Third Quarter Highlights
- Record third quarter net sales $1.35 billion, up 25%
year-on-year and 15% sequentially
- Operating income $127 million, operating income margin
9.4%
- Net income $92 million, earnings per diluted share $0.38
- EBITDA $255 million
- Initiation of a regular quarterly cash dividend of $0.04 per
share
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, 2020
and the initiation of a regular quarterly cash dividend of $0.04
per share.
“Stronger than expected demand in the communications and
automotive and industrial end markets drove revenue above the high
end of our guidance,” said Giel Rutten, Amkor’s president and chief
executive officer. “The Board’s decision to initiate a dividend is
a significant milestone for Amkor. Over the past several years,
Amkor has capitalized on growth opportunities in advanced packaging
technologies that target 5G, advanced automotive systems, IoT and
high-performance computing, and the introduction of a regular cash
dividend reflects our consistent operating performance, strong free
cash flow generation and confidence in our long-term financial
outlook.”
Results
Q3 2020
Q2 2020
Q3 2019
($ in millions, except per share
data)
Net sales
$1,354
$1,173
$1,084
Gross margin
17.8%
16.4%
16.8%
Operating income
$127
$87
$79
Operating income margin
9.4%
7.4%
7.3%
Net income attributable to Amkor
$92
$55
$54
Earnings per diluted share
$0.38
$0.23
$0.23
EBITDA*
$255
$209
$209
“All-time record quarterly revenue drove operating income margin
to 9.4% and EPS to $0.38 for the quarter. We also paid down $230
million of debt this quarter, bringing our net debt to $0.4
billion, the lowest in our public company history,” said Megan
Faust, Amkor’s executive vice president and chief financial
officer. “The initiation of a dividend expands Amkor’s capital
allocation strategy for delivering value to stockholders. Our
consistent free cash flow and strong balance sheet give us the
financial flexibility to continue to make investments in future
growth opportunities and return capital to stockholders.”
At September 30, 2020, total cash and short-term investments was
$0.9 billion, and total debt was $1.3 billion.
The initial quarterly cash dividend of $0.04 per share is
payable on January 7, 2021 to stockholders of record at the close
of business on December 18, 2020. The declaration and payment of
future dividends, as well as any record and payment dates, are
subject to the approval of the Board of Directors.
*EBITDA and net debt are non-GAAP financial measures. The
reconciliation to the comparable GAAP financial measure is included
below under “Selected Operating Data.”
Business Outlook
“Continued strength in advanced packaging and a recovering
automotive end market are expected to drive solid revenue
performance in the fourth quarter of 2020,” said Rutten. “Growing
demand and share gains in the communications end market is expected
to drive year on year revenue growth of 10% in the fourth
quarter.”
Fourth quarter 2020 outlook (unless otherwise noted):
- Net sales of $1.25 billion to $1.35 billion
- Gross margin of 17% to 20%
- Net income of $68 million to $115 million, or $0.28 to $0.47
per diluted share
- Full year 2020 capital expenditures of approximately $550
million
Conference Call Information
Amkor will conduct a conference call on Monday, October 26,
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 1-877-407-4019 or
1-201-689-8337. A replay of the call will be made available at
Amkor’s website or by dialing 1-877-660-6853 or 1-201-612-7415
(conference ID 13711716). 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
Q3 2020
Q2 2020
Q3 2019
Net Sales Data:
Net sales (in millions):
Advanced products (1)
$
899
$
729
$
589
Mainstream products (2)
455
444
495
Total net sales
$
1,354
$
1,173
$
1,084
Packaging services
86
%
84
%
84
%
Test services
14
%
16
%
16
%
Net sales from top ten customers
63
%
69
%
62
%
End Market Data:
Communications (handheld devices,
smartphones, tablets)
43
%
38
%
41
%
Consumer (connected home, set-top boxes,
televisions, visual imaging, wearables)
25
%
27
%
18
%
Automotive, industrial and other (driver
assist, infotainment, performance, safety)
17
%
19
%
26
%
Computing (data center, infrastructure,
PC/laptop, storage)
15
%
16
%
15
%
Total
100
%
100
%
100
%
Gross Margin Data:
Net sales
100.0
%
100.0
%
100.0
%
Cost of sales:
Materials
46.9
%
45.2
%
40.4
%
Labor
12.8
%
13.9
%
15.8
%
Other manufacturing
22.5
%
24.5
%
27.0
%
Gross margin
17.8
%
16.4
%
16.8
%
(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
This press release includes 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 2020
Q2 2020
Q3 2019
(in millions)
EBITDA Data:
Net income
$
93
$
56
$
54
Plus: Interest expense
16
16
17
Plus: Income tax expense
16
13
9
Plus: Depreciation & amortization
130
124
129
EBITDA
$
255
$
209
$
209
This press release also includes 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:
Q3 2020
Q2 2020
Q3 2019
(in millions)
Net Debt Data:
Total Debt
$
1,319
$
1,545
$
1,298
Less: Cash and Cash Equivalents
567
783
599
Less: Short-term Investments
356
311
6
Net Debt
$
396
$
451
$
693
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months
Ended
September 30,
For the Nine Months
Ended
September 30,
2020
2019
2020
2019
(In thousands, except per
share data)
Net sales
$
1,354,023
$
1,083,917
$
3,679,548
$
2,874,186
Cost of sales
1,112,938
901,677
3,057,235
2,447,731
Gross profit
241,085
182,240
622,313
426,455
Selling, general and administrative
77,781
70,458
224,623
206,803
Research and development
35,835
32,927
99,624
104,867
Total operating expenses
113,616
103,385
324,247
311,670
Operating income
127,469
78,855
298,066
114,785
Interest expense
16,404
16,988
49,461
54,914
Other (income) expense, net
2,415
(1,760
)
1,567
641
Total other expense, net
18,819
15,228
51,028
55,555
Income before taxes
108,650
63,627
247,038
59,230
Income tax expense
15,753
9,141
33,504
36,418
Net income
92,897
54,486
213,534
22,812
Net income attributable to non-controlling
interests
(746
)
(416
)
(2,070
)
(1,071
)
Net income attributable to Amkor
$
92,151
$
54,070
$
211,464
$
21,741
Net income attributable to Amkor per
common share:
Basic
$
0.38
$
0.23
$
0.88
$
0.09
Diluted
$
0.38
$
0.23
$
0.87
$
0.09
Shares used in computing per common share
amounts:
Basic
241,675
239,586
241,232
239,503
Diluted
242,592
239,937
241,937
239,858
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30,
2020
December 31,
2019
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
566,745
$
894,948
Restricted cash
945
610
Short-term investments
356,150
6,348
Accounts receivable, net of allowances
990,637
850,753
Inventories
299,830
220,602
Other current assets
54,264
28,272
Total current assets
2,268,571
2,001,533
Property, plant and equipment, net
2,560,195
2,404,850
Operating lease right of use assets
149,727
148,549
Goodwill
26,747
25,976
Restricted cash
3,087
2,974
Other assets
128,293
111,733
Total assets
$
5,136,620
$
4,695,615
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion
of long-term debt
$
136,526
$
144,479
Trade accounts payable
611,965
571,054
Capital expenditures payable
328,171
77,044
Accrued expenses
298,708
267,226
Total current liabilities
1,375,370
1,059,803
Long-term debt
1,182,573
1,305,755
Pension and severance obligations
175,941
176,971
Long-term operating lease liabilities
88,257
91,107
Other non-current liabilities
91,742
71,740
Total liabilities
2,913,883
2,705,376
Stockholders’ equity:
Preferred stock
—
—
Common stock
288
287
Additional paid-in capital
1,943,140
1,927,739
Retained earnings
445,541
234,077
Accumulated other comprehensive income
(loss)
23,309
19,115
Treasury stock
(217,660
)
(217,479
)
Total Amkor stockholders’ equity
2,194,618
1,963,739
Non-controlling interests in
subsidiaries
28,119
26,500
Total equity
2,222,737
1,990,239
Total liabilities and equity
$
5,136,620
$
4,695,615
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
2020
2019
(In thousands)
Cash flows from operating activities:
Net income
$
213,534
$
22,812
Depreciation and amortization
377,722
398,013
Other operating activities and non-cash
items
20,368
51,533
Changes in assets and liabilities
(177,576
)
(189,026
)
Net cash provided by operating
activities
434,048
283,332
Cash flows from investing activities:
Payments for property, plant and
equipment
(275,531
)
(328,497
)
Proceeds from sale of property, plant and
equipment
2,710
8,495
Proceeds from insurance recovery for
property, plant and equipment
—
1,538
Proceeds from sale of short-term
investments
37,633
—
Proceeds from maturities of short-term
investments
86,216
6,469
Payments for short-term investments
(475,696
)
(5,935
)
Other investing activities
13,331
(887
)
Net cash used in investing activities
(611,337
)
(318,817
)
Cash flows from financing activities:
Proceeds from revolving credit
facilities
312,000
172,700
Payments of revolving credit
facilities
(332,000
)
(92,700
)
Proceeds from short-term debt
86,769
51,434
Payments of short-term debt
(76,004
)
(42,067
)
Proceeds from issuance of long-term
debt
225,985
714,375
Payments of long-term debt
(370,426
)
(847,155
)
Payments of finance lease obligations
(7,193
)
(4,358
)
Other financing activities
7,707
(1,963
)
Net cash used in financing activities
(153,162
)
(49,734
)
Effect of exchange rate fluctuations on
cash, cash equivalents and restricted cash
2,696
1,385
Net decrease in cash, cash equivalents and
restricted cash
(327,755
)
(83,834
)
Cash, cash equivalents and restricted
cash, beginning of period
898,532
688,051
Cash, cash equivalents and restricted
cash, end of period
$
570,777
$
604,217
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 statements regarding future demand, operating
performance, free cash flow generation, financial outlook,
investment and return of capital, statements regarding future
dividends 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:
- 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 other
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 other 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;
- the possibility that we may decrease or suspend our quarterly
dividend;
- 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, 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/20201026005855/en/
Vincent Keenan Vice President, Investor Relations 480-786-7594
vincent.keenan@amkor.com
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