Himax Technologies (HIMX) Posts In-Line EPS, Sales Misses; Guides Q3 EPS In-Line

Himax Technologies (NASDAQ: HIMX) reported Q2 EPS of $0.004, in-line with the analyst estimate of $0.00. Revenue for the quarter came in at $151.7 million versus the consensus estimate of $153.66 million.

GUIDANCE:

Himax Technologies sees Q3 2017 EPS of $0.03-$0.04, versus the consensus of $0.04.

The second quarter revenues of $151.7 million represented a decrease of 2.2% sequentially and a decrease of 24.5% year-over-year. Despite the decline in the first half in our business, we expect a strong recovery in driver ICs segment and exciting opportunities in the non-driver segments over the remainder of 2017 and beyond. We believe our overall financial performance will be resilient,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax.

Mr. Wu said, “We have refreshed our product roadmap and delivered better product cost to our existing and newly added customers in the large display driver IC segment. Moreover, sales into smartphones already rebounded in June as customers have started to replenish inventories for new product release. Our FHD+ solutions for 18:9 displays and TDDI have drawn tremendous interests from top tier brands, not to mention that our discrete touch panel controller ICs and driver ICs for automotive applications continue to grow strongly in the small-and-medium display driver segment. Last but not the least, we have delivered AMOLED product samples to some customers in the second quarter.” Mr. Wu continued, “Judging by the on-going design-in activities and schedules of mass shipment for key projects across all product lines, we have high confidence that our display driver IC business will resume strong growth momentum in the second half.“

“We are also optimistic about the growth prospects for our non-driver business, most notably with our industry leading structure light integrated solution for 3D sensing and WLO. Our 3D sensing solution consists of several critical in-house technologies, including advanced optics utilizing our world leading WLO technology, laser driver IC, high precision active alignment for the projector assembly, high performance near-infrared CMOS image sensor and an ASIC chip for 3D depth map generation. These building blocks enable us to react quickly and tailor our solutions to customers’ specific needs. While we prefer to offer a total solution, we can also provide those critical in-house technologies individually to select customers so as to best accommodate their specific needs. We are in close collaboration with select leading smartphone makers and partners, aiming to bring our total solution to mass production as early as early 2018 to meet our top-tier customers' aggressive launch timetables. 3D sensing total solution represents a very high entry barrier for potential competition and much higher ASP for Himax. By the time we start shipping our total solutions, it will contribute greatly to our revenue and profit, and consequently a more favorable product mix for us,” said Mr. Wu.

“In the last earnings call, we reported that this year’s capex will be significantly higher than usual. We also reported the urgent addition of new WLO capacity to meet the rush demand of a certain customer. This new capacity is located in our existing headquarters in which we retrofitted space to make room for the new equipment. The project is going smoothly as planned. A major ramp of the new WLO capacity has already started at the beginning of the third quarter and will accelerate throughout the remainder of 2017 and beyond,” Mr. Wu continued.

Advanced wafer-level optics (WLO) is one of the key technologies enabling 3D sensing, which is the top priority of Himax’s WLO business. Mr. Wu said, “Leveraging on our exceptional design know-how and mass production experience in WLO technology, we are able to produce the world’s most compact optics required of 3D sensing while achieving superior performance. In addition to 3D sensing, we also have ongoing collaborations with customers in developing light-guide for AR glasses and micro displays using our WLO technology.”

Mr. Wu further said, “For the other major capex project of this year, we reported the construction of a new building is going well and everything is proceeding according to schedule. The new building, located near our current headquarters, will house additional 8” glass WLO capacity and provide the extra office space we desperately need. The new building will be completed and ready for personnel and equipment move-in by the end of 2017 or early 2018. Its timely completion is particularly critical for our 3D sensing total solution business as it will house the new WLO capacity needed for multiple smartphone customers.”

“Judging from our customers’ enthusiasm, we are planning to kick-start the phase II capital expansion beyond the phase I’s $80 million mark that we announced earlier much sooner than expected in order to fulfill the strong 3D sensing demand for the next 2-3 years. The phase II capacity will still be located in the new building, which has sufficient room to house capacity much in excess of the phase II expansion. We expect the phase II investment to provide a handsome return and will entrench Himax as top tier customers’ 3D sensing go-to supplier for our leading technology and reliable capacity support in this up and coming industry with tremendous growth potential,” said Mr. Wu.

For earnings history and earnings-related data on Himax Technologies (HIMX) click here.

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