Amkor Technology Reports Financial Results for the Fourth Quarter and Full Year 2019

Fourth Quarter 2019 Highlights:

Record net sales $1.18 billion, up 9% sequentially and year-on-year
Gross margin 18.9%
Net income $99 million, earnings per diluted share $0.41
EBITDA $244 million

Full Year 2019 Highlights:

Net sales $4.05 billion
Net income $121 million, earnings per diluted share $0.50
EBITDA $756 million
Net cash from operations $564 million and free cash flow $104 million
Fifth consecutive year of positive free cash flow

Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the fourth quarter and full year ended December 31, 2019.

“Fourth quarter revenue grew 9% sequentially to a new record of $1.18 billion,” said Steve Kelley, Amkor’s president and chief executive officer. “Strong demand for advanced packages in the mobile and consumer markets drove revenue above the high end of expectations.”

“Gross margin and EPS were also well above the high end of guidance due to record revenue,” said Megan Faust, Amkor’s executive vice president and chief financial officer. “We generated over $100 million of free cash flow while continuing to make strategic investments in advanced packaging technologies to support future growth.”

Results

Q4 2019 (1)

Q3 2019

Q4 2018 (2)

2019 (3)

2018

($ in millions, except per share amounts)

Net sales

$1,178

$1,084

$1,081

$4,053

$4,316

Gross margin

18.9%

16.8%

16.9%

16.0%

16.5%

Operating income

$118

$79

$75

$233

$258

Net income attributable to Amkor

$99

$54

$28

$121

$127

Earnings per diluted share

$0.41

$0.23

$0.12

$0.50

$0.53

EBITDA (4)

$244

$209

$219

$756

$837

Annual free cash flow (4)

$104

$120

(1) Q4 2019 net income includes a $4 million discrete income tax benefit, or $0.01 per diluted share, primarily related to changes in the valuation of certain deferred tax assets. (2) Q4 2018 net income includes a $17 million discrete income tax charge, or $0.07 per diluted share, driven by finalizing the accounting for U.S. tax reform. (3) Full year 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 and a net $11 million discrete income tax charge, or $0.05 per diluted share, related to changes in the valuation of certain deferred tax assets. (4) EBITDA and free cash flow are non-GAAP measures. The reconciliations to the comparable GAAP measures are included below under “Selected Operating Data.”

At December 31, 2019, cash and cash equivalents were $895 million, and total debt was $1.45 billion.

Business Outlook

“We expect first quarter 2020 revenue to be up approximately 25% year-on-year and down about 5% sequentially.” said Kelley. “Looking forward, we are well-positioned for growth in 2020. Amkor’s value proposition - centered on technology, quality, high yields and service - is resonating with customers in our target markets.”

First quarter 2020 outlook (unless otherwise noted):

Net sales of $1.08 billion to $1.16 billion
Gross margin of 14.5% to 17.5%
Net income of $22 million to $59 million, or $0.09 to $0.24 per diluted share
Full year 2020 capital expenditures of around $550 million

Conference Call Information

Amkor will conduct a conference call on Monday, February 10, 2020, 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 1452598). 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

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 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

Q4 2019

Q3 2019

Q4 2018

2019

2018

Net Sales Data:

Net sales (in millions):

Advanced products (1)

667

589

564

2,111

2,118

Mainstream products (2)

511

495

517

1,942

2,198

Total net sales

1,178

1,084

1,081

4,053

4,316

Packaging services

Test services

Net sales from top ten customers

End Market Distribution Data:

Communications (handheld devices, smartphones, tablets)

Automotive, industrial and other (driver assist, infotainment, performance, safety)

Consumer (connected home, set-top boxes, televisions, visual imaging, wearables)

Computing (datacenter, infrastructure, PC/laptops, storage)

Total

100

Gross Margin Data:

Net sales

100.0

Cost of sales:

Materials

42.6

40.4

38.8

40.0

38.7

Labor

13.9

15.8

16.0

16.1

Other manufacturing

24.6

27.0

28.3

28.0

28.7

Gross margin

18.9

16.8

16.9

16.0

16.5

(1) Advanced products include flip chip and wafer-level processing and related test services (2) Mainstream products include wirebond packaging and related test services

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 Measures Reconciliation:

Q4 2019

Q3 2019

Q4 2018

2019

2018

(in millions)

EBITDA Data:

Net income

100

123

130

Plus: Interest expense

Plus: Income tax expense (benefit)

Plus: Depreciation & amortization

126

129

143

524

572

EBITDA

244

209

219

756

837

In the press release above we refer to free cash flow, which is not defined by U.S. GAAP. We define free cash flow as net cash provided by operating activities less payments for property, plant and equipment, plus proceeds from the sale of and insurance recovery for property, plant and equipment, if applicable. We believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital expenditures. However, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities. Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of free cash flow to U.S. GAAP net cash provided by operating activities.

Non-GAAP Financial Measures Reconciliation:

2019

2018

Free Cash Flow Data:

Net cash provided by operating activities

564

663

Less: Purchases of property, plant and equipment

(472

)

(547

)

Plus: Proceeds from sale of and insurance recovery for property, plant and equipment

Free cash flow

104

120

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

For the Three Months Ended December 31,

For the Year Ended December 31,

2019

2018

2019

2018

(In thousands, except per share data)

Net sales

1,178,464

1,081,271

4,052,650

4,316,466

Cost of sales

955,480

898,901

3,403,211

3,605,901

Gross profit

222,984

182,370

649,439

710,565

Selling, general and administrative

71,828

69,353

281,933

295,239

Research and development

32,771

37,636

137,638

157,182

Gain on sale of real estate

—

(3,302

)

—

Total operating expenses

104,599

106,989

416,269

452,421

Operating income

118,385

75,381

233,170

258,144

Interest expense

16,673

18,038

71,587

78,946

Other (income) expense, net

1,132

(363

)

1,773

(6,617

)

Total other expense, net

17,805

17,675

73,360

72,329

Income before taxes

100,580

57,706

159,810

185,815

Income tax expense

764

28,812

37,182

56,250

Net income

99,816

28,894

122,628

129,565

Net income attributable to noncontrolling interests

(669

)

(599

)

(1,740

)

(2,473

)

Net income attributable to Amkor

99,147

28,295

120,888

127,092

Net income attributable to Amkor per common share:

Basic

0.41

0.12

0.50

0.53

Diluted

0.41

0.12

0.50

0.53

Shares used in computing per common share amounts:

Basic

240,384

239,378

239,725

239,329

Diluted

241,146

239,596

240,122

239,741

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,

2019

2018

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents

894,948

681,569

Restricted cash

610

2,589

Accounts receivable, net of allowances

850,753

724,456

Inventories

220,602

230,589

Other current assets

34,620

32,005

Total current assets

2,001,533

1,671,208

Property, plant and equipment, net

2,404,850

2,650,448

Operating lease right of use assets *

148,549

—

Goodwill

25,976

25,720

Restricted cash

2,974

3,893

Other assets

111,733

144,178

Total assets

4,695,615

4,495,447

LIABILITIES AND EQUITY

Current liabilities:

Short-term borrowings and current portion of long-term debt

144,479

114,579

Trade accounts payable

571,054

530,398

Capital expenditures payable

77,044

255,237

Accrued expenses

267,226

258,209

Total current liabilities

1,059,803

1,158,423

Long-term debt

1,305,755

1,217,732

Pension and severance obligations

176,971

184,321

Long-term operating lease liabilities *

91,107

—

Other non-current liabilities

71,740

79,071

Total liabilities

2,705,376

2,639,547

Amkor stockholders’ equity:

Preferred stock

—

Common stock

287

285

Additional paid-in capital

1,927,739

1,909,425

Retained earnings

234,077

113,189

Accumulated other comprehensive income

19,115

23,812

Treasury stock

(217,479

)

(216,171

)

Total Amkor stockholders’ equity

1,963,739

1,830,540

Noncontrolling interests in subsidiaries

26,500

25,360

Total equity

1,990,239

1,855,900

Total liabilities and equity

4,695,615

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 Year Ended December 31,

2019

2018

(In thousands)

Cash flows from operating activities:

Net income

122,628

129,565

Depreciation and amortization

524,177

571,961

Gain on sale of real estate

(3,302

)

—

Deferred income taxes

25,931

(13,110

)

Other operating activities and non-cash items

20,306

15,518

Changes in assets and liabilities

(125,890

)

(40,524

)

Net cash provided by operating activities

563,850

663,410

Cash flows from investing activities:

Payments for property, plant and equipment

(472,433

)

(547,122

)

Proceeds from sale of property, plant and equipment

10,117

2,841

Proceeds from insurance recovery for property, plant and equipment

1,538

1,371

Proceeds from foreign exchange forward contracts

13,550

6,754

Payments for foreign exchange forward contracts

(15,593

)

(5,864

)

Other investing activities

332

4,637

Net cash used in investing activities

(462,489

)

(537,383

)

Cash flows from financing activities:

Proceeds from revolving credit facilities

272,700

—

Payments of revolving credit facilities

(272,700

)

(75,000

)

Proceeds from short-term debt

51,434

23,341

Payments of short-term debt

(52,635

)

(46,631

)

Proceeds from issuance of long-term debt

975,575

596,226

Payments of long-term debt

(862,927

)

(535,738

)

Payments for debt issuance costs

(7,027

)

(3,796

)

Payments of finance lease obligations

(6,574

)

(3,930

)

Proceeds from issuance of stock through share-based compensation plans

11,405

1,050

Other financing activities

(1,001

)

3,855

Net cash provided by (used in) financing activities

108,250

(40,623

)

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

870

(204

)

Net increase in cash, cash equivalents and restricted cash

210,481

85,200

Cash, cash equivalents and restricted cash, beginning of period

688,051

602,851

Cash, cash equivalents and restricted cash, end of period

898,532

688,051

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 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:

health conditions or pandemics, such as the recent coronavirus outbreak, impacting the supply chain and consumer demand for electronic products and services;
dependence on the highly cyclical, volatile semiconductor industry;
industry downturns and declines in global economic and financial conditions;
fluctuation in demand for semiconductors and conditions in the semiconductor industry generally, as well as by specific customers, such as inventory reductions by our customers impacting demand in key markets;
changes in our capacity and capacity utilization rates and fluctuations in our manufacturing yields;
the development, transition and ramp to high volume manufacture of more advanced silicon nodes and evolving wafer, packaging and test technologies, may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials;
absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer forecasts and the impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative to our production capacity;
changes in costs, quality, availability and delivery times of raw materials, components and equipment, including any disruption in the supply of certain materials due to regulations and customer requirements, as well as wage inflation and fluctuations in commodity prices;
dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive;
dependence on international factories and operations, and risks relating to our customers’ and vendors’ international operations;
laws, rules, regulations and policies imposed by U.S. or foreign governments, such as tariffs, customs, duties and other restrictive trade barriers, national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental, health and safety, and in particular the recent increase in tariffs, customs, duties and other restrictive trade barriers considered or adopted by 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;
fluctuations in currency exchange rates, particularly the dollar/yen exchange rate for our operations in Japan;
competition with established competitors in the packaging and test business, the internal capabilities of integrated device manufacturers, and new competitors, including foundries;
decisions by our integrated device manufacturer and foundry customers to curtail outsourcing;
difficulty achieving high capacity utilization rates due to high percentage of fixed costs;
our substantial investments in equipment and facilities to support the demand of our customers;
there can be no assurance regarding when our 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;
the historical downward pressure on the prices of our packaging and test services;
any warranty claims, product return and liability risks, and the risk of negative publicity if our products fail, as well as the risk of litigation incident to our business;
our substantial indebtedness and restrictive covenants in the indentures and agreements governing our current and future indebtedness;
difficulty funding our liquidity needs;
our significant severance plan obligations associated with our manufacturing operations in Korea;
maintaining an effective system of internal controls;
difficulty attracting, retaining or replacing qualified personnel;
our continuing development and implementation of changes to, and maintenance and security of, our information technology systems;
challenges with integrating diverse operations;
any changes in tax laws (including the recent enactment of U.S. tax reform), taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for tax holidays, or any requirements to establish or adjust valuation allowances on deferred tax assets;
our ability to develop new proprietary technology, protect our proprietary technology, operate without infringing the proprietary rights of others, and implement new technologies;
natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions; and
the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval.

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/20200210005776/en/

Amkor Technology, Inc.

Vincent Keenan Vice President, Investor Relations 480-786-7594 vincent.keenan@amkor.com

Amkor Technology (NASDAQ:AMKR)
Historical Stock Chart
From Mar 2024 to Apr 2024