Second Quarter Highlights
- Second quarter net sales $1.17 billion, up 31%
year-on-year
- Operating income $87 million, operating margin 7.4%
- Net income $55 million, earnings per diluted share $0.23
- EBITDA $209 million
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the second quarter ended June 30, 2020.
“Broad based demand drove revenue well above the high end of
expectations,” said Giel Rutten, Amkor’s president and chief
executive officer. “The strategic investments we made in both
advanced packaging technology and manufacturing capacity enabled
significant growth in revenue and profitability.”
Results
Q2 2020
Q1 2020
Q2 2019
($ in millions, except per share
data)
Net sales
$1,173
$1,153
$895
Gross margin
16.4
%
16.4
%
13.8
%
Operating income
$87
$84
$23
Operating margin
7.4
%
7.3
%
2.5
%
Net income attributable to Amkor*
$55
$64
($9
)
Earnings per diluted share*
$0.23
$0.26
($0.04
)
EBITDA**
$209
$210
$149
*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.
**EBITDA is a non-GAAP financial measure.
The reconciliation to the comparable GAAP financial measure is
included below under “Selected Operating Data.”
“The strong revenue performance and disciplined expense
management resulted in operating income margin of 7.4% and earnings
per diluted share of $0.23,” said Megan Faust, Amkor’s executive
vice president and chief financial officer. “Our profitability and
focus on free cash flow generation has further strengthened our
balance sheet, and we ended the quarter with net debt of $450
million.”
At June 30, 2020, total cash and short-term investments was $1.1
billion, and total debt was $1.5 billion.
Business Outlook
“We expect sequential revenue growth in the third quarter,
driven by the launch of flagship smart phones, including more 5G
models where we have a strong footprint,” said Rutten. “We believe
mid- and long-term growth drivers remain intact, and we will
continue to invest in markets, including 5G, high performance
computing and IoT, where we see the highest potential for
growth.”
Third quarter 2020 outlook (unless otherwise noted):
- Net sales of $1.2 billion to $1.3 billion
- Gross margin of 15% to 18%
- Net income of $42 million to $85 million, or $0.17 to $0.35 per
diluted share
- Full year 2020 capital expenditures of approximately $550
million
Conference Call Information
Amkor will conduct a conference call on Monday, July 27, 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 8565096). 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 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
Q2 2020
Q1 2020
Q2 2019
Net Sales Data:
Net sales (in millions):
Advanced products (1)
$
729
$
705
$
433
Mainstream products (2)
444
448
462
Total net sales
$
1,173
$
1,153
$
895
Packaging services
84
%
85
%
83
%
Test services
16
%
15
%
17
%
Net sales from top ten customers
69
%
67
%
62
%
End Market Data:
Communications (handheld devices,
smartphones, tablets)
38
%
38
%
37
%
Consumer (connected home, set-top boxes,
televisions, visual imaging, wearables)
27
%
24
%
15
%
Automotive, industrial and other (driver
assist, infotainment, performance, safety)
19
%
23
%
29
%
Computing (data center, infrastructure,
PC/laptop, storage)
16
%
15
%
19
%
Total
100
%
100
%
100
%
Gross Margin Data:
Net sales
100.0
%
100.0
%
100.0
%
Cost of sales:
Materials
45.2
%
45.3
%
38.0
%
Labor
13.9
%
14.2
%
17.4
%
Other manufacturing
24.5
%
24.1
%
30.8
%
Gross margin
16.4
%
16.4
%
13.8
%
(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:
Q2 2020
Q1 2020
Q2 2019
(in millions)
EBITDA Data:
Net income (loss)
$
56
$
64
$
(9
)
Plus: Interest expense
16
17
19
Plus: Income tax expense
13
5
6
Plus: Depreciation & amortization
124
124
133
EBITDA
$
209
$
210
$
149
In this press release, we provide net
debt, which is not defined by U.S. GAAP. We define net debt as
total debt as reported on the consolidated balance sheet less the
sum of cash and cash equivalents, and short term investments. We
believe net debt to be relevant and useful information to our
investors because it provides them with additional information in
assessing our capital structure, financial leverage, and our
ability to reduce debt and to fund investing and financing
activities. This measure should be considered in addition to, and
not as a substitute for, or superior to, total debt, prepared in
accordance with U.S. GAAP. Furthermore, our definition of net debt
may not be comparable to similarly titled measures reported by
other companies.
Non-GAAP Financial Measure
Reconciliation:
Q2 2020
Q1 2020
Q2 2019
(in millions)
Net Debt Data:
Total Debt
$
1,545
$
1,513
$
1,308
Less: Cash and Cash Equivalents
783
941
551
Less: Short-term Investments
311
58
6
Net Debt
$
451
$
514
$
751
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2020
2019
2020
2019
(In thousands, except per
share data)
Net sales
$
1,172,909
$
895,305
$
2,325,525
$
1,790,269
Cost of sales
980,589
771,851
1,944,297
1,546,054
Gross profit
192,320
123,454
381,228
244,215
Selling, general and administrative
74,260
64,758
146,842
136,345
Research and development
31,536
36,186
63,789
71,940
Total operating expenses
105,796
100,944
210,631
208,285
Operating income
86,524
22,510
170,597
35,930
Interest expense
16,012
18,653
33,057
37,926
Other (income) expense, net
1,467
6,966
(848
)
2,401
Total other expense, net
17,479
25,619
32,209
40,327
Income (loss) before taxes
69,045
(3,109
)
138,388
(4,397
)
Income tax expense
12,905
5,897
17,751
27,277
Net income (loss)
56,140
(9,006
)
120,637
(31,674
)
Net income attributable to non-controlling
interests
(716
)
(444
)
(1,324
)
(655
)
Net income (loss) attributable to
Amkor
$
55,424
$
(9,450
)
$
119,313
$
(32,329
)
Net income (loss) attributable to Amkor
per common share:
Basic
$
0.23
$
(0.04
)
$
0.50
$
(0.14
)
Diluted
$
0.23
$
(0.04
)
$
0.49
$
(0.14
)
Shares used in computing per common share
amounts:
Basic
241,098
239,508
241,009
239,461
Diluted
241,410
239,508
241,345
239,461
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
June 30, 2020
December 31, 2019
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
783,228
$
894,948
Restricted cash
931
610
Short-term investments
310,634
6,348
Accounts receivable, net of allowances
898,717
850,753
Inventories
306,902
220,602
Other current assets
41,383
28,272
Total current assets
2,341,795
2,001,533
Property, plant and equipment, net
2,471,977
2,404,850
Operating lease right of use assets
146,013
148,549
Goodwill
26,140
25,976
Restricted cash
3,027
2,974
Other assets
126,436
111,733
Total assets
$
5,115,388
$
4,695,615
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion
of long-term debt
$
148,872
$
144,479
Trade accounts payable
583,341
571,054
Capital expenditures payable
259,344
77,044
Accrued expenses
291,278
267,226
Total current liabilities
1,282,835
1,059,803
Long-term debt
1,396,389
1,305,755
Pension and severance obligations
165,401
176,971
Long-term operating lease liabilities
87,204
91,107
Other non-current liabilities
66,631
71,740
Total liabilities
2,998,460
2,705,376
Stockholders’ equity:
Preferred stock
—
—
Common stock
287
287
Additional paid-in capital
1,934,047
1,927,739
Retained earnings
353,390
234,077
Accumulated other comprehensive income
(loss)
19,272
19,115
Treasury stock
(217,592
)
(217,479
)
Total Amkor stockholders’ equity
2,089,404
1,963,739
Non-controlling interests in
subsidiaries
27,524
26,500
Total equity
2,116,928
1,990,239
Total liabilities and equity
$
5,115,388
$
4,695,615
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June
30,
2020
2019
(In thousands)
Cash flows from operating activities:
Net income (loss)
$
120,637
$
(31,674
)
Depreciation and amortization
248,036
268,819
Other operating activities and non-cash
items
10,151
33,112
Changes in assets and liabilities
(136,422
)
(101,329
)
Net cash provided by operating
activities
242,402
168,928
Cash flows from investing activities:
Payments for property, plant and
equipment
(134,340
)
(273,672
)
Proceeds from sale of property, plant and
equipment
2,389
8,247
Proceeds from insurance recovery for
property, plant and equipment
—
1,538
Proceeds from sale of short-term
investments
8,593
—
Proceeds from maturities of short-term
investments
13,072
6,469
Payments for short-term investments
(325,632
)
(5,935
)
Other investing activities
805
2,330
Net cash used in investing activities
(435,113
)
(261,023
)
Cash flows from financing activities:
Proceeds from revolving credit
facilities
282,000
85,000
Payments of revolving credit
facilities
(216,000
)
(5,000
)
Proceeds from short-term debt
62,495
29,781
Payments of short-term debt
(66,609
)
(25,548
)
Proceeds from issuance of long-term
debt
225,985
614,375
Payments of long-term debt
(201,425
)
(732,178
)
Payments of finance lease obligations
(4,876
)
(2,746
)
Other financing activities
972
(3,865
)
Net cash provided by (used in) financing
activities
82,542
(40,181
)
Effect of exchange rate fluctuations on
cash, cash equivalents and restricted cash
(1,177
)
1,131
Net decrease in cash, cash equivalents and
restricted cash
(111,346
)
(131,145
)
Cash, cash equivalents and restricted
cash, beginning of period
898,532
688,051
Cash, cash equivalents and restricted
cash, end of period
$
787,186
$
556,906
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 COVID-19, impacting
labor availability and operating capacity, capital availability,
the supply chain and consumer demand for our customers’ 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, 2019 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/20200727005749/en/
Vincent Keenan Vice President, Investor Relations 480-786-7594
vincent.keenan@amkor.com
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