Amkor Technology Reports Financial Results for the Second Quarter 2021
Second Quarter Highlights
•Record net sales $1.41 billion, up 20% year-on-year
•Gross margin 19.4%, operating income margin 11.0%
•Record second quarter net income $126 million, record second quarter earnings per diluted share $0.51
•EBITDA $295 million
TEMPE, Ariz. - July 26, 2021 - 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, 2021.
“Second quarter revenue grew 6% sequentially to a new all-time record of $1.41 billion. Strong demand for Advanced SiP in the Communications and Consumer end markets drove revenue above the high end of expectations,” said Giel Rutten, Amkor’s president and chief executive officer. “Our Automotive and Industrial business grew 33% year-on-year to a record $300 million, overcoming several supply chain challenges.”
Results
Q2 2021
Q1 2021
Q2 2020
($ in millions, except per share data)
Net sales
$1,407
$1,326
$1,173
Gross margin
19.4%
20.0%
16.4%
Operating income
$155
$144
$87
Operating income margin
11.0%
10.9%
7.4%
Net income attributable to Amkor
$126
$120
$55
Earnings per diluted share
$0.51
$0.49
$0.23
EBITDA (1)
$295
$280
$209
(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.”
“Strong utilization and growth in Advanced SiP drove solid profitability. Operating income margin expanded 365 basis points year-on-year to 11%, and EPS more than doubled to a second quarter record of $0.51,” said Megan Faust, Amkor’s executive vice president and chief financial officer. “EBITDA grew over 40% year-on-year, and our solid financial position provides flexibility to continue to invest in growth opportunities.”
At June 30, 2021, total cash and short-term investments was $0.9 billion, and total debt was $1.1 billion.
We paid a quarterly dividend of $0.04 per share, representing a dividend payment of $9.8 million in the aggregate, on June 28, 2021 to stockholders of record as of June 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 26% year-on-year growth in the third quarter with revenue of $1.70 billion, fueled by new product ramps for Advanced products in Communications,” said Rutten. “We are working closely with our customers and suppliers to help mitigate ongoing supply chain constraints affecting the semiconductor industry.”
Third quarter 2021 outlook (unless otherwise noted):
•Net sales of $1.65 billion to $1.75 billion
•Gross margin of 18.5% to 20.5%
•Net income of $150 million to $200 million, or $0.60 to $0.80 per diluted share
•Full year 2021 capital expenditures of approximately $775 million
Conference Call Information
Amkor will conduct a conference call on Monday, July 26, 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.
Automotive, industrial and other (driver assist, infotainment, performance, safety)
22
%
22
%
19
%
Computing (data center, infrastructure, PC/laptop, storage)
16
%
17
%
16
%
Total
100
%
100
%
100
%
Gross Margin Data:
Net sales
100.0
%
100.0
%
100.0
%
Cost of sales:
Materials
44.7
%
43.2
%
45.2
%
Labor
13.1
%
13.8
%
13.9
%
Other manufacturing
22.8
%
23.0
%
24.5
%
Gross margin
19.4
%
20.0
%
16.4
%
(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:
Q2 2021
Q1 2021
Q2 2020
(in millions)
EBITDA Data:
Net income
$
126
$
120
$
56
Plus: Interest expense
13
13
16
Plus: Income tax expense
16
12
13
Plus: Depreciation & amortization
140
135
124
EBITDA
$
295
$
280
$
209
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2021
2020
2021
2020
(In thousands, except per share data)
Net sales
$
1,406,535
$
1,172,909
$
2,732,685
$
2,325,525
Cost of sales
1,133,715
980,589
2,194,331
1,944,297
Gross profit
272,820
192,320
538,354
381,228
Selling, general and administrative
74,189
74,260
150,957
146,842
Research and development
43,516
31,536
87,834
63,789
Total operating expenses
117,705
105,796
238,791
210,631
Operating income
155,115
86,524
299,563
170,597
Interest expense
12,764
16,012
25,437
33,057
Other (income) expense, net
(96)
1,467
(7)
(848)
Total other expense, net
12,668
17,479
25,430
32,209
Income before taxes
142,447
69,045
274,133
138,388
Income tax expense
15,989
12,905
27,656
17,751
Net income
126,458
56,140
246,477
120,637
Net income attributable to non-controlling interests
(652)
(716)
(862)
(1,324)
Net income attributable to Amkor
$
125,806
$
55,424
$
245,615
$
119,313
Net income attributable to Amkor per common share:
Basic
$
0.52
$
0.23
$
1.01
$
0.50
Diluted
$
0.51
$
0.23
$
1.00
$
0.49
Shares used in computing per common share amounts:
Basic
243,863
241,098
243,566
241,009
Diluted
245,551
241,410
245,372
241,345
AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2021
December 31, 2020
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
724,785
$
698,002
Restricted cash
937
1,007
Short-term investments
160,941
133,769
Accounts receivable, net of allowances
1,064,586
962,643
Inventories
374,109
297,293
Other current assets
45,684
40,218
Total current assets
2,371,042
2,132,932
Property, plant and equipment, net
2,873,570
2,566,002
Operating lease right of use assets
144,529
147,236
Goodwill
25,392
27,325
Restricted cash
3,498
3,188
Other assets
149,748
145,628
Total assets
$
5,567,779
$
5,022,311
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt
$
134,912
$
149,007
Trade accounts payable
710,326
636,434
Capital expenditures payable
460,413
181,339
Accrued expenses
374,002
349,207
Total current liabilities
1,679,653
1,315,987
Long-term debt
916,407
1,005,339
Pension and severance obligations
146,737
159,610
Long-term operating lease liabilities
78,492
84,420
Other non-current liabilities
163,420
102,996
Total liabilities
2,984,709
2,668,352
Stockholders’ equity:
Preferred stock
—
—
Common stock
290
289
Additional paid-in capital
1,968,339
1,953,378
Retained earnings
788,567
562,502
Accumulated other comprehensive income (loss)
16,113
27,270
Treasury stock
(219,061)
(217,740)
Total Amkor stockholders’ equity
2,554,248
2,325,699
Non-controlling interests in subsidiaries
28,822
28,260
Total equity
2,583,070
2,353,959
Total liabilities and equity
$
5,567,779
$
5,022,311
AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June 30,
2021
2020
(In thousands)
Cash flows from operating activities:
Net income
$
246,477
$
120,637
Depreciation and amortization
274,991
248,036
Other operating activities and non-cash items
305
10,151
Changes in assets and liabilities
(65,442)
(136,422)
Net cash provided by operating activities
456,331
242,402
Cash flows from investing activities:
Payments for property, plant and equipment
(273,617)
(134,340)
Proceeds from sale of property, plant and equipment
2,249
2,389
Proceeds from sale of short-term investments
45,396
8,593
Proceeds from maturities of short-term investments
103,116
13,072
Payments for short-term investments
(173,307)
(325,632)
Other investing activities
(25,332)
805
Net cash used in investing activities
(321,495)
(435,113)
Cash flows from financing activities:
Proceeds from revolving credit facilities
—
282,000
Payments of revolving credit facilities
—
(216,000)
Proceeds from short-term debt
3,679
62,495
Payments of short-term debt
(10,431)
(66,609)
Proceeds from issuance of long-term debt
120,992
225,985
Payments of long-term debt
(184,212)
(201,425)
Payments of finance lease obligations
(6,633)
(4,876)
Payments of dividends
(29,221)
—
Other financing activities
8,287
972
Net cash (used in) provided by financing activities
(97,539)
82,542
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
(10,274)
(1,177)
Net increase (decrease) in cash, cash equivalents and restricted cash
27,023
(111,346)
Cash, cash equivalents and restricted cash, beginning of period
702,197
898,532
Cash, cash equivalents and restricted cash, end of period
$
729,220
$
787,186
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,” “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;
•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 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;
•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;
•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, national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental, health and safety;
•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;
•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. 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.
