Third Quarter Highlights
- Third quarter net sales $1,144 million, up 7% sequentially
- Net Income $57 million, earnings per diluted share $0.24
- EBITDA $235 million, up 13% sequentially
- Completed debt refinancing, reducing interest expense by $11 million annually
TEMPE, Ariz. — (BUSINESS WIRE) — October 29, 2018 — Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2018.
"Third quarter revenue grew 7% sequentially, reflecting strength in mobile communications," said Steve Kelley, Amkor's CEO.
| Results | Q3 2018 | Q2 2018 | Q3 2017 | |||
| ($ in millions, except per share data) | ||||||
| Net sales | $1,144 | $1,066 | $1,149 | |||
| Gross margin | 17.5% | 15.9% | 19.5% | |||
| Net income attributable to Amkor | $57 | $33 | $59 | |||
| Earnings per diluted share | $0.24 | $0.14 | $0.25 | |||
| EBITDA1 | $235 | $208 | $251 | |||
1) EBITDA is a non-GAAP measure. The reconciliation to the comparable GAAP measure is included below under "Selected Operating Data."
"Better than expected gross profit and EPS were driven primarily by improved operating leverage," said Megan Faust, Amkor’s CFO. "We also completed a debt refinancing which will generate annual interest savings of approximately $11 million."
Business Outlook
Fourth quarter 2018 outlook (unless otherwise noted):
- Net sales of $1.02 billion to $1.10 billion
- Gross margin of 13% to 15%
- Net income of $5 million to $34 million, or $0.02 to $0.14 per diluted share
- Full year capital expenditures of approximately $600 million
Conference Call Information
Amkor will conduct a conference call on Monday, October 29, 2018, at 5:00 p.m. Eastern Time. This call may include material information not included in this press release. This call is being webcast and can be accessed at Amkor's website: www.amkor.com. You may also access the call by dialing 1-877-645-6380 or 1-404-991-3911. A replay of the call will be made available at Amkor's website or by dialing 1-855-859-2056 or 1-404-537-3406 (conference ID 8196238). The webcast is also being distributed over NASDAQ OMX's investor distribution network to both institutional and individual investors. Institutional investors can access the call via NASDAQ OMX's password-protected event management site, Street Events ( www.streetevents.com).
About Amkor Technology, Inc.
Amkor Technology, Inc. is one of the world’s largest providers of outsourced semiconductor packaging and test services. Founded in 1968, Amkor pioneered the outsourcing of IC packaging and test, and is now a strategic manufacturing partner for more than 250 of the world’s leading semiconductor companies, foundries and electronics OEMs. Amkor’s operational base includes production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the USA. For more information, visit www.amkor.com.
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AMKOR TECHNOLOGY, INC. |
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Selected Operating Data |
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| Q3 2018 | Q2 2018 | Q3 2017 | ||||||||||
| Net Sales Data: | ||||||||||||
| Net sales (in millions): | ||||||||||||
| Advanced products* | $ | 582 | $ | 496 | $ | 563 | ||||||
| Mainstream products** | 562 | 570 | 586 | |||||||||
| Total net sales | $ | 1,144 | $ | 1,066 | $ | 1,149 | ||||||
| Packaging services | 84 | % | 83 | % | 82 | % | ||||||
| Test services | 16 | % | 17 | % | 18 | % | ||||||
| Net sales from top ten customers | 62 | % | 65 | % | 67 | % | ||||||
| End Market Data: | ||||||||||||
| Communications (smartphones, tablets, handheld devices) | 47 | % | 42 | % | 46 | % | ||||||
| Automotive, industrial and other (driver assist, infotainment, safety, performance) | 25 | % | 26 | % | 24 | % | ||||||
| Computing (datacenter, infrastructure, PC/laptop, storage) | 17 | % | 19 | % | 17 | % | ||||||
| Consumer (set-top boxes, televisions, connected home, personal electronics, visual imaging) | 11 | % | 13 | % | 13 | % | ||||||
| Total | 100 | % | 100 | % | 100 | % | ||||||
| Gross Margin Data: | ||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
| Cost of sales: | ||||||||||||
| Materials | 40.3 | % | 38.9 | % | 36.9 | % | ||||||
| Labor | 15.1 | % | 16.0 | % | 15.1 | % | ||||||
| Other manufacturing | 27.1 | % | 29.2 | % | 28.5 | % | ||||||
| Gross margin | 17.5 | % | 15.9 | % | 19.5 | % | ||||||
* Advanced products include flip chip and wafer-level processing and
related test services
** Mainstream products include wirebond
packaging and related test services
AMKOR TECHNOLOGY, INC.
Selected Operating Data
In the press release above we provide EBITDA, which is not defined by U.S. GAAP. We define EBITDA as net income before interest expense, income tax expense and depreciation and amortization. We believe EBITDA to be relevant and useful information to our investors because it provides additional information in assessing our financial operating results. Our management uses EBITDA in evaluating our operating performance, our ability to service debt and our ability to fund capital expenditures. However, EBITDA has certain limitations in that it does not reflect the impact of certain expenses on our consolidated statements of income, including interest expense, which is a necessary element of our costs because we have borrowed money in order to finance our operations, income tax expense, which is a necessary element of our costs because taxes are imposed by law, and depreciation and amortization, which is a necessary element of our costs because we use capital assets to generate income. EBITDA should be considered in addition to, and not as a substitute for, or superior to, operating income, net income or other measures of financial performance prepared in accordance with U.S. GAAP. Furthermore our definition of EBITDA may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of EBITDA to U.S. GAAP net income.
| Non-GAAP Financial Measure Reconciliation: | |||||||||||
| Q3 2018 | Q2 2018 | Q3 2017 | |||||||||
| (in millions) | |||||||||||
| EBITDA Data: | |||||||||||
| Net income | $ | 57 | $ | 33 | $ | 60 | |||||
| Plus: Interest expense | 20 | 21 | 21 | ||||||||
| Plus: Income tax expense | 14 | 11 | 21 | ||||||||
| Plus: Depreciation & amortization | 144 | 143 | 149 | ||||||||
| EBITDA | $ | 235 | $ | 208 | $ | 251 | |||||
| AMKOR TECHNOLOGY, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
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| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2018 | 2017* | 2018 | 2017* | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales | $ | 1,144,192 | $ | 1,148,884 | $ | 3,235,195 | $ | 3,056,553 | ||||||||
| Cost of sales | 943,485 | 924,996 | 2,707,000 | 2,519,815 | ||||||||||||
| Gross profit | 200,707 | 223,888 | 528,195 | 536,738 | ||||||||||||
| Selling, general and administrative | 70,463 | 75,568 | 225,886 | 219,635 | ||||||||||||
| Research and development | 37,541 | 42,841 | 119,546 | 128,690 | ||||||||||||
| Gain on sale of real estate | — | — | — | (108,109 | ) | |||||||||||
| Total operating expenses | 108,004 | 118,409 | 345,432 | 240,216 | ||||||||||||
| Operating income | 92,703 | 105,479 | 182,763 | 296,522 | ||||||||||||
| Interest expense | 19,770 | 20,321 | 60,908 | 63,733 | ||||||||||||
| Interest expense, related party | — | 180 | — | 1,715 | ||||||||||||
| Other (income) expense, net | 1,315 | 3,257 | (6,254 | ) | 11,150 | |||||||||||
| Total other expense, net | 21,085 | 23,758 | 54,654 | 76,598 | ||||||||||||
| Income before taxes | 71,618 | 81,721 | 128,109 | 219,924 | ||||||||||||
| Income tax expense | 14,326 | 21,263 | 27,438 | 53,404 | ||||||||||||
| Net income | 57,292 | 60,458 | 100,671 | 166,520 | ||||||||||||
| Net income attributable to non-controlling interests | (630 | ) | (1,194 | ) | (1,874 | ) | (3,029 | ) | ||||||||
| Net income attributable to Amkor | $ | 56,662 | $ | 59,264 | $ | 98,797 | $ | 163,491 | ||||||||
| Net income attributable to Amkor per common share: | ||||||||||||||||
| Basic | $ | 0.24 | $ | 0.25 | $ | 0.41 | $ | 0.68 | ||||||||
| Diluted | $ | 0.24 | $ | 0.25 | $ | 0.41 | $ | 0.68 | ||||||||
| Shares used in computing per common share amounts: | ||||||||||||||||
| Basic | 239,370 | 239,068 | 239,312 | 238,873 | ||||||||||||
| Diluted | 239,766 | 239,640 | 239,783 | 239,610 | ||||||||||||
* Effective January 1, 2018, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), utilizing the full retrospective transition method. The prior periods presented here have been revised to reflect this change.
| AMKOR TECHNOLOGY, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
|
September 30,
2018 |
December 31,
2017 |
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| (In thousands) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 547,665 | $ | 596,364 | ||||
| Restricted cash | 2,559 | 2,000 | ||||||
| Accounts receivable, net of allowances | 797,678 | 798,264 | ||||||
| Inventories | 228,108 | 213,649 | ||||||
| Other current assets | 35,226 | 33,727 | ||||||
| Total current assets | 1,611,236 | 1,644,004 | ||||||
| Property, plant and equipment, net | 2,714,084 | 2,695,065 | ||||||
| Goodwill | 24,813 | 25,036 | ||||||
| Restricted cash | 3,896 | 4,487 | ||||||
| Other assets | 141,440 | 139,796 | ||||||
| Total assets | $ | 4,495,469 | $ | 4,508,388 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings and current portion of long-term debt | $ | 97,646 | $ | 123,848 | ||||
| Trade accounts payable | 548,864 | 569,085 | ||||||
| Capital expenditures payable | 253,756 | 294,258 | ||||||
| Accrued expenses | 271,067 | 330,868 | ||||||
| Total current liabilities | 1,171,333 | 1,318,059 | ||||||
| Long-term debt | 1,267,992 | 1,240,581 | ||||||
| Pension and severance obligations | 179,900 | 182,216 | ||||||
| Other non-current liabilities | 54,403 | 47,823 | ||||||
| Total liabilities | 2,673,628 | 2,788,679 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 285 | 285 | ||||||
| Additional paid-in capital | 1,908,171 | 1,903,357 | ||||||
| Retained earnings (accumulated deficit) | 84,894 | (13,903 | ) | |||||
| Accumulated other comprehensive income (loss) | 19,729 | 22,519 | ||||||
| Treasury stock | (216,135 | ) | (215,982 | ) | ||||
| Total Amkor stockholders’ equity | 1,796,944 | 1,696,276 | ||||||
| Non-controlling interests in subsidiaries | 24,897 | 23,433 | ||||||
| Total equity | 1,821,841 | 1,719,709 | ||||||
| Total liabilities and equity | $ | 4,495,469 | $ | 4,508,388 | ||||
| AMKOR TECHNOLOGY, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| For the Nine Months Ended September 30, | ||||||||
| 2018 | 2017 | |||||||
| (In thousands) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 100,671 | $ | 166,520 | ||||
| Depreciation and amortization | 429,181 | 435,667 | ||||||
| Gain on sale of real estate | — | (108,109 | ) | |||||
| Other operating activities and non-cash items | (2,006 | ) | (8,124 | ) | ||||
| Changes in assets and liabilities | (100,628 | ) | (72,043 | ) | ||||
| Net cash provided by operating activities | 427,218 | 413,911 | ||||||
| Cash flows from investing activities: | ||||||||
| Payments for property, plant and equipment | (478,036 | ) | (413,974 | ) | ||||
| Proceeds from sale of property, plant and equipment | 1,606 | 133,320 | ||||||
| Acquisition of business, net of cash acquired | — | (43,771 | ) | |||||
| Other investing activities | 3,160 | (1,600 | ) | |||||
| Net cash used in investing activities | (473,270 | ) | (326,025 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from revolving credit facilities | — | 75,000 | ||||||
| Payments of revolving credit facilities | (75,000 | ) | — | |||||
| Proceeds from short-term debt | 23,341 | 50,333 | ||||||
| Payments of short-term debt | (35,125 | ) | (52,068 | ) | ||||
| Proceeds from issuance of long-term debt | 372,226 | 223,976 | ||||||
| Payments of long-term debt | (279,697 | ) | (398,755 | ) | ||||
| Payments of long-term debt, related party | — | (17,837 | ) | |||||
| Payment of deferred consideration for purchase of facility | — | (3,890 | ) | |||||
| Payments of capital lease obligations | (2,669 | ) | (4,123 | ) | ||||
| Other financing activities | (2,482 | ) | 425 | |||||
| Net cash provided by (used in) financing activities | 594 | (126,939 | ) | |||||
| Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash | (3,273 | ) | 9,231 | |||||
| Net decrease in cash, cash equivalents and restricted cash | (48,731 | ) | (29,822 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 602,851 | 555,495 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 554,120 | $ | 525,673 | ||||
Forward-Looking Statement Disclaimer
This press release contains forward-looking statements within the meaning of federal securities laws. All statements other than statements of historical fact are considered forward-looking statements including, without limitation, statements regarding the interest savings generated by a debt refinancing, and all of the statements made under "Business Outlook" above. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could affect future results and cause actual results and events to differ materially from historical and expected results and those expressed or implied in the forward-looking statements, including, but not limited to, the following:
- the highly unpredictable nature, cyclicality, and rate of growth of the semiconductor industry;
- timing and volume of orders relative to production capacity and the inability to achieve high capacity utilization rates, control costs and improve profitability;
- laws, rules, regulations and policies imposed by the U.S. or foreign governments in areas such as tariffs, customs, duties and other restrictive trade barriers, national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, privacy, labor, environmental, health and safety, and in particular the recent increase in protectionist measures considered or adopted by the U.S. and foreign governments;
- laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer or government supported efforts to promote the development and growth of local competitors;
- volatility of consumer demand, double booking by customers and deterioration in forecasts from our customers for products incorporating our semiconductor packages, including any slowdown in demand or changes in customer forecasts for smartphones or other mobile devices and generally soft end market demand for electronic devices;
- delays, lower manufacturing yields and supply constraints relating to wafers, particularly for advanced nodes and related technologies;
- dependence on key customers, the impact of changes in our market share and prices for our services with those customers and the business and financial condition of those customers;
- the performance of our business, interest rate fluctuations and other economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity and facilities to service customer demand and the availability of cash flow from operations or financing;
- the effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers, including the uncertain macroeconomic environment;
- the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters and the impact of other legal proceedings;
- changes in tax rates and taxes as a result of changes in U.S. or foreign tax law or the interpretations thereof (including the impact of recent U.S. tax reform), changes in our organizational structure, changes in the jurisdictions in which our income is determined to be earned and taxed, the outcome of tax reviews, audits and ruling requests, our ability to realize deferred tax assets and the expiration of tax holidays;
- curtailment of outsourcing by our customers;
- our substantial indebtedness and restrictive covenants;
- failure to realize sufficient cash flow or access to other sources of liquidity to fund capital expenditures;
- the effects of an economic slowdown in major economies worldwide;
- disruptions in our business or deficiencies in our controls resulting from the integration of acquired operations, particularly J-Devices, or the implementation and security of, and changes to, our enterprise resource planning, factory shop floor systems and other management information systems;
- there can be no assurance regarding when our new K5 factory and research and development center in Korea will be fully utilized, or that the actual scope, costs, timeline or benefits of the project will be consistent with our current expectations;
- economic effects of terrorist attacks, political instability, natural disasters and military conflict;
- competition, competitive pricing and declines in average selling prices;
- fluctuations in packaging and test manufacturing yields;
- dependence on international operations and sales and fluctuations in foreign currency exchange rates, particularly in Japan and Korea;
- dependence on raw material and equipment suppliers and changes in raw material and precious metal costs;
- dependence on key personnel;
- enforcement of and compliance with intellectual property rights; and
- technological challenges.
Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect our operating results and financial condition are discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2017 and in the company's subsequent filings with the Securities and Exchange Commission made prior to or after the date hereof. Amkor undertakes no obligation to review or update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181029005766/en/
Contact:
Amkor Technology, Inc.
Chris Chaney
Vice President, Investor
Relations
480-786-7594
Email Contact