Tower Semiconductor Reports Second Quarter 2021 Record Revenues; Guides Third Quarter Further Strong Revenue Growth
[ Back ]   [ More News ]   [ Home ]
Tower Semiconductor Reports Second Quarter 2021 Record Revenues; Guides Third Quarter Further Strong Revenue Growth

MIGDAL HAEMEK, Israel, Aug. 02, 2021 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the second quarter ended June 30, 2021.

Highlights

Second Quarter of 2021 Results Overview

Revenue for the second quarter of 2021 was $362 million, the highest quarterly revenue in Company’s history, as compared to $310 million in the second quarter of 2020, reflecting 17% year over year growth. Organic revenue for the second quarter of 2021, defined as total revenue excluding revenues from Nuvoton Japan (previously named Panasonic Semiconductor Solutions) and from Maxim in the San Antonio fab, grew by 26% year over year.

Gross profit for the second quarter of 2021 was $74 million, 28% higher than $58 million in the second quarter of 2020.

Operating profit for the second quarter of 2021 was $34 million, 54% higher than $22 million in the second quarter of 2020.

Net profit for the second quarter of 2021 was $31 million, or $0.29 basic earnings per share, 62% higher as compared to net profit of $19 million or $0.18 basic earnings per share in the second quarter of 2020.

Cash flow generated from operating activities in the second quarter of 2021 was $93 million with investment in fixed assets of $56 million, net. In addition, in the second quarter of 2021, the company repaid $20 million of its debt and invested $17 million in deposits and marketable securities. 

Agreement with ST Microelectronics accelerating the ramp-up of Agrate 300mm fab to large volumes
In June 2021, Tower and ST Microelectronics announced joining forces to accelerate Agrate 300mm factory ramp-up. Tower and ST will share the cleanroom in Agrate facility, with Tower installing its own equipment in one third of the total space. The transaction will support Tower’s customers’ increasing demand for analog RF, power platforms, displays and other technologies, tripling its 300mm foundry capacity.

Manufacturing Expansion and Capabilities
The Company continues to execute its $150 million capacity expansion plan and is now announcing an additional $100 million investment for further expansion of 200mm differentiated platforms.

Business Outlook
Tower Semiconductor guides revenue for the third quarter of 2021 to be $385 million, with an upward or downward range of 5%. Mid-range revenue guidance represents year over year 24% total growth and 38% organic growth.

Mr. Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, stated: “We are excited with the second quarter 2021 record revenue performance, leading to a third quarter revenue guidance of substantial continued growth, breaking a $1.5 billion annual run rate. We remain confident that we are serving the right customers in the right markets as evidenced by the 38% mid-range year over year organic revenue growth guidance.”

Ellwanger added, “We are effectively executing our expansion plans, and hence expect continued fourth quarter 2021 growth in both top and bottom lines. Our announced partnership with ST Microelectronics at the Agrate, Italy 300mm factory, will significantly enhance our 300mm capabilities, in order to further boost our leading position in advanced 300mm based analog RF, power platforms, displays and other technologies.”

Teleconference and Webcast
Tower Semiconductor will host an investor conference call today, Monday, August 2, 2021, at 10:00 a.m. Eastern time (9:00 a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time and 5:00 p.m. Israel time) to discuss the company’s financial results for the second quarter of 2021 and its outlook.

This call will be webcast and can be accessed via Tower Semiconductor’s website at www.towersemi.com or by calling 1-888-642-5032 (U.S. Toll-Free), 03-918-0610 (Israel), +972-3-918-0610 (International).  For those who are not available to listen to the live broadcast, the call will be archived on Tower Semiconductor’s website for 90 days.

The Company presents its financial statements in accordance with U.S. GAAP.  The financial information included in the tables below includes unaudited condensed financial data. Some of the financial information in this release and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, which we describe in this release as “adjusted” financial measures, are non-GAAP financial measures as defined in Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission as they apply to our Company. These adjusted financial measures are calculated excluding one or both of the following: (1) amortization of acquired intangible assets and (2) compensation expenses in respect of equity grants to directors, officers, and employees. These adjusted financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the adjusted financial measures, as well as a reconciliation between the adjusted financial measures and the comparable GAAP financial measures. As used and/or presented in this release and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, as well as calculated in the tables herein, the term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists of net profit in accordance with GAAP, excluding financing and other income (expense), net, taxes, non-controlling interest, depreciation and amortization expense and stock-based compensation expense. EBITDA is reconciled in the tables below from GAAP operating profit. EBITDA is not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies. EBITDA and the adjusted financial information presented herein and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. The term Net Cash, as used and/or presented in this release and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, is comprised of cash, cash equivalents, short-term deposits and marketable securities less debt amounts as presented in the balance sheets included herein. The term Net Cash is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for cash, debt, operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. The term Free Cash Flow, as used and/or presented in this release and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, is calculated to be net cash provided by operating activities (in the amounts of $93 million, $87 million and $67 million for the three months periods ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively) less cash used for investments in property and equipment, net (in the amounts of $56 million, $49 million and $63 million for the three months periods ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively).  The term Free Cash Flow is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP.

About Tower Semiconductor
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), the leading foundry of high value analog semiconductor solutions, provides technology and manufacturing platforms for integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating positive and sustainable impact on the world through long term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle, as well as process transfer services including development, transfer, and optimization to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor operates two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm) and three facilities in Japan (two 200mm and one 300mm) through TPSCo. For more information, please visit:  www.towersemi.com

CONTACTS:
Noit Levy | Investor Relations | +972 74 737 7556 | noitle@towersemi.com

This press release, including our revenue guidance and other projections with respect to our business and activities, includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements and you should not place any undue reliance on such forward-looking statements. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) demand in our customers’ end markets; (ii) over demand for our foundry services and/or products that exceeds our capacity; (iii) maintaining existing customers and attracting additional customers, (iv) high utilization and its effect on cycle time, yield and on schedule delivery which may cause customers to transfer their product(s) to other fabs, (v) operating results fluctuate from quarter to quarter making it difficult to predict future performance, (vi) impact of our debt and other liabilities on our financial position and operations, (vii) our ability to successfully execute acquisitions, integrate them into our business, utilize our expanded capacity and find new business, (viii) fluctuations in cash flow, (ix) our ability to satisfy the covenants stipulated in our agreements with our lender banks and bondholders (as of June 30, 2021 we are in compliance with all such covenants included in our banks’ agreements, bond G indenture and others), (x) pending litigation, (xi) new customer engagements, qualification and production ramp-up at our facilities, including TPSCo and the San Antonio facility, (xii) meeting the conditions set in the approval certificates received from the Israeli Investment Center under which we received a significant amount of grants in past years, (xiii) receipt of orders that are lower than the customer purchase commitments, (xiv) failure to receive orders currently expected, (xv) possible incurrence of additional indebtedness, (xvi) effect of global recession, unfavorable economic conditions and/or credit crisis, (xvii) our ability to accurately forecast financial performance, which is affected by limited order backlog and lengthy sales cycles, (xviii) possible situations of obsolete inventory if forecasted demand exceeds actual demand when we manufacture products before receipt of customer orders, (xix) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results and future average selling price erosion, (xx) the execution of debt re-financing and/or other fundraising activities to enable the service of our debt and/or other liabilities and/or for strategic opportunities, including to fund Agrate fab’s significant 300mm capacity investments, in addition to other previously announced capacity expansion plans, and the possible unavailability of such financing and/or the availability of such financing on unfavorable terms, (xxi) operating our facilities at high utilization rates which is critical in order to cover a portion or all of the high level of fixed costs associated with operating a foundry, and our debt, in order to improve our results, (xxii) the purchase of equipment to increase capacity, the timely completion of the equipment installation, technology transfer and raising the funds therefor, (xxiii) the concentration of our business in the semiconductor industry, (xxiv) product returns, (xxv) our ability to maintain and develop our technology processes and services to keep pace with new technology, evolving standards, changing customer and end-user requirements, new product introductions and short product life cycles, (xxvi) competing effectively, (xxvii) use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers; (xxviii) achieving acceptable device yields, product performance and delivery times, (xxix) our dependence on intellectual property rights of others, our ability to operate our business without infringing others’ intellectual property rights and our ability to enforce our intellectual property against infringement, (xxx) our fab3 landlord’s construction project adjacent to our fabrication facility, including possible temporary reductions or interruptions in the supply of utilities and/or fab manufacturing, as well as claims that our noise abatement efforts are not adequate under the terms of the amended lease; (xxxi) retention of key employees and recruitment and retention of skilled qualified personnel, (xxxii) exposure to inflation, currency rates (mainly the Israeli Shekel and Japanese Yen) and interest rate fluctuations and risks associated with doing business locally and internationally, as well fluctuations in the market price of our traded securities, (xxxiii) issuance of ordinary shares as a result of conversion and/or exercise of any of our convertible securities, as well as any sale of shares by any of our shareholders, or any market expectation thereof, which may depress the market price of our ordinary shares and may impair our ability to raise future capital, (xxxiv) meeting regulatory requirements worldwide, including environmental and governmental regulations, (xxxv) potential engagement for fab establishment, joint venture and/or capital lease transactions for capacity enhancement in advanced technologies, including risks and uncertainties associated with Agrate fab establishment project, its qualification schedule, customer engagements, cost structure and investment amounts and other terms, which may entail new customer engagements, technology, equipment and process qualification and production facility ramp-up, and which may require additional funding to cover its significant capacity investment needs and other payments, the availability of which funding cannot be assured on favorable terms, if at all; (xxxvi) potential impact on TPSCo and the Company due to the purchase of 49% of TPSCo by NTCJ (previously named PSCS) from Panasonic, (xxxvii) industry and market impact due to the coronavirus and its potential impact on our business, operational continuity, supply chain, revenue and profitability; (xxxviii) potential security, cyber and privacy breaches, and (xxxix) business interruption due to fire and other natural disasters, the security situation in Israel and other events beyond our control such as power interruptions.

A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect our business is included under the heading "Risk Factors" in Tower’s most recent filings on Forms 20-F and 6-K, as were filed with the Securities and Exchange Commission (the “SEC”) and the Israel Securities Authority. Future results may differ materially from those previously reported. The Company does not intend to update, and expressly disclaims any obligation to update, the information contained in this release.


 

(Financial tables follow)

 

 TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 (dollars in thousands)
             
             
        June 30, March 31, December 31,
        2021 2021 2020
             
 A S S E T S       
             
  CURRENT ASSETS       
   Cash and cash equivalents $215,755$215,581$211,683
   Short-term deposits  323,713 307,386 310,230
   Marketable securities  189,489 187,027 188,967
   Trade accounts receivable  144,868 164,166 162,100
   Inventories  209,306 197,189 199,126
   Other current assets  39,929 27,854 30,810
    Total current assets  1,123,060 1,099,203 1,102,916
             
  LONG-TERM INVESTMENTS 41,453 40,765 40,699
             
  PROPERTY AND EQUIPMENT, NET 859,589 827,230 839,171
             
  GOODWILL AND INTANGIBLE ASSETS, NET 16,978 17,471 17,962
             
  DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET 91,312 92,980 93,401
             
    TOTAL ASSETS $2,132,392$2,077,649$2,094,149
             
             
 LIABILITIES AND SHAREHOLDERS' EQUITY      
             
  CURRENT LIABILITIES       
   Short-term debt $104,062$101,295$106,513
   Trade accounts payable  100,426 85,288 96,940
   Deferred revenue and customers' advances 19,608 20,814 10,027
   Other current liabilities  78,411 66,160 59,432
    Total current liabilities  302,507 273,557 272,912
             
  LONG-TERM DEBT  234,500 241,634 283,765
             
  LONG-TERM CUSTOMERS' ADVANCES 32,047 33,971 25,451
             
  EMPLOYEE RELATED LIABILITIES 15,958 15,447 15,833
             
  DEFERRED TAX AND OTHER LONG-TERM LIABILITIES  29,771 35,011 41,286
             
    TOTAL LIABILITIES  614,783 599,620 639,247
             
    TOTAL SHAREHOLDERS' EQUITY 1,517,609 1,478,029 1,454,902
             
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,132,392$2,077,649$2,094,149
             



 TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 
 (dollars and share count in thousands, except per share data) 
           
           
     Three months ended 
     June 30, March 31, June 30, 
     2021 2021 2020 
           
 REVENUES$362,138$347,214$310,090 
           
 COST OF REVENUES 288,383 277,400 252,385 
           
   GROSS PROFIT 73,755 69,814 57,705 
           
 OPERATING COSTS AND EXPENSES:       
           
  Research and development 21,081 20,343 19,424 
  Marketing, general and administrative 18,671 16,991 16,154 
           
     39,752 37,334 35,578 
           
           
   OPERATING PROFIT 34,003 32,480 22,127 
           
 FINANCING AND OTHER INCOME (EXPENSE), NET (484) (7,842) 1,831 
           
   PROFIT BEFORE INCOME TAX 33,519 24,638 23,958 
           
 INCOME TAX BENEFIT (EXPENSE), NET (2,202) 5,876 (2,484) 
           
   NET PROFIT 31,317 30,514 21,474 
           
 Net income attributable to non-controlling interest (451) (2,192) (2,422) 
           
   NET PROFIT ATTRIBUTABLE TO THE COMPANY$30,866$28,322$19,052 
           
           
 BASIC EARNINGS PER SHARE$0.29$0.26$0.18 
           
 Weighted average number of shares 108,043 107,940 106,956 
           
           
 DILUTED EARNINGS PER SHARE$0.28$0.26$0.18 
           
 Weighted average number of shares 109,629 109,462 108,277 
           
           
 RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:     
           
  GAAP NET PROFIT$30,866$28,322$19,052 
   Stock based compensation 5,971 4,906 3,795 
   Amortization of acquired intangible assets 492 491 493 
  ADJUSTED NET PROFIT$37,329$33,719$23,340 
           
 ADJUSTED EARNINGS PER SHARE:       
           
  Basic$0.35$0.31$0.22 
           
  Diluted$0.34$0.31$0.22 
           



 TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 (dollars and share count in thousands, except per share data)
        
        
     Six months ended
     June 30,
     2021 2020
        
 REVENUES$709,352$610,261
        
 COST OF REVENUES 565,783 500,013
        
   GROSS PROFIT 143,569 110,248
        
 OPERATING COSTS AND EXPENSES:    
        
  Research and development 41,424 38,838
  Marketing, general and administrative 35,662 32,845
        
     77,086 71,683
        
        
   OPERATING PROFIT 66,483 38,565
        
 FINANCING AND OTHER EXPENSE, NET (8,326) (282)
        
   PROFIT BEFORE INCOME TAX 58,157 38,283
        
 INCOME TAX BENEFIT (EXPENSE), NET 3,674 (778)
        
   NET PROFIT 61,831 37,505
        
 Net income attributable to non-controlling interest (2,643) (1,433)
        
   NET PROFIT ATTRIBUTABLE TO THE COMPANY$59,188$36,072
        
        
 BASIC EARNINGS PER SHARE$0.55$0.34
        
 Weighted average number of shares 107,992 106,885
        
        
 DILUTED EARNINGS PER SHARE$0.54$0.33
        
 Weighted average number of shares 109,545 108,213
        
        
 RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:  
        
  GAAP NET PROFIT$59,188$36,072
   Stock based compensation 10,877 8,338
   Amortization of acquired intangible assets 983 803
  ADJUSTED NET PROFIT$71,048$45,213
        
 ADJUSTED EARNINGS PER SHARE:    
        
  Basic$0.66$0.42
        
  Diluted$0.65$0.42
        


 

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES 
RECONCILIATION FROM GAAP OPERATING PROFIT TO EBITDA (UNAUDITED) 
(dollars in thousands) 
          
          
    Three months ended 
    June 30, March 31, June 30, 
    2021 2021 2020 
          
          
          
 GAAP OPERATING PROFIT $34,003$32,480$22,127 
  Depreciation of fixed assets  58,474 56,624 55,175 
  Stock based compensation 5,971 4,906 3,795 
  Amortization of acquired intangible assets 492 491 493 
          
 EBITDA$98,940$94,501$81,590 
          
          
          
    Six months ended   
    June 30, June 30,   
    2021 2020   
          
 GAAP OPERATING PROFIT $66,483$38,565   
  Depreciation of fixed assets  115,098 106,659   
  Stock based compensation 10,877 8,338   
  Amortization of acquired intangible assets 983 803   
          
 EBITDA$193,441$154,365   
          

 

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES 
CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED) 
(dollars in thousands) 
         
         
   Three months ended 
   June 30, March 31, June 30, 
   2021 2021 2020 
         
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD$215,581$211,683$251,348 
         
 Net cash provided by operating activities 93,250 87,413 66,603 
 Investments in property and equipment, net (56,184) (49,415) (62,537) 
 Exercise of options -- 364 1,127 
 Debt repaid, net (19,769) (29,375) (5,000) 
 Effect of Japanese Yen exchange rate change over cash balance (68) (3,478) 682 
 Investments in short-term deposits, marketable securities and other assets, net (17,055) (1,611) 6,570 
         
CASH AND CASH EQUIVALENTS - END OF PERIOD$215,755$215,581$258,793 
         
         
         
   Six months ended   
   June 30,   
   2021 2020   
         
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD$211,683$355,561   
         
 Net cash provided by operating activities 180,663 134,939   
 Investments in property and equipment, net (105,599) (125,444)   
 Exercise of options 364 1,214   
 Debt repaid, net (49,144) (29,197)   
 Effect of Japanese Yen exchange rate change over cash balance (3,546) 506   
 Investments in short-term deposits, marketable securities and other assets, net (18,666) (78,786)   
         
CASH AND CASH EQUIVALENTS - END OF PERIOD$215,755$258,793   
         



TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
(dollars in thousands) 
                 
       Six months ended Three months ended 
       June 30, June 30, June 30, March 31, June 30, 
       2021 2020 2021 2021 2020 
                 
CASH FLOWS - OPERATING ACTIVITIES           
                 
 Net profit for the period$61,831$37,505$31,317$30,514$21,474 
                 
 Adjustments to reconcile net profit for the period           
  to net cash provided by operating activities:           
   Income and expense items not involving cash flows:           
    Depreciation and amortization 127,535 117,299 65,482 62,053 60,268 
    Effect of exchange rate differences on debentures (1,994) (910) 1,798 (3,792) 3,159 
    Other expense (income), net (3,227) (890) 1,758 (4,985) (876) 
   Changes in assets and liabilities:           
    Trade accounts receivable 12,722 (1,296) 18,996 (6,274) (12,981) 
    Other assets (8,983) 5,122 (16,065) 7,082 (1,998) 
    Inventories (15,484) (17,380) (12,077) (3,407) (11,209) 
    Trade accounts payable (14,568) (12,950) (5,302) (9,266) (6,751) 
    Deferred revenue and customers' advances  16,207 (2,498) (3,133) 19,340 (1,927) 
    Other current liabilities 19,696 10,729 12,612 7,084 13,977 
    Long-term employee related liabilities 140 2,078 247 (107) 2,109 
    Deferred tax, net and other long-term liabilities (13,212) (1,870) (2,383) (10,829) 1,358 
     Net cash provided by operating activities 180,663 134,939 93,250 87,413 66,603 
                 
CASH FLOWS - INVESTING ACTIVITIES           
 Investments in property and equipment, net (105,599) (125,444) (56,184) (49,415) (62,537) 
 Investments in deposits, marketable securities and other assets, net (18,666) (78,786) (17,055) (1,611) 6,570 
     Net cash used in investing activities (124,265) (204,230) (73,239) (51,026) (55,967) 
                 
CASH FLOWS - FINANCING ACTIVITIES           
                 
 Debt repaid, net (49,144) (29,197) (19,769) (29,375) (5,000) 
 Exercise of options 364 1,214 -- 364 1,127 
     Net cash used in financing activities (48,780) (27,983) (19,769) (29,011) (3,873) 
                 
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE (3,546) 506 (68) (3,478) 682 
                 
                 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,072 (96,768) 174 3,898 7,445 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 211,683 355,561 215,581 211,683 251,348 
                 
CASH AND CASH EQUIVALENTS - END OF PERIOD$215,755$258,793$215,755$215,581$258,793 
                 

Primary Logo