Second Quarter Highlights
- Net sales $989 million, sequential and
year-on-year growth 8%
- Net income $116 million and earnings
per diluted share $0.48 (includes after-tax gain of $82 million, or
$0.34 per diluted share, from sale of K1 factory)
- EBITDA $316 million
- Completed Nanium acquisition
Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of
semiconductor packaging and test services, today announced
financial results for the second quarter ended June 30,
2017.
“Second quarter revenues were up 8% sequentially,” said Steve
Kelley, Amkor’s president and chief executive officer. “Our growth
in the quarter reflected solid demand across most end markets.”
“In late May, we completed our acquisition of Nanium. This
acquisition enhances Amkor’s leadership position in wafer-level
packaging, a critical technology for smartphones, tablets and other
small form-factor applications,” continued Kelley.
Results Q2 2017
Q1 2017 Q2 2016 ($ in millions, except per
share data) Net sales $ 989 $ 914 $ 917 Gross margin 17.4 % 15.6 %
14.3 % Net income (loss) $ 116 ($10 ) $ 5 Earnings per diluted
share $ 0.48 ($0.04 ) $ 0.02 EBITDA** $ 316 $ 154 $ 168 Net cash
provided by operating activities $ 97 $ 103 $ 135 Free cash flow**
$ 43 $ 17 ($22 )
**EBITDA and free cash flow are non-GAAP measures. The
reconciliations to the comparable GAAP measures are included below
under “Selected Operating Data.”
Cash and cash equivalents were $658 million and total debt was
$1.6 billion, at June 30, 2017.
“As expected, we completed the sale of our K1 factory in Korea
in Q2,” said Megan Faust, Amkor’s corporate vice president and
chief financial officer. “The sale price was $142 million, and we
recognized an after-tax gain of $82 million ($0.34 per diluted
share).”
“We also issued a redemption notice for $200 million of the
outstanding $400 million of our Senior Notes due 2021,” added
Faust. “The redemption was completed in July using cash on hand.
The redemption will result in annualized interest savings of
approximately $13 million.”
Business Outlook
“Looking ahead to Q3, we expect that revenues will increase
around 9% sequentially, driven by the launch of flagship mobile
devices,” said Kelley.
Third quarter 2017 outlook (unless otherwise noted):
- Net sales of $1.04 billion to $1.12
billion, up 5% to 13% from the prior quarter
- Gross margin of 17% to 20%
- Net income of $24 million to
$64 million, or $0.10 to $0.27 per share
- Full year capital expenditures of
around $525 million, up $25 million from our previous forecast
Conference Call Information
Amkor will conduct a conference call on Monday, July 31,
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 59359701). 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
Q2 2017 Q1 2017 Q2
2016 Net Sales Data: Net sales (in millions): Advanced
products* $ 431 $ 383 $ 394 Mainstream products** 558
531 523 Total net sales $ 989 $
914 $ 917 Packaging services 81 % 81 % 83 %
Test services 19 % 19 % 17 % Net sales from top ten
customers 67 % 67 % 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) 42 % 41 % 44 % Automotive and industrial (infotainment,
safety, performance, comfort) 26 % 26 % 25 % Consumer (televisions,
set top boxes, gaming, portable media, digital cameras) 14 % 14 %
14 % Networking (servers, routers, switches) 10 % 11 % 11 %
Computing (PCs, hard disk drives, printers, peripherals, servers)
8 % 8 % 6 % Total 100 % 100 %
100 %
Gross Margin Data: Net sales 100.0 %
100.0 % 100.0 % Cost of sales: Materials 35.3 % 35.4 % 37.7 % Labor
16.4 % 16.5 % 16.0 % Other manufacturing 30.9 % 32.5
% 32.0 % Gross margin 17.4 % 15.6 %
14.3 % * Advanced products include flip chip and
wafer-level processing and related test services ** Mainstream
products include wirebond packaging and related test services
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: Q2 2017 Q1 2017 Q2 2016
(in millions) EBITDA Data: Net income attributable to
Amkor $ 116 $ (10 ) $ 5 Plus: Interest expense 22 22 22 Plus:
Income tax expense 33 — 3 Plus: Depreciation & amortization 145
142 138 EBITDA $ 316 $ 154 $ 168
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: Q2 2017 Q1 2017 Q2 2016
(in millions) Free Cash Flow Data: Net cash provided
by operating activities $ 97 $ 103 $ 135 Less: Purchases of
property, plant and equipment (183 ) (88 ) (157 ) Plus: Proceeds
from sale of property, plant and equipment 129 2 —
Free cash flow $ 43 $ 17 $ (22 )
AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF
INCOME (Unaudited) For the Three Months
Ended For the Six Months Ended June 30,
June 30, 2017 2016 2017
2016 (In thousands, except per share data) Net sales
$ 989,447 $ 917,326 $ 1,903,047 $ 1,786,008 Cost of sales
817,212 785,720 1,587,906
1,531,518 Gross profit 172,235 131,606
315,141 254,490 Selling, general
and administrative 67,783 70,896 144,478 144,531 Research and
development 44,268 30,168 85,824 57,323 Gain on sale of real estate
(108,109 ) — (108,109 ) —
Total operating expenses 3,942 101,064
122,193 201,854 Operating income
168,293 30,542 192,948 52,636 Interest expense 22,158 20,816 43,412
37,008 Interest expense, related party 293 1,242 1,535 2,484 Other
(income) expense, net (3,190 ) (242 ) 7,674
2,950 Total other expense, net 19,261
21,816 52,621 42,442
Income before taxes 149,032 8,726 140,327 10,194 Income tax
expense 32,573 3,360 33,012
5,233 Net income 116,459 5,366 107,315 4,961
Net income attributable to non-controlling interests (952 )
(653 ) (1,814 ) (1,123 ) Net income
attributable to Amkor $ 115,507 $ 4,713 $ 105,501
$ 3,838 Net income attributable to Amkor per
common share: Basic $ 0.48 $ 0.02 $ 0.44 $
0.02 Diluted $ 0.48 $ 0.02 $ 0.44 $
0.02 Shares used in computing per common share
amounts: Basic 238,863 237,090 238,774 237,058 Diluted 239,679
237,434 239,601 237,297
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, December 31, 2017 2016
(In thousands) ASSETS Current assets: Cash and cash
equivalents $ 657,627 $ 549,518 Restricted cash 2,000 2,000
Accounts receivable, net of allowances 604,366 563,107 Inventories
295,750 267,990 Other current assets 36,889
27,081 Total current assets 1,596,632 1,409,696 Property,
plant and equipment, net 2,645,810 2,564,648 Goodwill 25,161 24,122
Restricted cash 4,225 3,977 Other assets 112,303
89,643 Total assets $ 4,384,131 $ 4,092,086
LIABILITIES AND EQUITY Current liabilities:
Short-term borrowings and current portion of long-term debt $
313,004 $ 35,192 Current portion of long-term debt, related party
17,546 — Trade accounts payable 477,191 487,430 Capital
expenditures payable 231,481 144,370 Accrued expenses
348,869 338,669 Total current liabilities
1,388,091 1,005,661 Long-term debt 1,220,236 1,364,638 Long-term
debt, related party 17,454 75,000 Pension and severance obligations
170,554 166,701 Other non-current liabilities 60,842
76,682 Total liabilities 2,857,177
2,688,682 Stockholders’ equity: Preferred
stock — — Common stock 285 284 Additional paid-in capital 1,899,970
1,895,089 Accumulated deficit (198,056 ) (303,557 ) Accumulated
other comprehensive income (loss) 19,263 6,262 Treasury stock
(215,868 ) (214,490 ) Total Amkor stockholders’
equity 1,505,594 1,383,588 Non-controlling interests in
subsidiaries 21,360 19,816 Total equity
1,526,954 1,403,404 Total liabilities
and equity $ 4,384,131 $ 4,092,086
AMKOR
TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) For the Six Months
Ended June 30, 2017 2016 (In
thousands) Cash flows from operating activities: Net income $
107,315 $ 4,961 Depreciation and amortization 287,068 275,241 Gain
on sale of real estate (108,109 ) — Other operating activities and
non-cash items (3,787 ) (6,177 ) Changes in assets and liabilities
(82,528 ) (826 ) Net cash provided by operating
activities 199,959 273,199 Cash flows
from investing activities: Payments for property, plant and
equipment (271,651 ) (355,974 ) Proceeds from sale of property,
plant and equipment 130,962 593 Acquisition of business, net of
cash acquired (43,771 ) — Other investing activities (2,117
) (830 ) Net cash used in investing activities
(186,577 ) (356,211 ) Cash flows from financing activities:
Proceeds from revolving credit
facilities
75,000 115,000
Payments of revolving credit
facilities
— (100,000 ) Proceeds from short-term debt 41,228 24,630 Payments
of short-term debt (32,110 ) (23,035 ) Proceeds from issuance of
long-term debt 215,086 34,000 Payments of long-term debt (207,653 )
(8,582 ) Payment of deferred consideration for purchase of facility
(3,890 ) — Payments of capital lease obligations (2,665 ) (887 )
Other financing activities 561 (604 ) Net cash
provided by financing activities 85,557 40,522
Effect of exchange rate fluctuations on cash, cash
equivalents and restricted cash 9,418 18,782
Net increase (decrease) in cash, cash equivalents and
restricted cash 108,357 (23,708 ) Cash, cash equivalents and
restricted cash, beginning of period 555,495
527,348 Cash, cash equivalents and restricted cash, end of
period $ 663,852 $ 503,640
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 our
position in wafer-level packaging as a result of the Nanium
acquisition, 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:
- 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;
- 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/20170731006153/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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