Himax(HIMX) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Fourth quarter net revenues reached $262.3 million, a sequential increase of 22.8%, significantly exceeding the guidance of 4.0% to 8.0% [9] - IFRS gross margin was 30.5%, down from 36.0% in the previous quarter, and lower than the guidance range of 31.5% to 33.5% [9] - IFRS profit per diluted ADS was 24.1 cents, surpassing the guidance of 17.8 cents to 20.8 cents [9] - For the full year 2022, revenues totaled$ 1.2 billion, representing a 22.3% decline compared to 2021 [16] Business Line Data and Key Metrics Changes - Revenue from large display drivers was $43.5 million in Q4, a 5.3% sequential increase, accounting for 16.6% of total revenues [10] - Small and medium-sized display driver revenue was$ 177.4 million, a 25.5% sequential increase, driven by TDDI shipments across sectors [11] - Automotive driver sales increased single digit quarter over quarter, representing over 30% of total sales in Q4, with TDDI sales surging by more than 170% year-over-year [12] - Non-driver sales reached $41.4 million, up 33.8% from the previous quarter, with Tcon business showing strong growth [13] Market Data and Key Metrics Changes - The automotive segment saw over 50% growth in 2022, with TDDI sales increasing by more than 300% [18] - Large panel display driver revenue decreased by 33.7% year-over-year, while small and medium-sized driver sales decreased by 19.2% [17] - The overall annual sales decline was attributed to unexpected lockdowns in China and geopolitical tensions [16] Company Strategy and Development Direction - The company aims to manage inventory levels aggressively, sacrificing short-term gross margin to offload excess stock [26] - Focus on high-margin product areas such as automotive and WiseEye smart image sensing businesses for future growth [27] - The company is optimistic about the recovery of the semiconductor industry and expects sales to rebound in the second quarter of 2023 [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter is typically the slowest due to seasonal factors and current macroeconomic challenges [26] - The company anticipates that Q1 will be the trough of the year, with sales expected to improve in the second half of 2023 [29] - Management expressed confidence in the automotive TDDI business, expecting strong growth driven by design wins and market demand [55] Other Important Information - The company reported a significant decrease in cash, down to$ 229.9 million as of December 31, 2022, primarily due to dividend payouts [22] - Year-end inventories were $370.9 million, down from$ 410.1 million the previous quarter, indicating improved inventory management [23] Q&A Session Summary Question: Impact of wafer foundry charges on margins - Management confirmed that charges related to unmet minimum loading obligations will still impact Q1 margins, but these are not the primary factor for margin contraction [46][47] Question: Guidance outlook for first quarter revenue - Management explained that the automotive DDIC segment is expected to see a decline due to inventory digestion, while TDDI is anticipated to grow [54] Question: Pricing trends in coming quarters - Management indicated that foundry partners are unlikely to lower prices significantly this year due to high inventory levels across the board [62]