Himax Technologies Clocks 24.8% Q2 Revenue Decline, Massive Earnings Drop

Himax Technologies, Inc HIMX reported a second-quarter FY23 revenue decline of 24.8% year-on-year to $235.03 million, marginally missing the consensus of $235.6 million. Net revenues declined 3.8% Q/Q.

IFRS earnings per ADS of $0.005 beat the consensus of $0.00.

Revenue from large display drivers declined by 14.3% Q/Q to $45.4 million.

Notebook sales notably outperformed guidance, thanks to solid shipment to critical customers. TV IC sales declined as expected as customers suspended pull-ins, having already replenished their inventory.

Small and medium-sized display drivers' revenue was $150.3 million, down by 2.9% Q/Q. Smartphone and tablet driver sales increased mid-teens and single digits, respectively, in Q2 as Himax saw a recovery in business momentum, particularly in TDDI products.

The Q2 automotive driver sales decreased single digits sequentially but outperformed guidance of a low teen decline as clients resumed order replenishment for both traditional DDIC and TDDI. 

Himax is particularly confident in its automotive TDDI growth potential, backed by hundreds of design wins already secured, significantly ahead of its peers. Among these design wins, only a small portion has commenced mass production.

Second-quarter revenues from its non-driver business exceeded guidance with revenue of $39.3 million, up 7.9% from a quarter ago. The better-than-expected sales performance was due to higher shipments for Tcon and CMOS image sensors.

Despite the slight sequential decline in Tcon sales in the second quarter, it surpassed guidance of a low-teens decline, bolstered by better-than-expected shipment of monitor and automotive Tcons.

Gross margin came in at 21.7%, down from 28.1% last quarter due to price erosion from offloading excess inventory.

The operating loss was $(2.1) million versus a profit of $17.6 million in the prior quarter.

Himax held $211.4 million in cash and equivalents and generated $8 million in operating cash flow.

Outlook: Himax sees Q3 revenue be flat to decline 7.0% Q/Q (vs. consensus $261.27 million). It expects non-IFRS earnings per ADS of $0.015 - $0.06 (vs. consensus $0.04).

Price Action: HIMX shares traded lower by 1.53% at $6.45 premarket on the last check Thursday.