Himax Technologies Reports 3Q 2017 Financial Results

Himax Technologies, Inc. announced its financial results for the third quarter ended Sept. 30, 2017. The Company’s 2017 third quarter revenues and GAAP earnings per diluted ADS came in at high end of its guidance while gross margin and non-GAAP earnings per diluted ADS both exceeded the guidance.
 
The third quarter revenues of $197.1 million represented an increase of 29.9% sequentially and a decrease of 9.6% year-over-year. Revenue from large panel display drivers was $54.9 million, up 5.4% sequentially and down 23.7% year-over-year.
 
Revenue for small and medium-sized drivers came in at $87.2 million, up 24.5% sequentially but down 12.2% year- over-year. The product segment accounted for 44.2% of total sales for the third quarter, as compared to 46.1% in the second quarter of 2017 and 45.5% a year ago. Sales into smartphones rebounded strongly, up more than 30% sequentially, but still declining 36.0% year-over-year.
 
Sales into automotive application went up single digit sequentially and more than 20% year-over-year. The quarterly revenue now reached more than $20 million, a historical high.
 
Revenues from the non-driver businesses were $55.0 million, up 85.9% sequentially and up 17.5% versus last year. Non-driver products accounted for 27.9% of total revenues, also a record high, as compared to 19.5% in the second quarter of 2017 and 21.5% a year ago.
 
GAAP gross margin for the third quarter was 25.5%, up 170 bps from 23.8% in the second quarter of 2017 and down 10 bps from 25.6% for the same period last year. Third quarter non-GAAP operating income was $10.2 million, or 5.2% of sales, down from 11.5% for the same period last year and up from -0.3% a quarter ago.
 
“Despite the decline in the first half in our business, we delivered solid results in the third quarter, achieving both top and bottom line growth across all three major product categories,” said Jordan Wu, president and CEO of Himax.
 
“One of the highlights of our third quarter business is the joint announcement with Qualcomm to unveil our 3D sensing total solution,” Wu continued. “The announcement detailed the two companies’ collaboration in the development and commercialization of high resolution, low power active 3D depth sensing solutions for the Android smartphone ecosystem.
 
“The Qualcomm/Himax SLiMTM (Structured Light Imaging Module) solution is state-of-the-art and the only true 3D sensing total solution available for the Andriod market right now,” added Wu. “Our SLiMTM total solution brings together Qualcomm’s industry leading 3D algorithm with Himax’s advanced diffraction optical element (DOE) design and mass-production-proven wafer level optics for the projector and cutting-edge NIR sensors with superior quantum efficiency for the receiver.
 
“To complete our turn-key solution for the Android market, we have put together an A team by partnering with a few top players in their respective industry, covering laser, NIR camera lens, IR filter, semiconductor foundry and module assembly,” Wu noted. “We are targeting to have the SLiMTM 3D sensing total solution and production capacity ready for mass production and shipment by the end of the first quarter of 2018 with an initial capacity of 2 million units per month. The initial capacity is part of our Phase I investment of $80 million.”
 
Himax believes 3D sensing is among the most significant new features for the next generation smartphone. It is a game-changing opportunity for the Company and will be the Himax’s biggest growth engine for the next few years.
 
“We are excited that Apple has pioneered the 3D sensing technology on iPhone X and is paving the way for smartphone to become a major AR platform. In the Android market, we are seeing leading players also aggressively looking to adopt 3D sensing. We are in close collaboration with multiple top tier Android smartphone OEMs, aggressively aiming to launch flagship smartphone models with 3D sensing total solution during the first half of 2018. By the time we started shipping our 3D total solutions, they will be major contributor to both our revenues and profit, consequently creating a more favorable product mix for us,” said Wu.