Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today
its results for the first quarter ended March 31, 2022.
First Quarter of 2022 Results
Overview
Revenue for the first quarter
of 2022 was $421 million, as compared to $347 million in the first
quarter of 2021, reflecting 21% revenue growth. Organic revenue for
the first quarter of 2022, defined as total revenue excluding
revenues from Nuvoton in the Japanese fabs and from Maxim in the
San Antonio fab, grew by 29% year over year. Revenue for the fourth
quarter of 2021 was $412 million. Gross profit for
the first quarter of 2022 was $105 million, 50% higher than $70
million recorded in the first quarter of 2021. Gross profit in the
fourth quarter of 2021 was $100 million.
Operating profit for the first
quarter of 2022 was $63 million, 94% higher than the $32 million
recorded in the first quarter of 2021. Operating profit in the
fourth quarter of 2021 was $ 56 million.
Net profit for the first
quarter of 2022 was $54 million, or $0.50 basic and $0.49 diluted
earnings per share, 91% higher than $28 million recorded in the
first quarter of 2021, which represented $0.26 basic and diluted
earnings per share. Net profit for the fourth quarter of 2021 was
$52 million, representing $0.48 basic and $0.47 diluted earnings
per share.
Cash flow generated from
operating activities in the first quarter of 2022 was $137 million
and investment in fixed assets was $81 million, net. During the
first quarter of 2022, the company repaid $31 million of its
debt.
Corporate Credit Rating In May
2022, Standard & Poor’s Ma’alot (an Israeli rating company that
is fully owned by S&P Global Ratings) completed its annual
rating review for the Company and decided to increase the corporate
credit rating and bonds series G rating from “ilAA- “to “ilAA “,
with a stable horizon.
Guidance and Conference Call
In light of the Company’s definitive agreement
with Intel Corporation, as announced on February 15, 2022, the
Company is not providing herewith revenue guidance for the second
quarter 2022 and will not host an earnings conference call.
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, which may be used and/or presented in
this release and/or prior earnings related filings and/or in
related public disclosures or filings with respect to the financial
statements and/or results of the Company, which we describe as
“adjusted” financial measures and/or reconciled financial measures,
are 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 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 and/or prior earnings related filings
and/or in related public disclosures or filings with respect to the
financial statements and/or results of the Company, as well as
calculated in the tables herein, the term Earnings Before Interest
Tax Depreciation and Amortization which we define as EBITDA
consists of operating profit in accordance with GAAP, excluding (i)
depreciation expenses, which include depreciation recorded in cost
of revenues and in operating cost and expenses lines (e.g, research
and development related equipment and/or fixed other assets
depreciation), (ii) stock-based compensation expense and (iii)
amortization of acquired intangible assets. 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 and/or prior
earnings related filings and/or in related public disclosures or
filings with respect to the financial statements and/or results of
the Company, 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. The term Net Cash, as may be used and/or
presented in this release and/or prior earnings related filings
and/or in related public disclosures or filings with respect to the
financial statements and/or results of the Company, is comprised of
cash, cash equivalents, short-term deposits and marketable
securities less debt amounts as presented in the balance sheets
included herein. 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. The term Free Cash
Flow, as used and/or presented in this release and/or prior
earnings related filings and/or in related public disclosures or
filings with respect to the financial statements and/or results of
the Company, is calculated to be net cash provided by operating
activities (in the amounts of $137 million, $134 million and $87
million for the three months periods ended March 31, 2022, December
31, 2021 and March 31, 2021, respectively) less cash used for
investments in property and equipment, net (in the amounts of $81
million, $86 million and $49 million for the three months periods
ended March 31, 2022, December 31, 2021 and March 31, 2021,
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 Tower SemiconductorTower
Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), the leading foundry
of high value analog semiconductor solutions, provides technology
and manufacturing platforms for integrated circuits (ICs) in
growing markets such as consumer, industrial, automotive, mobile,
infrastructure, medical and aerospace and defense. Tower
Semiconductor focuses on creating positive and sustainable impact
on the world through long term partnerships and its advanced and
innovative analog technology offering, comprised of a broad range
of customizable process platforms such as SiGe, BiCMOS,
mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors,
integrated power management (BCD and 700V), and MEMS. Tower
Semiconductor also provides world-class design enablement for a
quick and accurate design cycle as well as process transfer
services including development, transfer, and optimization, to IDMs
and fabless companies. To provide multi-fab sourcing and extended
capacity for its customers, Tower Semiconductor owns two
manufacturing facilities in Israel (150mm and 200mm), two in the
U.S. (200mm), three facilities in Japan (two 200mm and one 300mm)
which it owns through its 51% holdings in TPSCo and is sharing a
300mm manufacturing facility being established in Italy by
STMicroelectronics. For more information, please
visit: www.towersemi.com
CONTACTS: Noit Levy | Investor
Relations | +972 74 737 7556 | noitle@towersemi.com
This press release, including other projections
with respect to our business and activities, 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) high utilization and its
effect on cycle time, yield and on schedule delivery which may
cause customers to transfer their product(s) to other fabs, (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, (x) pending litigation, (xi) new customer engagements,
qualification and production ramp-up at our facilities,(xii)
meeting the conditions set in the approval certificates received
from the Israeli Investment Center under which we received a
significant amount of grants in past years, (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 other fundraising activities to enable the service of our
debt and/or other liabilities and/or for strategic opportunities,
including to fund Agrate fab’s significant 300mm capacity
investments, in addition to other previously announced capacity
expansion plans, and the possible unavailability of such financing
and/or the availability of such financing on unfavorable terms,
(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) our fab3 landlord’s
construction project adjacent to our fabrication facility,
including possible temporary reductions or interruptions in the
supply of utilities and/or fab manufacturing, as well as claims
that our noise abatement efforts are not adequate under the terms
of the amended lease that caused him to request a judicial
declaration that there was a material non-curable breach of the
lease and that he would be entitled to terminate the lease (we do
not agree and are disputing these claims), (xxxi) retention of key
employees and recruitment and retention of skilled qualified
personnel, (xxxii) exposure to inflation, currency rates (mainly
the Israeli Shekel and Japanese Yen) and interest rate fluctuations
and risks associated with doing business locally and
internationally, as well fluctuations in the market price of our
traded securities, (xxxiii) 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, (xxxiv) meeting regulatory requirements worldwide,
including environmental and governmental regulations, (xxxv)
potential engagement for fab establishment, joint venture and/or
capital lease transactions for capacity enhancement in advanced
technologies, including risks and uncertainties associated with
Agrate fab establishment project, its qualification schedule,
technology, equipment and process qualification and production
facility ramp-up, customer engagements, cost structure and
investment amounts and other terms, which may require additional
funding to cover its significant capacity investment needs and
other payments, the availability of which funding cannot be assured
on favorable terms, if at all, (xxxvi) potential impact on TPSCo
and the Company due to the purchase in 2020 of 49% of TPSCo by NTCJ
(previously named PSCS) from Panasonic and due to the planned
cessation of operations of Arai manufacturing factory in Japan,
which is currently manufacturing products solely for NTCJ and is
not serving Tower’s or TPSCo’s foundry customers, (xxxvii) industry
and market impact due to the coronavirus and its potential impact
on our business, operational continuity, supply chain, revenue and
profitability, (xxxviii) potential security, cyber and privacy
breaches, (xxxix) our ability to satisfy the covenants stipulated
in our agreements with the series G bondholders (as of March 31,
2022, we are in compliance with this indenture’s covenants), (xxxx)
risks associated with the transaction announced on February 15,
2022 under which Intel Corporation is to acquire the Company,
including the timely receipt of certain governmental and other
regulatory approvals, the potential for regulatory authorities to
require divestitures, behavioral remedies or other concessions in
order to obtain their approval of the proposed transaction, the
occurrence of any event, change or other circumstance that could
give rise to a termination of the merger agreement, the effect of
the announcement or pendency of the transaction on business
relationships, operating results and business generally, delays,
disruptions or increased costs due to the integration process with
the acquirer, litigation related to or resulting from the
transaction, difficulties to retain key personnel and customers,
diverting management’s attention from the ongoing business
operations, potential negative reactions or changes to business
relationships resulting from the announcement or completion of the
transaction, and (xxxxi) business interruption due to fire,
earthquake and other natural disasters, the security situation in
Israel, global trade “war”, COVID-19 pandemic, including its impact
on global supply chain to the fabs and from the fabs, power
interruptions and other events beyond our control.
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
(UNAUDITED) |
(dollars in thousands) |
|
March 31, |
|
December 31, |
|
2022 |
|
2021 |
ASSETS |
|
|
|
CURRENT ASSETS |
|
|
|
Cash and cash equivalents |
$ |
203,484 |
|
$ |
210,930 |
Short-term deposits |
402,873 |
|
363,648 |
Marketable securities |
184,539 |
|
190,068 |
Trade accounts receivable |
176,443 |
|
142,228 |
Inventories |
247,826 |
|
234,512 |
Other current assets |
41,629 |
|
54,817 |
Total current assets |
1,256,794 |
|
1,196,203 |
LONG-TERM INVESTMENTS |
27,235 |
|
39,597 |
PROPERTY AND EQUIPMENT, NET |
879,781 |
|
876,683 |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
16,665 |
|
18,820 |
DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET |
89,677 |
|
99,938 |
TOTAL ASSETS |
$ |
2,270,152 |
|
$ |
2,231,241 |
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES |
|
|
|
Short-term debt |
$ |
78,165 |
|
$ |
83,868 |
Trade accounts payable |
109,077 |
|
78,712 |
Deferred revenue and customers' advances |
49,444 |
|
39,992 |
Other current liabilities |
87,258 |
|
73,756 |
Total current liabilities |
323,944 |
|
276,328 |
LONG-TERM DEBT |
190,383 |
|
230,972 |
LONG-TERM CUSTOMERS' ADVANCES |
63,872 |
|
69,968 |
EMPLOYEE RELATED LIABILITIES |
14,626 |
|
14,622 |
DEFERRED TAX AND OTHER LONG-TERM LIABILITIES |
19,670 |
|
23,962 |
TOTAL LIABILITIES |
612,495 |
|
615,852 |
TOTAL SHAREHOLDERS' EQUITY |
1,657,657 |
|
1,615,389 |
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
$ |
2,270,152 |
|
$ |
2,231,241 |
|
|
|
|
|
|
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 |
|
March 31, |
|
December 31, |
|
March 31, |
|
2022 |
|
2021 |
|
2021 |
REVENUES |
$ |
421,132 |
|
|
$ |
412,108 |
|
|
$ |
347,214 |
|
COST OF
REVENUES |
316,501 |
|
|
311,935 |
|
|
277,400 |
|
GROSS PROFIT |
104,631 |
|
|
100,173 |
|
|
69,814 |
|
OPERATING COSTS AND
EXPENSES: |
|
|
|
|
|
|
|
|
Research and development |
20,318 |
|
|
22,371 |
|
|
20,343 |
|
Marketing, general and administrative |
21,253 |
|
|
21,939 |
|
|
16,991 |
|
|
41,571 |
|
|
44,310 |
|
|
37,334 |
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT |
63,060 |
|
|
55,863 |
|
|
32,480 |
|
FINANCING AND OTHER
EXPENSE, NET |
(2,133 |
) |
|
(372 |
) |
|
(7,842 |
) |
PROFIT BEFORE INCOME TAX |
60,927 |
|
|
55,491 |
|
|
24,638 |
|
INCOME TAX BENEFIT
(EXPENSE), NET |
(5,153 |
) |
|
(3,614 |
) |
|
5,876 |
|
NET PROFIT |
55,774 |
|
|
51,877 |
|
|
30,514 |
|
Net income
attributable to non-controlling interest |
(1,741 |
) |
|
(138 |
) |
|
(2,192 |
) |
NET PROFIT ATTRIBUTABLE TO THE COMPANY |
$ |
54,033 |
|
|
$ |
51,739 |
|
|
$ |
28,322 |
|
BASIC EARNINGS PER
SHARE |
$ |
0.50 |
|
|
$ |
0.48 |
|
|
$ |
0.26 |
|
Weighted average
number of shares |
108,934 |
|
|
108,768 |
|
|
107,940 |
|
DILUTED EARNINGS PER
SHARE |
$ |
0.49 |
|
|
$ |
0.47 |
|
|
$ |
0.26 |
|
Weighted average
number of shares |
110,539 |
|
|
110,267 |
|
|
109,462 |
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES |
RECONCILIATION FROM GAAP OPERATING PROFIT TO EBITDA
(UNAUDITED) |
(dollars in thousands) |
|
T h r e e m o n t h s e n d e d |
|
March 31, |
|
December 31, |
|
March 31, |
|
2022 |
|
2021 |
|
2021 |
GAAP OPERATING PROFIT |
$ |
63,060 |
|
$ |
55,863 |
|
$ |
32,480 |
Depreciation |
64,368 |
|
64,692 |
|
56,624 |
Stock based compensation |
5,715 |
|
8,815 |
|
4,906 |
Amortization of acquired intangible assets |
506 |
|
506 |
|
491 |
EBITDA |
$ |
133,649 |
|
$ |
129,876 |
|
$ |
94,501 |
|
|
|
|
|
|
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 |
|
March 31, |
|
December 31, |
|
March 31, |
|
2022 |
|
2021 |
|
2021 |
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD |
$ |
210,930 |
|
|
$ |
211,503 |
|
|
$ |
211,683 |
|
Net cash provided by operating activities |
136,571 |
|
|
133,656 |
|
|
87,413 |
|
Investments in property and equipment, net |
(80,840 |
) |
|
(85,947 |
) |
|
(49,415 |
) |
Exercise of options |
44 |
|
|
48 |
|
|
364 |
|
Debt received (repaid), net |
(30,539 |
) |
|
1,040 |
|
|
(29,375 |
) |
Effect of Japanese Yen exchange rate change over cash
balance |
(3,071 |
) |
|
(2,102 |
) |
|
(3,478 |
) |
Investments in short-term deposits, marketable securities
and other assets, net |
(29,611 |
) |
|
(47,268 |
) |
|
(1,611 |
) |
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$ |
203,484 |
|
|
$ |
210,930 |
|
|
$ |
215,581 |
|
|
|
|
|
|
|
|
|
|
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) |
(dollars in thousands) |
|
T h r e e m o n t h s e n d e d |
|
March 31, |
|
December 31, |
|
March 31, |
|
2022 |
|
2021 |
|
2021 |
CASH FLOWS - OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
Net profit for the period |
$ |
55,774 |
|
|
$ |
51,877 |
|
|
$ |
30,514 |
|
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 |
70,780 |
|
|
73,693 |
|
|
62,053 |
|
Effect of exchange rate differences on
debentures |
(1,330 |
) |
|
2,353 |
|
|
(3,792 |
) |
Other expense (income), net |
1,347 |
|
|
(175 |
) |
|
(4,985 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
(35,181 |
) |
|
2,291 |
|
|
(6,274 |
) |
Other assets |
13,874 |
|
|
(12,927 |
) |
|
7,082 |
|
Inventories |
(18,328 |
) |
|
(16,155 |
) |
|
(3,407 |
) |
Trade accounts payable |
30,595 |
|
|
(8,971 |
) |
|
(9,266 |
) |
Deferred revenue and customers' advances |
3,385 |
|
|
39,029 |
|
|
19,340 |
|
Other current liabilities |
15,103 |
|
|
5,242 |
|
|
7,084 |
|
Long-term employee related liabilities |
331 |
|
|
(2,778 |
) |
|
(107 |
) |
Deferred tax, net and other long-term
liabilities |
221 |
|
|
177 |
|
|
(10,829 |
) |
Net cash provided by operating activities |
136,571 |
|
|
133,656 |
|
|
87,413 |
|
CASH FLOWS - INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
Investments in property and equipment, net |
(80,840 |
) |
|
(85,947 |
) |
|
(49,415 |
) |
Investments in deposits, marketable securities and other
assets, net |
(29,611 |
) |
|
(47,268 |
) |
|
(1,611 |
) |
Net cash used in investing activities |
(110,451 |
) |
|
(133,215 |
) |
|
(51,026 |
) |
CASH FLOWS - FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
Debt received (repaid), net |
(30,539 |
) |
|
1,040 |
|
|
(29,375 |
) |
Exercise of options |
44 |
|
|
48 |
|
|
364 |
|
Net cash provided by (used in) financing
activities |
(30,495 |
) |
|
1,088 |
|
|
(29,011 |
) |
EFFECT OF FOREIGN
CURRENCY EXCHANGE RATE CHANGE |
(3,071 |
) |
|
(2,102 |
) |
|
(3,478 |
) |
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS |
(7,446 |
) |
|
(573 |
) |
|
3,898 |
|
CASH AND CASH
EQUIVALENTS - BEGINNING OF PERIOD |
210,930 |
|
|
211,503 |
|
|
211,683 |
|
CASH AND CASH
EQUIVALENTS - END OF PERIOD |
$ |
203,484 |
|
|
$ |
210,930 |
|
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215,581 |
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Tower Semiconductor (NASDAQ:TSEM)
Historical Stock Chart
From Apr 2024 to May 2024
Tower Semiconductor (NASDAQ:TSEM)
Historical Stock Chart
From May 2023 to May 2024