Full Year Record Revenue of $1. 68 Billion ;
I ncrease d P rofitability R esulting in 16% N et M argin for 2022

MIGDAL HAEMEK, Israel, Feb. 16, 2023 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the fourth quarter and for the year ended December 31, 2022.

Fourth Quarter of 2022 Results Overview

Revenue for the fourth quarter of 2022 was $403 million, as compared to $412 million in the fourth quarter of 2021. Organic revenue for the fourth quarter of 2022, defined as total revenue excluding revenues from Nuvoton in the Japanese fabs and from Maxim in the San Antonio fab, increased by 6% year over year. Revenue for the third quarter of 2022 was $427 million.

G ross profit for the fourth quarter of 2022 was $125 million, 25% higher than $100 million recorded in the fourth quarter of 2021, mainly due to replacing approximately $20 million of contractual revenue from Arai, following the previously disclosed cessation of its operations, with higher margin organic foundry customer revenue. Gross profit in the third quarter of 2022 was $125 million. 

O perating profit for the fourth quarter of 2022 was $99 million, 77% higher than the $56 million recorded in the fourth quarter of 2021. Operating profit in the third quarter of 2022 was $79 million. Our operating profits for 2022 included restructuring income and cost relating to the previously disclosed Arai cessation of operations which occurred during 2022 as part of reorganizing and restructuring our Japan operations. All such related income and cost are presented in a separate line as restructuring income, net, in the amount of $14 million for the three months ended December 31, 2022, as compared with $4 million cost for the three months ended September 30, 2022.

Net profit for the fourth quarter of 2022 was $83 million, or $0.76 basic and $0.75 diluted earnings per share, 61% higher than the $52 million or $0.48 basic and $0.47 diluted earnings per share recorded in the fourth quarter of 2021. Net profit in the third quarter of 2022 was $69 million, which represented $0.63 basic and $0.62 diluted earnings per share.

Cash flow generated from operating activities in the fourth quarter of 2022 was $133 million with investment in fixed assets of $38 million, net of proceeds from machinery and equipment sold during the quarter, including as part of Arai fab cessation of operations. During the fourth quarter of 2022, the company repaid $11 million of its debt.

Full year 2022 Results Overview

Revenue for the full year of 2022 was $1.68 billion, as compared to $1.51 billion in 2021, reflecting 11% year over year revenue growth and 23% year over year organic revenue growth (as defined above).

Gross profit for the full year of 2022 was $466 million, 42% higher than $329 million in 2021.

Operating profit for the full year of 2022 was $312 million, 87% higher than the $167 million in 2021. Our operating profit for 2022 included restructuring income, net relating to the previously disclosed Arai cessation of operations which occurred during 2022 as part of reorganizing and restructuring our Japan operations. All such related income and cost are presented in a separate line as restructuring income, net, in the amount of $10 million for the year ended December 31, 2022.

Net profit for the full year of 2022 was $265 million, representing 16% net profit margins or $2.42 basic and $2.39 diluted earnings per share, 76% higher than the $150 million or $1.39 basic and $1.37 diluted earnings per share in 2021.

Cash flow generated from operating activities for the full year of 2022 was $530 million with investment in fixed assets of $214 million, net of proceeds from machinery and equipment sold during the year, including as part of Arai fab cessation of operations. During the year ended December 31, 2022, the company repaid $78 million of its debt.

Guidance and Conference Call
In light of the Company’s definitive agreement with Intel Corporation, as announced on February 15, 2022, the Company is not providing revenue guidance for the first quarter 2023 and will not host an earnings conference call.

This release is available on Company’s website: https://towersemi.com/2023/02/16/02162023/

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, which may be used and/ or presented in this release and/ or prior earnings related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, which we may describe as adjusted financial measures and/ or reconciled 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 the following: (1) amortization of acquired intangible assets, (2) compensation expenses in respect of equity grants to directors, officers, and employees and (3) restructuring income, net, which includes income, net of cost associated with the cessation of operations of the Arai manufacturing factory in Japan which occurred during 2022 in the amount of approximately $14 million income, net for the three months ended December 31, 2022 as compared to $4 million restructuring related cost for the three months ended September 30, 2022 and as compared to $10 million restructuring income, net for the year ended December 31, 2022. 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 prior earnings related filings 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 which we define as EBITDA consists of operating profit in accordance with GAAP, excluding (i) depreciation expenses, which include depreciation recorded in cost of revenues and in operating cost and expenses lines ( e.g , research and development related equipment and/ or fixed other assets depreciation) , (ii) stock-based compensation expense , (iii) amortization of acquired intangible assets and (iv) restructuring cost ( income , net ) in relation to the Arai manufacturing factory in Japan, as described in (3) above . EBITDA is reconcile d 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 prior earnings - related filings 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 may be used and/ or presented in this release and/ or prior earnings-related filings 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 prior earnings related filings 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 $ 133 million, $ 122 million and $ 134 million for the three months periods ended December 31, 2022, September 30, 2022 and December 31, 2021 , respectively and in the amount s of $530 million and $421 million for the year s ended December 31, 2022 and December 31, 2021, respectively ) less cash used for investments in property and equip ment, net (in the amounts of $ 38 million, $ 45 million and $ 8 6 million for the three months periods ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively and in the amount s of $ 214 million and $279 million for the year s ended December 31, 2022 and December 31, 2021, 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 .