MIGDAL HAEMEK, Israel, Feb. 14, 2024 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the fourth quarter and for the year ended December 31, 2023.
Fourth Quarter of 2023 Results Overview
Revenue for the fourth quarter of 2023 was $352 million as compared with $358 million for the third quarter of 2023. Revenue for the fourth quarter of 2022 was $403 million.
G ross profit for the fourth quarter of 2023 was $84 million as compared with $87 million for the third quarter of 2023. Gross profit for the fourth quarter of 2022 was $125 million.
O perating profit for the fourth quarter of 2023 was $45 million, as compared with $362 million in the third quarter of 2023 which included $314 million, net, from the Intel merger contract termination. Operating profit for the fourth quarter of 2022 was $99 million and included $14 million restructuring income, net from the previously disclosed reorganization and restructure of our Japan operations during 2022.
Net profit for the fourth quarter of 2023 was $54 million, or $0.49 basic and $0.48 diluted earnings per share, as compared with net profit for the third quarter of 2023 of $342 million, or $3.10 basic and $3.07 diluted earnings per share which included $290 million, net from the Intel merger contract termination. Net profit in the fourth quarter of 2022 was $83 million, or $0.76 basic and $0.75 diluted earnings per share and included $9 million restructuring income, net.
Cash flow generated from operating activities in the fourth quarter of 2023 was $126 million, as compared with $402 million in the third quarter of 2023 which included the cash proceeds received from Intel following the merger contract termination. Investments in equipment and other fixed assets were $136 million, net for the fourth quarter of 2023 and debt payments made during the quarter ended December 31, 2023 totaled $9 million, net.
Full year 202
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Results Overview
Revenue for the full year of 2023 was $1.42 billion, gross profit was $354 million, operating profit was $547 million and included $314 million, net, from the Intel merger contract termination and $33 million of restructuring income, net, from the reorganization and restructure of our Japan operations during 2022 as noted above. Net profit for the full year of 2023 was $518 million, or $4.70 basic and $4.66 diluted earnings per share and included $290 million, net, due to the payment by Intel of merger contract termination fees and $11 million restructuring income, net.
For the full year of 2022 revenue was $1.68 billion, gross profit was $466 million, operating profit was $312 million and included $10 million, net of restructuring income and net profit was $265 million, or $2.42 basic and $2.39 diluted earnings per share and included $7 million restructuring income, net.
Cash flow generated from operating activities for the year ended December 31, 2023 was $677 million and included the cash proceeds received from Intel following the merger contract termination noted above. Investment in fixed assets for the year ended December 31, 2023 was $432 million, net and debt payments made during the year ended December 31, 2023 totaled $32 million, net.
Business Outlook
Tower Semiconductor guides revenue for the first quarter of 2024 to be $325 million, with an upward or downward range of 5%, with a target of notable quarter over quarter growth throughout the year.
Mr. Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, stated: “We left 2023 with multiple powerful doors having been opened, catalyzed through the unrealized merger deal. Tower is in the best position in its history, based upon financial strength, technical offerings, operational performance, and growing capacity, backed by strategic customer partnerships, the strength of which cannot be overstated.”
Ellwanger further commented: “We are seeing a rebound in several market segments, driving sequential revenue growth throughout the year.”
Japan Earthquake
On January 1st, 2024, there was an earthquake in Japan in a neighboring vicinity of our facilities at Hokuriku. Tower is grateful that no employees suffered any physical harm through this event. Due to state-of-the-art building practices, Tower did not suffer facility structural damage. It did suffer tools damage and scrap of some percentage of work in progress at both factories, as well as cessation of operations. The activities of the Company’s dedicated and most capable employees have recovered both factories to full operation with start levels currently to the levels set in the annual plan.
Fab 1 Operational Consolidation
Anticipating shifting market dynamics and customer demand, the Company is actively optimizing its operations, through a strategic consolidation of its 6”, Fab 1 activities into its 8”, Fab 2 operations. Specifically, a portion of the operations will be seamlessly integrated into Fab 2 facility, ensuring continuity and even greater efficiency in its operations. In parallel, the Company will thoughtfully phase out certain lower margin products to align with its strategic goals and long-term financial model.
Teleconference and Webcast
Tower Semiconductor will host an investor conference call today, Wednesday, February 14, 2024, at 10:30 a.m. Eastern time (9:30 a.m. Central time, 8:30 a.m. Mountain time, 7:30 a.m. Pacific time and 5:30 p.m. Israel time) to discuss the company’s financial results for the fourth quarter and full year of 2023 and its business 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, 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 as included in our operating costs and expenses, (2) compensation expenses in respect of equity grants to directors, officers, and employees as included in our operating costs and expenses , (3) merger c ontract termination fees received from Intel , net of associated cost and taxes following the previously announced Intel contract termination as included in net profit , and ( 4 ) r estructuring income, net , which include s income, net of cost and taxes associated with the cessation of operations of the Arai facility in Japan which occurred during 2022 as included in net profit . These adjusted financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables may 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 pr ior 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 may be included and 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 expense s, 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 , (iv) merger contract termination fees received from Intel, net of associated cost following the previously announced Intel contract termination , as included in operating profit and (v) restructuring income, net in relation to the Arai facility in Japan, as included in operating profit . EBITDA is reconciled in the tables below and/or in prior earnings- related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company from GAAP operating profit. 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, are 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 $ 126 million, $ 402 million and $ 133 million for the three months periods ended D ecember 31, 2023, September 30, 2023 and December 31 , 2022 , respectively and in the amounts of $677 million and $530 million for the years ended December 31, 2023 and December 31, 2022, respectively ( less cash used for investments in property and equip ment, net (in the amounts of $ 136 million, $ 101 million and $ 38 million for the three months periods ended December 3 1 , 2023, September 30 , 2023 and December 3 1 , 2022 , respectively and in the amounts of $432 million and $214 million for the years ended December 31, 2023 and December 31, 2022, 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 .
