Market Overview

Parade Technologies Reports Second Quarter 2018 Financial Results

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Financial Highlights:

  • Q218 consolidated revenue US$75.67 million, compared with US$85.92
    million in the year-ago quarter
  • Q218 consolidated net income US$12.32 million; Basic and Fully diluted
    after-tax EPS US$0.16 (NT$4.80) and US$0.16 (NT$4.63), respectively

Parade Technologies, Ltd. (Taipei Exchange: 4966.TWO), a leading
high-speed interface IC supplier, today announced financial results for
the second quarter fiscal year 2018 ended June 30, 2018, and provided
guidance for the third quarter of fiscal year 2018.

Consolidated revenue was US$75.67 million and consolidated net income
was US$12.32 million. Basic and fully diluted after-tax earnings per
share ("EPS") were US$0.16 (NT$4.80) and US$0.16 (NT$4.63),
respectively. These results compared to consolidated revenue US$85.92
million and consolidated net income of US$14.83 million, or US$0.20
(NT$5.95) and US$0.19 (NT$5.74) per basic and fully diluted share, in
the year-ago quarter.

In US dollars, the second quarter of 2018 consolidated revenue decreased
6.18% sequentially and was down 11.92% year-over-year.

The gross profit in the second quarter of 2018 was US$31.05 million,
representing a decrease of 5.73% from the previous quarter and a
decrease of 9.97% compared to the same quarter of last year.

On May 1, 2018, Parade announced a new generation DisplayPort to HDMI
protocol converter PS186. The PS186 accepts DisplayPort version 1.4a
audio/video data and outputs HDMI 2.0b with the ability to support HDR
at 4K. The PS186 is ideal for DisplayPort to HDMI protocol converters or
"dongles", as well as docking stations, particularly those supporting
the USB-C™ interface that is seeing wide adoption across notebook PCs
and smart phones.

On May 8, 2018, Parade introduces industry's first highly-integrated eDP
Tcon embedded driver (TED) IC that supports VESA eDP 1.4b panel
self-refresh developed for thin-profile LCD display panels. The TC3210
provides a single chip display driver solution to replace the
traditional eDP Tcon mated up with separate source driver chips. The
TC3210 is designed for Chip-on-Glass (COG) application on both slim LTPS
and Oxide TFT panels.

On May 16, 2018, Parade also announced the DP667V, a new automotive
grade selection of the company's popular DP667 eDP Tcon. The DP667V
meets the rigorous automotive AEC-Q100 stress test qualification
requirements and operates over an ambient temperature range of -40 to
+105 deg C. The DP667V is ideally suited for larger, high-resolution
displays typically used for automotive infotainment and navigation
display applications including center console placement. The device is
designed to enable LCD panels with a resolution up to 4Kx2K, and two
devices can be used for panel resolutions up to 8Kx2K. And up to 30-bit
color is supported enabling superior image quality.

Based on current business outlook, Parade is providing the following
guidance for the third quarter of fiscal 2018:

  • Revenue: US$81.0 ~89.0 Million
  • Gross Margin: 40% ~43%
  • Operating Expense: US$18.75 ~19.75 Million

The financial figures detailed above for the second quarter of 2018 have
been reviewed by independent accountants.

About Parade Technologies, Ltd.

Parade Technologies, Ltd. is a leading supplier of mixed-signal ICs for
a variety of popular display and high-speed interface standards used in
computers, consumer electronics and display panels. The fabless
semiconductor company was founded in 2005 and publicly listed on Taipei
Exchange
("TPEx") in 2011 (stock code: 4966). Parade's portfolio of
IC products serves the growing demand for HDMI™, DisplayPort™, SATA, and
USB ICs for display, storage and interface applications.

In addition to being a technology innovator, Parade is an active
participant and leader in industry standards-setting
organizations. Parade Technologies, Inc., a wholly owned US-based
subsidiary of Parade Technologies, Ltd., is a member of VESA (Video
Electronics Standard Association). Parade Technologies, Inc. has made
key contributions to the development of VESA's DisplayPort™ digital
video interface standard.

Parade leverages its close relationships with market leading Tier-1 OEMs
to develop ICs that provide unique system capabilities. Many of the
company's devices integrate proprietary technologies that offer superior
system signal integrity, advanced system integration and enhanced power
efficiency. As a result of the company's "standards-plus" design
philosophy, Parade ICs have been designed into products offered by
nearly every leading computer and display vendor worldwide.

                     
Parade Technologies, Ltd. and Subsidiaries.
 

The reader is advised that these consolidated financial statements
have been prepared originally in NT$ and conformed with the
adoption of IFRSs.  In the event of any differences between NT$
and US$ version, the NT$ version shall prevail.

 
                                           

UNAUDITED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE
INCOME

USD in Thousands

NTD in Thousands

Sequential Quarter Three Months ended Six Months ended Sequential Quarter Three Months ended Six Months ended
Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, Jun 30, Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, Jun 30,
2018 2018 2018 2017 2018 2017 2018 2018 2018 2017 2018 2017
 
Revenue 75,671 80,653 75,671 85,915 156,324 161,556 2,252,718 2,363,141 2,252,718 2,599,780 4,615,859 4,951,467
Cost of goods sold   44,621     47,715     44,621     51,426   92,336     96,810   1,328,378     1,398,037     1,328,378     1,556,152   2,726,415     2,967,147
Gross profit   31,050     32,939     31,050     34,489   63,988     64,746   924,340     965,104     924,340     1,043,628   1,889,444     1,984,320
Research & development expenses 12,851 12,202 12,851 11,278 25,053 22,311 382,557 357,526 382,557 341,279 740,083 684,282
Sales & marketing expenses 3,621 4,126 3,621 4,124 7,747 8,016 107,788 120,892 107,788 124,787 228,680 245,802
General & administrative expenses   2,703     2,752     2,703     2,541   5,455     4,899   80,474     80,621     80,474     76,886   161,095     150,194
Total operating expenses   19,175     19,080     19,175     17,943   38,255     35,226   570,819     559,039     570,819     542,952   1,129,858     1,080,278
Operating income   11,875     13,859     11,875     16,546   25,733     29,520   353,521     406,065     353,521     500,676   759,586     904,042
Non-operating income and expenses   86     (58 )   86     1   28     16   2,559     (1,700 )   2,559     44   859     501
Income before income taxes   11,961     13,800     11,961     16,547   25,761     29,536   356,080     404,365     356,080     500,720   760,445     904,543
Income tax (benefit) expense   (361 )   (10 )   (361 )   1,722   (371 )   2,760   (10,738 )   (283 )   (10,738 )   52,117   (11,021 )   84,373
Net income   12,322     13,810     12,322     14,825   26,132     26,776   366,818     404,648     366,818     448,603   771,466     820,170
EPS - Basic (In Dollar) $ 0.16 $ 0.18 $ 0.16 $ 0.20 $ 0.34 $ 0.35 $ 4.80 $ 5.30 $ 4.80 $ 5.95 $ 10.10 $ 10.87
Shares used in computing EPS-Basic (In thousands) 76,418 76,287 76,418 75,444 76,386 75,480 76,418 76,287 76,418 75,444 76,386 75,480
EPS - Diluted (In Dollar) $ 0.16 $ 0.17 $ 0.16 $ 0.19 $ 0.33 $ 0.34 $ 4.63 $ 5.08 $ 4.63 $ 5.74 $ 9.72 $ 10.47
Shares used in computing EPS-Diluted (In thousands)   79,243       79,653       79,243       78,103     79,396       78,366   79,243       79,653       79,243       78,103     79,396       78,366
 
 
UNAUDITED CONSOLIDATED BALANCE SHEETS USD in Thousands NTD in Thousands
As of June 30, 2018 and 2017 Jun 30,   Jun 30, Jun 30,   Jun 30,
2018 2017 2018 2017
Current assets
Cash & cash equivalents 175,166 146,676 5,335,542 4,461,882
Accounts receivable, net 44,437 41,249 1,353,561 1,254,785
Inventories, net 41,909 41,300 1,276,542 1,256,354
Other current assets 15,281   10,047   465,472   305,636  
Total current assets 276,793   239,272   8,431,117   7,278,657  
Non-current assets
Property, plant and equipment, net 8,054 5,235 245,336 159,254
Intangible assets 85,612 89,454 2,607,748 2,721,191
Deferred income tax assets 1,564 1,941 47,626 59,036
Other non-current assets 832   1,000   25,323   30,426  
Total non-current assets 96,062   97,630   2,926,033   2,969,907  
Total Assets 372,855   336,902   11,357,150   10,248,564  
 
Current Liabilities
Accounts payable 20,877 30,999 635,915 942,994
Other payables 52,343 40,432 1,549,249 1,227,186
Current income tax liabilities 18,971 18,838 577,845 573,065
Other current liabilities 5,050   8,818   153,816   268,238  
Total current liabilities 97,241   99,087   2,916,825   3,011,483  
Equity
Ordinary shares 25,840 25,487 784,606 773,946
Capital reserves 85,884 71,479 2,601,913 2,169,037
Retained earnings 183,887 154,303 5,680,908 4,762,763
Other equity (17,237 ) (11,456 ) (546,414 ) (407,821 )
Treasury shares (2,760 ) (1,998 ) (80,688 ) (60,844 )
Total equity 275,614   237,815   8,440,325   7,237,081  
Total liabilities and equity 372,855   336,902   11,357,150   10,248,564  
 
   
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS USD in Thousands NTD in Thousands
For six months ended June 30, 2018 and 2017 Jun 30,   Jun 30, Jun 30,   Jun 30,
2018 2017 2018 2017

Cash flows from operating activities

Income before income tax for the period 25,761 29,536 760,445 904,543
Depreciation and amortization 5,615 4,710 165,878 144,494
Share-based compensation cost 3,737 2,561 110,404 78,577
Interest income (41 ) (26 ) (1,212 ) (811 )
Income and expenses having no effect on cash flows 9,312   7,245   275,070   222,260  
Accounts receivable 7,835 6,309 238,655 191,934
Inventories (7,634 ) (14,971 ) (232,535 ) (455,416 )
Other current assets (5,591 ) (2,552 ) (170,322 ) (77,662 )
Net changes in assets relating to operating activities (5,390 ) (11,214 ) (164,202 ) (341,144 )
Accounts payable (4,911 ) 974 (149,577 ) 29,617
Other payables (1,472 ) 575 (44,842 ) 17,501
Other current liabilities (3,231 ) (895 ) (98,402 ) (27,214 )
Net changes in liabilities relating to operating activities (9,613 ) 654   (292,821 ) 19,904  
Cash provided by operations 20,070   26,221   578,492   805,563  
Interest received 29 23 855 694
Income taxes paid (580 ) (625 ) (17,135 ) (19,163 )
Net cash provided by operating activities 19,519   25,619   562,212   787,094  

Cash flows from investing activities

Acquisition of equipment (860 ) (1,798 ) (25,407 ) (55,177 )
Acquisition of intangible assets (953 ) (721 ) (28,157 ) (22,111 )
Increase in refundable deposits (13 ) (155 ) (407 ) (4,726 )
Net cash used in investing activities (1,826 ) (2,674 ) (53,971 ) (82,014 )

Cash flows from financing activities

Proceeds from exercise of employee stock options 367 490 10,835 15,043
Purchase of treasury shares (2,760 ) (1,998 ) (80,688 ) (60,844 )
Cash dividend regain from canceled share-based compensation 16   4   494   127  
Net cash used in financing activities (2,377 ) (1,504 ) (69,359 ) (45,674 )
Effect of exchange rate changes on cash and cash equivalents (205 ) 248 133,433 (228,363 )
Increase in cash and cash equivalents 15,111 21,689 572,315 431,043
Cash and cash equivalents at beginning of period 160,055   124,987   4,763,227   4,030,839  
Cash and cash equivalents at end of period 175,166   146,676   5,335,542   4,461,882  
 

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