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MIGDAL HAEMEK, Israel, Nov. 14, 2022 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the third quarter ended September 30, 2022.
Third Quarter of 2022 Results Overview
Revenue for the third quarter of 2022 was $427 million, as compared to $387 million in the third quarter of 2021, reflecting 10% revenue growth. Organic revenue grew by 22% year over year for the third quarter of 2022 (organic revenue defined as total revenue excluding revenues from (i) Nuvoton in the Japanese fabs and (ii) Maxim in the San Antonio fab). Revenue for the second quarter of 2022 was $426 million.
Gross profit for the third quarter of 2022 was $125 million, 46% higher than $85 million recorded in the third quarter of 2021. Gross profit in the second quarter of 2022 was $112 million.
Operating profit for the third quarter of 2022 was $79 million, 79% higher than $44 million recorded in the third quarter of 2021. Operating profit in the second quarter of 2022 was $71 million.
Net profit for the third quarter of 2022 was $69 million, reflecting 16.2% net margin, which exceeded the November 2021 publicly stated target of achieving 15% net margin in 2022, or $0.63 basic and $0.62 diluted earnings per share, 77% higher than $39 million recorded in the third quarter of 2021, which represented $0.36 basic and diluted earnings per share.
Net profit for the second quarter of 2022 was $58 million, representing $0.53 basic and diluted earnings per share.
Cash flow generated from operating activities in the third quarter of 2022 was $122 million and investment in fixed assets was $45 million, net. During the third quarter of 2022, the Company repaid $28 million of its debt.
Guidance and Conference Call
In light of the Company’s definitive agreement with Intel Corporation, as announced on February 15, 2022, the Company is not providing revenue guidance for the fourth quarter 2022 and will not host an earnings conference call.
The Company presents its financial statements in accordance with U.S. GAAP. The financial information included in the tables below includes unaudited condensed financial data. Some of the financial information,whichmay beused and/orpresentedin this release and/ or prior earnings related filings and/ orin related public disclosures or filings with respect to the financial statements and/ or results of the Company, which we describe as “adjusted” financial measuresand/ or reconciled financial measures, are non-GAAP financial measures as defined in Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission as they apply to our Company. These adjusted financial measures are calculated excluding the following: (1) amortization of acquired intangible assets,(2) compensation expenses in respect of equity grants to directors,officers,and employeesand (3) restructuring costs, whichincludecostsassociated withthecessation of operations ofthe Arai manufacturing factory in Japanin 2022in the amount ofapproximately$4millionrecorded in the statements of operations for the three and nine months ended September 30, 2022. These adjusted financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the adjusted financial measures, as well as a reconciliation between the adjusted financial measures and the comparable GAAP financial measures. As used and/ or presented in this release and/ orprior earnings related filings and/ orin related public disclosures or filings with respect to the financial statements and/ or results of the Company, as well as calculated in the tables herein, the term Earnings Before Interest Tax Depreciation and Amortizationwhich we define asEBITDA consists ofoperatingprofit in accordance with GAAP, excluding(i)depreciation expenses, which include depreciation recorded in cost of revenues and in operating cost and expenses lines (e.g, research and development relatedequipment and/ or fixed otherassets depreciation), (ii)stock-based compensation expense,(iii)amortization of acquired intangible assetsand (iv) restructuring costsinrelation totheArai manufacturing factory in Japan, as described in (3) above. EBITDA is reconciled in the tables below from GAAP operating profit. EBITDA is not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies. EBITDA and the adjusted financial information presented herein and/ orpriorearnings related filings and/ orin related public disclosures or filings with respect to the financial statements and/ or results of the Company, should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. The term Net Cash, asmay beused and/ or presented in this release and/ orpriorearnings-relatedfilings and/ orin related public disclosures or filings with respect to the financial statements and/ or results of the Company, is comprised of cash, cash equivalents, short-term deposits and marketable securities less debt amounts as presented in the balance sheets included herein. The term Net Cash is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for cash, debt, operating profit, net profit or loss, cash flows provided by operating,investingand financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP.The term Free Cash Flow, as used and/ or presented in this release and/ orpriorearnings related filings and/ orin related public disclosures or filings with respect to the financial statements and/ or results of the Company, is calculated to be net cash provided by operating activities (in the amounts of$122million,$138millionand$107million for the three months periods endedSeptember 30, 2022,June 30, 2022andSeptember30, 2021, respectively) less cash used for investments in property and equipment, net (in the amounts of $45million, $49millionand$88million for the threemonths periods endedSeptember 30, 2022,June 30, 2022andSeptember30,2021, respectively).The term Free Cash Flow is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating,investingand financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP.
About Tower Semiconductor
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), the leading foundry of high value analog semiconductor solutions, provides technology and manufacturing platforms for integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical and aerospace and defense. Tower Semiconductor focuses on creating positive and sustainable impact on the world through long term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor owns two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm), two facilities in Japan (200mm and 300mm) which it owns through its 51% holdings in TPSCo and is sharing a 300mm manufacturing facility being established in Italy by STMicroelectronics. For more information, please visit: www.towersemi.com
CONTACTS:
Noit Levy | Investor Relations | +972 74 737 7556 | noitle@towersemi.com
A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect our business is included under the heading "Risk Factors" in Tower’s most recent filings on Forms 20-F and 6-K, as were filed with the Securities and Exchange Commission (the “SEC”) and the Israel Securities Authority. Future results may differ materially from those previously reported. The Company does not intend to update, and expressly disclaims any obligation to update, the information contained in this release.
(Financial tables follow)
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||
| (dollars in thousands) | |||||
| September 30, | December 31, | ||||
| 2022 | 2021 | ||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | $ | 390,369 | $ | 210,930 | |
| Short-term deposits | 338,811 | 363,648 | |||
| Marketable securities | 171,951 | 190,068 | |||
| Trade accounts receivable | 165,086 | 142,228 | |||
| Inventories | 269,405 | 234,512 | |||
| Other current assets | 41,710 | 54,817 | |||
| Total current assets | 1,377,332 | 1,196,203 | |||
| PROPERTY AND EQUIPMENT, NET | 902,440 | 876,683 | |||
| GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 15,774 | 18,820 | |||
| DEFERRED TAX AND OTHER LONG-TERM ASSETS, NET | 88,864 | 139,535 | |||
| TOTAL ASSETS | $ | 2,384,410 | $ | 2,231,241 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Short-term debt | $ | 61,186 | $ | 83,868 | |
| Trade accounts payable | 143,992 | 78,712 | |||
| Deferred revenue and customers' advances | 37,907 | 39,992 | |||
| Other current liabilities | 121,487 | 73,756 | |||
| Total current liabilities | 364,572 | 276,328 | |||
| LONG-TERM DEBT | 202,142 | 230,972 | |||
| LONG-TERM CUSTOMERS' ADVANCES | 44,414 | 69,968 | |||
| DEFERRED TAX AND OTHER LONG-TERM LIABILITIES | 20,356 | 38,584 | |||
| TOTAL LIABILITIES | 631,484 | 615,852 | |||
| TOTAL SHAREHOLDERS' EQUITY | 1,752,926 | 1,615,389 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,384,410 | $ | 2,231,241 | |
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||
| (dollars and share count in thousands, except per share data) | ||||||||
| Three months ended | ||||||||
| September 30, | June 30, | September 30, | ||||||
| 2022 | 2022 | 2021 | ||||||
| REVENUES | $ | 427,087 | $ | 426,168 | $ | 386,706 | ||
| COST OF REVENUES | 302,576 | 313,728 | 301,330 | |||||
| GROSS PROFIT | 124,511 | 112,440 | 85,376 | |||||
| OPERATING COSTS AND EXPENSES: | ||||||||
| Research and development | 22,406 | 20,481 | 21,591 | |||||
| Marketing, general and administrative | 18,864 | 21,285 | 19,620 | |||||
| Restructuring costs | 4,033 | -- | -- | |||||
| 45,303 | 41,766 | 41,211 | ||||||
| OPERATING PROFIT | 79,208 | 70,674 | 44,165 | |||||
| FINANCING AND OTHER EXPENSE, NET | (9,351) | (8,162) | (2,714) | |||||
| PROFIT BEFORE INCOME TAX | 69,857 | 62,512 | 41,451 | |||||
| INCOME TAX EXPENSE, NET | (3,175) | (4,339) | (1,084) | |||||
| NET PROFIT | 66,682 | 58,173 | 40,367 | |||||
| Net loss (income) attributable to non-controlling interest | 2,453 | (96) | (1,282) | |||||
| NET PROFIT ATTRIBUTABLE TO THE COMPANY | $ | 69,135 | $ | 58,077 | $ | 39,085 | ||
| BASIC EARNINGS PER SHARE | $ | 0.63 | $ | 0.53 | $ | 0.36 | ||
| Weighted average number of shares | 109,416 | 109,138 | 108,354 | |||||
| DILUTED EARNINGS PER SHARE | $ | 0.62 | $ | 0.53 | $ | 0.36 | ||
| Weighted average number of shares | 110,825 | 110,561 | 109,825 | |||||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||
| (dollars and share count in thousands, except per share data) | |||||||
| Nine months ended | |||||||
| September 30, | |||||||
| 2022 | 2021 | ||||||
| REVENUES | $ | 1,274,387 | $ | 1,096,058 | |||
| COST OF REVENUES | 932,805 | 867,113 | |||||
| GROSS PROFIT | 341,582 | 228,945 | |||||
| OPERATING COSTS AND EXPENSES: | |||||||
| Research and development | 63,205 | 63,015 | |||||
| Marketing, general and administrative | 61,402 | 55,282 | |||||
| Restructuring costs | 4,033 | -- | |||||
| 128,640 | 118,297 | ||||||
| OPERATING PROFIT | 212,942 | 110,648 | |||||
| FINANCING AND OTHER EXPENSE, NET | (19,646 | ) | (11,040 | ) | |||
| PROFIT BEFORE INCOME TAX | 193,296 | 99,608 | |||||
| INCOME TAX BENEFIT (EXPENSE), NET | (12,667) | 2,590 | |||||
| NET PROFIT | 180,629 | 102,198 | |||||
| Net loss (income) attributable to non-controlling interest | 616 | (3,925 | ) | ||||
| NET PROFIT ATTRIBUTABLE TO THE COMPANY | $ | 181,245 | $ | 98,273 | |||
| BASIC EARNINGS PER SHARE | $ | 1.66 | $ | 0.91 | |||
| Weighted average number of shares | 109,165 | 108,114 | |||||
| DILUTED EARNINGS PER SHARE | $ | 1.64 | $ | 0.90 | |||
| Weighted average number of shares | 110,691 | 109,640 | |||||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | ||||||||
| RECONCILIATION FROM GAAP OPERATING PROFIT TO EBITDA (UNAUDITED) | ||||||||
| (dollars in thousands) | ||||||||
| Three months ended | ||||||||
| September 30, | June 30, | September 30, | ||||||
| 2022 | 2022 | 2021 | ||||||
| GAAP OPERATING PROFIT | $ | 79,208 | $ | 70,674 | $ | 44,165 | ||
| Depreciation | 67,343 | 60,886 | 63,021 | |||||
| Stock based compensation | 6,526 | 5,543 | 5,452 | |||||
| Amortization of acquired intangible assets | 509 | 508 | 504 | |||||
| Restructuring costs | 4,033 | -- | -- | |||||
| EBITDA | $ | 157,619 | $ | 137,611 | $ | 113,142 | ||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED SOURCES AND USES REPORT (UNAUDITED) | |||||||||||
| (dollars in thousands) | |||||||||||
| Three months ended | |||||||||||
| September 30, | June 30, | September 30, | |||||||||
| 2022 | 2022 | 2021 | |||||||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | $ | 211,177 | $ | 203,484 | $ | 215,755 | |||||
| Net cash provided by operating activities | 122,402 | 138,097 | 106,974 | ||||||||
| Investments in property and equipment, net | (45,134 | ) | (49,377 | ) | (87,714 | ) | |||||
| Exercise of options | -- | -- | 46 | ||||||||
| Proceeds from an investment in a subsidiary | 5,469 | -- | -- | ||||||||
| Debt repaid, net | (28,164 | ) | (8,211 | ) | (29,211 | ) | |||||
| Effect of Japanese Yen exchange rate change over cash balance | (4,638 | ) | (7,682 | ) | (597 | ) | |||||
| Investments in short-term deposits, marketable securities and other assets, net | 129,257 | (65,134 | ) | 6,250 | |||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 390,369 | $ | 211,177 | $ | 211,503 | |||||
| TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
| (dollars in thousands) | |||||||||||
| Three months ended | |||||||||||
| September 30, | June 30, | September 30, | |||||||||
| 2022 | 2022 | 2021 | |||||||||
| CASH FLOWS - OPERATING ACTIVITIES | |||||||||||
| Net profit for the period | $ | 66,682 | $ | 58,173 | $ | 40,367 | |||||
| Adjustments to reconcile net profit for the period | |||||||||||
| to net cash provided by operating activities: | |||||||||||
| Income and expense items not involving cash flows: | |||||||||||
| Depreciation and amortization | 74,958 | 67,007 | 69,482 | ||||||||
| Effect of exchange rate differences | 104 | 2,276 | 779 | ||||||||
| Other expense, net | 7,950 | 560 | 1,941 | ||||||||
| Changes in assets and liabilities: | |||||||||||
| Trade accounts receivable | 3,991 | 3,578 | (678 | ) | |||||||
| Other assets | 527 | (3,355 | ) | (4,186 | ) | ||||||
| Inventories | (25,510 | ) | (10,630 | ) | (12,553 | ) | |||||
| Trade accounts payable | (15,951 | ) | 22,415 | (2,100 | ) | ||||||
| Deferred revenue and customers' advances | (16,906 | ) | (14,031 | ) | 19,288 | ||||||
| Other current liabilities | 20,725 | 10,974 | (8,087 | ) | |||||||
| Long-term employee related liabilities | (220 | ) | 26 | (43 | ) | ||||||
| Deferred tax, net and other long-term liabilities | 6,052 | 1,104 | 2,764 | ||||||||
| Net cash provided by operating activities | 122,402 | 138,097 | 106,974 | ||||||||
| CASH FLOWS - INVESTING ACTIVITIES | |||||||||||
| Investments in property and equipment, net | (45,134 | ) | (49,377 | ) | (87,714 | ) | |||||
| Investments in deposits, marketable securities and other assets, net | 129,257 | (65,134 | ) | 6,250 | |||||||
| Net cash provided by (used in) investing activities | 84,123 | (114,511 | ) | (81,464 | ) | ||||||
| CASH FLOWS - FINANCING ACTIVITIES | |||||||||||
| Debt repaid, net | (28,164 | ) | (8,211 | ) | (29,211 | ) | |||||
| Proceeds from an investment in a subsidiary | 5,469 | -- | -- | ||||||||
| Exercise of options | -- | -- | 46 | ||||||||
| Net cash used in financing activities | (22,695 | ) | (8,211 | ) | (29,165 | ) | |||||
| EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGE | (4,638 | ) | (7,682 | ) | (597 | ) | |||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 179,192 | 7,693 | (4,252 | ) | |||||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 211,177 | 203,484 | 215,755 | ||||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 390,369 | $ | 211,177 | $ | 211,503 | |||||