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Amkor Technology Reports Financial Results for the Third Quarter 2018

Third Quarter Highlights

TEMPE, Ariz. — (BUSINESS WIRE) — October 29, 2018 — Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the third quarter ended September 30, 2018.

"Third quarter revenue grew 7% sequentially, reflecting strength in mobile communications," said Steve Kelley, Amkor's CEO.

Results   Q3 2018   Q2 2018   Q3 2017
  ($ in millions, except per share data)
Net sales $1,144   $1,066   $1,149
Gross margin 17.5% 15.9% 19.5%
Net income attributable to Amkor $57 $33 $59
Earnings per diluted share $0.24 $0.14 $0.25
EBITDA1 $235 $208 $251

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

"Better than expected gross profit and EPS were driven primarily by improved operating leverage," said Megan Faust, Amkor’s CFO. "We also completed a debt refinancing which will generate annual interest savings of approximately $11 million."

Business Outlook

Fourth quarter 2018 outlook (unless otherwise noted):

Conference Call Information

Amkor will conduct a conference call on Monday, October 29, 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 8196238). 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

 

     
Q3 2018 Q2 2018 Q3 2017
Net Sales Data:
Net sales (in millions):
Advanced products* $ 582 $ 496 $ 563
Mainstream products** 562   570   586  
Total net sales $ 1,144   $ 1,066   $ 1,149  
 
Packaging services 84 % 83 % 82 %
Test services 16 % 17 % 18 %
 
Net sales from top ten customers 62 % 65 % 67 %
 
End Market Data:
Communications (smartphones, tablets, handheld devices) 47 % 42 % 46 %
Automotive, industrial and other (driver assist, infotainment, safety, performance) 25 % 26 % 24 %
Computing (datacenter, infrastructure, PC/laptop, storage) 17 % 19 % 17 %
Consumer (set-top boxes, televisions, connected home, personal electronics, visual imaging) 11 % 13 % 13 %
Total 100 % 100 % 100 %
 
Gross Margin Data:
Net sales 100.0 % 100.0 % 100.0 %
Cost of sales:
Materials 40.3 % 38.9 % 36.9 %
Labor 15.1 % 16.0 % 15.1 %
Other manufacturing 27.1 % 29.2 % 28.5 %
Gross margin 17.5 % 15.9 % 19.5 %

* Advanced products include flip chip and wafer-level processing and related test services
** Mainstream products include wirebond packaging and related test services

AMKOR TECHNOLOGY, INC.
Selected Operating Data

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:      
Q3 2018 Q2 2018 Q3 2017
(in millions)
EBITDA Data:
Net income $ 57 $ 33 $ 60
Plus: Interest expense 20 21 21
Plus: Income tax expense 14 11 21
Plus: Depreciation & amortization 144   143   149
EBITDA $ 235   $ 208   $ 251
 
 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 

   
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2018   2017* 2018   2017*
(In thousands, except per share data)
Net sales $ 1,144,192 $ 1,148,884 $ 3,235,195 $ 3,056,553
Cost of sales 943,485   924,996   2,707,000   2,519,815  
Gross profit 200,707   223,888   528,195   536,738  
Selling, general and administrative 70,463 75,568 225,886 219,635
Research and development 37,541 42,841 119,546 128,690
Gain on sale of real estate       (108,109 )
Total operating expenses 108,004   118,409   345,432   240,216  
Operating income 92,703 105,479 182,763 296,522
Interest expense 19,770 20,321 60,908 63,733
Interest expense, related party 180 1,715
Other (income) expense, net 1,315   3,257   (6,254 ) 11,150  
Total other expense, net 21,085   23,758   54,654   76,598  
Income before taxes 71,618 81,721 128,109 219,924
Income tax expense 14,326   21,263   27,438   53,404  
Net income 57,292 60,458 100,671 166,520
Net income attributable to non-controlling interests (630 ) (1,194 ) (1,874 ) (3,029 )
Net income attributable to Amkor $ 56,662   $ 59,264   $ 98,797   $ 163,491  
 
Net income attributable to Amkor per common share:
Basic $ 0.24   $ 0.25   $ 0.41   $ 0.68  
Diluted $ 0.24   $ 0.25   $ 0.41   $ 0.68  
 
Shares used in computing per common share amounts:
Basic 239,370 239,068 239,312 238,873
Diluted 239,766 239,640 239,783 239,610

* 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.

 
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
September 30,
2018
December 31,
2017
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 547,665 $ 596,364
Restricted cash 2,559 2,000
Accounts receivable, net of allowances 797,678 798,264
Inventories 228,108 213,649
Other current assets 35,226   33,727  
Total current assets 1,611,236 1,644,004
Property, plant and equipment, net 2,714,084 2,695,065
Goodwill 24,813 25,036
Restricted cash 3,896 4,487
Other assets 141,440   139,796  
Total assets $ 4,495,469   $ 4,508,388  
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt $ 97,646 $ 123,848
Trade accounts payable 548,864 569,085
Capital expenditures payable 253,756 294,258
Accrued expenses 271,067   330,868  
Total current liabilities 1,171,333 1,318,059
Long-term debt 1,267,992 1,240,581
Pension and severance obligations 179,900 182,216
Other non-current liabilities 54,403   47,823  
Total liabilities 2,673,628   2,788,679  
 
Stockholders’ equity:
Preferred stock
Common stock 285 285
Additional paid-in capital 1,908,171 1,903,357
Retained earnings (accumulated deficit) 84,894 (13,903 )
Accumulated other comprehensive income (loss) 19,729 22,519
Treasury stock (216,135 ) (215,982 )
Total Amkor stockholders’ equity 1,796,944 1,696,276
Non-controlling interests in subsidiaries 24,897   23,433  
Total equity 1,821,841   1,719,709  
Total liabilities and equity $ 4,495,469   $ 4,508,388  
 
 
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Nine Months Ended September 30,
2018   2017
(In thousands)
Cash flows from operating activities:
Net income $ 100,671 $ 166,520
Depreciation and amortization 429,181 435,667
Gain on sale of real estate (108,109 )
Other operating activities and non-cash items (2,006 ) (8,124 )
Changes in assets and liabilities (100,628 ) (72,043 )
Net cash provided by operating activities 427,218   413,911  
Cash flows from investing activities:
Payments for property, plant and equipment (478,036 ) (413,974 )
Proceeds from sale of property, plant and equipment 1,606 133,320
Acquisition of business, net of cash acquired (43,771 )
Other investing activities 3,160   (1,600 )
Net cash used in investing activities (473,270 ) (326,025 )
Cash flows from financing activities:
Proceeds from revolving credit facilities 75,000
Payments of revolving credit facilities (75,000 )
Proceeds from short-term debt 23,341 50,333
Payments of short-term debt (35,125 ) (52,068 )
Proceeds from issuance of long-term debt 372,226 223,976
Payments of long-term debt (279,697 ) (398,755 )
Payments of long-term debt, related party (17,837 )
Payment of deferred consideration for purchase of facility (3,890 )
Payments of capital lease obligations (2,669 ) (4,123 )
Other financing activities (2,482 ) 425  
Net cash provided by (used in) financing activities 594   (126,939 )
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash (3,273 ) 9,231  
Net decrease in cash, cash equivalents and restricted cash (48,731 ) (29,822 )
Cash, cash equivalents and restricted cash, beginning of period 602,851   555,495  
Cash, cash equivalents and restricted cash, end of period $ 554,120   $ 525,673  
 

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, without limitation, statements regarding the interest savings generated by a debt refinancing, and 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, 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.



Contact:

Amkor Technology, Inc.
Chris Chaney
Vice President, Investor Relations
480-786-7594
Email Contact