Second Quarter Highlights
- Second quarter net sales $895 million
- Operating income $23 million
- Net loss $9 million, earnings per diluted share ($0.04)
- EBITDA $149 million
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the second quarter ended June 30, 2019.
"Second quarter profitability was at the high end of guidance,
with revenue just above the midpoint," said Steve Kelley, Amkor's
president and chief executive officer. "Strong factory performance
and prudent cost management drove solid sequential improvement in
operating income."
Results
Q2 2019
Q1 2019
Q2 2018
($ in millions, except per share
data)
Net sales
$895
$895
$1,066
Gross margin
13.8%
13.5%
15.9%
Operating income
$23
$13
$54
Net income attributable to Amkor (1)
($9)
($23)
$33
Earnings per diluted share (1)
($0.04)
($0.10)
$0.14
EBITDA (2)
$149
$153
$208
(1) 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. 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.
(2) EBITDA is a non-GAAP measure. The reconciliation to the
comparable GAAP measure is included below under "Selected Operating
Data."
"We are executing well in a challenging market environment,"
said Megan Faust, Amkor's corporate vice president and chief
financial officer. "Our focus in 2019 remains on controlling Capex
and other expenses, while investing in future growth
opportunities."
At June 30, 2019, cash and cash equivalents were $551 million,
and total debt was $1.3 billion.
Business Outlook
"In the third quarter, we expect revenues to increase about 15%
sequentially, driven by gains in the mobile communications and
consumer markets," said Kelley. "We are encouraged by the level of
new product qualification activity for 5G, automotive and IoT
applications."
Third quarter 2019 outlook (unless otherwise noted):
- Net sales of $990 million to $1.07 billion
- Gross margin of 12% to 16%
- Net income of ($7) million to $41 million, or ($0.03) to $0.17
per diluted share
- Full year 2019 capital expenditures of approximately $475
million
Conference Call Information
Amkor will conduct a conference call on Monday, July 29, 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 4127169). 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
Q2 2019
Q1 2019
Q2 2018
Net Sales Data:
Net sales (in millions):
Advanced products (1)
$
433
$
422
$
496
Mainstream products (2)
462
473
570
Total net sales
$
895
$
895
$
1,066
Packaging services
83
%
82
%
83
%
Test services
17
%
18
%
17
%
Net sales from top ten customers
62
%
66
%
65
%
End Market Data:
Communications (handheld devices,
smartphones, tablets)
37
%
38
%
42
%
Automotive, industrial and other (driver
assist, infotainment, performance, safety)
29
%
28
%
26
%
Computing (datacenter, infrastructure,
PC/laptop, storage)
19
%
20
%
19
%
Consumer (connected home, set-top boxes,
televisions, visual imaging, wearables)
15
%
14
%
13
%
Total
100
%
100
%
100
%
Gross Margin Data:
Net sales
100.0
%
100.0
%
100.0
%
Cost of sales:
Materials
38.0
%
38.0
%
38.9
%
Labor
17.4
%
17.4
%
16.0
%
Other manufacturing
30.8
%
31.1
%
29.2
%
Gross margin
13.8
%
13.5
%
15.9
%
(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 2019
Q1 2019
Q2 2018
(in millions)
EBITDA Data:
Net income
$
(9
)
$
(23
)
$
33
Plus: Interest expense
19
19
21
Plus: Income tax expense
6
21
11
Plus: Depreciation & amortization
133
136
143
EBITDA
$
149
$
153
$
208
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2019
2018
2019
2018
(In thousands, except per
share data)
Net sales
$
895,305
$
1,065,684
$
1,790,269
$
2,091,003
Cost of sales
771,851
895,967
1,546,054
1,763,515
Gross profit
123,454
169,717
244,215
327,488
Selling, general and administrative
64,758
74,700
136,345
155,423
Research and development
36,186
41,076
71,940
82,005
Total operating expenses
100,944
115,776
208,285
237,428
Operating income
22,510
53,941
35,930
90,060
Interest expense
18,653
21,127
37,926
41,138
Other (income) expense, net
6,966
(11,001
)
2,401
(7,569
)
Total other expense, net
25,619
10,126
40,327
33,569
Income (loss) before taxes
(3,109
)
43,815
(4,397
)
56,491
Income tax expense
5,897
10,631
27,277
13,112
Net income (loss)
(9,006
)
33,184
(31,674
)
43,379
Net income attributable to non-controlling
interests
(444
)
(593
)
(655
)
(1,244
)
Net income (loss) attributable to
Amkor
$
(9,450
)
$
32,591
$
(32,329
)
$
42,135
Net income (loss) attributable to Amkor
per common share:
Basic
$
(0.04
)
$
0.14
$
(0.14
)
$
0.18
Diluted
$
(0.04
)
$
0.14
$
(0.14
)
$
0.18
Shares used in computing per common share
amounts:
Basic
239,508
239,351
239,461
239,283
Diluted
239,508
239,804
239,461
239,805
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
June 30, 2019
December 31, 2018
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
551,438
$
681,569
Restricted cash
2,590
2,589
Accounts receivable, net of allowances
702,466
724,456
Inventories
217,638
230,589
Other current assets
38,988
32,005
Total current assets
1,513,120
1,671,208
Property, plant and equipment, net
2,515,533
2,650,448
Operating lease right of use asset *
132,763
—
Goodwill
26,159
25,720
Restricted cash
2,878
3,893
Other assets
118,831
144,178
Total assets
$
4,309,284
$
4,495,447
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion
of long-term debt
$
198,230
$
114,579
Trade accounts payable
459,548
530,398
Capital expenditures payable
134,500
255,237
Accrued expenses
246,615
258,209
Total current liabilities
1,038,893
1,158,423
Long-term debt
1,109,945
1,217,732
Pension and severance obligations
174,897
184,321
Long-term operating lease liability *
80,049
—
Other non-current liabilities
74,324
79,071
Total liabilities
2,478,108
2,639,547
Stockholders’ equity:
Preferred stock
—
—
Common stock
285
285
Additional paid-in capital
1,913,103
1,909,425
Retained earnings
80,860
113,189
Accumulated other comprehensive income
(loss)
27,317
23,812
Treasury stock
(216,254
)
(216,171
)
Total Amkor stockholders’ equity
1,805,311
1,830,540
Non-controlling interests in
subsidiaries
25,865
25,360
Total equity
1,831,176
1,855,900
Total liabilities and equity
$
4,309,284
$
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 Six Months Ended June
30,
2019
2018
(In thousands)
Cash flows from operating activities:
Net income (loss)
$
(31,674
)
$
43,379
Depreciation and amortization
268,819
285,515
Other operating activities and non-cash
items
33,112
(3,239
)
Changes in assets and liabilities
(101,329
)
(119,276
)
Net cash provided by operating
activities
168,928
206,379
Cash flows from investing activities:
Payments for property, plant and
equipment
(273,672
)
(389,568
)
Proceeds from sale of property, plant and
equipment
8,247
603
Proceeds from insurance recovery for
property, plant and equipment
1,538
—
Other investing activities
2,864
2,647
Net cash used in investing activities
(261,023
)
(386,318
)
Cash flows from financing activities:
Proceeds from revolving credit
facilities
85,000
—
Payments of revolving credit
facilities
(5,000
)
—
Proceeds from short-term debt
29,781
7,264
Payments of short-term debt
(25,548
)
(31,546
)
Proceeds from issuance of long-term
debt
614,375
64,000
Payments of long-term debt
(732,178
)
(77,015
)
Payments of finance lease obligations
(2,746
)
(1,689
)
Other financing activities
(3,865
)
492
Net cash used in financing activities
(40,181
)
(38,494
)
Effect of exchange rate fluctuations on
cash, cash equivalents and restricted cash
1,131
1,347
Net decrease in cash, cash equivalents and
restricted cash
(131,145
)
(217,086
)
Cash, cash equivalents and restricted
cash, beginning of period
688,051
602,851
Cash, cash equivalents and restricted
cash, end of period
$
556,906
$
385,765
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 our focus on capital
expenditures and cost controls and investments in growth
opportunities, 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:
- 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,
including the potential impact of the phase-out of LIBOR on our
variable interest rate debt;
- 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/20190729005700/en/
Vincent Keenan Vice President, Investor Relations 480-786-7594
vincent.keenan@amkor.com
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