First Quarter and Business Highlights
- Net sales $914 million, 5% year-on-year
growth
- Gross margin 15.6%
- Net cash provided by operating
activities $103 million and free cash flow $17 million
- Strong Q2 outlook of around 9%
sequential revenue growth
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the first quarter ended March 31, 2017.
"First quarter operating results came in as expected, with
revenues up 5% year-on-year," said Steve Kelley, Amkor's president
and chief executive officer. "Although the smartphone market
experienced a seasonal slowdown in the first quarter, demand in
other end markets was healthy."
Results Q1 2017 Q4 2016
Q1 2016 ($ in millions, except per share data)
Net sales $914 $1,022 $869 Gross margin* 15.6% 22.2%
14.1% Net income (loss) ($10) $100 ($1) Earnings per diluted share
($0.04) $0.42 $— EBITDA** $154 $280 $155 Net cash provided by
operating activities $103 $238 $138 Free cash flow** $17 $117
($61)
*Fourth quarter 2016 results include approximately $26 million
(250 basis points to gross margin) of insurance proceeds related to
the second quarter 2016 Japan earthquakes.**EBITDA and free cash
flow are non-GAAP measures. The reconciliations to the comparable
GAAP measures are included below under "Selected Operating
Data."
“Our business was essentially break-even for the first quarter
and in line with guidance," said Megan Faust, Amkor’s corporate
vice president and chief financial officer. "Earnings were reduced
by a non-cash foreign exchange rate loss of $11 million ($0.05 per
diluted share) related to the re-measurement of our balance sheet
liabilities denominated in foreign currencies."
Cash and cash equivalents were $614 million and total debt was
$1.5 billion, at March 31, 2017.
Business Outlook
"Looking ahead to Q2, we expect that revenues will increase
around 9% sequentially, driven by strength in communications and
other markets," said Kelley.
"We expect to complete our acquisition of Nanium in the second
quarter. Nanium is the leader in wafer-level fan-out technology and
has already shipped over 1 billion units to major customers. This
acquisition will strengthen our position in the wafer-level
packaging market," continued Kelley.
"In Q2, we expect to complete the sale of our K1 factory in
Korea," said Faust. "The sale price is approximately $140 million,
and we expect to recognize an after-tax gain of approximately $80
million ($0.33 per diluted share)."
Second quarter 2017 outlook (unless otherwise noted):
- Net sales of $955 million to $1.035
billion, up 5% to 13% from the prior quarter
- Gross margin of 16% to 20%
- Net income of $86 million to
$125 million, or $0.36 to $0.52 per share (includes gain from
the sale of our K1 factory)
- Full year capital expenditures of
around $500 million, unchanged from our previous forecast
Conference Call Information
Amkor will conduct a conference call on Thursday, April 27,
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 7226501). 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
Q1 2017 Q4 2016
Q1 2016 Net Sales Data: Net sales (in millions):
Advanced products* $ 383 $ 451 $ 356 Mainstream products** 531
571 513 Total net sales $ 914 $ 1,022
$ 869 Packaging services 81 % 83 % 82 % Test
services 19 % 17 % 18 % Net sales from top ten customers 67
% 66 % 67 %
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) 41 % 45 % 42 % Automotive and industrial (infotainment,
safety, performance, comfort) 26 % 25 % 25 % Consumer (televisions,
set top boxes, gaming, portable media, digital cameras) 14 % 14 %
16 % Networking (servers, routers, switches) 11 % 9 % 10 %
Computing (PCs, hard disk drives, printers, peripherals, servers) 8
% 7 % 7 % Total 100 % 100 % 100 %
Gross Margin Data:
Net sales 100.0 % 100.0 % 100.0 % Cost of sales: Materials 35.4 %
36.6 % 37.5 % Labor 16.5 % 14.5 % 16.2 % Other manufacturing***
32.5 % 26.7 % 32.2 % Gross margin 15.6 % 22.2 % 14.1 %
* Advanced products include flip chip and wafer-level processing
and related test services** Mainstream products include wirebond
packaging and related test services*** Fourth quarter 2016 results
include approximately $26 million (250 basis points to gross
margin) of insurance proceeds related to the second quarter 2016
Japan earthquakes
AMKOR TECHNOLOGY, INC.Selected
Operating Data
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:
Q1 2017 Q4 2016 Q1 2016
(in millions) EBITDA Data: Net income (loss)
attributable to Amkor $ (10 ) $ 100 $ (1 ) Plus: Interest expense
22 22 17 Plus: Income tax expense — 19 2 Plus: Depreciation &
amortization 142 139 137 EBITDA $ 154 $
280 $ 155
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. 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:
Q1 2017 Q4 2016 Q1 2016 (in
millions) Free Cash Flow Data: Net cash provided by
operating activities $ 103 $ 238 $ 138 Less: Purchases of property,
plant and equipment (88 ) (168 ) (199 ) Plus: Proceeds from sale of
and insurance recovery for property, plant and equipment 2
47 — Free cash flow $ 17 $ 117 $ (61 )
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF
INCOME
(Unaudited)
For the Three Months EndedMarch 31,
2017 2016 (In thousands, except per share
data) Net sales $ 913,600 $ 868,682 Cost of sales 770,694
745,798 Gross profit 142,906 122,884
Selling, general and administrative 76,695 73,635 Research and
development 41,556 27,155 Total operating expenses
118,251 100,790 Operating income 24,655 22,094
Interest expense 21,254 16,192 Interest expense, related party
1,242 1,242 Other (income) expense, net 10,864 3,192
Total other expense, net 33,360 20,626 Income (loss)
before taxes (8,705 ) 1,468 Income tax expense 439 1,873
Net income (loss) (9,144 ) (405 ) Net income attributable to
non-controlling interests (862 ) (470 ) Net income (loss)
attributable to Amkor $ (10,006 ) $ (875 ) Net income (loss)
attributable to Amkor per common share: Basic $ (0.04 ) $ —
Diluted $ (0.04 ) $ — Shares used in computing per
common share amounts: Basic 238,685 237,025 Diluted 238,685 237,025
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2017 December 31,
2016 (In thousands) ASSETS Current assets:
Cash and cash equivalents $ 613,974 $ 549,518 Restricted cash 2,000
2,000 Accounts receivable, net of allowances 545,794 563,107
Inventories 267,208 267,990 Other current assets 70,722
27,081 Total current assets 1,499,698 1,409,696 Property,
plant and equipment, net 2,551,706 2,564,648 Goodwill 25,228 24,122
Restricted cash 4,263 3,977 Other assets 97,426 89,643
Total assets $ 4,178,321 $ 4,092,086
LIABILITIES AND EQUITY Current liabilities: Short-term
borrowings and current portion of long-term debt $ 36,927 $ 35,192
Trade accounts payable 453,686 487,430 Capital expenditures payable
209,831 144,370 Accrued expenses 338,663 338,669
Total current liabilities 1,039,107 1,005,661 Long-term debt
1,450,737 1,364,638 Long-term debt, related party 35,000 75,000
Pension and severance obligations 177,374 166,701 Other non-current
liabilities 67,174 76,682 Total liabilities 2,769,392
2,688,682 Stockholders’ equity: Preferred
stock — — Common stock 285 284 Additional paid-in capital 1,896,286
1,895,089 Accumulated deficit (313,563 ) (303,557 ) Accumulated
other comprehensive income (loss) 20,078 6,262 Treasury stock
(214,700 ) (214,490 ) Total Amkor stockholders’ equity 1,388,386
1,383,588 Non-controlling interests in subsidiaries 20,543
19,816 Total equity 1,408,929 1,403,404 Total
liabilities and equity $ 4,178,321 $ 4,092,086
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
For the Three Months EndedMarch 31,
2017 2016 (In thousands) Cash flows
from operating activities: Net income (loss) $ (9,144 ) $ (405 )
Depreciation and amortization 141,816 137,136 Other operating
activities and non-cash items (7,890 ) (3,944 ) Changes in assets
and liabilities (22,105 ) 5,311 Net cash provided by
operating activities 102,677 138,098 Cash flows from
investing activities: Payments for property, plant and equipment
(88,285 ) (198,788 ) Proceeds from sale of property, plant and
equipment 1,835 121 Other investing activities (2,492 ) (426 ) Net
cash used in investing activities (88,942 ) (199,093 ) Cash flows
from financing activities: Payments under revolving credit
facilities — (40,000 ) Borrowings under short-term debt 13,275 —
Payments of short-term debt (14,073 ) (11,901 ) Proceeds from
issuance of long-term debt 50,000 — Payments of long-term debt
(3,295 ) (4,204 ) Payments for debt issuance costs (156 ) (156 )
Payment of deferred consideration for purchase of facility (3,890 )
— Payments for capital lease obligations (913 ) (401 ) Proceeds
from the issuance of stock through share-based compensation plans
145 — Payments of tax withholding for restricted shares (210 ) (119
) Payments of subsidiary dividends to non-controlling interests
(135 ) (135 ) Net cash provided by (used in) financing activities
40,748 (56,916 ) Effect of exchange rate fluctuations on
cash, cash equivalents and restricted cash 10,259 8,250
Net increase (decrease) in cash, cash equivalents and
restricted cash 64,742 (109,661 ) Cash, cash equivalents and
restricted cash, beginning of period 555,495 527,348
Cash, cash equivalents and restricted cash, end of period $ 620,237
$ 417,687
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, our strong Q2 outlook 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:
- there can be no assurance regarding the
success of our growth initiatives, the closing of the sale of our
K1 factory or the closing of our acquisition of NANIUM;
- there can be no assurance regarding
when our new 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;
- 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, 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,
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/20170427006737/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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