Business Wire | Jul 27, 2020 04:04PM EDT

Amkor Technology Reports Financial Results for the Second Quarter 2020

Jul. 27, 2020

TEMPE, Ariz.--(BUSINESS WIRE)--Jul. 27, 2020--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, 2020.

"Broad based demand drove revenue well above the high end of expectations," said Giel Rutten, Amkor's president and chief executive officer. "The strategic investments we made in both advanced packaging technology and manufacturing capacity enabled significant growth in revenue and profitability."

Results Q2 2020 Q1 2020 Q2 2019

($ in millions, except per share data)

Net sales $1,173 $1,153 $895

Gross margin 16.4 % 16.4 % 13.8 %

Operating income $87 $84 $23

Operating margin 7.4 % 7.3 % 2.5 %

Net income attributable to Amkor* $55 $64 ($9 )

Earnings per diluted share* $0.23 $0.26 ($0.04 )

EBITDA** $209 $210 $149

*Q2 2019 net income includes an $8 million charge, or $0.03 per share, relatedto the early redemption of $525 million of senior notes due 2022.

**EBITDA is a non-GAAP financial measure. The reconciliation to the comparableGAAP financial measure is included below under "Selected Operating Data."

"The strong revenue performance and disciplined expense management resulted in operating income margin of 7.4% and earnings per diluted share of $0.23," said Megan Faust, Amkor's executive vice president and chief financial officer. "Our profitability and focus on free cash flow generation has further strengthened our balance sheet, and we ended the quarter with net debt of $450 million."

At June 30, 2020, total cash and short-term investments was $1.1 billion, and total debt was $1.5 billion.

Business Outlook

"We expect sequential revenue growth in the third quarter, driven by the launch of flagship smart phones, including more 5G models where we have a strong footprint," said Rutten. "We believe mid- and long-term growth drivers remain intact, and we will continue to invest in markets, including 5G, high performance computing and IoT, where we see the highest potential for growth."

Third quarter 2020 outlook (unless otherwise noted):

* Net sales of $1.2 billion to $1.3 billion * Gross margin of 15% to 18% * Net income of $42 million to $85 million, or $0.17 to $0.35 per diluted share * Full year 2020 capital expenditures of approximately $550 million

Conference Call Information

Amkor will conduct a conference call on Monday, July 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 8565096). 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

Q2 2020 Q1 2020 Q2 2019

Net Sales Data:

Net sales (in millions):

Advanced products (1) $ 729 $ 705 $ 433

Mainstream products (2) 444 448 462

Total net sales $ 1,173 $ 1,153 $ 895



Packaging services 84 % 85 % 83 %

Test services 16 % 15 % 17 %



Net sales from top ten customers 69 % 67 % 62 %



End Market Data:

Communications (handheld devices, smartphones, 38 % 38 % 37 %tablets)

Consumer (connected home, set-top boxes, 27 % 24 % 15 %televisions, visual imaging, wearables)

Automotive, industrial and other (driver 19 % 23 % 29 %assist, infotainment, performance, safety)

Computing (data center, infrastructure, PC/ 16 % 15 % 19 %laptop, storage)

Total 100 % 100 % 100 %



Gross Margin Data:

Net sales 100.0 % 100.0 % 100.0 %

Cost of sales:

Materials 45.2 % 45.3 % 38.0 %

Labor 13.9 % 14.2 % 17.4 %

Other manufacturing 24.5 % 24.1 % 30.8 %

Gross margin 16.4 % 16.4 % 13.8 %

(1) Advanced products include flip chip and wafer-level processing and relatedtest 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. Wedefine EBITDA as net income before interest expense, income tax expense anddepreciation and amortization. We believe EBITDA to be relevant and usefulinformation to our investors because it provides additional information inassessing our financial operating results. Our management uses EBITDA inevaluating our operating performance, our ability to service debt and ourability to fund capital expenditures. However, EBITDA has certain limitationsin that it does not reflect the impact of certain expenses on our consolidatedstatements of income, including interest expense, which is a necessary elementof 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 areimposed by law, and depreciation and amortization, which is a necessary elementof our costs because we use capital assets to generate income. EBITDA should beconsidered in addition to, and not as a substitute for, or superior to,operating income, net income or other measures of financial performanceprepared in accordance with U.S. GAAP. Furthermore our definition of EBITDA maynot 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 2020 Q1 2020 Q2 2019

(in millions)

EBITDA Data:

Net income (loss) $ 56 $ 64 $ (9 )

Plus: Interest expense 16 17 19

Plus: Income tax expense 13 5 6

Plus: Depreciation & amortization 124 124 133

EBITDA $ 209 $ 210 $ 149

In this press release, we provide net debt, which is not defined by U.S. GAAP.We define net debt as total debt as reported on the consolidated balance sheetless the sum of cash and cash equivalents, and short term investments. Webelieve net debt to be relevant and useful information to our investors becauseit provides them with additional information in assessing our capitalstructure, financial leverage, and our ability to reduce debt and to fundinvesting and financing activities. This measure should be considered inaddition to, and not as a substitute for, or superior to, total debt, preparedin accordance with U.S. GAAP. Furthermore, our definition of net debt may notbe comparable to similarly titled measures reported by other companies.

Non-GAAP Financial Measure Reconciliation:

Q2 2020 Q1 2020 Q2 2019

(in millions)

Net Debt Data:

Total Debt $ 1,545 $ 1,513 $ 1,308

Less: Cash and Cash Equivalents 783 941 551

Less: Short-term Investments 311 58 6

Net Debt $ 451 $ 514 $ 751

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

For the Three Months Ended June For the Six Months Ended June 30, 30,

2020 2019 2020 2019

(In thousands, except per share data)

Net sales $ 1,172,909 $ 895,305 $ 2,325,525 $ 1,790,269

Cost of sales 980,589 771,851 1,944,297 1,546,054

Gross profit 192,320 123,454 381,228 244,215

Selling,general and 74,260 64,758 146,842 136,345 administrative

Research and 31,536 36,186 63,789 71,940 development

Total operating 105,796 100,944 210,631 208,285 expenses

Operating 86,524 22,510 170,597 35,930 income

Interest 16,012 18,653 33,057 37,926 expense

Other (income) 1,467 6,966 (848 ) 2,401 expense, net

Total other 17,479 25,619 32,209 40,327 expense, net

Income (loss) 69,045 (3,109 ) 138,388 (4,397 ) before taxes

Income tax 12,905 5,897 17,751 27,277 expense

Net income 56,140 (9,006 ) 120,637 (31,674 ) (loss)

Net incomeattributable to (716 ) (444 ) (1,324 ) (655 ) non-controllinginterests

Net income(loss) $ 55,424 $ (9,450 ) $ 119,313 $ (32,329 ) attributable toAmkor



Net income(loss)attributable to Amkor percommon share:

Basic $ 0.23 $ (0.04 ) $ 0.50 $ (0.14 )

Diluted $ 0.23 $ (0.04 ) $ 0.49 $ (0.14 )



Shares used incomputing per common shareamounts:

Basic 241,098 239,508 241,009 239,461

Diluted 241,410 239,508 241,345 239,461

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30, 2020 December 31, 2019

(In thousands)

ASSETS

Current assets:

Cash and cash equivalents $ 783,228 $ 894,948

Restricted cash 931 610

Short-term investments 310,634 6,348

Accounts receivable, net of allowances 898,717 850,753

Inventories 306,902 220,602

Other current assets 41,383 28,272

Total current assets 2,341,795 2,001,533

Property, plant and equipment, net 2,471,977 2,404,850

Operating lease right of use assets 146,013 148,549

Goodwill 26,140 25,976

Restricted cash 3,027 2,974

Other assets 126,436 111,733

Total assets $ 5,115,388 $ 4,695,615

LIABILITIES AND EQUITY

Current liabilities:

Short-term borrowings and current portion of $ 148,872 $ 144,479 long-term debt

Trade accounts payable 583,341 571,054

Capital expenditures payable 259,344 77,044

Accrued expenses 291,278 267,226

Total current liabilities 1,282,835 1,059,803

Long-term debt 1,396,389 1,305,755

Pension and severance obligations 165,401 176,971

Long-term operating lease liabilities 87,204 91,107

Other non-current liabilities 66,631 71,740

Total liabilities 2,998,460 2,705,376



Stockholders' equity:

Preferred stock - -

Common stock 287 287

Additional paid-in capital 1,934,047 1,927,739

Retained earnings 353,390 234,077

Accumulated other comprehensive income (loss) 19,272 19,115

Treasury stock (217,592 ) (217,479 )

Total Amkor stockholders' equity 2,089,404 1,963,739

Non-controlling interests in subsidiaries 27,524 26,500

Total equity 2,116,928 1,990,239

Total liabilities and equity $ 5,115,388 $ 4,695,615

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months Ended June 30,

2020 2019

(In thousands)

Cash flows from operating activities:

Net income (loss) $ 120,637 $ (31,674 )

Depreciation and amortization 248,036 268,819

Other operating activities and non-cash items 10,151 33,112

Changes in assets and liabilities (136,422 ) (101,329 )

Net cash provided by operating activities 242,402 168,928

Cash flows from investing activities:

Payments for property, plant and equipment (134,340 ) (273,672 )

Proceeds from sale of property, plant and 2,389 8,247 equipment

Proceeds from insurance recovery for property, - 1,538 plant and equipment

Proceeds from sale of short-term investments 8,593 -

Proceeds from maturities of short-term 13,072 6,469 investments

Payments for short-term investments (325,632 ) (5,935 )

Other investing activities 805 2,330

Net cash used in investing activities (435,113 ) (261,023 )

Cash flows from financing activities:

Proceeds from revolving credit facilities 282,000 85,000

Payments of revolving credit facilities (216,000 ) (5,000 )

Proceeds from short-term debt 62,495 29,781

Payments of short-term debt (66,609 ) (25,548 )

Proceeds from issuance of long-term debt 225,985 614,375

Payments of long-term debt (201,425 ) (732,178 )

Payments of finance lease obligations (4,876 ) (2,746 )

Other financing activities 972 (3,865 )

Net cash provided by (used in) financing 82,542 (40,181 ) activities

Effect of exchange rate fluctuations on cash, (1,177 ) 1,131 cash equivalents and restricted cash

Net decrease in cash, cash equivalents and (111,346 ) (131,145 ) restricted cash

Cash, cash equivalents and restricted cash, 898,532 688,051 beginning of period

Cash, cash equivalents and restricted cash, end $ 787,186 $ 556,906 of period

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 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:

* 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; * 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 technologies, may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials; * 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; * changes in costs, 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 wage inflation and fluctuations in commodity prices; * dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive; * 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 foreign governments, such as tariffs, customs, duties and other restrictive trade barriers, national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental, health and safety, and in particular the recent increase in tariffs, customs, duties and other restrictive trade barriers considered or adopted by U.S. and foreign governments; * 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; * 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; * our substantial investments in equipment and facilities to support the demand of our customers; * there can be no assurance regarding when our 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 expectations; * 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; * 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 (including the recent enactment of U.S. tax reform), 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, health conditions or pandemics, 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, 2019 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 except as may be required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200727005749/en/

CONTACT: Vincent Keenan Vice President, Investor Relations 480-786-7594 vincent.keenan@amkor.com