 | |||||
Amkor Technology Reports Record Financial Results for the Third Quarter 2021
Third Quarter Highlights
•Record net sales $1.68 billion, up 20% sequentially and 24% year-on-year
•Record gross profit $325 million, record operating income $211 million
•Gross margin 19.3%, operating income margin 12.6%
•Record net income $181 million, record earnings per diluted share $0.74
•Record EBITDA $358 million
TEMPE, Ariz. - October 25, 2021 - 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, 2021.
“We delivered an outstanding third quarter with record revenue of $1.68 billion, up $274 million from the second quarter, reflecting a 20% sequential increase. All of our end markets set new record revenue levels this quarter,” said Giel Rutten, Amkor’s president and chief executive officer. “The organization rapidly and efficiently scaled for substantial growth, including ramps of multiple new product introductions in Communications and Consumer.”
| Results | Q3 2021 | Q2 2021 | Q3 2020 | |||||||||||||||||
| ($ in millions, except per share data) | ||||||||||||||||||||
| Net sales | $1,681 | $1,407 | $1,354 | |||||||||||||||||
| Gross margin | 19.3% | 19.4% | 17.8% | |||||||||||||||||
| Operating income | $211 | $155 | $127 | |||||||||||||||||
| Operating income margin | 12.6% | 11.0% | 9.4% | |||||||||||||||||
| Net income attributable to Amkor | $181 | $126 | $92 | |||||||||||||||||
| Earnings per diluted share | $0.74 | $0.51 | $0.38 | |||||||||||||||||
| EBITDA (1) | $358 | $295 | $255 | |||||||||||||||||
(1) EBITDA is a non-GAAP financial measure. The reconciliation to the most directly comparable GAAP financial measure is included below under “Selected Operating Data.”
“High utilization and excellent factory execution drove record profitability in the third quarter,” said Megan Faust, Amkor’s executive vice president and chief financial officer. “With gross profit of $325 million and operating income of $211 million, we posted EPS of $0.74, nearly double the prior year period.”
At September 30, 2021, total cash and short-term investments was $0.8 billion, and total debt was $1.0 billion.
The company paid a quarterly dividend of $0.04 per share, representing a dividend payment of $9.8 million in the aggregate, on September 30, 2021 to stockholders of record as of September 7, 2021. The declaration and payment of future dividends, as well as any record and payment dates, are subject to the approval of the Board of Directors.
Business Outlook
“We expect our momentum to continue in the fourth quarter, with 20% year-on-year revenue growth for both the quarter and the full year,” said Rutten. “We remain confident in our strong market position within the fastest growing semiconductor markets of 5G, Automotive, High Performance Computing and IoT.”
Fourth quarter 2021 outlook (unless otherwise noted):
•Net sales of $1.59 billion to $1.69 billion
•Gross margin of 18.0% to 20.5%
•Net income of $140 million to $190 million, or $0.55 to $0.75 per diluted share
•Full year 2021 capital expenditures of approximately $775 million
Conference Call Information
Amkor will conduct a conference call on Monday, October 25, 2021, at 5:00 p.m. Eastern Time. This call may include material information not included in this press release. To access the live audio webcast and the accompanying slide presentation, visit the Investor Relations section of Amkor’s website, located at https://ir.amkor.com. The live call can also be accessed by dialing 1-877-407-4019 or 1-201-689-8337.
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.
Contact:
Jennifer Jue
Senior Director, Investor Relations and Finance
480-786-7594
jennifer.jue@amkor.com
AMKOR TECHNOLOGY, INC.
Selected Operating Data
| Q3 2021 | Q2 2021 | Q3 2020 | |||||||||||||||
| Net Sales Data: | |||||||||||||||||
| Net sales (in millions): | |||||||||||||||||
| Advanced products (1) (3) | $ | 1,236 | $ | 980 | $ | 1,003 | |||||||||||
| Mainstream products (2) (3) | 445 | 427 | 351 | ||||||||||||||
| Total net sales | $ | 1,681 | $ | 1,407 | $ | 1,354 | |||||||||||
| Packaging services | 87 | % | 85 | % | 86 | % | |||||||||||
| Test services | 13 | % | 15 | % | 14 | % | |||||||||||
| Net sales from top ten customers | 64 | % | 61 | % | 63 | % | |||||||||||
| End Market Data: | |||||||||||||||||
| Communications (handheld devices, smartphones, tablets) | 43 | % | 40 | % | 43 | % | |||||||||||
Consumer (connected home, set-top boxes, televisions, visual imaging, wearables) | 22 | % | 22 | % | 25 | % | |||||||||||
Automotive, industrial and other (driver assist, infotainment, performance, safety) | 20 | % | 22 | % | 17 | % | |||||||||||
Computing (data center, infrastructure, PC/laptop, storage) | 15 | % | 16 | % | 15 | % | |||||||||||
| Total | 100 | % | 100 | % | 100 | % | |||||||||||
| Gross Margin Data: | |||||||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
| Cost of sales: | |||||||||||||||||
| Materials | 48.3 | % | 44.7 | % | 46.9 | % | |||||||||||
| Labor | 11.5 | % | 13.1 | % | 12.8 | % | |||||||||||
| Other manufacturing | 20.9 | % | 22.8 | % | 22.5 | % | |||||||||||
| Gross margin | 19.3 | % | 19.4 | % | 17.8 | % | |||||||||||
(1) Advanced products include flip chip, memory and wafer-level processing and related test services.
(2) Mainstream products include all other wirebond packaging and related test services.
(3) Beginning in 2021, we are reporting memory net sales in Advanced products. Previously, memory net sales were reported in Mainstream products. Prior year amounts were reclassified to conform to current year presentation.
AMKOR TECHNOLOGY, INC.
Selected Operating Data
In this press release we refer to 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 2021 | Q2 2021 | Q3 2020 | |||||||||||||||
| (in millions) | |||||||||||||||||
| EBITDA Data: | |||||||||||||||||
| Net income | $ | 182 | $ | 126 | $ | 93 | |||||||||||
| Plus: Interest expense | 13 | 13 | 16 | ||||||||||||||
| Plus: Income tax expense | 17 | 16 | 16 | ||||||||||||||
| Plus: Depreciation & amortization | 146 | 140 | 130 | ||||||||||||||
| EBITDA | $ | 358 | $ | 295 | $ | 255 | |||||||||||
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Net sales | $ | 1,681,000 | $ | 1,354,023 | $ | 4,413,685 | $ | 3,679,548 | |||||||||||||||
| Cost of sales | 1,356,168 | 1,112,938 | 3,550,499 | 3,057,235 | |||||||||||||||||||
| Gross profit | 324,832 | 241,085 | 863,186 | 622,313 | |||||||||||||||||||
| Selling, general and administrative | 72,581 | 77,781 | 223,538 | 224,623 | |||||||||||||||||||
| Research and development | 40,790 | 35,835 | 128,624 | 99,624 | |||||||||||||||||||
| Total operating expenses | 113,371 | 113,616 | 352,162 | 324,247 | |||||||||||||||||||
| Operating income | 211,461 | 127,469 | 511,024 | 298,066 | |||||||||||||||||||
| Interest expense | 12,896 | 16,404 | 38,333 | 49,461 | |||||||||||||||||||
| Other (income) expense, net | (501) | 2,415 | (508) | 1,567 | |||||||||||||||||||
| Total other expense, net | 12,395 | 18,819 | 37,825 | 51,028 | |||||||||||||||||||
| Income before taxes | 199,066 | 108,650 | 473,199 | 247,038 | |||||||||||||||||||
| Income tax expense | 17,219 | 15,753 | 44,875 | 33,504 | |||||||||||||||||||
| Net income | 181,847 | 92,897 | 428,324 | 213,534 | |||||||||||||||||||
| Net income attributable to non-controlling interests | (993) | (746) | (1,855) | (2,070) | |||||||||||||||||||
| Net income attributable to Amkor | $ | 180,854 | $ | 92,151 | $ | 426,469 | $ | 211,464 | |||||||||||||||
| Net income attributable to Amkor per common share: | |||||||||||||||||||||||
| Basic | $ | 0.74 | $ | 0.38 | $ | 1.75 | $ | 0.88 | |||||||||||||||
| Diluted | $ | 0.74 | $ | 0.38 | $ | 1.74 | $ | 0.87 | |||||||||||||||
| Shares used in computing per common share amounts: | |||||||||||||||||||||||
| Basic | 244,100 | 241,675 | 243,746 | 241,232 | |||||||||||||||||||
| Diluted | 245,942 | 242,592 | 245,611 | 241,937 | |||||||||||||||||||
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, 2021 | December 31, 2020 | ||||||||||
| (In thousands) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 545,592 | $ | 698,002 | |||||||
| Restricted cash | 929 | 1,007 | |||||||||
| Short-term investments | 244,470 | 133,769 | |||||||||
| Accounts receivable, net of allowances | 1,289,617 | 962,643 | |||||||||
| Inventories | 445,918 | 297,293 | |||||||||
| Other current assets | 48,598 | 40,218 | |||||||||
| Total current assets | 2,575,124 | 2,132,932 | |||||||||
| Property, plant and equipment, net | 2,901,564 | 2,566,002 | |||||||||
| Operating lease right of use assets | 146,210 | 147,236 | |||||||||
| Goodwill | 25,351 | 27,325 | |||||||||
| Restricted cash | 3,508 | 3,188 | |||||||||
| Other assets | 118,691 | 145,628 | |||||||||
| Total assets | $ | 5,770,448 | $ | 5,022,311 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term borrowings and current portion of long-term debt | $ | 140,380 | $ | 149,007 | |||||||
| Trade accounts payable | 815,877 | 636,434 | |||||||||
| Capital expenditures payable | 393,660 | 181,339 | |||||||||
| Accrued expenses | 389,068 | 349,207 | |||||||||
| Total current liabilities | 1,738,985 | 1,315,987 | |||||||||
| Long-term debt | 884,236 | 1,005,339 | |||||||||
| Pension and severance obligations | 145,633 | 159,610 | |||||||||
| Long-term operating lease liabilities | 76,955 | 84,420 | |||||||||
| Other non-current liabilities | 164,960 | 102,996 | |||||||||
| Total liabilities | 3,010,769 | 2,668,352 | |||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock | — | — | |||||||||
| Common stock | 290 | 289 | |||||||||
| Additional paid-in capital | 1,973,207 | 1,953,378 | |||||||||
| Retained earnings | 959,641 | 562,502 | |||||||||
| Accumulated other comprehensive income (loss) | 15,936 | 27,270 | |||||||||
| Treasury stock | (219,061) | (217,740) | |||||||||
| Total Amkor stockholders’ equity | 2,730,013 | 2,325,699 | |||||||||
| Non-controlling interests in subsidiaries | 29,666 | 28,260 | |||||||||
| Total equity | 2,759,679 | 2,353,959 | |||||||||
| Total liabilities and equity | $ | 5,770,448 | $ | 5,022,311 | |||||||
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 428,324 | $ | 213,534 | |||||||
| Depreciation and amortization | 420,970 | 377,722 | |||||||||
| Other operating activities and non-cash items | 22,222 | 20,368 | |||||||||
| Changes in assets and liabilities | (239,897) | (177,576) | |||||||||
| Net cash provided by operating activities | 631,619 | 434,048 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Payments for property, plant and equipment | (491,425) | (275,531) | |||||||||
| Proceeds from sale of property, plant and equipment | 2,722 | 2,710 | |||||||||
| Payments for short-term investments | (348,822) | (475,696) | |||||||||
| Proceeds from sale of short-term investments | 70,085 | 37,633 | |||||||||
| Proceeds from maturities of short-term investments | 165,774 | 86,216 | |||||||||
| Other investing activities | (34,703) | 13,331 | |||||||||
| Net cash used in investing activities | (636,369) | (611,337) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from revolving credit facilities | — | 312,000 | |||||||||
| Payments of revolving credit facilities | — | (332,000) | |||||||||
| Proceeds from short-term debt | 15,514 | 86,769 | |||||||||
| Payments of short-term debt | (14,228) | (76,004) | |||||||||
| Proceeds from issuance of long-term debt | 154,784 | 225,985 | |||||||||
| Payments of long-term debt | (250,402) | (370,426) | |||||||||
| Payments of finance lease obligations | (12,785) | (7,193) | |||||||||
| Payments of dividends | (38,993) | — | |||||||||
| Other financing activities | 9,462 | 7,707 | |||||||||
| Net cash used in financing activities | (136,648) | (153,162) | |||||||||
| Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash | (10,770) | 2,696 | |||||||||
| Net decrease in cash, cash equivalents and restricted cash | (152,168) | (327,755) | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 702,197 | 898,532 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 550,029 | $ | 570,777 | |||||||
Forward-Looking Statement Disclaimer
This press release contains forward-looking statements within the meaning of federal securities laws. You are cautioned not to place undue reliance on forward-looking statements, which are often characterized by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or “intend,” by the negative of these terms or other comparable terminology or by discussions of strategy, plans or intentions. These forward-looking statements, including all of the statements made under “Business Outlook” above, 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:
•health conditions or pandemics, such as COVID-19, impacting labor availability and operating capacity, capital availability, the supply chain and consumer demand for our customers’ products and services;
•dependence on the highly cyclical, volatile semiconductor industry;
•changes in cost, quality, availability and delivery times of raw materials, components and equipment, including any disruption in the supply of certain materials due to regulations and customer requirements, as well as supply constraints, production delays, fluctuations in commodity prices and wage inflation;
•industry downturns and declines in global economic and financial conditions;
•fluctuation in demand for semiconductors and conditions in the semiconductor industry generally, as well as by specific customers, such as inventory reductions by our customers impacting demand in key markets;
•changes in our capacity and capacity utilization rates and fluctuations in our manufacturing yields;
•the development, transition and ramp to high volume manufacture of more advanced silicon nodes and evolving wafer, packaging and test services technologies, which may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials;
•the absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer forecasts and the impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative to our production capacity;
•dependence on key customers or concentration of customers in certain end markets, such as Communications and Automotive and Industrial;
•dependence on international factories and operations and risks relating to our customers’ and vendors’ international operations;
•laws, rules, regulations and policies imposed by U.S. or other governments, such as tariffs, customs, duties and other restrictive trade barriers and national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental, health and safety laws;
•laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors;
•fluctuations in currency exchange rates, particularly the dollar/yen exchange rate for our operations in Japan;
•competition with established competitors in the packaging and test business, the internal capabilities of integrated device manufacturers and new competitors, including foundries;
•our substantial investments in equipment and facilities to support the demand of our customers;
•decisions by our integrated device manufacturer and foundry customers to curtail outsourcing;
•difficulty achieving high capacity utilization rates due to high percentage of fixed costs;
•the historical downward pressure on the prices of our packaging and test services;
•any warranty claims, product return and liability risks, and the risk of negative publicity if our products fail, as well as the risk of litigation incident to our business;
•our substantial indebtedness and restrictive covenants in the indentures and agreements governing our current and future indebtedness;
•the possibility that we may decrease or suspend our quarterly dividend;
•difficulty funding our liquidity needs;
•our significant severance plan obligations associated with our manufacturing operations in Korea;
•maintaining an effective system of internal controls;
•difficulty attracting, retaining or replacing qualified personnel;
•our continuing development and implementation of changes to, and maintenance and security of, our information technology systems;
•challenges with integrating diverse operations;
•any changes in tax laws, taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for tax holidays, or any requirements to establish or adjust valuation allowances on deferred tax assets;
•our ability to develop new proprietary technology, protect our proprietary technology, operate without infringing the proprietary rights of others and implement new technologies;
•natural disasters and other calamities, political instability, hostilities or other disruptions; and
•the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval.
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, 2020 (the “Form 10-K”) and in the company’s subsequent filings with the Securities and Exchange Commission (“SEC”) made prior to or after the date hereof. Because such statements include risks and uncertainties, actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors, including those set forth in the Form 10-K and from time to time in our other reports filed with or furnished to the SEC. You should carefully consider the trends, risks and uncertainties described in this press release, the Form 10-K and other reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of the following trends, risks or uncertainties actually occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could decline, and you could lose part or all of your investment. All forward-looking statements in this press release are made based on our current expectations, forecasts, estimates and assumptions. 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 except as may be required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.