Himax Technologies (NASDAQ: HIMX) reported Q2 EPS of $0.013, $0.00 better than the analyst estimate of $0.01. Revenue for the quarter came in at $181.4 million versus the consensus estimate of $181.6 million.

Q2 revenue increased 11.4% QoQ to $181.4M, came in at the mid-point of the Company’s guidance

• Product sales: large driver ICs, 33.4% of revenue, up 2.2% QoQ; small and medium-sized driver ICs, 49.2% of revenue, up 24.5% QoQ; non-driver products, 17.4% of revenue, down 1.1% QoQ
• Q2 IFRS gross margin was 23%, up 50 bps sequentially due to improved product mix
• Q2 IFRS profit was $2.0M, or 1.2 cents per diluted ADS, up from loss of $2.8M, or 1.6 cents per diluted ADS in Q1 2018
• Expect 2H18 WLO shipment to increase significantly over 1H18
• Company is in partnership with leading smartphone names to enable their 3D sensing by providing optics, projector or total solution, depending on their needs and in-house capabilities; projects cover all types of 3D sensing technologies including structured light, ASC and ToF
• Company remains positive on its long term business outlook

“The Company’s second quarter 2018 revenues and gross margin met our guidance while IFRS earnings per diluted ADS exceeded guidance. The anticipated sequential growth in revenue was mainly driven by accelerating TDDI shipment in the smartphone sector and further growth in the automotive sector in the small and medium-sized display driver business. Furthermore, our WLO business in the non-driver IC business rebounded as anticipated. Shipment volume increased and WLO capacity utilization improved subsequently,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax.

“Looking into the third quarter, we expect our large display driver IC business will grow sequentially benefiting from Chinese panel customers’ capacity expansion and the ramping of new fabs. Our small and medium-sized business is likely to decline as our growth in the automotive segment will be offset by the significant decline of smartphone sales. The soft smartphone sales was caused by our limited TDDI shipment due to the constraint of industry pervasive capacity shortage issue and the traditional discrete driver IC is being replaced quickly by TDDI and AMOLED. To capture the TDDI opportunity, we have been working very hard to source and qualify additional foundry capacity. We expect the addition of new foundry capacity for TDDI will start mass production toward early fourth quarter and will substantially grow our TDDI revenue starting from Q4 2018.”

“For the non-driver areas, we expect the WLO shipment for the second half of 2018 will increase significantly versus the first half. As to our 3D sensing business, we are in partnership with several leading smartphone names to enable their 3D sensing by providing optics, projector or total solution, depending on customer’s needs and their in-house capabilities. The projects we are involved in cover all three types of 3D sensing technologies, namely structured light, active stereo camera (ASC), and to a lesser extent, time-of-flight (ToF). 3D sensing for Android smartphone market is still at a nascent stage with very limited adoption in 2018. We expect the market adoption will pick up starting 2019. With our comprehensive technology coverage, proven manufacturing expertise, new solutions roadmap and alliances with leading AP platform providers, we believe we are best positioned to be the partner of choice for Android smartphone makers in their 3D sensing projects,” said Mr. Jordan Wu.

GUIDANCE:

Himax Technologies sees Q3 2018 EPS of $0.015, versus the consensus of $0.03.

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