Tower Semiconductor Reports Record Revenues and Strong Margins

Tower Semiconductor Reports Record Revenues and Strong Margins Growth

Third quarter 2021 with 25% total and 40% organic year over year revenue growth

Further Expansion Guided for Fourth Quarter Indicating over $1.6 Billion Annual Revenue Run Rate

MIGDAL HAEMEK, Israel, Nov. 08, 2021 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the third quarter ended September 30, 2021.

Highlights

Third quarter revenue of $387 million, reflecting another quarter of record revenue for the company, with year over year 40% organic growth and 25% total growth.
Significant year over year (YoY) and quarter over quarter (QoQ) dollar increases in gross profit (60% YoY, 16% QoQ), operating profit (131% YoY, 30% QoQ), and net profit (157% YoY, 27% QoQ).
Record cash from operations of $107 million for the third quarter, demonstrating significant year over year growth of 56% and 15% quarter over quarter, with record shareholders’ equity as of September 30, 2021.
Net profit of $39 million for the third quarter, resulting in $0.36 basic and diluted earnings per share and adjusted net profit of $45 million, resulting in adjusted basic and diluted earnings per share of $0.42 and $0.41, respectively.
Guides mid-range revenue for 2021 fourth quarter of $410 million, demonstrating fourth quarter year over year 19% total growth and 26% organic growth.

Mr. Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, stated: “We are pleased that our strong business planning, followed by our operational execution on capacity expansion initiatives enable us to benefit from current market conditions and to have multiple corridors for revenue and margins increases for the next years. We have strong assurance of growth continuity due to the specific high value markets we chose to participate in, where we have strong customer relationships and mutual market positioning.”

Ellwanger further commented: “We guided to end 2021 breaking $1.5 billion revenue with a fourth quarter annualized run rate greater than $1.6 billion, as compared to a $1.27 billion 2020 revenue. Our initiatives on capacity growth with a richer capability mix, combined with certain pricing initiatives, target more than 15% net profit margins in 2022. Our long-term forecast is very positive, indicating continuous growth for the foreseeable years.”

Third Quarter of 2021 Results Overview

Revenue for the third quarter of 2021 was $387 million, the highest quarterly revenue in the Company’s history, as compared to $310 million in the third quarter of 2020, reflecting 25% year over year growth. Organic revenue for the third quarter of 2021, defined as total revenue excluding revenues from Nuvoton in the Japanese fabs and from Maxim in the San Antonio fab, grew by 40% year over year.

Gross profit for the third quarter of 2021 was $85 million, 60% higher than $53 million recorded in the third quarter of 2020 and 16% higher than $74 million recorded in the second quarter of 2021.

Operating profit for the third quarter of 2021 was $44 million, more than double the $19 million recorded in the third quarter of 2020 and 30% higher than $34 million recorded in the second quarter of 2021.

Net profit for the third quarter of 2021 was $39 million, or $0.36 basic and diluted earnings per share, more than double the net profit of $15 million or $0.14 basic and diluted earnings per share recorded in the third quarter of 2020. This net profit of $39 million is 27% higher than $31 million recorded in the second quarter of 2021, which represented $0.29 basic earnings per share and $0.28 diluted earnings per share.

Adjusted Net profit for the third quarter of 2021 was $45 million (as reconciled in the tables below), resulting in adjusted basic and diluted earnings per share of $0.42 and $0.41, respectively, as compared to adjusted basic and diluted earnings per share of $0.18 and $0.18, respectively for the third quarter of 2020, and as compared to adjusted basic and diluted earnings per share of $0.35 and $0.34, respectively for the second quarter of 2021.

Cash flow generated from operating activities in the third quarter of 2021 was $107 million with investment in fixed assets of $88 million, net. In addition, in the third quarter of 2021, the company repaid $29 million of its debt.

Business Outlook
Tower Semiconductor guides revenue for the fourth quarter of 2021 to be $410 million, with an upward or downward range of 5%. Mid-range revenue guidance represents fourth quarter year over year 19% total growth and 26% organic growth.

Teleconference and Webcast
Tower Semiconductor will host an investor conference call today, Monday, November 8, 2021, 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 third quarter of 2021 and its outlook.

This call will be webcast and can be accessed via Tower Semiconductor’s website at www.towersemi.com or by calling 1-888-642-5032 (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 on Tower Semiconductor’s website for 90 days.

The Company presents its financial statements in accordance with U.S. GAAP. The financial information included in the tables below includes unaudited condensed financial data. Some of the financial information in this release and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, which we describe 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 both of the following: (1) amortization of acquired intangible assets and (2) compensation expenses in respect of equity grants to directors, officers, and employees. 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 a reconciliation between the adjusted financial measures and the comparable GAAP financial measures. As used and/ or presented in this release and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, as well as calculated in the tables herein, the term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists of net profit in accordance with GAAP, excluding financing and other income (expense), net, taxes, non-controlling interest, depreciation and amortization expense and stock-based compensation expense. 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 and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, 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. The term Net Cash, as used and/ or presented in this release and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, is comprised of cash, cash equivalents, short-term deposits and marketable securities less debt amounts as presented in the balance sheets included herein. The term Net Cash is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for cash, debt, 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. The term Free Cash Flow, as used and/ or presented in this release and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, is calculated to be net cash provided by operating activities (in the amounts of $107 million, $93 million and $69 million for the three months periods ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively) less cash used for investments in property and equipment, net (in the amounts of $88 million, $56 million and $67 million for the three months periods ended September 30, 2021, June 30, 2021 and September 30, 2020 , respectively) . The term Free Cash Flow is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and 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.

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