TowerJazz (NASDAQ:TSEM) (TASE:TSEM) reported today its
results for the second quarter ended June 30, 2018.
Highlights for the second
quarter:
- Revenues of $335 million, up 7% sequentially;
- Substantial sequential increase in gross, operating and net
profit, up 19%, 39% and 45% respectively;
- Net profit of $38 million, up 45% over prior quarter, resulting
in basic EPS of $0.38, up $0.11 over prior quarter;
- Cash from operations of $77 million and free cash flow of $37
million;
- Strengthened financial structure by prepaying $40 million U.S.
wholly owned subsidiary loan and replacing TPSCo $100 million
long-term loan with improved terms.
Business OutlookRevenues for
the third quarter of 2018 are forecasted to be approximately $335
million, with a range of ±5%; targeting fourth quarter record
revenues of about $360 million to $380 million.
Mr. Russell Ellwanger, Chief Executive
Officer of TowerJazz, commented, “We are
pleased with the second quarter improvement in our results and
particularly the margins’ growth, allowing us to bring over half of
the quarterly incremental revenue to the bottom line, consistent
with our margin model. The third quarter contains the proper wafer
start plan and product mix to transition us to a fourth quarter
targeted record revenue. For the third quarter, we continue to see
weakness in the mobile sector with recent reductions in customer
demand. For the SiGe infrastructure technology, given its strong
and higher than originally expected customer demand, and hence the
high number of customers and flow variants that needed to be
qualified, the shipment profile from recently added capacity is
pushed out slightly. Customers were notified of increased SiGe
capacity and starts have been maximized, expecting full revenue
realization in the fourth quarter. As our customers’ mid to long
term demand for SiGe exceeds our newly acquired capacity, we have
invested in additional CapEx for our Newport Beach facility,
targeted to come on line in the first quarter of 2019.
Additionally, demand remains strong for discrete Power and all
300mm offerings.”
Ellwanger further commented: “During the first
half our major focuses were: (1) qualifying incremental SiGe
capacity to optimize our production mix for the high end
infrastructure market whilst moving RFCMOS parts to other
factories, predominantly San Antonio and replacing some low margin
mobile business, (2) ensuring 300 mm manufacturing capability,
enabling third quarter RF, Power and CIS start ramps with high
yielding flow capability; and (3) multiple organic activities,
increasing our served markets, for continued mid to long-term high
margin growth. In line with this, our second half main growth
drivers remain 300mm production ramp and increased SiGe capacity to
meet the very high and still growing customer demand.”
Second Quarter 2018 Results
OverviewRevenues for the second quarter of 2018 were $335
million, reflecting a 7% increase over the prior quarter.
Gross and operating profits for the second
quarter of 2018 were $79 million and $44 million, respectively, $12
million higher as compared to $66 million and $32 million,
respectively, in the first quarter of 2018. This represents quarter
over quarter incremental increase of 55% margins as compared to the
$22 million revenue increase.
EBITDA for the second quarter of 2018 was $96
million, an $11 million and 13% EBITDA growth as compared to $84
million in the prior quarter.
Net profit for the second quarter of 2018 was
$38 million, or $0.38 basic earnings per share, as compared to $26
million or $0.27 basic earnings per share in the prior quarter.
Free cash flow for the quarter was $37 million,
with $77 million cash flow from operations and $40 million
investments in fixed assets, net. The other main cash activities
during the second quarter of 2018 were $15 million investment in
marketable securities and $4 million of debt received, net of debt
repaid.
Cash (including marketable securities), net of
gross debt, as of June 30, 2018, totalled to a record of $276
million as compared to net cash of $247 million as of March 31,
2018 and $226 million as of December 31, 2017.
Shareholders' equity as of June 30, 2018 was a
record $1.1 billion, as compared to $1.07 billion as of March 31,
2018 and $1.03 billion as of December 31, 2017.On April 30, 2018,
the Company and its bonds series G have received an upgraded rating
from Standard & Poor’s, Israeli subsidiary, Ma’alot (an Israeli
rating company that is fully owned by S&P Global Ratings). Its
previous rating was ilA+ with a stable horizon and the new upgraded
rating is ilAA-, with a stable horizon.
In June 2018, TPSCo restructured its outstanding
loans originally due 2018-2020, which carried variable interest
rates of TIBOR plus 1.65% to TIBOR plus 2%, by early repaying these
loans and obtaining a new approximately $100 million loan from
three leading Japanese banks at better terms and longer duration.
The new loan final maturity date is June 2025, includes three years
grace period followed by nine equal installments from June 2021 to
June 2025, and carries a fixed interest rate of 1.95% per
annum.
In July 2018, the Company early repaid the $40
million loan, initially borrowed in 2016 from JA Mitsui (US), in
relation to the acquisition of the San Antonio fab from Maxim and
its ramp. The loan carried annual interest of ICE LIBOR plus 2%,
hence its early repayment will save the Company $1.5 million to $2
million per annum in interest and fees.
Teleconference and Webcast
TowerJazz will host an investor conference call
today, Thursday, July 26, 2018, at 10:00 a.m. Eastern time (9:00
a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time
and 5:00 p.m. Israel time) to discuss the Company’s financial
results for the second quarter 2018 and its outlook.This call will
be webcast and can be accessed via TowerJazz’s website at
www.towerjazz.com , or by calling 1-888-668-9141 (U.S. Toll-Free),
03-918-0609 (Israel), +972-3-918-0609 (International). For
those who are not available to listen to the live broadcast, the
call will be archived on TowerJazz’s website for 90 days.
The Company presents its financial statements in
accordance with U.S. GAAP. The financial information included
in the tables below includes unaudited condensed financial data.
Some of the financial information in this release, which we
describe in this release as “adjusted” financial measures, is
non-GAAP financial measures as defined in Regulation G and related
reporting requirements promulgated by the Securities and Exchange
Commission as they apply to our Company. These adjusted financial
measures are calculated excluding one or more of the following: (1)
amortization of acquired intangible assets and (2) compensation
expenses in respect of equity grants to directors, officers and
employees. These adjusted financial measures should be evaluated in
conjunction with, and are not a substitute for, GAAP financial
measures. The tables also present the GAAP financial measures,
which are most comparable to the adjusted financial measures, as
well as a reconciliation between the adjusted financial measures
and the comparable GAAP financial measures. As used and/ or
presented in this release, as well as calculated in the tables
herein, the term Earnings Before Interest Tax Depreciation and
Amortization (EBITDA) consists of net profit in accordance with
GAAP, excluding financing expenses, net, other income, net, taxes,
non-controlling interest, depreciation and amortization expense and
stock-based compensation expense. EBITDA is reconciled in the
tables below from GAAP operating profit. EBITDA is not a required
GAAP financial measure and may not be comparable to a similarly
titled measure employed by other companies. EBITDA and the adjusted
financial information presented herein should not be considered in
isolation or as a substitute for operating profit, net profit, cash
flows provided by operating, investing and financing activities,
per share data or other profit or cash flow statement data prepared
in accordance with GAAP. The term Net Cash, as used and/ or
presented in this release, is comprised of cash, cash equivalents,
short-term deposits and marketable securities (in the amounts of
$627 million, $590 million and $560 million as of June 30, 2018,
March 31, 2018 and December 31, 2017, respectively) less the
outstanding principal amount of bank loans (in the amounts of $140
million as of June 30, 2018 , and $138 million as of March 31, 2018
and December 31, 2017, respectively), the outstanding principal
amount of capital leases (in the amounts of $31 million, $25
million and $16 million as of June 30, 2018, March 31, 2018 and
December 31, 2017, respectively) and the outstanding principal
amount of debentures (in the amount of $180 million as of June 30,
2018, March 31, 2018 and December 31, 2017, respectively). The term
Net Cash is not a required GAAP financial measure, may not be
comparable to a similarly titled measure employed by other
companies and should not be considered in isolation or as a
substitute for cash, debt, operating profit, net profit or loss,
cash flows provided by operating, investing and financing
activities, per share data or other profit or cash flow statement
data prepared in accordance with GAAP. In addition, the term Free
Cash Flow, as used and/ or presented in this release, is calculated
to be cash from operating activities (in the amounts of $77
million, $75 million and $84 million for the three months periods
ended June 30, 2018, March 31, 2018, and June 30, 2017,
respectively) less cash for investments in property and equipment,
net (in the amounts of $40 million, $40 million and $41 million for
the three months periods ended June 30, 2018, March 31, 2018, and
June 30, 2017, respectively). The term Free Cash Flow is not a
required GAAP financial measure, may not be comparable to a
similarly titled measure employed by other companies and should not
be considered in isolation or as a substitute for operating profit,
net profit or loss, cash flows provided by operating, investing and
financing activities, per share data or other profit or cash flow
statement data prepared in accordance with GAAP.
About TowerJazz
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE:
TSEM) and its subsidiaries operate collectively under the brand
name TowerJazz, the global specialty foundry leader. TowerJazz
manufactures next-generation integrated circuits (ICs) in growing
markets such as consumer, industrial, automotive, medical and
aerospace and defense. TowerJazz’s advanced technology is comprised
of a broad range of customizable process platforms such as: SiGe,
BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated
power management (BCD and 700V), and MEMS. TowerJazz also provides
world-class design enablement for a quick and accurate design cycle
as well as Transfer Optimization and development Process Services
(TOPS) to IDMs and fabless companies that need to expand capacity.
To provide multi-fab sourcing and extended capacity for its
customers, TowerJazz operates two manufacturing facilities in
Israel (150mm and 200mm), two in the U.S. (200mm) and three
facilities in Japan (two 200mm and one 300mm). For more
information, please visit www.towerjazz.com.
CONTACTS: Noit Levy-Karoubi | TowerJazz | +972
74 737 7556 | Noit.levi@towerjazz.comGK Investor Relations |
Gavriel Frohwein, +1 646 201 9246 | gavriel@gkir.com
This press release includes forward-looking
statements, which are subject to risks and uncertainties. Actual
results may vary from those projected or implied by such
forward-looking statements and you should not place any undue
reliance on such forward-looking statements. Potential risks and
uncertainties include, without limitation, risks and uncertainties
associated with: (i) demand in our customers’ end markets, (ii)
over demand for our foundry services and/or products that exceeds
our capacity, (iii) maintaining existing customers and attracting
additional customers, (iv) operation with no interruption at times
of high utilization in certain areas, and/ or at times of possible
bottlenecks, power outages, water leaks, contamination events,
chemical leaks or other issues, which may adversely affect our
cycle time, yield, and on schedule delivery, customer satisfaction,
revenue and margins, (v) operating results fluctuate from quarter
to quarter making it difficult to predict future performance, (vi)
impact of our debt and other liabilities on our financial position
and operations, (vii) our ability to successfully execute
acquisitions, integrate them into our business, utilize our
expanded capacity and find new business, (viii) fluctuations in
cash flow, (ix) our ability to satisfy the covenants stipulated in
our agreements with our lender banks and bondholders (as of June
30, 2018 we are in compliance with all such covenants included in
our banks’ agreements, bond G indenture and others), (x) obtaining
new customer engagements, products qualification and production
ramp-up of the TPSCo facilities and our San Antonio facility, (xi)
landlord’s claims with respect to the lease of the fab 3 facility;
(xii) meeting the conditions set in the approval certificates
received from the Israeli Investment Center, (xiii) receipt of
orders that are lower than the customer purchase commitments, (xiv)
failure to receive orders currently expected, (xv) possible
incurrence of additional indebtedness, (xvi) effect of global
recession, unfavorable economic conditions and/or credit crisis,
(xvii) our ability to accurately forecast financial performance,
which is affected by limited order backlog and lengthy sales
cycles, (xviii) possible situations of obsolete inventory if
forecasted demand exceeds actual demand when we manufacture
products before receipt of customer orders, (xix) the cyclical
nature of the semiconductor industry and the resulting periodic
overcapacity, fluctuations in operating results and future average
selling price erosion, (xx) the execution of debt re-financing
and/or fundraising to enable the service of our debt and/or other
liabilities, (xxi) operating our facilities at high utilization
rates which is critical in order to cover a portion or all of the
high level of fixed costs associated with operating a foundry, and
our debt, in order to improve our results, (xxii) the purchase of
equipment to increase capacity, the timely completion of the
equipment installation, technology transfer and raising the funds
therefor, (xxiii) the concentration of our business in the
semiconductor industry, (xxiv) product returns, (xxv) our ability
to maintain and develop our technology processes and services to
keep pace with new technology, evolving standards, changing
customer and end-user requirements, new product introductions and
short product life cycles, (xxvi) competing effectively, (xxvii)
use of outsourced foundry services by both fabless semiconductor
companies and integrated device manufacturers; (xxviii) achieving
acceptable device yields, product performance and delivery times,
(xxix) our dependence on intellectual property rights of others,
our ability to operate our business without infringing others’
intellectual property rights and our ability to enforce our
intellectual property against infringement, (xxx) retention of key
employees and recruitment and retention of skilled qualified
personnel, (xxxi) exposure to inflation, currency rates (mainly the
Israeli Shekel and Japanese Yen),interest rate fluctuations and
risks associated with doing business locally and internationally,
as well fluctuations in the market price of our traded securities,
(xxxii) issuance of ordinary shares as a result of conversion
and/or exercise of any of our convertible securities, as well as
any sale of shares by any of our shareholders, or any market
expectation thereof, which may depress the market price of our
ordinary shares and may impair our ability to raise future capital,
(xxxiii) meeting regulatory requirements worldwide, including
environmental and governmental regulations, (xxxiv) pending
litigation, including the shareholder class action that was filed
against the Company, certain officers, its directors and/or its
external auditor in Israel, following a short sell thesis report
issued by a short-selling focused firm, which has been dismissed by
the Israeli district court, on which the Israeli plaintiff has
recently appealed to the Israeli supreme court, (xxxv) realization
of the fab establishment project in China, including obtaining
required project funding, negotiation and closure of definitive
agreements in relation thereto, licensing of technologies, receipt
of payment milestones to Tower, qualification and ramp of process
flows and products to enable mass production for customers and
attain revenue to levels that would cover the facility’s fixed
costs, and (xxxvi) business interruption due to fire and other
natural disasters, the security situation in Israel and other
events beyond our control such as power interruptions.
A more complete discussion of risks and
uncertainties that may affect the accuracy of forward-looking
statements included in this press release or which may otherwise
affect our business is included under the heading "Risk Factors" in
Tower’s most recent filings on Forms 20-F and 6-K, as were filed
with the Securities and Exchange Commission (the “SEC”) and the
Israel Securities Authority. Future results may differ materially
from those previously reported. The Company does not intend to
update, and expressly disclaims any obligation to update, the
information contained in this release.
# #
#
(Financial tables follow)
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
(unaudited) |
|
|
A S S E T S |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
486,880 |
$ |
445,961 |
|
|
Marketable securities |
|
140,140 |
|
113,874 |
|
|
Trade accounts receivable |
|
161,017 |
|
149,666 |
|
|
Inventories |
|
153,413 |
|
143,315 |
|
|
Other current assets |
|
19,089 |
|
21,516 |
|
|
|
Total current assets |
|
960,539 |
|
874,332 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM INVESTMENTS |
|
28,978 |
|
26,073 |
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
648,413 |
|
635,124 |
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS, NET |
|
16,671 |
|
19,841 |
|
|
|
|
|
|
|
|
|
|
GOODWILL |
|
7,000 |
|
7,000 |
|
|
|
|
|
|
|
|
|
|
DEFERRED TAX AND OTHER LONG-TERM ASSETS,
NET |
|
101,022 |
|
111,269 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
$ |
1,762,623 |
$ |
1,673,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
Short-term debt |
$ |
100,242 |
$ |
105,958 |
|
|
Trade accounts payable |
|
126,135 |
|
115,347 |
|
|
Deferred revenue and customers' advances |
|
10,297 |
|
14,338 |
|
|
Other current liabilities |
|
75,867 |
|
66,730 |
|
|
|
Total current liabilities |
|
312,541 |
|
302,373 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT |
|
248,685 |
|
228,723 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM CUSTOMERS' ADVANCES |
|
29,771 |
|
31,908 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM EMPLOYEE RELATED LIABILITIES |
|
14,616 |
|
14,662 |
|
|
|
|
|
|
|
|
|
|
DEFERRED TAX AND OTHER LONG-TERM
LIABILITIES |
|
56,335 |
|
66,267 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
661,948 |
|
643,933 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL SHAREHOLDERS' EQUITY |
|
1,100,675 |
|
1,029,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$ |
1,762,623 |
$ |
1,673,639 |
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
(dollars and share count in thousands, except
per share data) |
|
|
|
T h r e e
m o n t h s e n d e
d |
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
REVENUES |
$ |
335,138 |
|
$ |
312,710 |
|
$ |
345,059 |
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
256,610 |
|
|
246,545 |
|
|
253,998 |
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
78,528 |
|
|
66,165 |
|
|
91,061 |
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
18,173 |
|
|
18,266 |
|
|
16,432 |
|
|
|
Marketing, general and administrative |
|
16,115 |
|
|
15,994 |
|
|
17,238 |
|
|
|
|
|
|
|
|
|
|
34,288 |
|
|
34,260 |
|
|
33,670 |
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
44,240 |
|
|
31,905 |
|
|
57,391 |
|
|
|
|
|
|
|
|
|
FINANCING EXPENSES, NET |
|
(7,031 |
) |
|
(3,791 |
) |
|
(3,123 |
) |
|
|
|
|
|
|
|
|
OTHER INCOME, NET |
|
1,578 |
|
|
22 |
|
|
142 |
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
38,787 |
|
|
28,136 |
|
|
54,410 |
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE, NET |
|
(2,778 |
) |
|
(955 |
) |
|
(2,683 |
) |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING
INTEREST |
|
36,009 |
|
|
27,181 |
|
|
51,727 |
|
|
|
|
|
|
|
|
|
NON
CONTROLLING INTEREST |
|
1,733 |
|
|
(1,063 |
) |
|
(1,710 |
) |
|
|
|
|
|
|
|
|
|
|
NET PROFIT |
$ |
37,742 |
|
$ |
26,118 |
|
$ |
50,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
0.38 |
|
$ |
0.27 |
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
98,888 |
|
|
98,495 |
|
|
96,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
0.37 |
|
$ |
0.26 |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
Net profit used for diluted earnings per
share |
$ |
37,742 |
|
$ |
26,118 |
|
$ |
52,217 |
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
101,066 |
|
|
101,112 |
|
|
105,648 |
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
RECONCILIATION OF CERTAIN FINANCIAL DATA
(UNAUDITED) |
|
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T h r e e
m o n t h s e n d e
d |
|
|
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
|
|
|
|
|
|
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET
PROFIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP NET PROFIT |
|
$ |
37,742 |
$ |
26,118 |
$ |
50,017 |
|
|
|
Stock based
compensation |
|
2,678 |
|
3,367 |
|
2,319 |
|
|
|
Amortization of acquired intangible
assets |
|
1,652 |
|
1,661 |
|
2,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT |
$ |
42,072 |
$ |
31,146 |
$ |
54,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT PER
SHARE: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.43 |
$ |
0.32 |
$ |
0.57 |
|
|
|
Diluted |
|
|
$ |
0.42 |
$ |
0.31 |
$ |
0.54 |
|
|
|
Fully diluted |
|
$ |
0.41 |
$ |
0.31 |
$ |
0.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE
DATA: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
42,072 |
$ |
31,146 |
$ |
54,582 |
|
|
|
Diluted |
|
|
$ |
44,463 |
$ |
31,146 |
$ |
56,782 |
|
|
|
Fully diluted |
|
$ |
44,463 |
$ |
33,486 |
$ |
56,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE
PER SHARE DATA: |
|
|
|
|
|
|
|
Basic |
|
|
|
98,888 |
|
98,495 |
|
96,365 |
|
|
|
Diluted |
|
|
|
106,856 |
|
101,112 |
|
105,648 |
|
|
|
Fully diluted |
|
|
107,880 |
|
107,717 |
|
107,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA CALCULATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING PROFIT |
$ |
44,240 |
$ |
31,905 |
$ |
57,391 |
|
|
|
Depreciation of fixed
assets |
|
46,978 |
|
47,357 |
|
46,360 |
|
|
|
Stock based compensation |
|
2,678 |
|
3,367 |
|
2,319 |
|
|
|
Amortization of acquired intangible
assets |
|
1,652 |
|
1,661 |
|
2,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
$ |
95,548 |
$ |
84,290 |
$ |
108,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) |
|
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S i x m
o n t h s e n d e
d |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES |
|
|
$ |
647,848 |
|
$ |
675,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES |
|
|
503,155 |
|
|
499,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
144,693 |
|
|
175,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING COSTS AND EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
36,439 |
|
|
32,200 |
|
|
|
|
Marketing, general and administrative |
|
32,109 |
|
|
33,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,548 |
|
|
65,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
|
76,145 |
|
|
110,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING EXPENSE, NET |
|
(10,822 |
) |
|
(7,352 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME, NET |
|
|
1,600 |
|
|
653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE INCOME TAX |
|
66,923 |
|
|
103,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE, NET |
|
(3,733 |
) |
|
(4,682 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE NON CONTROLLING
INTEREST |
|
63,190 |
|
|
98,773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON
CONTROLLING INTEREST |
|
670 |
|
|
(3,247 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PROFIT |
|
$ |
63,860 |
|
$ |
95,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
0.65 |
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
98,693 |
|
|
95,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER SHARE |
$ |
0.63 |
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit used for diluted earnings per
share |
$ |
63,860 |
|
$ |
99,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares |
|
101,090 |
|
|
105,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
|
RECONCILIATION OF CERTAIN FINANCIAL DATA
(UNAUDITED) |
|
(dollars and share count in thousands, except
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S i x m
o n t h s e n d e
d |
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET
PROFIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP NET PROFIT |
|
$ |
63,860 |
$ |
95,526 |
|
|
|
Stock based
compensation |
|
|
6,045 |
|
4,417 |
|
|
|
Amortization of acquired intangible
assets |
|
|
3,313 |
|
4,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT |
|
$ |
73,218 |
$ |
104,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT PER SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
0.74 |
$ |
1.10 |
|
|
|
Diluted |
|
|
$ |
0.72 |
$ |
1.03 |
|
|
|
Fully diluted |
|
$ |
0.72 |
$ |
1.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET PROFIT USED TO CALCULATE PER SHARE
DATA: |
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
73,218 |
$ |
104,525 |
|
|
|
Diluted |
|
|
$ |
73,218 |
$ |
108,882 |
|
|
|
Fully diluted |
|
$ |
77,949 |
$ |
108,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF SHARES AND OTHER SECURITIES USED TO CALCULATE
PER SHARE DATA: |
|
|
|
|
|
|
|
|
Basic |
|
|
|
98,693 |
|
95,139 |
|
|
|
Diluted |
|
|
|
101,090 |
|
105,288 |
|
|
|
Fully diluted |
|
|
107,880 |
|
107,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA CALCULATION: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP OPERATING PROFIT |
|
$ |
76,145 |
$ |
110,154 |
|
|
|
Depreciation of fixed
assets |
|
|
94,335 |
|
90,179 |
|
|
|
Stock based compensation |
|
|
6,045 |
|
4,417 |
|
|
|
Amortization of acquired intangible
assets |
|
|
3,313 |
|
4,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
$ |
179,838 |
$ |
209,332 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONSOLIDATED SOURCES AND USES REPORT
(UNAUDITED) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T h r e e
m o n t h s e n d e
d |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD |
$ |
464,661 |
|
$ |
445,961 |
|
$ |
432,113 |
|
|
|
|
|
|
|
|
|
Cash from
operations |
|
76,929 |
|
|
75,001 |
|
|
84,294 |
|
|
Investments in
property and equipment, net |
|
(40,148 |
) |
|
(40,047 |
) |
|
(41,312 |
) |
|
Exercise of
warrants and options, net |
|
26 |
|
|
658 |
|
|
14,254 |
|
|
Debt received
(repaid), net |
|
3,809 |
|
|
(6,656 |
) |
|
(5,655 |
) |
|
Effect of
Japanese Yen exchange rate change over cash balance |
|
(2,909 |
) |
|
4,707 |
|
|
(91 |
) |
|
Investments in
marketable securities and other assets, net |
|
(15,488 |
) |
|
(14,963 |
) |
|
-- |
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
486,880 |
|
$ |
464,661 |
|
$ |
483,603 |
|
|
|
|
|
|
|
|
FREE CASH FLOW |
$ |
36,781 |
|
$ |
34,954 |
|
$ |
42,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD |
$ |
445,961 |
|
$ |
389,377 |
|
|
|
|
|
|
|
|
|
|
|
Cash from
operations |
|
151,930 |
|
|
166,434 |
|
|
|
|
Investments in
property and equipment, net |
|
(80,195 |
) |
|
(81,660 |
) |
|
|
|
Exercise of
warrants and options, net |
|
684 |
|
|
27,010 |
|
|
|
|
Debt repaid,
net |
|
(2,847 |
) |
|
(17,460 |
) |
|
|
|
Effect of
Japanese Yen exchange rate change over cash balance |
|
1,798 |
|
|
4,280 |
|
|
|
|
TPSCo dividend
to Panasonic |
|
-- |
|
|
(4,378 |
) |
|
|
|
Investments in
marketable securities and other assets, net |
|
(30,451 |
) |
|
-- |
|
|
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
486,880 |
|
$ |
483,603 |
|
|
|
|
|
|
|
|
|
|
FREE CASH FLOW |
$ |
71,735 |
|
$ |
84,774 |
|
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
June 30, |
|
March 31, |
|
June 30, |
|
|
2018 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
CASH FLOWS - OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
$ |
36,009 |
|
$ |
27,181 |
|
$ |
51,727 |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net profit for the
period |
|
|
|
|
|
|
|
|
to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
Income and expense items not involving cash
flows: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
53,493 |
|
|
53,977 |
|
|
52,389 |
|
|
|
|
|
Effect of indexation, translation and fair value
measurement on debt |
|
(4,797 |
) |
|
(1,740 |
) |
|
4,873 |
|
|
|
|
|
Other income, net |
|
(1,578 |
) |
|
(22 |
) |
|
(142 |
) |
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
(18,351 |
) |
|
8,089 |
|
|
(17,242 |
) |
|
|
|
|
Other current assets |
|
5,713 |
|
|
3,370 |
|
|
(7,307 |
) |
|
|
|
|
Inventories |
|
(6,713 |
) |
|
(2,692 |
) |
|
1,688 |
|
|
|
|
|
Trade accounts payable |
|
10,222 |
|
|
(6,313 |
) |
|
(6,530 |
) |
|
|
|
|
Deferred revenue and customers'
advances |
|
(5,466 |
) |
|
(712 |
) |
|
(4,564 |
) |
|
|
|
|
Other current liabilities |
|
13,355 |
|
|
(4,219 |
) |
|
12,866 |
|
|
|
|
|
Long-term employee related liabilities |
|
193 |
|
|
(387 |
) |
|
(234 |
) |
|
|
|
|
Deferred tax, net |
|
(5,151 |
) |
|
(1,531 |
) |
|
(3,230 |
) |
|
|
|
|
|
Net
cash provided by operating activities |
|
76,929 |
|
|
75,001 |
|
|
84,294 |
|
|
|
|
|
|
|
|
CASH FLOWS - INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
Investments in property and equipment,
net |
|
(40,148 |
) |
|
(40,047 |
) |
|
(41,312 |
) |
|
Investments in marketable securities
and other assets, net |
|
(15,488 |
) |
|
(14,963 |
) |
|
-- |
|
|
|
|
|
|
Net
cash used in investing activities |
|
(55,636 |
) |
|
(55,010 |
) |
|
(41,312 |
) |
|
|
|
|
|
|
|
CASH FLOWS - FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt received (repaid),
net |
|
3,809 |
|
|
(6,656 |
) |
|
(5,655 |
) |
|
Exercise of warrants and options,
net |
|
26 |
|
|
658 |
|
|
14,254 |
|
|
|
|
|
|
Net
cash provided by (used in) financing activities |
|
3,835 |
|
|
(5,998 |
) |
|
8,599 |
|
|
|
|
|
|
|
|
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGE |
|
(2,909 |
) |
|
4,707 |
|
|
(91 |
) |
INCREASE IN CASH AND CASH EQUIVALENTS |
|
22,219 |
|
|
18,700 |
|
|
51,490 |
|
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIOD |
|
464,661 |
|
|
445,961 |
|
|
432,113 |
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
486,880 |
|
$ |
464,661 |
|
$ |
483,603 |
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED) |
(dollars in thousands) |
|
|
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
|
2017 |
|
|
|
|
|
CASH FLOWS - OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Net profit for the period |
$ |
63,190 |
|
$ |
98,773 |
|
|
|
|
|
|
|
Adjustments to reconcile net profit for the
period |
|
|
|
|
|
|
to net cash provided by operating
activities: |
|
|
|
|
|
|
|
Income and expense items not involving cash
flows: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
107,470 |
|
|
102,087 |
|
|
|
|
|
Effect of indexation, translation and fair value
measurement on debt |
|
(6,537 |
) |
|
11,761 |
|
|
|
|
|
Other income, net |
|
(1,600 |
) |
|
(653 |
) |
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
(10,262 |
) |
|
(7,713 |
) |
|
|
|
|
Other current assets |
|
9,083 |
|
|
(11,746 |
) |
|
|
|
|
Inventories |
|
(9,405 |
) |
|
267 |
|
|
|
|
|
Trade accounts payable |
|
3,909 |
|
|
(10,658 |
) |
|
|
|
|
Deferred revenue and customers'
advances |
|
(6,178 |
) |
|
(13,299 |
) |
|
|
|
|
Other current liabilities |
|
9,136 |
|
|
3,776 |
|
|
|
|
|
Long-term employee related liabilities |
|
(194 |
) |
|
(491 |
) |
|
|
|
|
Deferred tax, net |
|
(6,682 |
) |
|
(5,670 |
) |
|
|
|
|
|
Net
cash provided by operating activities |
|
151,930 |
|
|
166,434 |
|
|
|
|
|
|
CASH FLOWS - INVESTING
ACTIVITIES |
|
|
|
|
|
Investments in property and equipment,
net |
|
(80,195 |
) |
|
(81,660 |
) |
|
Investments in marketable securities
and other assets, net |
|
(30,451 |
) |
|
-- |
|
|
|
|
|
|
Net
cash used in investing activities |
|
(110,646 |
) |
|
(81,660 |
) |
|
|
|
|
|
CASH FLOWS - FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Debt repaid, net |
|
(2,847 |
) |
|
(17,460 |
) |
|
Exercise of warrants and options,
net |
|
684 |
|
|
27,010 |
|
|
Dividend paid to Panasonic |
|
-- |
|
|
(4,378 |
) |
|
|
|
|
|
Net
cash provided by (used in) financing activities |
|
(2,163 |
) |
|
5,172 |
|
|
|
|
|
|
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE
CHANGE |
|
1,798 |
|
|
4,280 |
|
INCREASE IN CASH AND CASH EQUIVALENTS |
|
40,919 |
|
|
94,226 |
|
CASH AND CASH EQUIVALENTS - BEGINNING
OF PERIOD |
|
445,961 |
|
|
389,377 |
|
CASH AND CASH EQUIVALENTS - END OF PERIOD |
$ |
486,880 |
|
$ |
483,603 |
|
|
|
|
|
|
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