Third Quarter Highlights
- Net sales $1,135 million, up 15%
sequentially
- Gross margin 19.1%
- Net income $54 million, earnings per
diluted share $0.23
- EBITDA $243 million
- Redemption of $200 million of Senior
Notes due 2021, with annualized interest savings of approximately
$13 million
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the third quarter ended September 30,
2017.
"We achieved record sales in the third quarter, up 15%
sequentially and 5% year-over-year," said Steve Kelley, Amkor's
president and chief executive officer. "Demand was strong in nearly
all end markets, and our factories executed well.”
Results Q3
2017 Q2 2017 Q3 2016
($ in millions, except per share data) Net sales $ 1,135 $ 989 $
1,086 Gross margin 19.1 % 17.4 % 19.7 % Net income attributable to
Amkor $ 54 $ 116 $ 60 Earnings per diluted share $ 0.23 $ 0.48 $
0.25 EBITDA** $ 243 $ 316 $ 249 Net cash provided by operating
activities $ 214 $ 97 $ 219 Free cash flow** $ 74 $ 43 $ 106
**EBITDA and free cash flow are non-GAAP measures. The
reconciliations to the comparable GAAP measures are included below
under "Selected Operating Data."
"As part of our 2017 Japan factory consolidation plan, we
incurred approximately $10 million of one-time costs in the third
quarter,” said Megan Faust, Amkor’s corporate vice president and
chief financial officer. “After completion of the plan in the
fourth quarter, we expect annualized savings from this initiative
of around $30 million, including a $25 million reduction in
manufacturing costs."
"Our focus on CapEx discipline has driven improved free cash
flow," added Faust. "During the quarter we redeemed $200 million of
the outstanding $400 million of our Senior Notes due 2021 using
cash on hand. This will result in annualized pre-tax interest
savings of approximately $13 million."
Cash and cash equivalents were $519 million and total debt was
$1.4 billion, at September 30, 2017.
Business Outlook
"We expect solid fourth quarter demand in mobile communications
and our other end markets, leading to another year of record sales
for Amkor," said Kelley.
Fourth quarter and full year 2017 outlook:
Fourth quarter
- Net sales of $1.05 billion to $1.13
billion
- Gross margin of 17% to 18.5%
- Net income of $34 million to
$54 million, or $0.14 to $0.23 per share
Full year
- Net sales of approximately $4.13
billion
- Gross margin of approximately
17.5%
- Net income of approximately $205
million, or around $0.85 per share (including an after tax gain of
$0.34 per share from sale of K1 factory in Korea)
- Full year capital expenditures of
approximately $550 million
Conference Call Information
Amkor will conduct a conference call on Monday, October 30,
2017, 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 98894733). 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 10 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
Q3 2017 Q2 2017 Q3 2016 Net Sales
Data: Net sales (in millions): Advanced products* $ 554 $ 431 $
480 Mainstream products** 581 558 606 Total
net sales $ 1,135 $ 989 $ 1,086
Packaging services 82 % 81 % 82 % Test services 18 % 19 % 18 %
Net sales from top ten customers 67 % 67 % 68 %
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) 46 % 42 % 47 % Automotive and
industrial (infotainment, safety, performance, comfort) 24 % 26 %
24 % Consumer (televisions, set top boxes, gaming, portable media,
digital cameras) 13 % 14 % 14 % Networking (servers, routers,
switches) 10 % 10 % 9 % Computing (PCs, hard disk drives, printers,
peripherals, servers) 7 % 8 % 6 % Total 100 % 100 % 100 %
Gross Margin Data: Net sales 100.0 % 100.0 % 100.0 % Cost of
sales: Materials 37.1 % 35.3 % 37.2 % Labor 15.2 % 16.4 % 14.6 %
Other manufacturing 28.6 % 30.9 % 28.5 % Gross margin 19.1 % 17.4 %
19.7 %
* 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 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: Q3 2017 Q2 2017 Q3 2016
(in millions) EBITDA Data: Net income $ 56 $ 116 $ 61
Plus: Interest expense 20 22 23 Plus: Income tax expense 19 33 24
Plus: Depreciation & amortization 148 145 141
EBITDA $ 243 $ 316 $ 249
In the press release above 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, our ability to service debt and our ability to fund
capital expenditures. 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: Q3 2017 Q2 2017 Q3 2016
(in millions) Free Cash Flow Data: Net cash provided
by operating activities $ 214 $ 97 $ 219 Less: Purchases of
property, plant and equipment (142 ) (183 ) (126 ) Plus: Proceeds
from sale of property, plant and equipment 2 129 13
Free cash flow $ 74 $ 43 $ 106
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months
EndedSeptember 30,
For the Nine Months
EndedSeptember 30,
2017 2016 2017
2016 (In thousands, except per share data) Net sales
$ 1,135,027 $ 1,086,014 $ 3,038,074 $ 2,872,022 Cost of sales
918,389 872,214 2,506,295 2,403,732
Gross profit 216,638 213,800 531,779 468,290
Selling, general and administrative 75,567 72,363 220,045
216,894 Research and development 42,834 26,822 128,658 84,145 Gain
on sale of real estate — — (108,109 ) — Total
operating expenses 118,401 99,185 240,594
301,039 Operating income 98,237 114,615 291,185 167,251
Interest expense 20,321 21,488 63,733 58,496 Interest expense,
related party 180 1,243 1,715 3,727 Other (income) expense, net
3,354 6,657 11,028 9,607 Total other
expense, net 23,855 29,388 76,476 71,830
Income before taxes 74,382 85,227 214,709 95,421 Income tax
expense 18,752 24,086 51,764 29,319 Net
income 55,630 61,141 162,945 66,102 Net income attributable to
non-controlling interests (1,195 ) (1,052 ) (3,009 ) (2,175 ) Net
income attributable to Amkor $ 54,435 $ 60,089 $
159,936 $ 63,927 Net income attributable to
Amkor per common share: Basic $ 0.23 $ 0.25 $ 0.67
$ 0.27 Diluted $ 0.23 $ 0.25 $ 0.67
$ 0.27 Shares used in computing per common
share amounts: Basic 239,068 237,353 238,873 237,157 Diluted
239,640 238,192 239,610 237,586
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2017
December 31, 2016
(In thousands) ASSETS Current assets: Cash and cash
equivalents $ 519,449 $ 549,518 Restricted cash 2,000 2,000
Accounts receivable, net of allowances 691,700 563,107 Inventories
314,207 267,990 Other current assets 39,116 27,081
Total current assets 1,566,472 1,409,696 Property, plant and
equipment, net 2,706,715 2,564,648 Goodwill 25,076 24,122
Restricted cash 4,224 3,977 Other assets 109,782 89,643
Total assets $ 4,412,269 $ 4,092,086
LIABILITIES AND EQUITY Current liabilities: Short-term
borrowings and current portion of long-term debt $ 117,970 $ 35,192
Trade accounts payable 562,330 487,430 Capital expenditures payable
289,780 144,370 Accrued expenses 385,659 338,669
Total current liabilities 1,355,739 1,005,661 Long-term debt
1,243,697 1,364,638 Long-term debt, related party — 75,000 Pension
and severance obligations 179,112 166,701 Other non-current
liabilities 50,871 76,682 Total liabilities 2,829,419
2,688,682 Stockholders’ equity: Preferred
stock — — Common stock 285 284 Additional paid-in capital 1,901,381
1,895,089 Accumulated deficit (143,621 ) (303,557 ) Accumulated
other comprehensive income (loss) 18,309 6,262 Treasury stock
(215,917 ) (214,490 ) Total Amkor stockholders’ equity 1,560,437
1,383,588 Non-controlling interests in subsidiaries 22,413
19,816 Total equity 1,582,850 1,403,404 Total
liabilities and equity $ 4,412,269 $ 4,092,086
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
For the Nine Months
EndedSeptember 30,
2017 2016 (In thousands) Cash
flows from operating activities: Net income $ 162,945 $ 66,102
Depreciation and amortization 435,667 416,517 Gain on sale of real
estate (108,109 ) — Other operating activities and non-cash items
(9,763 ) (4,382 ) Changes in assets and liabilities (66,829 )
13,379 Net cash provided by operating activities 413,911
491,616 Cash flows from investing activities:
Payments for property, plant and equipment (413,974 ) (481,670 )
Proceeds from sale of property, plant and equipment 133,320 13,687
Acquisition of business, net of cash acquired (43,771 ) — Other
investing activities (1,600 ) (143 ) Net cash used in investing
activities (326,025 ) (468,126 ) Cash flows from financing
activities: Proceeds from revolving credit facilities 75,000
115,000 Payments of revolving credit facilities — (155,000 )
Proceeds from short-term debt 50,333 27,594 Payments of short-term
debt (52,068 ) (36,211 ) Proceeds from issuance of long-term debt
223,976 45,000 Payments of long-term debt (398,755 ) (12,955 )
Payments of long-term debt, related party (17,837 ) — Payment of
deferred consideration for purchase of facility (3,890 ) — Payments
of capital lease obligations (4,123 ) (1,691 ) Other financing
activities 425 1,585 Net cash used in financing
activities (126,939 ) (16,678 ) Effect of exchange rate
fluctuations on cash, cash equivalents and restricted cash 9,231
21,885 Net increase (decrease) in cash, cash
equivalents and restricted cash (29,822 ) 28,697 Cash, cash
equivalents and restricted cash, beginning of period 555,495
527,348 Cash, cash equivalents and restricted cash, end of
period $ 525,673 $ 556,045
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
expected timing for completion of and annualized savings from our
factory consolidation plan, the amount of interest savings
generated by the redemption of $200 million of our 2021 Senior
Notes, 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;
- 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,
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 possible tax reforms proposed by new
administrations), 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
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;
- 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
current expectations;
- economic effects of terrorist attacks,
political instability, natural disasters and military
conflict;
- competition, competitive pricing and
declines in average selling prices;
- fluctuations in manufacturing
yields;
- dependence on international operations
and sales and fluctuations in foreign currency exchange rates,
particularly in Japan;
- 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;
- environmental and other governmental
regulations, including regulatory efforts by foreign governments to
support local competitors; 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, 2016 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/20171030006212/en/
Amkor Technology, Inc.Megan FaustCorporate Vice President &
Chief Financial Officer480-786-7707megan.faust@amkor.comorGreg
JohnsonVice President, Finance and Investor
Relations480-786-7594greg.johnson@amkor.com
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