Q1 2024 Revenues, EPS and Gross Margin All Exceeded Guidance Range Issued on February 6, 2024Company Q2 2024 Guidance: Revenues to Increase 8% to 13% QoQ,Gross Margin is Expected to be 31.5% to 33.5%, Profit per diluted ADS to be 13.0 Cents to 17.0 Cents Q1 2024 revenues were $207.6M, a decrease of 8.8% QoQ, exceeding the guidance range of a 9% to 16% decline QoQ. Q1 GM reached 29.3%, outperforming guidance of around 28.5% Q1 2024 after-tax profit was $12.5M, or 7.1 cents per diluted ADS, surpassing the guidance range of 2.0 cents to 5.0 centsCompany’s Q2 2024 revenues to increase 8% to 13% QoQ. GM to be in the range of 31.5% to 33.5%, a notable increase from 29.3% in Q1, primarily because of higher sales from automotive and Tcon businesses, both of which enjoy better gross margin than corporate average. Profit per diluted ADS to be in the range of 13.0 cents to 17.0 centsCompany announced an annual cash dividend of 29.0 cents per ADS, payable on July 12, 2024, with a payout ratio of 100% of the previous year’s profitCompany believes Q1 sales to be the low point of the year; Q2 sales to pick up, especially in automotive. Business momentum is expected to steadily improve throughout the second halfHimax remains positive about automotive IC business in second half of the year despite industry headwinds faced by the global automotive industryCompany’s WiseEye AI enables battery-powered devices with AI sensing for intuitive and intelligent user interactions. Illustrated by DESMAN world’s first smart door lock, which feature 24/7 sentry monitoring and real-time event recordingsCompany’s WiseEye Module features plug-and-play integration with no-code/low-code AI. Adopted in battery-powered parking systems across Asia, as well as applications in fleet management, occupancy sensing, pet tracking, people flow sensing, access control, among othersAt ISC West, Company unveiled WiseEye PalmVein, powered by WiseEye2 AI processor, for ultralow power (merely milliwatts), swift authenticate (< 100 milliseconds), targeting battery-powered access control devices for a small group of authorized individualsCompany to unveil ultra-luminous, new-generation Color Sequential Front-Lit LCoS Microdisplay at Display Week 2024, with brightness achieving 250,000 nits (2.5x brightness of 2023) with low power (300 milliwatts) and tiny form factor (0.5 c.c). Making stylish and everyday-ready AR glasses become a reality TAINAN, Taiwan, May 09, 2024 — Himax Technologies, Inc. (Nasdaq: HIMX) (“Himax” or “Company”), a leading supplier and fabless manufacturer of display drivers and other semiconductor products, announced its financial results for the first quarter 2024 ended March 31, 2024. “We believe Q1 will be the low point for this year and see sales starting to pick up in Q2, especially in the automotive sector. With several other upcoming demand catalysts on the horizon, including major sporting events and festival shopping seasons, business momentum is expected to continue to steadily improve throughout the second half,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax. “The automotive display market is experiencing a megatrend of expanding quantities, sizes, and sophistication of displays within vehicles as fancy displays are increasingly becoming a major selling point for car makers. As the leader in the automotive display IC business, Himax is poised to benefit from this trend, which implies higher content value per vehicle for display semiconductor vendors such as us, leading to sustainable growth slated for the next few years,” concluded Mr. Jordan Wu. First Quarter 2024 Financial Results Himax net revenues registered $207.6 million, a decrease of 8.8% sequentially, exceeding its guidance range of a 9% to 16% decline. Gross margin came in at 29.3%, outperforming the guidance of around 28.5%. Q1 profit per diluted ADS was 7.1 cents, surpassing the guidance range of 2.0 cents to 5.0 cents. Revenue from large display drivers decreased 7.0% sequentially to $31.3 million due to seasonally soft macroeconomic conditions compounded by ongoing production and inventory control measures by Company’s leading panel customers. Consequently, its sales of TV and monitor ICs declined sequentially. However, notebook IC sales saw a nice double-digit increase quarter-over-quarter, as customers accelerated their purchases after several quarters of destocking. Sales of large panel driver ICs accounted for 15.1% of total revenues for the quarter, compared to 14.8% last quarter and 21.7% a year ago. Small and medium-sized display driver revenue reached $144.3 million, a sequential decline of 11.5%. The better-than-guidance result was fueled by strong sales in DDIC for automotive and OLED tablets. Driven by rush orders for traditional DDIC, Q1 automotive driver sales, encompassing both traditional DDIC and TDDI, experienced a single-digit decline, outperforming the guidance of a mid-teens decline. Meanwhile, automotive TDDI sales continued to defy the industry downturn and increased sequentially thanks to Company’s robust pipeline of design-win projects. The automotive business, including traditional DDIC, TDDI, Tcon, and OLED sales, remained the largest revenue contributor in the first quarter, representing around 46% of total sales. Q1 smartphone IC sales declined sequentially but exceeded guidance, fueled by rush orders from leading customers. Conversely, tablet driver sales declined as expected amidst the typical low season characterized by sluggish demand. The small and medium-sized driver IC segment accounted for 69.5% of total sales for the quarter, compared to 71.6% in the previous quarter and 63.3% a year ago. First quarter revenues from its non-driver business exceeded guidance, reaching $32.0 million, an increase of 3.4% from the previous quarter. The better-than-expected performance is attributable to a resurgence in orders for large-sized display Tcon products. In the realm of automotive Tcon, the adoption of Company’s automotive local dimming Tcon continues to rapidly expand, as evidenced by increasing number of project awards from numerous Tier-1s for the new vehicle projects of their OEM customers around the world. This sets the stage for robust sales growth in the coming years. Non-driver products accounted for 15.4% of total revenues, as compared to 13.6% in the previous quarter and 15.0% a year ago. Operating expenses for the first quarter were $50.7 million, a decrease of 3.1% from the previous quarter and a decline of 0.6% from a year ago. Given the persistent macroeconomic headwinds, Himax continues to be diligent with strict budget and expense control measures. Q1 operating income was $10.0 million or 4.8% of sales, compared to 7.2% of sales for the same period last year and 7.3% of sales last quarter. The decreases in operating margin were primarily driven by lower sales. The sequential decrease was also attributed to lower gross margin. However, Q2 gross margin is on track to rebound from Q1. First-quarter after-tax profit was $12.5 million, or 7.1 cents per diluted ADS, compared to $23.6 million, or 13.5 cents per diluted ADS last quarter, and $14.9 million, or 8.5 cents per diluted ADS in the same period last year. Balance Sheet and Cash Flow Himax had $277.4 million of cash, cash equivalents and other financial assets at the end of March 2024, compared to $223.8 million at the same time last year and $206.4 million a quarter ago. The increase in cash balance stemmed primarily from continuous destocking efforts across all major product lines. In Q2, however, cash, cash equivalents, and other financial assets are set to decline primarily due to decreasing sales in the previous two quarters resulting in lower Q1 receivables. In addition, accounts payable is expected to increase as a result of rising Q1 wafer orders placed in preparation for higher shipment volume starting in Q2. Other significant Q2 cash outflows include annual income tax payments as well as refunds to certain customers for deposits made during the industry-wide capa