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Amkor Technology Reports Financial Results for the Fourth Quarter and Full Year 2019

February 10, 2020 GMT

TEMPE, Ariz.--(BUSINESS WIRE)--Feb 10, 2020--

Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the fourth quarter and full year ended December 31, 2019.

“Fourth quarter revenue grew 9% sequentially to a new record of $1.18 billion,” said Steve Kelley, Amkor’s president and chief executive officer. “Strong demand for advanced packages in the mobile and consumer markets drove revenue above the high end of expectations.”

“Gross margin and EPS were also well above the high end of guidance due to record revenue,” said Megan Faust, Amkor’s executive vice president and chief financial officer. “We generated over $100 million of free cash flow while continuing to make strategic investments in advanced packaging technologies to support future growth.”

Results

Q4 2019 (1)

 

Q3 2019

 

Q4 2018 (2)

 

2019 (3)

 

2018

 

($ in millions, except per share amounts)

Net sales

$1,178

 

$1,084

 

$1,081

 

$4,053

 

$4,316

Gross margin

18.9%

 

16.8%

 

16.9%

 

16.0%

 

16.5%

Operating income

$118

 

$79

 

$75

 

$233

 

$258

Net income attributable to Amkor

$99

 

$54

 

$28

 

$121

 

$127

Earnings per diluted share

$0.41

 

$0.23

 

$0.12

 

$0.50

 

$0.53

EBITDA (4)

$244

 

$209

 

$219

 

$756

 

$837

Annual free cash flow (4)

 

 

 

 

 

 

$104

 

$120

(1) Q4 2019 net income includes a $4 million discrete income tax benefit, or $0.01 per diluted share, primarily related to changes in the valuation of certain deferred tax assets.
(2) Q4 2018 net income includes a $17 million discrete income tax charge, or $0.07 per diluted share, driven by finalizing the accounting for U.S. tax reform.
(3) Full year 2019 net income includes an $8 million charge, or $0.03 per share, related to the early redemption of $525 million of senior notes due 2022 and a net $11 million discrete income tax charge, or $0.05 per diluted share, related to changes in the valuation of certain deferred tax assets.
(4) EBITDA and free cash flow are non-GAAP measures. The reconciliations to the comparable GAAP measures are included below under “Selected Operating Data.”

At December 31, 2019, cash and cash equivalents were $895 million, and total debt was $1.45 billion.

Business Outlook

“We expect first quarter 2020 revenue to be up approximately 25% year-on-year and down about 5% sequentially.” said Kelley. “Looking forward, we are well-positioned for growth in 2020. Amkor’s value proposition - centered on technology, quality, high yields and service - is resonating with customers in our target markets.”

First quarter 2020 outlook (unless otherwise noted):

Conference Call Information

Amkor will conduct a conference call on Monday, February 10, 2020, 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 1452598). 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

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 www.amkor.com.

AMKOR TECHNOLOGY, INC.

Selected Operating Data

 

Q4 2019

 

Q3 2019

 

Q4 2018

 

2019

 

2018

Net Sales Data:

 

 

 

 

 

 

 

 

 

Net sales (in millions):

 

 

 

 

 

 

 

 

 

Advanced products (1)

$

667

 

 

$

589

 

 

$

564

 

 

$

2,111

 

 

$

2,118

 

Mainstream products (2)

511

 

 

495

 

 

517

 

 

1,942

 

 

2,198

 

Total net sales

$

1,178

 

 

$

1,084

 

 

$

1,081

 

 

$

4,053

 

 

$

4,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Packaging services

84

%

 

84

%

 

84

%

 

83

%

 

83

%

Test services

16

%

 

16

%

 

16

%

 

17

%

 

17

%

 

 

 

 

 

 

 

 

 

 

Net sales from top ten customers

65

%

 

62

%

 

61

%

 

63

%

 

62

%

 

 

 

 

 

 

 

 

 

 

End Market Distribution Data:

 

 

 

 

 

 

 

 

 

Communications (handheld devices, smartphones, tablets)

37

%

 

41

%

 

45

%

 

38

%

 

44

%

Automotive, industrial and other (driver assist, infotainment, performance, safety)

25

%

 

26

%

 

25

%

 

27

%

 

26

%

Consumer (connected home, set-top boxes, televisions, visual imaging, wearables)

24

%

 

18

%

 

12

%

 

18

%

 

12

%

Computing (datacenter, infrastructure, PC/laptops, storage)

14

%

 

15

%

 

18

%

 

17

%

 

18

%

Total

100

%

 

100

%

 

100

%

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

 

Gross Margin Data:

 

 

 

 

 

 

 

 

 

Net sales

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Cost of sales:

 

 

 

 

 

 

 

 

 

Materials

42.6

%

 

40.4

%

 

38.8

%

 

40.0

%

 

38.7

%

Labor

13.9

%

 

15.8

%

 

16.0

%

 

16.0

%

 

16.1

%

Other manufacturing

24.6

%

 

27.0

%

 

28.3

%

 

28.0

%

 

28.7

%

Gross margin

18.9

%

 

16.8

%

 

16.9

%

 

16.0

%

 

16.5

%

(1) Advanced products include flip chip and wafer-level processing and related test services
(2) 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 Measures Reconciliation:

 

 

 

 

 

 

 

 

 

 

Q4 2019

 

Q3 2019

 

Q4 2018

 

2019

 

2018

 

(in millions)

EBITDA Data:

 

 

 

 

 

 

 

 

 

Net income

$

100

 

 

$

54

 

 

$

29

 

 

$

123

 

 

$

130

 

Plus: Interest expense

17

 

 

17

 

 

18

 

 

72

 

 

79

 

Plus: Income tax expense (benefit)

1

 

 

9

 

 

29

 

 

37

 

 

56

 

Plus: Depreciation & amortization

126

 

 

129

 

 

143

 

 

524

 

 

572

 

EBITDA

$

244

 

 

$

209

 

 

$

219

 

 

$

756

 

 

$

837

 

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:

 

 

 

 

2019

 

2018

 

 

Free Cash Flow Data:

 

 

 

Net cash provided by operating activities

$

564

 

 

$

663

 

Less: Purchases of property, plant and equipment

(472

)

 

(547

)

Plus: Proceeds from sale of and insurance recovery for property, plant and equipment

12

 

 

4

 

Free cash flow

$

104

 

 

$

120

 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

For the Three Months Ended
December 31,

 

For the Year Ended
December 31,

 

2019

 

2018

 

2019

 

2018

 

(In thousands, except per share data)

Net sales

$

1,178,464

 

 

$

1,081,271

 

 

$

4,052,650

 

 

$

4,316,466

 

Cost of sales

955,480

 

 

898,901

 

 

3,403,211

 

 

3,605,901

 

Gross profit

222,984

 

 

182,370

 

 

649,439

 

 

710,565

 

Selling, general and administrative

71,828

 

 

69,353

 

 

281,933

 

 

295,239

 

Research and development

32,771

 

 

37,636

 

 

137,638

 

 

157,182

 

Gain on sale of real estate

 

 

 

 

(3,302

)

 

 

Total operating expenses

104,599

 

 

106,989

 

 

416,269

 

 

452,421

 

Operating income

118,385

 

 

75,381

 

 

233,170

 

 

258,144

 

Interest expense

16,673

 

 

18,038

 

 

71,587

 

 

78,946

 

Other (income) expense, net

1,132

 

 

(363

)

 

1,773

 

 

(6,617

)

Total other expense, net

17,805

 

 

17,675

 

 

73,360

 

 

72,329

 

Income before taxes

100,580

 

 

57,706

 

 

159,810

 

 

185,815

 

Income tax expense

764

 

 

28,812

 

 

37,182

 

 

56,250

 

Net income

99,816

 

 

28,894

 

 

122,628

 

 

129,565

 

Net income attributable to noncontrolling interests

(669

)

 

(599

)

 

(1,740

)

 

(2,473

)

Net income attributable to Amkor

$

99,147

 

 

$

28,295

 

 

$

120,888

 

 

$

127,092

 

 

 

 

 

 

 

 

 

Net income attributable to Amkor per common share:

 

 

 

 

 

 

 

Basic

$

0.41

 

 

$

0.12

 

 

$

0.50

 

 

$

0.53

 

Diluted

$

0.41

 

 

$

0.12

 

 

$

0.50

 

 

$

0.53

 

Shares used in computing per common share amounts:

 

 

 

 

 

 

 

Basic

240,384

 

 

239,378

 

 

239,725

 

 

239,329

 

Diluted

241,146

239,596

240,122

239,741

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

December 31,

 

2019

 

2018

 

(In thousands)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

894,948

 

 

$

681,569

 

Restricted cash

610

 

 

2,589

 

Accounts receivable, net of allowances

850,753

 

 

724,456

 

Inventories

220,602

 

 

230,589

 

Other current assets

34,620

 

 

32,005

 

Total current assets

2,001,533

 

 

1,671,208

 

Property, plant and equipment, net

2,404,850

 

 

2,650,448

 

Operating lease right of use assets *

148,549

 

 

 

Goodwill

25,976

 

 

25,720

 

Restricted cash

2,974

 

 

3,893

 

Other assets

111,733

 

 

144,178

 

Total assets

$

4,695,615

 

 

$

4,495,447

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Short-term borrowings and current portion of long-term debt

$

144,479

 

 

$

114,579

 

Trade accounts payable

571,054

 

 

530,398

 

Capital expenditures payable

77,044

 

 

255,237

 

Accrued expenses

267,226

 

 

258,209

 

Total current liabilities

1,059,803

 

 

1,158,423

 

Long-term debt

1,305,755

 

 

1,217,732

 

Pension and severance obligations

176,971

 

 

184,321

 

Long-term operating lease liabilities *

91,107

 

 

 

Other non-current liabilities

71,740

 

 

79,071

 

Total liabilities

2,705,376

 

 

2,639,547

 

 

 

 

 

Amkor stockholders’ equity:

 

 

 

Preferred stock

 

 

 

Common stock

287

 

 

285

 

Additional paid-in capital

1,927,739

 

 

1,909,425

 

Retained earnings

234,077

 

 

113,189

 

Accumulated other comprehensive income

19,115

 

 

23,812

 

Treasury stock

(217,479

)

 

(216,171

)

Total Amkor stockholders’ equity

1,963,739

 

 

1,830,540

 

Noncontrolling interests in subsidiaries

26,500

 

 

25,360

 

Total equity

1,990,239

 

 

1,855,900

 

Total liabilities and equity

$

4,695,615

 

 

$

4,495,447

 

* Effective January 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). Upon adoption, we recorded a right-of-use asset and lease liability on our balance sheet. Prior period financial statements were not required to be adjusted for the effects of this new standard.

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Year Ended December 31,

 

2019

 

2018

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net income

$

122,628

 

 

$

129,565

 

Depreciation and amortization

524,177

 

 

571,961

 

Gain on sale of real estate

(3,302

)

 

 

Deferred income taxes

25,931

 

 

(13,110

)

Other operating activities and non-cash items

20,306

 

 

15,518

 

Changes in assets and liabilities

(125,890

)

 

(40,524

)

Net cash provided by operating activities

563,850

 

 

663,410

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Payments for property, plant and equipment

(472,433

)

 

(547,122

)

Proceeds from sale of property, plant and equipment

10,117

 

 

2,841

 

Proceeds from insurance recovery for property, plant and equipment

1,538

 

 

1,371

 

Proceeds from foreign exchange forward contracts

13,550

 

 

6,754

 

Payments for foreign exchange forward contracts

(15,593

)

 

(5,864

)

Other investing activities

332

 

 

4,637

 

Net cash used in investing activities

(462,489

)

 

(537,383

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Proceeds from revolving credit facilities

272,700

 

 

 

Payments of revolving credit facilities

(272,700

)

 

(75,000

)

Proceeds from short-term debt

51,434

 

 

23,341

 

Payments of short-term debt

(52,635

)

 

(46,631

)

Proceeds from issuance of long-term debt

975,575

 

 

596,226

 

Payments of long-term debt

(862,927

)

 

(535,738

)

Payments for debt issuance costs

(7,027

)

 

(3,796

)

Payments of finance lease obligations

(6,574

)

 

(3,930

)

Proceeds from issuance of stock through share-based compensation plans

11,405

 

 

1,050

 

Other financing activities

(1,001

)

 

3,855

 

Net cash provided by (used in) financing activities

108,250

 

 

(40,623

)

 

 

 

 

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

870

 

 

(204

)

 

 

 

 

Net increase in cash, cash equivalents and restricted cash

210,481

 

 

85,200

 

Cash, cash equivalents and restricted cash, beginning of period

688,051

 

 

602,851

 

Cash, cash equivalents and restricted cash, end of period

$

898,532

 

 

$

688,051

  

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:

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, 2018 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 except as may be required by law.

View source version on businesswire.com:https://www.businesswire.com/news/home/20200210005776/en/

CONTACT: Amkor Technology, Inc.Vincent Keenan

Vice President, Investor Relations

480-786-7594

vincent.keenan@amkor.com

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: TECHNOLOGY PACKAGING SEMICONDUCTOR MANUFACTURING

SOURCE: Amkor Technology, Inc.

Copyright Business Wire 2020.

PUB: 02/10/2020 04:02 PM/DISC: 02/10/2020 04:02 PM

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