TowerJazz Reports 71 Percent Year Over Year Revenue Growth With Strong Margins for the First Quarter of 2015
Growth Guided for the Second Quarter; Continued Increasing Customer Demand Throughout the Year;
Strong Balance Sheet With Net Debt to EBITDA Ratio Reduced to Below 1X
MIGDAL HAEMEK,
Highlights
- Revenue of
$226 million , up 71% year over year, with 33% organic growth and 31% for top 10 customers; - Strong margins with year-over-year improvement of:
- Non-GAAP gross profit of 36%, from
$45 million to $81 million ; - Non-GAAP net profit of
$50 million , an increase of 2.5X, with annualized EBITDA run rate exceeding$200 million ;
- Non-GAAP gross profit of 36%, from
- Strengthened balance sheet
- Net debt of
$162 million atMarch 31, 2015 , as compared to$406 million as ofMarch 31, 2014 :- Net debt to EBITDA ratio of 0.8X;
- Successful accelerated bond conversion of
$162 million resulted in a one-time non cash GAAP financing cost of$73 million , enabling sustainable GAAP net profit going forward;
- Shareholders' equity increased by 49% quarter over quarter to a record of
$292 million , as compared to$196 million in the previous quarter;
- Net debt of
- Substantial industry leading customer partnered technologies, such as commercial IR camera with
FLIR and gesture control withIntel ; - Guiding for second quarter growth with continued increase of new products entering the factories.
First Quarter Results Overview
Revenues for the first quarter of 2015 were
Gross profit, on a non-GAAP basis, for the first quarter of 2015 was
EBITDA, which is akin to non-GAAP operating profit, was
On a non-GAAP basis, net profit for the quarter was
Gross profit, on a GAAP basis, for the first quarter of 2015 was
Net loss on a GAAP basis for the first quarter of 2015 was
Sustainable GAAP net profit going forward may be expected by the Company due to the future non-cash financing-expenses being reduced in a significant manner, in relation to the Series F bonds, having been reduced from
Balance sheet was strengthened with a
During the first quarter of 2015, the Company's main cash activities, which resulted in cash on hand of
Business Outlook
TowerJazz expects revenues for the second quarter of 2015 ending
CEO Comments
Mr.
Ellwanger concluded, "We have continued to strengthen our position as the analog global leader, serving first tier customers in all segments of our business, and as well have gained a strong US investor base reflected by a 75X increase in NASDAQ dollar volume of trade, while also surpassing a
Teleconference and Webcast
TowerJazz will host an investor conference call today,
This call will be webcast and can be accessed via TowerJazz's website at www.towerjazz.com., or by calling: 1-888-668-9141 (U.S. Toll-Free), 03-918-0609 (
As previously announced, beginning with the second quarter of 2007, the Company has been presenting its financial statements in accordance with U.S. GAAP. This release, including the financial tables below, presents other financial information that may be considered "non-GAAP financial measures" under Regulation G and related reporting requirements promulgated by the
Since the initial listing of the Company on NASDAQ in
About TowerJazz
To provide multi-fab sourcing and extended capacity for its customers, TowerJazz operates two manufacturing facilities in
This press release includes forward-looking statements, which are subject to risks and uncertainties. Actual results may vary from those projected or implied by such forward-looking statements and you should not place any undue reliance on such forward-looking statements. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) maintaining existing customers and attracting additional customers, (ii) demand in our customers' end markets, (iii) high utilization and its effect on cycle time, yield and on schedule delivery which may cause customers to transfer their product to other fabss, (iv) operating results fluctuate from quarter to quarter making it difficult to predict future performance, (v) serving our debt and other liabilities, (vi) our ability to successfully execute acquisitions, integrate them into our business, utilize our expanded capacity and find new business, (vii) fluctuations in cash flow, (viii) our ability to satisfy the covenants stipulated in our agreements with our lenders, banks and bond holders, (viii) our majority stake in TPSCo, (ix) ceasing the Nishiwaki fab operations in the course of restructuring our activities and business in
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, F-3, F-4, S-8 and 6-K, as were filed with the
(Financial tables follow)
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | ||
CONSOLIDATED BALANCE SHEETS | ||
(dollars in thousands) | ||
March 31, | December 31, | |
2015 | 2014 | |
(Unaudited) | ||
A S S E T S | ||
CURRENT ASSETS | ||
Cash and short-term interest bearing deposits | $ 134,216 | $ 187,167 |
Trade accounts receivable | 105,491 | 99,166 |
Other receivables | 7,408 | 5,759 |
Inventories | 86,153 | 87,873 |
Other current assets | 20,314 | 14,119 |
Total current assets | 353,582 | 394,084 |
LONG-TERM INVESTMENTS | 11,785 | 11,896 |
PROPERTY AND EQUIPMENT, NET | 408,513 | 419,111 |
INTANGIBLE ASSETS, NET | 41,225 | 42,037 |
GOODWILL | 7,000 | 7,000 |
OTHER ASSETS, NET | 6,391 | 10,018 |
TOTAL ASSETS | $ 828,496 | $ 884,146 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
CURRENT LIABILITIES | ||
Short term debt | $ 26,721 | $ 119,999 |
Trade accounts payable | 108,616 | 98,632 |
Deferred revenue | 8,112 | 5,478 |
Employee related liabilities, including | ||
Nishiwaki retirement allowance | 44,059 | 59,597 |
Other current liabilities | 15,043 | 16,619 |
Total current liabilities | 202,551 | 300,325 |
LONG-TERM DEBT | 225,841 | 267,087 |
LONG-TERM CUSTOMERS' ADVANCES | 6,181 | 6,272 |
EMPLOYEE RELATED LIABILITIES | 15,973 | 16,699 |
DEFERRED TAX LIABILITY | 75,854 | 75,278 |
OTHER LONG-TERM LIABILITIES | 10,057 | 22,924 |
Total liabilities | 536,457 | 688,585 |
TOTAL SHAREHOLDERS' EQUITY | 292,039 | 195,561 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 828,496 | $ 884,146 |
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |
CONSOLIDATED CASH REPORT (UNAUDITED) | |
(dollars in thousands) | |
Three months | |
ended | |
March 31, | |
2015 | |
Cash at beginning of the period | $ 187,167 |
Cash from operations, excluding interest payments | 43,986 |
Funds received from exercise of warrants and options | 6,471 |
Investments in property, equipment and other fixed assets | (28,122) |
Debt repayment- principal, mainly to early redeem Jazz notes | (46,683) |
Debt repayment- interest | (3,696) |
Nishiwaki's employees retirement related payments in connection with its cessation of operations | (24,907) |
Cash at end of the period | $ 134,216 |
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||
(dollars in thousands, except per share data) | |||
Three months ended | |||
March 31, | December 31, | March 31, | |
2015 | 2014 | 2014 | |
GAAP | GAAP | GAAP | |
REVENUES | $ 226,217 | $ 235,289 | $ 132,653 |
COST OF REVENUES | 193,225 | 197,197 | 128,403 |
GROSS PROFIT | 32,992 | 38,092 | 4,250 |
OPERATING COSTS AND EXPENSES | |||
Research and development | 14,837 | 14,378 | 7,443 |
Marketing, general and administrative | 16,161 | 15,525 | 10,816 |
Nishiwaki Fab restructuring costs and impairment | -- | (20,228) | 71,459 |
Merger related costs | -- | -- | 1,229 |
30,998 | 9,675 | 90,947 | |
OPERATING PROFIT (LOSS) | 1,994 | 28,417 | (86,697) |
INTEREST EXPENSE, NET | (3,633) | (7,817) | (8,113) |
OTHER NON CASH FINANCING EXPENSE, NET (a) | (84,596) | (17,156) | (20,117) |
GAIN FROM ACQUISITION, NET | -- | -- | 151,155 |
OTHER INCOME (EXPENSE), NET | (9) | 15 | 139 |
PROFIT (LOSS) BEFORE INCOME TAX (b) | (86,244) | 3,459 | 36,367 |
INCOME TAX BENEFIT (c) | 10,894 | 740 | 2,454 |
PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST (b) | (75,350) | 4,199 | 38,821 |
NON CONTROLLING INTEREST | 2,286 | (3,575) | -- |
NET PROFIT (LOSS) (b) | $ (73,064) | $ 624 | $ 38,821 |
(a) Other non cash financing expense, net for the three months ended March 31, 2015 comprised primarily of accelerated accretion and amortization resulting from the $162 million accelerated conversions of debentures series F. | |||
(b) The differences between the above-referenced GAAP profit (loss) results for the first quarter of 2015 as compared with the comparable periods' results are mainly due to: (i) $85 million other non cash financing expenses included in the three months ended March 31, 2015, primarily reflecting accelerated accretion resulted from the successful $162 million accelerated conversion of debentures series F (ii) $151 million gain from the acquisition of TPSCo included in the first quarter of 2014; and (iii) $71 million and ($20) million related to Nishiwaki Fab cessation of operations recorded in the three months ended March 31, 2014 and December 31, 2014, respectively. | |||
(c) Income tax benefit for the three months ended March 31, 2015 includes primarily an $11 million income resulting from expiration of the statute of limitations during the first quarter of 2015 in connection with tax items for which accruals have been made in prior years |
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||||||
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||
(dollars in thousands, except per share data) | |||||||||
Three months ended | Three months ended | Three months ended | |||||||
March 31, | March 31, | March 31, | |||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||
non-GAAP | Adjustments (see a, b, c, d, e below) | GAAP | |||||||
REVENUES | $ 226,217 | $ 132,653 | $ -- | $ -- | $ 226,217 | $ 132,653 | |||
COST OF REVENUES | 145,530 | 88,162 | 47,695 | (a) | 40,241 | (a) | 193,225 | 128,403 | |
GROSS PROFIT | 80,687 | 44,491 | (47,695) | (40,241) | 32,992 | 4,250 | |||
OPERATING COSTS AND EXPENSES | |||||||||
Research and development | 14,422 | 7,155 | 415 | (b) | 288 | (b) | 14,837 | 7,443 | |
Marketing, general and administrative | 14,929 | 9,866 | 1,232 | (c) | 950 | (c) | 16,161 | 10,816 | |
Nishiwaki Fab restructuring costs and impairment | -- | -- | -- | 71,459 | -- | 71,459 | |||
Merger related costs | -- | -- | -- | 1,229 | -- | 1,229 | |||
29,351 | 17,021 | 1,647 | 73,926 | 30,998 | 90,947 | ||||
OPERATING PROFIT (LOSS) | 51,336 | 27,470 | (49,342) | (114,167) | 1,994 | (86,697) | |||
INTEREST EXPENSE, NET | (3,633) | (8,113) | -- | (d) | -- | (d) | (3,633) | (8,113) | |
OTHER NON CASH FINANCING EXPENSE, NET (*) | -- | -- | (84,596) | (20,117) | (84,596) | (20,117) | |||
GAIN FROM ACQUISITION, NET | -- | -- | -- | 151,155 | -- | 151,155 | |||
OTHER INCOME (EXPENSE), NET | (9) | 139 | -- | -- | (9) | 139 | |||
PROFIT (LOSS) BEFORE INCOME TAX | 47,694 | 19,496 | (133,938) | 16,871 | (86,244) | (f) | 36,367 | ||
INCOME TAX BENEFIT (EXPENSE) | (464) | -- | 11,358 | (e) | 2,454 | (e) | 10,894 | 2,454 | |
PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST | 47,230 | 19,496 | (122,580) | 19,325 | (75,350) | (f) | 38,821 | ||
NON CONTROLLING INTEREST | 2,286 | -- | -- | -- | 2,286 | -- | |||
NET PROFIT (LOSS) | $ 49,516 | $ 19,496 | $ (122,580) | $ 19,325 | $ (73,064) | (f) | $ 38,821 | ||
NON-GAAP GROSS MARGINS | 36% | 34% | |||||||
NON-GAAP OPERATING MARGINS | 23% | 21% | |||||||
NON-GAAP NET MARGINS | 22% | 15% | |||||||
BASIC EARNINGS PER ORDINARY SHARE | $ 0.78 | $ 0.40 | |||||||
(a) Includes depreciation and amortization expenses in the amounts of $47,439 and $39,944 and stock based compensation expenses in the amounts of $256 and $297 for the three months ended March 31, 2015 and March 31, 2014 respectively. | |||||||||
(b) Includes depreciation and amortization expenses in the amounts of $96 and $29 and stock based compensation expenses in the amounts of $319 and $259 for the three months ended March 31, 2015 and March 31, 2014 respectively. | |||||||||
(c) Includes depreciation and amortization expenses in the amounts of $497 and $200 and stock based compensation expenses in the amounts of $735 and $750 for the three months ended March 31, 2015 and March 31, 2014 respectively. | |||||||||
(d) Non-GAAP interest expense, net include only interest on an accrual basis. | |||||||||
(e) Non-GAAP income tax expense include taxes paid during the period on a cash basis. | |||||||||
(f) The differences between the above-referenced GAAP profit (loss) results for the first quarter of 2015 as compared with the comparable periods' results are mainly due to: (i) $85 million other non cash financing expenses included in the three months ended March 31, 2015, primarily reflecting accelerated accretion resulted from the successful $162 million accelerated conversion of debentures series F (ii) $151 million gain from the acquisition of TPSCo included in the first quarter of 2014; and (iii) $71 million of costs related to Nishiwaki Fab cessation of operations recorded in the three months ended March 31, 2014. | |||||||||
(*) Other non cash financing expense, net for the three months ended March 31, 2015 comprised primarily of accelerated accretion and amortization resulting from the $162 million accelerated conversions of debentures series F. |
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES | |||||||||
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||
(dollars in thousands, except per share data) | |||||||||
Three months ended | Three months ended | Three months ended | |||||||
March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | ||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||
non-GAAP | Adjustments (see a, b, c, d, e below) | GAAP | |||||||
REVENUES | $ 226,217 | $ 235,289 | $ -- | $ -- | $ 226,217 | $ 235,289 | |||
COST OF REVENUES | 145,530 | 151,105 | 47,695 | (a) | 46,092 | (a) | 193,225 | 197,197 | |
GROSS PROFIT | 80,687 | 84,184 | (47,695) | (46,092) | 32,992 | 38,092 | |||
OPERATING COSTS AND EXPENSES | |||||||||
Research and development | 14,422 | 13,676 | 415 | (b) | 702 | (b) | 14,837 | 14,378 | |
Marketing, general and administrative | 14,929 | 14,623 | 1,232 | (c) | 902 | (c) | 16,161 | 15,525 | |
Nishiwaki Fab restructuring costs and impairment | -- | -- | -- | (20,228) | -- | (20,228) | |||
29,351 | 28,299 | 1,647 | (18,624) | 30,998 | 9,675 | ||||
OPERATING PROFIT | 51,336 | 55,885 | (49,342) | (27,468) | 1,994 | 28,417 | |||
INTEREST EXPENSE, NET | (3,633) | (7,817) | -- | (d) | -- | (d) | (3,633) | (7,817) | |
OTHER NON CASH FINANCING EXPENSE, NET (*) | -- | -- | (84,596) | (17,156) | (84,596) | (17,156) | |||
OTHER INCOME (EXPENSE), NET | (9) | 15 | -- | -- | (9) | 15 | |||
PROFIT (LOSS) BEFORE INCOME TAX | 47,694 | 48,083 | (133,938) | (44,624) | (86,244) | (f) | 3,459 | ||
INCOME TAX BENEFIT (EXPENSE) | (464) | 1,410 | 11,358 | (e) | (670) | (e) | 10,894 | 740 | |
PROFIT (LOSS) BEFORE NON CONTROLLING INTEREST | 47,230 | 49,493 | (122,580) | (45,294) | (75,350) | (f) | 4,199 | ||
NON CONTROLLING INTEREST | 2,286 | (3,575) | -- | -- | 2,286 | (3,575) | |||
NET PROFIT (LOSS) | $ 49,516 | $ 45,918 | $ (122,580) | $ (45,294) | $ (73,064) | (f) | $ 624 | ||
BASIC EARNINGS (LOSS) PER ORDINARY SHARE | $ (1.15) | $ 0.01 | |||||||
Weighted average number of ordinary shares outstanding - in thousands (**) | 63,581 | 55,647 | |||||||
(a) Includes depreciation and amortization expenses in the amounts of $47,439 and $46,083 and stock based compensation expenses in the amounts of $256 and $9 for the three months ended March 31, 2015 and December 31, 2014 respectively. | |||||||||
(b) Includes depreciation and amortization expenses in the amounts of $96 and $398 and stock based compensation expenses in the amounts of $319 and $304 for the three months ended March 31, 2015 and December 31, 2014 respectively. | |||||||||
(c) Includes depreciation and amortization expenses in the amounts of $497 and $213 and stock based compensation expenses in the amounts of $735 and $689 for the three months ended March 31, 2015 and December 31, 2014 respectively. | |||||||||
(d) Non-GAAP interest expense, net include only interest on an accrual basis. | |||||||||
(e) Non-GAAP income tax benefit (expense) include taxes paid during the period on a cash basis. | |||||||||
(f) The differences between the above-referenced GAAP profit (loss) results for the first quarter of 2015 as compared with the comparable periods' results are mainly due to: (i) $85 million other non cash financing expenses included in the three months ended March 31, 2015, primarily reflecting accelerated accretion resulted from the successful $162 million accelerated conversion of debentures series F; and (ii) ($20) million related to Nishiwaki Fab cessation of operations recorded in the three months ended December 31, 2014. | |||||||||
(*) Other non cash financing expense, net for the three months ended March 31, 2015 comprised primarily of accelerated accretion and amortization resulting from the $162 million accelerated conversions of debentures series F. | |||||||||
(**) Fully diluted earnings per share calculation and presentation are not required under GAAP for the first quarter of 2015, since the company did not record a net profit; hence, under GAAP, fully diluted earnings per share is not different than basic earnings per share for the first quarter of 2015; in order to calculate fully diluted share count, in case it was required under GAAP, shares underlying the following securities may have been added to the 77 million outstanding shares as of the date of this release- approximately 13 million possible shares underlying options and warrants, 3 million underlying debentures series F, 3 million underlying capital notes and 6 million underlying Jazz notes due December 2018 (unless repayable with cash). |
CONTACT: TowerJazz Investor Relations | Noit Levy-Karoubi, +972 4 604 7066 | Noit.levi@towerjazz.com GK Investor Relations |Kenny Green , (646) 201 9246 | towerjazz@gkir.com