Amkor Technology Reports Financial Results for the Second Quarter 2023

TEMPE, Ariz., July 31, 2023--(BUSINESS WIRE)--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, 2023.

Second Quarter 2023 Highlights

• Net sales $1.46 billion

• Gross profit $187 million, operating income $76 million

• Net income $64 million, earnings per diluted share $0.26

• EBITDA $245 million

"Amkor’s second quarter performance was in line with our expectations, with demand for Advanced packaging solutions driving sequential growth in both the Computing and Consumer end markets," said Giel Rutten, Amkor’s president and chief executive officer. "With our technology leadership and broad geographic footprint, Amkor is outperforming the industry and is well positioned to capitalize on the industry megatrends that we expect to propel growth beyond the current cycle."

Quarterly Financial Results

($ in millions, except per share data)		Q2 2023		Q1 2023		Q2 2022
Net sales		$1,458		$1,472		$1,505
Gross margin		12.8%		13.2%		16.6%
Operating income		$76		$69		$143
Operating income margin		5.2%		4.7%		9.5%
Net income attributable to Amkor		$64		$45		$125
Earnings per diluted share		$0.26		$0.18		$0.51
EBITDA (1)		$245		$229		$302

(1) EBITDA is a non-GAAP measure. The reconciliation to the comparable GAAP measure is included below under "Selected Operating Data."

At June 30, 2023, total cash and short-term investments was $1.2 billion, and total debt was $1.1 billion.

The company paid a quarterly dividend of $0.075 per share on June 26, 2023. The declaration and payment of future dividends, as well as any record and payment dates, are subject to the approval of the Board of Directors.

Business Outlook

The following information presents Amkor’s guidance for the third quarter 2023 (unless otherwise noted):

• Net sales of $1.725 billion to $1.825 billion

• Gross margin of 13.5% to 15.5%

• Net income of $90 million to $130 million, or $0.36 to $0.53 per diluted share

• Full year 2023 capital expenditures of approximately $750 million

Conference Call Information

Amkor will conduct a conference call on Monday, July 31, 2023, at 5:00 p.m. Eastern Time. This call may include material information not included in this press release. To access the live audio webcast and the accompanying slide presentation, visit the Investor Relations section of Amkor’s website, located at ir.amkor.com. The live call can also be accessed by dialing 1-877-407-4019 or 1-201-689-8337.

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 the world’s leading semiconductor companies, foundries and electronics OEMs. Amkor’s operational base includes production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the USA. For more information visit amkor.com.

AMKOR TECHNOLOGY, INC. Selected Operating Data
	Q2 2023				Q1 2023				Q2 2022
Net Sales Data:
Net sales (in millions):
Advanced products (1)	$	1,084			$	1,068			$	1,084
Mainstream products (2)		374				404				421
Total net sales	$	1,458			$	1,472			$	1,505
Packaging services		88	%			88	%			87	%
Test services		12	%			12	%			13	%
Net sales from top ten customers		66	%			66	%			65	%
End Market Distribution Data:
Communications (smartphones, tablets)		41	%			45	%			37	%
Automotive, industrial and other (ADAS, electrification, infotainment, safety)		23	%			26	%			23	%
Computing (data center, infrastructure, PC/laptop, storage)		20	%			17	%			18	%
Consumer (AR & gaming, connected home, home electronics, wearables)		16	%			12	%			22	%
Total		100	%			100	%			100	%
Gross Margin Data:
Net sales		100.0	%			100.0	%			100.0	%
Cost of sales:
Materials		53.6	%			52.9	%			49.2	%
Labor		10.9	%			11.3	%			11.8	%
Other manufacturing		22.7	%			22.6	%			22.4	%
Gross margin		12.8	%			13.2	%			16.6	%

(1) Advanced products include flip chip, memory and wafer-level processing and related test services.
(2) Mainstream products include all other wirebond packaging and related test services.

In this press release, we refer to 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, and our ability to service debt, and our ability to fund capital expenditures and pay dividends. 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:
(in millions)	Q2 2023			Q1 2023			Q2 2022
EBITDA Data:
Net income	$	64		$	45		$	125
Plus: Interest expense		14			16			15
Plus: Income tax expense		9			11			11
Plus: Depreciation & amortization		158			157			151
EBITDA	$	245		$	229		$	302

AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)
	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2023				2022				2023				2022
Net sales	$	1,457,922			$	1,504,868			$	2,929,461			$	3,101,684
Cost of sales		1,271,052				1,255,713				2,548,170				2,527,199
Gross profit		186,870				249,155				381,291				574,485
Selling, general and administrative		64,860				68,868				143,531				145,827
Research and development		45,688				37,478				92,735				75,841
Total operating expenses		110,548				106,346				236,266				221,668
Operating income		76,322				142,809				145,025				352,817
Interest expense		14,354				14,593				30,521				28,741
Other (income) expense, net		(11,883	)			(8,041	)			(15,435	)			(13,137	)
Total other expense, net		2,471				6,552				15,086				15,604
Income before taxes		73,851				136,257				129,939				337,213
Income tax expense		9,407				10,788				20,271				40,516
Net income		64,444				125,469				109,668				296,697
Net income attributable to non-controlling interests		(158	)			(691	)			(31	)			(1,256	)
Net income attributable to Amkor	$	64,286			$	124,778			$	109,637			$	295,441
Net income attributable to Amkor per common share:
Basic	$	0.26			$	0.51			$	0.45			$	1.21
Diluted	$	0.26			$	0.51			$	0.44			$	1.20
Shares used in computing per common share amounts:
Basic		245,637				244,592				245,485				244,498
Diluted		246,964				245,855				247,046				245,938

AMKOR TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
	June 30, 2023				December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	804,834			$	959,072
Short-term investments		399,233				281,964
Accounts receivable, net of allowances		1,198,612				1,365,504
Inventories		534,477				629,576
Other current assets		61,890				65,123
Total current assets		2,999,046				3,301,239
Property, plant and equipment, net		3,309,592				3,135,614
Operating lease right of use assets		146,080				171,163
Goodwill		19,550				21,517
Restricted cash		3,428				3,334
Other assets		160,484				188,890
Total assets	$	6,638,180			$	6,821,757
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	155,978			$	143,813
Trade accounts payable		701,610				899,164
Capital expenditures payable		310,387				146,602
Short-term operating lease liability		53,991				70,991
Accrued expenses		354,522				401,841
Total current liabilities		1,576,488				1,662,411
Long-term debt		975,535				1,088,521
Pension and severance obligations		88,249				93,540
Long-term operating lease liabilities		66,030				75,745
Other non-current liabilities		169,019				201,839
Total liabilities		2,875,321				3,122,056
Stockholders’ equity:
Preferred stock		—				—
Common stock		292				291
Additional paid-in capital		2,005,055				1,996,344
Retained earnings		1,947,420				1,874,644
Accumulated other comprehensive income (loss)		1,432				16,699
Treasury stock		(222,049	)			(219,226	)
Total Amkor stockholders’ equity		3,732,150				3,668,752
Non-controlling interests in subsidiaries		30,709				30,949
Total equity		3,762,859				3,699,701
Total liabilities and equity	$	6,638,180			$	6,821,757

AMKOR TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	For the Six Months Ended June 30,
	2023				2022
Cash flows from operating activities:
Net income	$	109,668			$	296,697
Depreciation and amortization		314,647				299,341
Other operating activities and non-cash items		4,784				(10,041	)
Changes in assets and liabilities		(6,521	)			(123,728	)
Net cash provided by operating activities		422,578				462,269
Cash flows from investing activities:
Payments for property, plant and equipment		(282,309	)			(340,208	)
Proceeds from sale of property, plant and equipment		1,107				773
Payments for short-term investments		(355,135	)			(298,351	)
Proceeds from sale of short-term investments		47,000				14,120
Proceeds from maturities of short-term investments		193,315				155,910
Other investing activities		(22,850	)			(58,916	)
Net cash used in investing activities		(418,872	)			(526,672	)
Cash flows from financing activities:
Proceeds from revolving credit facilities		370,000				—
Payments of revolving credit facilities		(370,000	)			—
Proceeds from short-term debt		11,043				18,112
Payments of short-term debt		(11,149	)			(12,048	)
Proceeds from issuance of long-term debt		—				190,000
Payments of long-term debt		(72,061	)			(155,284	)
Payments of finance lease obligations		(31,129	)			(15,943	)
Payments of dividends		(36,874	)			(24,473	)
Other financing activities		(1,589	)			(5,089	)
Net cash used in financing activities		(141,759	)			(4,725	)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash		(16,091	)			(25,020	)
Net decrease in cash, cash equivalents and restricted cash		(154,144	)			(94,148	)
Cash, cash equivalents and restricted cash, beginning of period		962,406				831,521
Cash, cash equivalents and restricted cash, end of period	$	808,262			$	737,373

Forward-Looking Statement Disclaimer

This press release contains forward-looking statements within the meaning of the federal securities laws. You are cautioned not to place undue reliance on forward-looking statements, which are often characterized by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or "intend," by the negative of these terms or other comparable terminology or by discussions of strategy, plans or intentions. All forward-looking statements in this press release are made based on our current expectations, forecasts, estimates and assumptions. Because such statements include risks and uncertainties, actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors, including, but not limited to, the following:

• dependence on the cyclical and volatile semiconductor industry and vulnerability to industry downturns and declines in global economic and financial conditions;

• dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive;

• changes in costs, quality, availability and delivery times of raw materials, components and equipment;

• health conditions or pandemics, such as the COVID-19 pandemic, impacting labor availability and operating capacity, capital availability, the supply chain and consumer demand for our customers’ products and services;

• fluctuations in operating results and cash flows;

• our substantial indebtedness;

• dependence on international factories and operations and risks relating to trade restrictions and regional conflict;

• fluctuations in interest rates and changes in credit risk;

• competition with established competitors in the packaging and test business, the internal capabilities of integrated device manufacturers and new competitors, including foundries;

• difficulty funding our liquidity needs, including as a result of disruptions to the banking system and capital markets;

• our substantial investments in equipment and facilities to support the demand of our customers;

• difficulty attracting, retaining or replacing qualified personnel;

• difficulty achieving the relatively high-capacity utilization rates necessary to realize satisfactory gross margins given our high percentage of fixed costs;

• maintaining an effective system of internal controls;

• the absence of backlog and the short-term nature of our customers’ commitments;

• our continuing development and implementation of changes to, and maintenance and security of, our information technology systems;

• the historical downward pressure on the prices of our packaging and test services;

• challenges with integrating diverse operations;

• fluctuations in our manufacturing yields;

• any changes in tax laws, taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for conditional reduced tax rates, or any requirements to establish or adjust valuation allowances on deferred tax assets;

• our ability to develop new proprietary technology, protect our proprietary technology, operate without infringing the proprietary rights of others and implement new technologies;

• environmental, health and safety liabilities and expenditures;

• warranty claims, product return and liability risks, and the risk of negative publicity if our products fail, as well as the risk of litigation incident to our business;

• natural disasters and other calamities, political instability, hostilities or other disruptions;

• restrictive covenants in the indentures and agreements governing our current and future indebtedness;

• the possibility that we may decrease or suspend our quarterly dividend;

• significant severance plan obligations associated with our manufacturing operations in Korea; and

• the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval.

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, 2022 (the "Form 10-K") and from time to time in our other reports filed with or furnished to the Securities and Exchange Commission ("SEC"). You should carefully consider the trends, risks and uncertainties described in this press release, the Form 10-K and other reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of these trends, risks or uncertainties continues or occurs, our business, financial condition or operating results could be materially and adversely affected, the trading prices of our securities could decline, and you could lose part or all of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement. We assume no obligation to review or update any forward-looking statements to reflect events or circumstances occurring after the date of this press release except as may be required by applicable law.

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Contacts

Jennifer Jue
Vice President, Investor Relations and Finance
480-786-7594
jennifer.jue@amkor.com