First Quarter Highlights
- Net sales $869 million
- Gross margin 14.1%
- Net income and earnings per diluted
share at breakeven
- Includes consolidation of J-Devices'
operating results for the first time
- Automotive revenues of $220 million in
Q1, up 7% sequentially and 6% year-over-year on a combined basis
with J-Devices
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, 2016.
"First quarter results were above the high end of our guidance,”
said Steve Kelley, Amkor's president and chief executive officer.
“We benefited from better than expected performance in Japan and in
the high-end Android smartphone market. In addition, our strategic
initiatives continued to build momentum with automotive sales of
$220 million in the quarter, up 7% sequentially and 6%
year-over-year on a combined basis with J-Devices. Our Greater
China revenues were also up 21% sequentially. However, overall
demand was still relatively low on a historical basis, which led to
breakeven financial performance in the quarter."
GAAP Results
Q1 2016 Q4 2015
Q1 2015
($ in millions, except per share data)
Net sales
$869
$671
$743
Gross margin 14.1 % 15.3 % 18.2 % Net income (loss)
($1
)
($10
)
$29
Earnings per diluted share
$—
($0.04
)
$0.12
Non-GAAP Results*
Q1 2016
Q4 2015 Q1 2015 ($ in millions,
except per share data) Net sales
$869
$671
$743
Gross margin 14.1 % 15.3 % 18.2 % Net income (loss)
($1
)
$4
$29
Earnings per diluted share
$—
$0.02
$0.12
EBITDA
$155
$131
$184
Adjusted EBITDA
$155
$145
$184
* Fourth quarter 2015 net income and earnings per diluted share
exclude a gain of $16 million related to our previous investments
in J-Devices and a non-cash loss of $30 million relating to the
release of a foreign currency translation adjustment account, for a
net loss of $14 million. The reconciliation to the comparable GAAP
measures is included below under "Selected Operating Data."
In December 2015, Amkor increased its ownership in J-Devices
Corporation from 66% to 100%. As a result, the accounting for
J-Devices changed from the equity method to the consolidation
method effective at the time of acquisition. J-Devices' operating
results were consolidated with Amkor for the first time beginning
in the first quarter of 2016.
“Our first quarter revenues were up 30% sequentially with the
consolidation of $217 million of sales from J-Devices,” said Joanne
Solomon, Amkor’s executive vice president and chief financial
officer. “J-Devices also contributed $0.04 to our earnings per
share in the quarter."
Cash and cash equivalents were $413 million, and total debt was
$1.5 billion, at March 31, 2016.
Business Outlook
"Looking ahead, we see improved demand across most end markets
in Q2," said Kelley. “Unfortunately, we do not expect to realize
meaningful revenue growth in Q2 due to temporary disruptions
stemming from the recent earthquakes in Japan. Our Kumamoto factory
was damaged in the earthquakes and is operating on a limited basis
today. Repair work is being expedited, and we expect to ramp to
full operational capacity over the next 11 weeks. We now expect Q2
revenues of around $875 million, which reflect roughly $35 million
in lower sales due to the impact of the earthquakes. We also expect
to incur incremental costs of around $20 million in Q2 for damaged
inventory and repairs to buildings and equipment. Taking into
account insurance payments anticipated later this year, we expect
the net impact on our full year 2016 results to be modest."
Second quarter 2016 outlook (unless otherwise noted):
- Net sales of $850 million to
$900 million, down 2% to up 4% from the prior quarter
- Gross margin of 10% to 13%
- Net loss of $11 million to
$33 million, or ($0.04) to ($0.14) per share
- Full year 2016 capital expenditures of
around $650 million, unchanged from our previous forecast
Conference Call Information
Amkor will conduct a conference call on Wednesday,
April 27, 2016, 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 89394810). 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 operating base includes more than 8 million square
feet of floor space, with production facilities, product
development centers, and sales and support offices located in key
electronics manufacturing regions in Asia, Europe and the U.S. For
more information, visit www.amkor.com.
AMKOR TECHNOLOGY, INC.
Selected Operating Data
Q1 2016 Q4 2015 Q1 2015 Net Sales
Data: Net sales (in millions): Advanced products* $ 356 $ 333 $
373 Mainstream products** 513 338 370 Total
net sales $ 869 $ 671 $ 743 Packaging
services 82 % 85 % 85 % Test services 18 % 15 % 15 % Net
sales from top ten customers 67 % 64 % 60 % Packaged units
(in millions): Advanced products* 941 1,196 1,188 Mainstream
products** 3,048 2,492 2,671 Total packaged
units 3,989 3,688 3,859
End Market
Distribution Data (an approximation including representative
devices and applications based on a sampling of our largest
customers)
: Communications (smart phones, tablets, handheld
devices, wireless LAN) 42 % 54 % 57 % Automotive, industrial and
other (infotainment, safety, performance, comfort) 25 % 15 % 11 %
Consumer (televisions, set top boxes, gaming, portable media,
digital cameras) 16 % 12 % 12 % Networking (servers, routers,
switches) 10 % 11 % 11 % Computing (PCs, hard disk drives,
printers, peripherals, servers) 7 % 8 % 9 % Total 100 % 100 % 100 %
Gross Margin Data: Net sales 100.0 % 100.0 % 100.0 %
Cost of sales: Materials 37.5 % 35.8 % 36.7 % Labor 16.2 % 15.8 %
14.2 % Other manufacturing 32.2 % 33.1 % 30.9 % Gross margin 14.1 %
15.3 % 18.2 %
*Advanced products include flip chip and wafer-level processing
and related test services**Mainstream products include wirebond
packaging and related test services
In the press release above we provide non-GAAP net income and
non-GAAP earnings per diluted share. We present these non-GAAP
amounts to demonstrate the impact of the consolidation of
J-Devices. Generally, a non-GAAP financial measure is a numerical
measure of a company’s performance, financial position or cash
flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with U.S. generally
accepted accounting principles ("U.S. GAAP"). These measures have
limitations, and should be considered in addition to, and not as a
substitute for, or superior to, net income and earnings per diluted
share prepared in accordance with U.S. GAAP. Below is the
reconciliation of non-GAAP net income and non-GAAP earnings per
diluted share to U.S. GAAP net income and earnings per diluted
share.
Non-GAAP Financial Measures Reconciliation:
Q1 2016 Q4 2015 Q1 2015 (in
millions, except per share amounts) Net income (loss)
attributable to Amkor $ (1 ) $ (10 ) $ 29 Plus: Net loss on
acquisition of J-Devices, net of tax — 14 — Non-GAAP
net income (loss) $ (1 ) $ 4 $ 29 Earnings per
diluted share $ — $ (0.04 ) $ 0.12 Plus: Net loss on acquisition of
J-Devices per diluted share, net of tax — 0.06 —
Non-GAAP earnings per diluted share $ — $ 0.02 $ 0.12
In the press release above we provide EBITDA and Adjusted
EBITDA, which are 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 and Adjusted EBITDA to be
relevant and useful information to our investors because they
provide additional information in assessing our financial operating
results. Our management uses EBITDA and Adjusted EBITDA in
evaluating our operating performance, our ability to service debt
and our ability to fund capital expenditures. However, EBITDA and
Adjusted EBITDA have certain limitations in that they do 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
and Adjusted 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 and Adjusted EBITDA
may not be comparable to similarly titled measures reported by
other companies. Below is our reconciliation of EBITDA and Adjusted
EBITDA to U.S. GAAP net income.
Non-GAAP Financial Measures Reconciliation:
Q1 2016 Q4 2015 Q1 2015 (in
millions) EBITDA Data: Net income (loss) attributable to
Amkor $ (1 ) $ (10 ) $ 29 Plus: Interest expense 17 18 25 Plus:
Income tax expense 2 1 6 Plus: Depreciation & amortization 137
122 124 EBITDA $ 155 $ 131 $ 184
Plus: Net loss on acquisition of J-Devices — 14 —
Adjusted EBITDA $ 155 $ 145 $ 184
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months EndedMarch 31,
2016
2015 (In thousands, except per share data) Net sales
$ 868,682 $ 742,875 Cost of sales 745,798 607,928
Gross profit 122,884 134,947 Selling, general and
administrative 73,635 62,942 Research and development 27,155
18,026 Total operating expenses 100,790 80,968
Operating income 22,094 53,979 Interest expense 16,192 23,777
Interest expense, related party 1,242 1,242 Other (income) expense,
net 3,192 (498 ) Total other expense, net 20,626
24,521 Income before taxes and equity in earnings of
unconsolidated affiliate 1,468 29,458 Income tax expense 1,873
5,999 Income (loss) before equity in earnings of
unconsolidated affiliate (405 ) 23,459 Equity in earnings of
J-Devices — 6,238 Net income (loss) (405 ) 29,697 Net
income attributable to noncontrolling interests (470 ) (916 ) Net
income (loss) attributable to Amkor $ (875 ) $ 28,781
Net income (loss) attributable to Amkor per common share: Basic $ —
$ 0.12 Diluted $ — $ 0.12 Shares
used in computing per common share amounts: Basic 237,025 236,708
Diluted 237,025 237,424
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2016 December 31, 2015
(In thousands) ASSETS Current assets: Cash and cash
equivalents $ 413,465 $ 523,172 Restricted cash 2,000 2,000
Accounts receivable, net of allowances 537,745 526,143 Inventories
237,000 238,205 Other current assets 29,363 27,960
Total current assets 1,219,573 1,317,480 Property, plant and
equipment, net 2,616,227 2,579,017 Goodwill 20,840 19,443
Restricted cash 2,222 2,176 Other assets 100,292 104,346
Total assets $ 3,959,154 $ 4,022,462
LIABILITIES AND EQUITY Current liabilities: Short-term
borrowings and current portion of long-term debt $ 26,183 $ 76,770
Trade accounts payable 407,698 434,222 Capital expenditures payable
199,944 242,980 Accrued expenses 306,285 264,212
Total current liabilities 940,110 1,018,184 Long-term debt
1,433,426 1,435,269 Long-term debt, related party 75,000 75,000
Pension and severance obligations 176,631 167,197 Other non-current
liabilities 88,820 101,679 Total liabilities
2,713,987 2,797,329 Stockholders’ equity:
Preferred stock — — Common stock 283 283 Additional paid-in capital
1,884,397 1,883,592 Accumulated deficit (461,025 ) (460,150 )
Accumulated other comprehensive income (loss) 17,804 (2,084 )
Treasury stock (213,877 ) (213,758 ) Total Amkor stockholders’
equity 1,227,582 1,207,883 Noncontrolling interests in subsidiaries
17,585 17,250 Total equity 1,245,167 1,225,133
Total liabilities and equity $ 3,959,154 $ 4,022,462
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
For the Three Months EndedMarch 31,
2016
2015 (In thousands) Cash flows from operating
activities: Net income (loss) $ (405 ) $ 29,697 Depreciation and
amortization
137,136
124,387 Other operating activities and non-cash items (3,944 )
(9,525 ) Changes in assets and liabilities 5,311 20,465
Net cash provided by operating activities
138,098
165,024 Cash flows from investing activities:
Payments for property, plant and equipment (198,788 ) (106,149 )
Proceeds from sale of property, plant and equipment 121 3,254
Investment in J-Devices — (12,908 ) Other investing activities (472
) (322 ) Net cash used in investing activities (199,139 ) (116,125
) Cash flows from financing activities: Borrowings under
revolving credit facilities — 30,000 Payments under revolving
credit facilities (40,000 ) — Payments of short-term debt (11,901 )
— Payments of long-term debt (4,204 ) (35,000 ) Payments for debt
issuance costs (156 ) — Payments for capital lease obligations (401
) — Proceeds from the issuance of stock through share-based
compensation plans — 574 Payments of tax withholding for restricted
shares (119 ) (230 ) Payments of subsidiary dividends to
noncontrolling interests (135 ) — Net cash used in financing
activities (56,916 ) (4,656 ) Effect of exchange rate
fluctuations on cash and cash equivalents
8,250
— Net increase (decrease) in cash and cash equivalents
(109,707 ) 44,243 Cash and cash equivalents, beginning of period
523,172 449,946 Cash and cash equivalents, end of
period $ 413,465 $ 494,189
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, without limitation, statements regarding the
impact and recovery from the recent earthquakes in Japan and all of
the other 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:
- there can be no assurance that our
recovery from the recent earthquakes in Japan will occur as quickly
as expected, or that the actual costs and financial impact will be
consistent with our current expectations, for example due to
additional earthquakes, shortages in labor or supplies for repairs
or operations, increased inventory or repair costs, shortages in
customer materials, changes in customer preferences, demand or
loadings, or delays or shortfalls in insurance payments;
- there can be no assurance regarding
when our new K5 facility in Korea will be fully utilized, or that
the actual scope, costs, timeline or benefits of the project will
be consistent with our current expectations;
- the highly unpredictable nature and
cyclicality 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;
- 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 and the
impact of changes in our market share and prices for our services
with those customers;
- the performance of our business,
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, the jurisdictions in
which our income is determined to be earned and taxed, the outcome
of tax audits and tax 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, particularly the recent slowdown in
China;
- disruptions in our business or
deficiencies in our controls resulting from the integration of
newly 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;
- economic effects of terrorist attacks,
military conflict and natural disasters such as the recent
earthquakes in Japan;
- competition, competitive pricing and
declines in average selling prices;
- fluctuations in manufacturing
yields;
- dependence on international operations
and sales and exchange rate fluctuations;
- dependence on raw material and
equipment suppliers and changes in raw material and precious metal
costs, including any disruptions in the supply chain resulting from
the recent earthquakes in Japan;
- dependence on key personnel;
- enforcement of and compliance with
intellectual property rights;
- environmental and other governmental
regulations; 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, 2015 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: http://www.businesswire.com/news/home/20160427006697/en/
Amkor Technology, Inc.Joanne SolomonExecutive Vice President
& Chief Financial
Officer480-786-7878joanne.solomon@amkor.comorGreg JohnsonSenior
Director, Finance and Investor
Relations480-786-7594greg.johnson@amkor.com
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