Amkor Technology Reports Financial Results for the Fourth Quarter and Full Year 2020

Annual Growth of 25% Drove Record Revenue and EPS

Fourth Quarter 2020 Highlights:

Net sales $1.37 billion, up 16.3% year on year
Gross margin 20.3%, operating income margin 11.6%
Net income $127 million, earnings per diluted share $0.52
EBITDA $288 million

Full Year 2020 Highlights:

Net sales $5.05 billion, up 24.6% year on year
Net income $338 million, earnings per diluted share $1.40
EBITDA $960 million
Net cash from operations $770 million and free cash flow $221 million
Sixth 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, 2020.

“Better than expected demand for smartphone and automotive products drove fourth quarter revenue up 16% year on year to a record $1.37 billion,” said Giel Rutten, Amkor’s president and chief executive officer. “For full year 2020, we delivered record revenue of $5.05 billion, an increase of nearly $1 billion over 2019. Demand for advanced packages, particularly advanced SiP, drove strong growth in the consumer, communications and computing end markets.”

“High utilization drove gross margin over 20%, and operating income margin reached 11.6% in the fourth quarter. The improved profitability and continued spending discipline resulted in record annual EPS of $1.40,” said Megan Faust, Amkor’s executive vice president and chief financial officer. “In 2020, free cash flow doubled from 2019 to a record $221 million. We also further strengthened our balance sheet by lowering our blended borrowing rate and paying down approximately $300 million in debt, ending the year with all-time low net debt of $322 million.”

Results

Q4 2020 (1)

Q3 2020

Q4 2019 (2)

2020 (1)

2019 (3)

($ in millions, except per share amounts)

Net sales

$1,371

$1,354

$1,178

$5,051

$4,053

Gross margin

20.3%

17.8%

18.9%

17.8%

16.0%

Operating income

$159

$127

$118

$457

$233

Net income attributable to Amkor

$127

$92

$99

$338

$121

Earnings per diluted share

$0.52

$0.38

$0.41

$1.40

$0.50

EBITDA (4)

$288

$255

$244

$960

$756

Annual free cash flow (4)

$221

$104

Net debt (4)

$322

$549

(1)

Q4 and full year 2020 net income includes a $20 million discrete income tax benefit, or $0.08 per diluted share, primarily related to changes in the valuation of certain deferred tax assets.

(2)

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.

(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, free cash flow and net debt are non-GAAP measures. The reconciliations to the comparable GAAP measures are included below under “Selected Operating Data.”

At December 31, 2020, total cash and short-term investments was $832 million, and total debt was $1.154 billion.

Business Outlook

“We expect the first quarter to be another strong quarter, with revenue projected to be 15% above the first quarter of 2020, driven by continued recovery in automotive and better than seasonal demand for smartphones,” said Rutten. “We see 2021 as another good growth year for Amkor as 5G deployment, high performance computing, IoT wearables and recovery in automotive are all expected to drive strong demand for our services.”

First quarter 2021 outlook (unless otherwise noted):

Net sales of $1.27 billion to $1.37 billion
Gross margin of 17% to 20%
Net income of $70 million to $118 million, or $0.29 to $0.48 per diluted share
Full year 2021 capital expenditures to be around $700 million

Conference Call Information

Amkor will conduct a conference call on Monday, February 8, 2021, 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 13715048). 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 2020

Q3 2020

Q4 2019

2020

2019

Net Sales Data:

Net sales (in millions):

Advanced products (1)

868

899

667

3,202

2,111

Mainstream products (2)

503

455

511

1,849

1,942

Total net sales

1,371

1,354

1,178

5,051

4,053

Packaging services

Test services

Net sales from top ten customers

End Market Distribution Data:

Communications (handheld devices, smartphones, tablets)

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

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

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

Total

100

Gross Margin Data:

Net sales

100.0

Cost of sales:

Materials

44.6

46.9

42.6

45.5

40.0

Labor

12.9

12.8

13.9

13.4

16.0

Other manufacturing

22.2

22.5

24.6

23.3

28.0

Gross margin

20.3

17.8

18.9

17.8

16.0

(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 refer to 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, and our ability to service debt, and our ability to fund capital expenditures and pay dividends. 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 2020

Q3 2020

Q4 2019

2020

2019

(in millions)

EBITDA Data:

Net income

127

100

340

123

Plus: Interest expense

Plus: Income tax expense

Plus: Depreciation & amortization

133

130

126

510

524

EBITDA

288

255

244

960

756

In this press release, 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, and our ability to service debt, and our ability to fund capital expenditures and pay dividends. 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:

2020

2019

(in millions)

Free Cash Flow Data:

Net cash provided by operating activities

770

564

Less: Purchases of property, plant and equipment

(553

)

(472

)

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

Free cash flow

221

104

AMKOR TECHNOLOGY, INC. Selected Operating Data

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:

2020

2019

(in millions)

Net Debt Data:

Total Debt

1,154

1,450

Less: Cash and Cash Equivalents

(698

)

(895

)

Less: Short-term Investments

(134

)

Net Debt

322

549

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

For the Three Months Ended December 31,

For the Year Ended December 31,

2020

2019

2020

2019

(In thousands, except per share data)

Net sales

1,371,041

1,178,464

5,050,589

4,052,650

Cost of sales

1,092,540

955,480

4,149,775

3,403,211

Gross profit

278,501

222,984

900,814

649,439

Selling, general and administrative

78,219

71,828

302,842

278,631

Research and development

41,103

32,771

140,727

137,638

Total operating expenses

119,322

104,599

443,569

416,269

Operating income

159,179

118,385

457,245

233,170

Interest expense

14,707

16,673

64,168

71,587

Other (income) expense, net

4,828

1,132

6,395

1,773

Total other expense, net

19,535

17,805

70,563

73,360

Income before taxes

139,644

100,580

386,682

159,810

Income tax expense

12,679

764

46,183

37,182

Net income

126,965

99,816

340,499

122,628

Net income attributable to noncontrolling interests

(291

)

(669

)

(2,361

)

(1,740

)

Net income attributable to Amkor

126,674

99,147

338,138

120,888

Net income attributable to Amkor per common share:

Basic

0.52

0.41

1.40

0.50

Diluted

0.52

0.41

1.40

0.50

Shares used in computing per common share amounts:

Basic

242,333

240,384

241,509

239,725

Diluted

243,356

241,146

242,248

240,122

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,

2020

2019

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents

698,002

894,948

Restricted cash

1,007

610

Short-term investments

133,769

6,348

Accounts receivable, net of allowances

962,643

850,753

Inventories

297,293

220,602

Other current assets

40,218

28,272

Total current assets

2,132,932

2,001,533

Property, plant and equipment, net

2,566,002

2,404,850

Operating lease right of use assets

147,236

148,549

Goodwill

27,325

25,976

Restricted cash

3,188

2,974

Other assets

145,628

111,733

Total assets

5,022,311

4,695,615

LIABILITIES AND EQUITY

Current liabilities:

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

149,007

144,479

Trade accounts payable

636,434

571,054

Capital expenditures payable

181,339

77,044

Accrued expenses

349,207

267,226

Total current liabilities

1,315,987

1,059,803

Long-term debt

1,005,339

1,305,755

Pension and severance obligations

159,610

176,971

Long-term operating lease liabilities

84,420

91,107

Other non-current liabilities

102,996

71,740

Total liabilities

2,668,352

2,705,376

Amkor stockholders’ equity:

Preferred stock

—

Common stock

289

287

Additional paid-in capital

1,953,378

1,927,739

Retained earnings

562,502

234,077

Accumulated other comprehensive income

27,270

19,115

Treasury stock

(217,740

)

(217,479

)

Total Amkor stockholders’ equity

2,325,699

1,963,739

Noncontrolling interests in subsidiaries

28,260

26,500

Total equity

2,353,959

1,990,239

Total liabilities and equity

5,022,311

4,695,615

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Year Ended December 31,

2020

2019

(In thousands)

Cash flows from operating activities:

Net income

340,499

122,628

Depreciation and amortization

510,396

524,177

Other operating activities and non-cash items

12,594

42,935

Changes in assets and liabilities

(93,456

)

(125,890

)

Net cash provided by operating activities

770,033

563,850

Cash flows from investing activities:

Payments for property, plant and equipment

(553,021

)

(472,433

)

Proceeds from sale of property, plant and equipment

3,819

10,117

Proceeds from insurance recovery for property, plant and equipment

—

1,538

Payments for short-term investments

(535,368

)

(5,935

)

Proceeds from sale of short-term investments

247,081

—

Proceeds from maturities of short-term investments

159,015

6,469

Other investing activities

39,769

(2,245

)

Net cash used in investing activities

(638,705

)

(462,489

)

Cash flows from financing activities:

Proceeds from revolving credit facilities

312,000

272,700

Payments of revolving credit facilities

(332,000

)

(272,700

)

Proceeds from short-term debt

86,769

51,434

Payments of short-term debt

(87,353

)

(52,635

)

Proceeds from issuance of long-term debt

331,033

975,575

Payments of long-term debt

(648,514

)

(862,927

)

Payments of finance lease obligations

(9,851

)

(6,574

)

Other financing activities

14,197

3,377

Net cash (used in) provided by financing activities

(333,719

)

108,250

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

6,056

870

Net (decrease) increase in cash, cash equivalents and restricted cash

(196,335

)

210,481

Cash, cash equivalents and restricted cash, beginning of period

898,532

688,051

Cash, cash equivalents and restricted cash, end of period

702,197

898,532

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;
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 production delays, wage inflation, fluctuations in commodity prices and supply constraints;
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;
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/20210208005851/en/

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

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