Amkor Technology Reports Record Financial Results for the Third Quarter 2022
TEMPE, Ariz. -- October 31, 2022 -- 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, 2022.
Record Third Quarter 2022 Highlights
•Net sales $2.1 billion, up 24% year-on-year
•Gross profit $421 million, operating income $319 million
•Net income $306 million, earnings per diluted share $1.24
•EBITDA $481 million
“Amkor delivered outstanding results in the third quarter. Revenue of $2.1 billion and EPS of $1.24 are quarterly records, with all end markets hitting new record revenue levels. Quality execution of steep production ramps for new high-volume products drove this excellent performance,” said Giel Rutten, Amkor’s president and chief executive officer. “Despite macroeconomic uncertainty, we remain well positioned to execute on our strategy, leveraging our leadership position in Advanced packaging and our broad geographic footprint to support the industry megatrends of 5G, IoT, Automotive, and HPC.”
Quarterly Financial Results
($ in millions, except per share data)
Q3 2022
Q2 2022
Q3 2021
Net sales
$2,084
$1,505
$1,681
Gross margin
20.2%
16.6%
19.3%
Operating income
$319
$143
$211
Operating income margin
15.3%
9.5%
12.6%
Net income attributable to Amkor
$306
$125
$181
Earnings per diluted share
$1.24
$0.51
$0.74
EBITDA (1)
$481
$302
$358
(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.”
At September 30, 2022, total cash and short-term investments was $0.9 billion, and total debt was $1.1 billion.
The company paid a quarterly dividend of $0.05 per share on September 26, 2022. 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
The following information presents Amkor’s guidance for the fourth quarter 2022 (unless otherwise noted):
•Net sales of $1.80 billion to $1.90 billion
•Gross margin of 16.0% to 18.0%
•Net income of $150 million to $195 million, or $0.60 to $0.80 per diluted share
•Full year 2022 capital expenditures of approximately $900 million
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Conference Call Information
Amkor will conduct a conference call on Monday, October 31, 2022, 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 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 amkor.com.
Jennifer Jue
Senior Director, Investor Relations and Finance
480-786-7594
jennifer.jue@amkor.com
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AMKOR TECHNOLOGY, INC.
Selected Operating Data
Q3 2022
Q2 2022
Q3 2021
Net Sales Data:
Net sales (in millions):
Advanced products (1)
$
1,640
$
1,084
$
1,236
Mainstream products (2)
444
421
445
Total net sales
$
2,084
$
1,505
$
1,681
Packaging services
87
%
87
%
87
%
Test services
13
%
13
%
13
%
Net sales from top ten customers
67
%
65
%
64
%
End Market Data:
Communications (smart phones, tablets)
47
%
37
%
43
%
Consumer (AR & gaming, connected home, home electronics, wearables)
20
%
22
%
22
%
Automotive, industrial and other (ADAS, electrification, infotainment, safety)
18
%
23
%
20
%
Computing (data center, infrastructure, PC/laptop, storage)
15
%
18
%
15
%
Total
100
%
100
%
100
%
Gross Margin Data:
Net sales
100.0
%
100.0
%
100.0
%
Cost of sales:
Materials
53.3
%
49.2
%
48.3
%
Labor
8.6
%
11.8
%
11.5
%
Other manufacturing
17.9
%
22.4
%
20.9
%
Gross margin
20.2
%
16.6
%
19.3
%
(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.
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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, and our ability to service debt, and our ability to fund capital expenditures and pay dividends. 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:
(in millions)
Q3 2022
Q2 2022
Q3 2021
EBITDA Data:
Net income
$
306
$
125
$
182
Plus: Interest expense
15
15
13
Plus: Income tax expense
4
11
17
Plus: Depreciation & amortization
156
151
146
EBITDA
$
481
$
302
$
358
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
2022
2021
2022
2021
Net sales
$
2,083,691
$
1,681,000
$
5,185,375
$
4,413,685
Cost of sales
1,662,463
1,356,168
4,189,662
3,550,499
Gross profit
421,228
324,832
995,713
863,186
Selling, general and administrative
67,947
72,581
213,774
223,538
Research and development
33,994
40,790
109,835
128,624
Total operating expenses
101,941
113,371
323,609
352,162
Operating income
319,287
211,461
672,104
511,024
Interest expense
14,879
12,896
43,620
38,333
Other (income) expense, net
(5,692)
(501)
(18,829)
(508)
Total other expense, net
9,187
12,395
24,791
37,825
Income before taxes
310,100
199,066
647,313
473,199
Income tax expense
3,643
17,219
44,159
44,875
Net income
306,457
181,847
603,154
428,324
Net income attributable to non-controlling interests
(376)
(993)
(1,632)
(1,855)
Net income attributable to Amkor
$
306,081
$
180,854
$
601,522
$
426,469
Net income attributable to Amkor per common share:
Basic
$
1.25
$
0.74
$
2.46
$
1.75
Diluted
$
1.24
$
0.74
$
2.45
$
1.74
Shares used in computing per common share amounts:
Basic
244,744
244,100
244,581
243,746
Diluted
246,094
245,942
246,015
245,611
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
624,084
$
826,744
Restricted cash
—
962
Short-term investments
308,063
251,530
Accounts receivable, net of allowances
1,550,517
1,258,767
Inventories
669,297
484,959
Other current assets
49,185
33,601
Total current assets
3,201,146
2,856,563
Property, plant and equipment, net
3,087,061
2,871,058
Operating lease right of use assets
168,778
159,742
Goodwill
19,492
24,516
Restricted cash
3,235
3,815
Other assets
214,212
122,860
Total assets
$
6,693,924
$
6,038,554
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt
$
123,521
$
153,008
Trade accounts payable
927,527
828,727
Capital expenditures payable
287,936
210,875
Short-term operating lease liability
69,161
64,233
Accrued expenses
381,012
422,892
Total current liabilities
1,789,157
1,679,735
Long-term debt
1,001,544
984,988
Pension and severance obligations
104,206
120,472
Long-term operating lease liabilities
73,776
83,937
Other non-current liabilities
206,398
196,876
Total liabilities
3,175,081
3,066,008
Stockholders’ equity:
Preferred stock
—
—
Common stock
291
290
Additional paid-in capital
1,991,045
1,977,134
Retained earnings
1,728,740
1,163,939
Accumulated other comprehensive income (loss)
(13,583)
19,978
Treasury stock
(219,147)
(219,065)
Total Amkor stockholders’ equity
3,487,346
2,942,276
Non-controlling interests in subsidiaries
31,497
30,270
Total equity
3,518,843
2,972,546
Total liabilities and equity
$
6,693,924
$
6,038,554
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AMKOR TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Nine Months Ended September 30,
2022
2021
Cash flows from operating activities:
Net income
$
603,154
$
428,324
Depreciation and amortization
455,679
420,970
Other operating activities and non-cash items
(20,396)
22,222
Changes in assets and liabilities
(492,673)
(239,897)
Net cash provided by operating activities
545,764
631,619
Cash flows from investing activities:
Payments for property, plant and equipment
(575,502)
(491,425)
Proceeds from sale of property, plant and equipment
2,691
2,722
Payments for short-term investments
(364,274)
(348,822)
Proceeds from sale of short-term investments
26,202
70,085
Proceeds from maturities of short-term investments
274,452
165,774
Other investing activities
(86,785)
(34,703)
Net cash used in investing activities
(723,216)
(636,369)
Cash flows from financing activities:
Proceeds from revolving credit facilities
80,000
—
Payments of revolving credit facilities
(80,000)
—
Proceeds from short-term debt
29,711
15,514
Payments of short-term debt
(21,662)
(14,228)
Proceeds from issuance of long-term debt
250,000
154,784
Payments of long-term debt
(183,493)
(250,402)
Payments of finance lease obligations
(26,938)
(12,785)
Payments of dividends
(36,725)
(38,993)
Other financing activities
(4,152)
9,462
Net cash provided by (used in) in financing activities
6,741
(136,648)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
(33,491)
(10,770)
Net decrease in cash, cash equivalents and restricted cash
(204,202)
(152,168)
Cash, cash equivalents and restricted cash, beginning of period
831,521
702,197
Cash, cash equivalents and restricted cash, end of period
$
627,319
$
550,029
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Forward-Looking Statement Disclaimer
This press release contains forward-looking statements within the meaning of the 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. All forward-looking statements in this press release are made based on our current expectations, forecasts, estimates and assumptions. 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, 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;
•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 supply constraints, production delays, fluctuations in commodity prices and wage inflation;
•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, export controls, sanctions 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;
•our substantial indebtedness and restrictive covenants in the indentures and agreements governing our current and future indebtedness;
•fluctuations in interest rates and changes in credit risk;
•difficulty funding our liquidity needs;
•dependence on key customers or concentration of customers in certain end markets, such as Communications and Automotive and Industrial;
•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;
•our substantial investments in equipment and facilities to support the demand of our customers;
•difficulty attracting, retaining or replacing qualified personnel;
•difficulty achieving high capacity utilization rates due to high percentage of fixed costs;
•changes in our capacity and capacity utilization rates and fluctuations in our manufacturing yields;
•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;
•maintaining an effective system of internal controls;
•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
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possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative to our production capacity;
•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 historical downward pressure on the prices of our packaging and test services;
•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;
•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;
•the possibility that we may decrease or suspend our quarterly dividend;
•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;
•our significant severance plan obligations associated with our manufacturing operations in Korea;
•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, 2021 (the “Form 10-K”) and from time to time in our other reports filed with or furnished to the Securities and Exchange Commission (“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 these trends, risks or uncertainties continues or occurs, our business, financial condition or operating results could be materially and adversely affected, the trading prices of our securities could decline, and you could lose part or all of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement. We assume 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 applicable law.