TowerJazz Reports Increase in Revenue, EBITDA and Net Profit for

TowerJazz Reports Increase in Revenue, EBITDA and Net Profit for the First Quarter of 2016

MIGDAL HAEMEK, Israel, May 09, 2016 (GLOBE NEWSWIRE) -- TowerJazz (NASDAQ:TSEM) (TASE:TSEM) today reported results for the first quarter of 2016 ended March 31, 2016.

2016 First Quarter Financial Highlights

Record revenues of $278 million, representing 23% year over year growth and 9% quarter over quarter growth;
Net profit of $66 million, including net gain from acquisition of the San Antonio facility of $41 million;
- Excluding such gain, net profit is $25 million, as compared with $22 million in the previous quarter, representing 12% quarter over quarter growth;
Record EBITDA of $78 million, up 51% year-over-year;
Cash from operations of $77 million with free cash flow of $20 million, including $15 million of customer prepayments used for capacity expansion;
Cash and short-term deposits balance of $245 million as of March 31, 2016, compared to $206 million as of December 31, 2015;
Completed San Antonito fab acquisition from Maxim in February 2016;
Strong second quarter revenue guidance with mid-range of $300 million, representing 27% year over year and 8% quarter over quarter growth.

2016 First Quarter Results Overview
Revenues for the 2016 first quarter were a record $278 million, reflecting 23% growth as compared with the first quarter of 2015 and 9% higher than the previous quarter.

Gross profit for the first quarter of 2016 was $61 million as compared with $33 million gross profit in the first quarter of 2015, and with $65 million gross profit in the immediately preceding quarter. Operating profit was $31 million for the first quarter of 2016, as compared with $2 million reported in the first quarter of 2015 and $34 million operating profit in the immediately preceding quarter. EBITDA for the first quarter totaled $78 million. This represents a 51% increase as compared with $51 million EBITDA in the first quarter of 2015 and represents an increase from $76 million EBITDA in the immediately preceding quarter.

Net profit for the first quarter of 2016 was $66 million, or $0.78 in basic earnings per share, as compared with $22 million or $0.28 per share in the immediately preceding quarter and compared with a loss of $73 million or $1.15 basic loss per share in the first quarter of 2015, which was primarily due to non-cash financing expenses resulting from the successful accelerated conversion of Series F debenture.

The $66 million net profit recorded for the first quarter of 2016 includes $41 million net gain from acquisition. The gain from acquisition, net is a result of the fair value assigned to the assets and liabilities of the San Antonio fab, which are provisional. Based on ASC-805 “Business Combinations”, we are required to reflect the purchase price allocation immediately following acquisition date and complete it in a period not exceeding one year. The fair value of the assets acquired, net of liabilities, in the amount of $81 million, exceeded the $40 million purchase price by $41 million, thereby creating a net gain from acquisition. In accordance with GAAP, the final valuation values may vary from the provisional valuation performed during the first quarter of 2016, which could result in adjustments to the net acquisition gain, to be recorded during 2016, if any. Net profit for the quarter, excluding the net gain from acquisition is $25 million, representing 12% quarter over quarter increase.

The Company also provides financial information in this release, which it refers to as “adjusted financial measures” and is described and reconciled in the tables below, such as adjusted net profit for the first quarter of 2016 which was $32 million, as compared with adjusted net profit of $26 million in the immediately preceding quarter and $8 million adjusted net loss for the first quarter of 2015.

Cash and short-term deposits balance as of March 31, 2016 was $245 million, as compared with $206 million as of December 31, 2015. During the first quarter of 2016, the Company generated $77 million cash from operations (or $81 million excluding interest payment) and invested $57 million in fixed assets, resulting in $20 million positive free cash flow, which includes $15 million of customer prepayment used for capacity expansion.

Shareholders' equity as of March 31, 2016 was $504 million, an increase of 73% as compared with $292 million as of March 31, 2015 and an increase of 31% as compared with $386 million as of December 31, 2015. Net debt amounted to $65 million as of March 31, 2016, as compared with net debt of $162 million as of March 31, 2015 and $105 million as of December 31, 2015.

Business Outlook
TowerJazz expects revenues for the second quarter of 2016 ending June 30, 2016 to be $300 million, with an upward or downward range of 5%, representing approximately 27% year over year revenue growth as compared with the second quarter of 2015 and 8% growth as compared with the first quarter of 2016.

CEO Comments
Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “We are pleased with our first quarter financial results; continued revenue and EBITDA growth above previous records. During the quarter, we completed the acquisition of the San Antonio factory, a key strategic move, increasing our business relationship with Maxim while providing additional capacity in close proximity to our large US customer base. We have already qualified and taped-out multiple RF flows for key customers that will provide revenues in the fourth quarter this year and a strong ramp through 2017.”

Ellwanger concluded, “Based upon customers’ demand, organic capacity increases and strong assurance of revenue growth within our Japanese factories, we expect significant performance in 2016, top and bottom lines.”

Debt Refinancing
During 2015, the Company reduced its net debt from $318 million to $105 million. The Company is currently exploring opportunities to replace its existing Israeli banks’ facility agreements totaling $78 million with a new series of long term un-secured straight bonds which would further strengthen its balance sheet and provide better financial and business flexibility by removing the bank contract’s extensive restrictions and covenants. For this purpose, the Company is filing a shelf prospectus to replace its recently expired 2013 shelf prospectus and is targeting to issue long term straight bonds, for which it recently received an “A” rating from Standard & Poor’s Maalot (a rating company which is fully owned by S&P Global Ratings). The long term bonds would be non-convertible, un-secured and enable the Company greater financial and business flexibility. The documentation to this extent will be filed subject to the prospectus approval process by the Tel Aviv Stock Exchange and the Israeli Securities Authority.

Teleconference and Webcast
TowerJazz will host an investor conference call today, May 09, 2016, at 10:00 a.m. Eastern time (9:00 a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time and 5:00 p.m. Israel time) to discuss the Company’s financial results for the first quarter 2016 and its second quarter 2016 outlook.

This call will be webcast and can be accessed via TowerJazz’s website at www.towerjazz.com, or by calling: 1-888-407-2553 (U.S. Toll-Free), 03-918-0610 (Israel), +972-3-918-0610 (International). For those who are not available to listen to the live broadcast, the call will be archived for 90 days.

The Company presents its financial statements in accordance with U.S. GAAP. Some of the financial information in this release, including in the financial tables below, which we refer to in this release as “adjusted financial measures” are non-GAAP financial measures as defined in Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission as they apply to our Company. These adjusted financial measures are calculated excluding one or more of the following: (1) amortization of acquired intangible assets; (2) compensation expenses in respect of equity grants to directors, officers and employees; (3) gain from acquisition, net, (4) other non-cash financing expense, net associated with Bonds Series F accelerated conversion; and (5) other non-recurring items such as acquisition related costs, non-recurring tax items and Nishiwaki Fab restructuring costs and impairment. These adjusted financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the adjusted financial measures as well as reconciliation between the adjusted financial measures and the comparable GAAP financial measures. As used in this release, the term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists of profit or loss, according to U.S. GAAP, excluding Nishiwaki Fab restructuring costs and impairment, gain from acquisition, net, acquisition related costs, interest and other financing expenses (net), taxes, non-controlling interest, depreciation and amortization and stock based compensation expenses. EBITDA is reconciled in the tables below from GAAP operating profit. EBITDA is not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies . EBITDA and the adjusted financial information presented herein should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. Net debt, as presented in this release, is comprised of the outstanding principal amount of banks’ loans (in the amounts of approximately $245 million, $246 million and $192 million as of March 31, 2016, December 31, 2015 and March 31, 2015respectively) and the outstanding principal amount of debentures (in the amounts of approximately $65 million, $65 million, and $104 million as of March 31, 2016, December 31, 2015 and March 31, 2015, respectively), less cash and deposits (in the amounts of approximately $245 million, $206 million, and $134 million as of March 31, 2016, December 31, 2015 and March 31, 2015, respectively).

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