Amkor Technology Reports Financial Results for the First Quarter

Amkor Technology Reports Financial Results for the First Quarter 2020

Second quarter 2020 outlook (unless otherwise noted):

Net sales of $1.0 billion to $1.1 billion
Gross margin of 9.5% to 13.5%
Net income of ($32) million to $19 million, or ($0.13) to $0.08 per diluted share
Full year 2020 capital expenditures of approximately $550 million

Conference Call Information

Amkor will conduct a conference call on Monday, April 27, 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 3086586). 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 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 2020			Q4 2019			Q1 2019
Net Sales Data:
Net sales (in millions):
Advanced products (1)	$	705		$	667		$	422
Mainstream products (2)	448			511			473
Total net sales	$	1,153		$	1,178		$	895

Packaging services	85		%	84		%	82		%
Test services	15		%	16		%	18		%

Net sales from top ten customers	67		%	65		%	66		%

End Market Data:
Communications (handheld devices, smartphones, tablets)	38		%	37		%	38		%
Consumer (connected home, set-top boxes, televisions, visual imaging, wearables)	24		%	24		%	14		%
Automotive, industrial and other (driver assist, infotainment, performance, safety)	23		%	25		%	28		%
Computing (datacenter, infrastructure, PC/laptop, storage)	15		%	14		%	20		%
Total	100		%	100		%	100		%

Gross Margin Data:
Net sales	100.0		%	100.0		%	100.0		%
Cost of sales:
Materials	45.3		%	42.6		%	38.0		%
Labor	14.2		%	13.9		%	17.4		%
Other manufacturing	24.1		%	24.6		%	31.1		%
Gross margin	16.4		%	18.9		%	13.5		%

(1) Advanced products include flip chip and wafer-level processing and related test services
(2) Mainstream products include wirebond packaging and related test services

AMKOR TECHNOLOGY, INC. Selected Operating Data

In this press release, 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 2020		Q4 2019		Q1 2019
	(in millions)
EBITDA Data:
Net income	$	64	$	100	$	(23	)
Plus: Interest expense	17		17		19
Plus: Income tax expense	5		1		21
Plus: Depreciation & amortization	124		126		136
EBITDA	$	210	$	244	$	153

AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	For the Three Months Ended March 31,
	2020			2019
	(In thousands, except per share data)
Net sales	$	1,152,616		$	894,964
Cost of sales	963,708			774,203
Gross profit	188,908			120,761
Selling, general and administrative	72,582			71,587
Research and development	32,253			35,754
Total operating expenses	104,835			107,341
Operating income	84,073			13,420
Interest expense	17,045			19,273
Other (income) expense, net	(2,315		)	(4,565		)
Total other expense, net	14,730			14,708
Income (loss) before taxes	69,343			(1,288		)
Income tax expense	4,846			21,380
Net income (loss)	64,497			(22,668		)
Net income attributable to non-controlling interests	(608		)	(211		)
Net income (loss) attributable to Amkor	$	63,889		$	(22,879	)

Net income (loss) attributable to Amkor per common share:
Basic	$	0.27		$	(0.10	)
Diluted	$	0.26		$	(0.10	)

Shares used in computing per common share amounts:
Basic	240,919			239,414
Diluted	241,333			239,414

AMKOR TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)

	March 31, 2020			December 31, 2019
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	941,447		$	894,948
Restricted cash	610			610
Short-term investments	58,263			6,348
Accounts receivable, net of allowances	880,629			850,753
Inventories	238,201			220,602
Other current assets	34,553			28,272
Total current assets	2,153,703			2,001,533
Property, plant and equipment, net	2,367,746			2,404,850
Operating lease right of use assets	147,985			148,549
Goodwill	26,235			25,976
Restricted cash	3,267			2,974
Other assets	112,701			111,733
Total assets	$	4,811,637		$	4,695,615
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	141,521		$	144,479
Trade accounts payable	562,633			571,054
Capital expenditures payable	107,131			77,044
Accrued expenses	236,464			267,226
Total current liabilities	1,047,749			1,059,803
Long-term debt	1,371,501			1,305,755
Pension and severance obligations	178,084			176,971
Long-term operating lease liabilities	89,733			91,107
Other non-current liabilities	65,945			71,740
Total liabilities	2,753,012			2,705,376

Stockholders’ equity:
Preferred stock	—			—
Common stock	287			287
Additional paid-in capital	1,931,088			1,927,739
Retained earnings	297,966			234,077
Accumulated other comprehensive income (loss)	19,709			19,115
Treasury stock	(217,533		)	(217,479		)
Total Amkor stockholders’ equity	2,031,517			1,963,739
Non-controlling interests in subsidiaries	27,108			26,500
Total equity	2,058,625			1,990,239
Total liabilities and equity	$	4,811,637		$	4,695,615

AMKOR TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	For the Three Months Ended March 31,
	2020			2019
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	64,497		$	(22,668	)
Depreciation and amortization	123,657			135,835
Other operating activities and non-cash items	8,287			15,928
Changes in assets and liabilities	(99,852		)	(77,038		)
Net cash provided by operating activities	96,589			52,057
Cash flows from investing activities:
Payments for property, plant and equipment	(55,888		)	(203,216		)
Proceeds from sale of property, plant and equipment	1,887			180
Proceeds from insurance recovery for property, plant and equipment	—			1,538
Payments for short-term investments	(55,754		)	—
Other investing activities	5,163			(569		)
Net cash used in investing activities	(104,592		)	(202,067		)
Cash flows from financing activities:
Proceeds from revolving credit facilities	201,000			—
Proceeds from short-term debt	14,086			29,781
Payments of short-term debt	(9,409		)	(10,588		)
Proceeds from issuance of long-term debt	24,000			572,375
Payments of long-term debt	(172,336		)	(63,636		)
Payments of finance lease obligations	(2,355		)	(1,376		)
Other financing activities	109			(2,848		)
Net cash provided by financing activities	55,095			523,708
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash	(300		)	(829		)
Net increase in cash, cash equivalents and restricted cash	46,792			372,869
Cash, cash equivalents and restricted cash, beginning of period	898,532			688,051
Cash, cash equivalents and restricted cash, end of period	$	945,324		$	1,060,920

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