Market Newsdesk

Press Release – Boston, London, Nice, Paris, Singapore, Tokyo, November 12, 2020

Scientific Beta criticises use of Enterprise Value in European Benchmark Regulation

European Benchmark Regulation’s switch from a robust market standard to alternative indicators is unhelpful in the pursuit of climate change mitigation

If global warming is to be curtailed to 1.5°C, then there is an urgent need for net greenhouse gas emissions to be sharply reduced, an achievement which can only be met by dramatic reductions in the carbon intensities of human activities.

Normalisation of emissions by revenues is an established standard in the market and a feature of the weighted average carbon intensity metric recommended for reporting by the Task Force on Climate-related Financial Disclosures¹. However, the proposed delegated act setting out the requirements for EU Climate Benchmarks has recently mandated the use of enterprise value including cash for normalisation. This variation on carbon intensity has not been properly justified or thought through. The group that assisted the regulator represented that the shift from market value of products and services to market valuation of the producer would be detrimental to the coal industry and that enterprise-value-based carbon intensity would be applicable across equity and fixed income indices. However, beyond coal, all companies with a lower than average enterprise value to sales ratio suffer from this unjustified shift.

Stakeholder feedback led the regulator to account for some of the data issues and biases plaguing enterprise value. However, a fundamental issue that remains insufficiently addressed is that enterprise value embarks equity market volatility. This weakens the link between changes in measured carbon intensity and underlying emissions, and produces carbon intensity volatility that facilitates greenwashing. In both respects, the market standard appears preferable.

In a new white paper entitled “Carbon Intensity Bumps on the Way to Net Zero,” Scientific Beta’s Frederic Ducoulombier, ESG Director, and Victor Liu, Quantitative Analyst, conclude that the European Benchmark Regulation’s switch from a robust market standard to alternative indicators is unhelpful in the pursuit of climate change mitigation. From a climate impact point of view, one should avoid guiding portfolio construction by enterprise value-based carbon intensity. Investors wishing to allocate to EU Climate Benchmarks without encouraging greenwashing should ensure methodologies make use of this metric to the minimum extent required for compliance.

The Scientific Beta white paper on the subject can be accessed through the link below:

Carbon Intensity Bumps on the Way to Net Zero

Issues with the EU regulation and emissions data are further discussed in two other white papers:

A Critical Appraisal of Recent EU Regulatory Developments Pertaining to Climate Indices and Sustainability Disclosures for Passive Investment

Understanding the Importance of Scope 3 Emissions and the Implications of Data Limitations

¹ Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, Financial Stability Board, 2017, p. 44.

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Scientific Beta is an original initiative which aims to favour the adoption of the latest advances in smart beta design and implementation by the whole investment industry. Its academic origin provides the foundation for its strategy: offer, in the best economic conditions possible, the smart beta solutions that are most proven scientifically with full transparency of both the methods and the associated risks.
Scientific Beta, 1 George Street, #15-02, Singapore 049145. For further information, please contact: [email protected], Web: www.scientificbeta.com.

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• Press_release_enterprise_value_climate_benchmarks

BEIJING, Nov. 12, 2020 (GLOBE NEWSWIRE) — Genetron Holdings Limited (“Genetron Health” or the “Company”, NASDAQ: GTH), a leading precision oncology platform company in China that specializes in offering molecular profiling tests, early cancer screening products and companion diagnostics development, today announced that management will present at the CNBC East Tech West Conference to be held in Guangzhou, China, Nov. 17-18, 2020.

On Wednesday Nov. 18, Sizhen Wang, Co-Founder and Chief Executive Officer of Genetron Health will participate in the following:

• Panel discussion entitled, “Innovative Ways in Tackling Life Threatening Disease,” at 9:30 am Beijing Time

For more information, please visit:
https://ir.genetronhealth.com/investors.
https://www.cnbcevents.com/easttechwest/

About Genetron Holdings Limited

Genetron Holdings Limited (“Genetron Health” or the “Company”) is a leading precision oncology platform company in China that specializes in cancer molecular profiling and harnesses advanced technologies in molecular biology and data science to transform cancer treatment. The Company has developed a comprehensive oncology portfolio that covers the entire spectrum of cancer management, addressing needs and challenges from early screening, diagnosis and treatment recommendations, as well as continuous disease monitoring and care. Genetron also partners with global biopharmaceutical companies and offers customized services and products. For more information, please visit ir.genetronhealth.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

Investor Relations Contacts

US:

Hoki Luk
Head of Investor Relations
Email: [email protected]
Phone: +1 (408) 204-5343

Stephanie Carrington
Westwicke, an ICR Company
Email: [email protected]
Phone: +1 (646) 277-1282

Asia:

Bill Zima
ICR, Inc.
Email: [email protected]
[email protected]

Media Relations Contact

Edmond Lococo
ICR
[email protected]
Mobile: +86 138-1079-1408
[email protected]

Yuan Tao
[email protected]

The Luxury Lifestyle Magazine’s 10^th Annual Innovator Awards Recognize Groundbreaking Talents in a First-Ever Virtual Award Presentation

NEW YORK, Nov. 12, 2020 (GLOBE NEWSWIRE) — WSJ. Magazine premiered its annual Innovator Awards in virtual format last night. Eight honorees, all of whom grace separate covers of the magazine’s highly anticipated November issue, were paid tribute for trailblazing accomplishments in their respective fields. For the first time in Innovators history, the once-private, star-studded awards presentation could be viewed and enjoyed by all.

Selected by WSJ. Magazine editors, the honorees/presenters were: BTS (Music), presented by James Corden, Darren Walker (Philanthropy), presented by Ava DuVernay, Jennifer Lopez (Pop Culture), presented by Maluma, MASS Design Group (Architecture), presented by Hank Willis Thomas, Michaela Coel (Television) presented by Phoebe Waller-Bridge, Patti Smith (Literature), presented by Ethan Hawke, Titus Kaphar (Art), presented by Swizz Beatz and Tyler Perry (Entertainment), presented by Taraji P. Henson.

“Last night WSJ. screened a series of short documentary films that highlight some of the most captivating talents and ideas resonating through the culture right now,” said Kristina O’Neill, editor in chief of WSJ. Magazine. “I’m grateful to the 2020 Innovators for their determination to leave the world a better place than they found it, to their equally impressive award presenters and to everyone at WSJ. who had a hand in putting together this year’s virtual awards—not to mention all the viewers who tuned in to share the excitement.”

“This year’s Innovators, which was not only shared virtually for the first time ever but also marks our 10th Anniversary, has proven the strength and dynamism of the franchise,” said Luke Bahrenburg Publisher of WSJ. Magazine. “Every year we honor individuals who are drivers of change and progress across our culture, and this year in particular, we are thrilled to be able to share this celebration with a global audience. We are particularly proud and grateful to do so with the support of our fantastic partners—Harry Winston, Rémy Martin and Lexus—all of whom share our commitment to innovation.”

WSJ.’s November issue will be available in the U.S. on November 21st.

View the full Innovator 2020 Awards presentation HERE 
Please find additional information at https://wsjinnovators.com/

Presenting sponsors of this year’s program were Harry Winston, Rémy Martin, and Lexus in addition with sponsor Augustinus Bader.

About WSJ. Magazine

WSJ. is The Wall Street Journal’s award-winning luxury lifestyle magazine. With authority, sophistication and a unique artistic sensibility, WSJ.’s digital platforms and print issues cover a wide range of cultural topics, from fashion and food to architecture and design. Visit www.wsjmagazine.com.

About
The
Wall Street Journal

The Wall Street Journal is a global news organization that provides leading news, information, commentary and analysis. The Wall Street Journal engages readers across print, digital, mobile, social, podcasts and video. Building on its heritage as the preeminent source of global business and financial news, the Journal includes coverage of U.S. & world news, politics, arts, culture, lifestyle, sports, and health. It holds 38 Pulitzer Prizes for outstanding journalism. The Wall Street Journal is published by Dow Jones, a division of News Corp (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV).

Media contact:
KB Brand Partners / Kristin Kavanagh Shane
[email protected]
917 371 8996

Company
Q3
20
20
Revenue
,
Gross Margin
and EPS
all
Exceed
Guidance
; Revenue
,
Gross Margin
and EPS
all
meet
Its Pre-Announced Key
Financial
Results

Provides
Q4
2020
Guidance: Revenue to i
ncrease
by
around 10
% sequentially, Gross Margin is expected to be around 29%, IFRS profitper diluted ADS to be around 15.0 centsto 16.0 cents, and Non-IFRS profit per diluted ADS to be around 15.1 centsto 16.1 cents

• Q
  3
  revenue
  increased
  28.3
  %
  sequentially to
  $
  239.9
  M
  ,
  exceed
  ing
  the
  guidance of
  an increase of around 20%
  sequentially
• Product sales: large driver ICs, 23.2
  % of revenue,
  down
  6.3
  %
  QoQ
  ; small and medium-sized driver ICs,
  63.2
  % of revenue,
  up
  53.5
  %
  QoQ
  ; non-driver products, 13.6
  % of revenue,
  up
  13.3
  %
  QoQ
• Q3
  IFRS gross
  margin
  was
  22.3
  %,
  up 130
  bps sequentially, exceed
  ing
  the
  guidance of
  flat to slightly down from the 21.0% of the second quarter
• Q3
  IFRS
  profit
  was $
  8.5
  M
  , or
  4.9
  cents per diluted ADS
  ,
  exceed
  ing
  the
  guidance of
  around 2.0 cents to 2.8 cents
  per diluted ADS
  .
  It is
  higher
  than
  profit
  of $
  1.4
  M
  , or
  0.8
  cents per diluted ADS in
  Q2
  2020
• Q3
  non
  -IFRS
  profit
  was $
  12.6
  M
  , or
  7.3
  cents per diluted ADS,
  exceed
  ing
  the
  guidance
  of
  around 3.5 cents to 4.3 cents
  per diluted ADS
  .
  It is
  higher
  than
  profit
  of $
  1.7
  M
  , or
  1.0
  cent per diluted ADS in
  Q2
  2020
• Display drivers for TV, tablet, smartphone and automotive as well as CMOS image sensors all contributed to the better-than-guided sales
  in Q3
• Q3
  Gross margin
  sequential increase was contributed by a favorable product mix of more shipments of better margin products such as tablet and automotive ICs, higher engineering fee income and resales of certain products whose values have been written-off previously in accordance with the Company’s inventory management protocol
• The extension of strong demand derived from persisting homeworking and distance education
  results
  in growing monitor and
  notebook
  demands
  till end of 2020
• The smartphone market has regained some momentum in Q3, and the momentum seems to have carried into Q4. On the backdrop of a rebounding smartphone market,
  the Company’s
  smartphone TDDI revenue is projected to have nice high-teens
   sequential growth in 
  Q4
  although foundry capacity remains a growth constraint. Traditional
  DD
  ICs for smartphone, after a temporary spike in Q3, is set to decline double-digit in Q4
• Tablet has been one of
  the
  Company’s
  top sales contributors throughout 2020
• Company
  is a pioneer in the tablet TDDI technology and led the market for mass production
  in Q1
  2020
  . At present,
  the
  C
  ompany is
  the dominant supplier for literally all leading Android names.
  The
  Company e
  xpect
  s
  a sequential increase of
  around 80% for tablet TDDI inQ4 as the penetration of in-cell touch into tablet continues to accelerate
• Q3
  Driver IC revenue for automotive was up 13.2
  %
  QoQ
  and up 3.9
  %
  YoY
  , despite a sluggish global automotive market. The sequential growth was owed, to a large extent, to the aggressive pursuit of market share gains by China panel maker customers to which the Companyisa major supplier. As the panels inside a car continue to grow in both number and size, the demand for automotive driver ICs is well positioned for healthy growth in the coming years
• For Q4, the Company expects further revenue growth
   from the already high level of Q3 in most of its business sectors. Capacity shortage remains a major factor that negatively impacts the Company’s capabilities to make more shipments to customers. In consideration of capacity constraints which may not be resolved shortly, the
  Company often has to strategically prioritize the production of products for those customer models where the Company is the key supplier and/or enjoy better profitability
• Himax
  ’s
  WiseEye total solution offering focus
  es
  on
  notebook
  , TV, doorbell, door lock and air conditioner
  applications and is
  in partnership with leading players in their respective industries
  .
  A
  number of these solutions are slated to enter mass production in 2021.
  For the other type of business model where Himax only offers key parts, the
  Company actively participate
  s
  in the AI and cloud ecosystems
  . The Company
  is making another
  major breakthrough with another world-leading cloud service provider other than Google

TAINAN, Taiwan, Nov. 12, 2020 (GLOBE NEWSWIRE) — 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 third quarter ended September 30, 2020.

“Gross margin expansion has always been at the top of our agenda and we will surely work hard toward continuous profitability improvement. The upbeat Q4 gross margin guidance is mainly a reflection of the tight foundry capacity which results in better pricing and more favorable product mix,” said Mr. Jordan Wu, President and Chief Executive Officer of Himax.

“The foundry industry appears to be going through a structural change in the supply-demand dynamics for the mature process nodes – both 8” and 12”. We believe the current tightness is likely to persist throughout the next few years. We are experiencing major foundry supply shortage in quite a few of our business areas, including TDDI and DDIC for smartphone, tablet and automotive applications as well as CMOS Image Sensor. For next year’s wafer demands, we have secured with our foundry partners a capacity which is already larger than our total shipment for this year. On top of that, we are developing additional capacities for various product areas with an aim to further our available foundry pool for the next few years. Some of these new capacities will start making contributions next year. We will report the progress in due course. Another important factor for continuous gross margin improvement will come from a number of our non-driver products which are either already in volume production and look on track to grow in size, such as timing controller and ultralow power CIS, or will be new additions to our revenue stream, such as the WiseEye total solution and the WE-I ASIC chip. Again, gross margin expansion will continue to be one of our major business goals for next year and beyond,” concluded Mr. Jordan Wu.

Third
Quarter 2020 Financial Results

The Company recorded net revenue of $239.9 million, an increase of 28.3% sequentially and an increase of 46.1% compared to the same period last year. The 28.3% sequential increase of revenue exceeded its guidance of an increase of around 20% quarter-over-quarter. Display drivers for TV, tablet, smartphone and automotive as well as CMOS image sensors all contributed to the better-than-guided sales. Gross margin was 22.3%, exceeding the prior guidance of flat to slightly down from the 21.0% of the second quarter. IFRS profit per diluted ADS was 4.9 cents, exceeding its guidance of around 2.0 cents to 2.8 cents. Strong sales and improved gross margin contributed to the better-than-expected earnings results. The EPS increase was, however, offset by the RSU expense which was higher than what was indicated on the last earnings call as the Company raised the RSU amount to reward the team for the better-than-expected financial results. Non-IFRS profit per diluted ADS was 7.3 cents, exceeding its guidance of around 3.5 cents to 4.3 cents.

Revenue from large display drivers was $55.7 million, down 6.3% sequentially and up 11.3% year-over-year. The sequential decline was driven by significantly lower shipments of monitor ICs due to customers’ inventory correction following a demand hike in the first half. If combining the first three quarters of 2020, its sales into monitor segment still increased 22.1% from last year. The demand for monitors remains robust and the Company expects a strong rebound in the fourth quarter. Offsetting monitor’s third quarter weakness was a surge in TV and notebook sales. TV segment revenue increased 17.6% sequentially, reflecting strong consumer spending and home entertainment demand. Panel customers’ building of inventories in anticipation of higher TV panel prices also contributed to the sequential increase. It was no surprise that notebook sales recorded the highest growth among large display products, increasing 31.5% quarter-over-quarter, thanks to the continuing demand for telework and e-learning with panel customers seemingly still sitting on low inventories. Large panel driver ICs accounted for 23.2% of total revenues for the quarter, compared to 31.8% in the second quarter of 2020 and 30.5% a year ago.

Small and medium-sized display drivers recorded a very strong third quarter, with revenues of $151.6 million, up 53.5% sequentially and up 96.6% year-over-year. TDDIs for both tablet and smartphone posted extraordinary sales growth in Q3. For the automotive segment, the Company delivered a decent low-teens sequential growth amidst a declining automotive market worldwide. Small and medium-sized segment accounted for 63.2% of total sales for the quarter, compared to 52.8% in the second quarter of 2020 and 46.9% a year ago.

The Company’s smartphone sales, the best performing product category of all in Q3, reached a quarterly record-high of $63.3 million, up 153.6% sequentially and 101.2% year-over-year. It represented more than 26% of its total sales in Q3. Its smartphone TDDI sales were up 155.7% sequentially and up 193.7% from the same period last year. The significant sequential growth was a continuation from Q2 when the product category already grew 69.0% from the previous quarter. However, as mentioned in the last earnings call, the growth was capped by an industry-wide wafer foundry shortage. The Company’s smartphone and tablet TDDI ICs share the same pool of foundry capacity and the Company was, and still is, unable to meet all the demands for these products.

The Q3 strength in smartphone TDDI reflected customers’ aggressive new product launch plans with the Company’s TDDI solutions as well as its ability to price its products higher to reflect the tight wafer foundry situation. Amid the economic downturn and lackluster overall smartphone consumption, OEMs are pushing more for budget handsets using TFT-LCD screens, instead of the more expensive AMOLED displays. Sales of traditional smartphone DDICs also surged by 147.8% sequentially and were up 5.3% from same period last year with demands from key brand customers. Himax believes such strong sales of traditional smartphone DDICs were a short-term rebound as the product category is quickly being replaced by TDDI and AMOLED, as the Company has repeatedly indicated.

Revenue for tablet posted a third consecutive record-high, with Q3 sales growing 26.0% sequentially and 336.4% year-over-year. The quarterly revenue reached $53.7 million, accounting for more than 25% of its driver IC revenue. The Company expects its tablet segment sales to continue to grow as overall market demand for tablet remains robust for more home working and online education needs and TDDI’s penetration in tablet market continues to pick up. Himax’s tablet TDDI has a leading market position at a time when TDDI is quickly becoming mainstream for Android tablets. Third quarter tablet TDDI sales increased over 35% sequentially and were better than its guidance of a 20.0% increase. This marked the second consecutive quarter of increases in tablet TDDI shipments since the initial mass production in the first quarter of 2020, and the Company is firmly in the leading position among peers. However, as mentioned above, the sequential growth was crippled by tight foundry capacity as the Company couldn’t ship enough to meet all customer demands. Revenue of traditional discrete driver ICs for tablet also delivered 20.3% sequential growth and was up 164.5% year-over-year in the third quarter thanks to strong orders from both leading brand and white box names. 

Himax’s third quarter driver IC revenue for automotive was up 13.2% sequentially and up 3.9% year-over-year, despite a sluggish global automotive market. The sequential growth was owed, to a large extent, to the aggressive pursuit of market share gains by China panel maker customers to which Himax is a major supplier. These customers are comfortable with Himax leading technology and proven production record which supports them in their efforts to ramp up production swiftly. With global automotive demand showing signs of recovery, the Company expects to see robust and sustainable growth in Q4 and into 2021.

Third quarter revenue from the Company’s non-driver businesses was $32.6 million, up 13.3% sequentially but down 12.1% year-over-year. The sequential increase was mainly a result of higher engineering fee income and increased shipments of the Tcon for high frame rate and high-resolution displays as well as CMOS image sensor products with demand coming from notebook and IP camera applications. However, the increase in sales was offset by a decrease in WLO shipments to an anchor customer. Non-driver products accounted for 13.6% of total revenue, as compared to 15.4% in the second quarter of 2020 and 22.6% a year ago.

Gross margin for the third quarter was 22.3%, up 130 basis points sequentially and up 280 basis points from the same period last year. The sequential increase was contributed by a favorable product mix of more shipments of better margin products such as tablet and automotive ICs, higher engineering fee income and resales of certain products whose values have been written-off previously in accordance with the Company’s inventory management protocol. Weighing on gross margins were lower WLO shipments which decreased factory utilization, and increased shipments for smartphone ICs which registered a lower gross margin than the corporate average. Gross margin increased 2.8% from last year thanks to a more favorable product mix with more shipments of tablet and Tcon, higher engineering fee income and resales of written-off products. Likewise, the gain was offset by lower WLO and higher smartphone shipments.

The Company’s IFRS operating expenses were $44.2 million in the third quarter, up 17.4% from the preceding quarter and up 11.4% from a year ago. The sequential expenses increase was caused mainly by $4.8 million of RSU, the immediately vested portion of the total RSU grant, which was higher than the $3.0 million guided on the last earnings call, to beneficially compensate employees from a better-off profit. The $1.8 million additional RSU expense represents 0.9 cents lower in after-tax EPS. The increased salary also contributed to the higher operating expenses. The year-over-year increase was a result of increased RSU. As an annual practice, Himax rewards employees with an annual bonus at the end of September which always leads to a substantial increase in the third quarter IFRS operating expenses compared to the other quarters of the year. This year, the RSU grant totaled $5.0 million, out of which $4.8 million was vested immediately and expensed in the third quarter. Non-IFRS operating expenses for the third quarter were $38.9 million, up 4.8% from the previous quarter but down 0.9% from the same quarter in 2019.

IFRS operating margin for the third quarter was 3.9%, up from 0.9% in the prior quarter and up from -4.7% in the same period last year. The sequential increase was mainly due to higher sales and better gross margin but offset by higher operating expenses. The year-over-year improvement was primarily a result of higher sales and improved gross margin. Third quarter non-IFRS operating profit was $14.7 million, or 6.1% of sales, higher from non-IFRS operating profit of $2.1 million, or 1.1% of sales last quarter and up from -4.4% for the same period last year.

IFRS profit for the third quarter was $8.5 million, or 4.9 cents per diluted ADS, compared to profit of $1.4 million, or 0.8 cents per diluted ADS, in the previous quarter and loss of $7.2 million, or 4.2 cents per diluted ADS, a year ago.

Third quarter non-IFRS profit was $12.6 million, or 7.3 cents per diluted ADS, compared to non-IFRS profit of $1.7 million, or 1.0 cent per diluted ADS last quarter and non-IFRS loss of $6.9 million, or 4.0 cents per diluted ADS for the same period last year.

Balance Sheet and Cash Flow

Himax had $142.9 million of cash, cash equivalents and other financial assets as of the end of September 2020, compared to $128.0 million at the same time last year and $107.1 million a quarter ago. The higher cash balance was mainly a result of an operating cash inflow of $33.5 million during the quarter. Restricted cash was $104.0 million at the end of the quarter, compared to $164.0 million of the preceding quarter and a year ago. The restricted cash is used to guarantee the short-term secured borrowings for the same amount. The Company repaid a total of $60.0 million short-term secured borrowings during the quarter and, in the meantime, the restricted cash deposit was reduced by the same amount. Separately, during this quarter, Himax entered into a new ten-year unsecured loan agreement of $60 million and repaid all short-term unsecured borrowings totaling $58.4 million. As a result, the Company had $60.0 million of long-term unsecured loans as of the end of Q3, of which $6.0 million was current portion. There was no more short-term unsecured loan as of the end of the quarter, compared to $58.4 million a quarter ago and $90.6 million at the same time last year. Not only has the Company strengthened its balance sheet by replacing all short-term unsecured borrowings with ten-year loans, it also managed to secure favorable terms of the new long-term loan so that the additional interest payments are minimal.

Accounts receivable as of the end of September 2020 were $221.1 million, up from $206.1 million last quarter and $157.3 million a year ago. DSO was 99 days at the end of the quarter, as compared to 86 days a year ago and 101 days at the end of the last quarter.

Himax’s inventories as of September 30, 2020 were $125.7 million, down from $161.5 million last quarter and $167.6 million a year ago. The much lower inventory level in Q3 was a result of strong customer demands amid tight foundry capacity. While Himax will continue to pursue an aggressive inventory build-up strategy, its inventory position will likely remain at such a low level in the foreseeable future given the severe foundry capacity shortage prevailing in the market place.

Net cash inflow from operating activities for the third quarter was $33.5 million as compared to an inflow of $24.0 million for the same period last year and an outflow of $9.2 million last quarter.

Third quarter capital expenditures amounted to $1.2 million, versus $31.2 million a year ago and $0.7 million last quarter. The third quarter capex was for R&D related equipment for its IC design businesses.

Share Buyback Update

As of September 30, 2020, Himax had 172.4 million ADS outstanding, little changed from last quarter. On a fully diluted basis, the total number of ADS outstanding was 173.4 million.

Q
4
2020
Outlook
The Company briefly comments on the background for its upbeat Q4 gross margin guidance and its view on the sustainability of the higher margin.

First off, gross margin expansion has always been at the top of Himax’s agenda and the Company will surely work hard toward continuous profitability improvement. The upbeat Q4 gross margin guidance is mainly a reflection of the tight foundry capacity which results in better pricing and more favorable product mix. The foundry industry appears to be going through a structural change in the supply-demand dynamics for the mature process nodes – both 8” and 12”. Himax believes the current tightness is likely to persist throughout the next few years. Major volume applications such as display drivers for TDDI and AMOLED, PMIC for 5G smartphone, CIS that is ever upgrading in resolution, just to name a few, are significantly expanding in wafer consumption and competing for the same pool of mature nodes while the industry has no major expansion plan in sight for such capacity.

Himax is experiencing major foundry supply shortages in quite a few of its business areas, including TDDI and DDIC for smartphone, tablet and automotive applications as well as CMOS Image Sensor. For next year’s wafer demands, the Company has secured with its foundry partners a capacity which is already larger than its total shipment for this year. On top of that, Himax is developing additional capacities for various product areas with an aim to further its available foundry pool for the next few years. Some of these new capacities will start making contributions next year. The Company will report the progress in due course.

Another important factor for continuous gross margin improvement will come from a number of the Company’s non-driver products which are either already in volume production and look on track to grow in size, such as timing controller and ultralow power CIS, or will be new additions to its revenue stream, such as the WiseEye total solution and the WE-I ASIC chip.

Again, gross margin expansion will continue to be one of Himax’s major business goals for next year and beyond.

Display
D
river IC
Business

LDDIC
For the fourth quarter, the Company expects large display driver IC revenue to increase by high-single-digit sequentially. This is due to the extension of strong demand derived from persisting homeworking and distance education, resulting in growing monitor and notebook demands. The Company expects a decent sequential increase of around 20% in the monitor segment in the fourth quarter. As for notebook, it anticipates even stronger momentum in Q4, increasing more than 75% quarter over quarter. Himax has active design-in activities in high-end monitor and new generation low-power notebook where it provides not only the Company’s driver IC, but also timing controller. Especially in gaming monitors and e-learning notebooks, the Company anticipates more market share gains from the design-wins of Himax’s leading display driver ICs and Tcon with key customers.

With respect to TV, Himax expects mid-single-digit sequential decline in the next quarter owing to a correction to a surge in TV demand in the previous quarter. Recently, the Company saw top-tier TV brands with aggressive promotion tactics in 8K TVs in anticipation of major sporting events resuming across many countries after a long lockdown. Himax’s 8K TV display drivers and timing controller ICs have been widely adopted by multiple leading end customers.

It is worth highlighting that Himax has been developing and delivering timing controller products for many years and this segment already represents more than 5% of its total revenue. It is applied in a wide range of products such as TV, monitor, notebook and automotive. The Company’s technology not only provides higher resolution, higher frame rate and better image quality, it can also enable lower power in products where power consumption is critical. The margin and ASP of the timing controller product are much higher than those of display drivers, and the Company expects this segment to be an extensive long-term growth opportunity. Himax’s Tcon revenue in the fourth quarter, while limited by a capacity shortage in IC packaging due to competing demands from 5G chipsets, is on track to increase by more than 20% sequentially. This will represent more than 40% increase annually.

SMDDIC

Begin with the Himax’s smartphone business segment. The Company’s TDDI product roadmap as well as new design-wins and new production plans all position Himax well to gain market share throughout 2020 and into 2021.

The pandemic has weighed on the global smartphone shipment significantly due to supply chain disruption at the beginning of the year, followed by a lackluster consumer demand. However, the smartphone market has regained some momentum in Q3, and the momentum seems to have carried into Q4. On the backdrop of a rebounding smartphone market, the Company’s smartphone TDDI revenue is projected to have nice high-teens sequential growth in the fourth quarter although foundry capacity remains a growth constraint. Traditional display driver ICs for smartphone, after a temporary spike in Q3, is set to decline double digit in Q4.

As the Company stated before, AMOLED technology has advanced to become the mainstream display for high-end smartphones. Himax is highly committed in this field. Much progress has been made by collaborating with leading panel makers across China. Himax’s development started from smartphone, and extends to wearable, tablet and automotive with Chinese panel makers. Himax believes AMOLED driver IC will become one of the major growth engines for the Company’s small and medium panel driver IC business from 2021.

Turning to the tablet business, tablet has been one of Himax’s top sales contributors throughout 2020.  In the fourth quarter, it is on track for another sequential growth of over 20%. As mentioned on previous earnings calls, for consumers, tablet TDDI offers a lighter weight and slimmer and more stylish design as well as improved touch accuracy with added option for active stylus specifically geared towards high quality writing and drawing. Himax is a pioneer in the tablet TDDI technology and led the market for mass production in the first quarter of 2020. At present, Himax is the dominant supplier for literally all leading Android names. Tablet TDDI represents a tremendous upside potential for Himax thanks to its higher ASP and more units of TDDI chips in each tablet than those for smartphone. The company expects a sequential increase of around 80% for its tablet TDDI in the fourth quarter as the penetration of in-cell touch into tablet continues to accelerate. To expand and strengthen the Company’s position in the market for next generation models, Himax is working on new designs with resolution and touch accuracy upgrades, targeting large size tablets from key customers.

For traditional DDIC for tablet, the Company expects low-teens sequential decline for Q4, but sales to be up more than 50% compared to the same period last year due to booming tablet demand arising from homeworking and remote learning. The demand for traditional DDIC for tablet is also being eroded by in-cell TDDI but at a more moderate pace than that for smartphone.

Turning to the automotive sector. As the panels inside a car continue to grow in both number and size, the demand for automotive driver ICs is well positioned for healthy growth in the coming years. Although the global car demand has been badly hit by Covid-19, especially in the first half of the year, the market is showing signs of gradual recovery starting Q3. Himax’s automotive ICs, which enjoy higher gross margins, are experiencing a solid rebound lately with car makers rushing in for inventory replenishment after quite a few sluggish quarters.

The demand of automotive display ICs for more sophisticated and higher performing displays has continued its rising trajectory. Advanced new features such as in-cell touch, local dimming, cascade-topology connection and P2P high-speed interface bridging functions are being adopted with Himax being the primary partner for major automotive panel makers and tier-1 players to enable these new technologies. With these new technologies on track for more shipments starting 2021, Himax is confident that its automotive segment is hitting another inflection point with a strong and positive long-term outlook.

For the fourth quarter, revenue for the small and medium-sized driver IC business is expected to increase by around mid-teens sequentially with demand continuing to surpass supply. Capacity shortage remains a major factor that negatively impacts its capabilities to make more shipments to customers. In consideration of capacity constraints which may not be resolved shortly, the Company often has to strategically prioritize the production of products for those customer models where Himax is the key supplier and/or enjoy better profitability.

Non-Driver Product Categories

WLO

The fourth quarter WLO revenue declined sequentially as a result of lower shipments to an anchor customer. Himax’s WLO factory will continue to manufacture the anchor customer’s legacy product going forward. With the Company’s exceptional technologies of WLO in nanoimprinting manufacturing and diffraction optics design, it has been engaged by multiple customers / partners to develop future generation products covering a wide range of applications such as ToF 3D sensing, waveguide for AR goggles, biomedical devices and others.

3D Sensing

In smart phone application, Himax targets next generation Android smartphones and the Company is collaborating with leading laser and ToF sensor vendors to develop a new world-facing 3D sensing camera whereby it provides optical components and/or projectors which are critical for the performance of the whole ToF solution.

For non-smartphone 3D-sensing engagements where the Company provides a structured light-based 3D sensing total solution, its target markets range from smart door lock, facial recognition-based e-payment, business access control to biomedical inspection device. A number of recent design-wins will enter into mass production soon.

Alternatively, Himax also offers a market leading 3D decoder ASIC to those customers who wish to design their own structured light 3D sensing solution. Here the Company has had quite a few design-wins from customers targeting China’s vast e-payment market with some shipments already starting in the fourth quarter. The Company is also working with customers for industrial robotics, smart door lock and home security, all of which carry great potential for Himax’s 3D business in the future.

Ultralow power smart sensing

In order for Himax’s WiseEye technology to reach its maximum potential, it has adopted a flexible business model whereby, in addition to a total solution where it provides processor, image sensor and AI algorithm, the Company also offers those key parts individually in order to address the customer’s different needs and widen its market reach.

For the total solution offering, the Company’s current focus applications include notebook, TV, doorbell, door lock, and air conditioner as it continues to work out new solutions to cover further edge device AI markets. In partnership with leading players in their respective industries, a number of these solutions are slated to enter mass production in 2021. For the other type of business model where Himax only offers key parts, its strategy is to actively participate in the ecosystems led by the world’s leading AI and cloud service providers. In addition to the collaboration with Google on their TensorFlow Lite for Microcontrollers that Himax announced previously, the Company is making another major breakthrough by partnering with another world-leading cloud service provider with a business focus more toward healthcare, financial services, government, retail and industrial manufacturing. Separately, to further lower the technical barrier for using Himax’s WiseEye solution, the Company teamed up with a leading online store specialized in easy development tools for machine learning on edge devices. Himax is extremely excited about the rapid business progress and believes the Company’s WiseEye offerings will become a major contributor to its P&L in the near future.

CMOS Image Sensor

The Company continues to see extremely strong demands for its CMOS image sensors for IP camera and notebook, but its actual shipment has been badly capped by the foundry capacity available to it. Separately, Himax’s industry-first 2-in-1 CMOS image sensor that supports RGB mode for video conferencing and ultralow power AI mode for facial recognition has penetrated the laptop ecosystem for their most stylish super slim bezel designs. The Company expects to have small volume shipment toward late 2020 with more to come in next year.

Regarding ultralow power always-on CMOS image sensor, which targets in battery powered or always-on applications, Himax is getting promising feedback and design adoptions from customers in various markets, such as car recorders, surveillance, smart electric meters, drones, home appliances, and consumer electronics. In Q4, CIS revenue is expected to be flat sequentially although demand is much stronger than that. Again, its shipment is capped by foundry capacity constraint.

For non-driver IC business, the Company expects revenue to decrease by low-single-digit sequentially in the fourth quarter.

Fourth Quarter 2020 Guidance
The Company is providing the following financial guidance for the fourth quarter of 2020:
Net Revenue:	To increase by around 10% sequentially
Gross Margin:	To be around 29%, depending on final product mix
IFRS Profit:	To be around 15.0 cents to 16.0 cents per diluted ADS
Non-IFRS Profit (1):	To be around 15.1 cents to 16.1 cents per diluted ADS
( 1 ) Non- IFRS Profit excludes share-based compensation and acquisition-related charges

For the fourth quarter, Himax expects further revenue growth from the already high level of Q3 in most of its business sectors. Gross margin shall see a major uptick and could reach a quarterly historical high for Himax.

With the increase in revenue and margin growth in fourth quarter, net income shall increase sequentially. To further reward employees, there would be another $3.0 million of cash bonus in the fourth quarter which will be expensed immediately. This represents 1.4 cents lower in EPS.

HIMAX TECHNOLOGIES THIRD QUARTER 2020 EARNINGS CONFERENCE CALL
DATE:	Thursday, November 12th, 2020
TIME:	U.S.         8:00 a.m. EST
	Taiwan    9:00 p.m.
DIAL IN:	U.S. +1 (866) 444-9147
	INTERNATIONAL+1 (678) 509-7569
CONFERENCE ID:	4408778
WEBCAST:	https://edge.media-server.com/mmc/p/x93vx34d

A replay of the call will be available beginning two hours after the call through 11:30 a.m. US EST on November 20^th, 2020 (12:30 a.m. Taiwan time, November 21^st, 2020) on www.himax.com.tw and by telephone at +1 (855) 859-2056 (US Domestic) or +1 (404) 537-3406 (International). The conference ID number is 4408778. This call is being webcast by Nasdaq and can be accessed by clicking on this link or Himax’s website, where the webcast can be accessed through November 12^th, 2021.

About Himax Technologies, Inc.

Himax Technologies, Inc. (NASDAQ: HIMX) is a fabless semiconductor solution provider dedicated to display imaging processing technologies. Himax is a worldwide market leader in display driver ICs and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, digital cameras, car navigation, virtual reality (VR) devices and many other consumer electronics devices. Additionally, Himax designs and provides controllers for touch sensor displays, in-cell Touch and Display Driver Integration (TDDI) single-chip solutions, LED driver ICs, power management ICs, scaler products for monitors and projectors, tailor-made video processing IC solutions, silicon IPs and LCOS micro-displays for augmented reality (AR) devices and heads-up displays (HUD) for automotive. The Company also offers digital camera solutions, including CMOS image sensors and wafer level optics for AR devices, 3D sensing and machine vision, which are used in a wide variety of applications such as mobile phones, tablets, laptops, TVs, PC cameras, automobiles, security, medical devices, home appliance and Internet of Things. Founded in 2001 and headquartered in Tainan, Taiwan, Himax currently employs around 2,000 people from three Taiwan-based offices in Tainan, Hsinchu and Taipei and country offices in China, Korea, Japan, Israel, and the US. Himax has 2,915 patents granted and 551 patents pending approval worldwide as of September 30^th, 2020. Himax has retained its position as the leading display imaging processing semiconductor solution provider to consumer electronics brands worldwide.

http://www.himax.com.tw

Forward Looking Statements

Factors that could cause actual events or results to differ materially include, but not limited to, general business and economic conditions and the state of the semiconductor industry; market acceptance and competitiveness of the driver and non-driver products developed by the Company; demand for end-use applications products; reliance on a small group of principal customers; the uncertainty of continued success in technological innovations; our ability to develop and protect our intellectual property; pricing pressures including declines in average selling prices; changes in customer order patterns; changes in estimated full-year effective tax rate; shortages in supply of key components; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; our ability to collect accounts receivable and manage inventory and other risks described from time to time in the Company’s SEC filings, including those risks identified in the section entitled “Risk Factors” in its Form 20-F for the year ended December 31, 2019 filed with the SEC, as may be amended.

Company Contacts:

Eric Li
,
Chief IR/PR Officer

Himax Technologies, Inc.
Tel: +886-6-505-0880 Ext.60145
Fax: +886-2-2314-0877
Email: [email protected]
www.himax.com.tw

Karen Tiao, Investor Relations
Himax Technologies, Inc.
Tel: +886-2-2370-3999 Ext. 22326
Fax: +886-2-2314-0877
Email: [email protected]
www.himax.com.tw

Investor Relations – US Representative

Mark Schwalenberg, Senior Vice President
MZ North America
Tel: +1-312-261-6430
Email: [email protected]

-Financial Tables-

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of P rofit or L oss
( These interim financials do not fully comply with IFRS because they omit all interim disclosure required by IFRS )
(Amounts in Thousands of U.S. Dollars, Except Share and Per Share Data)
	Three Months Ended September 3 0 ,								Three Months Ended June 3 0 ,
		20 20				20 19				20 20
Revenues	$	239,934			$	164,254			$	1 86,984
Costs and expenses:
Cost of revenues		186,329				132,239				147,726
Research and development		33,073				29,156				28,403
General and administrative		6,530				6,053				5,662
Sales and marketing		4,558				4,447				3,548
Total costs and expenses		230 ,490				171,895				1 85,339
Operating income (loss)		9,444				(7,641	)			1 ,645
Non operating income (loss) :
Interest income		157				416				263
Changes in fair value of financial assets at fair value through profit or loss		131				(1	)			(83	)
Foreign currency exchange gains (losses), net		(139	)			91				1
Finance costs		(314	)			(634	)			(551	)
Share of profits (losses) of associates		(191	)			(135	)			12
Other income		96				19				22
		(260	)			(244	)			(336	)
Profit (loss) before income tax es		9,184				(7,885	)			1,309
Income tax expense		1,124				–				365
Profit (loss) for the period		8,060				(7,885	)			944
L oss at tributable to noncontrolling interests		391				705				439
Profit (loss) attributable to Himax T echnologies, Inc. stockholders	$	8,451			$	(7,180	)		$	1,383
Basic earnings (loss) per ADS attributable to Himax T echnologies, Inc. stockholders	$	0.049			$	(0.042	)		$	0.0 08
Diluted earnings (loss) per ADS attributable to Himax T echnologies, Inc. stockholders	$	0.049			$	(0.042	)		$	0.0 08
Basic Weighted Average Outstanding ADS		172,730				172,541				172, 618
Diluted Weighted Average Outstanding ADS		173,447				172,541				17 3,158

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of P rofit or L oss
(Amounts in Thousands of U.S. Dollars, Except Share and Per Share Data)
			Nine Months Ended Se ptember 30 ,
					20 20				20 1 9
Revenues				$	611,512			$	496,906
Costs and expenses:
Cost of revenues					476,727				395,078
Research and development					89,165				87,815
General and administrative					17,996				17,730
Sales and marketing					11,888				13,246
Total costs and expenses					595,776				513,869
Operating i ncome ( loss )					15,736				(16,963		)
Non operating income (loss) :
Interest income					816				1,492
Changes in fair value of financial assets at fair value through profit or loss					(17	)			6
Foreign currency exchange gains (losses), net					(193	)			401
Finance costs					(1,458	)			(1,655		)
Share of losses of associates					(270	)			(96		)
Other income					153				66
					(969	)			214
Pr ofit (l oss ) before income tax es					14,767				(16,749		)
Income tax expense					2,953				–
Profit (l oss) for the period					11,814				(16,749		)
L oss attributable to noncontrolling interests					1,314				2,099
Profit (loss) attributable to Himax T echnologies, Inc. stockholders				$	13,128			$	(14,650		)
Basic earnings (loss) per ADS attributable to Himax T echnologies, Inc. stockholders				$	0.076			$	( 0.085		)
Dilute d earnings (loss) per ADS attributable to Himax T echnologies, Inc. stockholders				$	0.076			$	( 0.085		)
Basic Weighted Average Outstanding ADS					172,643				172,541
Diluted Weighted Average Outstanding ADS					173,284				172,541

Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Amounts in Thousands of U.S. Dollars)
The amount of share-based compensation included in applicable statements of profit or loss categories is summarized as follows:	Three Months Ended September 3 0 ,									Three Months Ended June 3 0 ,
		20 20					20 1 9				20 20
Share-based compensation
Cost of revenues	$	72				$	–			$	5
Research and development		4,076					60				122
General and administrative		328					22				15
Sales and marketing		537					10				26
Income tax benefit		(1,081	)				(21	)			(31	)
Total	$	3,932				$	71			$	137
The amount of acquisition-related charges included in applicable statements of profit or loss categories is summarized as follows:
Acquisition-related charges
Research and development	$	276				$	276			$	277
Income tax benefit		(65	)				(64	)			(65	)
Total	$	211				$	212			$	212

Himax Technologies, Inc.
Unaudited Supplemental Financial Information
(Amounts in Thousands of U.S. Dollars)
The amount of share-based compensation included in applicable statements of profit or loss categories is summarized as follows:	Nine Months Ended September 30 ,
			20 20				20 1 9
Share-based compensation
Cost of revenues		$	87			$	–
Research and development			4,467				86
General and administrative			368				26
Sales and marketing			603				19
Income tax benefit			(1,176	)			(30	)
Total		$	4,349			$	101
The amount of acquisition-related charges included in applicable statements of profit or loss categories is summarized as follows:
Acquisition-related charges
Research and development		$	829			$	1,217
Income tax benefit			(194	)			(309	)
Total		$	635			$	908

Himax Technologies, Inc.
IFRS Unaudited Condensed Consolidated S tatement s of F inancial P osition
(Amounts in Thousands of U.S. Dollars)
		September 3 0 , 20 20				June 3 0 , 20 20				September 3 0 , 201 9
A ssets
Current assets:
Cash and cash equivalents		$	131,823			$	96,130			$	116,579
Financial assets at amortized cost			8,294				10,929				11,278
Financial assets at fair value through profit or loss			2,734				–				97
Accounts receivable, net			221,100				206,075				157,320
Inventories			125,725				161,474				167,581
Income taxes receivable			81				75				55
Restricted deposit			104,000				164,000				164,000
Other receivable from related party			1,200				1,200				1,200
Other current assets			26,294				24,246				19,732
Total current assets			621,251				6 64,129				637,842
Financial assets at fair value through profit or loss			13,480				13,352				9,761
Financial assets at fair value through other comprehensive income			730				737				703
Equity method investments			3,761				3,660				4,036
Property , plant and equipment, net			135,123				137,530				141,835
Deferred tax assets			14,714				14,537				13,389
Goodwill			28,138				28,138				28,138
Other i ntangible assets, net			7,550				7,953				9,161
Restricted deposit			138				135				128
Other non-current assets			2,105				2,033				2,149
			205,739				2 08,075				209,300
Total assets		$	826,990			$	8 72,204			$	847,142
Liabilities and E quity
Current liabilities:
Short-term unsecured borrowings		$	–			$	58,437			$	90,606
Current portion of long-term unsecured borrowings			6,000				–				–
Short-term secured borrowings			104,000				164,000				164,000
Accounts payable			153,153				161,474				114,825
Income taxes payable			5,340				3,960				1,618
Other payable to related party			2,480				2,740				2,620
Other current liabilities			38,700				34,749				37,458
Total current liabilities			309,673				425,360				411,1 27
Long-term unsecured borrowings			54,000				–				–
Net defined benefit liabilit ies			51				50				149
Deferred tax liabilities			1,222				1,284				1,440
Other non-current liabilities			16,689				9,989				4,471
			71,962				11 , 323				6,060
Total liabilities			381,635				436,683				417,1 87
Equity
Ordinary shares			107,010				107,010				107,010
Additional paid-in capital			106,276				105,686				104,829
Treasury shares			(8,486	)			(8,656	)			(8,764	)
Accumulated other comprehensive income			(980	)			(1,110	)			(1,334	)
Retained earnings			238,931				230,564				229,507
Equity attributable to owners of Himax Technologies, Inc.			442,751				433,494				431,2 48
Noncontrolling interests			2,604				2,027				(1,293	)
Total equity			445,355				435,521				429,9 55
Total liabilities and equity		$	826,990			$	8 72,204			$	847,142

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
( Amounts in T housands of U . S . D ollars)
		Three Months Ended September 3 0 ,								Three Months Ended Ju ne 3 0 ,
			20 20				20 19				20 20
Cash flows from operating activities:
Profit (loss) for the period		$	8,060			$	(7,885	)		$	944
Adjustments for:
Depreciation and amortization			5,530				6,004				5,881
Share-based compensation expenses			251				92				168
Gain on disposal of property, plant and equipment, net			(2	)			–				(242	)
Changes in fair value of financial assets at fair value through profit or loss			(131	)			1				83
Interest income			(157	)			(416	)			(263	)
Finance costs			314				634				551
Income tax expense			1,124				–				365
Share of losses (profits) of associates			191				135				(12	)
Inventories write downs			2,205				8,174				3,413
Unrealized foreign currency exchange losses (gains)			32				182				(59	)
			17,417				6,921				10,829
Changes in:
Accounts receivable			(15,025	)			18,905				(19,340	)
Inventories			33,544				12,780				(16,456	)
Other current assets			(398	)			2,649				(602	)
Accounts payable			(8,321	)			(19,399	)			15,875
Other payable to related party			(260	)			260				300
Net defined benefit liabilities			1				–				1
Other current liabilities			3,579				2,180				1,365
Other non-current liabilities			4,139				200				–
Cash generated from operating activities			34,676				24,496				(8,028	)
Interest received			120				213				548
Interest paid			(313	)			(639	)			(555	)
Income tax paid			(1,010	)			(86	)			(1,123	)
Net cash provided by (used in) operating activities			33,473				23,984				(9,158	)
Cash flows from investing activities:
Acquisitions of property, plant and equipment			(1,162	)			(31,222	)			(708	)
Proceeds from disposal of property, plant and equipment			2				–				247
Acquisitions of intangible assets			–				(18	)			(6	)
Acquisitions of financial assets at amortized cost			(866	)			(959	)			(1,425	)
Proceeds from disposal of financial assets at amortized cost			3,787				1,896				1,446
Acquisitions of financial assets at fair value through profit or loss			(9,547	)			(4,339	)			(2,483	)
Proceeds from disposal of financial assets at fair value through profit or loss			6,866				21,287				2,502
Proceeds from capital reduction of investment			–				17				–
Acquisitions of equity method investments			–				(129	)			–

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
( Amounts in T housands of U . S . D ollars)
		Three Months Ended September 3 0 ,								Three Months Ended June 3 0 ,
			20 20				20 1 9				20 20
Decrease (increase) in refundable deposits			(345	)			21				177
Releases (pledges) of restricted deposit			(3	)			323				(3	)
Cash received in advance from disposal of land			1,486				–				–
Net cash p rovided by ( used in ) investing activities			218				(13,123	)			(253	)
Cash flows from financing activities:
Payments of cash dividends			(4	)			–				–
Proceeds from issuance of new shares by subsidiaries			884				–				–
Proceeds from short-term unsecured borrowings			10,000				60,000				58,403
Repayments of short-term unsecured borrowings			(68,403	)			(46,385	)			(67,818	)
Proceeds from long-term unsecured borrowings			60,000				–				–
Proceeds from short-term secured borrowings			107,000				67,000				87,000
Repayments of short-term secured borrowings			(167,000	)			(67,000	)			(87,000	)
Release of restricted deposit			60,000				–				–
Payment of lease liabilities			(709	)			(392	)			(669	)
Proceeds from exercise of employee stock options			253				–				173
Net cash provided by (used in) financing activities			2,021				13,223				(9,911	)
Effect of foreign currency exchange rate change s on cash and cash equivalents			(19	)			(362	)			(225	)
Net increase ( decrease ) in cash and cash equivalents			35,693				23,722				(19,547	)
Cash and cash equivalents at beginning of period			96,130				92,857				115,677
Cash and cash equivalents at end of period		$	131,823			$	116,579			$	96,130

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
( Amounts in T housands of U . S . D ollars)
				Nine Months Ended September 30,
						20 20				20 1 9
Cash flows from operating activities:
Profit (loss) for the period					$	11,814			$	(16,749	)
Adjustments for:
Depreciation and amortization						17,165				18,533
Share-based compensation expenses						763				131
Gain on disposal of property, plant and equipment, net						(244	)			(6	)
Changes in fair value of financial assets at fair value through profit or loss						17				(6	)
Interest income						(816	)			(1,492	)
Finance costs						1,458				1,655
Income tax expense						2,953				–
Share of losses of associates						270				96
Inventories write downs						9,695				17,932
Unrealized foreign currency exchange losses (gains)						(18	)			68
						43,057				20,162
Changes in:
Accounts receivable						(56,157	)			31,696
Inventories						8,354				(22,952	)
Other current assets						(292	)			(2,596	)
Accounts payable						38,833				(35,675	)
Other payable to related party						260				(1,177	)
Net defined benefit liabilities						1				50
Other current liabilities						103				(777	)
Other non-current liabilities						4,065				200
Cash generated from operating activities						38,224				(11,069	)
Interest received						849				1,315
Interest paid						(1,498	)			(1,675	)
Income tax paid						(2,673	)			(4,356	)
Net cash provided by (used in) operating activities						34,902				(15,785	)
Cash flows from investing activities:
Acquisitions of property, plant and equipment						(4,962	)			(43,193	)
Proceeds from disposal of property, plant and equipment						249				14
Acquisitions of intangible assets						(78	)			(114	)
Acquisitions of financial assets at amortized cost						(3,028	)			(3,286	)
Proceeds from disposal of financial assets at amortized cost						5,998				3,034
Acquisitions of financial assets at fair value through profit or loss						(13,135	)			(46,971	)
Proceeds from disposal of financial assets at fair value through profit or loss						10,465				47,007
Acquisition of business						–				(700	)
Acquisition of a subsidiary, net of cash acquired						–				(400	)
Proceeds from capital reduction of investment						–				47
Acquisitions of equity method investments						–				(129	)
Decrease (increase) in refundable deposits						(3,182	)			88
Releases (pledges) of restricted deposit						(5	)			328
Cash paid for loan made to related party						–				(1,200	)
Cash received from loan made to related party						–				2,780
Cash received in advance from disposal of land						1,486				–
Net cas h used in investing activities						(6,192	)			(42,695	)

Himax Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
( Amounts in T housands of U . S . D ollars)
				Nine Months Ended September 30,
						20 20				20 1 9
Cash flows from financing activities:
Payments of cash dividends						(4	)			–
Proceeds from issuance of new shares by subsidiaries						884				–
Proceeds from short-term unsecured borrowings						208,137				177,006
Repayments of short-term unsecured borrowings						(265,355	)			(106,385	)
Proceeds from long-term unsecured borrowings						60,000				–
Proceeds from short-term secured borrowings						231,000				131,000
Repayments of short-term secured borrowings						(291,000	)			(131,000	)
Release of restricted deposit						60,000				–
Payment of lease liabilities						(1,840	)			(1,356	)
Proceeds from exercise of employee stock options						426				–
Net cash provided by financing activities						2,248				69,265
Effect of foreign currency exchange rate change s on cash and cash equivalents						(190	)			(643	)
Net increase in cash and cash equivalents						30,768				10,142
Cash and cash equivalents at beginning of period						101,055				106,437
Cash and cash equivalents at end of period					$	131,823			$	116,579

Himax Technologies, Inc.
Non- IFRS Unaudited Supplemental Data – Reconciliation Schedule
(Amounts in Thousands of U.S. Dollars)
Gross Margin, Operating Margin and Net Margin Excluding Share- B ased Compensation and Acquisition-Related Charges:
	Three Months Ended September 3 0 ,								Three Months Ended June 3 0 ,
		20 20				20 19				20 20
Revenues	$	239,934			$	164,254			$	186,984
Gross profit		53,605				32,015				39,258
Add: Share-based compensation – cost of revenues		72				–				5
Gross profit excluding share-based compensation		53,677				32,015				39,263
Gross margin excluding share-based compensation		22.4	%			19.5	%			21.0	%
Operating income (loss)		9,444				(7,641	)			1,645
Add: Share-based compensation		5,013				92				168
Operating income (loss) excluding share-based compensation		14,457				(7,549	)			1,813
Add: Acquisition-related charges –intangible assets amortization		276				276				277
Operating income (loss) excluding share-based compensation and acquisition-related charges		14,733				(7,273	)			2,090
Operating margin excluding share-based compensation and acquisition-related charges		6.1	%			(4.4	%)			1.1	%
Profit (loss) attributable to Himax Technologies, Inc. stockholders		8,451				(7,180	)			1,383
Add: Share-based compensation, net of tax		3,932				71				137
Add: Acquisition-related charges, net of tax		211				212				212
Profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges		12,594				(6,897	)			1,732
Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges		5.2	%			(4.2	%)			0.9	%
*Gross margin excluding share-based compensation equals gross profit excluding share-based compensation divided by revenues
*Operating margin excluding share-based compensation and acquisition-related charges equals operating income (loss) excluding share-based compensation and acquisition-related charges divided by revenues
*Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges equals profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges divided by revenues

Himax Technologies, Inc.
Non- IFRS Unaudited Supplemental Data – Reconciliation Schedule
(Amounts in Thousands of U.S. Dollars)
Gross Margin, Operating Margin and Net Margin Excluding Share- B ased Compensation and Acquisition-Related Charges:
			Nine Months Ended September 30 ,
					20 20				20 1 9
Revenues				$	611,512			$	496,906
Gross profit					134,785				101,828
Add: Share-based compensation – cost of revenues					87				–
Gross profit excluding share-based compensation					134,872				101,828
Gross margin excluding share-based compensation					22.1	%			20.5	%
Operating income (loss)					15,736				(16,963	)
Add: Share-based compensation					5,525				131
Operating income (loss) excluding share-based compensation					21,261				(16,832	)
Add: Acquisition-related charges –intangible assets amortization					829				1,217
Operating income (loss) excluding share-based compensation and acquisition-related charges					22,090				(15,615	)
Operating margin excluding share-based compensation and acquisition-related charges					3.6	%			(3.1	%)
Profit (loss) attributable to Himax Technologies, Inc. stockholders					13,128				(14,650	)
Add: Share-based compensation, net of tax					4,349				101
Add: Acquisition-related charges, net of tax					635				908
Profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges					18,112				(13,641	)
Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges					3.0	%			(2.7	%)
*Gross margin excluding share-based compensation equals gross profit excluding share-based compensation divided by revenues
*Operating margin excluding share-based compensation and acquisition-related charges equals operating income (loss) excluding share-based compensation and acquisition-related charges divided by revenues
*Net margin attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges equals profit (loss) attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges divided by revenues

Diluted Earnings Per ADS Attributable to Himax Technologies, Inc. S tockholders Excluding Share-based Compensation and Acquisition-Related Charges: (Amounts in U.S. Dollars)
	Three Months Ended September 30 ,			Nine Months Ended September 30 ,
	2020			2020
Diluted IFRS earnings per ADS attributable to Himax Technologies, Inc. stockholders	$0.049			$0.076
Add: Share-based compensation per ADS	$0.023			$0.025
Add: Acquisition-related charges per ADS	$0.001			$0.004
Diluted non-IFRS earnings per ADS attributable to Himax Technologies, Inc. stockholders excluding share-based compensation and acquisition-related charges	$0.073			$0.105
Numbers do not add up due to rounding

CALGARY, Alberta, Nov. 12, 2020 (GLOBE NEWSWIRE) — If governments in Canada want to help increase economic productivity growth (and the possibility of a four-day work week), they should remove trade barriers between people and businesses in different provinces, finds a new essay released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Canada may be one country but we’re not one economy, as barriers to investment and trade create artificial walls between our provincial and territorial economies at great cost to productivity and living standards,” said Trevor Tombe, associate professor of economics at the University of Calgary and author of Towards a More Productive and United Canada: The Case for Liberalizing Interprovincial Trade.

For example, according to recent estimates, Canada’s overall economic productivity could increase by 3.8 per cent if our internal trade barriers on goods were eliminated.

In other words, if our governments (including the federal and provincial governments) removed these trade barriers, Canada’s economy would grow by an additional $90 billion per year—or more than $2,300 per person and more than $6,000 per household—which would increase the possibility of a four-day work week.

A separate essay examines other national barriers meant to protect existing companies and firms from both domestic and foreign competition. In Canada, these barriers and protections come in many forms including expensive licensing requirements, restrictions on the nationality of investors, subsidies to established firms, privileged access to government contracts and outright monopoly grants.

Because these barriers limit competition, protected firms become less dynamic, which slows productivity growth, limits opportunities for workers and the possibility of a four-day work week.

“If governments in Canada want to help create more opportunities for entrepreneurs and more pressure on existing firms to remain competitive and responsive to their customers, they should foster more open and competitive markets,” said Vincent Geloso, assistant professor of economics at King’s University College, Fraser Institute senior fellow and author of Barriers to Entry and Productivity Growth.

These essays
are
part of a series published by the
Fraser
Institute
,
which
focu
s
es
on policy reforms that can improve productivity growth and lay the foundation for a
four-
day work week.

MEDIA
CONTACT
S:
Trevor Tombe, Associate Professor, University of Calgary
Vincent Geloso, Senior Fellow, Fraser Institute

To arrange media
interviews or for more information, please contact:

Mark Hasiuk, 604-688-0221 ext. 517, [email protected]

Follow the Fraser Institute on

Twitter

|
Like us
on

 Facebook

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

 

VANCOUVER, British Columbia, Nov. 12, 2020 (GLOBE NEWSWIRE) — P2 Gold Inc. (“P2” or the “Company”) (TSX-V:PGLD) reports that its Board of Directors has appointed Ken McNaughton as a director of the Company.

Mr. McNaughton recently retired as the Chief Exploration Officer at Pretium Resources Inc. At Pretium, Mr. McNaughton had been responsible for Pretium’s greenfield exploration programs since joining the Company in 2011, shortly after it was formed to advance the early exploration-stage Brucejack Project. He had led the exploration programs for both the Brucejack and Snowfield projects prior to their acquisition by Pretium and had been responsible for the exploration program in 2009, when bonanza-grade drilling results established Brucejack as a high-grade gold discovery. Most recently, Mr. McNaughton led Pretium’s exploration of its Bowser Claims, which border the Company’s Todd Creek Property to the west.

The Company also reports that Julian Kemp has resigned as a member of the Board of Directors of the Company, effective November 11, 2020. Mr. Kemp joined the Board prior to the initial public offering of the Company, Chaired the Audit Committee and provided the Board with a depth of knowledge and experience in the areas of finance and corporate governance. The Company thanks Mr. Kemp for his contributions.

About
P2 Gold Inc
.

P2 is a mineral exploration and development company focused on advancing precious metals discoveries and acquisitions in the Pacific Northwest.

For further information, please contact:

P2 Gold Inc. www.p2gold.com Joseph Ovsenek President, CEO and Chairman [email protected] Tel: +1 (604) 558-5167

Chris Hopkins, CFO chopkins@p2gold.com Tel: +1 (416) 786-9793

Forward Looking Information

This press release contains “forward-looking information” within the meaning of applicable securities laws that is intended to be covered by the safe harbours created by those laws. “Forward-looking information” includes statements that use forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “believe”, “continue”, “potential” or the negative thereof or other variations thereof or comparable terminology. Such forward-looking information includes, without limitation, information with respect to the Company’s expectations, strategies and plans for the Silver Reef Property, BAM Property, Todd Creek Property, Stockade Property and Lost Cabin Property including the Company’s planned expenditures and exploration activities.

Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made. Furthermore, such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of the Company to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking information. See “Risk Factors” in the Company’s annual information form dated October 21, 2020 filed on SEDAR at www.sedar.com for a discussion of these risks.

The Company cautions that there can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, investors should not place undue reliance on forward-looking information.

Except as required by law, the Company does not assume any obligation to release publicly any revisions to forward-looking information contained in this press release to reflect events or circumstances after the date hereof.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SHANGHAI, China, Nov. 12, 2020 (GLOBE NEWSWIRE) — Pinduoduo Inc. (“Pinduoduo” or the “Company”) (NASDAQ: PDD), an innovative and fast growing technology platform and one of the leading Chinese e-commerce players, today announced its unaudited financial results for the third quarter ended September 30, 2020.

Third
Q
uarter
20
20
Highlights

• GMV
  ¹ in the twelve-month period ended September 30, 2020 was RMB1,457.6 billion (US$²214.7 billion), an increase of 73% from RMB840.2 billion in the twelve-month period ended September 30, 2019.

• Total revenues in the quarter were RMB14,209.8 million (US$2,092.9 million), an increase of 89% from RMB7,513.9 million in the same quarter of 2019.

• Average monthly active users
  ³ in the quarter were 643.4 million, an increase of 50% from 429.6 million in the same quarter of 2019.

• Active buyers
  ⁴ in the twelve-month period ended September 30, 2020 were 731.3 million, an increase of 36% from 536.3 million in the twelve-month period ended September 30, 2019.

• Annual spending per active buyer
  ⁵ in the twelve-month period ended September 30, 2020 was RMB1,993.1 (US$293.6), an increase of 27% from RMB1,566.7 in the twelve-month period ended September 30, 2019.

“This quarter we continued to invest in user engagement, which resulted in strong growth of MAUs and active buyers,” commented Mr. Lei Chen, Chief Executive Officer of Pinduoduo. “Our strategic priorities are informed by the changes in consumer habits that we observe and anticipate. We continue to innovate in order to meet such needs, especially in the agricultural industry.”

“This quarter we started Duo Duo Maicai to address the structural changes we see in how consumers fulfill their daily grocery needs. Duo Duo Maicai is a natural extension of our existing business and offers consumers a complementary experience to our main app,” added Mr. David Liu, Vice President of Strategy. “It is a long-term business that aligns well with our commitment to digitize China’s agricultural value chain and to be China’s leading agriculture platform. We are committed to continued investments into the agricultural supply chain and ecosystem.”

“Despite industry seasonality, we continued to deliver solid execution through the third quarter and generated positive cash flow from operations,” added Mr. Tony Ma, Vice President of Finance. “As a result, our trailing 12-month GMV grew 73% from a year ago, and our total revenues in the September quarter increased by 89% year-over-year.”

Third
Quarter
2
020
Unaudited
Financial Results

Total revenues were RMB14,209.8 million (US$2,092.9 million), an increase of 89% from RMB7,513.9 million in the same quarter of 2019. The increase was primarily due to an increase in revenues from online marketing services.

• Revenues from online marketing services
  and others were RMB12,877.7 million (US$1,896.7 million), an increase of 92% from RMB6,711.4 million in the same quarter of 2019. The increase was primarily attributable to higher advertising demand from merchants on our platform given continued advancement in our brand and market position.

• Revenues from
  transaction services were RMB1,332.1 million (US$196.2 million), an increase of 66% from RMB802.5 million in the same quarter of 2019, primarily due to the increase in GMV.

Total costs of revenues were RMB3,260.2 million (US$480.2 million), an increase of 78% from RMB1,833.3 million in the same quarter of 2019. The increase was mainly due to higher payment processing fee, higher costs for cloud services, and other expenses directly attributable to online marketing services and other revenues.

Total operating expenses were RMB12,245.4 million (US$1,803.5 million), compared with RMB8,472.6 million in the same quarter of 2019.

• Sales and marketing expenses were RMB10,071.9 million (US$1,483.4 million), an increase of 46% from RMB6,908.8 million in the same quarter of 2019, mainly due to an increase in advertising expenses and promotion and coupon expenses.

• General and administrative expenses were RMB368.6 million (US$54.3 million), a decrease of 16% from RMB436.6 million in the same quarter of 2019. Our G&A expenses in the third quarter of 2019 included certain expenses relating to our initiatives to alleviate rural poverty. We did not incur such expenses this quarter.

• Research and development expenses were RMB1,804.9 million (US$265.8 million), an increase of 60% from RMB1,127.2 million in the same quarter of 2019. The increase was primarily due to an increase in headcount and the recruitment of more experienced R&D personnel, and an increase in R&D-related cloud services expenses.

Operating loss was RMB1,295.7 million (US$190.8 million), compared with RMB2,792.0 million in the same quarter of 2019. Non-GAAP operating loss⁶ was RMB339.8 million (US$50.0 million), compared with RMB2,123.5 million in the same quarter of 2019.

Net
loss
a
ttributable to ordinary shareholders was RMB784.7 million (US$115.6 million), compared with RMB2,335.0 million in the same quarter of 2019. Non-GAAP net gain attributable to ordinary shareholders⁶ was RMB466.4 million (US$68.7 million), compared with non-GAAP net loss of RMB1,660.4 million in the same quarter of 2019.

Basic and d
iluted net
loss
per ADS were RMB0.66 (US$0.10), compared with RMB2.00 in the same quarter of 2019. Non-GAAP basic net gain per ADS were RMB0.39 (US$0.06), compared with RMB1.44 loss in the same quarter of 2019. Non-GAAP diluted net gain per ADS were RMB0.33 (US$0.05), compared with RMB1.44 loss in the same quarter of 2019.

Net cash
provided by
operating activities was RMB8,321.8 million (US$1,225.7 million), compared with RMB2,618.2 million in the same quarter of 2019, primarily due to an increase in online marketing services revenues.

Cash
,
cash equivalents
and short-term investments were RMB45.6 billion (US$6.7 billion) as of September 30, 2020, compared with RMB41.1 billion as of December 31, 2019.

Conference Call

The Company will host a conference call to discuss the earnings at 7:30 AM U.S. Eastern Time on Thursday, November 12, 2020 (8:30 PM Beijing/Hong Kong Time on Thursday, November 12, 2020).

Please pre-register to join this conference using the registration link below. Please dial in using the participant dial-in numbers, direct event passcode, PIN and unique registrant ID which would be provided to you upon registering.

Pre-register at: http://apac.directeventreg.com/registration/event/9476278

A telephone replay of the call will be available after the conclusion of the conference call until 7:59 AM Eastern Time on November 20, 2020.

Dial-in numbers for the replay are as follows:

International:	+61-2-8199-0299
U.S.:	+1-646-254-3697
Passcode:	9476278

A live and archived webcast of the conference call will be available at http://investor.pinduoduo.com/

_______________
¹   “GMV” refers to the total value of all orders for products and services placed on the Pinduoduo mobile platform, regardless of whether the products and services are actually sold, delivered or returned. Buyers on the platform are not charged for shipping fees in addition to the listed price of merchandise. Hence, merchants may embed the shipping fees in the listed price. If embedded, then the shipping fees are included in GMV. As a prudential matter aimed at eliminating any influence on Pinduoduo’s GMV of irregular transactions, the Company excludes from its calculation of GMV transactions in certain product categories over certain amounts and transactions by buyers in certain product categories over a certain amount per day.
²   This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB6.7896 to US$1.00, the noon buying rate in effect on September 30, 2020 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
³   “Monthly active users” refers to the number of user accounts that visited the Pinduoduo mobile app during a given month, which does not include those that accessed the platform through social networks and access points.
⁴   “Active buyers” in a given period refers to the number of user accounts that placed one or more orders (i) on the Pinduoduo mobile app, and (ii) through social networks and access points in that period, regardless of whether the products and services are actually sold, delivered or returned.
⁵   “Annual spending per active buyer” in a given period refers to the quotient of total GMV in that period divided by the number of active buyers in the same period.
⁶   The Company’s non-GAAP financial measures exclude share-based compensation expenses, interest expenses related to the convertible bonds’ amortization to face value and fair value change of long-term investments. See “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures” set forth at the end of this press release.

Use of Non-GAAP Financial Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP operating loss and non-GAAP net loss attributable to ordinary shareholders, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company’s non-GAAP financial measures exclude share-based compensation expenses, interest expenses related to the convertible bonds’ amortization to face value and fair value change of long-term investments.

The Company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The Company believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based compensation expenses, interest expenses related to the convertible bonds’ amortization to face value and fair value change of long-term investments, which are non-cash items. The Company also believes that the non-GAAP financial measures could provide further information about the Company’s results of operations, and enhance the overall understanding of the Company’s past performance and future prospects.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. The Company’s non-GAAP financial measures do not reflect all items of income and expenses that affect the Company’s operations and do not represent the residual cash flow available for discretionary expenditures. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The Company encourages you to review the Company’s financial information in its entirety and not rely on a single financial measure.

For more information on the non-GAAP financial measures, please see the table captioned “Reconciliation of Non-GAAP Measures to The Most Directly Comparable GAAP Measures” set forth at the end of this press release.

Safe Harbor Statements

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as Pinduoduo’s strategic and operational plans, contain forward-looking statements. Pinduoduo may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Pinduoduo’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Pinduoduo’s growth strategies; its future business development, results of operations and financial condition; its ability to understand buyer needs and provide products and services to attract and retain buyers; its ability to maintain and enhance the recognition and reputation of its brand; its ability to rely on merchants and third-party logistics service providers to provide delivery services to buyers; its ability to maintain and improve quality control policies and measures; its ability to establish and maintain relationships with merchants; trends and competition in China’s e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of China’s e-commerce market; PRC governmental policies and regulations relating to Pinduoduo’s industry, and general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Pinduoduo’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Pinduoduo undertakes no obligation to update any forward-looking statement, except as required under applicable law.

About Pinduoduo Inc.

Pinduoduo is an innovative and fast growing technology platform that provides buyers with value-for-money merchandise and fun and interactive shopping experiences. The Pinduoduo mobile platform offers a comprehensive selection of attractively priced merchandise, featuring a dynamic social shopping experience that leverages social networks effectively.

For more information, please visit http://investor.pinduoduo.com/. We also share Pinduoduo news and thought pieces on industry trends at our content hub at https://stories.pinduoduo-global.com/ which may be of interest to investors.

For investor and media inquiries, please contact:

Pinduoduo Inc.

[email protected]

[email protected]

PINDUODUO INC.  CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December 31 , 201 9			September 30, 20 20
		RMB			RMB			US$
					(Unaudited)
ASSETS
Current a ssets
Cash and cash equivalents		5,768,186			5,715,676			841,828
Restricted cash		27,577,671			38,813,084			5,716,549
Receivables from online payment platforms		1,050,974			531,009			78,209
Short-term investments		35,288,827			39,859,089			5,870,609
Amounts due from related parties		2,365,528			3,449,126			508,001
Prepayments and other current assets		950,277			1,802,585			265,492
Total current assets		73,001,463			90,170,569			13,280,688
Non-current assets
Property, equipment and software, net		41,273			46,509			6,850
Intangible asset		1,994,292			1,486,959			219,005
Right-of-use assets		517,188			534,076			78,661
Other non-current assets		503,120			7,172,813			1,056,441
Total non-current assets		3,055,873			9,240,357			1,360,957
Total a ssets		76,057,336			99,410,926			14,641,645

PINDUODUO INC.  CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”))
		As of
		December 31 , 201 9			September 30, 20 20
		RMB			RMB			US$
					(Unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY
L IABILITIES
Current l iabilities
Amounts due to related parties		1,502,892			3,298,767			485,856
Customer advances and deferred revenues		605,970			1,042,093			153,484
Payable to merchants		29,926,488			40,299,835			5,935,524
Accrued expenses and other liabilities		4,877,062			6,904,953			1,016,988
Merchant deposits		7,840,912			10,574,559			1,557,464
Short-term borrowings		898,748			2,773,023			408,422
Lease liabilities		115,734			182,318			26,853
Total current liabilities		45,767,806			65,075,548			9,584, 59 1
Non-current liabilities
Convertible bonds		5,206,682			5,504,873			810,780
Lease liabilities		428,593			390,803			57,559
Other non-current liabilities		7,389			36,040			5,308
Total non-current liabilities		5,642,664			5,931,716			873,647
Total l iabilities		51,410,470			71,007,264			10,458, 2 38
SHAREHOLDERS’ EQUITY
Ordinary shares		148			153			23
Additional paid-in capital		41,493,949			51,969,053			7,654,214
Accumulated other comprehensive income		1,448,230			533,303			78,547
Accumulated deficits		(18,295,461	)		(24,098,847	)		(3,549,377	)
Total shareholders’ equity		24,646,866			28,403,662			4,183, 40 7
Total liabilities and shareholders’ equity		76,057,336			99,410,926			14,641,645

        

PINDUODUO INC.  CONDENSED CONSOLIDATED STATEMENTS OF LOSS  (Amounts in thousands of RMB and US$)
		For the three months ended September 30 ,									For the nine months ended September 30 ,
		201 9			20 20						201 9			20 20
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues		7,513,948			14,209,782			2,092,875			19,349,160			32,944,156			4,852,150
Costs of revenues		(1,833,318	)		(3,260,155	)		(480,169	)		(4,301,341	)		(7,752,517	)		(1,141,823	)
Gross profit		5,680,630			10,949,627			1,612,706			15,047,819			25,191,639			3,710,327
Sales and marketing expenses		(6,908,755	)		(10,071,868	)		(1,483,426	)		(17,901,713	)		(26,482,073	)		(3,900,388	)
General and administrative expenses		(436,610	)		(368,611	)		(54,291	)		(951,030	)		(1,101,727	)		(162,267	)
Research and development expenses		(1,127,238	)		(1,804,886	)		(265,831	)		(2,597,983	)		(4,940,392	)		(727,641	)
Total operating expenses		(8,472,603	)		(12,245,365	)		(1,803,548	)		(21,450,726	)		(32,524,192	)		(4,790,296	)
Operating loss		(2,791,973	)		(1,295,738	)		(190,842	)		(6,402,907	)		(7,332,553	)		(1,079,969	)
Interest and investment income, net		414,615			485,413			71,494			1,069,285			1,783,971			262,751
Interest expenses		(6,150	)		(165,638	)		(24,396	)		(6,150	)		(479,190	)		(70,577	)
Foreign exchange gain		33,542			97,861			14,413			76,416			76,191			11,222
Other income, net		23,176			57,936			8,533			55,608			112,553			16,577
L oss before income tax and share of results of equity investee s		(2,326,790	)		(820,16 6	)		(120,798	)		(5,207,748	)		(5,839, 02 8	)		(859,996	)
Share of results of equity investees		(8,218	)		35,458			5,222			(8,218	)		35,642			5,249
Income tax expenses		–			–			–			–			–			–
Net loss		(2,335,008	)		(784,70 8	)		(115,576	)		(5,215,966	)		(5,803,38 6	)		(854,747	)

PINDUODUO INC.  CONDENSED CONSOLIDATED STATEMENTS OF LOSS  (Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended September 30 ,									For the nine months ended September 30 ,
		201 9			20 20						201 9			20 20
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			( Una udited)			(Unaudited)			(Unaudited)
Net loss		(2,335,008	)		(784, 70 8	)		(115,576	)		(5,215,966	)		(5,803,38 6	)		(854,747	)
Net loss attributable to ordinary shareholders		(2,335,008	)		(784, 70 8	)		(115,576	)		(5,215,966	)		(5,803,38 6	)		(854,747	)
Loss per ordinary share:
-Basic		(0.50	)		(0.16	)		(0.02	)		(1.13	)		(1.22	)		(0.18	)
-Diluted		(0.50	)		(0.16	)		(0.02	)		(1.13	)		(1.22	)		(0.18	)
Loss per ADS (4 ordinary shares equals 1 ADS ):
-Basic		(2.00	)		(0.66	)		(0.10	)		(4.52	)		(4.90	)		(0.72	)
-Diluted		(2.00	)		(0.66	)		(0.10	)		(4.52	)		(4.90	)		(0.72	)
Weighted average number of outstanding ordinary shares ( in thousands) :
-Basic		4,649,429			4,786,276			4,786,276			4,619,623			4,739,382			4,739,382
-Diluted		4,649,429			4,786,276			4,786,276			4,619,623			4,739,382			4,739,382

PINDUODUO INC. NOTES TO FINANCIAL INFORMATION (Amounts in thousands of RMB and US$)
		For the three months ended September 30 ,									For the nine months ended September 30 ,
		2019			2020						2019			2020
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues
Online marketing services and others		6,711,455			12,877,658			1,896,674			17,126,942			29,424,626			4,333,779
Transaction services		802,493			1,332,124			196,201			2,222,218			3,519,530			518,371
Total Revenues		7,513,948			14,209,782			2,092,875			19,349,160			32,944,156			4,852,150

        

PINDUODUO INC. NOTES TO FINANCIAL INFORMATION (Amounts in thousands of RMB and US$)
		For the three months ended September 30 ,									For the nine months ended September 30 ,
		2019			2020						2019			2020
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			( Una udited)			(Unaudited)			(Unaudited)
Share-based compensation costs included in:
Costs of revenues		8,567			4,424			652			16,579			22,368			3,294
Sales and marketing expenses		219,008			335,331			49,389			623,508			816,672			120,283
General and administrative expenses		206,066			236,011			34,761			562,118			714,515			105,237
Research and development expenses		234,786			380,163			55,991			556,829			1,126,258			165,880
Total		668,427			955,929			140,79 3			1,759,034			2,679,813			394,694

PINDUODUO INC.   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of RMB and US$)
		For the three months ended September 30 ,									For the nine months ended September 30 ,
		201 9			20 20						201 9			20 20
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net cash provided by operating activities		2,618,232			8,321,792			1,225,667			5,222,963			13,250,058			1,951,521
Net cash used in investing activities		(16,175,856	)		(455,054	)		(67,022	)		(16,857,806	)		(11,735,064	)		(1,728,387	)
Net cash provided by financing activities		6,967,004			–			–			14,960,832			9,624,213			1,417,493
Effect of exchange rate changes on cash, cash equivalents and restricted cash		292,531			(15,868	)		(2,337	)		500,402			43,696			6,436
(Decrease)/increase in cash, cash equivalents and restricted cash		(6,298,089	)		7,850,870			1,156,308			3,826,391			11,182,903			1,647,063
Cash, cash equivalents and restricted cash at beginning of period		40,664,166			36,677,890			5,402, 0 69			30,539,686			33,345,857			4,911,314
Cash, cash equivalents and restricted cash at end of period		34,366,077			44,528,760			6,558,37 7			34,366,077			44,528,760			6,558,377

PINDUODUO INC. RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES (Amounts in thousands of RMB and US$, except for per share data)
		For the three months ended September 30 ,									For the nine months ended September 30 ,
		201 9			20 20						201 9			20 20
		RMB			RMB			US$			RMB			RMB			US$
		(Unaudited)			(Una udited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Operating loss		(2,791,973	)		(1,295,738	)		(190,842	)		(6,402,907	)		(7,332,553	)		(1,079,969	)
Add: Share-based compensation		668,427			955,929			140,793			1,759,034			2,679,813			394,694
Non-GAAP operating loss		(2,123,546	)		(339,809	)		(50,049	)		(4,643,873	)		(4,652,740	)		(685,275	)
Net loss attributable to ordinary shareholders		(2,335,008	)		(784,708	)		(115,575	)		(5,215,966	)		(5,803,386	)		(854,747	)
Add: Share-based compensation		668,427			955,929			140,793			1,759,034			2,679,813			394,694
Add: Interest expense related to convertible bonds’ amortization to face value		6,150			147,081			21,663			6,150			433,838			63,897
Add/Less: Loss/(gain) from fair value change of long-term investments		–			148,093			21,812			–			(90,755	)		(13,367	)
Non-GAAP net (loss)/gain attributable to ordinary shareholders		(1,660,431	)		466,395			68,693			(3,450,782	)		(2,780,490	)		(409,523	)
Weighted-average number of outstanding ordinary shares – basic (in thousands)		4,649,429			4,786,276			4,786,276			4,619,623			4,739,382			4,739,382
Weighted-average number of outstanding ordinary shares – diluted (in thousands)		4,649,429			5,576,093			5,576,093			4,619,623			4,739,382			4,739,382
Basic loss per ordinary share		(0.50	)		(0.16	)		(0.02	)		(1.13	)		(1.22	)		(0.18	)
Add: Non-GAAP adjustments to (loss)/gain per ordinary share		0.14			0.26			0.03			0.38			0.63			0.09
Non-GAAP basic (loss)/gain per ordinary share		(0.36	)		0.10			0.01			(0.75	)		(0.59	)		(0.09	)
Non-GAAP basic (loss)/gain per ADS		(1.44	)		0.39			0.06			(3.00	)		(2.35	)		(0.35	)
Diluted loss per ordinary share		(0.50	)		(0.16	)		(0.02	)		(1.13	)		(1.22	)		(0.18	)
Add: Non-GAAP adjustments to (loss)/gain per ordinary share		0.14			0.24			0.03			0.38			0.63			0.09
Non-GAAP diluted (loss)/gain per ordinary share		(0.36	)		0.08			0.01			(0.75	)		(0.59	)		(0.09	)
Non-GAAP diluted (loss)/gain per ADS		(1.44	)		0.33			0.05			(3.00	)		(2.35	)		(0.35	)