Himax Technologies (NASDAQ: HIMX) reported Q3 EPS of ($0.04), in-line with the analyst estimate of ($0.04). Revenue for the quarter came in at $164.3 million versus the consensus estimate of $158.63 million.

• Company Meets Q3 2019 Revenue, Gross Margin and EPS Guidance
• Q3 revenue decreased 3.0% sequentially to $164.3M, in line with the Company’s guidance
• Product sales: large driver ICs, 30.5% of revenue, down 15.6% QoQ; small and medium-sized driver ICs, 46.9% of revenue, down 5.6% QoQ; non-driver products, 22.6% of revenue, up 31.1% QoQ
• Q3 IFRS gross margin was 19.5%, flat sequentially
• Q3 IFRS loss was $7.2M, or 4.2 cents per diluted ADS, down from loss of $5.2M, or 3.0 cents per diluted ADS in Q2 2019
• Q3 Non-IFRS loss was $6.9M, or 4.0 cents per diluted ADS, down from loss of $4.8M, or 2.8 cents per diluted ADS in Q2 2019
• Q3 IFRS gross margin declined 390 bps year-over-year largely due to pricing pressure and high material cost in LDDIC and smartphone TDDI segments as well as significantly more shipments of lower end TDDI, offset by higher margin from increased WLO shipments which led to higher capacity utilization
• 2H19 smartphone TDDI growth below Company’s target: New FHD+ TDDI project opportunities did not materialize due to accelerating adoption of AMOLED display adoption and TDDI adoption is shifting more towards mid- to low-end models where the Company has low market share. Furthermore, TDDI pricing pressure fueled by the increased competition negatively impacting its margins
• Expects automotive and tablet DDIC sales to grow in Q4
• Q3 WLO revenue increased substantially due to a pickup in shipments to fulfill an anchor customer’s higher seasonal demand. Expects a slightly lower shipment volume sequentially in the fourth quarter
• Company has adjusted structured light-based 3D sensing development to focus on applications for non-smartphone segments; actively pursuing smartphone makers’ ongoing time-of-flight (ToF) 3D sensing projects with ecosystem partners by providing WLO optics
• Company’s strategy is to focus on delivering P&L improvement by executing on the technologies it already developed for both DDIC and non-DDIC area

“2019 has been a challenging year for Himax. Uncertainty in the global economy continues to overshadow the marketplace, where we are seeing waning demand in all industries that consume display. This, combined with prevailing LCD industry capacity oversupply, has led to severe pricing pressure for panels which inevitably affected the sales and margin of display driver IC across all of our major product segments including TV, smartphone and automotive,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax.

“As we look forward, although at this time we have limited visibility, we do not anticipate the business environment to improve in the near term. Our strategy is to focus on delivering P&L improvement by executing on the technologies we already developed for both driver IC and non-driver IC areas,” concluded Mr. Jordan Wu.

GUIDANCE:

Himax Technologies sees Q4 2019 EPS of ($0.04)-($0.03), versus the consensus of ($0.07).

• Company remains positive on its long-term business outlook
• Provides Q4 2019 Guidance Revenue to be around Flat Sequentially, Gross Margin to be Slightly Up Sequentially, IFRS Loss per Diluted ADS to be around 3.0 to 4.5 Cents, and Non-IFRS Loss per Diluted ADS to be around 2.7 to 4.2 Cents

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