PR Newswire | Jul 30, 2020 04:02PM EDT

07/30 15:01 CDT

MagnaChip Reports Results for Second Quarter 2020-- GAAP earnings per share of $0.34 from continuing operations-- Non-GAAP diluted earnings per share from continuing operations of $0.13-- Cash of $192.8 million highest since IPO in March 2011; net operating cash flow of $36.0 million, which was the 5th straight quarter of positive operating cash flow-- Revenue from continuing operations of $118.8 million; reflecting approximately $6 million impact from the strategic exit of non-auto LCD DDIC product line during the second quarter-- Revenue from standard products business of $109.0 million and the Foundry Services Group of $95.8 million-- Non-GAAP combined revenue of $204.7 million from total operations exceeded high-end of the guidance range-- Gross profit margin from continuing operations of 27.0%, 460 bps increase Y/Y-- Gross profit margin from standard products business of 29.5% and the Foundry Services Group of 32.3%-- Excluding depreciation benefit of $2 million from discontinued operations, non-GAAP combined gross margin from total operations of 29.7% surpassed high-end of guidance range SEOUL, South Korea and SAN JOSE, Calif., July 30, 2020

SEOUL, South Korea and SAN JOSE, Calif., July 30, 2020 /PRNewswire/ -- MagnaChip Semiconductor Corporation (NYSE: MX) ("MagnaChip" or the "Company") today announced financial results for the second quarter of 2020.

"We executed well and delivered an excellent quarter despite market disruptions caused by COVID-19 by achieving key financial metrics above expectations, said YJ Kim, MagnaChip's chief executive officer. In addition to delivering outstanding financial results, our team is making substantial progress with the pending sale of our Foundry Services Group business and Fab 4. Based on the progress we made so far, we now anticipate that the transaction likely will close in the third quarter instead of our previous estimate of the September-October timeframe."

"The new MagnaChip is undergoing a dramatic transformation to accelerate our profitability. While we can't be completely immune to the risk of COVID-19 and macroeconomic conditions, we will continue our relentless execution to deliver a successful close of the pending transaction and strengthen our business foundation for profitable growth."

Q2 2020 Financial Highlights

The following table sets forth certain financial and other information relating to the continuing and discontinued operations. Following the execution of the definitive agreement to sell the Foundry business and Fab 4, the Foundry Services Group has been accounted for as a discontinued operations beginning in the first quarter of 2020.



In thousands of US dollars, except share data

Q2 2020 Q1 2020 Q/Q change Q2 2019 Y/Y change

Revenues

Continuing Operations^(1) 118,828 120,473 down 1.4 % 140,885 down 15.7 %

Standard Products Business^ 108,955 110,736 down 1.6 % 132,006 down 17.5 % (1)

Foundry Services Group 95,779 86,279 up 11.0 % 73,139 up 31.0 %

Non-GAAP Combined Total 204,734 197,015 up 3.9 % 205,145 down 0.2 % Revenues^(2)

Gross Profit Margin

Continuing Operations^(1) 27.0% 24.2% up 2.8 pts 22.4% up 4.6 pts

Standard Products Business^ 29.5% 26.3% up 3.2 pts 24.0% up 5.5 pts (1)

Foundry Services Group^(3) 32.3% 24.0% up 8.3 pts 16.7% up 15.6 pts

Non-GAAP Combined Total Gross 30.8% 25.3% up 5.5 pts 21.4% up 9.4 pts Profit Margin^(2)(3)

Net Income (Loss)

Continuing Operations 11,774 (31,078) up 137.9 % (8,490) up 238.7 %

Diluted Earnings (Loss) per CommonShare

Continuing Operations 0.28 (0.89) up 131.5% (0.25) up 212.0%

In thousands of US dollars, except share data

Non-GAAP^(2)

Q2 2020 Q1 2020 Q/Q change Q2 2019 Y/Y change

Continuing Operations

Adjusted Operating Income 10,125 7,281 up 39.1 % 9,423 up 7.4 %

Adjusted Net Income 4,753 1,092 up 335.3 % 3,829 up 24.1 %

Adjusted Net Income per 0.13 0.03 up 333.3 % 0.11 up 18.2 % Common Share-Diluted

In thousands of US dollars

GAAP

Q2 2020 Q1 2020 Q/Q change Q2 2019 Y/Y change

Revenues - Standard Products Business

Display Solutions 69,176 77,593 down 10.8 % 84,261 down 17.9 %

Power Solutions 39,779 33,143 up 20.0 % 47,745 down 16.7 %

(1) Following the consummation of the sale of the Foundry Services Group business and Fab 4, and for a period up to three years, the Company will provide transitional foundry services to the buyer for Foundry products manufactured in the Company's fabrication facility located in Gumi ("Transitional Fab 3 Foundry Services"). For the periods prior to the disposal of the Foundry Services Group business and Fab 4, revenue from the Transitional Fab 3 Foundry Services by the Company to the Foundry Services Group (i.e., discontinued operations) is recorded at cost as part of its continuing operations. Management believes that excluding the revenue of the Transitional Fab 3 Foundry Services from the continuing operations (i.e., revenue from standard products business) allows investors to better understand the results of continuing operations of our core standard products display solutions and power solutions businesses.

(2) Management believes that non-GAAP financial measures, when viewed in conjunction with GAAP results, can provide a meaningful understanding of the factors and trends affecting MagnaChip's business and operations and assist in evaluating our core operating performance, as well as providing a meaningful comparison to previous information provided on a basis prior to the discontinued operations classification of the Foundry Services Group. However, such non-GAAP financial measures have limitations and should not be considered as a substitute for net income from continuing operations or as a better indicator of our operating performance than measures that are presented in accordance with GAAP. A reconciliation of GAAP results to non-GAAP results is included in this press release.

(3) In the second quarter, depreciation and amortization associated with the assets classified as held-for-sale ceased, which resulted in an increase in gross profit from discontinued operations by approximately $2 million.

Q3 2020 financial guidance

On July 20, 2020, our Fab 3 facility in Gumi, South Korea experienced a temporary power outage for approximately 9 hours and 15 minutes as a result of an accident involving branches of a nearby tree falling onto cables connecting one of the electricity pylons that supplies power to the Gumi plant. We are nearly fully operational in our Fab 3 facility as of the date of this earnings report. The accident caused damage to our work-in-process wafers with an estimated total cost of up to approximately $2.3 million. The related impact to our revenue from continuing operations is expected to be negligible. We are currently evaluating potential insurance and other claims that we may have for the above loss and damages.

As we expect to close the pending sale of the Foundry business and Fab 4 in Q3, we will provide a quarterly outlook on continuing operations only. The COVID-19 global pandemic and escalated trade tension are rapidly evolving situations and reduce our forward visibility. While actual results may vary, MagnaChip currently anticipates for Q3 2020:

* Revenue from the continuing operations to be in the range of $118 million to $124 million, including $9.5 million to $10 million of the Transitional Fab 3 Foundry Services at cost * Gross profit margin from continuing operations to be in the range of 25% to 27% * Without the estimated power outage impact, gross profit margin from continuing operations would have been in the range of 27% and 29%

Second Quarter 2020 Earnings Conference Call

MagnaChip will host a conference call at 5 p.m. Eastern Time on July 30, 2020. The conference call will be webcast live and also is available by dialing toll-free at 1-844-536-5472. International call-in participants can dial 1-614-999-9318. The conference ID number is 8269223. Participants are encouraged to initiate their calls at least 10 minutes in advance of the 5 p.m. ET start time to ensure a timely connection. The webcast and earnings release will be accessible at www.magnachip.com. A replay of the conference call will be available the same day and will run for 72 hours. The replay dial-in numbers are 1-404-537-3406 or toll-free at 1-855-859-2056. The access code is 8269223.

Safe Harbor for Forward-Looking Statements

Information in this release regarding MagnaChip's forecasts, business outlook, expectations and beliefs are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include statements about MagnaChip's future operating and financial performance, outlook and business plans, including third quarter 2020 revenue and gross profit margin expectations, the evaluation and expectation of costs and related revenue impact and timing as a result of the power outage, and the impact of the COVID-19 pandemic and escalated trade tensions on MagnaChip's third quarter 2020 and future operating results. All forward-looking statements included in this release are based upon information available to MagnaChip as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include the impact of changes in macroeconomic and/or general economic conditions, including those caused by or related to the COVID-19 outbreak, recessions, economic instability and the outbreak of disease; the impact of competitive products and pricing; timely design acceptance by our customers; timely introduction of new products and technologies; ability to ramp new products into volume production; industry wide shifts in supply and demand for semiconductor products; industry and/or company overcapacity; effective and cost efficient utilization of manufacturing capacity; financial stability in foreign markets and the impact of foreign exchange rates; unanticipated costs and expenses or the inability to identify expenses which can be eliminated; compliance with U.S. and international trade and export laws and regulations by us and our distributors; the risk that the pending sale of our Foundry Services Group business and the Fab 4 facility to Magnus Semiconductor, LLC or one of its wholly owned subsidiaries is not consummated according to our current expectations or at all; public health issues, including the COVID-19 pandemic; other business interruptions that could disrupt supply or delivery of, or demand for, MagnaChip's products, including uncertainties regarding the impacts of the COVID-19 pandemic that may result in factory closures, reduced workforces, scarcity of raw materials and goods produced in infected areas, as well as reduced consumer and business spending affecting demand for MagnaChip's products due to government and private sector mandatory business closures, travel restrictions or the like to prevent the spread of disease; and other risks detailed from time to time in MagnaChip's filings with the SEC, including our Form 10-K filed on February 21, 2020 (including that the impact of the COVID-19 pandemic may also exacerbate the risks discussed therein), our Form 10-Q filed on May 11, 2020 and subsequent registration statements, amendments or other reports that we may file from time to time with the Securities and Exchange Commission and/or make available on our website. MagnaChip assumes no obligation and does not intend to update the forward-looking statements provided, whether as a result of new information, future events or otherwise.

About MagnaChip Semiconductor

MagnaChip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, industrial and automotive applications. The Company provides a broad range of standard products and manufacturing services to customers worldwide. MagnaChip, with more than 40 years of operating history, owns a portfolio of approximately 2,950 registered patents and pending applications, and has extensive engineering, design and manufacturing process expertise. For more information, please visit www.magnachip.com. Information on or accessible through MagnaChip's website is not a part of, and is not incorporated into, this release.

CONTACTS:

In the United States: In Korea:

So-Yeon Jeong Chankeun Park

Head of Investor Relations Director, Public Relations

Tel. +1-408-712-6151 Tel. +82-2-6903-5223

Investor.relations@magnachip.com chankeun.park@magnachip.com

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of US dollars, except share data)

(Unaudited)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2020 2020 2019 2020 2019

Revenues:

Net sales -standard $ 108,955 $ 110,736 $ 132,006 $ 219,691 $ 232,270productsbusiness

Net sales -transitional 9,873 9,737 8,879 19,610 15,882Fab 3 foundryservices

Total revenues 118,828 120,473 140,885 239,301 248,152

Cost of sales:

Cost of sales- standard 76,817 81,606 100,384 158,423 181,625productsbusiness

Cost of sales- transitional 9,873 9,737 8,879 19,610 15,882Fab 3 foundryservices

Total cost of 86,690 91,343 109,263 178,033 197,507sales

Gross profit 32,138 29,130 31,622 61,268 50,645

Gross profitas apercentage ofstandard 29.5 % 26.3 % 24.0 % 27.9 % 21.8 %productsbusiness netsales

Gross profitas a 27.0 % 24.2 % 22.4 % 25.6 % 20.4 %percentage oftotal revenues

Operatingexpenses:

Selling,general and 12,408 12,102 11,095 24,510 23,131administrativeexpenses

Research anddevelopment 11,108 10,509 11,772 21,617 23,816expenses

Other charges - 554 - 554 -

Totaloperating 23,516 23,165 22,867 46,681 46,947expenses

Operating 8,622 5,965 8,755 14,587 3,698income:

Interest (5,430) (5,607) (5,439) (11,037) (11,076)expense

Foreigncurrency gain 8,469 (30,971) (11,571) (22,502) (22,181)(loss), net

Loss on earlyextinguishmentof long-term - - - - (42)borrowings,net

Other income, 791 838 551 1,629 1,138net

Income (loss)fromcontinuing 12,452 (29,775) (7,704) (17,323) (28,463)operationsbefore incometax expense

Income tax 678 1,303 786 1,981 1,582expense

Income (loss)from 11,774 (31,078) (8,490) (19,304) (30,045)continuingoperations

Income (loss)fromdiscontinued 17,397 7,329 (1,030) 24,726 (13,600)operations,net of tax

Net income $ 29,171 $ (23,749) $ (9,520) $ 5,422 $ (43,645)(loss)

Basic earnings(loss) percommon share-

Continuing $ 0.34 $ (0.89) $ (0.25) $ (0.55) $ (0.88)operations

Discontinued 0.50 0.21 (0.03) 0.71 (0.40)operations

Total $ 0.84 $ (0.68) $ (0.28) $ 0.16 $ (1.28)

Dilutedearnings(loss) percommon share-

Continuing $ 0.28 $ (0.89) $ (0.25) $ (0.55) $ (0.88)operations

Discontinued 0.37 0.21 (0.03) 0.71 (0.40)operations

Total $ 0.65 $ (0.68) $ (0.28) $ 0.16 $ (1.28)

Weightedaverage numberof shares-

Basic 35,092,312 34,893,157 34,245,127 34,992,734 34,220,141

Diluted 46,474,237 34,893,157 34,245,127 34,992,734 34,220,141

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of US dollars, except share data)

(Unaudited)

June 30, December 31,

2020 2019

Assets

Current assets

Cash and cash equivalents $ 192,824 $ 151,657

Accounts receivable, net 48,548 47,447

Inventories, net 45,511 41,404

Other receivables 10,406 10,200

Prepaid expenses 8,598 9,003

Hedge collateral 11,740 9,820

Other current assets 7,405 10,013

Current assets held for sale 205,086 99,821

Total current assets 530,118 379,365

Property, plant and equipment, net 69,110 73,068

Operating lease right-of-use assets 1,182 1,876

Intangible assets, net 2,590 2,769

Long-term prepaid expenses 2,936 5,757

Other non-current assets 9,212 9,059

Non-current assets held for sale - 123,434

Total assets $ 615,148 $ 595,328

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable $ 42,366 $ 40,376

Other accounts payable 4,049 6,410

Accrued expenses 45,735 44,799

Operating lease liabilities 1,053 1,625

Current portion of long-term borrowings, net 82,706 -

Other current liabilities 5,481 3,583

Current liabilities held for sale 146,569 37,040

Total current liabilities 327,959 133,833

Long-term borrowings, net 223,242 304,743

Accrued severance benefits, net 49,927 51,181

Other non-current liabilities 7,845 9,671

Non-current liabilities held for sale - 110,881

Total liabilities 608,973 610,309

Commitments and contingencies

Stockholders' equity

Common stock, $0.01 par value, 150,000,000 sharesauthorized, 44,248,706 shares issued and 35,143,033outstanding at June 30, 2020 and 43,851,991 shares 443 439issued and 34,800,312 outstanding at December 31,2019

Additional paid-in capital 155,591 152,404

Accumulated deficit (52,709) (58,131)

Treasury stock, 9,105,673 shares at June 30, 2020and 9,051,679 shares at December 31, 2019, (107,649) (107,033)respectively

Accumulated other comprehensive income (loss) 10,499 (2,660)

Total stockholders' equity (deficit) 6,175 (14,981)

Total liabilities and stockholders' equity $ 615,148 $ 595,328

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US dollars)

(Unaudited)

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2020 June 30, 2019

Cash flows from operatingactivities

Net income (loss) $ 29,171 $ 5,422 $ (43,645)

Adjustments to reconcilenet income (loss) to netcash providedby operating activities

Depreciation and 2,544 10,479 16,505amortization

Provision for severance 5,108 10,179 6,406benefits

Amortization of debtissuance costs and 607 1,205 1,134original issue discount

Loss (gain) on foreign (12,083) 26,397 24,609currency, net

Restructuring and other 141 141 732charges

Provision for inventory 1,463 2,033 8,940reserves

Stock-based compensation 1,643 2,528 1,441

Loss on earlyextinguishment of - - 42long-term borrowings, net

Other (218) (111) (494)

Changes in operatingassets and liabilities

Accounts receivable, net 9,992 (438) (20,974)

Unbilled accounts 3,996 10,933 6,201receivable, net

Inventories (9,197) (14,060) (7,351)

Other receivables (1,915) 67 (2,969)

Other current assets 3,838 4,747 5,929

Accounts payable 2,959 4,947 32,137

Other accounts payable (4,325) (5,898) (3,960)

Accrued expenses 4,878 161 2,880

Other current liabilities 158 1,220 (7,491)

Other non-current (570) 1,238 1,716liabilities

Payment of severance (2,192) (4,272) (4,579)benefits

Other (1) 147 (54)

Net cash provided 35,997 57,065 17,155by operating activities

Cash flows from investingactivities

Proceeds from settlement 1,616 5,855 4,627of hedge collateral

Payment of hedge - (7,841) (8,395)collateral

Purchase of property, (5,491) (8,842) (15,000)plant and equipment

Payment for intellectual (244) (473) (642)property registration

Collection of guarantee - 47 388deposits

Payment of guarantee (571) (571) (1,330)deposits

Other 13 21 193

Net cash used in (4,677) (11,804) (20,159)investing activities

Cash flows from financingactivities

Repurchase of long-term - - (1,175)borrowings

Proceeds from exercise of 663 663 149stock options

Acquisition of treasury - (1,021) (2,588)stock

Repayment of financingrelated to water (132) (267) (281)treatment facilityarrangement

Repayment of principalportion of lease (59) (119) (118)liabilities

Net cash provided by(used in) financing 472 (744) (4,013)activities

Effect of exchange rateson cash and cash 3,739 (3,350) (1,668)equivalents

Net increase (decrease)in cash and cash 35,531 41,167 (8,685)equivalents

Cash and cash equivalents

Beginning of the period 157,293 151,657 132,438

End of the period $ 192,824 192,824 123,753

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME

(In thousands of US dollars)

(Unaudited)

Three Months Ended Six Months Ended

June 30, March June June 30, June 31, 30, 30, 2020 2020 2020 2019 2019

Operating income $ 8,622 $ 5,965 $ 8,755 $ 14,587 $ 3,698

Adjustments:

Equity-based compensation 1,503 762 668 2,265 1,231expense

Others - 554 - 554 585

Adjusted Operating Income $ 10,125 $ 7,281 $ 9,423 $ 17,406 $ 5,514

We present Adjusted Operating Income as supplemental measures of our performance. We define Adjusted Operating Income for the periods indicated as operating income adjusted to exclude (i) Equity-based compensation expense and (ii) Others. Others include non-recurring professional fees and expenses incurred in connection with certain treasury and finance initiatives for the three months ended March 31, 2020, and a $0.6 million legal settlement charge related to dispute with a prior customer and a legal expense related to the indemnification of a former employee, which is borne by us under a negotiated separation agreement for the three months ended March 31, 2019.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND ADJUSTED NET INCOME (LOSS)

(In thousands of US dollars, except share data)

(Unaudited)

Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

2020 2020 2019 2020 2019

Income (loss)from $ 11,774 $ (31,078) $ (8,490) (19,304) (30,045)continuingoperations

Adjustments:

Interest 4,736 4,930 4,852 9,666 9,911expense, net

Income tax 678 1,303 786 1,981 1,582expense

Depreciationand 2,544 2,570 2,551 5,114 5,102amortization

EBITDA 19,732 (22,275) (301) (2,543) (13,450)

Equity-basedcompensation 1,503 762 668 2,265 1,231expense

Foreigncurrency loss (8,469) 30,971 11,571 22,502 22,181(gain), net

Derivativevaluation loss (55) (117) 80 (172) 136(gain), net

Loss on earlyextinguishmentof long-term - - - - 42borrowings,net

Others - 554 - 554 585

Adjusted 12,711 9,895 12,018 22,606 10,725EBITDA

Income (loss) from $ 11,774 $ (31,078) $ (8,490) $ (19,304) $ (30,045)continuingoperations

Adjustments:

Equity-basedcompensation 1,503 762 668 2,265 1,231expense

Foreigncurrency loss (8,469) 30,971 11,571 22,502 22,181(gain), net

Derivativevaluation loss (55) (117) 80 (172) 136(gain), net

Loss on earlyextinguishmentof long-term - - - - 42borrowings,net

Others - 554 - 554 585

Adjusted Net $ 4,753 $ 1,092 $ 3,829 $ 5,845 $ (5,870)Income (Loss)

Adjusted NetIncome (Loss) per commonshare-

- Basic $ 0.14 $ 0.03 $ 0.11 $ 0.17 $ (0.17)

- Diluted $ 0.13 $ 0.03 $ 0.11 $ 0.16 $ (0.17)

Weightedaverage number 35,092,312 34,893,157 34,245,127 34,992,734 34,220,141of shares -basic

Weightedaverage number 36,330,083 35,883,200 34,965,562 36,248,039 34,220,141of shares -diluted

We present Adjusted EBITDA and Adjusted Net Income (Loss) as supplemental measures of our performance. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of long-term borrowings, net and (v) Others. Others include non-recurring professional fees and expenses incurred in connection with certain treasury and finance initiatives for the three months ended March 31, 2020, and a $0.6 million legal settlement charge related to dispute with a prior customer and a legal expense related to the indemnification of a former employee, which is borne by us under a negotiated separation agreement for the three months ended March 31, 2019. EBITDA for the periods indicated is defined as Income (loss) from continuing operations before interest expense, net, income tax expense and depreciation and amortization. We prepare Adjusted Net Income (Loss) by adjusting income (loss) from continuing operations to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income (Loss) is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We define Adjusted Net Income (Loss) for the periods as income (loss) from continuing operations, adjusted to exclude (i) Equity-based compensation expense, (ii) Foreign currency loss (gain), net, (iii) Derivative valuation loss (gain), net, (iv) Loss on early extinguishment of long-term borrowings, net and (v) Others. Others include non-recurring professional fees and expenses incurred in connection with certain treasury and finance initiatives for the three months ended March 31, 2020, and a $0.6 million legal settlement charge related to dispute with a prior customer and a legal expense related to the indemnification of a former employee, which is borne by us under a negotiated separation agreement for the three months ended March 31, 2019.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP COMBINED RESULTS OF OPERATIONS

(In thousands of US dollars)

(Unaudited)

Three Months Ended June 30, 2020

Continuing Operations Discontinued Combined Operations

Transitional Transitional Standard Foundry Fab 3 Fab 3

Combined results of products foundry Services foundryoperations (non-GAAP): business services Group services

Net sales $ 108,955 $9,873 $95,779 $ (9,873) $204,734

Gross profit margin 29.5% - 32.3% - 30.8%

Three Months Ended June 30, 2019

Continuing Operations Discontinued Combined Operations

Transitional Transitional Standard Foundry Fab 3 Fab 3

Combined results of products foundry Services foundryoperations (non-GAAP): business services Group services

Net sales $132,006 $8,879 $73,139 $ (8,879) $205,145

Gross profit margin 24.0% - 16.7% - 21.4%

Six Months Ended June 30, 2020

Continuing Operations Discontinued Combined Operations

Transitional Transitional Standard Foundry Fab 3 Fab 3

Combined results of products foundry Services foundryoperations (non-GAAP): business services Group services

Net sales $219,691 $19,610 $182,058 $ (19,610) $401,749

Gross profit margin 27.9% - 28.3% - 28.1%

Six Months Ended June 30, 2019

Continuing Operations Discontinued Combined Operations

Transitional Transitional Standard Foundry Fab 3 Fab 3

Combined results of products foundry Services foundryoperations (non-GAAP): business services Group services

Net sales $232,270 $15,882 $130,255 $ (15,882) $362,525

Gross profit margin 21.8% - 12.2% - 18.4%

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SOURCE MagnaChip Semiconductor Corporation