First Quarter Highlights
- First quarter net sales $895
million
- Operating income $13 million
- Net income ($23) million, earnings per
diluted share ($0.10)
- EBITDA $153 million
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the first quarter ended March 31, 2019.
"Our operating results for the first quarter exceeded
expectations, with gross margin above the high end of our
guidance," said Steve Kelley, Amkor's president and chief executive
officer. "Better than expected gross profit and EBITDA were largely
due to cost control efforts."
Results Q1 2019 Q4 2018
Q1 2018 ($ in millions, except per share data) Net
sales $895 $1,081 $1,025 Gross margin 13.5% 16.9%
15.4% Operating income $13 $75 $36 Net income attributable to Amkor
(1) ($23) $28 $10 Earnings per diluted share (1) ($0.10) $0.12
$0.04 EBITDA (2) $153 $219 $175
1) Q1 2019 net income includes a $15 million non-cash discrete
income tax charge, or $0.06 per diluted share, to reduce the value
of certain deferred tax assets. 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.2) EBITDA
is a non-GAAP measure. The reconciliation to the comparable GAAP
measure is included below under "Selected Operating Data."
"We delivered a solid quarter with operating income well above
expectations," said Megan Faust, Amkor's corporate vice president
and chief financial officer. "We also successfully refinanced $525
million of our senior notes, enabling greater financial flexibility
for managing the business by extending maturities to 2027."
Net debt was approximately $800 million at March 31, 2019.
Business Outlook
"We expect second quarter 2019 revenue to be flat to the first
quarter, reflecting a more stable market," said Kelley. "We plan to
maintain our strong focus on cost and CapEx discipline."
Second quarter 2019 outlook (unless otherwise noted):
- Net sales of $850 million to $930
million
- Gross margin of 9% to 14%
- Net income of ($59) million to
($10) million, or ($0.25) to ($0.04) per diluted share
- Full year 2019 capital expenditures of
approximately $475 million
Conference Call Information
Amkor will conduct a conference call on Thursday, May 2,
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 8289834). 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 250 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
Q1 2019 Q4 2018 Q1 2018
Net Sales Data: Net sales (in millions): Advanced products
(1) $ 422 $ 564 $ 476 Mainstream products (2) 473 517
549 Total net sales $ 895 $ 1,081 $ 1,025
Packaging services 82 % 84 % 81 % Test services 18 %
16 % 19 % Net sales from top ten customers 66 % 61 % 69 %
End Market Data: Communications (smartphones,
tablets, handheld devices) 38 % 45 % 42 % Automotive, industrial
and other (driver assist, infotainment, safety, performance) 28 %
25 % 26 % Computing (datacenter, infrastructure, PC/laptop,
storage) 20 % 18 % 19 % Consumer (set-top boxes, televisions,
connected home, personal electronics, visual imaging) 14 % 12 % 13
% Total 100 % 100 % 100 %
Gross Margin Data: Net
sales 100.0 % 100.0 % 100.0 % Cost of sales: Materials 38.0 % 38.8
% 36.9 % Labor 17.4 % 16.0 % 17.5 % Other manufacturing 31.1 % 28.3
% 30.2 % Gross margin 13.5 % 16.9 % 15.4 %
1) Advanced products include flip chip and wafer-level
processing and related test services2) 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 Measure Reconciliation:
Q1 2019 Q4 2018 Q1 2018 (in
millions) EBITDA Data: Net income $ (23 ) $ 29 $ 10
Plus: Interest expense 19 18 20 Plus: Income tax expense 21 29 2
Plus: Depreciation & amortization 136 143 143
EBITDA $ 153 $ 219 $ 175
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months Ended March
31,
2019 2018 (In thousands, except per share
data) Net sales $ 894,964 $ 1,025,319 Cost of sales 774,203
867,548 Gross profit 120,761 157,771
Selling, general and administrative 71,587 80,723 Research and
development 35,754 40,929 Total operating expenses 107,341
121,652 Operating income 13,420 36,119 Interest expense
19,273 20,011 Other (income) expense, net (4,565 ) 3,432
Total other expense, net 14,708 23,443 Income (loss)
before taxes (1,288 ) 12,676 Income tax expense 21,380 2,481
Net income (loss) (22,668 ) 10,195 Net income attributable
to non-controlling interests (211 ) (651 ) Net income (loss)
attributable to Amkor $ (22,879 ) $ 9,544 Net income
(loss) attributable to Amkor per common share: Basic $ (0.10 ) $
0.04 Diluted $ (0.10 ) $ 0.04 Shares used in
computing per common share amounts: Basic 239,414 239,214 Diluted
239,414 239,816
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2019 December 31,
2018 (In thousands) ASSETS Current assets:
Cash and cash equivalents $ 1,055,402 $ 681,569 Restricted cash
2,589 2,589 Accounts receivable, net of allowances 684,914 724,456
Inventories 227,502 230,589 Other current assets 32,522
32,005 Total current assets 2,002,929 1,671,208 Property,
plant and equipment, net 2,564,177 2,650,448 Operating lease right
of use asset * 122,982 — Goodwill 25,449 25,720 Restricted cash
2,929 3,893 Other assets 128,720 144,178 Total assets
$ 4,847,186 $ 4,495,447
LIABILITIES AND EQUITY
Current liabilities: Short-term borrowings and current portion of
long-term debt $ 638,702 $ 114,579 Trade accounts payable 459,383
530,398 Capital expenditures payable 123,737 255,237 Accrued
expenses 245,796 258,209 Total current liabilities
1,467,618 1,158,423 Long-term debt 1,215,262 1,217,732 Pension and
severance obligations 181,826 184,321 Long-term operating lease
liability * 73,876 — Other non-current liabilities 76,022
79,071 Total liabilities 3,014,604 2,639,547
Stockholders’ equity: Preferred stock — — Common stock 285
285 Additional paid-in capital 1,911,179 1,909,425 Retained
earnings 90,310 113,189 Accumulated other comprehensive income
(loss) 21,456 23,812 Treasury stock (216,219 ) (216,171 ) Total
Amkor stockholders’ equity 1,807,011 1,830,540 Non-controlling
interests in subsidiaries 25,571 25,360 Total equity
1,832,582 1,855,900 Total liabilities and equity $
4,847,186 $ 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 Three Months Ended March
31,
2019 2018 (In thousands) Cash flows
from operating activities: Net income (loss) $ (22,668 ) $ 10,195
Depreciation and amortization 135,835 142,509 Other operating
activities and non-cash items 15,928 (4,734 ) Changes in assets and
liabilities (77,038 ) (339 ) Net cash provided by operating
activities 52,057 147,631 Cash flows from investing
activities: Payments for property, plant and equipment (203,216 )
(230,603 ) Proceeds from sale of property, plant and equipment 180
342 Proceeds from insurance recovery for property, plant and
equipment 1,538 — Other investing activities (569 ) 656 Net
cash used in investing activities (202,067 ) (229,605 ) Cash flows
from financing activities: Proceeds from short-term debt 29,781 —
Payments of short-term debt (10,588 ) (17,352 ) Proceeds from
issuance of long-term debt 572,375 — Payments of long-term debt
(63,636 ) (6,220 ) Payments of finance lease obligations (1,376 )
(808 ) Other financing activities (2,848 ) 455
Net cash provided by (used in) financing
activities
523,708 (23,925 ) Effect of exchange rate fluctuations on
cash, cash equivalents and restricted cash (829 ) 3,892 Net
increase (decrease) in cash, cash equivalents and restricted cash
372,869 (102,007 ) Cash, cash equivalents and restricted cash,
beginning of period 688,051 602,851 Cash, cash
equivalents and restricted cash, end of period $ 1,060,920 $
500,844
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:
- 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 and generally soft end
market demand 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 recent 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
restrictive covenants;
- 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 new 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190502005901/en/
Vincent KeenanVice President, Investor
Relations480-786-7594vincent.keenan@amkor.com
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