U.S. Markets closed

Amkor Technology Reports Financial Results for the First Quarter 2018

TEMPE, Ariz.--(BUSINESS WIRE)--

Amkor Technology, Inc. (AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the first quarter ended March 31, 2018.

"First quarter results were in line with expectations, with sales up 14% year-on-year," said Steve Kelley, Amkor's president and chief executive officer. "We benefited from our strategic focus on balanced revenue growth across end markets and regions. Increased participation in all major smartphone ecosystems, together with gains in computing and automotive, were the key growth drivers in Q1 2018."

 
Results     Q1 2018   Q4 2017   Q1 2017
    ($ in millions, except per share data)
Net sales $1,025   $1,150   $899
Gross margin 15.4% 19.5% 15.1%
Net income (loss) attributable to Amkor1 $10 $100 ($15)
Earnings per diluted share1 $0.04 $0.42 ($0.06)
EBITDA1,2 $175 $254 $149
 

1) Q4 2017 net income includes an estimated one-time net tax benefit of $42 million, or $0.17 per diluted share, primarily due to the reversal of a valuation allowance on certain U.S. deferred tax assets related to U.S. tax reform.
2) EBITDA is a non-GAAP measure. The reconciliation to the comparable GAAP measure is included below under "Selected Operating Data."

"Operating margin, net income and EBITDA all showed solid gains year-on-year," said Megan Faust, Amkor’s corporate vice president and chief financial officer. "Profitability improved due to healthy sales growth, despite an unfavorable foreign currency impact of 120 bps on gross margin compared to Q1 2017."

Cash and cash equivalents were $495 million and total debt was $1.3 billion, at March 31, 2018.

New Accounting Standards

Effective January 1, 2018, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), utilizing the full retrospective transition method. The prior periods presented here have been revised to reflect this change.

Business Outlook

"We expect second quarter 2018 revenues to be around $1.03 billion, up 2% year-on-year," said Kelley. "The smartphone market is expected to remain somewhat muted in Q2, while demand in our other end markets is solid."

Second quarter 2018 outlook (unless otherwise noted):

  • Net sales of $990 million to $1.07 billion
  • Gross margin of 14% to 16%
  • Net loss of $4 million to net income of $24 million, or ($0.02) to $0.10 per diluted share
  • Full year capital expenditures of approximately $600 million

Conference Call Information

Amkor will conduct a conference call on Thursday, April 26, 2018, 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 2471407). 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 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 www.amkor.com.

 

AMKOR TECHNOLOGY, INC.

Selected Operating Data

 
    Q1 2018   Q4 2017   Q1 2017
Net Sales Data:
Net sales (in millions):
Advanced products* $ 476 $ 582 $ 376
Mainstream products** 549   568   523  
Total net sales $ 1,025   $ 1,150   $ 899  
 
Packaging services 81 % 82 % 82 %
Test services 19 % 18 % 18 %
 
Net sales from top ten customers 69 % 67 % 66 %
 

End Market Data:

Communications (smartphones, tablets, handheld devices) 42 % 48 % 37 %
Automotive, industrial and other (driver assist, infotainment, safety, performance) 26 % 23 % 29 %
Computing (datacenter, infrastructure, PC/laptop, storage) 19 % 17 % 20 %
Consumer (set-top boxes, televisions, connected home, personal electronics, visual imaging) 13 % 12 % 14 %
Total 100 % 100 % 100 %
 
Gross Margin Data:
Net sales 100.0 % 100.0 % 100.0 %
Cost of sales:
Materials 36.9 % 37.5 % 35.6 %
Labor 17.5 % 14.6 % 16.6 %
Other manufacturing 30.2 % 28.4 %

32.7

%
Gross margin 15.4 % 19.5 %

15.1

%
 

* 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:        
Q1 2018 Q4 2017 Q1 2017
(in millions)
EBITDA Data:
Net income $ 10 $ 101 $ (14 )
Plus: Interest expense 20 20 22
Plus: Income tax expense (benefit) 2 (14 ) (1 )
Plus: Depreciation & amortization 143   147   142  
EBITDA $ 175   $ 254   $ 149  
 
 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 
    For the Three Months Ended March 31,
2018   2017
(In thousands, except per share data)
Net sales $ 1,025,319 $ 899,284
Cost of sales 867,548   763,050  
Gross profit 157,771   136,234  
Selling, general and administrative 80,723 76,282
Research and development 40,929   41,568  
Total operating expenses 121,652   117,850  
Operating income 36,119 18,384
Interest expense 20,011 21,254
Interest expense, related party 1,242
Other (income) expense, net 3,432   11,181  
Total other expense, net 23,443   33,677  
Income (loss) before taxes 12,676 (15,293 )
Income tax expense (benefit) 2,481   (1,325 )
Net income (loss) 10,195 (13,968 )
Net income attributable to non-controlling interests (651 ) (818 )
Net income (loss) attributable to Amkor $ 9,544   $ (14,786 )
 
Net income (loss) attributable to Amkor per common share:
Basic $ 0.04   $ (0.06 )
Diluted $ 0.04   $ (0.06 )
 
Shares used in computing per common share amounts:
Basic 239,214 238,685
Diluted 239,816 238,685
 
 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
    March 31,
2018
  December 31,
2017
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 495,183 $ 596,364
Restricted cash 2,000 2,000
Accounts receivable, net of allowances 734,953 798,264
Inventories 228,611 213,649
Other current assets 30,837   33,727  
Total current assets 1,491,584 1,644,004
Property, plant and equipment, net 2,727,878 2,695,065
Goodwill 26,546 25,036
Restricted cash 3,661 4,487
Other assets 142,041   139,796  
Total assets $ 4,391,710   $ 4,508,388  
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 105,451 $ 123,848
Trade accounts payable 527,910 569,085
Capital expenditures payable 223,312 294,258
Accrued expenses 311,408   330,868  
Total current liabilities 1,168,081 1,318,059
Long-term debt 1,240,141 1,240,581
Pension and severance obligations 191,180 182,216
Other non-current liabilities 45,234   47,823  
Total liabilities 2,644,636   2,788,679  
 
Stockholders’ equity:
Preferred stock
Common stock 285 285
Additional paid-in capital 1,905,666 1,903,357
Accumulated deficit (4,359 ) (13,903 )
Accumulated other comprehensive income (loss) 37,571 22,519
Treasury stock (216,038 ) (215,982 )
Total Amkor stockholders’ equity 1,723,125 1,696,276
Non-controlling interests in subsidiaries 23,949   23,433  
Total equity 1,747,074   1,719,709  
Total liabilities and equity $ 4,391,710   $ 4,508,388  
 
 

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
    For the Three Months Ended March 31,
2018   2017
(In thousands)
Cash flows from operating activities:
Net income (loss) $ 10,195 $ (13,968 )
Depreciation and amortization 142,509 141,816
Other operating activities and non-cash items (4,734 ) (9,653 )
Changes in assets and liabilities (339 ) (15,518 )
Net cash provided by operating activities 147,631   102,677  
Cash flows from investing activities:
Payments for property, plant and equipment (230,603 ) (88,285 )
Proceeds from sale of property, plant and equipment 342 1,835
Other investing activities 656   (2,492 )
Net cash used in investing activities (229,605 ) (88,942 )
Cash flows from financing activities:
Proceeds from short-term debt 13,275
Payments of short-term debt (17,352 ) (14,073 )
Proceeds from issuance of long-term debt 50,000
Payments of long-term debt (6,220 ) (3,295 )
Payment of deferred consideration for purchase of facility (3,890 )
Payments of capital lease obligations (808 ) (913 )
Other financing activities 455   (356 )
Net cash provided by (used in) financing activities (23,925 ) 40,748  
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash 3,892   10,259  
Net increase (decrease) in cash, cash equivalents and restricted cash (102,007 ) 64,742
Cash, cash equivalents and restricted cash, beginning of period 602,851   555,495  
Cash, cash equivalents and restricted cash, end of period $ 500,844   $ 620,237  
 

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 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;
  • laws, rules, regulations and policies imposed by U.S. or foreign governments in areas such as tariffs, customs, duties and other restrictive trade barriers, national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, privacy, labor, environmental, health and safety;
  • laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer or government supported efforts to promote the development and growth of local competitors;
  • 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 the impact of recent U.S. tax reform), 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 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 packaging and test manufacturing yields;
  • dependence on international operations and sales and fluctuations in foreign currency exchange rates, particularly in Japan and Korea;
  • 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; 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, 2017 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: https://www.businesswire.com/news/home/20180426006774/en/