Melexis Q2 2019 results - Second quarter sales of 120.0 million EUR

Intermediate declaration by the Board of Directors
Ieper, Belgium - July 31st, 2019, 07.00 hrs CET

Sales for the second quarter of 2019 were 120.0 million EUR, a decrease of 15% compared to the same quarter of the previous year and an increase of 3% compared to the previous quarter.
The EUR/USD exchange rate evolution had a positive impact on sales of 3% compared to the same quarter of last year and no impact compared to the previous quarter.
The gross result was 49.8 million EUR or 41.4% of sales, a decrease of 24% compared to the same quarter of last year and an increase of 6% compared to the previous quarter.
R&D expenses were 16.3% of sales, G&A was at 6.5% of sales and Selling was at 3.4% of sales.
The operating result was 18.4 million EUR or 15.4% of sales, a decrease of 48% compared to the same quarter of last year and an increase of 17% compared to the previous quarter.
The net result was 15.6 million EUR or 0.39 EUR per share, a decrease of 45% compared to 28.1 million EUR or 0.70 EUR per share in the second quarter of 2018 and an increase of 12% compared to the previous quarter.

Sales for the first half year of 2019 were 236.5 million EUR, a decrease of 16% compared to the first half year of 2018.
The EUR/USD exchange rate evolution had a positive impact of 3% compared to the first half year of 2018.
The gross result was 96.5 million EUR or 40.8% of sales, a decrease of 25% compared to the same period last year. R&D expenses were 16.6% of sales, G&A was at 6.5% of sales and Selling was at 3.3% of sales.
The operating result was 34.2 million EUR or 14.4% of sales, a decrease of 51% compared to 69.7 million EUR in the same half year of 2018.
The net result was 29.5 million EUR or 0.73 EUR per share, a decrease of 48% compared to 56.9 million EUR or 1.41 EUR per share in the first half year of 2018.

Dividend
The Board of Directors decided to pay out an interim dividend of 1.30 EUR gross per share. The Melexis shares will start trading ex coupon on October 22, 2019 (opening of the market). The record date is October 23, 2019 (closing of the market) and the dividend will be payable as from October 24, 2019.

Outlook
Melexis expects sales in the third quarter of 2019 to be in the range of 117-123 million euro, with a gross profit margin around 41% and an operating margin around 15% at the midpoint of the sales guidance. Melexis expects its full year 2019 sales level to remain below the previous year. Gross profit margin is expected to be around 41% taking into account a EUR/USD exchange rate of 1.13.

Business comment - Françoise Chombar, CEO:
“Amidst an uncertain economic and geopolitical situation caused by global trade tensions and a continuing downward trend in global car sales, Melexis sales for the second quarter of 2019 came out in the middle of the guidance provided in April and a touch better than in the first quarter. This was translated into a better than expected operating margin, mainly as a result of operational costs well under control.

Although we now estimate inventories at customers to be below the level in the beginning of the year, it remains uncertain at which moment a change in order behavior will occur. Visibility remains low.

I would like to highlight the solid performance of two product lines in the second quarter, linked to automotive semiconductor content growth. Small and smart motor peripherals powered by Melexis embedded drivers give Tier1s and vehicle manufacturers an easy solution to add motor functions and diagnostics in a flexible way while reducing wiring and weight, e.g. in small water pumps for optimal thermal management of electric car batteries. Legislation, such as the recently introduced China 6 norm or the Bharat 6 in India, stimulate vehicle manufacturers to adapt the way they handle fuel vapor, for example. Melexis pressure sensors in synergy with embedded drivers address this pollution reduction challenge, which is especially critical with hybrid vehicles. Melexis thus continues to benefit from the increase of ‘sense and drive’ content in cars, surfing on the secular trends of more electrification, assisted drive and personalization.

Sales to automotive customers represented 92% of total sales, both in the second quarter and first half of 2019. The portion of standard product (ASSPs) sales represented 65% of total sales in the second quarter and 64% of total sales in the first half of 2019.”

The statutory auditor PwC Bedrijfsrevisoren cvba has confirmed that the review, which is substantially complete, has not to date revealed any material misstatement in the interim consolidated accounts, and that the accounting data reported in the press release is consistent, in all material respects, with the draft accounts from which it has been derived.

Financial calendar

Publication Q3 2019 Results: October 23, 2019
Dividend pay date: October 24, 2019 (ex coupon on October 22, 2019)
Publication FY 2019 Results: February 5, 2020

The company’s results will be discussed in a conference call on Wednesday, July 31st, 2019 at 17 hrs CET. The conference call will be in English. You have to register for this conference call in advance. You can register by clicking on the following link and filling out the requested information:
http://emea.directeventreg.com/registration/9792456
Conference ID: 9792456.

After registration, you will receive the conference call number, a participant user pin, conference pin and instructions on how to join the conference call. For security purposes all participants must register individually if they wish to join the call. A replay number for this call is available for 7 days after the end of the conference call. The replay number for this call is +44 33 33 00 97 85, access code: 9792456.

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