Regulatory News:

Highlights Q4 2019:

- Revenue was USD 113.4 million, within the guidance of USD 111-118 million, down 17% year-on-year and 13% quarter-on-quarter

- Bookings were 128.2 million, up 5% year-on-year and 6% quarter-on-quarter;

- EBITDA was USD -2.6 million, down 116% year-on-year and down 120% quarter-on-quarter; EBITDA margin of -2.3% was below the 1-7% guidance due to non-recurring factors

- EBIT was USD -21.9 million, down USD 21.0 million year-on-year and down USD 15.8 million quarter-on-quarter

- Net loss was USD -22.4 million, down USD 17.9 million year-on-year and down USD 14.3 million quarter-on-quarter

Highlights 2019:

- Revenue of USD 506.4 million, down 14% year-on-year

- Prototyping revenues up 14% year-on-year and medical business up 17% year-on-year

- EBITDA of USD 28.4 million, down 70% year-on-year

- EBIT of USD -43.9 million compared to USD 32.9m last year

- Net profit of USD -49.1 million compared to USD 22.6m last year

Outlook:

- Q1 2020 revenue is expected in the range of USD 125-132 million with an EBITDA margin in the range of 6-10%. For the full year 2020, management expects revenue to grow by approximately 10% with an EBITDA margin in the range of 10-15%.

- The guidance for Q1 2020 is based on an average exchange rate of 1.12 USD/Euro.

Revenue breakdown per quarter:

in millions of USD

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q4 y-o-y growth

Automotive

68.5

79.3

76.6

59.7

64.1

62.5

60.5

56.7

-5%

Industrial

23.2

25.0

23.8

24.3

24.1

23.3

24.4

20.1

-17%

Medical

4.8

5.6

6.3

7.3

6.8

6.3

8.8

6.3

-13%

Subtotal core business

96.5

109.8

106.7

91.3

95.0

92.1

93.7

83.2

-9%

67.2%

70.6%

70.5%

66.4%

72.5%

70.0%

71.8%

73.3%

 

CCC1

46.5

45.3

44.4

45.9

35.8

39.1

36.7

30.1

-34%

Others

0.5

0.3

0.3

0.3

0.2

0.3

0.0

0.1

 

Total revenues

143.5

155.5

151.4

137.4

131.0

131.6

130.5

113.4

-17%

1 Consumer, Communications & Computer

in millions of USD

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q4 y-o-y growth

CMOS

132.2

140.6

138.7

122.0

118.2

114.4

114.4

98.1

-20%

MEMS

10.5

12.7

9.5

10.4

8.1

10.7

9.5

9.9

-5%

Silicon carbide

0.9

2.2

3.3

5.0

4.7

6.4

6.5

5.5

9%

Total revenues

143.5

155.5

151.4

137.4

131.0

131.6

130.5

113.4

-17%

Business development

X-FAB’s fourth quarter revenues came in at USD 113.4 million, within the guidance range of USD 111-118 million. Compared to the same quarter last year, revenues declined 17%, quarter-on-quarter they went down by 13%.

Full year revenues totaled at USD 506.4 million, down 14% compared to the previous year. While prototyping revenues remained strong throughout the year recording a growth of 14%, the decline was mainly caused by the drop in automotive production revenues and the consumer, communications & computer business (CCC).

X-FAB’s core business, namely automotive, industrial and medical, recorded quarterly revenues of USD 83.2 million. This is a decline of 9% year-on-year. In 2019, revenues in the core business totaled USD 364.0 million, down 10% compared to 2018.

In the fourth quarter, automotive revenues decreased 5% year-on-year. While automotive prototyping revenues had been trending up in the first three quarters of the year, they recorded a fall of 16% year-on-year in the fourth quarter, which is mainly due to the strong comparable quarter a year ago. Fourth quarter production revenues declined 4% year-on-year. In the total of 2019, X-FAB’s automotive business went down 14%, entirely driven by the decrease in production revenues. Prototyping revenues recorded a growth of 4%.

Fourth quarter revenues in the industrial market went down 17% year-on-year. While prototyping revenues recorded a strong growth of 29% year-on-year, production revenues declined by 34% compared to the same quarter last year, mainly caused by inventory corrections at a major industrial customer. In the full year, industrial revenues recorded a reduction of 4% caused by a decline in production revenues amounting to 8%, while prototyping revenues went up 6% compared to the previous year.

In the fourth quarter, X-FAB’s medical business decreased by 13% compared to the same quarter last year. The decline was mainly driven by lower volumes after a main customer put production temporarily on hold to manage inventories. Medical prototyping revenues of the fourth quarter continued to grow strongly by 27% year-on-year. The full year closed with a revenue increase of 17% compared to the previous year with prototyping revenues going up by 28% and production revenues by 13%. In 2019, the rising demand for lab-on-a-chip applications was the strongest growth driver for X-FAB’s medical business.

Consumer, communications & computer business went down 34% year-on-year in Q4 2019 with a 37% decline of prototyping revenues after the same quarter last year was particularly strong due to a one-off IP sale with a revenue contribution of USD 1 million. CCC production revenues declined 34% year-on-year. For the full year 2019, X-FAB’s CCC business decreased by 22%. While production revenues went down 27%, prototyping revenues recorded a growth of 33%, mainly driven by RF applications for the Asian market.

The decline of CCC production revenue is in line with the planned decrease of the legacy business at X-FAB France. The share of the French site’s revenues based on X-FAB technologies was at 11% in the fourth quarter and 13% for the full year of 2019.

In the fourth quarter, X-FAB recorded prototyping revenues of USD 17.3 million, down 2% year-on-year. Excluding the proceeds from a one-off IP sale in the fourth quarter of 2018, they went up by 4%. For the full year, X-FAB prototyping revenues came in at USD 66.7 million, up 14% compared to the previous year.

Bookings have been trending upwards during the fourth quarter coming in at a total of USD 128.2 million. This is an increase of 5% year-on-year and 6% quarter-on-quarter.

Operations update

In 2019, all manufacturing sites advanced with their capacity expansion and optimization projects tailored to increase output and productivity. While some of the improvements will only have an effect at higher utilization levels, the site in Kuching, Malaysia, managed to expand its available capacity to 30,000 wafer starts per month, bringing the Group’s total capacity up to 100,000 wafer starts per month (8-inch equivalents).

X-FAB’s silicon carbide (SiC) business continued to progress well. After adding two new customers in the fourth quarter, the site in Lubbock, Texas, meanwhile serves 20 SiC customers, of which an increasing share is coming from the Asian region. Two of its existing customers moved from prototyping to production closing 2019 with a total of six customers in volume production. The preparations for offering in-house SiC epitaxy are on track. The line successfully started to build customer samples producing very good results. Internal qualification is scheduled to be completed in the first quarter 2020, which is the final milestone to kick off volume production. Epitaxy refers to the process of depositing a thin epitaxial layer on a SiC raw wafer, which is a significant value-add step in the overall process of manufacturing silicon carbide semiconductors. The pipeline for new customers as well as new projects remains strong as X-FAB keeps adding new technologies while enabling customers to significantly reduce their development time. The latter is mainly based on the progress made in developing modular process blocks allowing customers to implement technologies faster. SiC prototyping revenue in the fourth quarter came in at USD 3.7 million, up 55% compared to the same quarter last year, while production revenue declined by 28% year-on-year, mainly due to inventory corrections at a main customer. For the total of 2019, SiC revenues came in at USD 23.2 million, up 104% compared to the previous year.

X-FAB group’s capital expenditures in the fourth quarter were at USD 15.6 million, down 33% compared to the same quarter last year. In the full year 2019, capital expenditures totaled USD 79.0 million, down from what was initially planned as some capex projects were deferred or stopped in the context of X-FAB’s cost-saving initiative. Main capex projects in 2019 included the expansion of capabilities and capacities for X-FAB’s SiC offering, the new office building at the site in Kuching, Malaysia, the expansion of capabilities at X-FAB France as well as of capacities at X-FAB Dresden. Capex spending in 2020 largely depends on how business will develop and what the expectations will be for following years. It may range from USD 60 million up to USD 90 million.

Profitability and FX volatility

Profitability of the fourth quarter was negatively impacted by two extraordinary factors, which fully account for the shortfall of the fourth quarter’s EBITDA guidance. A USD 3.7 million accrual was made for potential warranty costs arising from a one-off fab event. The exact amount of warranties to be paid is still in the process of being identified. X-FAB has furthermore terminated the collaboration with a supplier for a fab automation project, which was capitalized; it was written off in the fourth quarter having an impact of USD 2.5 million.

Unfinished and finished goods inventory of the fourth quarter increased by USD 3.4 million, while it had decreased in the previous quarter. This contributed positively to profitability.

In the fourth quarter, other income and expenses significantly dropped compared to the same quarter last year. While the disposal of several smaller assets contributed positively to profitability, the write-off due to the terminated fab automation project had a negative impact.

Full year net financial result improved from USD -7.3 million in the previous year to USD -1.1 million in 2019. Not only did the US-Dollar/Euro exchange rate remain stable throughout 2019, X-FAB has also continued its efforts to increase the share of Euro-denominated sales in order to limit the impact of exchange rate fluctuations on profitability and to have a better natural hedging in place. For the full year of 2019, the share of Euro-denominated sales reached 25%; in the fourth quarter it came in at 26%.

The actual exchange rate for the fourth quarter of 2019 was 1.11 leading to an EBITDA margin of -2.3%. At a constant US-Dollar/Euro exchange rate of 1.14 experienced in the fourth quarter of last year, the EBITDA margin in Q4 2019 would have been at -2.9%.

Financial optimization activities in 2019 furthermore included the conversion of the vast majority of intercompany loans into equity, therefore reducing the amount of taxable interests. This will be fully effective in 2020.

In the fourth quarter, X-FAB continued its cost-saving initiative that was started in early 2019 comprising several measures to lower costs related to staff, travel, electricity and raw materials. Amongst others, X-FAB managed to reduce the Group’s total headcount as per year-end by about 260.

Management comments & outlook

Commenting on the development of X-FAB’s business, Rudi De Winter, CEO of X-FAB Group, said: “In the fourth quarter, we started to see signs of a recovery. Bookings were trending up and the order behavior of our customers, who had been very cautious before, began to change. Bookings in each of the past two months were the highest since mid-2018. Not only did we see an increase in new orders but also more and more customers requesting fast deliveries, which is pointing towards low inventory levels in the supply chain. I am also particularly pleased with the consistently high prototyping activity throughout the year as we have achieved record revenue levels in the second half, despite the market weakness. With the growth drivers we have in place, such as our SiC business, our unique offering to serve the medical market, or our RF technology to support the transition to 5G, I am confident that we will be able to gradually grow our revenues in 2020.”

Procedures of the independent auditor

The statutory auditor, KPMG Bedrijfsrevisoren – Réviseurs d’Entreprises CVBA, represented by Herwig Carmans, has confirmed that the audit procedures, which have been substantially completed, have not revealed any material adjustments which would have to be made to the condensed consolidated financial information as of and for the year ended December 31, 2019, included in the annual announcement of X-FAB Silicon Foundries SE.

X-FAB Quarterly Conference Call

X-FAB’s fourth quarter results will be discussed in a live conference call on Tuesday, February 11, 2020 at 6.30 p.m. CET. The conference call will be in English. Please register in advance of the conference using the following link: http://emea.directeventreg.com/registration/1788814

Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and a unique registrant ID. In the 10 minutes prior to the call, you will need to use the conference access information provided in the email received at the point of registering.

The conference call will be available for replay from February 11th 11.30 p.m. CET until February 18th 11.30 p.m. CET. The replay number will be +44 (0) 3333009785, conference ID 1788814.

The first quarter 2020 results will be communicated on April 30, 2020.

About X-FAB

X-FAB is the leading analog/mixed-signal and MEMS foundry group manufacturing silicon wafers for automotive, industrial, consumer, medical and other applications. Its customers worldwide benefit from the highest quality standards, manufacturing excellence and innovative solutions by using X-FAB’s modular CMOS processes in geometries ranging from 1.0 to 0.13 µm, and its special silicon carbide and MEMS long-lifetime processes. X-FAB’s analog-digital integrated circuits (mixed-signal ICs), sensors and micro-electro-mechanical systems (MEMS) are manufactured at six production facilities in Germany, France, Malaysia and the U.S. X-FAB employs about 3,800 people worldwide.

For more information, please visit www.xfab.com.

 

Forward-looking information

This press release may include forward-looking statements. Forward-looking statements are statements regarding or based upon our management’s current intentions, beliefs or expectations relating to, among other things, X-FAB’s future results of operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which we operate. By their nature, forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results or future events to differ materially from those expressed or implied thereby. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein.

Forward-looking statements contained in this press release regarding trends or current activities should not be taken as a report that such trends or activities will continue in the future. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless legally required. You should not place undue reliance on any such forward-looking statements, which speak only as of the date of this press release.

The information contained in this press release is subject to change without notice. No re-report or warranty, express or implied, is made as to the fairness, accuracy, reasonableness or completeness of the information contained herein and no reliance should be placed on it.

Condensed Consolidated Statement of Profit and Loss

in thousands of USD

Quarter

ended
31 Dec 2019

unaudited

Quarter

ended
31 Dec 2018

unaudited

Quarter

ended
30 Sep 2019

unaudited

Year

ended
31 Dec 2019

unaudited

Year

ended
31 Dec 2018

audited

Revenue

113,390

137,424

130,462

506,417

587,899

Revenues in USD in %

73

79

73

75

81

Revenues in EUR in %

26

21

27

25

18

Cost of sales

-117,702

-120,305

-118,960

-479,128

-483,892

Gross Profit

-4,312

17,119

11,503

27,290

104,007

Gross Profit margin in %

-3.8%

12.5%

8.8%

5.4%

17.7%

 

 

 

 

 

 

Research and development expenses

-6,615

-7,830

-8,055

-28,298

-31,237

Selling expenses

-2,064

-2,022

-2,013

-8,080

-8,070

General and administrative expenses

-7,917

-7,797

-7,248

-30,728

-31,499

Rental income and expenses from investment properties

168

-454

-110

-129

1,021

Other income and other expenses

-1,145

121

-199

-3,920

-1,304

Operating profit

-21,886

-864

-6,122

-43,865

32,919

Finance income

2,943

3,978

3,145

13,049

21,296

Finance costs

-2,665

-4,763

-3,851

-14,102

-28,603

Net financial result

278

-784

-706

-1,053

-7,307

 

 

 

 

 

 

Profit before tax

-21,607

-1,648

-6,828

-44,918

25,613

Income tax

-842

-2,906

-1,361

-4,165

-3,059

Profit for the period

-22,449

-4,554

-8,189

-49,083

22,554

 

 

 

 

 

 

Operating profit (EBIT)

-21,886

-864

-6,122

-43,865

32,919

Depreciation

19,330

16,787

18,807

72,286

61,492

EBITDA

-2,555

15,924

12,685

28,421

94,412

EBITDA margin in %

-2.3

11.6

9.7

5.6

16.1

 

 

 

 

 

 

Earnings per share at the end of period

-0.17

-0.03

-0.06

-0.38

0.17

Weighted average number of shares

130,631,921

130,631,921

130,631,921

130,631,921

130,631,921

 

 

 

 

 

 

EUR/USD average exchange rate

1.10710

1.14088

1.11236

1.11976

1.18183

Amounts in the financial tables provided in this press release are rounded to the nearest thousand except when otherwise indicated, rounding differences may occur.


Condensed Consolidated Statement of Financial Position

in thousands of USD

Year ended
31 Dec 2019

unaudited

Year ended
31 Dec 2018

audited

ASSETS

 

 

Non-current assets

 

 

Property, plant, and equipment

368,754

345,626

Investment properties

9,128

9,415

Intangible assets

8,363

9,023

Non-current investments

736

381

Other non-current assets

27,568

20,594

Deferred tax assets

33,378

34,234

Total non-current assets

447,928

419,272

 

 

 

Current assets

 

 

Inventories

154,649

147,150

Trade and other receivables

55,636

71,378

Other assets

34,429

26,699

Cash and cash equivalents

173,211

242,768

Total current assets

417,925

487,995

 

 

 

TOTAL ASSETS

865,853

907,268

 

 

 

EQUITY AND LIABILITIES

 

 

Equity

 

 

Share capital

432,745

432,745

Share premium

348,709

348,709

Retained earnings

-134,379

-84,782

Cumulative translation adjustment

-445

-539

Treasury shares

-770

-770

Total equity attributable to equity holders of the parent

645,860

695,363

 

 

 

Non-controlling interests

377

364

 

 

 

Total equity

646,237

695,726

 

 

 

Non-current liabilities

 

 

Non-current loans and borrowings

92,347

72,328

Other non-current liabilities and provisions

7,407

7,446

Total non-current liabilities

99,753

79,774

 

 

 

Current liabilities

 

 

Trade payables

38,327

45,889

Current loans and borrowings

26,700

31,632

Other current liabilities and provisions

54,835

54,246

Total current liabilities

119,863

131,767

 

 

 

TOTAL EQUITY AND LIABILITIES

865,853

907,268

Condensed Consolidated Statement of Cash Flow

in thousands of USD

Quarter

ended
31 Dec 2019

unaudited

Quarter

ended
31 Dec 2018

unaudited

Quarter

ended
30 Sep 2019

unaudited

Full year

ended
31 Dec 2019

unaudited

Full year

ended
31 Dec 2018

audited

Income before taxes

-21,607

-1,648

-6,828

-44,918

25,613

 

 

 

 

 

 

Reconciliation of net income to cash flow arising from operating activities:

21,283

17,188

19,154

74,076

65,979

Depreciation and amortization, before effect of grants and subsidies

19,330

16,787

18,807

72,286

61,492

Recognized investment grants and subsidies netted with depreciation and amortization

-1,551

-398

-712

-3,750

-2,820

Interest income and expenses (net)

358

254

382

1,582

1,019

Loss/(gain) on the sale of plant, property, and equipment (net)

2,195

171

0

2,202

900

Loss/(gain) on the change in fair value of derivatives (net) and financial assets (net)

5

616

-35

-355

4,033

Other non-cash transactions (net)

944

-242

713

2,111

1,354

 

 

 

 

 

 

Changes in working capital:

7,999

-24,144

3,510

-13,399

-41,469

Decrease/(increase) of trade receivables

8,191

-2,350

-763

16,169

10,387

Decrease/(increase) of other receivables & prepaid expenses

-3,402

9,017

-1,848

-16,342

7,992

Decrease/(increase) of inventories

-1,623

-16,011

4,933

-7,498

-41,304

(Decrease)/increase of trade payables

8,350

-8,321

2,480

-33

-18,770

(Decrease)/increase of other liabilities

-3,518

-6,479

-1,293

-5,695

227

 

 

 

 

 

 

Income taxes (paid)/received

-88

-711

-157

-754

-1,020

 

 

 

 

 

 

Cash Flow from operating activities

7,587

-9,314

15,679

15,004

49,102

 

 

 

 

 

 

Cash Flow from investing activities:

 

 

 

 

 

Payments for property, plant, equipment & intangible assets

-15,602

-23,327

-18,600

-78,958

-85,102

Payments for investments

0

-150

0

-350

-150

Acquisition of subsidiary, net of cash acquired

0

0

0

0

0

Payments for loan investments to related parties

-8

-43

-63

-231

-199

Proceeds from loan investments related parties

40

37

44

217

178

Proceeds from sale of property, plant, and equipment

415

179

0

454

206

Interest received

689

903

672

2,648

3,156

 

 

 

 

 

 

Cash Flow used in investing activities

-14,466

-22,402

-17,947

-76,220

-81,911

Condensed Consolidated Statement of Cash Flow – con’t

in thousands of USD

Quarter

ended
31 Dec 2019

unaudited

Quarter

ended
31 Dec 2018

unaudited

Quarter

ended
30 Sep 2019

unaudited

Full year

ended
31 Dec 2019

unaudited

Full year

ended
31 Dec 2018

audited

Cash Flow from (used in) financing activities:

 

 

 

 

 

Proceeds from loans and borrowings

0

0

24,706

24,706

0

Repayment of loans and borrowings

-12,754

-9,466

-7,329

-34,667

-34,703

Receipts from sale & leaseback arrangements

7

0

1,181

1,187

0

Payments of lease installments

-1,399

-618

-1,311

-5,485

-2,561

Receipt of government grants and subsidies

3,309

0

6,300

9,609

357

Interest paid

-358

-517

-383

-1,551

-2,195

Gross proceeds from capital increase

0

0

0

0

0

Direct cost related to capital increase

0

0

0

0

0

Payment of preference dividend

-1,000

-1,000

0

-1,000

-1,000

Distribution to non-controlling interests

0

0

0

-11

-12

 

 

 

 

 

 

Cash Flow from (used in) financing activities

-12,195

-11,602

23,162

-7,213

-40,114

 

 

 

 

 

 

Effect of changes in foreign currency exchange rates on cash

3,036

-1,912

-2,877

-1,129

-3,544

Increase/(decrease) of cash and cash equivalents

-19,075

-43,317

20,895

-68,428

-72,923

Cash and cash equivalents at the beginning of the period

189,250

287,998

171,232

242,768

319,235

Cash and cash equivalents at the end of

the period

173,211

242,768

189,250

173,211

242,768

###