TowerJazz Reports Third Quarter 2014 Results

Corporate Revenue Represents Year over Year Growth of 70% with Forecasted Continued Fourth Quarter Growth

Top 10 “Organic” Customers Year-to-Date Growth of 34%

MIGDAL HAEMEK, Israel — (BUSINESS WIRE) — November 13, 2014 — TowerJazz (NASDAQ: TSEM & TASE: TSEM) today reports results for the third quarter of 2014 ended September 30, 2014.

Highlights

  • Third quarter revenues of $226 million, up 70% year over year;
  • Revenues for the 2014 nine month period were $593 million, up 60% year over year;
  • Organic top 10 customers business growth year-to-date of approximately 34% over 2013 with third quarter top 10 customers at 23% quarter over quarter growth;
  • EBITDA of $37 million for the third quarter of 2014 as compared to $21 million in the third quarter 2013 and $33 million in the prior quarter;
  • End of quarter cash balance of $195 million with $47 million net cash from operations (excluding Nishiwaki cessation related employee payments) generated during the third quarter and strong balance sheet ratios;
  • Signed definitive agreement to refinance $111 million bank debt with a long term loan, substantially reducing principal payments for 2015 and 2016 from $101 million to $24 million;
  • Third quarter record design wins and masks sets entering the factories, with masks sets’ growth of 30% year-over-year and 11% quarter-over-quarter.

Financial Results Overview

Third quarter 2014 revenues were $226 million, an increase of 70% as compared with $133 million in the third quarter of 2013.

For the 2014 nine-month period, revenues were $593 million, 60% up year over year. On a non-GAAP basis, gross and operating profit were $175 million, and $98 million, respectively, an increase of 49% and 57% as compared to the same period in 2013. Non-GAAP net profit for the 2014 nine month period was $81 million, or $1.61 earnings per share, significantly higher than the $37 million, or $1.01 earnings per share in 2013.

On a non-GAAP basis, as described and reconciled in the tables below, 2014 third quarter gross profit was $68 million, reflecting a 30% gross margin. This is an increase of 72% compared to $39 million in the third quarter of 2013, and an increase of 3 points from the 27% reported last quarter.

On a non-GAAP basis, 2014 third quarter operating profit was $37 million, reflecting a 17% operating margin, an increase of 77% as compared to $21 million in the third quarter of 2013, and an increase of 3 points from the 14% reported last quarter.

On a non-GAAP basis, 2014 third quarter net profit was $31 million, an increase of 153% as compared to $12 million in the third quarter of 2013, and similar to the prior quarter. 2014 third quarter non-GAAP net profit represents $0.58 earnings per share, more than double the $0.26 earnings per share in the third quarter of 2013.

On a GAAP basis, net loss in the third quarter of 2014 was $19 million, representing $0.37 per share, as compared with a net loss of $32 million or $0.68 per share in the third quarter of 2013.

Cash and short-term deposits as of September 30, 2014 were $195 million, as compared to $192 million as of June 30, 2014. The increase in cash balance during the quarter was attributed mainly to $52 million cash generated from operating activities excluding interest payments of $5 million; investments of $37 million in fixed assets, net; repayment of $10 million of debt; proceeds from exercise of options of $3M; in addition, funds received from Nishiwaki assets sale, net of Japanese employee retirement related payments, amounted to $0.2 million.

Cash and short-term deposits as of September 30, 2014 were $195 million, as compared to $123 million as of December 31, 2013. The increase in cash balance during the first nine months of 2014 was attributed mainly to $118 million cash generated from operating activities excluding interest payments of $21 million; investments of $73 million in fixed assets, net; repayment of $35 million, of debt; proceeds from exercise of options and bond issuance of $14 million; $58 million of cash in TPSCo associated with its establishment as of March 31, 2014 and a receipt of $86 million loan from JA Mitsui bank that was used to repay the bridge loan previously received from Panasonic; in addition, funds received from Nishiwaki assets’ sale, net of Japanese employee retirement related payments, amounted to $12 million.

Shareholders' equity as of September 30, 2014 was $180 million as compared to $141 million as of December 31, 2013.

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