bps to 28.1% Q/Q due to price erosion from offloading excess inventory.
  • The non-IFRS operating margin declined by 2,640 bps Q/Q to 9.9%. Non-IFRS earnings per ADS of $0.115 beat the consensus of $0.07.
  • Himax held $223.8 million in cash and equivalents and generated $66.4 million in operating cash flow.
  • Dividend: Himax declared a cash dividend of 24.0 cents per ordinary share for FY22 (vs. 62.5 cents per ordinary share, for FY21).
  • Outlook: Himax sees Q2 revenue to decrease by 9% Q/Q (vs. consensus $237.99 million). It expects non-IFRS earnings per ADS of $0.01 - $0.036 (vs. consensus $0.08).
  • Price Action: HIMX shares traded lower by 6.71% at $6.40 on the last check Thursday.
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