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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

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.

AMKOR TECHNOLOGY, INC.

Selected Operating Data

 

 

Q2 2021

 

Q1 2021

 

Q2 2020

Net Sales Data:

 

 

 

 

 

Net sales (in millions):

 

 

 

 

 

Advanced products (1) (3)

$

980

 

 

$

921

 

 

$

835

 

Mainstream products (2) (3)

427

 

 

405

 

 

338

 

Total net sales

$

1,407

 

 

$

1,326

 

 

$

1,173

 

 

 

 

 

 

 

Packaging services

85

%

 

85

%

 

84

%

Test services

15

%

 

15

%

 

16

%

 

 

 

 

 

 

Net sales from top ten customers

61

%

 

61

%

 

69

%

 

 

 

 

 

 

End Market Data:

 

 

 

 

 

Communications (handheld devices, smartphones, tablets)

40

%

 

40

%

 

38

%

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

22

%

 

21

%

 

27

%

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.

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