Third Quarter Highlights
- Third quarter net sales $1,084 million, up 21%
sequentially
- Operating income $79 million
- Net income $54 million, earnings per diluted share $0.23
- EBITDA $209 million
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the third quarter ended September 30,
2019.
"Sequential revenue growth of 21% drove financial results above
the high end of guidance," said Steve Kelley, Amkor's president and
chief executive officer. "Demand was particularly strong for our
advanced packaging technologies."
Results
Q3 2019
Q2 2019
Q3 2018
($ in millions, except per share
data)
Net sales
$1,084
$895
$1,144
Gross margin
16.8%
13.8%
17.5%
Operating income
$79
$23
$93
Net income attributable to Amkor (1)
$54
($9)
$57
Earnings per diluted share (1)
$0.23
($0.04)
$0.24
EBITDA (2)
$209
$149
$235
(1) Q2 2019 net income includes an $8 million charge, or $0.03
per share, related to the early redemption of $525 million of
senior notes due 2022.
(2) EBITDA is a non-U.S. GAAP measure. The reconciliation to the
comparable U.S. GAAP measure is included below under "Selected
Operating Data."
"Operating margin, earnings per share and EBITDA all showed
meaningful sequential improvement in the third quarter," said Megan
Faust, Amkor's corporate vice president and chief financial
officer. "Based on our solid business outlook for the fourth
quarter, we expect to deliver a fifth consecutive year of positive
free cash flow."
At September 30, 2019, cash and cash equivalents were $600
million, and total debt was $1.3 billion.
Business Outlook
"We expect revenue of about $1.1 billion in the fourth quarter,
reflecting continued healthy demand for Amkor's advanced packages,"
said Kelley.
Fourth quarter 2019 outlook:
- Net sales of $1.05 billion to $1.14 billion
- Gross margin of 15% to 18%
- Net income of $26 million to $78 million, or $0.11 to $0.32 per
diluted share
- Full year 2019 capital expenditures of approximately $475
million
Conference Call Information
Amkor will conduct a conference call on Monday, October 28,
2019, 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 4599721). 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 300 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.
AMKOR TECHNOLOGY, INC.
Selected Operating
Data
Q3 2019
Q2 2019
Q3 2018
Net Sales Data:
Net sales (in millions):
Advanced products (1)
$
589
$
433
$
582
Mainstream products (2)
495
462
562
Total net sales
$
1,084
$
895
$
1,144
Packaging services
84
%
83
%
84
%
Test services
16
%
17
%
16
%
Net sales from top ten customers
62
%
62
%
62
%
End Market Data:
Communications (handheld devices,
smartphones, tablets)
41
%
37
%
47
%
Automotive, industrial and other (driver
assist, infotainment, performance, safety)
26
%
29
%
25
%
Computing (datacenter, infrastructure,
PC/laptop, storage)
15
%
19
%
17
%
Consumer (connected home, set-top boxes,
televisions, visual imaging, wearables)
18
%
15
%
11
%
Total
100
%
100
%
100
%
Gross Margin Data:
Net sales
100.0
%
100.0
%
100.0
%
Cost of sales:
Materials
40.4
%
38.0
%
40.3
%
Labor
15.8
%
17.4
%
15.1
%
Other manufacturing
27.0
%
30.8
%
27.1
%
Gross margin
16.8
%
13.8
%
17.5
%
(1) Advanced products include flip chip and wafer-level
processing and related test services (2) Mainstream products
include wirebond packaging and related test services
AMKOR TECHNOLOGY, INC. Selected
Operating Data
In this press release, 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 2019
Q2 2019
Q3 2018
(in millions)
EBITDA Data:
Net income
$
54
$
(9
)
$
57
Plus: Interest expense
17
19
20
Plus: Income tax expense
9
6
14
Plus: Depreciation & amortization
129
133
144
EBITDA
$
209
$
149
$
235
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2019
2018
2019
2018
(In thousands, except per
share data)
Net sales
$
1,083,917
$
1,144,192
$
2,874,186
$
3,235,195
Cost of sales
901,677
943,485
2,447,731
2,707,000
Gross profit
182,240
200,707
426,455
528,195
Selling, general and administrative
70,458
70,463
206,803
225,886
Research and development
32,927
37,541
104,867
119,546
Total operating expenses
103,385
108,004
311,670
345,432
Operating income
78,855
92,703
114,785
182,763
Interest expense
16,988
19,770
54,914
60,908
Other (income) expense, net
(1,760
)
1,315
641
(6,254
)
Total other expense, net
15,228
21,085
55,555
54,654
Income before taxes
63,627
71,618
59,230
128,109
Income tax expense
9,141
14,326
36,418
27,438
Net income
54,486
57,292
22,812
100,671
Net income attributable to non-controlling
interests
(416
)
(630
)
(1,071
)
(1,874
)
Net income attributable to Amkor
$
54,070
$
56,662
$
21,741
$
98,797
Net income attributable to Amkor per
common share:
Basic
$
0.23
$
0.24
$
0.09
$
0.41
Diluted
$
0.23
$
0.24
$
0.09
$
0.41
Shares used in computing per common share
amounts:
Basic
239,586
239,370
239,503
239,312
Diluted
239,937
239,766
239,858
239,783
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30, 2019
December 31, 2018
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
598,753
$
681,569
Restricted cash
2,590
2,589
Accounts receivable, net of allowances
803,104
724,456
Inventories
216,663
230,589
Other current assets
41,891
32,005
Total current assets
1,663,001
1,671,208
Property, plant and equipment, net
2,466,067
2,650,448
Operating lease right of use asset *
141,467
—
Goodwill
26,104
25,720
Restricted cash
2,874
3,893
Other assets
106,417
144,178
Total assets
$
4,405,930
$
4,495,447
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion
of long-term debt
$
102,952
$
114,579
Trade accounts payable
477,900
530,398
Capital expenditures payable
157,527
255,237
Accrued expenses
253,876
258,209
Total current liabilities
992,255
1,158,423
Long-term debt
1,195,005
1,217,732
Pension and severance obligations
178,530
184,321
Long-term operating lease liability *
85,094
—
Other non-current liabilities
67,426
79,071
Total liabilities
2,518,310
2,639,547
Stockholders’ equity:
Preferred stock
—
—
Common stock
286
285
Additional paid-in capital
1,915,481
1,909,425
Retained earnings
134,930
113,189
Accumulated other comprehensive income
(loss)
27,243
23,812
Treasury stock
(216,301
)
(216,171
)
Total Amkor stockholders’ equity
1,861,639
1,830,540
Non-controlling interests in
subsidiaries
25,981
25,360
Total equity
1,887,620
1,855,900
Total liabilities and equity
$
4,405,930
$
4,495,447
*Effective January 1, 2019, we adopted Accounting Standards
Update (ASU) No. 2016-02, Leases (Topic 842). Upon adoption, we
recorded a right-of-use asset and lease liability on our balance
sheet. Prior period financial statements were not required to be
adjusted for the effects of this new standard.
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
2019
2018
(In thousands)
Cash flows from operating activities:
Net income
$
22,812
$
100,671
Depreciation and amortization
398,013
429,181
Other operating activities and non-cash
items
51,533
(2,006
)
Changes in assets and liabilities
(189,026
)
(100,628
)
Net cash provided by operating
activities
283,332
427,218
Cash flows from investing activities:
Payments for property, plant and
equipment
(328,497
)
(478,036
)
Proceeds from sale of property, plant and
equipment
8,495
1,606
Proceeds from insurance recovery for
property, plant and equipment
1,538
—
Other investing activities
(353
)
3,160
Net cash used in investing activities
(318,817
)
(473,270
)
Cash flows from financing activities:
Proceeds from revolving credit
facilities
172,700
—
Payments of revolving credit
facilities
(92,700
)
(75,000
)
Proceeds from short-term debt
51,434
23,341
Payments of short-term debt
(42,067
)
(35,125
)
Proceeds from issuance of long-term
debt
714,375
372,226
Payments of long-term debt
(847,155
)
(279,697
)
Payments of finance lease obligations
(4,358
)
(2,669
)
Other financing activities
(1,963
)
(2,482
)
Net cash provided by (used in) financing
activities
(49,734
)
594
Effect of exchange rate fluctuations on
cash, cash equivalents and restricted cash
1,385
(3,273
)
Net decrease in cash, cash equivalents and
restricted cash
(83,834
)
(48,731
)
Cash, cash equivalents and restricted
cash, beginning of period
688,051
602,851
Cash, cash equivalents and restricted
cash, end of period
$
604,217
$
554,120
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
including statements regarding our fourth quarter outlook, delivery
of free cash flow, 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 or 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 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 debt covenants, including the
potential impact of the phase-out of LIBOR on our variable interest
rate debt;
- 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 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 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, 2018 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 except as may be
required by law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191028005717/en/
Vincent Keenan Vice President, Investor Relations 480-786-7594
vincent.keenan@amkor.com
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