MIGDAL HAEMEK, Israel, July 29, 2020 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reported today its results for the second quarter ended June 30, 2020.

Second Quarter Results Overview

Revenues, gross profit and operating profit for the second quarter of 2020 demonstrated quarter over quarter and year over year growth at $310 million revenues as compared to $300 million and $306 million; gross profit at $58 million, as compared to $53 million and $53 million; and operating profit at $22 million, as compared to $16 million and $18 million, for the first quarter of 2020 and the second quarter of 2019, respectively.

Net profit for the second quarter of 2020 was $19 million, or $0.18 basic and diluted earnings per share, as compared to net profit of $17 million or $0.16 basic and diluted earnings per share in the prior quarter, and $21 million or $0.20 basic and diluted earnings per share in the second quarter of 2019.

Cash flow generated from operations in the second quarter of 2020 was $67 million with investment in fixed assets, net of $63 million that included payments related to the 300mm facility capacity expansion program. In the second quarter of 2020, the company repaid $5 million of its debt. 

Business Outlook
Tower Semiconductor expects revenues for the third quarter of 2020 to be $320 million, with an upward or downward range of 5%, demonstrating quarter over quarter and year over year growth.

Mr. Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, commented: “Entering the second half of 2020, we are pleased that in the midst of certain market pullbacks, we continue to guide quarter over quarter and year over year growth. This is strong affirmation of our offerings, our increasing market share in RF SOI, and the high value our customers assign to our SiGe platform enablers. Our expansion into additional served markets for power management is well received, which business is seeing significant growth this year. Strengthening our diversification through entering newly served market applications and increased market share has enabled notable performance in this challenging environment.”

Ellwanger further commented: “We are motivated with the degree of customer interaction and acceptance of our recent developments, namely in advanced SiPho, very high-speed silicon germanium, the entire BSI and stacked wafer sensor offerings, as well as our newly served markets in display. These activities, in addition to our present strong and growing core business, back our confidence in our strategy and roadmap, and will be additionally accretive when all end markets revive to previous patterns.”

Teleconference and Webcast
Tower Semiconductor will host an investor conference call today, Wednesday, July 29, 2020, 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 second quarter of 2020 and its outlook.

This call will be webcast and can be accessed via Tower Semiconductor’s website at www.towersemi.com or by calling 1-888-668-9141 (U.S. Toll-Free), 03-918-0609 (Israel), +972-3-918-0609 (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 $67 million, $68 million and $72 million for the three months periods ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively) less cash used  for investments in property and equipment, net (in the amounts of $63 million, $63 million and $44 million for the three months periods ended June 30, 2020, March 31, 2020 and June 30, 2019, 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.

About Tower Semiconductor
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), the leader in high-value analog semiconductor foundry solutions, provides technology and manufacturing platforms for integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating positive and sustainable impact on the world through long term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as Transfer Optimization and development Process Services (TOPS) to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor operates two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm) and three facilities in Japan (two 200mm and one 300mm) through TPSCo. For more information, please visit www.towersemi.com.

CONTACTS:
Noit Levy | Investor Relations | +972 74 737 7556 | noitle@towersemi.com

This press release includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements and you should not place any undue reliance on such forward-looking statements. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) demand in our customers’ end markets; (ii) over demand for our foundry services and/or products that exceeds our capacity; (iii) maintaining existing customers and attracting additional customers, (iv) high utilization and its effect on cycle time, yield and on schedule delivery which may cause customers to transfer their product(s) to other fabs, (v) operating results fluctuate from quarter to quarter making it difficult to predict future performance, (vi) impact of our debt and other liabilities on our financial position and operations, (vii) our ability to successfully execute acquisitions, integrate them into our business, utilize our expanded capacity and find new business, (viii) fluctuations in cash flow, (ix) our ability to satisfy the covenants stipulated in our agreements with our lender banks and bondholders (as of June 30, 2020 we are in compliance with all such covenants included in our banks’ agreements, bond G indenture and others), (x) pending litigation, (xi) new customer engagements, qualification and production ramp-up at our facilities, including TPSCo and the San Antonio facility, (xii) meeting the conditions set in the approval certificates received from the Israeli Investment Center under which we received a significant amount of grants in past years, (xiii) receipt of orders that are lower than the customer purchase commitments, (xiv) failure to receive orders currently expected, (xv) possible incurrence of additional indebtedness, (xvi) effect of global recession, unfavorable economic conditions and/or credit crisis, (xvii) our ability to accurately forecast financial performance, which is affected by limited order backlog and lengthy sales cycles, (xviii) possible situations of obsolete inventory if forecasted demand exceeds actual demand when we manufacture products before receipt of customer orders, (xix) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results and future average selling price erosion, (xx) the execution of debt re-financing and/or fundraising to enable the service of our debt and/or other liabilities and/or for strategic opportunities and the possible unavailability of such financing and/ or the availability of such financing in unfavorable terms , (xxi) operating our facilities at high utilization rates which is critical in order to cover a portion or all of the high level of fixed costs associated with operating a foundry, and our debt, in order to improve our results, (xxii) the purchase of equipment to increase capacity, the timely completion of the equipment installation, technology transfer and raising the funds therefor, (xxiii) the concentration of our business in the semiconductor industry, (xxiv) product returns, (xxv) our ability to maintain and develop our technology processes and services to keep pace with new technology, evolving standards, changing customer and end-user requirements, new product introductions and short product life cycles, (xxvi) competing effectively, (xxvii) use of outsourced foundry services by both fabless semiconductor companies and integrated device manufacturers; (xxviii) achieving acceptable device yields, product performance and delivery times, (xxix) our dependence on intellectual property rights of others, our ability to operate our business without infringing others’ intellectual property rights and our ability to enforce our intellectual property against infringement, (xxx) our fab3 landlord’s construction project adjacent to our fabrication facility, including possible temporary reductions or interruptions in the supply of utilities and/ or fab manufacturing, as well as claims that our noise abatement efforts are not adequate under the terms of the amended lease; (xxxi) retention of key employees and recruitment and retention of skilled qualified personnel, (xxxii) exposure to inflation, currency rates (mainly the Israeli Shekel and Japanese Yen) and interest rate fluctuations and risks associated with doing business locally and internationally, as well fluctuations in the market price of our traded securities, (xxxiii) issuance of ordinary shares as a result of conversion and/or exercise of any of our convertible securities, as well as any sale of shares by any of our shareholders, or any market expectation thereof, which may depress the market price of our ordinary shares and may impair our ability to raise future capital, (xxxiv) meeting regulatory requirements worldwide, including environmental and governmental regulations, (xxxv) potential engagement for fab establishment, joint venture and/or capital lease transactions for capacity enhancement in advanced technologies, (xxxvi) potential future effect on TPSCo and the Company due to the possible closing of Panasonic sale of PSCS (a company holding 49% of TPSCo) to Nuvoton, (xxxvii) industry and market impact due to the coronavirus and its potential impact on our business, operational continuity, supply chain, revenue and profitability; (xxxviii) potential security, cyber and privacy breaches, and (xxxix) business interruption due to fire and other natural disasters, the security situation in Israel and other events beyond our control such as power interruptions.

A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect our business is included under the heading "Risk Factors" in Tower’s most recent filings on Forms 20-F and 6-K, as were filed with the Securities and Exchange Commission (the “SEC”) and the Israel Securities Authority. Future results may differ materially from those previously reported. The Company does not intend to update, and expressly disclaims any obligation to update, the information contained in this release.

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
							June 30,		December 31,
							2020		2019
A S S E T S
	CURRENT ASSETS
		Cash and cash equivalents				$	258,793	$	355,561
		Short-term deposits					269,263		215,609
		Marketable securities					195,886		176,070
		Trade accounts receivable					128,401		126,966
		Inventories					210,129		192,256
		Other current assets					28,158		22,019
			Total current assets				1,090,630		1,088,481
	LONG-TERM INVESTMENTS						41,219		40,085
	PROPERTY AND EQUIPMENT, NET						765,895		681,939
	GOODWILL AND INTANGIBLE ASSETS, NET						16,298		17,281
	DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET						91,834		105,047
			TOTAL ASSETS			$	2,005,876	$	1,932,833
LIABILITIES AND SHAREHOLDERS' EQUITY
	CURRENT LIABILITIES
		Short-term debt				$	79,668	$	65,932
		Trade accounts payable					154,517		119,199
		Deferred revenue and customers' advances					8,455		10,322
		Other current liabilities					68,192		57,603
			Total current liabilities				310,832		253,056
	LONG-TERM DEBT						219,764		245,821
	LONG-TERM CUSTOMERS' ADVANCES						27,570		28,196
	LONG-TERM EMPLOYEE RELATED LIABILITIES						14,970		13,285
	DEFERRED TAX AND OTHER LONG-TERM LIABILITIES						40,596		45,752
			TOTAL LIABILITIES				613,732		586,110
			TOTAL SHAREHOLDERS' EQUITY				1,392,144		1,346,723
				TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,005,876	$	1,932,833

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars and share count in thousands, except per share data)
								Three months ended
								June 30,			March 31,			June 30,
								2020			2020			2019
REVENUES							$	310,090		$	300,171		$	306,064
COST OF REVENUES								252,385			247,628			252,657
		GROSS PROFIT						57,705			52,543			53,407
OPERATING COSTS AND EXPENSES:
	Research and development							19,424			19,414			18,812
	Marketing, general and administrative							16,154			16,691			16,838
								35,578			36,105			35,650
		OPERATING PROFIT						22,127			16,438			17,757
FINANCING AND OTHER INCOME (EXPENSE), NET								1,831			(2,113	)		947
		PROFIT BEFORE INCOME TAX						23,958			14,325			18,704
INCOME TAX BENEFIT (EXPENSE), NET								(2,484	)		1,706			1,018
		PROFIT BEFORE NON CONTROLLING INTEREST						21,474			16,031			19,722
NON CONTROLLING INTEREST								(2,422	)		989			1,214
		NET PROFIT					$	19,052		$	17,020		$	20,936
BASIC EARNINGS PER SHARE							$	0.18		$	0.16		$	0.20
Weighted average number of shares								106,956			106,814			106,321
DILUTED EARNINGS PER SHARE							$	0.18		$	0.16		$	0.20
Weighted average number of shares								108,277			108,149			107,178
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
	GAAP NET PROFIT						$	19,052		$	17,020		$	20,936
		Stock based compensation						3,795			4,543			3,884
		Amortization of acquired intangible assets						493			310			494
	ADJUSTED NET PROFIT						$	23,340		$	21,873		$	25,314
ADJUSTED BASIC AND DILUTED EARNINGS PER SHARE							$	0.22		$	0.20		$	0.24

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars and share count in thousands, except per share data)
								Six months ended
								June 30,
								2020			2019
REVENUES							$	610,261		$	616,171
COST OF REVENUES								500,013			499,613
		GROSS PROFIT						110,248			116,558
OPERATING COSTS AND EXPENSES:
	Research and development							38,838			37,980
	Marketing, general and administrative							32,845			33,479
								71,683			71,459
		OPERATING PROFIT						38,565			45,099
FINANCING AND OTHER INCOME (EXPENSE), NET								(282	)		1,672
		PROFIT BEFORE INCOME TAX						38,283			46,771
INCOME TAX EXPENSE, NET								(778	)		(649	)
		PROFIT BEFORE NON CONTROLLING INTEREST						37,505			46,122
NON CONTROLLING INTEREST								(1,433	)		1,030
		NET PROFIT					$	36,072		$	47,152
BASIC EARNINGS PER SHARE							$	0.34		$	0.45
Weighted average number of shares								106,885			105,829
RECONCILIATION FROM GAAP NET PROFIT TO ADJUSTED NET PROFIT:
	GAAP NET PROFIT						$	36,072		$	47,152
		Stock based compensation						8,338			7,707
		Amortization of acquired intangible assets						803			2,135
	ADJUSTED NET PROFIT						$	45,213		$	56,994

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
RECONCILIATION FROM GAAP OPERATING PROFIT TO EBITDA (UNAUDITED)
(dollars in thousands)
EBITDA CALCULATION:
								Three months ended
								June 30,		March 31,		June 30,
								2020		2020		2019
	GAAP OPERATING PROFIT						$	22,127	$	16,438	$	17,757
		Depreciation of fixed assets						55,175		51,484		47,966
		Stock based compensation						3,795		4,543		3,884
		Amortization of acquired intangible assets						493		310		494
	EBITDA						$	81,590	$	72,775	$	70,101
								Six months ended
								June 30,		June 30,
								2020		2019
	GAAP OPERATING PROFIT						$	38,565	$	45,099
		Depreciation of fixed assets						106,659		94,007
		Stock based compensation						8,338		7,707
		Amortization of acquired intangible assets						803		2,135
	EBITDA						$	154,365	$	148,948

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED)
(dollars in thousands)
			Three months ended
			June 30,			March 31,			June 30,
			2020			2020			2019
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		$	251,348		$	355,561		$	408,098
	Net cash provided by operating activities		66,603			68,336			72,156
	Investments in property and equipment, net		(62,537	)		(62,907	)		(43,727	)
	Exercise of options		1,127			87			--
	Debt repaid, net		(5,000	)		(24,197	)		(7,475	)
	Effect of Japanese Yen exchange rate change over cash balance		682			(176	)		3,205
	Investments in short-term deposits, marketable securities and other assets, net		6,570			(85,356	)		(27,099	)
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	258,793		$	251,348		$	405,158
			Six months ended
			June 30,			June 30,
			2020			2019
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		$	355,561		$	385,091
	Net cash provided by operating activities		134,939			147,024
	Investments in property and equipment, net		(125,444	)		(85,445	)
	Exercise of options		1,214			397
	Debt repaid, net		(29,197	)		(10,549	)
	Effect of Japanese Yen exchange rate change over cash balance		506			2,465
	Investments in short-term deposits, marketable securities and other assets, net		(78,786	)		(33,825	)
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	258,793		$	405,158

TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
								Six months ended						Three months ended
								June 30,			June 30,			June 30,			March 31,			June 30,
								2020			2019			2020			2020			2019
CASH FLOWS - OPERATING ACTIVITIES
	Net profit for the period						$	37,505		$	46,122		$	21,474		$	16,031		$	19,722
	Adjustments to reconcile net profit for the period to net cash provided by operating activities:
			Income and expense items not involving cash flows:
				Depreciation and amortization				117,299			104,867			60,268			56,796			52,853
				Effect of exchange rate differences on debentures				(910	)		6,205			3,159			(4,069	)		2,204
				Other income, net				(890	)		(445	)		(876	)		(14	)		(428	)
			Changes in assets and liabilities:
				Trade accounts receivable				(1,296	)		31,271			(12,981	)		11,685			12,665
				Other assets				5,122			(5,755	)		(1,998	)		7,355			(2,050	)
				Inventories				(17,380	)		(3,017	)		(11,209	)		(6,171	)		378
				Trade accounts payable				(12,950	)		(15,204	)		(6,751	)		(6,199	)		(12,553	)
				Deferred revenue and customers' advances				(2,498	)		(13,649	)		(1,927	)		(571	)		(2,964	)
				Other current liabilities				10,729			(1,846	)		13,977			(3,248	)		2,957
				Long-term employee related liabilities				2,078			39			2,109			(31	)		(29	)
				Deferred tax, net and other long-term liabilities				(1,870	)		(1,564	)		1,358			(3,228	)		(599	)
					Net cash provided by operating activities			134,939			147,024			66,603			68,336			72,156
CASH FLOWS - INVESTING ACTIVITIES
	Investments in property and equipment, net							(125,444	)		(85,445	)		(62,537	)		(62,907	)		(43,727	)
	Investments in deposits, marketable securities and other assets, net							(78,786	)		(33,825	)		6,570			(85,356	)		(27,099	)
					Net cash used in investing activities			(204,230	)		(119,270	)		(55,967	)		(148,263	)		(70,826	)
CASH FLOWS - FINANCING ACTIVITIES
	Debt repaid, net							(29,197	)		(10,549	)		(5,000	)		(24,197	)		(7,475	)
	Exercise of options							1,214			397			1,127			87			--
					Net cash used in financing activities			(27,983	)		(10,152	)		(3,873	)		(24,110	)		(7,475	)
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE								506			2,465			682			(176	)		3,205
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS								(96,768	)		20,067			7,445			(104,213	)		(2,940	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD								355,561			385,091			251,348			355,561			408,098
CASH AND CASH EQUIVALENTS - END OF PERIOD							$	258,793		$	405,158		$	258,793		$	251,348		$	405,158