Second Quarter Highlights

  • Net sales $989 million, sequential and year-on-year growth 8%
  • Net income $116 million and earnings per diluted share $0.48 (includes after-tax gain of $82 million, or $0.34 per diluted share, from sale of K1 factory)
  • EBITDA $316 million 
  • Completed Nanium acquisition
  •  

TEMPE, Ariz. - July 31, 2017 - Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the second quarter ended June 30, 2017.

"Second quarter revenues were up 8% sequentially," said Steve Kelley, Amkor's president and chief executive officer. "Our growth in the quarter reflected solid demand across most end markets."

"In late May, we completed our acquisition of Nanium. This acquisition enhances Amkor's leadership position in wafer-level packaging, a critical technology for smartphones, tablets and other small form-factor applications," continued Kelley.

 

Results

Q2 2017

 

Q1 2017

 

Q2 2016

 

($ in millions, except per share data)

Net sales

$989

 

$914

 

$917

Gross margin

17.4%

 

15.6%

 

14.3%

Net income (loss)

$116

 

($10)

 

$5

Earnings per diluted share

$0.48

 

($0.04)

 

$0.02

EBITDA**

$316

 

$154

 

$168

Net cash provided by operating activities

$97

 

$103

 

$135

Free cash flow**

$43

 

$17

 

($22)

 

**EBITDA and free cash flow are non-GAAP measures. The reconciliations to the comparable GAAP measures are included below under "Selected Operating Data."

Cash and cash equivalents were $658 million and total debt was $1.6 billion, at June 30, 2017.

“As expected, we completed the sale of our K1 factory in Korea in Q2," said Megan Faust, Amkor’s corporate vice president and chief financial officer. "The sale price was $142 million, and we recognized an after-tax gain of $82 million ($0.34 per diluted share)."

"We also issued a redemption notice for $200 million of the outstanding $400 million of our Senior Notes due 2021," added Faust. "The redemption was completed in July using cash on hand. The redemption will result in annualized interest savings of approximately $13 million."

Business Outlook

"Looking ahead to Q3, we expect that revenues will increase around 9% sequentially, driven by the launch of flagship mobile devices," said Kelley.

Third quarter 2017 outlook (unless otherwise noted):

  • Net sales of $1.04 billion to $1.12 billion, up 5% to 13% from the prior quarter
  • Gross margin of 17% to 20%
  • Net income of $24 million to $64 million, or $0.10 to $0.27 per share
  • Full year capital expenditures of around $525 million, up $25 million from our previous forecast 

 

Conference Call Information

Amkor will conduct a conference call on Monday, July 31, 2017, 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 59359701). 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 operating base includes 10 million square feet of floor space, with production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the U.S. For more information, visit www.amkor.com.

Contacts:

Amkor Technology, Inc.
Megan Faust
Corporate Vice President & Chief Financial Officer
480-786-7707
megan.faust@amkor.com

Greg Johnson
Vice President, Finance and Investor Relations
480-786-7594
greg.johnson@amkor.com

 

AMKOR TECHNOLOGY, INC.

Selected Operating Data

 

Q2 2017

 

Q1 2017

 

Q2 2016

Net Sales Data:

 

 

 

 

 

Net sales (in millions):

 

 

 

 

 

Advanced products*

$

431

 

 

$

383

 

 

$

394

 

Mainstream products**

558

 

 

531

 

 

523

 

Total net sales

$

989

 

 

$

914

 

 

$

917

 

 

 

 

 

 

 

Packaging services

81

%

 

81

%

 

83

%

Test services

19

%

 

19

%

 

17

%

 

 

 

 

 

 

Net sales from top ten customers

67

%

 

67

%

 

67

%

 

 

 

 

 

 

End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers):

 

 

 

 

 

Communications (smart phones, tablets, handheld devices, wireless LAN)

42

%

 

41

%

 

44

%

Automotive and industrial (infotainment, safety, performance, comfort)

26

%

 

26

%

 

25

%

Consumer (televisions, set top boxes, gaming, portable media, digital cameras)

14

%

 

14

%

 

14

%

Networking (servers, routers, switches)

10

%

 

11

%

 

11

%

Computing (PCs, hard disk drives, printers, peripherals, servers)

8

%

 

8

%

 

6

%

Total

100

%

 

100

%

 

100

%

 

 

 

 

 

 

Gross Margin Data:

 

 

 

 

 

Net sales

100.0

%

 

100.0

%

 

100.0

%

Cost of sales:

 

 

 

 

 

Materials

35.3

%

 

35.4

%

 

37.7

%

Labor

16.4

%

 

16.5

%

 

16.0

%

Other manufacturing

30.9

%

 

32.5

%

 

32.0

%

Gross margin

17.4

%

 

15.6

%

 

14.3

%

 

 

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

**   Mainstream products include wirebond packaging and related test services

 

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:

 

 

 

 

 

 

Q2 2017

 

Q1 2017

 

Q2 2016

 

(in millions)

EBITDA Data:

 

 

 

 

 

Net income attributable to Amkor

$

116

 

 

$

(10

)

 

$

5

 

Plus: Interest expense

22

 

 

22

 

 

22

 

Plus: Income tax expense

33

 

 

 

 

3

 

Plus: Depreciation & amortization

145

 

 

142

 

 

138

 

EBITDA

$

316

 

 

$

154

 

 

$

168

 

 

In the press release above we refer to free cash flow, which is not defined by U.S. GAAP.  We define free cash flow as net cash provided by operating activities less payments for property, plant and equipment, plus proceeds from the sale of and insurance recovery for property, plant and equipment, if applicable.  We believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital expenditures.  However, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure.  The amount of mandatory versus discretionary expenditures can vary significantly between periods.  This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities.  Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.  Below is our reconciliation of free cash flow to U.S. GAAP net cash provided by operating activities.

 

Non-GAAP Financial Measures Reconciliation:

 

 

 

 

 

 

Q2 2017

 

Q1 2017

 

Q2 2016

 

(in millions)

Free Cash Flow Data:

 

 

 

 

 

Net cash provided by operating activities

$

97

 

 

$

103

 

 

$

135

 

Less: Purchases of property, plant and equipment

(183

)

 

(88

)

 

(157

)

Plus: Proceeds from sale of property, plant and equipment

129

 

 

2

 

 

 

Free cash flow

$

43

 

 

$

17

 

 

$

(22

)

 


 

For the Three Months Ended
June 30,

 

For the Six Months Ended
June 30,

 

2017

 

2016

 

2017

 

2016

 

(In thousands, except per share data)

Net sales

$

989,447

 

 

$

917,326

 

 

$

1,903,047

 

 

$

1,786,008

 

Cost of sales

817,212

 

 

785,720

 

 

1,587,906

 

 

1,531,518

 

Gross profit

172,235

 

 

131,606

 

 

315,141

 

 

254,490

 

Selling, general and administrative

67,783

 

 

70,896

 

 

144,478

 

 

144,531

 

Research and development

44,268

 

 

30,168

 

 

85,824

 

 

57,323

 

Gain on sale of real estate

(108,109

)

 

 

 

(108,109

)

 

 

Total operating expenses

3,942

 

 

101,064

 

 

122,193

 

 

201,854

 

Operating income

168,293

 

 

30,542

 

 

192,948

 

 

52,636

 

Interest expense

22,158

 

 

20,816

 

 

43,412

 

 

37,008

 

Interest expense, related party

293

 

 

1,242

 

 

1,535

 

 

2,484

 

Other (income) expense, net

(3,190

)

 

(242

)

 

7,674

 

 

2,950

 

Total other expense, net

19,261

 

 

21,816

 

 

52,621

 

 

42,442

 

Income before taxes

149,032

 

 

8,726

 

 

140,327

 

 

10,194

 

Income tax expense

32,573

 

 

3,360

 

 

33,012

 

 

5,233

 

Net income

116,459

 

 

5,366

 

 

107,315

 

 

4,961

 

Net income attributable to non-controlling interests

(952

)

 

(653

)

 

(1,814

)

 

(1,123

)

Net income attributable to Amkor

$

115,507

 

 

$

4,713

 

 

$

105,501

 

 

$

3,838

 

 

 

 

 

 

 

 

 

Net income attributable to Amkor per common share:

 

 

 

 

 

 

 

Basic

$

0.48

 

 

$

0.02

 

 

$

0.44

 

 

$

0.02

 

Diluted

$

0.48

 

 

$

0.02

 

 

$

0.44

 

 

$

0.02

 

 

 

 

 

 

 

 

 

Shares used in computing per common share amounts:

 

 

 

 

 

 

 

Basic

238,863

 

 

237,090

 

 

238,774

 

 

237,058

 

Diluted

239,679

 

 

237,434

 

 

239,601

 

 

237,297

 

 

 

 


 

June 30,
 2017

 

December 31,
 2016

 

(In thousands)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

657,627

 

 

$

549,518

 

Restricted cash

2,000

 

 

2,000

 

Accounts receivable, net of allowances

604,366

 

 

563,107

 

Inventories

295,750

 

 

267,990

 

Other current assets

36,889

 

 

27,081

 

Total current assets

1,596,632

 

 

1,409,696

 

Property, plant and equipment, net

2,645,810

 

 

2,564,648

 

Goodwill

25,161

 

 

24,122

 

Restricted cash

4,225

 

 

3,977

 

Other assets

112,303

 

 

89,643

 

Total assets

$

4,384,131

 

 

$

4,092,086

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

Short-term borrowings and current portion of long-term debt

$

313,004

 

 

$

35,192

 

Current portion of long-term debt, related party

17,546

 

 

 

Trade accounts payable

477,191

 

 

487,430

 

Capital expenditures payable

231,481

 

 

144,370

 

Accrued expenses

348,869

 

 

338,669

 

Total current liabilities

1,388,091

 

 

1,005,661

 

Long-term debt

1,220,236

 

 

1,364,638

 

Long-term debt, related party

17,454

 

 

75,000

 

Pension and severance obligations

170,554

 

 

166,701

 

Other non-current liabilities

60,842

 

 

76,682

 

Total liabilities

2,857,177

 

 

2,688,682

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock

 

 

 

Common stock

285

 

 

284

 

Additional paid-in capital

1,899,970

 

 

1,895,089

 

Accumulated deficit

(198,056

)

 

(303,557

)

Accumulated other comprehensive income (loss)

19,263

 

 

6,262

 

Treasury stock

(215,868

)

 

(214,490

)

Total Amkor stockholders’ equity

1,505,594

 

 

1,383,588

 

Non-controlling interests in subsidiaries

21,360

 

 

19,816

 

Total equity

1,526,954

 

 

1,403,404

 

Total liabilities and equity

$

4,384,131

 

 

$

4,092,086

 


 

For the Six Months Ended
June 30,

 

2017

 

2016

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net income

$

107,315

 

 

$

4,961

 

Depreciation and amortization

287,068

 

 

275,241

 

Gain on sale of real estate

(108,109

)

 

 

Other operating activities and non-cash items

(3,787

)

 

(6,177

)

Changes in assets and liabilities

(82,528

)

 

(826

)

Net cash provided by operating activities

199,959

 

 

273,199

 

Cash flows from investing activities:

 

 

 

Payments for property, plant and equipment

(271,651

)

 

(355,974

)

Proceeds from sale of property, plant and equipment

130,962

 

 

593

 

Acquisition of business, net of cash acquired

(43,771

)

 

 

Other investing activities

(2,117

)

 

(830

)

Net cash used in investing activities

(186,577

)

 

(356,211

)

Cash flows from financing activities:

 

 

 

Proceeds from revolving credit facilities

75,000

 

 

115,000

 

Payments of revolving credit facilities

 

 

(100,000

)

Proceeds from short-term debt

41,228

 

 

24,630

 

Payments of short-term debt

(32,110

)

 

(23,035

)

Proceeds from issuance of long-term debt

215,086

 

 

34,000

 

Payments of long-term debt

(207,653

)

 

(8,582

)

Payment of deferred consideration for purchase of facility

(3,890

)

 

 

Payments of capital lease obligations

(2,665

)

 

(887

)

Other financing activities

561

 

 

(604

)

Net cash provided by financing activities

85,557

 

 

40,522

 

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

9,418

 

 

18,782

 

Net increase (decrease) in cash, cash equivalents and restricted cash

108,357

 

 

(23,708

)

Cash, cash equivalents and restricted cash, beginning of period

555,495

 

 

527,348

 

Cash, cash equivalents and restricted cash, end of period

$

663,852

 

 

$

503,640

 


 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 our position in wafer-level packaging as a result of the Nanium acquisition, the amount of interest savings generated by the redemption of $200 million of our 2021 Senior Notes, 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:

 

  • there can be no assurance regarding when our new K5 factory and research and development center in Korea will be fully utilized, or that the actual scope, costs, timeline or benefits of the project will be consistent with our current expectations;
  • the highly unpredictable nature, cyclicality, and rate of growth of the semiconductor industry;
  • timing and volume of orders relative to production capacity and the inability to achieve high capacity utilization rates, control costs and improve profitability;
  • volatility of consumer demand, double booking by customers and deterioration in forecasts from our customers for products incorporating our semiconductor packages, including any slowdown in demand or changes in customer forecasts for smartphones or other mobile devices and generally soft end market demand for electronic devices;
  • delays, lower manufacturing yields and supply constraints relating to wafers, particularly for advanced nodes and related technologies;
  • dependence on key customers, the impact of changes in our market share and prices for our services with those customers and the business and financial condition of those customers;
  • the performance of our business, economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity and facilities to service customer demand and the availability of cash flow from operations or financing;
  • the effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers, including the uncertain macroeconomic environment;
  • the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters and the impact of other legal proceedings;
  • changes in tax rates and taxes as a result of changes in U.S. or foreign tax law or the interpretations thereof (including possible tax reforms proposed by new administrations), changes in our organizational structure, changes in the jurisdictions in which our income is determined to be earned and taxed, the outcome of tax reviews, audits and ruling requests, our ability to realize deferred tax assets and the expiration of tax holidays;
  • curtailment of outsourcing by our customers;
  • our substantial indebtedness and restrictive covenants;
  • failure to realize sufficient cash flow or access to other sources of liquidity to fund capital expenditures;
  • the effects of an economic slowdown in major economies worldwide, particularly the recent slowdown in China;
  • disruptions in our business or deficiencies in our controls resulting from the integration of newly acquired operations, particularly J-Devices, or the implementation and security of, and changes to, our enterprise resource planning, factory shop floor systems and other management information systems;
  • economic effects of terrorist attacks, political instability, natural disasters and military conflict;
  • competition, competitive pricing and declines in average selling prices;
  • fluctuations in manufacturing yields;
  • dependence on international operations and sales and fluctuations in foreign currency exchange rates, particularly in Japan;
  • dependence on raw material and equipment suppliers and changes in raw material and precious metal costs;
  • dependence on key personnel;
  • enforcement of and compliance with intellectual property rights;
  • environmental and other governmental regulations, including regulatory efforts by foreign governments to support local competitors; and
  • technological challenges. 

 

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, 2016 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.