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Himax(HIMX) - 2024 Q1 - Earnings Call Transcript
HIMXHimax(HIMX)2024-05-09 15:41
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Financial Data and Key Metrics - Q1 2024 revenue was 207.6million,asequentialdecreaseof8.8207.6 million, a sequential decrease of 8.8%, exceeding the guidance range of a 9% to 16% decline [5] - Gross margin for Q1 was 29.3%, outperforming the guidance of around 28.5% [5] - Q1 profit per diluted ADS was 7.1 cents, surpassing the guidance range of 2.0 to 5.0 cents [5] - Q1 operating income was 10.0 million, or 4.8% of sales, compared to 7.2% of sales in the same period last year [9] - Q1 after-tax profit was 12.5million,or7.1centsperdilutedADS,comparedto12.5 million, or 7.1 cents per diluted ADS, compared to 23.6 million last quarter [9] - Cash, cash equivalents, and other financial assets at the end of Q1 were 277.4million,upfrom277.4 million, up from 206.4 million last quarter [10] - Q1 inventories were 201.9million,downfrom201.9 million, down from 217.3 million last quarter, reflecting successful destocking efforts [11] Business Line Performance - Large display driver revenue decreased 7.0% sequentially to 31.3million,withTVandmonitorICsalesdecliningbutnotebookICsalesincreasingdouble−digitQoQ[5][6]−Smallandmedium−sizeddisplaydriverrevenuedeclined11.531.3 million, with TV and monitor IC sales declining but notebook IC sales increasing double-digit QoQ [5][6] - Small and medium-sized display driver revenue declined 11.5% sequentially to 144.3 million, driven by strong automotive and OLED tablet sales [7] - Automotive business, including traditional DDIC, TDDI, Tcon, and OLED sales, contributed around 46% of total Q1 revenue [7] - Non-driver sales increased 3.4% sequentially to 32.0million,drivenbystrongdemandforlarge−sizeddisplayTconproducts[8]MarketPerformance−AutomotiveTDDIsalesincreasedsequentiallydespiteindustrydownturns,supportedbyarobustpipelineofdesign−winprojects[7]−AutomotivelocaldimmingTconadoptionisexpandingrapidly,withincreasingprojectawardsfromTier−1suppliersfornewvehicleprojectsglobally[8]−SmartphoneICsalesdeclinedsequentiallybutexceededguidance,whiletabletdriversalesdeclinedasexpectedduetoseasonaldemandweakness[7]StrategicDirectionandIndustryCompetition−Thecompanyisfocusingoncostoptimizationandsupplierdiversificationtoenhancesupplyflexibilityandcost−effectiveness,particularlyintheautomotivemarket[17]−HimaxisexpandingitsOLEDofferings,includingDDIC,Tcon,andtouchcontrollers,incollaborationwithleadingpanelmanufacturersinKoreaandChina[23][25]−ThecompanyisleveragingitsleadershipinautomotiveTDDIandlocaldimmingTcontocapitalizeonthemegatrendofincreasingdisplaysophisticationinvehicles[16][17]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−ManagementexpectsQ22024revenuetoincrease832.0 million, driven by strong demand for large-sized display Tcon products [8] Market Performance - Automotive TDDI sales increased sequentially despite industry downturns, supported by a robust pipeline of design-win projects [7] - Automotive local dimming Tcon adoption is expanding rapidly, with increasing project awards from Tier-1 suppliers for new vehicle projects globally [8] - Smartphone IC sales declined sequentially but exceeded guidance, while tablet driver sales declined as expected due to seasonal demand weakness [7] Strategic Direction and Industry Competition - The company is focusing on cost optimization and supplier diversification to enhance supply flexibility and cost-effectiveness, particularly in the automotive market [17] - Himax is expanding its OLED offerings, including DDIC, Tcon, and touch controllers, in collaboration with leading panel manufacturers in Korea and China [23][25] - The company is leveraging its leadership in automotive TDDI and local dimming Tcon to capitalize on the megatrend of increasing display sophistication in vehicles [16][17] Management Commentary on Operating Environment and Future Outlook - Management expects Q2 2024 revenue to increase 8% to 13% sequentially, with gross margin projected to be between 31.5% and 33.5% [13] - The automotive sector is expected to drive growth in Q2, with high single-digit to double-digit sequential revenue increases anticipated [19][21] - The company anticipates a rebound in demand in the second half of 2024, supported by major sporting events and festival shopping seasons [14] Other Important Information - The company declared an annual cash dividend of 29.0 cents per ADS, totaling 51 million, with a payout ratio of 100% of the previous year's profit [12] - Himax is advancing its WiseEye Ultralow Power AI Sensing solution, with applications in smart home, automotive, healthcare, and other AIoT sectors [29][30] - The company unveiled its new-generation Color Sequential Front-Lit LCoS Microdisplay at Display Week 2024, targeting the AR glasses market [32][33] Q&A Session Summary Question: Why is Himax optimistic about the auto sector while other semiconductor companies are cautious? - Himax attributes its optimism to lean inventory levels and strong demand for automotive display ICs, supported by rush orders from panel customers [36][38] - The company highlights the megatrend of increasing display sophistication in vehicles, which drives higher content value per vehicle for display IC vendors [39][40] Question: What is the potential for see-through AR glasses using Himax's LCoS technology? - Himax believes its new-generation LCoS Microdisplay, with a brightness of 250,000 nits and low power consumption, is a breakthrough for AR glasses targeting the general public [44][45] - The company sees significant potential in the AR glasses market, with its LCoS solution offering better power efficiency and mass production readiness compared to micro-LED alternatives [46][47]