Amkor Technology Reports Record Financial Results for the Fourth Quarter and Full Year 2022

Rhea-AI Summary

Amkor Technology, Inc. (Nasdaq: AMKR) announced its financial results for Q4 and full year 2022, reporting record net sales of $1.91 billion for Q4, an 11% increase year-on-year, and $7.09 billion for the full year, a 16% rise. Net income for Q4 was $164 million, with earnings per diluted share at $0.67. Full year net income reached $766 million, with EPS of $3.11. However, guidance for Q1 2023 estimates a 9% decline in sales, with expected net income of $15 million to $55 million. The company also announced a 50% increase in its quarterly cash dividend effective December 27, 2022.

Positive

• Record net sales of $7.09 billion for 2022, up 16% year-on-year.
• Record net income of $766 million and EPS of $3.11 for 2022.
• 50% increase in quarterly cash dividend, from $0.05 to $0.075 per share.

Negative

• Q1 2023 net sales guidance indicates a 9% year-on-year decline.
• Gross margin expected to decrease to 10.5% to 13.5% in Q1 2023.

TEMPE, Ariz.--(BUSINESS WIRE)-- Amkor Technology, Inc. (Nasdaq: AMKR), a leading provider of semiconductor packaging and test services, today announced financial results for the fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

• Record fourth quarter net sales $1.91 billion, up 11% year-on-year
• Net income $164 million, earnings per diluted share $0.67

Full Year 2022 Highlights:

• Record net sales $7.09 billion, up 16% year-on-year
• Record gross profit $1.33 billion, record operating income $897 million
• Gross margin 18.8%, operating income margin 12.7%
• Record net income $766 million, record earnings per diluted share $3.11
• Record EBITDA $1.53 billion
• Net cash from operations $1.10 billion, free cash flow $194 million

“2022 was another great year for Amkor. We achieved record revenue of $7.1 billion and record EPS of $3.11. All end markets set new record revenue levels for the year, resulting in significant outperformance compared to the semiconductor market,” said Giel Rutten, Amkor’s president and chief executive officer. “Amkor’s strategic focus on advanced packaging, geographic diversity, and industry megatrends positions us well to continue to outperform the semiconductor industry through this cycle.”

Financial Results

($ in millions, except per share data)	Q4 2022	Q3 2022	Q4 2021	2022	2021
Net sales	$1,906	$2,084	$1,725	$7,092	$6,138
Gross margin	17.5%	20.2%	21.0%	18.8%	20.0%
Operating income	$225	$319	$252	$897	$763
Operating income margin	11.8%	15.3%	14.6%	12.7%	12.4%
Net income attributable to Amkor	$164	$306	$217	$766	$643
Earnings per diluted share	$0.67	$1.24	$0.88	$3.11	$2.62
EBITDA (1)	$382	$481	$398	$1,529	$1,331
Net cash provided by operating activities				$1,099	$1,121
Annual free cash flow (1)				$194	$344

(1)

EBITDA and free cash flow are non-GAAP measures. The reconciliations to the comparable GAAP measures are included below under “Selected Operating Data.”

At December 31, 2022, total cash and short-term investments was $1.24 billion, and total debt was $1.23 billion.

On November 15, 2022, Amkor’s Board of Directors announced a 50% increase in the company’s quarterly cash dividend, from $0.05 per share to $0.075 per share, on the company’s common stock. The increase was effective with the dividend paid on December 27, 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 first quarter 2023 (unless otherwise noted):

• Net sales of $1.40 billion to $1.50 billion, a year-on-year decrease of 9% at midpoint
• Gross margin of 10.5% to 13.5%
• Net income of $15 million to $55 million, or $0.06 to $0.22 per diluted share
• Full year 2023 capital expenditures of approximately $800 million

Conference Call Information

Amkor will conduct a conference call on Monday, February 13, 2023, 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.

AMKOR TECHNOLOGY, INC. Selected Operating Data
	Q4 2022		Q3 2022		Q4 2021		2022		2021
Net Sales Data:
Net sales (in millions):
Advanced Products (1)	$1,488		$1,640		$1,273		$5,368		$4,409
Mainstream Products (2)	418		444		452		1,724		1,729
Total net sales	$1,906		$2,084		$1,725		$7,092		$6,138
Packaging services	88 %		87 %		86 %		87 %		86 %
Test services	12 %		13 %		14 %		13 %		14 %
Net sales from top ten customers	67 %		67 %		66 %		65 %		63 %
End Market Distribution Data:
Communications (smartphones, tablets)	50 %		47 %		42 %		44 %		41 %
Automotive, industrial and other (ADAS, electrification, infotainment, safety)	20 %		18 %		20 %		20 %		21 %
Consumer (AR & gaming, connected home, home electronics, wearables)	17 %		20 %		22 %		20 %		22 %
Computing (data center, infrastructure, PC/laptop, storage)	13 %		15 %		16 %		16 %		16 %
Total	100 %		100 %		100 %		100 %		100 %
Gross Margin Data:
Net sales	100.0 %		100.0 %		100.0 %		100.0 %		100.0 %
Cost of sales:
Materials	55.1 %		53.3 %		47.4 %		51.4 %		46.1 %
Labor	9.0 %		8.6 %		11.4 %		10.0 %		12.3 %
Other manufacturing	18.4 %		17.9 %		20.2 %		19.8 %		21.6 %
Gross margin	17.5 %		20.2 %		21.0 %		18.8 %		20.0 %

(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

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 Measures Reconciliation:
(in millions)	Q4 2022			Q3 2022			Q4 2021			2022			2021
EBITDA Data:
Net income	$	164		$	306		$	217		$	767		$	646
Plus: Interest expense		15			15			13			59			52
Plus: Income tax expense		46			4			25			90			69
Plus: Depreciation & amortization		157			156			143			613			564
EBITDA	$	382		$	481		$	398		$	1,529		$	1,331

In this press release, we refer to free cash flow, which is not defined by U.S. GAAP. We define free cash flow as net cash provided by operating activities less payments for property, plant and equipment, plus proceeds from the sale of and insurance recovery for property, plant and equipment, if applicable. We believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, and our ability to service debt, and our ability to fund capital expenditures and pay dividends. However, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities. Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies. Below is our reconciliation of free cash flow to U.S. GAAP net cash provided by operating activities.

Non-GAAP Financial Measures Reconciliation:
(in millions)	2022				2021
Free Cash Flow Data:
Net cash provided by operating activities	$	1,099			$	1,121
Less: Purchases of property, plant and equipment		(908	)			(780	)
Plus: Proceeds from sale of and insurance recovery for property, plant and equipment		3				3
Free cash flow	$	194			$	344

AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited)
	For the Three Months Ended December 31,								For the Year Ended December 31,
	2022				2021				2022				2021
Net sales	$	1,906,210			$	1,724,644			$	7,091,585			$	6,138,329
Cost of sales		1,571,936				1,362,276				5,761,598				4,912,775
Gross profit		334,274				362,368				1,329,987				1,225,554
Selling, general and administrative		69,598				72,546				283,372				296,084
Research and development		39,594				37,413				149,429				166,037
Total operating expenses		109,192				109,959				432,801				462,121
Operating income		225,082				252,409				897,186				763,433
Interest expense		14,943				13,175				58,563				51,508
Other (income) expense, net		520				(2,633	)			(18,309	)			(3,141	)
Total other expense, net		15,463				10,542				40,254				48,367
Income before taxes		209,619				241,867				856,932				715,066
Income tax expense		45,731				24,584				89,890				69,459
Net income		163,888				217,283				767,042				645,607
Net income attributable to noncontrolling interests		413				(757	)			(1,219	)			(2,612	)
Net income attributable to Amkor	$	164,301			$	216,526			$	765,823			$	642,995
Net income attributable to Amkor per common share:
Basic	$	0.67			$	0.89			$	3.13			$	2.64
Diluted	$	0.67			$	0.88			$	3.11			$	2.62
Shares used in computing per common share amounts:
Basic		244,957				244,267				244,676				243,878
Diluted		246,693				245,894				246,205				245,704

AMKOR TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
	December 31,
	2022				2021
ASSETS
Current assets:
Cash and cash equivalents	$	959,072			$	826,744
Restricted cash		—				962
Short-term investments		281,964				251,530
Accounts receivable, net of allowances		1,365,504				1,258,767
Inventories		629,576				484,959
Other current assets		65,123				33,601
Total current assets		3,301,239				2,856,563
Property, plant and equipment, net		3,135,614				2,871,058
Operating lease right of use assets		171,163				159,742
Goodwill		21,517				24,516
Restricted cash		3,334				3,815
Other assets		188,890				122,860
Total assets	$	6,821,757			$	6,038,554
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	143,813			$	153,008
Trade accounts payable		899,164				828,727
Capital expenditures payable		146,602				210,875
Short-term operating lease liability		70,991				64,233
Accrued expenses		401,841				422,892
Total current liabilities		1,662,411				1,679,735
Long-term debt		1,088,521				984,988
Pension and severance obligations		93,540				120,472
Long-term operating lease liabilities		75,745				83,937
Other non-current liabilities		201,839				196,876
Total liabilities		3,122,056				3,066,008
Amkor stockholders’ equity:
Preferred stock		—				—
Common stock		291				290
Additional paid-in capital		1,996,344				1,977,134
Retained earnings		1,874,644				1,163,939
Accumulated other comprehensive income		16,699				19,978
Treasury stock		(219,226	)			(219,065	)
Total Amkor stockholders’ equity		3,668,752				2,942,276
Noncontrolling interests in subsidiaries		30,949				30,270
Total equity		3,699,701				2,972,546
Total liabilities and equity	$	6,821,757			$	6,038,554

AMKOR TECHNOLOGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	For the Year Ended December 31,
	2022				2021
Cash flows from operating activities:
Net income	$	767,042			$	645,607
Depreciation and amortization		612,702				563,582
Other operating activities and non-cash items		422				36,460
Changes in assets and liabilities		(281,410	)			(124,354	)
Net cash provided by operating activities		1,098,756				1,121,295
Cash flows from investing activities:
Payments for property, plant and equipment		(908,294	)			(779,779	)
Proceeds from sale of property, plant and equipment		3,148				3,157
Proceeds from insurance recovery for property, plant and equipment		—				104
Payments for short-term investments		(438,803	)			(414,208	)
Proceeds from sale of short-term investments		33,972				87,273
Proceeds from maturities of short-term investments		370,924				204,679
Other investing activities		(68,116	)			(45,105	)
Net cash used in investing activities		(1,007,169	)			(943,879	)
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		(27,187	)			(19,927	)
Proceeds from issuance of long-term debt		366,386				353,587
Payments of long-term debt		(214,290	)			(316,635	)
Payments of finance lease obligations		(40,673	)			(20,373	)
Payments of dividends		(55,116	)			(51,213	)
Other financing activities		(3,234	)			8,945
Net cash provided by (used in) financing activities		55,597				(30,102	)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash		(16,299	)			(17,990	)
Net increase in cash, cash equivalents and restricted cash		130,885				129,324
Cash, cash equivalents and restricted cash, beginning of period		831,521				702,197
Cash, cash equivalents and restricted cash, end of period	$	962,406			$	831,521

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;

• our substantial investments in equipment and facilities to support the demand of our customers;

• decisions to expend cash reserves for various uses in accordance with our capital allocation policy, including the payment of dividends, debt repayment, or stock repurchases;

• 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;

• 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;

• 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;

• 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;

• difficulty attracting, retaining or replacing qualified personnel;

• changes in our capacity and capacity utilization rates;

• the effect of changes in revenue levels and capacity utilization on our gross margin

• 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 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;

• 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230213005457/en/

Jennifer Jue

Senior Director, Investor Relations and Finance

480-786-7594

jennifer.jue@amkor.com

Source: Amkor Technology, Inc.

FAQ

What were Amkor's Q4 2022 financial results?

Amkor reported Q4 2022 net sales of $1.91 billion, net income of $164 million, and earnings per diluted share of $0.67.

What is Amkor's guidance for Q1 2023?

Amkor expects Q1 2023 net sales of $1.40 billion to $1.50 billion, indicating a 9% decline year-on-year.

What is Amkor's full year 2022 revenue?

Amkor's full year 2022 revenue reached a record $7.09 billion, up 16% year-on-year.

What is the quarterly cash dividend declared by Amkor?

Amkor increased its quarterly cash dividend by 50% to $0.075 per share, effective December 27, 2022.

What are Amkor's expected net income and EPS for Q1 2023?

For Q1 2023, Amkor expects net income between $15 million and $55 million, or $0.06 to $0.22 per diluted share.