Amkor Technology Reports Financial Results for the First Quarter 2021


Amkor Technology to Announce First Quarter 2021 Financial Results on April 26, 2021

TEMPE, Ariz.–(BUSINESS WIRE)–Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the first quarter ended March 31, 2021.

“Amkor delivered a first quarter revenue record of $1.33 billion, a 15% increase over the first quarter of last year,” said Giel Rutten, Amkor’s president and chief executive officer. “Continued strength in Advanced packaging and year-on-year growth of 13% in our Mainstream business led to better than seasonal results in Communications and to sequential growth in Automotive & Industrial, Consumer, and Computing end markets.”

Results

 

Q1 2021

 

Q4 2020 (1)

 

Q1 2020

 

 

($ in millions, except per share data)

Net sales

 

$1,326

 

$1,371

 

$1,153

Gross margin

 

20.0%

 

20.3%

 

16.4%

Operating income

 

$144

 

$159

 

$84

Operating income margin

 

10.9%

 

11.6%

 

7.3%

Net income attributable to Amkor

 

$120

 

$127

 

$64

Earnings per diluted share

 

$0.49

 

$0.52

 

$0.26

EBITDA (2)

 

$280

 

$288

 

$210

(1) Q4 2020 net income includes a $20 million discrete income tax benefit, or $0.08 per diluted share, primarily related to changes in the valuation of certain deferred tax assets.

(2) EBITDA is a non-GAAP financial measure. The reconciliation to the comparable GAAP financial measure is included below under “Selected Operating Data.”

“We continued to operate at high utilization rates across our factories in the quarter, driving significant improvement in year-on-year profitability to 20% gross margin and 11% operating income margin. EPS of $0.49 is a first quarter record,” said Megan Faust, Amkor’s executive vice president and chief financial officer. “Strong operating results and a solid balance sheet provide us the ability to invest in future growth, particularly for Advanced packaging technologies.”

At March 31, 2021, total cash and short-term investments was $0.8 billion, and total debt was $1.1 billion.

We paid a quarterly dividend of $0.04 per share, representing a dividend payment of $9.7 million in the aggregate, on March 15, 2021 to stockholders of record as of February 23, 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 believe the second quarter will be another solid quarter, with revenue of $1.34 billion at the midpoint of our guidance. Our forecast reflects capacity constraints in wafers and substrates that are expected to affect portions of the supply chain in the near term, and we are working closely with our customers and suppliers to mitigate the impact,” said Rutten. “Overall, we continue to see solid demand across all of our key markets and remain confident that our strong position in Advanced packaging will enable us to outgrow the semiconductor market in 2021.”

Second quarter 2021 outlook (unless otherwise noted):

  • Net sales of $1.29 billion to $1.39 billion
  • Gross margin of 17% to 20%
  • Net income of $77 million to $127 million, or $0.32 to $0.52 per diluted share
  • Full year 2021 capital expenditures of approximately $700 million

Conference Call Information

Amkor will conduct a conference call on Monday, April 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. You may also access the call by dialing 1-877-407-4019 or 1-201-689-8337. A replay of the call will be made available at Amkor’s website or by dialing 1-877-660-6853 or 1-201-612-7415 (conference ID 13718212).

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

 

Q1 2021

 

Q4 2020

 

Q1 2020

Net Sales Data:

 

 

 

 

 

Net sales (in millions):

 

 

 

 

 

Advanced products (1) (3)

$

921

 

 

$

972

 

 

$

795

 

Mainstream products (2) (3)

405

 

 

399

 

 

358

 

Total net sales

$

1,326

 

 

$

1,371

 

 

$

1,153

 

 

 

 

 

 

 

Packaging services

85

%

 

85

%

 

85

%

Test services

15

%

 

15

%

 

15

%

 

 

 

 

 

 

Net sales from top ten customers

61

%

 

61

%

 

67

%

 

 

 

 

 

 

End Market Data:

 

 

 

 

 

Communications (handheld devices, smartphones, tablets)

40

%

 

46

%

 

38

%

Consumer (connected home, set-top boxes, televisions, visual imaging, wearables)

21

%

 

19

%

 

24

%

Automotive, industrial and other (driver assist, infotainment, performance, safety)

22

%

 

19

%

 

23

%

Computing (data center, infrastructure, PC/laptop, storage)

17

%

 

16

%

 

15

%

Total

100

%

 

100

%

 

100

%

 

 

 

 

 

 

Gross Margin Data:

 

 

 

 

 

Net sales

100.0

%

 

100.0

%

 

100.0

%

Cost of sales:

 

 

 

 

 

Materials

43.2

%

 

44.6

%

 

45.3

%

Labor

13.8

%

 

12.9

%

 

14.2

%

Other manufacturing

23.0

%

 

22.2

%

 

24.1

%

Gross margin

20.0

%

 

20.3

%

 

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:

 

 

 

 

 

 

Q1 2021

 

Q4 2020

 

Q1 2020

 

(in millions)

EBITDA Data:

 

 

 

 

 

Net income

$

120

 

 

$

127

 

 

$

64

 

Plus: Interest expense

13

 

 

15

 

 

17

 

Plus: Income tax expense

12

 

 

13

 

 

5

 

Plus: Depreciation & amortization

135

 

 

133

 

 

124

 

EBITDA

$

280

 

 

$

288

 

 

$

210

 

 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

For the Three Months Ended March 31,

 

2021

 

2020

 

(In thousands, except per share data)

Net sales

$

1,326,150

 

 

 

$

1,152,616

 

 

Cost of sales

1,060,616

 

 

 

963,708

 

 

Gross profit

265,534

 

 

 

188,908

 

 

Selling, general and administrative

76,768

 

 

 

72,582

 

 

Research and development

44,318

 

 

 

32,253

 

 

Total operating expenses

121,086

 

 

 

104,835

 

 

Operating income

144,448

 

 

 

84,073

 

 

Interest expense

12,673

 

 

 

17,045

 

 

Other (income) expense, net

89

 

 

 

(2,315

)

 

Total other expense, net

12,762

 

 

 

14,730

 

 

Income before taxes

131,686

 

 

 

69,343

 

 

Income tax expense

11,667

 

 

 

4,846

 

 

Net income

120,019

 

 

 

64,497

 

 

Net income attributable to non-controlling interests

(210

)

 

 

(608

)

 

Net income attributable to Amkor

$

119,809

 

 

 

$

63,889

 

 

 

 

 

 

Net income attributable to Amkor per common share:

 

 

 

Basic

$

0.49

 

 

 

$

0.27

 

 

Diluted

$

0.49

 

 

 

$

0.26

 

 

 

 

 

 

Shares used in computing per common share amounts:

 

 

 

Basic

243,267

 

 

 

240,919

 

 

Diluted

245,129

 

 

 

241,333

 

 

 

AMKOR TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

March 31, 2021

 

December 31, 2020

 

(In thousands)

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

650,274

 

 

 

$

698,002

 

 

Restricted cash

933

 

 

 

1,007

 

 

Short-term investments

163,693

 

 

 

133,769

 

 

Accounts receivable, net of allowances

950,015

 

 

 

962,643

 

 

Inventories

307,545

 

 

 

297,293

 

 

Other current assets

41,594

 

 

 

40,218

 

 

Total current assets

2,114,054

 

 

 

2,132,932

 

 

Property, plant and equipment, net

2,623,470

 

 

 

2,566,002

 

 

Operating lease right of use assets

141,247

 

 

 

147,236

 

 

Goodwill

25,481

 

 

 

27,325

 

 

Restricted cash

3,565

 

 

 

3,188

 

 

Other assets

145,648

 

 

 

145,628

 

 

Total assets

$

5,053,465

 

 

 

$

5,022,311

 

 

LIABILITIES AND EQUITY

Current liabilities:

 

 

 

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

$

135,405

 

 

 

$

149,007

 

 

Trade accounts payable

602,962

 

 

 

636,434

 

 

Capital expenditures payable

273,934

 

 

 

181,339

 

 

Accrued expenses

304,556

 

 

 

349,207

 

 

Total current liabilities

1,316,857

 

 

 

1,315,987

 

 

Long-term debt

952,366

 

 

 

1,005,339

 

 

Pension and severance obligations

146,118

 

 

 

159,610

 

 

Long-term operating lease liabilities

77,651

 

 

 

84,420

 

 

Other non-current liabilities

98,236

 

 

 

102,996

 

 

Total liabilities

2,591,228

 

 

 

2,668,352

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

290

 

 

 

289

 

 

Additional paid-in capital

1,964,331

 

 

 

1,953,378

 

 

Retained earnings

672,534

 

 

 

562,502

 

 

Accumulated other comprehensive income (loss)

15,823

 

 

 

27,270

 

 

Treasury stock

(219,061

)

 

 

(217,740

)

 

Total Amkor stockholders’ equity

2,433,917

 

 

 

2,325,699

 

 

Non-controlling interests in subsidiaries

28,320

 

 

 

28,260

 

 

Total equity

2,462,237

 

 

 

2,353,959

 

 

Total liabilities and equity

$

5,053,465

 

 

 

$

5,022,311

 

 

 

AMKOR TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the Three Months Ended March 31,

 

2021

 

2020

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net income

$

120,019

 

 

 

$

64,497

 

 

Depreciation and amortization

135,390

 

 

 

123,657

 

 

Other operating activities and non-cash items

2,370

 

 

 

8,287

 

 

Changes in assets and liabilities

(80,991

)

 

 

(99,852

)

 

Net cash provided by operating activities

176,788

 

 

 

96,589

 

 

Cash flows from investing activities:

 

 

 

Payments for property, plant and equipment

(110,351

)

 

 

(55,888

)

 

Proceeds from sale of property, plant and equipment

547

 

 

 

1,887

 

 

Proceeds from sale of short-term investments

19,838

 

 

 

31

 

 

Proceeds from maturities of short-term investments

43,790

 

 

 

6,134

 

 

Payments for short-term investments

(92,879

)

 

 

(55,754

)

 

Other investing activities

(25,317

)

 

 

(1,002

)

 

Net cash used in investing activities

(164,372

)

 

 

(104,592

)

 

Cash flows from financing activities:

 

 

 

Proceeds from revolving credit facilities

 

 

 

201,000

 

 

Proceeds from short-term debt

3,679

 

 

 

14,086

 

 

Payments of short-term debt

(7,803

)

 

 

(9,409

)

 

Proceeds from issuance of long-term debt

50,000

 

 

 

24,000

 

 

Payments of long-term debt

(79,684

)

 

 

(172,336

)

 

Payments of finance lease obligations

(3,216

)

 

 

(2,355

)

 

Payments of dividends

(19,457

)

 

 

 

 

Other financing activities

7,037

 

 

 

109

 

 

Net cash (used in) provided by financing activities

(49,444

)

 

 

55,095

 

 

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

(10,397

)

 

 

(300

)

 

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

(47,425

)

 

 

46,792

 

 

Cash, cash equivalents and restricted cash, beginning of period

702,197

 

 

 

898,532

 

 

Cash, cash equivalents and restricted cash, end of period

$

654,772

 

 

 

$

945,324

 

 

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 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;
  • 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, and in particular the recent increase in tariffs, customs, duties and other restrictive trade barriers considered or adopted by U.S. and other 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;
  • the utilization level of our factory and research and development center in Korea and, the scope, costs, timeline or benefits of the project;
  • 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, 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, 2020 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.


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